UX in DYNAMICS business model

Business Model Canvas is a tool/template for business model design, analysis and innovation. The basis is the Business Model Canvas. This consists of nine business areas that play a significant role in explaining the impact of user experience on business prosperity.

Business Model Canvas (Osterwalder and Pigneur, 2012)

On the right side of the template are three business areas that relate to customers. In the left part of the template, there are three areas that relate to the company's internal processes. Both parts of the template are linked by the Value Proposition area. At the bottom of the template is the Revenue Sources and Cost Structure area. Revenues are generated by successful sales, i.e. customers. The costs are generated by the company.

Feedback loop Business Model (fig. above)

(fig. Šviráková 2024 according to Cosenz , 2018; Senge 2006; Šusta 2015) 

The basis of systems thinking, which can reveal the system structure, is the feedback loop diagram (Senge , 2006). Causal links between areas of the business model are expressed by arrows. An arrow with a (+) symbol is positive, a (-) symbol indicates a negative arrow. Arrows have positive/positive polarity in most cases. The higher the price per product, the higher the revenue per product sold. And conversely. One arrow in the loop diagram has negative/negative polarity. The higher the company's costs, the lower the economic result. And conversely. Each element in the model affects another element and is affected by another element, has a causal link.

Customer segments (descriptive characteristics), Kotler and Keller, 2013

For the further process of projecting UX into the company's business model, the division of customer segments according to Kotler and Keller (2013) is chosen.

1. Demographic Segmentation: Divides the market into segments based on variables such as age, generation, gender, race, ethnicity, marital status, family size, education, occupation, and income.

2. Geographic segmentation: Divides the target market based on location, such as country, state, city, or region.

3. Psychographic Segmentation: Categorizes customers according to their personality traits, values, beliefs, attitudes, interests, lifestyles and social strata.

4. Behavioral segmentation: Groups customers based on their behavior, such as purchasing habits, product usage, benefits sought, stage of the purchase journey, user status or loyalty level.

Product. We can monitor for example features, innovation, life cycle, sustainability, brand and packaging, emotions, status, functions, and tangibility.

Service (intangible product). We monitor availability, personalization, communication and support, sustainability, trust, possibility of trying the service.

Customer relations. We monitor communication, customer support, loyalty and retention, service, and emotion.

Distribution channels. We monitor retail, online commerce, partner stores, wholesale, direct sales, emotion: trust and joy.

Price. We monitor price strategy, price elasticity, psychology of behavior, prices in different geographical areas, discounts, and promotions.

Measuring User Experience (UX)

"Everyone has a user experience . It's not your job to create it. Your job is to make it good.” (Joel Marsh , 2019, p. 16)

"If the dynamic PROFIT variable does not reflect the influence of the UX variable, then it does not correctly reflect reality."
(Šviráková, 2023, p. 81)

Some research works are devoted to the measurement of user experience. Some of them:

1. Measure User Experience with Modular Questionnaires (Schrepp, 2021). User research by product category uses a questionnaire with scaled response options.

2. Measuring User Experience With 3, 5, 7, or 11 Points: Does It Matter? (Lewis, 2021). User research based on the SUS method ( System Usability Scale ) as a system-web usability scale.

3. Measuring U X of the Student-Centered e-Learning Environment ( Santoso et al., 2016)

4. A direct method for measuring UX in E-government portals ( Faisal et.al., 2016)

5. Innovation Management Approaches: Design Value Calculator Gamification. (Šviráková, Kramoliš , 2023). Follows up on user research. It measures UX from a management perspective.

The first variable for measuring UX is user experience

Possible examples for finding user/customer expectations for the Customer Segmentation area. Descriptive characteristics for customer segmentation (Kotler and Keller, 2013).

Company management must know the expectations of users/customers.

Questions and determination of importance using a scoring scale 1 – lowest expectation; 10 – highest:

1. Demographic: Do your customers/users expect you to offer them products based on their age, gender, education, or job title?

2. Geographic: Will your customers/users appreciate being a local business that is part of their community?

3. Psychographic: Do your customers/users expect to be able to choose products that match their lifestyles, values, and interests?

4. Behavioral: Do your customers/users expect your business to adapt its offering to suit their buying habits and behavior?

The second variable for measuring UX is competition and threats of substitutes

Starting point: Porter's five-factor model of the competitive environment,

the threat of substitutes factor (Porter, 2012).

