Innovation at 50x 031616
-
Upload
steve-blank -
Category
Business
-
view
234.916 -
download
3
Transcript of Innovation at 50x 031616
Innovation at 50x
Steve Blank@sgblank
www.steveblank.com
03/16/16
What is Innovation?
Innovation ≠ Incubator
Innovation ≠ Accelerator
Innovation ≠ Startup
Innovation ≠ Lean Anything
Innovation ≠ Open
Innovation ≠ Reorganization
Innovation ≠ Incubator
Innovation ≠ Accelerator
Innovation ≠ Startup
Innovation ≠ Café’s
These are all physical places to do innovation
Innovation ≠ Incubator
Innovation ≠ Accelerator
Innovation ≠ Startup
Innovation ≠ Café’s
These are all physical places to do innovation
Having them does not guarantee any innovation
will happen
Innovation Development• Places:
– R&D, Engineering, Incubators, Accelerators, Hackathons, Open Innovation, etc.
• Methodology:– Waterfall, Agile, Lean
• Pedagogy:– Lean LaunchPad/I-Corps, Case-studies, Mentors
• Metrics:– KPI’s, StateGate®, ECV, Pivots, IRL, TRL, …
• Funding– VC, Corporate VC, M&A, etc.
Innovation Development• Places:
– R&D, Engineering, Incubators, Accelerators, Hackathons, Open Innovation, etc.
• Methodology:– Waterfall, Agile, Lean
• Pedagogy:– Lean LaunchPad/I-Corps, Case-studies, Mentors
• Metrics:– KPI’s, StateGate®, ECV, Pivots, IRL, TRL,…
• Funding– VC, Corporate VC, M&A, Incremental, etc.
Innovation Is?
Satisfying users current or future wants/needs by turning an idea into a product or service
Innovation Is?
Satisfying users current or future wants/needs by turning an idea into a product or service with speed and urgency, using minimal resources and costs
Innovation Succeeds
• Where there is a path to adoption• When it fits into the overall mission and strategy• Because it performs, has metrics, …• It is managed as an innovation portfolio• And has management support (the spirit of “yes”)
Continuous disruption requires Continuous Innovation
Steve Blank
Continuous disruption requires Continuous Innovation
Steve Blank
what’s this mean?∧
20th Century Corporate Lifecycle
21st Century Corporate Lifecycle
Continuous disruption requires Continuous Innovation
Steve Blank
Continuous Innovation requires new management tools
Steve Blank
Continuous Innovation requires new management tools
Lean Innovation Management
Steve Blank
Why Lean Innovation Management?
10x the number of initiatives in 1/5 the amount of time
50x
Can You Create an Organization that Executes and Innovates?
Can You Create an Organization that Executes and Innovates?
It’s Called an Ambidextrous Organization
Source: James March, Charles O’Reilly, Michael Tushman
An Ambidextrous organization achieves breakthrough innovations
Source: James March, Charles O’Reilly, Michael Tushman
An Ambidextrous organization achieves breakthrough innovations while relentlessly improving the way
they execute current business model
Source: James March, Charles O’Reilly, Michael Tushman
An Ambidextrous organization achieves breakthrough innovations while relentlessly improving the way they execute
current business model and serve existing customers
Source: James March, Charles O’Reilly, Michael Tushman
Here’s How
Types of Company Innovation
Steve Blank
Three Horizons of Innovation
Source: Baghai, Coley, White
Mature Businessour established capabilities
Rapidly Growing Business Emerging Business
Three Horizons of Innovation
Source: modified Baghai, Coley, White
our established capabilities
New Three Horizons of Innovation
Known
Unknown
Partially Known
Level of innovation is defined by whether the business model is being executed, extended or explored!
Execute
Explore
Extend
Three Horizons of Innovation
Existing Business Model:Process Innovation
Execute Core Mission
Known
Three Horizons of Innovation
Existing Business Model:Process Innovation
Execute
Known
Partially Known
New Opportunities viaBusiness Model Innovation
Extends Core Business
Three Horizons of Innovation
Existing Business Model:Process Innovation
Execute
New Opportunities viaBusiness Model Innovation
Execute/Search
Known
Unknown
Partially known
New/Disruptive Business Model
Explores
Capabilities/Risk Assessment
Existing CapabilitiesLow Risk
Need New CapabilitiesHigh Risk
Some CapabilitiesModerate Risk
Known
UnknownPartially known
Innovation Allocation Across the Horizons
Known
UnknownPartially known
60-70%
20-30%5-10%
Return on Investment by Horizon
Known
UnknownPartially known
ROI 1-3 years
• Improve• Partner• Acquire
ROI 4-6 years
• Extend• Invest• Partner• Acquire
ROI 4-10 years
• Incubate• Invent• Invest• Acquire
Evangelos Simoudis/Steve Blank
Process Innovation
Product Mgmt Is the Current Process for Horizon 1
Horizon 1Extend the core
Product Management
Known Stakeholders
Use traditional methodologies for Horizon 1 projects
Steve Blank
Horizon 1: Roadmap Driven R&D
• Use product roadmap• Success: use in next gen product
– With “better” performance than last gen• Corporate competence: Predictable product improvement• Assets: IP, Advanced design
Source: Ikhlaq Sidhu, UC Berkeley
Horizon 1: Market/Customer Driven
• R&D decide their own projects with signals from: – Pilot studies – Business Unit or CTO priorities – External: start-ups and academic – Demo days or open interfaces to suppliers, customers,
universities • Projects must be relevant to core competencies • Success: is awareness, market perception, $’s+ profit• Assets: IP, Advanced design, External Industry Leadership
Source: Ikhlaq Sidhu, UC Berkeley
Process Innovation
Disruptive Innovation
Continuous Innovation
Lean Is the Process for Horizon 2 & 3 Innovation
Horizon 1Extend the core
Horizon 2
Horizon 3
Speed & Urgency
Lean
Use Lean Methodologies for Horizon 2 and 3 projects
Steve Blank
Lean Innovation Delivers Products and Services
that users want and need in a fraction of the time
The Lean Methodology
Lean = 3 parts
Business Model Canvas
Part 1
Customers
Channels
Customer Relationships
Revenue Model
Value Proposition
Activities
Resources
Partners
Costs
Source: Alexander Osterwalder- Business Model Generation
Business Model Canvas = hypotheses of how you create and deliver value for the company and its
customers
Part 1
Customers
Channels
Customer Relationships
