Entrepreneurial Design: Building a business that customers love and with which you earn money

Doing the Right Thing is the essence of entrepreneurship

StartupCamp Switzerland 2014 Patrick Sthler, fluidminds

However, what is the r i g h t th ing?

What are innovative companies that wowed you lately?

To WOW customers and

to earn MONEY is key

We need new boxes for fresh ideas. We see only what we are able to see.

Outside the box thinking

What are

the new boxes?

What is this?

Same thing, different perspective!

Which innovation expanded the global market for mobile communication the most?*

*After the invention of mobile telephony itself

Dr. Patrick Sthler | 10

Which innovation made this possible?

Prepaid

A small change in billing opened new markets in Africa, Asia, Latin America, Youths, etc..

Innovation is all about being dierent

But if everybody is doing he same, you have to find something else

The best is if your customers love your business due to your fantastic value proposition and and your ability to deliver what you promise


Do you know this man? Hans Rausing = Inventor of the Tetra Pack Systems

He could have sold his packaging machines, but

But he sold packaged services

Tetra Pack is not a product innovation but an implementation of an innovative value proposition aka business model

product/technology value

creates

X

business strategy

enables

defines

business model

The business perspective: Technology or a new product does not create value. It is the business model that creates value

product/services happy customers

creates

X

value proposition

solves

delivered by

business model

The customer perspective: Technology does not create value. It is the value proposition the customer loves

customer problem

addressed by

What is a business model?

The business model is the DNA of your business

Are you aware of your DNA?

The business model gives meaning to your employees and customers

4 key questions for a successful business:

What excites our customers?

Value Proposition

How do we create value for our customers?

Value Architecture

How do we earn money?

Revenue Model

Who is on our team? What values do we pursue?

Team & Values

What industry are we in? Who are our competitors?

In which industry are we in?


That was the job the customer wanted to do.

Customer job to be done We do not need a drilling machine, screws and dowels. We want to hang up a picture. Customers hire a product or service to get a job done. The products are a means to an end, not an end in themselves.

The value proposition creates the value for the customer, not the product!

Value Proposition The job-to-get-done is solution neutral. The job is to hang up a picture. Potential solution: The drilling machine, the

dowel and screws Hammer and nail Powerstrips by Tesa A friend with a drilling

machine

It is of uttermost importance to understand the core job we solve for our customers

Value Proposition

Customer Who is our

customer? What job do we

solve for them?

Value What value do we

create for our customers? What value do we create for our partners?

What excites our customer?

Customer job to be done Is it easy to put a Christmas tree straight up and keep it there safely and green?

There was no big market for Christmas tree stands until Mr Krinner saw the badly solved job

What is the job customers want to get done in their vacation?

Customer job to be done We want the perfect vacation. We want to relax and restore our batteries. We want to learn more about a country and enjoy life.

What job did the travel agent solve in the past? What is today's job he gets done for the customer?

Value architecture

Oer What is our oer?

Distribution & Communication Channels

How do we reach our customers?

How do we communicate with our customers?

How do we create the value?

Value Chain What activitites do

we have to do to produce our oer?

How does our value chain look like?

Partner What partners do

we need?

Core Capabilities What are the core

capabilities we need?

Architectural innovation Customers have to transport and assemble the furniture by themselves, thereby saving IKEA two expensive steps in their value chain Value Proposition A new value proposition beyond price and good design is created: Instant satisfaction without waiting for the later delivery of the furniture

2 AA-488228-2

Revenue Model

Cost Structure Cost structure is

defined by your value architecture.

Revenue Sources With what do we

earn money?

How do we earn money?

Revenue Model Innovation Power-by-the-hour: Jet engine maintenance paid by the hours in service Value Proposition Airlines get variable costs that depend on their business success.

Team & Values

Team Who is in our

team? What

competencies do we have in our team?

Values What values do we

life in our team? How do we

interact with each other and with customers?

Who is on our team? What values do we live?