The response scale is on the same scale as the user expectation measurement (1 – 10).

UX calculation for the company's business model

The calculation of the user experience is based on the knowledge/experience of the company's managers, who know the expectations of the users of their products, and on the knowledge of the competition. Ratio (dimensionless) indicator for a dynamic company model.

User experience management

Increasing business value is driven by increasing user experience where UX is weakest. Leverage according to Senge (2006, p. 81): a small investment in UX will bring a large financial effect for the company.

New Presentation: An economic model of the value of design (System dynamics model)

CONTENT

1. The current state of knowledge and research gap.

2. The aim of the habilitation work.

3. Theoretical framework as an overview of knowledge to achieve the goal.

4. Research processing methods.

5. Experimental part and main results.

6. Discussion and testing of the correctness of the model.

7. Benefit for science, practice and education.

Current state of knowledge and gap in research

The use of design helps companies to innovate, increases the productivity of companies and their turnover ( Benton , Miller and Reid , 2018). Design is too integral to easily measure design ROI (Cooper et al., 2016).

Path of long-term user experience ( Path of Long-Term User Experience ) is research focused on a model that works with dynamic perspectives of customer experience from a long-term perspective, which corresponds to an approach to dynamic models. ( Karahanoglu and Bakirlioglu , 2022).

User values are important in user experience design because values are an experience

and should be considered holistically to improve the user experience by increasing awareness

of values. ( Peng , Martens and Tian , 2018).

Investments (in the area of design) in product, service, interior or marketing innovations can be measured using a whole range of factors. DVI composite index ( Kramoliš , 2021) for calculating design potential (in Šviráková

and Kramoliš , 2021).

Currently, there is no empirical evidence that can demonstrate that the creation of a firm's economic value with the contribution of design change has a linear course. It means that the system is non-linear. Therefore, it is necessary to use dynamic models for further knowledge. Research on the value of design for the European Commission. (BCD Barcelona Design Centre, 2014).

Objective of the research work

A search of the mentioned research articles and a search of contributions and websites of design research organizations (Design Council , Danish Design Center, McKinsey, BCD Barcelona Design Center) revealed a research niche that is formulated as the main goal of the habilitation thesis.

Main Goal: Main research objective: To determine the causal relationship between design value and user experience. (Cooper et al., 2016; Karahanoglu and Bakirlioglu , 2022; Peng , Martens and Tian , 2018).

The sub-goals of the habilitation work aim to fulfill the main goal using an iterative approach to research implementation. Iteration plays an important role in the scientific method of experimentation and in the design thinking process.

DC1: Define design as a comprehensive category.

DC2: The board game is a vehicle for expressing the relationship between UX variables and design value.

DC3: Building a system dynamic complex business model of the organization.

DC4: Comparative analyzes in one company of one player as an experimental model.

DC5: Comparative analyzes across multiple firms with multiple players.

DC6: Reliability, correctness and comprehensibility of all research methods.

Theoretical framework for problem solving as an overview of knowledge to achieve the goal of the work

Balanced Scorecard it helps to monitor the performance of the organization from different perspectives: the financial perspective, the customer value creation perspective, the internal process perspective and the learning and growth perspective. Kaplan and Norton's (2007) BSC tool is a cause and effect model because each perspective influences the other three.

The design management model ( Parkman , Malkewitz , 2021) follows on from the Balanced model Scorecard . D esign is good business, which corresponds to (1) the finance perspective . Design serves as a differentiator, creating (2) customer value by enhancing UX, building organizational branding, progressive marketing communications, and improving distribution channels. Design serves as a coordinator. The design process as a coordinator includes an emphasis on product functionality, (3) the setting of production processes. Design serves as a transformer, as a vision. Design as a transformation tool is based on setting design so that the firm maintains its ability (4) to change and improve in favor of building the firm's strategic value.

Systems thinking makes it possible to understand the organization as a complex system and to examine the interrelationships between the BSC perspectives. Feedback loop diagrams are a tool that makes it possible to predict what effects the links between parts of an organization will have on its overall performance. ( Senge , 2006).

