Business Design (Beta)

Business Design

Executive MBA “Innovation & Business Creation” Technische Universität München (TUM) & University of California, Berkeley | May-June 2014 Bernhard Doll | [email protected]

Note: optimized for presentation with tablets

Intro

Education +  Ph.D. (Dr. rer. pol.) in Management from TU München +  M.Sc. (Univ.) in Psychology and Sociology +  Visiting Scholar at Hong Kong University of Science &

Technology and Macquarie University Sydney +  Dipl.-Inf./B. Eng. (hons) in Software Engineering +  Research Fellow at Leipzig Graduate School of Management +  Research Fellow at Peter-Pribilla-Foundation

Professional experience +  Founder and Managing Director of Orange Hills GmbH +  Founder, CTO, member of supervisory board or catalyst of many

start-ups (including Webmiles AG, Interhyp AG, SiteForce AG, Treems AG, mybestbrands GmbH, coma AG)

+  Director at Center for “Innovation & Business Creation” at TUM +  Head of Software Engineering at a.f.i.m. GmbH / TBWA +  Lecturer at TUM School of Management, University of St. Gallen,

Leipzig Graduate School of Management, University Erlangen-Nuremberg, FH Salzburg, FH München among others

About me

2

Intro

Readings

3

Schrage, M. (1999): Serious Play – How the world’s best companies simulate to innovate, Boston: Harvard Business School Press

ISBN-13: 978-0875848143

Kawasaki, G. (2004): The art of the start – the time-tested, battle-hardened guide for anyone starting anything, London: Penguin Books

ISBN-13: 978-1591840565

Ries, E. (2011): The Lean Startup, New York: Crown Business

ISBN-13: 978-0307887894

Intro 4

Agenda

1 2

Intro

3 4 5

Ideas Business Validation Realization

6

Day 2-4 Day 5-6

Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.

Day 1

Intro

WHY ARE YOU HERE?

5

Intro

Day 1 Day 2-4

6

HOW IT FEELS

UFF

OHH YEAH “…let’s rock the world – but how?“

than expected“

“…good to have clear guidance”

Day 5-6

Intro 7

What is design?

“Design is the transformation of existing conditions into preferred ones.“ Herbert Simon

“Design thinking is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.” Tim Brown, IDEO

”Design is not just what it looks like and feels like. Design is how it works.“ Steve Jobs, Apple

Intro 8

How designers work

Intro 9

How designers work

”Business people don‘t just need to understand designers better; they need to become designers.“ Roger Martin, Dean Rotman School

Intro 10

„Naked“ entrepreneur “I have a GREAT

vision to change the world!”

+  Corporate innovator +  Business developer +  Marketing expert +  Designer +  Researcher

Intro 11

„Naked“ entrepreneur Se

ed / startup stag

e

Early

stag

e

Expa

nsion

stag

e

Later s

tage

“I have a GREAT


+  Corporate innovator +  Business developer +  Marketing expert +  Designer +  Researcher

Intro 12

MOST OF THEM FAIL “I have a GREAT


Intro 13

BIGGEST PROBLEM?

People build something nobody wants.

Intro 14

BIGGEST PROBLEM?

People build something nobody wants.

Discover

Scope

Business Case

Execute

Test

Launch

Gate

Gate

Gate

Gate

Gate

Intro

IDEA: GOOD OR BAD?

Discover

Scope

Business Case

Gate

Gate

?

Strategy

Market strategy

Product position

USP

Market entry

Market

Market size

Competitors

Market share

Revenue goals

Finance

Relevant revenue

Break even time

Max. neg.

NPV for life cycle

Not clear

Me-too-product

Market occupied

< 25 Mio. €

1-2 players

< 10%

< 3 Mio. €

< 5% of branch

> 6 years

> 10 Mio. €

< 5 Mio. €

In discussion

In discussion

Some USP’s

Market follower

25-50 Mio. €

2-5 players

10-25%

3-12 Mio. €

5-25% of branch

4-6 years

5-10 Mio. €

5-10 Mio. €

Clear and communicated

Clear, coordinated with SMP*

Clear advantage in competition

Market leader

> 50 Mio. €

> 5 players

> 25%

> 12 Mio. €

> 25% of branch

< 4 years

< 5 Mio. €

> 10 Mio. €

Technology

Technology basis

Products basis / platform

Variants /options

Patent situation

Process-to-market

SMP*

R&D conditions

Transition to series

3rd party dependency

Risks

Technical risks

Time risks

Cost risks

Others

* Sales, Marketing, Production

0

15

Intro

Challenge #1 ...at the very beginning Innovation = hard to imagine

16

Intro

ULTIMATE CASH FORMULA

17

X

Intro

VIENNA COFFEE HOTSPOT

18

Intro

HOW TO DESIGN THE DIFFERENCE?

19

Hotel Sacher

Selling coffee, cakes and a tradi�onal Viennese coffee house atmosphere

Starbucks

Selling Frappuccino with caramel topping, cakes and a very special feeling

Intro

Challenge #2 ...at the very beginning Innovation = hard to predict

20

Intro

Getting from plan A ...To something that really works

21

1

2

3

4

Intro

Getting from plan A ...To something that really works

22

1

2

3

4

Pivot Pivot Pivot

Additional reading: Mullins, J. & Komisar, M. (2011): Getting to plan B, Harvard Business Press.

ISBN: 978-1422126691

Intro

Knowledge landscape

”What we know is a drop, what we don’t now is an ocean.” Isaac Newton 2

unknown known

unkn

own

know

n

Accessibility

Ava

ilabi

lity

1

3 4 explicit knowledge implicit knowledge

?

