Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 39 Designing Smart Cities: A Participatory Approach to Busi- ness Model Teaching Tim Mosig1, Wafa Said Mosleh2, and Claudia Lehmann3 Abstract This paper presents the design and content of a business model course for executive education. The course is in- spired by the Scandinavian participatory design approach, which invites cross-disciplinary and interactive engage- ment. It demonstrates how a situated learning experience enables a contextual process of inquiry among partici- pants. Please cite the paper as: Mosig, T., Mosleh, W. S., and Lehmann, C. (2021), Designing Smart Cities: A Participatory Approach to Business Model Teaching., Vol. 9, No. 3, pp. 39-49 Keywords: Business Models, Participatory Design, Situated Learning 1 HHL Leipzig Graduate School of Management – Center for Leading Innovation and Cooperation, tim.mosig@hhl.de 2 Department of Design and Communication – University of Southern Denmark/Danske Bank, wafamosleh@gmail.com 3 HHL Leipzig Graduate School of Management – LF Group Chair of Digital Innovation in Service Industries, claudia.lehmann@hhl.de DIO: https://doi.org/10.5278/jbm.v9i3.2566 ISSN 2246-2465 Introduction In recent years, business models (BMs), which sup- port articulating “how a business creates and deliv- ers value to customers” (Teece, 2010, p. 173), have received increased attention in academia and practice (Zott et al., 2011). This practical approach helps explain the underlying economic logic of how businesses can deliver value at a reasonable cost and, inspired by Osterwalder’s (2004) BM canvas, how they can be developed and visualized in a structured way. Although various BM ontologies and frameworks have provided a shared language for the description and visualization of BMs, its development still requires interdisciplinary knowledge from the fields of market- ing (customer segmentation), strategic management (value propositions), and procurement and logistics (key resources). Furthermore, as models are simpli- fied representations of reality (Stähler, 2002), BMs’ multidimensionality (Evans et al., 2017) and complexity increase as constant technological and socio-economic developments influence business and society. At the same time, globalization increases competitiveness, which requires businesses to remain responsive to the market. Hence, it is necessary for a business to con- tinually question and reframe its BM (Osterwalder, 2004). While BMs were previously the joint affair of management and business experts, interdisciplinary Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 40 efforts have increasingly proven to be crucial for the development and implementation of new ideas (Buur et al., 2013). Thus, facilitating meaningful interdisci- plinary conversations regarding BM development has, over the last decade, increasingly become a key concern for businesses. As a result, BMs have found their way into academic curriculums. Teaching BMs with the purpose of bridging theory and practice requires us to think of learning as a situated practice that invites participation in activities (explora- tion, problem-solving, and reflection) that contribute to the development of successful BMs. The activities designed for the course presented in this paper are based on the understanding that learning is situated (Lave & Wenger, 2008) and thereby a contextual pro- cess of inquiry. Furthermore, in the spirit of Lave and Wenger’s (2008) theory of communities of practice, such learning is not simply an individual experience, but something that emerges between participants. With this foundation, we emphasize that the teach- ing and learning of BMs cannot be defined as or lim- ited to a cognitive activity. Instead, we understand learning as understanding in practice (Lave, 1997) and as a relational process that emerges as patterns of meaning in the evolving relationships between those involved (Stacey, 2005). Thus, with BM development involving various stakeholders, we emphasize that teaching and learning about it emerges through col- laborative inquiry that embraces the participatory design (PD) approach presented as the foundation of our course design. Developing BMs for smart cities Based on the above-described challenges and oppor- tunities, we developed a BM course for MBA students (as part of executive education) using a participatory format to explore the topic from an interdisciplinary perspective and facilitate interaction among partici- pants throughout the course (Hains & Smith, 2012). The learning objectives are to: 1. Understand the components of a BM and describe and analyze different types of BM designs, 2. Strengthen their capacity to develop digital and technology-enabled BMs, 3. Gain the knowledge needed to use PD tools to work on new and innovative BMs, and 4. Recognize and reflect on the customer experience journey and apply relevant methods to explore cus- tomer needs. The course was taught at a well-known business school in Europe and was run three times at different lengths: 1) part time across five consecutive days, 2) part time over two days, and 3) full time for one day. Altogether, the three courses involved 122 participants from differ- ent geographical locations in Europe. To ensure a practice-oriented approach for teaching BMs, we chose