Dynamic modeling includes feedback loops, levels, and flows that are essential for understanding and tracking non-linear outputs that result from changes in inputs. Dynamic models explain the role of UX and design in the process of creating economic value. ( Cosenz , 2016; Šusta, 2015)

Model as a learning platform , model as a game. The model can be a tool for rational reasoning in a strategic decision-making situation. ( Boghian et al., 2019; Neves et al., 2021; Chukusol & Piriyasurawong , 2021)

Research processing methods

To achieve the main goal and partial goals of the habilitation thesis, the following research methods were used: experiment and experimental design. Both methods are characterized by iterations as successive steps of creating, validating and improving research. Two types of research were used in the experiment: descriptive and causal research.

The experimental design research method process began in 2020. During 2021 and 2022, research investigations were conducted in different types of organizations: non-profit organizations, public administration organizations, companies, universities. The individual steps of the iteration can be summarized as follows:

Step 1 : Research starting points, reflection of the current state of knowledge and search for a research gap.

Step 2 : Redesign of the system dynamic model of the start-up firm (Cosenz , 2017). Creating own model in Vensim software . A research license was purchased.

Step 3 : Redesign of the questionnaire (Šviráková according to BCD, 2014). Cooperation with a graphic designer. Collection of qualitative data on the design of companies. 150+ questionnaires received. The interviews took place individually and in groups, online and offline.

Step 4 : Implementation of the experiment. Creating Design Value prototypes Calculator and analysis of game strategies.

Step 5 : Detailed analysis of the results and change of parameters to calculate the optimal strategy using the DV Calculator .

Iteration: Step 2, 3, 4 and 5 were iteratively interlaced with each other, which meant going back one or more steps.

Step 6 : Gathering documentation for all prototypes and further development of the research concept.

Experimental part - fulfillment of objectives

Fulfillment of DC1 - Define design as a comprehensive category

Design is the integration of functional, distributional emotional and social experiences of the user.

The questionnaire in the form of a board game works with all dimensions of the user experience. If one part of UX is omitted in the questionnaire, the design cannot be understood in its complexity.

Sub-goal 1 was achieved.

Fulfillment of DC2 – The board game is a vehicle for expressing the relationship between UX variables and design value

DC3 – Building a system dynamic complex business model of the organization

DC4 – comparative analysis in one company

DC5 – comparative analyzes in several companies

When comparing the development of the PROFIT indicator in several companies, the PROFIT indicator is problematic for determining the value of the design. Therefore, in the next iteration of the research, another indicator was chosen, which is not burdened by the need to express it in monetary units and is not influenced by the initial values of the UX of the product. The design cost profitability indicator was chosen as a suitable indicator. The comparative analysis is set against the zero option of investing in design, which is
graphically zero for the entire modeled period. Multiple strategies can be compared at once using the design cost profitability indicator.

Basic formula:

                                  profit

Cost return = ------------------------- * 100 [%]

                               total cost

DC5 – comparative analyzes in 6 companies: management strategy

Main results of DC5 – comparative analysis in 6 companies: optimal solution

Main Results – To establish the causal relationship between design value and user experience

Discussion and testing of the correctness of the model

In the habilitation thesis, the entire research process was documented, including partial prototypes of the research questionnaire.

The reliability and correctness of the model was verified according to the consistency of the units used ( Sterman , 2000).

The correctness of the economic indicators and the resulting calculations in the model was verified using the accounting system test, which confirms the zero difference between assets and liabilities in the Balance Sheet statements of the modeled company and all scenarios and case studies.

The correctness of the model was verified by the sensitivity method of the behavior of the dynamic model by shock ( Sterman 2000).

The reliability, correctness and comprehensibility of all research methods is the fulfillment of sub-goal 6 (DC6).

A further development of the research concept is proposed: to focus on the customer experience (CX) and connect it more with the business model areas of the firm. Create a new visual tool for understanding the impact of CX on the value of design and on the profitability of design costs.

Benefits for science, practice and education

Benefits for science

Experiment and descriptive and causal research methods; Evidence: how design affects UX and how UX affects a company's bottom line.

By measuring with the help of modeling, the leverage effect can be demonstrated, where a small change in design can mean a big benefit for the company, its profitability and profitability.

Benefits for practice

Specific areas of UX where it is most beneficial to invest in design to have the greatest impact on the economics and management of organizations (Leverage Point).

Benefits for education

The game as an educational tool for understanding complex contexts.

Use of accounting to build a verified and correct company model.