Revenue Model
Value Proposition
Activities
Resources
Partners
Costs
Source: Alexander Osterwalder- Business Model Generation
1. Frame Hypotheses
• Frame Hypotheses
1. Frame Hypotheses
• Frame Hypotheses Business Model Canvas
Business Model Canvas
Source: Alexander Osterwalder- Business Model Generation
2. Test Hypotheses
• Frame Hypotheses• Test Hypotheses
Business Model Customer Development
Customer Development is how you search for the model
Customer Development
Turning the Business Model Canvas Into Facts
9 Guesses
Guess Guess
GuessGuess
GuessGuess
Guess
GuessGuess
Customers
Channel
Customer Relationships
Revenue Model
Source: Alexander Osterwalder- Business Model Generation
Customer Development is Hypothesis Testing
3. Build Incrementally & Iteratively
• Frame Hypotheses• Test Hypotheses• Build the product
incrementally & Iteratively
Business Model Customer DevelopmentAgile Engineering
The Minimum Viable Product (MVP)
• Smallest feature set that gets you the most … - learning, feedback, failure, orders, … - incremental and iterative
• It is not a prototype • It is not a deployable version with the fewest features• It is what enables a test of a hypothesis • It may be a drawing, a slide, a wireframe, clickable
workflow, etc…
The Pivot
• Definition: A substantive change to one or more of the business model canvas components
• Iteration without crisis
• Fast, agile and opportunistic
• Weeks and $100K
Pivot Cycle Time Matters
• Speed of cycle minimizes cash needs• Minimum feature set speeds up cycle time• Near instantaneous customer feedback drives feature set
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
ExecutionSearch
Pivot
Part 1
Agile Engineering
+Part 2
Part 3
Elements of Lean Startup
Lean Gets Theory
Customer Development2003Blank
Agile Engineering2011Ries
Business Model Canvas2010
Osterwalder
HBR Cover2013
Lean Gets Practice
Lean LaunchPadFor Students
2011
1250+ teams Taught in 75 Universities
760+ teams Taught by 50 Universities
I-CorpsFor SBIR/STTR
2012
I-Corps For Life Sciences
2014
I-Corps For NSA
2015
~250,000 on-line students
Udacity.com
How Does This Really Work?
Example 1:Stanford Team
Lessons learned after 130 interviews
Yegor Tkachenko, MS
Marketing AnalyticsMachine Learning
Eric Peter, CS & MBAConsumer Insight ExpertManagement Consulting
Scott Steinberg, MBA
Marketing Growth StrategyManagement Consulting
Karan Singhal, Undergrad CS
Web DevelopmentUser Interface Design
Share&Tell
Share&Tell
Yegor Tkachenko, MS
Marketing AnalyticsMachine Learning
Eric Peter, CS & MBA
Consumer Insight ExpertManagement Consulting
Scott Steinberg, MBA
Marketing Growth StrategyManagement Consulting
Karan Singhal, Undergrad CS
Web DevelopmentUser Interface Design
Day 1 (Clarified)
We create a way for consumers to make money
by actively sharing their behavioral data and
opinions.
Through this data, we help companies unlock
previously unattainable insights.
Now
We help retailers and CPG companies understand
online shopping behavior.
We do this by creating a platform for people to donate
their Amazon shopping history
to raise money for charity.
130 Interview
s
3,500+ Survey responses
Cost StructureFixed - Infrastructure, servers, team of data scientists, corporate sales force, project managers & analysts, product & user experience development team
Variable - Payment to consumers for use of their data, profit-sharing model (dividends) with consumers, consumer service reps
Revenue Streams1. Custom research studies2. Per-feedback fees (surveys, video interviews, focus groups)3. Sales of raw data / data with automated analytics on top4. Subscriptions to the platform
Pricing based on sample size/type, data type/amount, number of questions, feedback time
Key Resources
Key ActivitiesKey Partners Value Proposition Customer Relationships
Channels
Business Canvas - Week 1Customer Segments
Consumers• Millennials/students• Lower income consumers with smartphones• Existing research participants
Enterprises• Marketing agencies, consulting• Marketing departments at large companies• Marketing departments at non-large CPG companies
• Panel acquisition, retention, incentivization, quality control• Automated seamless insights extraction • Data security• Empowered customer service (for consumer)• Sales force, customer service knowledgable about market research design & execution
• Historical granular data
• Automated platform for seamless insights extraction
• Expertise in market research methodology, execution, statistics
Consumers• Profit sharing• Targeted ads in line with customer’s tastes• Sense of empowermentEnterprises• Unique data,analysis• Easy and fast way to do it
Consumer• Website• Mobile app
Enterprise• Direct web portal• Resold through market research agencies• Custom consulting & research design services
Consumers• Getting paid for data that has already been shared, but from which individuals are not profiting• Provide sense of empowerment and control over data• Offers a natural, effortless way to share opinions• Feel heard and that opinion matters
Enterprises• Linking real-behavior with opinions (vs. stated behavior)• Ability to follow up with consumer• Faster turnaround
• Data API providers• Data aggregators• Marketing agencies• Panel participants
blue = consumerblack = enterprise
What we thought: Enterprise VP blue = consumerblack = enterprise
Enterprise Value Proposition:
Replace traditional survey providers by:● Linking real behavior with opinions (vs.
stated behavior)● Ability to follow up with consumer● Faster turnaround
Key Resources
• Historical granular data
• Automated platform for seamless insights extraction
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to you?● ...
Survey
Surveys are based on SELF REPORTED data
Replace with real data
What we did: Talk to companies who use surveys for market
researchHypothesis: We can replace existing panel vendors if we have real behavioral data (as opposed to self-reported data)
What we did: 12 Customer Discovery interviews with companies that conduct market research using surveys
Enterprise
Week 1-3
What we found: Not that muchpain with self-reported data...