23

Intro

Challenge #3 ...at the very beginning Innovation = hard to Evaluate

24

Intro 25

Intro 26

Intro 27

1860 1900 1950 2000 2012

1

2

4

8

16

32

64

128

0

US$ per barrel

Crude oil prices since 1861

Source: Wikipedia

Intro 28

DCF + NPV

A

B

C

Companies should be making this comparison

DCF and NPV methodologies implicitly make this comparison

Assumed cash stream resulting from doing nothing

innovation against the default scenario of doing nothing, assuming – incorrectly – that the present

investment is not made. For a better assessment of the innovation‘s value, the comparison should be

more likely scenario of a decline in performance in the absence of innovation investment.“

Source: Christensen (2008)

NPV = DCF – required investment

PV = 1

1 + r1 x C1 DCF =

Ct

(1+rt)t

Intro 29

DCF + NPV

A

B

C

Companies should be making this comparison

DCF and NPV methodologies implicitly make this comparison

Assumed cash stream resulting from doing nothing

innovation against the default scenario of doing nothing, assuming – incorrectly – that the present

investment is not made. For a better assessment of the innovation‘s value, the comparison should be

more likely scenario of a decline in performance in the absence of innovation investment.“


NPV = DCF – required investment

PV = 1

1 + r1 x C1 DCF =

Ct

(1+rt)t


Example of the US music industry

New market entrants:

Established industry:

Intro

PSYCHOLOGY OF EVALUATING IDEAS

30

Estimated Output

Perceived Input

Alternative A Alternative B

Personal investment

ratio

Perceived Input

Personal investment ratio

Estimated Output

What do These Guys have in COmMon?

“perilous to conduct, or more uncertain in success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.

The coolness arises partly from the fear of opponents, who have the laws on their side and partly from the incredulity of men, who do not readily believe in the new things until they have long experienced them.”

Niccolo Machiavelli (1469-1527)

1 2

3 4

Intro

DEALING WITH UNCERTAINTY

31

Intro 32

Human-centered

Evolutionary Context-oriented

Holistic Visual Team-oriented

Six principles of Business Design

Intro

WRAP UP 33

Ideas

Agenda

34

1 2

Intro

3 4 5


6

Day 2-4 Day 5-6


Day 1

Ideas 35

HOW TO START?

Ideas

How to start

36

Markets & competitors

What others are doing

You & context

What you can achieve with your resources

Users & customers

What people need …or want to become

1 2

3

Ideas

How to start: OPTION 1

37



You & context


Users & customers


1 2

3

Ideas

The next big thing...

38 Trends & technology: h�p://�ny.cc/18h15

Web Trend M

ap

Ex�nc�on Timeline

Trends and Technology Timeline

Ex�nc�on: h�p://�ny.cc/uht29

Web Trends: h�p://�ny.cc/6ws7b

“The future is already here — it's just not very evenly distributed.“ (William Gibson)

Ideas

COPY CAT

39

Ideas

COPY CAT

40

Is Copy Cat a bad thing?

Paradigm

Position

Product Process Innovation

Do better...

Do different...

Source: Bessant (2007)

Ideas

“Innovation isn‘t about coming up with the next big idea. It is about combining existing ideas and parts in a new way.“ Saul Kaplan, The Business Innovation Factory

41

Ideas


42



You & context


Users & customers


1 2

3

Ideas

Before you CAN pitch the “right” solution, you have to understand the “right” customer problem

43

Ideas

Story of A milkshake

44

What’s the job this product helps you to get done?

“With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension. If marketers understand each of these dimensions, then they can design a product that's precisely targeted to the job.

In other words, the job, not the customer, is the fundamental unit of analysis for a marketer, who hopes to develop products that customers will buy.“

Clay Christensen, Harvard Business School (2006)

Ideas

JOB(S) TO GET DONE

45

„When________, they want to________, so they can________.“

Context

Job(s) to get done: 1.  “When I am hungry....” 2.  “When I'm in a rush and hungry....” 3.  “When I'm in a rush, starving and 'on the go'....” 4.  “When I'm in a rush, starving, 'on the go' and

need something I can eat with one hand, not sure when the next time I'll be able to eat,...”

Source: Klement (2013)

Motivation (not action) Outcome

„When I am sitting in my car commuting to work,

so I can enjoy my trip and arrive at my workplace fresh and relaxed.“

Add as many details as possible to the context of your customers’ situation to design solutions that really help getting their job(s) done:

Solution: Restaurant (with tasty food) Fast-food restaurant Fast-food restaurant with drive-through Fast-food restaurant with drive-through and food packaging that can be handled with one hand

Ideas

#GOOT(F)B

46

= get out of the (fucking) building

Ideas

“We don‘t know what we see, we see what we know.“ Johann Wolfgang v. Goethe

47

Ideas

Understanding Customers: PROCESS Cy

cle

2

1 + + Narrow down your target group(s) + Select method and process + Schedule your activities + Prepare interview guidelines and tools

(cameras, audio recorders, etc.)

Tip: Browse magazines for people who are pretty similar to your target group to sharpen your senses for them.

Preparation 2 Data gathering I 3 Customer matrix

4 Data gathering II 6 5 Filling up Matrix analysis

+ Select participants for cycle 1 +  Identify behavioral dimensions to span the market

+ Design of customer journeys and personas to capture the data

Observations Interviews

Dim

ensi

on A

Dimension B

Persona

Persona

Persona

+ Position personas on the matrix + 

+ Design of personas to capture the data

Dim

ensi

on A

Dimension B

Persona

Persona

Persona

Persona

Persona

Saturation

Analyze customer matrix +  to prioritize customer segments +  to identify market niches or

underserved markets +  to unveil innovation potential +  to understand competitive situation

you are looking for.

Observations Interviews

+ Overlay offerings / competitors etc.

Cycl

e 1

Persona

Persona

Ideas

VISUALIZING „FAKE“ CUSTOMERS

49

This is a persona: A persona is a archetypical description of customers / users . Personas are designed to capture and

about customers / users. They help you and your team to understand what makes them tick and what they potentially need to improve their lives. It’s about getting a “professional” gut

ultimate truth.

Consumer behavior

Personal quotes

Demographics

Preferences

Key statement

Pain points

Ideas

VISUALIZING MARKETS D

imen

sion

A

Dimension B Are there more

customers of this type?

50

Products and services of your competitors

Is there are market?

Stop your research when your learning curve starts

Products and services you offer

Ideas

WHO IS YOUR PRIMARY CUSTOMER?

51

Source: amazon.com Source: marykay.com.au

mission “to be the world’s most consumer-centric company. This unwavering focus on consumers has created innovations such as prime free shipping, detailed product reviews (including negative ones), look-inside-this-book, and the listing of lower-priced products from off-site competitors.“ - Robert Simons (2014)

Ideas

ANOTHER TWIST: How to improve ProDuCts

52

How can we make better products for our target group?

Ideas

WHY IMPROVE PRODUCTS?

53

Ideas

Develop YOUR customers

54

Additional reading: Schrage, M. (2012): Who do you want your customers to become? HBR Press.