to ground the course in the concept of smart cities. We contextualized the structure and con- tent around the smart city topic, using the following definition: A smart city is a well-defined geographical area, in which high technologies such as information and communication technology [ICT], logistics, energy production, and so on, cooperate to create benefits for citizens in terms of well-being, inclusion, and participation, environmental quality, [and] intelli- gent development. (Dameri, 2013, p. 2549) In addition to this definition, a smart city shows the following dimensions (Table 1). Dimensions of a smart city Related aspect of urban life Smart economy Smart people Smart governance Smart mobility Smart environment Smart living Industry Education E-democracy Logistics & infrastructures Efficiency & sustainability Security & quality Table 1: Dimensions and related aspects of urban life in a smart city (Lombardi et al., 2012) The word smart is stressed in the course material. Each dimension of a smart city consists of numerous prod- ucts and services (smart components) connected to one another. According to Kulakov et al. (2016), smart services utilize intelligent components, such as infor- mation, decision provision, and communication, to continuously acquire and apply knowledge. This helps adapt the services to customers’ preferences and improves quality, reliability, and user experience. Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 41 In terms of products, smart cities have “the ability to communicate and interact with their environment and other smart products by using internet-based services […] as well as the capability to react in real-time and their potential for dynamic reconfiguration” (Abram- ovici et al., 2018, p. 734). Thus, a smart city relies on services and products that are interconnected and com- municate with its environment. Due to the broad appli- cation of ICT solutions and the importance of them in the context of smart city development, it is possible to collect data that may contribute to a citizen-centered, sustainable, and value-creating smart city design. Using the smart city concept for teaching and training BMs has proven advantageous, as it focuses on the benefits of citizens, implying that participants should take a customer-centric perspective. The customer focus is increasingly taken into account in businesses’ strategic considerations. At the same time, a smart city needs to offer different services and facilities, grouped into functional districts (Lee &  Lee, 2014), to its citi- zens, such as education and healthcare (Washburn & Sindhu, 2010). Therefore, each service and functional district requires different input factors, leads to par- ticular outputs, and thereby adds value for the citizens in different ways (Albino et al., 2015). Hence, we can compare the different functional districts of a smart city to businesses that offer various products and ser- vices, as both need to keep end customers in mind. Based on the smart city topic, the MBA course was designed in six different stages, which participants needed to complete as part of their learning process about BM development. In the following sections, we present the methodological approach to the design and structure of the course and the details of those six stages. Approach The MBA course design is founded on the Scandinavian PD approach (Sanders & Stappers, 2008), of which the central component is to invite and facilitate participa- tion in co-design processes. As PD represents a grow- ing family of design practices that entails using a wide range of methods, it is difficult to describe it as sim- ply one approach or as tools and techniques that may be applied regardless of the problem at hand (Brandt et al., 2013). Instead, the activities must be strategi- cally organized to serve a particular focus by remaining attentive to the complete experience that the partici- pants will be engaged in. Thus, each activity needs to be coherently linked to the subsequent one to enable participation (Sanders & Stappers, 2008). Brandt et al. (2013) suggest the combination of activities that invite telling, making, and enacting to enable participants to influence future ways of living, learning, and being. This, in particular, is what the seminar program encour- ages through multiple modes of collaborative activity (see Figure 1). Together, these enable engagement of diverse groups (age, organizational hierarchy, func- tional and disciplinary backgrounds, and prior train- ing) and support different stages of idea development (Sanders & Stappers, 2008). Inviting participation through these methods encour- age the exchange of different perspectives (Andersen & Mosleh, 2020) and professional disciplines in the group work (Burns et al., 2006) and allow for new meaning to emerge. While the MBA course was designed based on a Scandinavian PD approach, participation emerges in the social interaction between participants and not necessarily due to the staging/facilitation of the activi- ties (Mosleh & Larsen, 2020). Thus, participation in the workshop is not understood as an ideal of demo- cratic engagement, which is mediated through specific methods, but rather as engagement that is encourages through the methods and which temporally unfolds in processes of social