“Self-reported data isn’t great, but it’s directionally good
enough.”
“With real data, we’d get the same insight as we do now, but perhaps we’d be slightly more confident.”
“In order to switch vendors, you need to be able to answer a question we can’t
answer today”
“We have to use [vendor] - we have a long term contract through our HQ."
Enterprise
Week 1-3
What we found: Not that muchpain with self-reported data...
“Self-reported data isn’t great,
but it’s directionally
good enough.”
“With real data, we’d get the same insight as we do now, but perhaps we’d be slightly more confident.”
“In order to switch vendors, you need to be
able to answer a question we can’t answer
today”
“We have to use [vendor] - we
have a long term contract through
our HQ."
EnterpriseWeek 1-3
Adding behavioral data alone does not make us 10x better.
We need to be able to answer a specific question that marketers can’t answer today
So, we focused on changing the value prop to answer new questions
for marketers
How should I identify my
consumer target(SMB Businesses)
How do I better understand my
consumer target?
What is the path to purchase for online
and omnichannel shopping?
What are current online shopping trends?
Customer Needs Identified through Customer Discovery:
EnterpriseWeek 1-3
So, we focused on changing the value prop to answer new questions for marketers
How should I identify my
consumer target(SMB Businesses)
How do I better understand my
consumer target?
What is the path to purchase for online
and omnichannel shopping?
What are current online shopping trends?
Customer Needs Identified through Customer Discovery:
EnterpriseWeek 1-3
Value Proposition
Enterprises• Linking real-behavior with opinions (vs. stated behavior)• Ability to follow up with consumer• Faster turnaround
Value PropositionEnterprises• Identify target consumers to increase marketing ROI
• Deeper and more accurate behavioral understanding of consumer segments
• Understand online/omnichannel path to purchase
• Understand online market trends at consumer level
Week 1 Week 3
✘
What about the consumer?
Cost StructureFixed - Infrastructure, servers, team of data scientists, corporate sales force, project managers & analysts, product & user experience development team
Variable - Payment to consumers for use of their data, profit-sharing model (dividends) with consumers, consumer service reps
Revenue Streams1. Custom research studies2. Per-feedback fees (surveys, video interviews, focus groups)3. Sales of raw data / data with automated analytics on top4. Subscriptions to the platformPricing based on sample size/type, data type/amount, number of questions, feedback time
Key Resources
Key ActivitiesKey Partners
Value Proposition
Customer Relationships
Channels
What we thought: Consumer VPCustomer Segments
Consumers• Millennials/students• Lower income consumers with smartphones• Existing research participants
Enterprises• Marketing agencies, consulting• Marketing departments at large companies• Marketing departments at non-large CPG companies
• Panel acquisition, retention, incentivization, quality control• Automated seamless insights extraction • Data security• Empowered customer service (for consumer)• Sales force, customer service knowledgable about market research design & execution
• Historical granular data
• Automated platform for seamless insights extraction
• Expertise in market research methodology, execution, statistics
Consumers• Profit sharing• Targeted ads in line with customer’s tastes• Sense of empowermentEnterprises• Unique data,analysis• Easy and fast way to do it
Consumer• Website• Mobile app
Enterprise• Direct web portal• Resold through market research agencies• Custom consulting & research design services
Consumers• Getting paid for data that has already been shared, but from which individuals are not profiting• Provide sense of empowerment and control over data• Offers a natural, effortless way to share opinions• Feel heard and that opinion matters
Enterprises• Linking real-behavior with opinions• Ability to follow up with consumer- Faster turnaround• Give additional context in traditional surveys
• Data API providers• Data aggregators• Marketing agencies• Panel participants
blue = consumerblack = enterprise
Consumer Value Proposition Hypothesis:
Get paid for your dataFeel in control of your data
Feel heard and that opinions matter...and, that consumers are willing to provide all these data types:• Social media likes & posts• Email purchase receipts• Credit card purchase
history• Amazon.com purchase
history• GPS location history• Web and search history
First consumer testHypothesis: People will provide their data and opinions for money
Tested through: ~25 Customer Discovery focused consumer interviews
ConsumerWeek 1-3
Experiment: Take an MVP on an iPad to the mall
ConsumerWeek 1-3
What we learnedHypothesis: People will provide their data and opinions for money
ConsumerWeek 1-3
Findings:
People will provide data and opinions for money, BUT
Only younger and poorer consumers were interested
Cash-based model had other problems too:● Doesn’t support retention and engagement● Misaligned incentives● Not scalable to get to large # of consumers
Tested through: ~25 Customer Discovery focused consumer interviews
As a result: What if we offered equity instead of cash?
Solves all business needs! ● panel retention and engagement● identity verification● quality of data
ConsumerWeek 4
Google Consumer Survey: n = 500
Oh Wait… Need to Isolate VariablesAlways be skeptical of your data!
Consumers aren’t interested in concept of being a partial owner - they cared about the
extra cash!
Designing a good experiment just saved us 49% of our equity...phew!
ConsumerWeek 4
Value Proposition
Consumer:• Getting paid for data that has already been shared, but from which individuals are not profiting• Provide sense of empowerment and control over data• Offers a natural, effortless way to share opinions• Feel heard and that opinion matters
By Week 4, We Had No Idea What Consumer Value Prop Should Be
Value Proposition
Consumer:• Getting compensated for data that has already been shared• Provide sense of empowerment, control over data• Partial ownership of company
Week 1-4ConsumerWeek 1-4
Consumer:• Control over data• ???
Value Proposition
Week 1 Week 3 Week 4
Let’s first focus on narrowing down enterprise value prop to see
what data we need.
What we did: Customer Validation!
How should I identify my consumer target
(SMB Businesses)
How do I better understand my
consumer target?
What is the path to purchase for online and omnichannel shopping?
What are current online shopping trends?
✘ ✘
EnterpriseWeek 4
14 more enterprise interviews to (in)validate our hypothesized value props and identify the most acute needs
“Great value prop guys, but I challenge you - if you had to do something tomorrow as an MVP,
what would it be? This is a LOT to do!”