ISBN: 978-1-4221-8785-2

Who do you want your customer to become?

How do you make your customer more valuable?

What customer journey can help „create“ this kind of customer?

Ideas


55



You & context


Users & customers


1 2

3

ON THE GAME IS

Ideas 57

Ideas 58

Leaderboard BUSINESS

Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.

Game DateIteration 1 2 3

Team A

Team B

Team C

Team D

Team E

Team F

Team

1

Team Team

2 3

SILVERBRONZE GOLD

Business Design GAME | Playing seriously with innovation

Team A

Strategy

Sales

Finance

R&D

Operations

Project Manager

“Best Judge” Badge

Team B

Strategy

Sales

Finance

R&D

Operations

Team C

Strategy

Sales

Finance

R&D

Operations

Team D

Strategy

Sales

Finance

R&D

Operations

Team E

Strategy

Sales

Finance

R&D

Operations

Team F

Strategy

Sales

Finance

R&D

Operations

GAMEBOARD BUSINESS

© 2014 Orange HillsTM GmbH. All rights reserved.

Game DateIteration 1 2 3


1 Introduction+ Mission+ Team+ Evaluation+ Workspace

2Reflection+ Meaning+ Pleasure+ Strengths+ Shared picture

3 Ideas+ Customers+ Scenarios+ Offerings+ Pains / gains

4Businessmodel+ Target groups+ Channels+ Offerings+ Profit formula etc.

5 Businessmodel+ Group work+ Interventions+ Reflection 6

BusinessDNA+ Jobs(s) to get done+ Core value+ Unfair advantage

7 BusinessDNA+ Group work+ Interventions+ Reflection

8 KPIs+ Output+ Learning+ Team

9 KPIs+ Group work+ Interventions+ Reflection

10Hypotheses+ Analogs+ Antilogs+ Exploration+ Hypotheses

11Hypotheses+ Group work+ Interventions+ Reflection

12Experiments+ Methods+ Tools+ Measurements+ Efficiency

13 Experi-ments+ Group work+ Interventions+ Reflection

14 Review+ Status quo+ Feedback+ Evaluation

15 Lean offerings+ User stories+ Non-functional requirements+ Benchmark

16Lean offerings+ Group work+ Interventions+ Reflection

17 Action plan+ Activities+ Output+ Teamwork 18

Actionplan+ Group work+ Interventions+ Reflection

19 Review+ Status quo+ Feedback+ Evaluation

20Execution+ Group work+ Interventions+ Reflection

21Review+ Status quo+ Feedback+ Evaluation

22 Execution+ Group work+ Interventions+ Reflection

23 Final+ Results+ Learnings + Evaluation+ Award ceremony

END

STAR

T

Consistency check

http://bit.ly/UHYzra

http://bit.ly/1lQHcf7

http://bit.ly/1rMo2hP

http://bit.ly/1k5aV8O

Interventions’ schedule1 2 3 4 5

Team

B

C

D

E

F

A

1. PLAN2. EXECUTE

3. LEARN4. DECIDE

This gameboard illustrates the flow of activities for interactive trainingsbased on the integrative process model called Business Design.

The training is designed as a game and will be played in a workshop setting, allowing participants to turn ideas into business. They will work in teams, slip into team roles to invent and implement a new business model. They will face unexpected challenges on the way. A reward system will push them beyond limits for one goal: To provide participants with a unique learning experience and help them become successful innovators.

optional

Design your business in your browser | http://www.rapidmodeler.de Download | http://blog.orangehills.de/#gab_en

Break-out

Break-out

Intro

Break-out

Intro

Intro

Intro

Break-out

Break-out

Break-out

Intro

Break-out

Intro

Break-out

Intro

Break-out

Break-out

Break-out

Plenum

Plenum

Plenum

Plenum

Intro

Ideas

Causation VS. Effectuation

61

Causation Effectuation “...takes a particular effect as given and focuses on selecting between different set of means to create that effect.“

”...takes a set of means as given and focus on selecting between possible effects that can be created with that set of means.“

Additional reading: Sarasvathy, S. (2009): Effectuation, Edward Elgar.

ISBN: 978-1848445727

Ideas

How do we design a value proposition for markets that do not exist yet?

How do we make pricing decisions when the firm does not exist yet?

How do we hire people for an organization that does not exist yet?

How do we value firms in an industry that did not exist five years ago?

62

Effectuation approach helps you unveil your personal/organizational “unfair” advantage, which is something you do better than your competitors and hard to copy.

Source: Egmont Ehapa Verlag

Ideas

THE STORY OF „FREITAG“ BAGS

63

Ideas

WRAP UP 66

Business

Agenda

67

1 2

Intro

3 4 5


6

Day 2-4 Day 5-6


Day 1

Business

BUSINESS Model innovation #bmi

68

Source: Osterwalder 2010

Additional reading: Osterwalder, A. (2008): Business Model Generation, Self Published.

ISBN: 978-2-8399-0580-0

Business

Example: XEROX

69

Pay per copy

Business

Example: GILETTE

70

18,85 € Amazon.com

21,97 € (8 pcs.) Amazon.com

Average lifespan: 6 weeks

Business

Example: Happy Meal

71

Who values what?

Business

Example: LINKEDIN

72

Upgrade to premium services

Business

Example: AIRBNB

73

Business

Example: INTERHYP.DE

74

“Interhyp is Germany‘s largest distributor of residential mortgages. As a broker, Interhyp does not act as a lender but instead selects the best mortgages for its customers among offers from over 250 commercial banks, saving banks and insurance companies. We focus on competent, personal and objective consulting by our approximately 316 mortgage consultants. Private customers receive advice from our homepage www.interhyp.de and

key German cities.”

Source: Interhyp Annual Report 2011

Business

Example: MYBESTBRANDS

75

~ 0,30 € per click-out

Business

Example: MYBESTBRANDS

76

~ 0,30 € per click-out

Business model patterns

Source:

Business

BUSINESS MODEL

Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.

Team DateIteration 1 2 3

Target groups

Who are our sales targets and who will be using our offerings?

Resources Partners

Primary

What is our primary customerand user segment that unlocks the most value in our business?

Customers Users

InvestmentsCostsPricing & revenuePattern

How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?

