Entrepreneurship and Innovation Management Autumn 2017 Photo: - - PowerPoint PPT Presentation

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Entrepreneurship and Innovation Management Autumn 2017 Photo: - - PowerPoint PPT Presentation

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Entrepreneurship and Innovation Management Autumn 2017 Photo: FryskLab/flickr Lecture 2: Customer development, and the business model The course structure Introduction to entrepreneurship and innovation Opportunity Entrepreneurial

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Entrepreneurship and Innovation Management

Autumn 2017

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Lecture 2: Customer development, and the business model

Photo: FryskLab/flickr

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The course structure

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Introduction to entrepreneurship and innovation Opportunity identification and creation Customer development & the business model Corporate entrepreneurship and innovation Funding of entrepreneurial ventures Entrepreneurial idea pitching

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Agenda for today

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Understand and reflect on:

  • 1. The principles of the lean startup

and canvas type approaches Practice:

  • 1. A full, fast-paced cycle of developing

a solution through design thinking

  • 2. Clarifying the components of the

business model of an entrepreneurial idea

Photo: Ewan McIntosh/flickr

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Lean startup

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Ideas WILL change: “93% of all innovations that have ultimately become successful started

  • ff in the wrong direction;

the probability that you’ll get it right the first time

  • ut
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the gate is very low”

Clayton Christensen, Harvard

Photo: Betsy Weber/flickr

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Initially podcasting idea - then an internal communication system becomes the company’s main product

Photo: Rosaura Ochoa/flickr

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From free search engine to licensing to paid search listings to targeted ads for other websites

Photo: Robert Scoble/flickr

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Lean startup: Eric Ries, Steve Blank build > measure > learn > …

Photo: Betsy Weber/flickr

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Startup: a temporary organization designed to search for a repeatable and scalable business model

Photo: Heisenberg Media/flickr

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Get

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the building! Who is the customer? What is the problem? What are the potential solutions?

Photo: glasseyes view/flickr

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A day in the life

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the customer Understand how they spend the day, commute, work, eat, have fun, ect. Not

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how they would buy the product!

Photo: Johanan Ottensooser/flickr

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Addressing a customer PAIN!

Has or can acquire a budget Has put together a solution out of bits and parts Has been actively looking for a solution Is aware of having a problem Has a problem

Source: Adapted from Blank, S. The four steps to the epiphany

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Must-have (pain killer) vs Nice to have (pain vitamin)

Photos: SimonQ錫濛譙, Mitch Altman/flickr

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Where is the customer of your idea in the pyramid? Is the solution a must-have

  • r a nice-to-have?
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Product - market fit: a solution that matches the problem Minimum viable product (MVP): a bare-bones product with just enough features to allow useful feedback from early adopters

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“if you’re not embarrassed by the first version

  • f your product,

you’ve launched too late”

Reid Hoffman, Linkedin founder

Photo: TechCrunch/flickr

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Source: http://learn.onemonth.com/if-youre-not-embarrassed-by-your-startup-you-launched-too-late

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Source: http://learn.onemonth.com/if-youre-not-embarrassed-by-your-startup-you-launched-too-late

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Source: http://learn.onemonth.com/if-youre-not-embarrassed-by-your-startup-you-launched-too-late

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Develop early prototypes!

Photo: Daniel Go/flickr

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Pop-up store

Photo: Dave Pinter/flickr

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Launch page

  • r

website

Photo: http://www.cmsmind.com

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Storyboard or ppt presentation showing how the product or service works

Photo: visualpun.ch/flickr

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Rapid prototyping for Google Glass

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http://ed.ted.com/lessons/rapid-prototyping-google-glass-tom- chi

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State your hypotheses and then test them: interest in solution characteristics of customer willingness to pay price point …

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Pivoting: a major change in a company’s direction based on user feedback

Photo: Martin Fisch/flickr

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Putting the process together

Source: Blank, 2013

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Failure is part

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the process! “Do not be embarrassed by your failures, learn from them and start again”

Sir Richard Branson, Virgin Group founder

Photo: Cynthia Smoot/flickr

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Getting out of the building!