Note: Quote paraphrased, concept of “Big Idea” was likely referenced
Key learning: A startup can’t do everything. It needs to do one thing well!
EnterpriseWeek 4
Well, why not focus on data that’s easiest to get?
Most Sensitive
Least Sensitive
Google Survey
ConsumerWeek 5
And heard from companies that Amazon data is big pain
point
EnterpriseWeek 5
As a result: An aha moment...
Share & Tell…...helps better understand your target's online & omnichannel shopping & purchasing behavior
• What is purchased on Amazon.com?• What is my online/omni market share?
Why?• Where else does my target shop? Why?• What does my target do before they buy?
What is their shopping path? Why?• What products does my customer buy /
not buy? What do they buy with my product? Why?
...helps better understand your target's persona / where to reach them
• What online behaviors (sites, apps, etc…)?• What media consumption habits?• What do they search for online?• What activities, interests, hobbies?• What demographics?
...provides ability to more directly and narrowly communicate with your target
• Direct messaging / promos on S&T platform
• Better targeting on existing ad networks
Focused value prop and segments:
Help CPG and retailers understand consumer trends
on Amazon
EnterpriseWeek 5-6
Cost StructureFixed - Infrastructure, servers, team of data scientists, corporate sales force, project managers & analysts, product & user experience development team
Variable - Payment/donations for use of their data, consumer service reps
Revenue Streams1. Subscriptions to insights / platform2. Per-survey fees3. Custom research studies4. Linking data to client databasesPricing based on sample size/type, data type/amount, number of questions, feedback time
Key Resources
Key ActivitiesKey Partners
Value Proposition
Customer Segments
Customer Relationships
Channels
Resulting Business Canvas
Consumers
• Smartphone using consumers who shop online• Millennials• Existing research participants• People who currently give to charity
Enterprises
• Retail (traditional)• Retail (e-commerce)• CPG with online sales
• Panel acquisition, retention, incentivization, quality control• Automated seamless insights extraction • Data security• Empowered customer service (for consumer)• Sales force, customer service knowledgable about market research design & execution
• Historical granular data
• Automated platform for seamless insights extraction
• Expertise in market research methodology, execution, statistics
Consumer• Website• Mobile appEnterprise• Direct web portal supported by research-experience B2B sales force• Projects sold through market research & strategy firms
Consumers• Get: Charities send invitations• Get/Keep: Shopping discovery + targeted discounts app• Keep: Reports / comparisons of your data
Enterprises• Get:partnership,telesales,PR • Keep: Unique data, analysis• Easy and fast way to do it
Consumers• Feel good by donating data to charity• (potentially) Service to discover, get discounts on, and buy stuff online
Enterprises• Understand purchasing trends on Amazon by demographic group
• Data API providers• Data aggregators• Marketing agencies• Panel participants• Charities/non-profits
EnterpriseWeek 5-6blue = consumer
black = enterprise
• Understand purchasing trends on Amazon by demographic group
• Retail (traditional)• Retail (e-commerce)• CPG with online sales
As a result: Develop low-fi MVPEnterpriseWeek 5-6
Now, how do we incentivize consumers to provide Amazon
data?
ConsumerWeek 5
We identified a few possiblealternatives to cash...
Pay cash
Provide a valuable service
$5 / $10 cash
Donate your data
(to benefit a charity)
Receive targeted
promotions
Personalized product recommen
dations
✘Had learned previously consumers more
willing to share data if they get some intrinsic value
ConsumerWeek 5
What we did: 10+ Customer Discovery interviews...and 2,000+ survey
responses
ConsumerWeek 5
What we found: “Donate your data”best meets the business’s needs
Gets Amazon data?
Retention /
engagement? Quality? Large #? Outcome
$5 / $10 cash
✔ Cash is king! ✘ May be transactional / one-shot deal
✘ Limits to low income
✔ ~>50% interested
Kill for now or use in combo w/ donations
Donate your data
✔ Interest in ‘doing good’
✔ Donation implies opp to ask for future donation
✔ Consumer leads verified through charities
✔ ~27% interested
Focus for class; need to understand impact of bias
Targeted promos
✘ Does not solve major pain, already available
✔ Creates clear gain w. reason to come back
✔ Can verify respondent behavior
✘ Quant test running, qualitatively poor reaction
Test for “keep / grow” insteadProduct
recs✘ Limited interest - does not solve pain, not 10X better than others
✔ Creates clear gain w. reason to come back
-- Unclear if able to verify respondent
• Need 0.75% of TAM to register (1M / 150M)• Of those interested, ~3% will register• Implies >25% interested
ConsumerWeek 5
What we found: Consumers skeptical of donation scams
“I’d donate my Amazon data to raise money for charity X,
but only if that charity asked me too”
“I probably would not donate to a random
startup unless I knew for sure that they
were legit”
Nonprofits should send out communication asking people to donate their data
Nonprofits are a customer acquisition channel and a new customer segment
ConsumerWeek 5
As a result: 3-sided marketConsumer
Week 6
Value Proposition
Consumer:• Control over data• ???
Consumer:• Feel good by donating data to charity• Doesn’t cost money to donate
Value Proposition
Week 3 Week 5
Resulting BMC changes (I)
Consumer:• Millennials & students• Lower income consumers with smartphones• Existing research participants
SegmentConsumer:• Millennials• People who donate to charity
Segment
ConsumerWeek 6
✘✘
Value Proposition
Non-Profit:• A new revenue stream• A new way to engage with donor base• A way to get donations without pushback
Value Proposition
Week 3 Week 5
Resulting BMC changes (II)
Segment
Non-Profit:• All non-profits
Segment
ConsumerWeek 6
Resulting BMC changes (III)Consumer
Week 6
Consumer:• Targeted ads in line with customer’s tastes• Sense of empowerment
Cust. Relationship
Consumer:• Get: Charities send invitations
Cust. Relationship
Need to test this
✘
eCommerce Data & Insight Companies
Data aggregators
Online Donation Tools and Platforms
Slice, Clavis, Profiteero, One Click Retail, Profiteero, Return Path, Paribus?