Brand & messages Offerings

Channels

Relationships

Channels

Processes

Profit formula

What (internal) key resources do we need to create and deliver the offerings?

Who are our (external) key partners to create and deliver the offerings?

What bundle of products and services do we offer to our customers and users?

How do we want our brand to be perceived and what is our story to sell the offerings?

Through which channels do our customers and users want to be reached?

What kinds of relationships do our customers and users expect?

Through which channels do our partners want to be reached?

What (internal) key processes do we need to create and deliver the offerings?

Delivery R&D

What job(s) are our customers and users trying to get done?

Job(s) to get done

What kind of value do we create for customers and users with our offerings?

Core value

What do we do better than our competitors, which is hard to copy?

Unfairadvantage


DNA

Download | http://blog.orangehills.de/#bml_en

BUSINESS Model...AS A TOOL

77

The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.

URL: bit.ly/UHYzra

Business

BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


DNA


BUSINESS Model: EXTERNAL VIEW

78

Target groups Customers are people who are willing to pay for your offerings. Users eventually use it. It is crucial to know as much as possible about customers and users - who they are, what job(s) they are trying to get done, what they really need. Do you?

Brand & messages It is not enough to develop a brilliant product. It has to be sold with a simple, clean and compelling message, wrapped in a brand that embodies your company’s values.

Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and

customers (and partners) is

need to discover.

Relationships Every business model requires its own type of relationship to customers and users. It can be very personal or automated. No matter what you choose, make sure you meet the expectations of your customers.

Offerings Your offerings are the central part of your business model. What do your customers pay for? What do they get in return? Think about products, but also services and a combination of both to best serve your customers.


URL: bit.ly/UHYzra

Business

BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


DNA



BUSINESS Model: INTERNAL VIEW

79

Partners Every successful business depends not only on the company‘s skills and resources but on reliable partners who do things, which are not core of the company. Managing these partners is key to your success.

answers to the questions, how much money can be made in terms of revenue, how costs are allocated and

transaction nets to achieve

Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and

customers (and partners) is

need to discover.

Resources To create and deliver your offering to customers and users, you need a certain set of resources. What are your key assets you need within your company for your business model – and what do you purchase from partners in the value chain.

“Pattern” Pricing & revenue Investments

Costs

Processes The question seems to be simple, but the answer is very tough. You can‘t excel in every aspect of your business model. You have to decide, what is really core of your company - and what can be outsourced.

URL: bit.ly/UHYzra

Business

BUSINESS MODEL

Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.


Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage

Business Design GAME

EXAMPLE: ITUNES

80


Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store?

MP3 software player

“1000 songs in your pocket”

Hardware player

iTunes store

We deliver seamless music experience

Wherever you are, enjoy all your music

Website

Retail stores

Mac hardware

(Premium) mass market

Apple enthusiasts

Automated

Apple brand

Record companies

OEMs

Technology providers (MP3 codec)

Content

Patents

Soft- and hardware

Cloud storage

Soft- and hardware design

Marketing & sales

Content manage-ment

Brand & access to customer base

Key account

Cloud storage

People

Hard- and software design

Marketing campaigns

Manufac-turing

Hardware revenues

99 cent per song Transaction

based

Royalties

URL: bit.ly/UHYzra

Business

VIRTUAL BUSINESS MODELING

81

“Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs.

For details visit: http://www.rapidmodeler.de

View: Business Model

Business

Business

BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


DNA


BUSINESS DNA

83

The “Business DNA” is the very essence of your business model, which is the key to build your initial market offerings in later stages. If you only have 30 seconds to pitch your business, present the DNA.

DNA

„When___,

they want to___,

so they can___.“

„We deliver___,

so that___.“

„We excel in___,

which is unfair because___.”

Primary customer /

user

Source: “Primary customer” according to Simons (2014)

What is the core of your business model?

URL: bit.ly/UHYzra

Business

BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


”HOW“ AND “WHAT“ IS NOT ENOUGH

84

How?

Why?

2

3

What?

1

Example:

“Everything we do, we believe in challenging the status quo. We believe in thinking differently.

The way we challenge the status quo is by making our products beautifully designed, simple and user-friendly.

And we happen to make great computers. Wanna buy one?“

Apple’s mission statement

Why?

How

? W

hat?

Additional reading: Sinek. S. (2009): Start with WHY, Portfolio / Penguin.

ISBN: 978-1591846444

Differentiate here!

Business

„WHY“ = SOURCE OF TRANSFORMATION

85

1997 2013

Business

“MARKETING IS ABOUT SELLING MORE STUFF TO MORE PEOPLE MORE OFTEN FOR MORE MONEY MORE EFFICIENTLY.” Sergio Zyman, CMO Coca-Cola

86

Business

HOW CAN WE MEASURE SUCCESS?

87

Relevant metrics Questions Acquisition Acquisition costs for customers, users and

etc.

How do customers and users become aware of you? SEO, SEM, widgets, email, PR, campaigns, blogs, etc.

Number of completed onboarding processes, enrollments, sign-ups, used the offering at least once, etc.

Engagement, daily and monthly active uses, churn/attrition rate, etc.

Daily/monthly revenue per segment, customer lifetime value, conversion rate, shopping cart size etc.

Invites sent, number of referrals, mentions in the press / blogs, viral cycle time etc.

Do drive-by visitors subscribe, buy, use, etc.? Features, design, tone,

Does a one-time customer or user

alerts, reminders, emails, updates, etc.

Do you make money from customer activity? Transactions, volume, costs, resource velocity, subscriptions, etc.

Do customers and users promote your offering? Email, widgets, conferences,

Activation

Retention

Revenue

Referral

Source: according to Croll / Yoskowitz (2013)

Ask yourself: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about.

Focus on a small number of KPIs to increase your focus. Don’t get lost in too much data. KPIs have to lead to action and you can’t affect dozen of KPIs simultaneously.

Daily Weekly Monthly Quarterly term targets: E.g. 10% more active users every week. Sounds boring? You will be surprised how quickly the numbers get large…

Business

BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


DNA


BUSINESS KPIs

88

Again: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about.


URL: bit.ly/UHYzra

Business

Example: GOOGLE ANALYTICS / GECKOBOARD

89

Business

Business

WRAP UP 91

Validation

Agenda

92

1 2

Intro

3 4 5


6

Day 2-4 Day 5-6


Day 1

Validation

BUSINESS MODEL



Target groups

What things are new to us but we can learn from others, because they have proven that it just works?

Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


EVERY PLAN IS BASED ON UNKNOWNS

93


URL: bit.ly/10cz2TI

MP3 software player

“1000 songs in your pocket”

Hardware player

iTunes store

Website

Retail stores

Mac hardware

(Premium) mass market

Apple enthusiasts

Automated

Apple brand

Record companies

OEMs

Technology providers (MP3 codec)

Content

Patents

Soft- and hardware

Cloud storage

Soft- and hardware design

Marketing & sales

Content manage-ment


Key account

Cloud storage

People

Hard- and software design

Marketing campaigns

Manufac-turing

Hardware revenues

99 cent per song

Transaction based

Royalties

Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store?

?

?

? We deliver seamless music experience

Wherever you are, enjoy all your music

? ?

Validation

LEARN TO PLAN PLAN TO LEARN

94

Validation

HYPOTHESES & EXPERIMENTS



Analogs


What hypotheses grow out of relevant antilogs that are critical for our business?

What things are new to us and new to the entire market, which is why we can’t learn from anyone?

+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA

Look at every single element of your business model to find analogs and antilogs:

Antilogs Exploration

Experiments

How can we test the identifiedhypotheses with the least effort?

Test focus

Impo

rtan

ce

Uncertainties

Make sure your analogs are reliable sources to learn from

others. In many cases, analogies eventually turn out to be somehow

different to your business when you look under the hood.

A+ A-

How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.

LO /

MVP


Validation

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Hypotheses

What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?

pre-launch

post-launch

Expe

rimen

ts

Download | http://blog.orangehills.de/#hyp_en

Hypotheses…AS A TOOL

95

URL: http://bit.ly/1lQHcf7

The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how

possible.

Don’t test ideas! Test the assumptions of your ideas, systematically!

Validation




Analogs







Experiments


Test focus

Impo

rtan

ce

Uncertainties




A+ A-


LO /

MVP


Validation

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Hypotheses


pre-launch

post-launch

Expe

rimen

ts


Hypotheses…AS A TOOL

96

Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn.

Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to).

The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how

possible.

Don’t test ideas! Test the assumptions of your ideas, systematically!

In some cases, the difference between analogs and antilogs is blurred.

Exploration Some antilogs (both uncertain and important) require an exploration phase

translate them into focused and testable hypotheses. Plan simple experiments around that to learn as quick as possible.

Show- stoppers

Experiments Some hypotheses can be tested with simple means, such as interviews, prototyping or advanced experimental settings including A/B, multivariate testing and crowd sourcing. Plan your tests carefully to

looking for.

Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down.


Validation




Analogs







Experiments


Test focus

Impo

rtan

ce

Uncertainties




A+ A-


LO /

MVP


Validation

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Hypotheses


pre-launch

post-launch

Expe

rimen

ts


EXAMPLE: AIRBNB

97

Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down.

H1

H2 H3

H4 H5 H6 H7

Level 1

Level2

Level 3

Hypotheses hierarchy

Details

Scope

”We will reach 5 million nights booked by 2012.“

”Hosts with professional photography will get 2-3 times more bookings than the market average.“

”Number of hosts signing up is 10x higher than the market average, because they are enthusiastic to receive professional photos.“

Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn.

Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to).

In some cases, the difference between analogs and antilogs is blurred.

Show- stoppers

Validation 98

What is YOUR BET ON THE FUTURE?

In other words: “What are your

your future business model? Yep, just 5…”

The “killer question” to challenge every innovation team

Validation

Validation 100

ONE OF THE WORST PRODUCT FLOPS

Validation

THEY TESTED A LOT: the right thing?

101

The Pepsi Challenge back in the late 80’s

WWhhiicchh CCoollaa ddoo yyoouu pprreeffeerr??

Validation 102

TESTING ≠≠REALITY

Validation

Business experiments

103

Source: Thomke (1998), p. 745

(1) Design

(2) Build

(3) Run

(4) Analyze

DESIGN REQUIREMENTS

DONE

Use learning from previous cycle(s) to conceive and design an improved solution.

Develop models and / or build prototypes to be used in running experiments.

Test model / prototype in real or simulated use environment.

previous step and learn.

Cha

nges

in e

xoge

nous

in

form

atio

n

DESIGN ACTIVITY

Examples:

+  Landing page (+ “notify me when you release”): Will anyone actually buy this?

+  Crowd testing: How much will customers pay?

+  Demo/video: Does this solution resonate with people?

+  E-mail marketing: Do customers like your story (and do something to be part of it)?

+  Sales prelaunch: Will customer buy (before you have even built it)?

+  Lean version 1.0: Will customers use it and come back? (à MVP, see next chapter)

Validation

PROTOTYPES AS Shared spaces

104 Source: According to Schrage (1999), p. xv

a) Transactional model of communication

b) Collaborative model of communication

Receiver / sender Sender / receiver Information

source / destination

Destination / information

source audible

Message Message Signal Received signal

Noise source

Source: According to Shannon (1948), p. 380

„shared space“

visual tactile

Receiver / sender Sender / receiver Information

source / destination

Destination / information

source

Message Message

Signal Received signal

Noise source

audible

Additional reading: Schrage, M. (1999): Serious play, Harvard Business Press.

ISBN: 978-0875848143

Validation

PROTOTYPE = INTERACTION

105

...to simulate, embrace and discuss what the future reality might be

Validation

SOCIAL PROTOTYPING

106

+  Do you remember?

...to simulate, embrace and discuss what the future reality might be

Validation

PROTOTYPE? YES

107

This is the traditional (engineering-driven)

perspective on

of its kind, the pre-version for mass

production.

Validation

PROTOTYPE? YES

108 Source: Calgraphix

Many mechanical models and

prototypes can be easily manufactured

with low-cost 3D printers.

Validation

PROTOTYPE? YES

109 Source: UIStencils

Storyboards can help visualize

customer encounters or entire

customer experience at early

stages.

Validation

PROTOTYPE? YES

110

Role plays are a cheap and easy way

to prototype services. If played by

yourself, you get a good understanding

how a customer might feel like.

Validation

PROTOTYPE? YES

111 Source: UIStencils

Even rough sketches of a new product,

service or software UI is a prototype. With a different

purpose, however.