CustomersWho are our customers?What job do we solve for our customers?

Customer BenefitWhat benefit do we create for our customers?What benefit do we create for our partners?

O!erWhat is our o!er?

Value ChainWhat are our value creating steps?What is our value chain?

Core CapabilitiesWhat are the core capabilities we need?

Distribution & Communication ChannelsHow do we reach our customers?How do we communicate with our customers?

PartnerWhich partners do we need?

Questions for a Successful Business Model

Cost StructureCost structure is defined by the value architecture.

Revenue SourcesWith what do we earn money?

TeamWho is on our team?What competencies do we have on the team?

ValuesWhat values do we pursue?How do we interact with each other and the customers?

Revenue Model

Team & Values

Value PropositionValue Architecture













Revenue Model

Team & Values














Revenue Model

Team & Values

Value PropositionValue ArchitectureIn the end the value proposition has to work.

Geberit a product innovator or is there more?

From plumber supply to under-the-wall systems for baths

Customer job to be done Geberit understood that the badly solved job in the sanitary industry was, how fast a bath room can be renovated. With Geberits products you can renovate bathrooms faster and in better quality. And they understood that plumbers are their core sales channel.

Geberit is the master in understanding how to build and use bathrooms.

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:

Cost Structure Revenue Sources

Team Values

Revenue Model

Team & Values


Why homeowners love Geberit?

Architects Plumbers

Homeowners Job-to-be done: Get my bathroom renovated very

well (design & quality) with as little hassle as possible

Faster and more convenient renovation of baths

Actually, it needs a lot of initiative not to get Geberit (Plumbers offer only Geberit)

Installation systems are more expensive than pure toilette tanks

Willingness of homeowners to pay more is higher due to the benefits speed & design

Deep understanding how baths are renovated & used

Understanding how homeowners decide to procure sanitary equipment

Plumbers are the sales channel Architects are used for direct

communication with homeowner

Plumbers, Engineers, Marketeers Diverse team

high quality long lasting products looking for better solution. Always!

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Why plumbers love Geberit?

PlumbersJob-to-be done: Have little hassle as possible with a

customer job and still earn a high margin

Easy to plan, order, prefabricate and install all components

All components from one supplier Satisfied homeowners that pay a

higher price New products for upselling

All these tools for plumbers cost money Geberit earns money via end customers Some income for trainings

Deep understanding how plumbers work and think about their business

Training know-how Partner & eco system mgmt

Plumbers are reached with direct sales, classical marketing

via training

trade schools (Handwerkerkammern)

Planning tools (CAD, product handbook)

integrated logistics trainings, material, certificates

long-term thinking, willingness to invest long-term in relationship with plumbers

innovative solutions Plumbers, Engineers, Marketeers Diverse team

Lets be a traveler. You arrive at Cairo Airport. What are your first thoughts? Is the taxi driver trustworthy? Does he know the way? Will he take the direct and safest way?

Ok, I found a taxi I like, but I just have no local currency. Does he take credit card? Does he give me a proper receipt for my company expenses?

Many badly solved jobs in taking a taxi in a not well-known city. Is there not a better solution than taxi queues or a taxi call with a dierent number in every city?

Customer job to be done Get safely, without any hassles, with an acceptable level of quality and for a reasonable price from A to B in a city

What could be a solution for all these badly solved jobs of a customer?

Just an app or a business model innovation?

ber or mytaxi solve the job to find a trustworthy taxi

Whats in for the customer? With a simple app he can solve his job of simple traveling with a taxi

Easy receipt management On a business travel you have one receipt for all your taxi expenses during a trip.

Easy Expense Mgmt for firms mytaxi makes life of big business customers like consultancies easier by central invoices and central analysis of travel expenses (if integrated into AirPlus account)

Easy paperless payment process with online receipt for expense handling. Easy tipping. Wow, great for drivers!