Data Wallet, Datacoup, Infoscout, Axciom, Experian, LiveRamp, SuperFly
Razoo, CrowdRise, Causes, Survey Monkey, One Big Tweet, GoodSearch, AmazonSmile
Share&Tell
Marketing research agencies
TNS Qualitative, ,Conifer Research,Horowitz Research,Nielsen, Kantar, IPsos,dunnhumby
Our Competitive Set Has Evolved too
Removed through pivotsOnline Survey ToolsTraditional survey panelsOnline qualitative research
Behavioral Consumer Panels
(w/ or w/o surveys)
Nielsen, NPD, IRI, LuthResearch,VertoAnalytics, RealityMine, comScore
SHARE & TELL
ConsumerWeek 6
Nonprofits might not be the right route
What we did:
Interviewed 10+ nonprofits
Tested email campaign to 60
nonprofits to gauge interest
What we learned:
● Only nonprofits who value smaller donations (<$100) from larger base of people were interested in the model
● Nonprofits are slow to make decisions and risk-averse
So what?
Focus more efforts on testing viability of direct to consumer route.
Key hypothesis to test: Can we build enough trust through social media and website?
NonprofitsWeek 7-9
Non-profits may not be
most efficient consumer acquisition
path.
What we did: Tested ‘direct to consumer’ using a high fidelity MVP...
https://www.datadoesgood.com
ConsumerWeek 7-9
What we learned: ‘Direct to consumer’ might be a viable route
Arrived to the landing page
Clicked ‘donate now’
Logged in with Facebook
Shared Amazon data
Filled out demographics
100%
~18%
~6%
~6%
~5%
~80%
~95%
~55%
Choose a charity ~11%
~60%
25%
ConsumerWeek 9
Cost StructureFixed - Infrastructure, servers, team of data scientists, corporate sales force, project managers & analysts, product & user experience development team
Variable - Payment/donations for use of their data, consumer service reps
Revenue Streams1. Subscriptions to insights / platform2. Per-survey fees3. Custom research studies4. Linking data to client databasesPricing based on sample size/type, data type/amount, number of questions, feedback time
Key Resources
Key ActivitiesKey Partners
Value Proposition
Customer Segments
Customer Relationships
Channels
Consumers• Online shoppers• Current charity givers• Millennials• Existing research participants
Enterprises• Buyers at e-commerce retailers • Marketers at CPG with online sales
Nonprofits??• Hungry for donations and values small donations from large # of donors• Private donations are main revenue stream
• Donor acquisition??• Donor retention and engagement??• Data quality control• Data security and storage• Automated analytics• Custom analytics• Sales force• Legal
• Physical - workspace, servers• Additional human (short-term) - Full-stack software engineer, Database architect, Security consultant, Legal Consultant, Advisors/Industry Movers(long-term) - Sales team, Analytics team, Security team, Engineering team, Advisors• Intellectual - Trademarks, Contracts with clients, Proprietary analytic tools, Software copyright• Financial - angel/venture funding
Consumers• Website• Mobile app
Enterprises• Web portal supported by B2B sales force• Projects through market research & strategy firms
Nonprofits??• Web portal
Consumers• Get: Social media campaigns & charities send invitations• Keep: Reports / comparisons of your data Enterprises• Get:partnership,telesales,PR • Keep: Unique data, analysis• Easy and fast way to do itNonprofits??• Get: telesales, PR
Consumers• Feel good by donating data to charity• Donating is free & easy
Enterprises• Understand purchasing trends on Amazon by demographic group.brand preference
Nonprofits??• A new revenue stream• A new way to engage with donor base• A way to get donations without pushback
Short Term:• Charities/non-profits• Nonprofit hubs/associations• Legal• Other collectors of online purchase history
Long Term• Data API providers• Data aggregators• E-commerce retailers• Ad networks and programmatic ad buyers?
Final Business Model Canvas Week 10
So...what’s next...
We are going to continue working on this after the class.
Can we gain traction with consumers?
Several additional experiments we want to run incorporating feedback from our MVP.
● Facebook “nominations”● Linking more directly to causes● Many improvements to the MVP
Can we get a letter of intent from any businesses?
We continue to hear companies say they are interested and that this data is valuable. Is one willing to sign a non-binding letter of intent
First Priority Second Priority
Appendix
What we learned: Refined value proposition for enterprise...
Share & Tell…...helps better understand your target's online & omnichannel shopping & purchasing behavior
• What is purchased on Amazon.com?• What is my online/omni market share?
Why?• Where else does my target shop? Why?• What does my target do before they buy?
What is their shopping path? Why?• What products does my customer buy /
not buy? What do they buy with my product? Why?
...helps better understand your target's persona / where to reach them
• What online behaviors (sites, apps, etc…)?• What media consumption habits?• What do they search for online?• What activities, interests, hobbies?• What demographics?
...provides ability to more directly and narrowly communicate with your target
• Direct messaging / promos on S&T platform
• Better targeting on existing ad networks
EnterpriseWeek 4
...for 3 generic enterprise segmentsEnterprise
Week 4
Retailers
Traditional
E-Commerce
1
2
CPG
With online sales
Without online sales
3
What is market research?
Comes in many forms...
1. Surveys to understand consumer opinions / emotions
2. Data to understand market trends
Initial hypothesis:“disrupt” survey-based market research
A quick primer:How do surveys work?
What features do my
customers care about?
1 Business asks a question about their customer
What does my most valuable customer look
like?
What drives customer loyalty?
A quick primer:How do surveys work?
2 Market research team writes a survey that will inform the answer
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to
you?● ...
Survey
5 - 10 minutes of questions
10 - 15 minutes of questions
A quick primer:How do surveys work?
3 Survey sent to consumers through a ‘panel provider’
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to
you?● ...
Survey
$ / person
Panel ProviderMarket Research team
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to
you?● ...
Survey
A quick primer:How do surveys work?
4 Consumers answer survey based on their memory
Panel ProviderMarket Research team
Self reported data
A quick primer:How do surveys work?
5 Market research team analyzes data to develop an answer
Market Research team
Insight & recommended business action
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to
you?● ...