Validation

Prototype? YES

112

A B C D E F G H I

1

2

3

4

5

6

7

8

9

10

1

2

Marke des Unternehmens mit hoher Strahlkra� in den Markt; verkörpert Innova�on („orange“)

... zeigt Kunden unseren USP Schnelligkeit, um Inves��ons-‐entscheidungen für Innova�onen vorzubereiten

Nutzer/Endkunde, für den wir innova�ve Geschä�smodelle entwickeln, eingebunden in den Innova�onsprozess

Zentrale Steuerung von Innova�onsprojekten in Anlehnung an Kanban

Mitarbeiter für Vorbereitung neuer Kundenprojekte: Bedarfsanalyse, Projekt-‐ und Zielplanung

Key Account Management für die persönliche Betreuung von Kunden

Endkunde

Kunde

Projek�eam

PM

K

Zufriedener Kunde mit „grei�aren“ Ereignissen und fer�g entwickeltem MVP

Projek�eam unserer Kunden bei der Arbeit, Prototypen zu entwickeln und systema�sch zu testen

Methodische Toolbox zur Unterstützung von „lean“ Innova�onsprojekten

Kid toys are powerful tools to

make the intangible of innovation

tangible. Use the power of metaphors to express aspects

beyond words.

Intro Source: LEGO© Serious Play™

3D modeling can help you

+  build your company’s vision +  model service encounters +  design business models +  support interdisciplinary teamwork

and personal engagement What do you see in this model?

Validation

EVOLUTION OF PrototypeS

114

Source: UnternehmerTUM (2006)

Failed start-up project, founded by three TUM engineering graduates

prototypes by yourself. You will get a better feeling for

your product, improve teamwork

and customer interactions.

Validation

PROTOTYPING TOOLS

115

+  Microsoft Powerpoint: Flexible tool to create visuals of different kinds

+  Storyboards 3D: Create stunning storyboards, even if you lack drawing skills

+  eMachineShop.com: Order CNC machine custom parts online (waterjet, plasma, laser cutting, etc.)

+  MakerBot Industries: Desktop 3D printing

+  Fab@Home: Open source 3D printing

+  Ponoko.com: Design, make and build your own custom products

+  Phidgets.com: Plug & play building blocks for low cost USB sensing and control

+  NI LabView: Visual development environment for electronic systems

+  Protoshare.com: Website wireframing / prototyping

+  Balsamiq.com: Rapid wireframing and mockups for websites & mobile apps

+  Axure: Interactive HTML prototypes

+  Microsoft Visio: Clickable web demos

+  Prototypes: Create functional click-dummys for tablets and smartphones

+  DjangoProject.com: Web framework to build functional web platforms

+  Node.js: Event-driven I/O system to build scalable server software

+  jQuery: UI library for web applications

+  UserVoice.com: Online user feedback system

Great inspiration: Make:magazine

Validation

EXAMPLE: 3D PRINTING FOR EVERYONE

116

Validation




Analogs







Experiments


Test focus

Impo

rtan

ce

Uncertainties




A+ A-


LO /

MVP


Validation

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Hypotheses


pre-launch

post-launch

Expe

rimen

ts


EXAMPLE: ITUNES

117

The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how to test the assumptions as

Users love to listen to their favorite tunes on the way

Users are used to load music online

Users manage their music on their PCs

How are the music rights (DRM) enforceable?

How likely is the antitrust approval?

How important is the look & feel of CD boxes?

Is 128 Kbit/s 16 bit sufficient?

How important is qrtwork and bonus material?

Are customers ready to pay for music downloads?

Do customers accept the limited usage rights?

How big is negotiating power of record companies?

60% of our test customers pay 99 cent per song

Two big music labels give access to > 5.000 songs…

75% of our test customers accept terms & conditions

Test POS with download possibilities of TOP 40 songs

Negotiations with record companies

Test POS with iPod customers

Back in 2003: Which hypotheses were Apple facing when they were about to launch iTunes?


Validation

…AND ONLINE

118



URL: bit.ly/q7slqa

View: Hypotheses & Experiments

Validation

TRACK YOUR LEARNING PERFORMANCE

119

URL: bit.ly/q7slqa

Home screen

Validation

Validation

WRAP UP 122

Realization

Agenda

123

1 2

Intro

3 4 5


6

Day 2-4 Day 5-6


Day 1

Realization

“IDEAS ARE WORTH NOTHING, UNLESS EXECUTED.“ Jason Fried, 37signals

124

Realization

Process paradigms

125

Things you know Things you don‘t know

Personality

More deterministic Less predictable

Innovation Innovation

Process

Objective

Paradigm

Control

Metaphor

Prototype

Patron

Result

Sequential

Implements „knowns“

Seeks simplicity

Top-down

Clock-wise

Is driven by process

Newton

Perfectionist

Iterative

Reduces „unknowns“

Embraces complexity

Buttom-up

Ecologies

Drives the process

Darwin

Optimalist

Realization

BIRTH OF “WATERFALL“ Model?

126

p. 2 p. 3 p. 4

p. 5

p. 9

Source: Royce, W. (1970): Managing the development of large software systems, IEEE WESCON, pp. 1-9.

Realization

EVOLUTION OF IDeas

127

„shadow beliefs“ of entrepreneurs

Business strategy

1

Business strategy

2

Business strategy

3

„We know exactly what we are doing!“

„We know what our customers want!“

„We can accurately predict the future!“

„Advancing the plan is progress!“

Busin

ess p

oten

tial

Pivot

Pivot

Change strategic directions, but stay grounded in what you have learned.

A pivot is not a mistake!

Examples: +  Zoom-in pivot +  Zoom-out pivot +  Value capture pivot +  Engine of growth pivot

Time Source: “shadow beliefs” according to Eric Ries (2009)

Realization 128

If you don‘t know what you are doing, you be�er do it fast!

Realization

EVOLUTION OF IDeas

129


Business strategy

1

Business strategy

2

Business strategy

3





Busin

ess p

oten

tial

Pivot

Pivot




Time Source: “shadow beliefs” according to Eric Ries (2009)

+  Customer discovery: Captures the founder’s vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts.

+  Customer validation: Tests whether the resulting business model is repeatable and scalable. If not, return to customer discovery.

+  Customer creation: Is the start of execution. It builds end-user demand and drives it into the sales channel to scale the business.

+  Company building: Transitions the organization from a start-up to a company focused on executing a validated model.