Integrated payment processes

There is a big fight in the moment between mytaxi and drivers due to new auctioning pricing model

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


taxi app to connect passengers with drivers local mytaxi oces for drivers word-of-mouth/ Online

Marketing

asset light. No ownership of taxis or other transportation means

optimal organization for matching drivers and passengers incl. payment process.

Takes a cut of 2.75% from direct payments via mytaxi, base fee 0.79

no entry fee, no contract obligation

Passengers Businesses with

many business travels Drivers

Bringing ordering a taxi into the digital age

Passenger: Easy to get a taxi of good quality

Driver: Easy to get passengers Simple & integrated processes

Hotels, Restaurants with many guest who order taxis

Ordering taxi

Matching passenger

& taxi

Payment passenger

& taxi

Receipt mgmt

(business)

Entrepreneurs, User interface designer, marketeers, actually at beginning nobody with knowhow of the taxi industry

Entrepreneurial drive Dont ask for permission ask for

forgiveness

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Passengers Job-to-be-done Finding quick a good

taxis without hassle Mgmt of receipts

Direct booking with push of one button

Known quality of taxi driver Easy payment Easy receipt management

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Driver Job-to-be-done Getting rides and

passengers

Direct booking without dispatch center

No entry fee, no contract obligation

Simple payment process

Why do customers like mytaxi?

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


taxi app to connect passengers with drivers local mytaxi oces for drivers word-of-mouth/ Online

Marketing

asset light. No ownership of taxis or other transportation means

optimal organization for matching drivers and passengers incl. payment process.

Takes a cut of 2.75% from direct payments via mytaxi, base fee 0.79

no entry fee, no contract obligation

Passengers Businesses with

many business travels Drivers

Bringing ordering a taxi into the digital age

Passenger: Easy to get a taxi of good quality

Driver: Easy to get passengers Simple & integrated processes

User interface designer, marketeers, actually at beginning nobody with knowhow of the taxi industry

Hotels, Restaurants with many guest who order taxis

Ordering taxi

Matching passenger

& taxi

Payment passenger

& taxi

Receipt mgmt

(business)

Entrepreneurial drive Dont ask for permission ask for

forgiveness

Bringing ordering and paying taxis to the digital age

"Old" experience "New" experience Queue in line, hail a taxi on street or

find a number to call a taxi Taxi ride starts with unknown driver,

quality experience may vary Cash payment required (and maybe

driver tries to rip client off) Client has to ask for receipt Client has to hand in receipt to

employer to get expenses back Complain with driver (or company) if

service was not satisfying

Request taxi via app

Customer knows which taxi & driver will arrive at what time

Automated, cashless payment

Online receipt for expense handling Easier expense report handling

Easily rate/review experience via app

Job-to-be-done Get safely, without any hassles, with an acceptable level of quality and for a reasonable price

from A to B

mytaxi is not the revolution of the taxi business. However the new model addresses many deficiencies of the old experience

Customer job to be done I want a very special place to stay, at a good price, and want get local insights where to go out, to eat and to shop. Of course, I want to know if I can trust the person I stay with.

AirBnB opened a whole new segment of oers to the individualistic traveler of today

Well, I know we are in a commodity market where the price is key, but I believe we can sell the good for 10x as much as before.

Would you dare to say this? What would be the answer of your boss?

"Old" experience "New" experience Queue in line, hail a taxi on street or

find a number to call a taxi Taxi ride starts with unknown driver,

quality experience may vary Cash payment required (and maybe

driver tries to rip client off) Client has to ask for receipt Client has to hand in receipt to

employer to get expenses back Complain with driver (or company) if

service was not satisfying

Request taxi via app

Customer knows which taxi & driver will arrive at what time

Automated, cashless payment

Online receipt for expense handling Easier expense report handling

Easily rate/review experience via app

Job-to-be-done Get safely, without any hassles, with an acceptable level of quality and for a reasonable price

from A to B

mytaxi is not the revolution of the taxi business. However the new model addresses many deficiencies of the old experience

Customer job to be done I want a very special place to stay, at a good price, and want get local insights where to go out, to eat and to shop. Of course, I want to know if I can trust the person I stay with.