Survey
...Where we thought we fit in
4 Consumers answer survey based on their memory
Panel ProviderMarket Research team
3 Survey sent to consumers through a ‘panel provider’
Why can’t this be based on actual (vs. self reported) data?
Demographics● Age?● Gender?● ...
Behavior● Where did you buy?● What? How much?● ...
Emotions / Feelings● Why did you buy?● What matters to
you?● ...
Survey
...Where we thought we fit in
4 Consumers answer survey based on their memory
Panel ProviderMarket Research team
3 Survey sent to consumers through a ‘panel provider’
...let’s be a “next gen” panel provider that merges real data
with opinions
...Where we thought we fit in
What data?• Social media likes &
posts• Email purchase receipts• Credit card purchase
history• Amazon.com purchase
history• GPS location history• Web and search history
Opinions how?• Record short video /
audio clips• Take <5 min surveys• Write reviews• 1-1 text chats
Other learnings
Presenting
Share the key insights that led to a decision or answer.
Don’t just share the answer
Example: Equity IdeaWe learned a, b, & c...therefore we want to do “x”
VS.
We want to do “x”. Here is some rationale for why.
Preempt question the audience might ask and prepare
responses.
Don’t bullshit if you don’t know the answer. It’s okay to say need
time investigate it.
1 2
Group work1. Set up regular recurring meetings at least twice a week
2. Carefully consider if the task is best performed by a group or by an individuala. Everyone wants to participate in decision making, but it is often more efficient
if a single person completes 80% of the task and the group then finishes the rest
3. If there is any tension, discuss it explicitly
4. Don’t take criticism of your ideas personally
5. Humor helps
Launchpad Methodology/Process1. Applying the scientific method to business model is extremely
usefula. treating all ideas as hypotheses prevents attachment to bad
ideasi. also encourages rapid iteration to get to better ideas faster
b. using MVPs as tests of ideas rather than finished products avoids wasting tons of development time
2. Interviewsa. what people initially say is not what they would actually do
i. need to push commitment to see what they actually dob. interviews with experts are a quick way to get a lay of an
industryc. it’s surprisingly easy to get interviews with experts with a warm
intro, student status, and the purpose of learning as much as we can
d. need to clarify customer segment as early as possible to interview the right peoplei. early interviews should focus on figuring out who they are
Example 2:National Science Foundation Team
Disruptive Innovation
Continuous Innovation
Lean Means Getting Out of Your Office
Horizon 2
Horizon 3
Speed & Urgency
Lean
Steve Blank
• If you’re not talking to 100’s of customers, it’s not lean• If you’re not building iterative and incremental minimum
viable products, it’s not lean
Managing Three Horizons of Innovation - Current
Existing Business Model:Process Innovation
Execute
New/Disruptive Business Model
Search
New Opportunities viaBusiness Model Innovation
Execute/Search
Known
UnknownPartially known
Lean Innovation MgmtProcess Mgmt
Managing Three Horizons of Innovation - Goal
Existing Business Model:Continuous Innovation
Execute
New/Disruptive Business Model
Search
New Opportunities viaBusiness Model Innovation
Execute/Search
Known
UnknownPartially known
Lean Innovation Mgmt
Innovation Metrics
NASA
NASA/DOD Technology Readiness Level (TRL)
• Formal Way to assess project maturity• Quantify Relative Risks• Data Driven• Adopted by NASA, DOD, FAA, ESA…
NASA/DOD Technology Readiness: Levels 1 & 2
Basic Technology Research• Basic principles observed• Technology concept formulated
Concept
NASA/DOD Technology Readiness Levels 3 & 4
Research to prove Feasibility • Experimental proof of concept• Breadboard validation in lab
Research
Concept
NASA/DOD Technology Readiness Levels 5 & 6
Demo Prototype • Breadboard validation outside the building• System demo in real-world
Research
Concept
Demo
NASA/DOD Technology Readiness Levels 7, 8, 9
Deployment• System Development• System deployed in real-world
Research
Concept
Demo
What Can We Do With Customer Discovery Data?
The Investment Readiness Level
Investment Readiness Level
We can do the same for new ventures
Investment Readiness Level
We can do the same for new ventures
Emphasis is on data
Investment Readiness Level
• A Formal Way to Quantify Relative Risks• Data Driven• Analog to NASA/DOD
Technology Readiness Level (TRL)• Use IRL as a way to establish immediate
funding increments
Investment Readiness: Levels 1 & 2
Hypotheses• Value Proposition summarized• Canvas hypotheses articulated
Hypotheses
Investment Readiness: Levels 3 & 4
Problem / Solution Fit• Problem Solution fit• Low fidelity MVP
Hypotheses
Problem/Solution
Investment Readiness: Levels 5 & 6
Validate• Product/Market fit• Right side of canvas
Hypotheses
Problem/Solution
Product/Market fit
Investment Readiness: Levels 7 & 8
Validate• Left side of canvas
Hypotheses
Problem/Solution
Product/Market fit
Investment Readiness: Levels 9
Metrics That Matter
Hypotheses
Problem/Solution
Product/Market fit
Left side of the canvas
Technology Readiness Level
Problem/Solution
Hypotheses
Product/Market Fit
Validate Right side of Canvas
Validate Left side of Canvas
Metrics that Matter
InvestmentReadiness Level
Horizon 1 ProceduresMeets a Horizon 3 Project
Steve Blank
Horizon 3 Project
Horizon 1 Management