relating. The activities are an invi- tation to confront particular themes using particular methods, but the social interaction of participants is improvised, and the outcomes of such engagement are thereby unpredictable. Thus, participation can- not be staged or controlled through specific forms of engagement (Mosleh & Larsen, 2020), which generally challenges more traditional ways of understanding PD practices (Mattelmäki & Sleeswijk Visser, 2011). Talking, telling, and explaining Making tangible things Acting, enacting, and playing Figure 1: Framework of Practicing PD; own illustration, adapted from Sanders & Stappers (2008) Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 42 The application of the described PD approach is real- ized in the design and structure of the course, where participants are invited to engage with the following six themes: 1) Problems & Challenges, 2) Divergence & Convergence, 3) Connectivity & Sustainability, 4) Experi- ence Creation, 5) Construction I, and 6) Construction II. Notably, these themes involved a variety of methods, such as the LEGO®SERIOUS®PLAY1 methodology, cus- tomer experience journey, and persona development. A comprehensive overview of the methods involved and how they contribute to the understanding of BMs is provided in Table 2. Additionally, in the following 1 https://www.lego.com/en-us/seriousplay/trademark-guidelines paragraphs, the themes, how they are addressed using the different methods, and how they may contribute to the teaching of BMs are delineated. Before commencing the activities, participants received a brief kick-off lecture on the topic of smart cities. The lecture related to current events and/or economic, technological, or social challenges that are known to influence a company’s BM. Stage 1. Problems and Challenges The participants were divided into groups of three to five and each assigned to one particular district, e.g., retail, culture and education, mobility, and health. The Methods applied in the Seminar Method Comments on how method(s) affect(s) the busi- ness model Step 1 – Problems and Challenges • Developing a short interview guide • Conducting semi-structured (customer) interviews • Analysis and discussion of findings • Developing a persona • to know who the customer is • to address real customer needs and not aspects assumed the customer wants get solved or addressed • to later on exactly know what the value is deliv- ered to the customer and to articulate the value proposition(s) for the business model accordingly Step 2 – Diverge and Converge • 6-3-5-method • Group discussions • Iterative process structures of getting feedback and refining ideas as it is also done in Design Thinking • to explore as many (business) opportunities as pos- sible arising from customer needs identified before • to then choose the options addressing the customer need best • to define the activities/products/ services represent- ing the activities Step 3 – Connectivity and Sustainability • Brainstorming • Group discussions • to define key resources, partners, and output factors of the business model Step 4 – Experience Creation • Customer Experience Journey • Prototyping with craft materials • Group discussions • to create the processes connecting all aspects defined so far for the business model • to see what kind of processes make most sense also considering the customer perspective Step 5 – Construction I • Prototyping using: ° LEGO® SERIOUS® PLAY Methodology ° Other craft materials • Group discussions • to test the business models, processes, and workflows Step 6 – Construction II • Prototyping using: ° LEGO® SERIOUS® PLAY Methodology ° Other craft materials • Group discussions • to implement the business (model) and connecting with external partners Table 2: Comprehensive overview of the methods applied throughout the seminar Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 43 groups were asked to develop products, services, and processes to satisfy citizens’ needs and solve chal- lenges central to the smart city concept. They also developed the corresponding BM for these districts throughout the duration of the course. During the first stage, the groups were asked to develop a short semi-structured interview guide (Blomberg & Burrell, 2012) to help them explore the existing chal- lenges and needs of users/citizens in the context of the particular district. Here, the district was viewed as a real-life business situation that the customer estab- lishes contact with. Subsequently, the interview was conducted with either the general public in the streets or some of the other course participants. During the interviews, participants gathered relevant details about the needs, challenges, and reasons as to why those needs are important to the customers/citizens. Finally, they discussed the collected insights and sum- marized their findings. This led to the development of a persona—a stereotypical person—that they wanted to develop their solutions for in the following stages. In some cases, two personas were developed if the needs and challenges were too diverse to fit into one. Effec- tively, the goal was to empathize with the customer/ citizen and identify real needs that can be addressed and resolved by the BM. In this manner, customer cen- tricity was taken into account. Stage 