AirBnB opened a whole new segment of oers to the individualistic traveler of today

Even more individual choice for the traveler who looks for the special place to stay AND connect to the people of the place he visits: AirBnB

Easy to book, transparent pricing: AirBnB

Building trust by very personal reviews (peer-to-peer social control mechanism plus insurance coverage)

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Website, App to connect B&Bs with customers word-of-mouth

sales crew for BnB owners

running site & acquisition costs of BnBs (PH)

asset light

Acquisition of BnB places Quality & Trust Mgmt Know-how of locations

Customers pay BnB owner Takes services fees from the rent the

households get (app. 15%)

Customer (C) looking for special place to stay

Private households (PH) who oer BnB

PH: Income and international contacts for BnB owners

C: places to stay that are outside the norm

Contacts with locals

n/a

n./a.

Travel like a human

Build up BnB oer

Help find right spot

Match needs &

oer Payment

& GTC Reputation

& Trust Mgmt

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customer (Travelers) Job-to-be-done Finding a special place to

stay Getting to know the

hidden gems of destination

Oer very special places that cannot booked anywhere else

Connect with locals that share their insights

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Households that oer BnB Job-to-be-done Earning money Have the world at home

Refinancing rent Trust provided by platform Risk of damage is insured Connecting with people from

abroad

Why do customers like airbnB?

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Website, App to connect B&Bs with customers word-of-mouth

sales crew for BnB owners

running site & acquisition costs of BnBs (PH)

asset light

Acquisition of BnB places Quality & Trust Mgmt Know-how of locations

Customers pay BnB owner Takes services fees from the rent the

households get (app. 15%)

Customer (C) looking for special place to stay

Private households (PH) who oer BnB

C: places to stay that are outside the norm

Contacts with locals PH: Income and international

contacts for BnB owners

n/a

n./a.

Build up BnB oer

Help find right spot

Match needs &

oer Payment

& GTC Reputation

& Trust Mgmt

Why do customers like airbnB?

Travel like a human

"Old" experience "New" experience Having friends in a city where you can

stay (Not) Finding via web offers directly

from BnB owners Asking tourist information at your

destination Read Lonely Planet or visit Tripadvisor Go to Interhome to find flat and holiday

homes Stay in overpriced, commodity city

hotels

AirBnB offers everything on one site Finding the right neighborhood in a

city Find & book the right place (room,

local person) Payment Settlement Trust & Reference Building

Client problem I want a very special place to stay, at a good price, and want to connect with locals to get

their insights where to go out, to eat and to shop. Of course, I want to know if I can trust the person I stay with.

Finding a place to stay in a city and connect to locals

Customer job to be done I want to fly conveniently from A to B for a good price.

"Old" experience "New" experience Flights go often via big hubs where

transfer is a hassle You pay for services you might not

need (like baggage, food, lounges, credit card payments, etc.)

Intransparent pricing, different prices per sales channel

Direct flights. No hassle for catching connecting flights

Pay for what you want and value (Check-in bags, reserved seats, SMS Flight Details)

Direct sales via Internet, no travel agencies

Client problem I want to fly conveniently from A to B for a good price.

Southwest: the innovator of the no-frill business model for airlines

Customers just pay for what they really want!

Well, I know we are in a commodity market where the price is key, but I believe we can sell the good for 10x as much as before.

Would you dare to say this? What would be the answer of your boss?

Customer utility

price

costs

company profit

customer value +

+

The magic formula for great firms

A deliberate change of a business model is a great strategy

All components of a business model are starting points for innovation

Value Innovation

Architectural Innovation

Revenue Model Innovation

Cultural Innovation

At the end, all business model innovation must create more value to the customers

Starting points of business model innovation

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Entrepreneurial design how to bring it alive?