Horizon 1 Management
Horizon 1 Management
The Problem
Startups/New Corporate Initiatives Start as Innovation Engines
New/Disruptive Innovation
• Disruptive• Business Model Innovation
• Better/faster/cheaper
• Innovation requires no restrictions by plans, procedures or processes
• Success = finding a repeatable and scalable business model
• Grows and scales
Steve Blank
Horizon 3
Horizon 3 Needs To Leave Home
Process Innovation
Continuous Innovation
Disruptive Innovation
• Physically separate from operating divisions
• Company Incubator, etc• Their own plans, procedures, policies,
incentives and KPI’s• They operate with speed and urgency• Goal is to find a repeatable and
scalable mission model
Steve Blank
Success Creates “Debt”
Success creates• Technical debt• Organizational debt
• Refactoring “cleans up” debt by restructuring it Refactoring
Steve Blank
New/Disruptive Innovation
Type of Innovation
Innovation Becomes Execution
Process Execution
Disruptive Innovation
• Success means scale
• Scale requires plans, procedures, processes, incentives, KPI’s
• Innovation becomes execution
Refactoring Group
Steve Blank
Continuous Innovation
Horizon 3
Refactoring is an Integral Part of Innovation
Process Innovation
Disruptive Innovation
• Horizon 3 takes shortcuts • Technical shortcuts add up and
become what is called Technical debt
• People/process shortcuts are Organizational debt
• Refactoring “cleans up” debt by restructuring it
• You need a process organization dedicated to refactoring Horizon 3 projects
Refactoring Group
Steve Blank
Horizon 1
Type of Innovation
Innovators Leave or Start New Initiatives
Process Execution
Disruptive Innovation
• Founders/early employees don’t fit in execution organizations
• Short-sighted companies: innovators leave
• Far-sighted companies: they start the next cycle of innovation
Refactoring Group
Steve Blank
Continuous Innovation
Disruptive Innovation
“Get to Yes” Corporate support of Innovation in
All 3 Horizons
Process Innovation
Refactoring Group
Company support orgs
Steve Blank
• Task Support Organizations to work inside Horizon 2/3• Assign Finance, Legal, HR, etc.• Job is helping all Horizon projects “get to yes”• leverage existing assets and capabilities is critical
Disruptive Innovation
Company Incentives & GoalsIn support of Innovation in All 3 Horizons
Disruptive Innovation
Steve Blank
• Companies operate on goals and incentives• Incent mavericks, incent support, incent adoption
Process Innovation
Refactoring Group
Company support orgs
Company Incentives & GoalsIn support of Innovation in All 3 Horizons
Disruptive Innovation
Steve Blank
• Company operates on goals and incentives• Incent mavericks, incent support, incent adoptionIf there are no Horizon 2/3 incentives in the company then there is no real commitment to innovation
Process Innovation
Refactoring Group
Company support orgs
Company Incentives & GoalsIn support of Innovation in All 3 Horizons
Disruptive Innovation
Steve Blank
• Company operates on goals and incentives• Incent mavericks, incent support, incent adoptionIf supporting Horizon 2/3 is not part of Company goals & incentives then there is no real commitment to innovation
Process Innovation
Refactoring Group
Company support orgs
Positive – Financial Awards, Performance Bonuses, & Honorary Awards
Negative – You can lose product funding
Type of Innovation
Innovation Becomes ExecutionHorizon 1 Adopts Horizon 2 & 3
Process Execution
Steve Blank
Horizon 3 support orgs
Refactoring Group
Continuous Innovation
• Success means scale
• Scale requires plans, KPI’s procedures, processes, incentives
• Innovation becomes execution
Disruptive Innovation
Horizon 2
Horizon 3
Horizon 1
Intrapreneurs are (Good) RebelsBad Rebels
AngerPessimist
Energy-sappingAlienate
ProblemsVocalize Problems
Worry ThatPoint Fingers
DoubtSocial Loner
AssertionsMe-focused
Break RulesComplain
Good Rebels
PassionOptimistEnergy-generatingAttractPossibilitiesSocialize OpportunitiesWonder ifPinpoint CausesBelieveSocial
QuestionsMission-focused
Change RulesCreate
Source: Carmen Medina www.rebelsatwork.com
Horizon 3 Protects MavericksHorizon 1 Fires Mavericks
• In Horizon 1– Pains in the butt– Always looking at something different– Doesn’t get with the program
• In Horizon 3– The head of your innovation project– Invents your next capability
Why Innovation Fails
Shiny Objects• Tech founder becomes enamored with new tech (shiny object)• Company still dependent on Horizon 1 until new tech is adopted
Solution:• Make sure that $’s, people, and infrastructure are in place to
cross the Tech Transfer “Valley of Death”
Leadership is Focused on Now• Leadership managing for current business & quarterly earnings• CEO and/or mgmt incentives all on current mission and goals
Solution:• Align incentives• Appoint a Corporate Chief Innovation Officer
Innovation Is a Buzzword• Stop using it to describe everything
Solution:• Use the Horizon 1, 2 & 3 metaphor
Failure is Career Retarding• In a company a failed project is to be avoided at all costs• In a Lean organization failure is part of the process• Pivoting from a failure gets us learning
Bottleneck: The Intransigent MiddleTurning Go into No
• Top of the organization says, “Do it”• Bottom of the organization
(innovators) ready to go• Middle management kills it
– Actively– Sabotage– Benign Neglect
• Innovation programs die
Steve Blank
Innovation Groups Ready
Middle Mgmt Barrier
Executive Buy-In
GO
NO
Why the Bottleneck?
