B2B business context.
Here is a showcase of the Frame innovation canvas, a powerful tool that helps businesses interpret complex and volatile business contexts. The canvas is based on the principles of design-driven innovation and provides a systematic method for analyzing market contexts and constructing frames that incorporate both technological and market perspectives.
The canvas has been adapted for the business sector and is designed to help businesses evaluate market contexts and make meaning shifts more visible. It is a simple yet effective tool that can be used by businesses of all sizes and industries to create new opportunities and innovate their offerings.
Whether you are an established business looking to stay ahead of the competition, or a startup looking to disrupt the market, this Frame innovation canvas can help you understand the market context and provide the desired value to your customers.
A design approah to systematically interpret B2B business context.
Note: The Frame Innovation Canvas is based on my master thesis, read more in the link blelow.
Frame innovation, at its core, provides a practical process for rethinking difficult challenges. It also serves as a foundation for a multidisciplinary team to build transdisciplinary thinking and practice (Willemsen, 2018).
Frame innovation can be seen as the concept it self and the problem solving process to perform frame innovation. The Frame Innovation Canvas visualizes the problem solving process with design abduction thinking as the back bone. Design driven innovation concept is integrated into the Canvas as a interpretation guidance for the data collected. All definitions of the canvas is be carefully examined and defined in business terms, which makes it a tailored tool for business context interpretation.
The simplicity of the Frame Innovation Canvas allows us to keep track of the change in business context when carrying out a high-level analysis, and by abdopting the design way of thinking (in this case the design abduction thinking and design driven innovation concept) it more likely to come up with meaningful intepretation of the business context and utilize it for further strategic development.
To put it simple, Frame Innovation Canvas is a visual overview with meaningful interpretation of the context change in your entire business.
While the Frame Innovation Canvas is an extremely abstract concept, it is broken down into the 7 key building blocks down below.
A product offering, a combination of elements: materials and parts, capital items, supplies and services, or systems that deliver customer value.
A strategy or an innovation management system, the pattern of interaction between elements, aiming to create and deliver value.
A customer value, the perception of what a product or service is worth to a customer versus the possible alternatives.
A perspective that is formed by grouping cause and effect in the problem context.
A suggestion with possible action, based on interpretation of the problem context to apply a certain pattern of interactions to achieve a desired outcome. (Normally a sequence of innovation scenario)
The purpose of a product or service (product offering) as perceived by a human. (Why a product offering is used)
The frames that are previously formed and are in action.
The field is identified as an intellectual, cultural, and social space, where "currencies," i.e., the power, interests, values, practices, and frames that could push the problem in a new direction, can be exchanged and played around with.
How does Frame innovation Canvas help you interpret business?
The Frame Innovation Canvas will guide us through 6 steps, helping us establish an interpretation for change in the target business context.
6 steps of Frame innovation Canvas
Extend beyond context
Forming themes (perspectives)
Identifying the why
In the first step interpreters construct the business context and examine the existing frames. This step provides insight into the change in context, whether it’s a development of new technology or a change in the market. This represents a first impression of the dynamics of the business context. In this step, interpreters will have to identify the "Pre-frame", the "Outcome" and the "How". Which are the existing ways of providing customer value, the new desired customer values that have been identified, and the strategy that aims to create or deliver the value. It is also important to understand the gap between the "pre-frame" and the desired "outcome", the paradox of what makes these desired values hard for the existing frames to deliver. In this step, the interpreter does not have to widen the field but go in-depth.
2. Extend beyond context
After establishing a complete overview of the business context, we will have to set aside the core paradox statements and start radically widening the context, creating the "field". Dorst (2015) identified the field as an intellectual, cultural, and social space, where "currencies," i.e., the power, interests, values, practices, and frames that could push the problem in a new direction, can be exchanged and played around with. In other words, the field is the place to expand the context, explore the customer values, innovation strategies, stakeholders, etc. This step enables interpreters to explore new values and strategies that are not constrained by the original business context. In this sense, interpreters can gain a sense of novel practices and scenarios that can further develop into future product offerings.
3. Forming Themes(perspective)
In this step, we group the elements to form universal themes, which represent the overall perspectives of the business context. Note that suggestions for actions are yet to be formed. In this step, we focus on forming perspectives, not reactions.