2. Divergence and Convergence During the second stage, participants underwent a pro- cess of divergence and convergence. The objective was to generate as many ideas as possible within a short time and then to narrow them down to two to three ideas. Each idea needed to be a service or product capable of addressing the previously identified customer need(s). The participants started by applying what we call the 6-3-5 method: six participants in a group passed three ideas around to receive feedback five times. In our case, based on the number of participants, the groups chose the same number of challenges from a set of problems that they identified during the Problems and Challenges stage. Each participant was assigned one challenge (a previously identified customer need). To address this challenge, participants were asked to explore three dis- tinct (potentially “smart”) services or products. Those ideas were then passed around to other participants within the group for feedback, which, in this case, was mainly a remark on how to develop the idea further. This method was adapted according to the number of participants in each group. Having circulated the ideas mentioned earlier, each participant came to know all the proposals made by others. In a group discussion, they reflected upon the various ideas and finally agreed on one approach per challenge. In some cases, several ideas were combined. Through the subsequent discussions, participants then delineated the proposals and presented a clear, action- able solution for each challenge chosen. At the end of the discussion, the group agreed upon one product or service they wanted to work with. This needed to be a well-defined solution that clearly explicated how it can help meet a need/resolve a customer’s challenge and thereby contribute to value creation in a smart urban environment. Effective and efficient communication was essential as the learning inside the individual par- ticipant was shared among all participants within the group via social interplay. Stage 3. Connectivity and Sustainability In this stage, participants engaged in addressing value propositions, delivering, and capturing, thereby dealing with the core aspects of a BM. Additionally, they were invited to consider key partners, resources, and channels. As each group addressed more than one customer need for their chosen district, all groups were required to ensure coherence in the value propositions of their proposals so that they were prepared for the subsequent step. During the Connectivity and Sustainability stage, par- ticipants considered the underlying value propositions of their proposals (i.e., the services or products). At this point, it was important to determine the different value propositions coherently so that they could nar- rate a reasoned story to the customer/citizen as to why these offerings are best suited to address a particular need. Accordingly, participants decided how the value was to be delivered to the customer/citizen. Participants needed to delve deeper into their solu- tion proposals and determine the necessary input and output factors. They discussed the necessary means to realize the solution in terms of key resources and partners and what the outcome of the solution may be. Meanwhile, participants also needed to consider Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 44 how to deal with output factors and the number/type of districts they could connect to achieve sustainability. Effectively, participants also dealt with the question of how the value should be captured. Hence, each group developed key elements of a new BM. Regarding input factors, particular data could become necessary to realize and deliver the service(s) or product(s). However, the data may have already been generated in another district or at another citizen touchpoint. Therefore, at a later stage, participants would need to identify connection points with other districts. In this current stage, they only needed to remain attentive to the circumstances and potential challenges to delivering the solution. Stage 4. Experience Creation In this stage, participants approached the first physical artifacts. All considerations they had made, along with their interim results, were now weaved into a story. The participants were asked to design a customer experi- ence journey including all services or products, their related value propositions, and channels in addition to the identified input and output factors. The customer experience journey supported the participants’ think- ing about how the solutions they developed for their persona might help improve the life of this persona as a citizen in a smart city. Additional questions that needed clarification included how the persona may feel while experiencing the services or products and a mechanism to determine the value propositions. Here, empathy was an important competence to achieve con- vincing results. The participants needed to clarify the persona’s experiences while utilizing their developed services or products using a prototype of a storyboard. The storyboards could be sketched on paper or physi- calized through the use of crafting materials. Thus, storytelling became important for the imagination of a personal experience. Working with paper and other tangible materials