Business Model Innovation

40
Business Model Innovation

description

Business Model Innovation. Activity: The World’s Tallest Marshmallow?. The Marshmallow Challenge Rules. Build the tallest  freestanding  structure. The entire marshmallow must be on top. Use as much or as little of the kit. Break up the spaghetti, string or tape. - PowerPoint PPT Presentation

Transcript of Business Model Innovation

Page 1: Business Model Innovation

Business Model Innovation

Page 2: Business Model Innovation

Activity: The World’s Tallest Marshmallow?

Page 3: Business Model Innovation

The Marshmallow Challenge Rules

Build the tallest freestanding structure

The entire marshmallow must be on top

Use as much or as little of the kit

Break up the spaghetti, string or tape

The challenge lasts 18 minutes

Page 4: Business Model Innovation

Nail It then Scale It Phases

Page 5: Business Model Innovation

One Approach

Page 6: Business Model Innovation

Management Science of Uncertainty

Uncertainty / Unknown

Certainty / Known

Traditional Management

Entrepreneurial Management

Page 7: Business Model Innovation

Key Element of Uncertainty

Uncertainty = Assumptions

Page 8: Business Model Innovation

A Tool to Identify Assumptions

Page 9: Business Model Innovation

Nail It then Scale ItThe Fundamentals

Page 10: Business Model Innovation

Fundamental #1: Get Into the Field

“Get the heck outside the building!” –Steve Blank

Page 11: Business Model Innovation

Fundamental #2: Fail Fast The goal is to fail fast and

inexpensively

Redefine failure The only failure is wasting your time and

money when you could avoid it▪ 1000 Markets Example

Page 12: Business Model Innovation

Fundamental #3: Intellectually Honest Learning

Common Learning Traps Confirmation bias Motivation bias Familiarity bias Superstitious learning

Goal: Listen to understand the world as it really is Attitude of wisdom Willingness to be wrong and to fail Example: Mike Cassidy, Xfire

Page 13: Business Model Innovation

Fundamental #4: Inexpensive, Rapid, Simple Experiments

Experiment with virtual prototypes

Identify your assumptions and turn them into facts

Power in low cost, simple, rapid Example: Jam experiment Example: Classtop and the $300

software package

Page 14: Business Model Innovation

Nail It then Scale It:Nail the Pain

Page 15: Business Model Innovation

Separate Problem Search from Solution

Which Problem Is

Worth Solving

(Nail the Pain)

Which Solution

Solves that Problem

(Nail the Solution)

Page 16: Business Model Innovation

Custer versus Napoleon

Page 17: Business Model Innovation

Phase 1: Nail the Market Pain

Objective: Discover the Monetizable Market Pain▪ Discover the “job” your customer is trying to get down without

being biased by the solution Develop the Big Idea Prototype

Steps:▪ Step 1: Don’t build anything▪ Step 2: Write down Monetizable Pain hypothesis▪ Step 3: Write down Big Idea Prototype▪ Step 5: Quick test with customers▪ Step 5: Quick exploration of markets

Test: Customers return your cold call

Page 18: Business Model Innovation

Monetizable Pain:Mosquito Bites vs Shark Bites The bigger the pain the easier to build

a business Motive Communications▪ Problem searchWhat about Instagram?

Page 19: Business Model Innovation

Monetizable Pain:How to Discover It? Customer observation and empathy

Put yourself in your customers shoes? What keeps them up at night, causes

them trouble, leads them to develop work-around?

Test your assumption with customers

Example: Motive Communications

Page 20: Business Model Innovation

How to Get Out There?

Page 21: Business Model Innovation

Practice It:Storyboard Step 1: Profile customer segment

I am ___________________________(who, with at least 3 characteristics)

I am trying to ___________________ (outcome/job trying to solve)

But it’s difficult because ___________(identify problems/barriers)

Page 22: Business Model Innovation

Practice It:Storyboard Step 2

Story board of the journey of how customer solves Step 3

Identify biggest pain … do root cause (five whys) Step 4

Identify most important root cause Step 5

What questions do you need to answer about the root cause

Who could you talk to in order to answer these questions?

Page 23: Business Model Innovation

Nail It then Scale ItNail the Solution

Page 24: Business Model Innovation

Phase 2: Nail the Market Solution

Objective: Discover the Minimum Feature Set that

drives purchase

Steps:▪ Test 1: Virtual Prototype Test▪ Test 2: Prototype Test▪ Test 3: Solution test

Test: Customers purchase

Page 25: Business Model Innovation

Problem

Most entrepreneurs build products …

Customers don’t want

Page 26: Business Model Innovation

Key Task

Achieve Product / Market Fit

Exact match between pain and solution

Page 27: Business Model Innovation

Key Tools

Prototypes

From virtual prototypes to actual prototypes

Page 28: Business Model Innovation

Key Tools

Minimum Feature Set

Page 29: Business Model Innovation

Virtual Prototypes

Can be Drawing Powerpoint Video

Test What will customers purchase▪ Even before you build it

Page 30: Business Model Innovation
Page 31: Business Model Innovation
Page 32: Business Model Innovation

Practice It:Virtual Prototype If you had to sell a customer today …

For the skeptics … AtTask

Page 33: Business Model Innovation

Phase 3: Nail the Go-to-Market Strategy

Objective: Discover customer buying process and

unique sales process for your customers

Steps:▪ Test 1: Buying process discovery▪ Test 2: Market infrastructure discovery▪ Test 3: Pilot customer validation

Page 34: Business Model Innovation

Customer Buying Process

Customer

Awareness

Customer

Evaluation

Customer

Purchasing

Customer Use

Page 35: Business Model Innovation

Market Communication Infrastructure

Company1

Partners2

Influencers3

Advertising / Marketing / Social Media

4

Target Customer5

Page 36: Business Model Innovation

Practice It:Map It Draw a map of customer buying

process

Prioritize 3 most important inflection points

Set two dates on your calendar to investigate

Page 37: Business Model Innovation

Phase 4: Nail the Business Model

Objective: Validate financial model & ignite business model

Steps▪ Leverage customer conversations to predict business

model▪ Validate the financial model▪ Iteratively launch product and go-to-market strategy▪ Business dashboard with continuous information flow▪ Adjust speed depending on market type

Examples: Webvan Webmetrics, Knowlix, Yahoo

Page 38: Business Model Innovation

A Tool to Identify Assumptions

Page 39: Business Model Innovation

Phase 5: Scale It Objective:

Scale discovered model until it breaks▪ Phase change recognition & management▪ Recognize changes▪ Shift process, structure and employees▪ Emphasize with visual management

▪ Consciously define culture▪ Succession and transition▪ Leaping between markets

Examples: Intuit, Fusionsoft, Craigslist, SodaStart, IMVU

Page 40: Business Model Innovation

Summary of Five StagesProduct development Before you build anything:

Identify hypotheses about customers Test those hypotheses as cheaply as possible Identify exactly customer pain and your

solution with customer Use a virtual prototype

Sales development Discover exactly how customers buy Develop a replicable sales model