4 . Framing
After forming different perspectives on the context, we then frame the context based on the themes that we established in the previous step. In other words, framing means coming up with suggestions for further actions to address the change in the business context. We find it effective to describe frames in scenarios or as a sequence of events. After proposing the frames, these different frames will have to be tested out and further explored. Businesses envision how things might work in these lighthearted explorations. Experts often discuss the process of generating and testing frame ideas in terms of "fruitfulness": will a frame steer us in a productive route, allowing us to develop several viable solutions, or not? (Dorst, 2015)
5. Identifying the why
This step is about identifying the meaning behind the frames, as frames are possible actions that can be taken. It is important to clarify the “why” behind these actions. The output of the process should not be an idea or a solution, but rather something more holistic. It should be shown more as a scenario, giving a sense of the new meaning to be reached for. In this step, interpreters will also map the meaning onto the DDI model to see the difference between the new meaning and the old one.
6. Transforming frames
Finally, the last stage is a critical examination of what frames and solution directions are viable in the short term or can be built progressively over time. This is the step to turn frames into product offerings (“What”) or as Dorst stated “a “business plan accompanied by a transformation agenda and a strategy for achieving results.”
Case study - Hilti
Hilti's successful radical innovation involved interpreting the business context and meeting Batigroup's needs with a new strategy in 2000. The strategy included fleet management, where customers could purchase "permanent tool availability" instead of tools. Hilti would supply, repair, replace, and cover stolen tools while also managing temporary high demand or specialty tools. This value offer aimed to increase customer performance by reducing downtime, improving safety, and delivering state-of-the-art tools. The innovation process is analyzed using the frame innovation model, which links the business context, interpretation, and solution.
Change in context
Figure 4-1 shows the timeline and the difference in value proposition of Hilti. When Hilti began in 1941, it specialized in the contract manufacture of construction tools. The company's scope and scale grew dramatically over time. With its growth, Hilti aimed to focus on areas where it might outperform the market. In this spirit, the company continued to concentrate on the commercial market rather than the DIY market. The direct selling strategy helped Hilti's business model succeed and set it apart from rivals like Bosch, Makita, and Hitachi Power Tools. They also deployed film crews to construction sites to film clients using their products. Due to always being in touch with their customers, their R&D department could get the same results with far fewer researchers.
Figure 4-1. Timeline and value proposition of Hilti.
Table 4-1 shows Hilti’s frame model before 1990, when it specialized in the contract manufacture of construction tools. Hilti aimed to focus on the commercial market rather than the DIY market. The top three values that customers desired are meeting specification, acceptable price, and product quality. Hilti managed to deliver these values with superior products and innovations in manufacturing. Additionally, their user-centric focus helped differentiate them from the market.
Table 4-1. The frame of Hilti’s product offering before 1990.
Table 4-2 illustrates Hilti's next frame model, which occurred in the 1990s, when Hilti began to diversify its product line while continuing to develop new appliances and technology. The business offered warranty certificates in 1992, three-year complete service for tool failures in 1996, and six-month repair guarantees in 1997 under the "frame" of designing for total cost of ownership. The tool's pricing was then updated to include "Lifetime Service," which includes a lifetime repair cost cap, two years of free maintenance, and a lifetime manufacturer's guarantee. By passing the risk to Hilti, these new business offerings reduce customer risk. The original business frame remains the foundation of the organization; the new frame is the additional value proposed to differentiate from the competition.
Table 4-2. The frame of Hilti’s product offering in1990s.
Although growing rapidly, market research forecasted increased competition throughout those years. Analysts at Hilti expect that competitors will increase in size, boosting their M&A activity to win market share. Hilti’s competitors have worked hard to diversify product lines and increase their performance-to-cost ratios. As a result , Hilti was confronted with an ever-increasing challenge.
In 2000, 70% of Hilti’s power tool sales went to businesses (See Table 12). They wanted versatile items with unique characteristics. They sought multi-purpose tools like hammer drills. These clients desired quality, durability, and convenience of use. They were ready to pay more for a longer product life and fewer maintenance expenses. The remaining 30% of the power tool market is made up of do-it-yourselfers, who have lower utilization and less interest in new technology. These customers bought it on price rather than performance.
Table 4-3. Hilti’s Customer Characteristic
Generally, professional clients (i.e., construction businesses) regarded power tools as c-parts (that is, parts of secondary importance, such as nuts or screws). Professional clients' average budget split for power tools was 2%. Thus, construction firms prioritized larger equipment. However, the 2% funding, which went to power tools, might boost efficiency and productivity in other ways.
The existing Hilti business model, where businesses owned their power tools, made construction companies accountable for all tool management efforts. However the construction site managers had other priorities. The unpredictable costs and procedures related to tool repairs and replacements damaged productivity and distracted workers from vital responsibilities. Construction businesses also struggled to manage power equipment, causing considerable delays.