Customer development process by Steve Blank

Pivot

Search

Customer discovery

Customer validation

Customer creation

Company building

Execute

Source: Blank/Dorf (2012)

„lean“ „fat“

Prod

uct /

Realization

EVOLUTION OF IDeas


Business strategy

1

Business strategy

2

Business strategy

3





Busin

ess p

oten

tial

Pivot

Pivot




Source: “shadow beliefs” according to Eric Ries (2009)

Pivot? Build-measure-learn cycle by Eric Ries

Phase 1 “Customer discovery”

Phase 2 “Customer validation”

Phase 3 “Customer creation” Growth Source: Ries (2012)

The fundamental activity of a startup or corporate innovator is to turn ideas into products and services, to measure how customers respond and then to learn what works and what doesn‘t. This may eventually lead to a pivot of your strategy or to preserve elements of your future model that have been proven right. All successful innovation processes should be geared to accelerate that feedback loop.

Idea

Build

Launch

Measure

Analyze

Learn

130 Time

Realization

“If you freeze an idea too quickly, you fall in love with it. If you refine it too quickly, you become attached to it and it becomes very hard to keep exploring, to keep looking for better. The crudeness of the early models in particular is very deliberate.” Jim Glymph, Gehry Partners

131

Realization

Lean Traditional

traditional VS. LEAN

132

Strategy Business model Hypotheses-driven

Business plan Implementation-driven

Customer development

Agile development Build the product iteratively and incrementally

Customer and agile development teams Hire for learning, nimbleness and speed

Metrics that matter Customer acquisition cost, lifetime customer value, churn, viralness

Expected Fix by iterating on ideas and pivoting away from ones that don‘t work

Rapid Operates on good-enough data

Product Management; prepare offering for market following a linear, step-by-step plan

Agile or waterfall development; build the product iteratively, or fully specify the product before building it

Department by function Hire for experience and ability to execute

Accounting

statement

Exception

Measured Operates on complete data

New-Product Process

Engineering

Organization

Financial Reporting

Failure

Speed

Source: Blank (2013)

Realization

”An organization can never know what it thinks or wants until it sees what it does.” Karl E. Weick, Sociologist

133

Additional reading: Ben-Sahar, T. (2009): The pursuit of perfect, McGraw Hill.

ISBN: 978-0071629034

Additional reading: Beinhocker, E. (2004): The origin of wealth, Harvard Business Press.

ISBN: 978-1422121030

Realization

LEAN OFFERINGS / MVP

134

In other (my) words: A new product or service with a minimum set of

+  Are your hypotheses covered? +  Can you charge your cu$tomer? +  Is your DNA embedded? +  Does your mother like it?

If yes, SHIP IT & LEARN!

“The Minimum Viable Product (MVP) is that version of a new product, which allows a team to collect the maximum amount of validated learning about customers with the least effort.” - Eric Ries

#hypo

#bm

#bm

Realization

”No matter how well you perform, there's always somebody of intelligent opinion who thinks it's lousy.“ Sir Laurence Olivier

135

Realization

MVP FOR…

136

Realization


Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.


Functional requirements

Non-functional requirements

Competitive benchmark

Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?

Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?

What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:

+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?

To define user stories, look through the lenses of customers and users.

Could haveWhat are optional user stories that can help us better serve our customers and users in the future?

F

Hypotheses

Keep in mind that each user story should be independent of any other user story.

What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?

Fc

What non-functional requirements should be embedded in our product and/or service?

NF

...what non-functional requirements do they fulfill?

NFc

DNA

fit

Ease of implementationDNA


Job(s) to get done

What kind of value do we create for customers and users with our offering?

Core value


Unfairadvantage


LEAN OFFERINGS…AS A TOOL

137

URL: http://bit.ly/1rMo2hP

The “Lean Offerings / MVP Canvas” gives you guidance to decide, which

launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype.

Rule of thumb:

Do you want users to switch from existing offerings to your products?

+  Yes: Features are an important part of people’s decision to try it.

+  No: Simplicity is usually much more important for users than being feature rich.

Realization













F

Hypotheses



Fc


NF


NFc

DNA

fit



Job(s) to get done


Core value


Unfairadvantage


LEAN OFFERINGS…AS A TOOL

138


functional requirements as user stories, which will be categorized based on how easy they can be implemented and how well

business model.

Non-functional requirements Apart from the functional requirements, we translate the DNA of the business model into a bunch of non-functional factors to make sure the MVP looks the way it is supposed to and is built with the right tool.

DNA The DNA of the underlying business model is key to prioritize functional and non-functional requirements of

before you start thinking

service.

Hypotheses MVPs are designed not only

service, but also to test hypotheses in reality, which can’t be tested in an experimental setting. Be aware of these hypotheses when you design your MVP.

Competitive benchmark What do other players in the market offer to their customers and users, which is similar to your offering? This analysis is especially important, when you want them switch from existing offerings to yours.



Rule of thumb:

Do you want users to switch from existing offerings to your products?

+  Yes: Features are an important part of people’s decision to try it.

+  No: Simplicity is usually much more important for users than being feature rich.


Realization













F

Hypotheses



Fc


NF


NFc

DNA

fit



Job(s) to get done


Core value


Unfairadvantage


EXAMPLE: ITUNES

139



Seamless music experience

Enjoy all my music, everywhere


Users want to play their entire music

Users want to purchase music

Users want to rate songs

Users want to organize music with folders

Users want to pay for purchases

Users want to search for new music (free text + categories)

Users want to copy songs on their iPod

Users want to listen to music with high quality

Users want to share their personal profile

Users demand bonus material and artwork

Users want to manage their personal profile

Users want to connect with other users

Users need music recommen-dations

Users want to archive music

Users want to recommend music to friends

Users want to adjust the sound quality (equalizer)

Back in 2003: Which user stories were able to represent best the DNA of the iTunes business model?

Great design Easy to use

Seamlessly integrated hard- and software

Users want to play selected songs from their library

Users want to organize music with folders

Users want to listen to their favorite tunes on the go


Realization

…AND ONLINE

140



View: MVP

Realization

Realization

FROM MVP TO MVB (= Business)

142

on the market is not enough. Consider with your team, which elements of your underlying business model are needed to create and deliver your offering to the market – your “Minimum Viable Business” (MVB). Which customer channels are the most effective ones for the start? Which partners do you

resources and processes are eventually needed to kick-off your business tomorrow?