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https://youtu.be/lLEebbiYIkI?t=3m15s

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So should we a l w a y s apply the lean startup approach?

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Critique of the lean startup approach

  • Might not be suitable to all industries (health industry..)
  • Might not be suitable for creating radical innovation:
  • (the lean startup approach) "...might lead to a local maximum, but it won’t help you

find the global maximum.

  • “If I had asked people what they wanted, they would have said faster horses”, Henry

Ford (allegedly)

  • All investors had been turning down airbnb’s founders idea during the early stages –

after all, why would anyone put strangers into their house?

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Design thinking

Photo: Ewan McIntosh/flickr

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Empathize Define Ideate Prototype T est

Source: adapted from the Bootcamp Bootleg, Stanford d.school

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Be an ethnographer! ”Seeing and hearing things with your

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eyes and ears is a critical first step in creating a breakthrough product.”

Design Agency IDEO

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Design thinking mindsets

Show, don’t tell Craft clarity Embrace experimentation Focus on human values Be mindful of process Bias towards action Radical collaboration

Illustrations: Bootcamp Bootleg, Stanford d.school

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Let’s practice design thinking!

Photo: Steven Depolo/flickr

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What are the similarities and differences between lean startup and design thinking?

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Lean startup vs design thinking

  • Both focus on customer definition, then problem definition, then

development of solution – not vice versa!

  • Both focus on prototyping and testing solutions early on
  • Both accept failure and iteration/pivoting as part of the process
  • Design thinking emphasizes observation / ethnography /creativity

techniques instead of asking the customer directly / testing online

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Business models & revenue models

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Business model: “the rationale of how an organization creates, delivers, and captures value” (Osterwalder & Pigneur, 2009) “a structural template that describes the organization of a focal firm’s transactions with all of its external constituents in factor and product markets” (Zott & Amit, 2008)

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Business model canvas

designed by: Strategyzer AG The makers of Business Model Generation and Strategyzer This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. strategyzer.com Revenue Streams Customer Segments Value Propositions

The Business Model Canvas

Key Partners Key Activities Cost Structure Customer Relationships Designed by: Date: Version: Designed for: Channels Key Resources

Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf

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Lean Canvas

Source: www.leancanvas.com

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Suggestions to avoid common mistakes

  • Be lean! Focus on most promising problem / customer / solution / revenue stream, not

the entire universe of possibilities.

  • When assessing revenue remember you need to have sufficient margins as to generate

profits after subtracting your costs. If you use retailers these will command high margins (e.g. 50% of final price).

  • If the paying customer is other than your user then address this explicitly and make sure

you can deliver strong value to the intended paying customer.

  • Platforms are challenging: you need to generate supply and demand at the same time to

be successful, you need to think both sides when developing your solution across each canvas component.

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Revenue model: what types of revenue?

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  • One or more revenue streams
  • Types of Revenue streams:
  • Asset sale: sale of a physical product
  • Usage fee: sale of the use of a service
  • Subscription fees: sale of continuous access to a service
  • Lending/renting/leasing: sale of exclusive right to an asset
  • Licencing: sale of the use of intellectual property
  • Brokerage fees: sale of intermediation services
  • Advertising: fees for advertising

Source: Osterwalder & Pigneur, 2010

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Asset sale Usage fee Subscription fee Lending/renting Licensing Brokerage Advertising

Logos: Wikimedia Foundation, Photo: jm3/flickr

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Revenue model: Who pays?

Hint: Your paying customer is not always your user!

  • B2B
  • B2C
  • C2C
  • B2B2C

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Revenue model: How is price set?

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  • Fixed Pricing
  • List price
  • Product feature dependent (e.g. ”Freemium”)
  • Customer segment dependent (e.g. ”Cross-subsidization”)
  • Volume dependent
  • Dynamic Pricing
  • Negotiation/bargaining
  • Yield management
  • Real-time market
  • Auctions

Source: Osterwalder & Pigneur, 2010

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Revenue model: How often?