enabled participants to discuss their ideas and visualize the customer experience journey to pinpoint how their services and products are intercon- nected and may help them further develop the journey. Stage 5. Construction I The fifth stage of the BM development encouraged col- laboration within the group to support a deeper level of understanding, explore relationships between different parts of the BM, and discuss their proposed solutions. To make it easier to incorporate changes in their pro- posed solutions, we integrated LEGO®SERIOUS®PLAY materials alongside other supplies and items that can be assembled and disassembled so that participants can explore the best possible physical representation of their solution. The predominant focus of this stage was to cre- ate a physical prototype. For this purpose, the LEGO®SERIOUS®PLAY methodology was used to build a tangible structure of a conceptual, intangible idea that the participants could discuss, show to oth- ers, and further develop in the remaining part of the MBA course (Gudiksen, 2015). The participants were thus asked to construct their smart city district. They illustrated the customer experience journey, extended by constructing facilities, exhibiting incoming and out- going connections to or from other potential districts, and converting their ideas/solutions for the services or products into a physical representation. Hence, this step further solidified the understanding of the rela- tionship between different facets of the BM and clari- fied how value is delivered and captured in a customer/ citizen-oriented manner according to the value propo- sitions. In doing this, participants may have discov- ered potential challenges to realizing the ideas, which then also needed to be addressed. At the end of this stage, each group presented their prototype and briefly explained the meaning of the different objects and items embedded in it. Stage 6. Construction II The last stage aimed to help participants understand the complexity of the world we live in and that a dis- trict in a smart city or a business is just a small part of a much larger ecosystem. This ecosystem only works successfully if all the different parts it consists of are aligned with each other. Once all groups presented their prototypes, they began engaging with one another. The task at hand in Con- struction II entailed discussion between all groups to imagine a potential setup of a holistic smart city by integrating all the districts constructed by the indi- vidual groups. Thus, the prototypes of each district needed to be connected (e.g., via infrastructure and items that signify data flow and exchange between Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 45 different districts and throughout the entire city). Again, the LEGO®SERIOUS®PLAY methodology and materials were integrated. Participants considered the input and output factors from which synergy effects might potentially arise. This also meant reconsidering how value is delivered and captured within and across the districts. In the end, the groups presented their overall prototype and explained the setup of all parts of the BM. Key Insights The tasks of the six stages were demanding. However, the interactive PD approach helped with structuring and inviting participants to playfully engage in the given tasks. Effectively, the different methods used enabled the facilitator to touch upon various aspects of a BM without having to name them specifically. However, the relation to BMs needed to be made for a sustainable learning outcome. In particular, the partici- pants’ reflections at the end of the course established the most important learning, as they, in a situated manner, drew connections between the activities and BM development. During the courses, several points proved to be impor- tant for the best possible outcome. Firstly, the inspira- tional kick-off lecture should not be too long or specific to avoid participant bias during a later stage. Secondly, each stage should be explained individually and then be carefully carried out by the groups. After each stage, a reflection should take place to elicit a clearer meaning of the steps followed and understand how the tasks align with different aspects of BMs. We found that providing all instructions at once led to irritation and frustration among participants, which in turn adversely affected the desired outcome. Thirdly, most support and additional explanations need to be provided during Stage 3, Connectivity and Sustainability. The underly- ing reason seems to be about the level of abstraction of what a value proposition is and how the transition between the proposed solutions and the value proposi- tion may be. Lastly, to improve the learning outcome and make it more sustainable, it was helpful to document the interim results and prototypes of each step through photography. The photos can be integrated into the presentation slide deck and forwarded to the partici- pants for documentation purposes. Reflecting on the limitations of the course design, we found that the number of participants in each cohort should not exceed 40 to ensure that the facilitator is able to provide all groups with sufficient support. Additionally, the quality of the course is dependent on the material and equipment available. In