Your thinking at this stage should be very focused and more detailed than ever before, when you sketched out your business model with the “Business Model Canvas”. Point out everything needed to tap into your market and get rid of the “waste” that is not essential to get YOUR job done.

External elements of your business model

… and internal elements













F

Hypotheses



Fc


NF


NFc

DNA

fit



Job(s) to get done


Core value


Unfairadvantage


Realization

Realization

LET‘S DO SOME “LEAN“ PROJECT MANAGEMENT

144

Realization

ACTION PLAN



Activities Output

Experiments

Lean offerings

Each post-it represents one activity with an effort of 2-3 mandays

What activities need to be carried out to build the lean offerings / MVP / B?

What activities need to be carried out to run the defined experiments?

+ Exploration+ Validation

What tangible output do we want to achieve after 7 weeks?

What have we learned and do we have to change our strategy?

AnalogsAre there any activities needed to investigate around analogs?

Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07

Halftime

F + NF

A+

How is your team doing?

Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en

Reflection

Team

ACTION PLAN…AS A TOOL

145

URL: http://bit.ly/1k5aV8O

The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team.

Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each

Realization

ACTION PLAN



Activities Output

Experiments

Lean offerings









Halftime

F + NF

A+



Reflection

Team

ACTION PLAN…AS A TOOL

146

Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the

these activities for the entire cycle and adapt the plan week by week due to new requirements.

Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle

whether changes are required.

Output

output for each cycle is

before you start working. In many cases, the development of your MVP

The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team.


Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary.

After each cycle, it is essential to sit down with

you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead.

Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information.


Realization

ACTION PLAN



Activities Output

Experiments

Lean offerings









Halftime

F + NF

A+



Reflection

Team

REFLECT WHAT YOU HAVE LEARNED

147

Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the

these activities for the entire cycle and adapt the plan week by week due to new requirements.

Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle

whether changes are required.

Output

output for each cycle is

before you start working. In many cases, the development of your MVP

Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary.

After each cycle, it is essential to sit down with

you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead.

Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information.

1.  Kill project: We have learned that our new offering doesn’t help our customers and users to get a meaningful job done.

2.  Fix problem: We have learned that we did something wrong from a methodological perspective.

3.  Pivot MVP: We have learned that our initial offering needs urgent

4.  Pivot strategy: We have learned that our initial strategy doesn’t work.

5.  Carry on: We have learned that we can create value for customers and us, which is good enough to carry on.

Realization

ACTION PLAN



Activities Output

Experiments

Lean offerings









Halftime

F + NF

A+



Reflection

Team

EXAMPLE: ITUNES

148

The “Project Dashboard” is a very simple but effective way to organize activities of a “lean” innovation project in your team.


Prepare sales process

UI concept design

Design sales presentation

Sketch mock-ups

Develop DRM concept

Setup initial music lib

Discuss sales presentation with marketing

Publish job profiles

Setup workplaces for new staff

Call president of DMV

Arrange meetings with record companies

Design landing page for test POS

Develop landing page

Prepare test POS in Munich retail store

Reorganize production for test POS

Inform store staff

Start test POS

Negotiate DRM concept with record companies

Sales presentation

Landing page for test POS

Initial music lib

Back in 2003: How could

implementation process look like?


Realization

VIRTUAL TEAM MANAGEMENT

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View: Action Plan

Realization

MANAGING PROJECT PORTFOLIO

150

Distance to success

Long way to go, but promising market

attractiveness and good

r = Market potential / growth

A

r

G F

C

E

B

D

Kill these projects - today

These projects are everybody’s darling

Potential candidates for spin-offs?

Realization

Realization

WRAP UP 152




Analogs







Experiments


Test focus

Impo

rtan

ce

Uncertainties




A+ A-


LO /

MVP


Validation

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Expe

rimen

tsLO

/ M

VPEx

perim

ents

LO /

MVP

Hypotheses


pre-launch

post-launch

Expe

rimen

ts














F

Hypotheses



Fc


NF


NFcDN

A fit



Job(s) to get done


Core value


Unfairadvantage


BUSINESS MODEL



Target groups


Resources Partners

Primary


Customers Users




Channels

Relationships

Channels

Processes

Profit formula









Delivery R&D


Job(s) to get done


Core value


Unfairadvantage


ACTION PLAN



Activities Output

Experiments Reflection

Lean offerings








Halftime

F + NF

A+

TeamHow is your team doing?


BUSINESS DESIGN PROCESS

153

Pivots / improvements

Extensions / improvements

B. Business model

C. Hypotheses & experiments

E. Action plan

D. Lean offerings

1

2

3

Market & trends

Customers & users

You & context

A. Business idea

Cycle 1-x

+  Analogs +  Antilogs +  Hypotheses +  Experiments

+  Functional requirements

+  Non-functional requirements & tools

+  Competitive benchmark

+  Activities “Lean offerings”

+  Activities “Experiments”

+  Output +  Team performance + 

+  Customers & users +  Brand & messages +  Channels +  Relationships +  Offerings +  Resources +  Processes +  Partners + +  Business DNA

Business DNA = +  Job(s) to get done +  Core value +  “Unfair” advantage

r = Market potential / growth

Distance to success

r

F. Portfolio

KPIs

Source: Orange Hills GmbH / Bernhard Doll (2013)

Realization

Agenda

154

1 2

Intro

3 4 5


6

Day 2-4 Day 5-6


Day 1

Realization

Any questions

156

? Aristotle: “What does it mean to be a good person?”

René Descartes: “What does it mean to be?”

Friedrich Nietzsche: “What does it mean?”

Bertrand Russell: “What does ‘it’ mean?”

C.S. Lewis: “What does it?”

Lil Jon:

“What?”

JUNE 13 NEXT GIG

NOT ENOUGH?

158

ISBN: 978-‐0262018494

Available at

ISBN: 978-‐3-‐8349-‐1943-‐4

ISBN: 978-‐0470510667

ISBN: 978-‐0470847428

ISBN: 978-‐0566092138

Bernhard Doll Orange Hills GmbH Sendlinger Str. 29 80331 München, Germany

E. [email protected] T. +49-89-4520545-0 F. +49-89-4520545-69

Follow us on Twitter: @orangehillsgmbh

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