Up to this point the business context of the market has been deeply understood. Construction sites struggled to manage their tool fleets over time because they had to handle, repair, and transport hundreds, if not thousands, of small tools. This represents the primary paradox of the business context, as construction companies grow they’ll need more tools, but they struggle to manage more tools. Additionally, specialized drilling equipment was prohibitively expensive. Hilti established a theme toward this paradox: the duty of a construction team is to build, not to control equipment. (The above context is mapped into Table 4-4).
Table 4-4. The change in Hilti’s business contexts.
Hilti, the world leader in small-tool manufacturing, in 1999 had surpassed $2 billion in sales and profit had been rising by almost 8% year on year. However, their user-centered approach in business enabled them to be aware of the changing context in the field. They set out to digitize and servitize their business in response to emerging customer needs by introducing a new business model to the market.
The context of the small-tool market changed in 1999, when Hilti received a large contract from Batigroup, Switzerland's largest construction company. To meet the demands of Batigroup, Hilti would need to alter its business strategy. This was tough since Hilti's previous business model had been quite effective. Hilti was Liechtenstein's largest company and one of the world's top premium power tool manufacturers in 1999. Hilti's strong brand image in Germany, Austria, and Switzerland was aided by high levels of innovation, long-term vision, and product quality.
In 1999 Marco Meyrat, General Manager of Hilti in Switzerland, then visited Batigroup and its construction sites, seeing that handling hundreds of power tools had put a burden on Batigroup's operations. As a result, Batigroup sought a comprehensive system, with the intention of outsourcing all tool fleet management operations, including administrative, maintenance, and financial services (See Table 4-5). There is a major potential for Hilti, since salesmen used to sell one or two power tools on every call, but that is no longer the case. Instead of selling individual tools, contracts involving hundreds of tools might now be marketed. Meyrat felt the business model might result in more than simply a large account project for Batigroup.
Table 4-5. Potential customer desired “outcome”.
The business model shift was then sparked by a visit to Batigroup by Hilti's CEO, Baschera. According to Baschera, one of the most difficult issues, even for senior management, would be handling hundreds of power tools. Meyrat also suggested that broadening Batigroup's request may help Hilti differentiate itself from its competitors. Hilti could manage hundreds of thousands of tools and a far greater share of their customers' wallets by meeting expanding consumer demand.
Despite the fact that there is tremendous potential, Bativgroup's proposal indicates a drastic departure from Hilti's established business practices, which have helped Hilti dominate the premium power tool industry. Baschera questioned the needed adjustments that must be made, claiming that the firm is now on the correct road. Meyrat responded by mentioning their customers' evolving needs and Hilti losing ground to rivals in the small-tool sector despite excellent results. Hilti is a premium brand, and premium is less valued in the small tool category. They are having difficulty differentiating themselves; therefore, this business model innovation is a great opportunity.
Table 4-6 demonstrates Hilti's new frame innovation process, which was developed in response to new customer needs such as the requirement for a comprehensive solution. The answer to managing, maintaining, and transporting hundreds, if not thousands, of small tools. Construction sites struggled to manage their tool fleets over time. Furthermore, specialized drilling machines were prohibitively expensive. Customers in the commercial sector desire a straightforward method for maintaining product availability; they value accessibility and usability over ownership of the necessary instruments. The truth is that the role of a construction team is to build, not to manage tools. The following are the three themes identified by this approach: To begin, make it simple to maintain. Next, increase overall customer performance by boosting tool availability. Third, ensure that your product offerings are future-proof. These concepts come together to establish a new frame, fleet management, which provides construction solutions rather than just tangible equipment. In this way Hilti helps customers by cutting down on downtime and making them safer by giving them new, well-maintained tools.
Table 4-6. The frame of Hilti’s fleet management innovation.
The fleet management concept is based on a key interpreter's interpretation and is derived from the automobile sector. Clients, particularly corporate customers, value a one-stop solution that meets their specific demands and maximizes efficiency. In exchange, they are willing to pay a premium. For a set monthly charge, Hilti supplies construction businesses with a customized power tool fleet.
From the customer's standpoint, instead of buying tools, they could buy "permanent tool availability," which means Hilti will provide, repair, and replace tools as well as cover theft or loss. This guarantees that essential equipment is always accessible, eliminating downtime; peak periods and slumps are balanced; expenses are predictable. For customers, this implies a simpler balance sheet, greater liquidity, and less administrative work. Also, demand spikes are no longer an issue since extra tools may be acquired at any moment.