StartupCamp Switzerland 2014 Dr. Patrick Sthler, fluidminds

Design Thinking Process

The right culture & values Multidisciplinary Teams

1

Customer Insight - Observe your customers

What job is not yet or badly solved?

- How does the Customer Experience Cycle look like?

- On what customer insights is your idea based?

- validate customer insight

2

Understand - understand the current

solutions and their strength & weakness

- understand how the potential customer thinks and decides

- understand the market & market mechanism

3

Ideate Develop as many ideas as possible in the area of - customers/ value

proposition - value architecture - revenue model

4

Design - decide for three or four

options - design the business

models for the options - check the

interdependencies in the business models

- work on the uniqueness (positioning)

- optimize the building blocks

5

Decide & Prototype - decide for the best

model to go for - build prototype - test prototype with

customers - write business case - decide again or work on

di!erent option

6

Build & Learn - execute business model - learn continuously from

customer feedback and control KPIs

- adjust and refine continuously the business model

Business Model Canvas

Tools for Entrepreneurial Design

Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values

Value PropositionValue Architecture Use the canvas to develop your business model!

1Customer Insight - Observe your customers





2





3



4







5




dierent option

6




Point of View

Designing is a process of opening your mind and focusing at the end

1

Customer Insight

3

Ideate 2

Understand 4

Design 5

Decide & Prototype

6

Build & Learn

Creating Business model design is a creative and analytical process at the same time. There is a reason why god gave us two brain hemispheres

Innovation Culture & Diversity

Where do we get a Value Innovation from? Lets find new customer insights as a starting point

Customers insight

New value proposition

Business model

innovation


Value PropositionThe best way is to start with the job we solve for our customers?

Buy Delivery/ Assembly Usage Comple-ments Service Disposal

How can we find systematically new customer insights?

Understand how the customers are buying, using and disposing the product

Understand the whole lifecycle of customers utility

Source: cp. Kim, W.C., Mauborgne, R., Knowing a Winning Business Idea when you see one, HBR Sep-Oct. 2000

Customer Experience Map

How can we improve the buyers utility cycle?

Can we do more for the customer?

Can we leave something to the customer?

Unsolved job-to-be-done What is the biggest problem with socks?

Blacksocks we save the world from socks problems

Disposal

Puttingin pairs

Washing

Use

Delivery

Buy

Customer

Productivity

Simplicity

Usability

Risk

Image &

fun

Enviromental

friendlyness

StartingPoints

Blacksocks We solve the world from its socks problems

10'000 12'000

25'000

40'000

0

10'000

20'000

30'000

40'000

2001 2002 2005 2008

Socks subscription

(2001-2008)

Customer Insights

Buying socks is no fun

Putting socks in pairs even less fun

Good socks are a sign of Being well

dressed

Value Proposition

Blacksocks subscription solves all

problems

Always enough new socks

No pairing needed since all socks are

identical

Revenue Model

Upfront payment

Easy planning and negative working

capital

Blacksocks =

revenue model

innovation

20% market share in Switzerland*

* premium segment starting at 9CHF

2Understand - understand the current




3Ideate Develop as many ideas as possible in the area of - customers/ value


Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Use the canvas to fine tune your business model around a better value proposition

4Design - decide for three or four






Customers

Customer Benefit

O!er

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values

Value PropositionValue Architecture Use the canvas to develop your business model!

5Decide & Prototype - decide for the best model

to go for - build prototype - test prototype with


dierent option

6Build & Learn - execute business model - learn continuously from








2





3



4







5




dierent option

6




More Information on http://blog.business-model-innovation.com

Dr. oec. Patrick Sthler

fluidminds GmbH

Bahnhofstrasse 35

CH-8001 Zrich

[email protected]

www.fluidminds.ch

blog.business-model-innovation.com

Entrepreneurial Design: Building a business that customers love and with which you earn money

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Transcript of Entrepreneurial Design: Building a business that customers love and with which you earn money