Two options:

  • Transaction revenues (one-time payments)
  • Recurring revenues (ongoing payments)

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Source: Osterwalder & Pigneur, 2010

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Don’t forget what’s happening

  • utside

the Canvas

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  • Market forces: Is your model in line with evolving customer needs?
  • Key trends: Is your model prepared for emerging trends?
  • Industry forces: Does your model have a competitive edge today?

Tomorrow?

  • Macro-economic forces: How will your model adjust to macro-

economic shifts?

Source: Osterwalder & Pigneur, 2010

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Assignment week 2( and 3 and 4)

By ¡now ¡you ¡should ¡be ¡close ¡to ¡deciding ¡on ¡the ¡most ¡promising ¡idea ¡you ¡will ¡be ¡developing ¡as ¡a ¡group ¡and ¡ul7mately ¡ presen7ng ¡during ¡the ¡final ¡pitch ¡session ¡of ¡this ¡course. ¡You ¡now ¡need ¡to ¡make ¡this ¡idea ¡more ¡concrete ¡and ¡develop ¡some ¡ first ¡assump7ons ¡about ¡how ¡the ¡solu7on ¡would ¡work ¡in ¡prac7ce. ¡ First, ¡you ¡need ¡to ¡define ¡and ¡visualize ¡your ¡main ¡target ¡customer ¡by ¡crea7ng ¡a ¡customer ¡“persona”: ¡give ¡him ¡or ¡her ¡a ¡name, ¡ and ¡describe ¡him ¡or ¡her ¡in ¡terms ¡of ¡demographics, ¡interests, ¡and ¡general ¡lifestyle. ¡Give ¡as ¡much ¡detail ¡as ¡possible ¡to ¡this ¡

  • persona. ¡ ¡

¡ The ¡business ¡model ¡canvas ¡is ¡another ¡helpful ¡tool ¡when ¡further ¡developing ¡your ¡solu7on. ¡Make ¡sure ¡you ¡do ¡not ¡fill ¡it ¡in ¡ absent-­‑mindedly, ¡but ¡actually ¡think ¡through ¡every ¡component ¡thoroughly. ¡The ¡revenue ¡stream ¡is ¡one ¡component ¡that ¡ needs ¡special ¡aGen7on, ¡and ¡where ¡most ¡ideas ¡are ¡poorly ¡developed. ¡ ¡ ¡ Finally, ¡you ¡need ¡to ¡develop ¡a ¡rough ¡visual ¡prototype ¡of ¡how ¡the ¡idea ¡will ¡work ¡in ¡prac7ce. ¡This ¡could ¡be ¡a ¡drawing ¡or ¡ storyboard, ¡a ¡physical ¡prototype, ¡a ¡website ¡or ¡app ¡mockup ¡/ ¡wireframe ¡or ¡anything ¡else ¡that ¡helps ¡a ¡poten7al ¡customer ¡to ¡ beGer ¡understand ¡the ¡experience ¡they ¡will ¡have ¡with ¡your ¡solu7on ¡and ¡to ¡provide ¡useful ¡feedback. ¡ ¡ You ¡need ¡to: ¡ ¡ Create ¡a ¡descrip7on ¡of ¡a ¡customer ¡persona ¡that ¡embodies ¡your ¡core ¡target ¡market ¡ Create ¡a ¡descrip7on ¡of ¡how ¡your ¡solu7on ¡is ¡structured ¡across ¡each ¡component ¡of ¡the ¡lean ¡-­‑ ¡business ¡model ¡canvas ¡(1 ¡slide ¡ per ¡component) ¡ NB ¡You ¡will ¡con7nue ¡perfec7ng ¡the ¡lean ¡business ¡model ¡canvas ¡in ¡weeks ¡4 ¡and ¡5 ¡( ¡sessions ¡4 ¡and ¡5) ¡ ¡ ¡ ¡

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