particular, the prototyping material needs to be suitable for the topic at hand to enable the participants to craft mean- ingful, tangible artifacts. The final point that should be considered is time, with some activities utilizing a fast ideation process to develop as many idea propos- als as possible while others demanded sufficient time to think about a particular topic or initiate discussions with other group members. Our findings show that to meet the expectations of well-elaborated and mean- ingful outcomes and a sustainable learning process, the course should not be scheduled for just one day but should instead last between three to five days. Discussion and Conclusion The coherent organization of the PD activities enabled all participants to engage (Sanders &  Stappers, 2008) and supported them in imagining future ways of liv- ing, learning, and being (Brandt et al., 2013). Within the groups, this combination of activities invited the exchange of different viewpoints (Andersen & Mosleh, 2020), enabling a collaborative and contextual process of inquiry, leading to the emergence of new ideas and meaning. The social interplay between participants supported a situated experience that emphasized learning as a relational process. This structure and con- tent are advantageous for the teaching of BMs, as it gives space for collaborative sense making and activity rather than the sole agenda of completing a BM can- vas. The participatory nature of the course helped par- ticipants achieve the learning goals in a way that did not limit them to a cognitive activity, as they together simulated and experienced the BM by experimenting with different future scenarios and possibilities using tangible objects, allowing for flexibility and change. Effectively, this course combines a rich set of differ- ent methods adopting elements of design thinking, project-based learning, customer experience journeys, Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 46 personas, the LEGO®SERIOUS®PLAY methodology, and an array of other PD techniques. Collectively, these methods provided sustainable learning outcomes for the participants by dealing with the topic of BMs in a detailed yet hands-on manner that supported them developing the content by themselves. Additionally, they were equipped with methodological knowledge to adapt and re-apply in different contexts and to other topics, expanding the value derived from the course. Our findings show that participants were happy with the learning experience, particularly the playful and participatory way of deriving and applying knowledge, which encourages us to develop the design and content further. In the future, we will apply the structure and content of the course to other topics as well, particularly within the field of digitization, using other themes are such as smart homes and buildings, e-/smart govern- ment, and advanced manufacturing. In conclusion, teaching BM in a way that supports a sit- uated learning experience is a challenge, but we found that integrating a PD approach proved helpful, as it enabled participants to collaboratively undergo a con- textual process of inquiry and imagine future ways of living in smart cities. The PD approach likewise encour- aged the exchange of different perspectives and sup- ported our idea of learning being a social activity rather than a cognitive one. This paper thereby highlighted that teaching and learning about BMs is a collaborative inquiry, which is invited and supported by the strategic organization of PD methods. 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Journal of Business Models (2021), Vol. 9, No. 3, pp. 39-49 49 Tim Mosig, M.Sc., is a research associate at the Center for Leading Innovation and Cooper- ation, a competence center of the HHL Leipzig Graduate School of Management. There, he conducts research on a variety of German and European innovation projects. Additionally, he teaches and provides workshops to inter- national MBA classes dealing with numerous aspects related to digitization. For his PhD, he is working in the field of data-driven business model innovation. Dr. Wafa Said Mosleh is a post-doc at the Uni- versity of Southern Denmark. She holds a PhD in participatory innovation and has undertaken research and consultancy work within larger organizations, such as LEGO and Lufthansa Systems. With a background in product design and an interest in the analytical nature of field research, Mosleh combines practices of design and anthropology to better understand organ- izational innovation processes from the expe- riences of local interaction. During her PhD, she was involved in developing and delivering education modules on design thinking and innovation for industry practitioners as well as graduate students. Prof. Dr. Claudia Lehmann is a professor of the LF Group Chair for Digital Innovation in Service Industries at HHL Leipzig Gradu- ate School of Management. Since 2015, she has also been executive director of the Center for Leading Innovation and Coop- eration (CLIC), a competence center of the HHL Leipzig Graduate School of Manage- ment. Professor Lehmann coordinates numerous German and European inno- vation projects and designs customized innovation strategies with her team and a broad network of institutions and experts. About the Authors