• Threat– Power, ownership, turf, prestige, pay
• Confused– Job spec’s are still the same– No training on how to support, participate
• No incentives to change behavior• No penalty for ignoring it
Steve Blank
Sales Freezes Talking to Customers
• Sales says “no one can talk to our customers”
Solution:• Customer Discovery is not pitching new products
Steve Blank
Engineering Is Not Talking to Customers
• Engineering believes innovation is about technology
Solution:• Focus the organization on understanding customer problems• Focus on solving current or future problems
Steve Blank
Towards New HorizonsRethinking the Enterprise
Towards New HorizonsRethinking the Enterprise
take best practices from startups and apply it to the corporation
Hor
Known Business Model
The Limits of Current Horizons
Evangelos Simoudis/Steve Blank
Horizon 1
The Limits of Current Horizons
189
Develop-ment
Research
Evangelos Simoudis/Steve Blank
Horizon 1
Develop-ment
Research
Business Units
Horizon 1The Limits of Current Horizons
Evangelos Simoudis/Steve Blank
Known Business Model
Extend the Business Model
The Limits of Current Horizons
Evangelos Simoudis/Steve Blank
Horizon 2
The Limits of Current Horizons
Develop-ment
Research
Business Units
CustomersCustomers
Customers
Evangelos Simoudis/Steve Blank
Horizon 2
The Limits of Current Horizons
Develop-ment
Research
Business Units
CustomersCustomers
Customers
Evangelos Simoudis/Steve Blank
• 90% of R&D dollars support existing products• Research = adv development to support existing products
Horizon 1 & 2
Known Business Model
Unknown Business Model
Extend the Business Model
The Limits of Current Horizons
Evangelos Simoudis/Steve Blank
Horizon 3
The Limits of Current Horizons
Develop-ment
Research
Business Units
CustomersCustomers
Customers
Evangelos Simoudis/Steve Blank
Horizon 3
Copyright 2016 Evangelos Simoudis
Research
DevelopmentBusiness
Units
In most companies, Horizon 3 research $’s are eliminated or outsourced
e.g., university funding, government labs consortia
Today R&D’s mission Has ChangedHorizon 3
Develop-ment
Research
Business Units
CustomersCustomers
Customers
Innovation Outpost(s)
and Inpost(s)
Solution = Innovation Outposts/Inposts
Evangelos Simoudis/Steve Blank
Innovation Outposts
Bus DevStrategy & Corp
Dev
Corp VC
Ecosystem Specific
R&D
Corp Incubators
Steve Blank/Evangelous Simoudis
Innovation Outpost• Standalone unit for Horizon 2 and 3 innovation • May contain as needed:
• Corp VC• Incubator• Specific R&D• Bus Development
Innovation Outposts
Bus DevStrategy & Corp
Dev
Corp VC
Ecosystem Specific
R&D
Corp Incubators
Business UnitsBusiness UnitsBusiness Units
Technology innovations
Business problems & context
Steve Blank/Evangelous Simoudis
Innovation Outpost
Business model & Technology Innovations
Spin ins
New Business Unit
StartupsStartups
Startups
Innovation Outposts
Bus DevStrategy & Corp
Dev
Corp VC
Ecosystem Specific
R&D
Corp Incubators
Business UnitsBusiness UnitsBusiness Units
Technology innovations
Business problems & context
Steve Blank/Evangelous Simoudis
Innovation Outpost
Spin ins
New Business Unit
• Outposts operate under many degrees of freedom• e.g., investments, incubation
• Launches many experiments (investments, incubated teams) inexpensively to test out innovation-related hypotheses
Innovation Outposts – Moonshot Support
Bus DevStrategy & Corp
Dev
Corp VC
Ecosystem Specific
R&D
Corp Incubators
Business UnitsBusiness UnitsBusiness Units
Technology innovations
Business problems & context
Steve Blank/Evangelous Simoudis
Innovation Outpost
Business model & Technology Innovations
Spin ins
New Business Unit
• Moonshot = large commitment of resources for a Horizon 3 goal • Requires H1 & H3 collaboration
NewUnit
NewUnit
As new business units created by the Innovation Outpost grow, they hire employees with different culture than that of the H1 corporate parent
H1 Corporation
ExistingBU
ExistingBU
Outposts Change the Culture
New Employees
Evangelos Simoudis/Steve Blank
NewUnit
NewUnit
NewUnit
New
Unit
ExistingBU
H1 Corporation
ExistingBU
2) augmenting the H1 corporation through their presence.
Outposts Change the Culture
Startups
Evangelos Simoudis/Steve Blank
Summary
• Lean Innovation Management is not about efficiency and innovation
• It’s about developing the capabilities necessary to offset competitors who may have equal or better technologies
• It’s how to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments
• It’s about survival in the 21st Century
Removing the Bottlenecks
• Prove that this can work• Then: Communicate, communicate, communicate
– Big idea – shared goal/mission– Strategy – big picture of how the pieces work together– Tactical implementation
• Update job specs to include innovation support• Change incentives to include innovation support• Shower those who came before with appreciation• Support those who try and fail and try again
Steve Blank
How to Start an Innovation Engine- 0
• Reorganize around Mission + Innovation• Each Horizon 1 division needs a Chief Innovation Officer
• Drives Continuous Innovation • Finds Horizon 2 opportunities• Starts and Funds 10x the new initiatives for MVP’s
• Company needs a COO of Innovation• Runs/funds Horizon 3 incubators with I-Corps methodology• Runs open innovation incubators• Provides staff and infrastructure support for Divisional Innovation
Steve Blank
How to Start an Innovation Engine- 1
• Adopt Common Language: Horizons, Lean, Pivots, MVPs, etc. • Identify Lean Innovation Vehicles
• R&D, Engineering, Incubators, Accelerators, etc.• Adopt Lean Product Development: Digital Services Playbook..• Adopt Lean Metrics: Hypotheses tested, Pivots, IRL, TRL, …
• Adopt Lean Funding: TRLs & IRL
• Adopt Lean Pedagogy: Lean LaunchPad/I-Corps
• Use Lean Mgmt processes– Agree how to “Hand-off” and “scale” small efforts (hard)– Develop organizational processes/procedures/incentives that support
innovation (hard)
Steve Blank
Start an Innovation Engine - 2
• Educate the company on Innovation – Communicate goals– Communicate process (hard)
• Everyone expects detailed specs like Horizon 1 - bad– Consolidate innovation efforts (hard)– Recruit teams (3-4 people)– Recruit mentors - one per team (hard)– Get divisional cooperation (hard)– Train the Trainers
Steve Blank
Start an Innovation Engine- 3
• Design Programs– Emphasis on speed, urgency, evidence, pivots– 1½ day “Train-the-Trainers”– 6/8-week “I-Corps” programs– Investments and adoption of H1 and H2 by divisions
• Run Programs
Steve Blank
Start an Innovation Engine - 4
• Rally around a mission not theory• Pick something everyone agrees is a good goal
and congruent with the company’s mission• Legitimatize the need for exploration and
exploitation
Steve Blank
Start an Innovation Engine -5
• Leadership that is capable of managing the issues associated with multiple simultaneous Horizons– Resource allocation– Incentives– Etc.
• Needs to balance a culture of risk taking, speed = mitigation, quick to opportunities, receptive to innovation
Steve Blank
Innovation at 50x
Steve Blank@sgblank
www.steveblank.com
2/1/16