In Hilti's view, the consumer pays for "intangible" expenses like risk assumption. To establish itself as a solution provider, Hilti had to move away from selling power tools. The corporation now thinks in terms of solutions and outcomes rather than goods and production. Moreover, the emphasis is on long-term client relationships, not sales transactions. Value is no longer produced by real commodities, but by intangible connections and value judgements.
All the frames mentioned in this paragraph are sorted in Table 4-7.
Implement of the new Frame
The fleet management business model initiative was initially kept small, targeting customers that had already established loyalty and close cooperation with Hilti with fleet sizes of around 200 power tools. The following are the initial value proposition of fleet management (See Table 4-6).
Full financing of the fleet
Monthly billing, same price guaranteed
Free maintenance and calibration of tools
Free loaned machines during repair downtimes
Free tool collection and delivery services
Provision of temporary power tools at a daily rate exclusive for fleet management customers (e.g., in the event peaks or for tools that were not part of the fleet)
Provisions for theft: Coverage of 80% of the outstanding monthly rates, while the customer had a deductible of 20% (prerequisite was that the customer must provide a police report)
An online tracking system and comprehensive inventory management
Renewal and recycling of tools at the end of the defined usage time (typically a two- to five-year period)
A 100% client penetration of Hilti tools with fleet management contracts could reduce Batigroup's tool park by 7%. The higher the customer wallet share, the lower the average tool and tool exchange age. But the business model's flaws soon became apparent. Initially, salespeople had trouble selling fleet management contracts, because selling a high-value service contract required executive negotiations. Salespeople also needed administrative and legal experience. Fleet management seemed to contradict this traditional high-tech hardware sales approach. The team had to learn to persuade without live demonstrations.
The long list of service options required of Hilti sales representatives was another challenge. They had no prior experience advising customers on service option configurations, and the customers themselves had no idea which options were most relevant to them. Moreover, complex contracts required prolonged customer negotiations. Furthermore, the minimum fleet size was also rigid, requiring $20,000 worth of tools.
It wasn't long before the pilot project gained traction in Switzerland, and the team's and their business model's success could not be overlooked. To advance fleet management and answer scalability questions, the company formed a task force in Schaan, Liechtenstein. As a result, Hilti launched the "EasyFleet" contract, which is now available to all global customers.
With EasyFleet, Hilti addressed complaints about its complex contracts. It started making contracts as simple as car rentals. The new contracts were two pages long, with simple check boxes and a signature to close the deal. EasyFleet created an "all-inclusive" service package while maintaining flexibility for large customers.
Hilti launched ON!Track in 2016, for Hilti needed a professional way to track all of its construction tools on the construction sites. It was Hilti's professional solution for managing the entire assets on a customer's construction site. The value proposition of ON!Track extended beyond fleet management, as the customer could integrate all assets (e.g., a cement mixer) including assets from other manufacturers. RFID chips were embedded in the tools and other machinery, with ON!Track's cloud-based data customers could track assets, their locations, and who was responsible for each. The asset history made proactive repair and inspection management possible. Hilti was thus able to achieve even greater integration into construction site logistics.
In order to clarify the evolution of meaning behind Hilti’s product offering, Figure 4-2 shows the DDI concept mapping of the findings in the frame innovation analysis. Three meaning transformation and two implementations of technology occured, in the case study. In Hilti’s case, servitization stimulated the development of digitalization, as the number of contracts accumulated Hilti had to find a way to manage all the tools out in the construction field.
Design driven innovation view of Hilti.
Hilti's new business model is a game changer for the European mechanical and systems engineering sector (Wurzer, 2019). Traditionally, innovations were introduced to the market in modest, incremental stages, in close collaboration with the consumer.The transition from product seller to solution supplier extends beyond additional services and conventional after-sales services or spare part supplies. Providing whole solutions has several advantages for Hilti: Extra income from services. Customized solutions to meet consumer demands. Differentiation in a global market.
The Hilti case study demonstrates how changes in the business context may lead to a chain reaction of innovations. It also emphasizes the requirement for an interpreter and the interpretation provided by him or her in the radical innovation path. As themes are built on the basis of their interpretations, frames are built on the basis of themes. It is shown in this example that the frame innovation model is capable of capturing the connection between the changes in the business contexts, interpreter’s interpretation, and the resulting product offering.
Note: The Frame Innovation Canvas is based on my master thesis, read more in the link blelow.