14 tips to entrepreneurs to start the right stuff
TRANSCRIPT
Doing the Right Thing is the essence of entrepreneurship
Universität St. Gallen, START 2016 Patrick Stähler, fluidminds – the business innovator
What do the colors mean?
Beyond optimization of the past
We have to unlearn the past and rethink our business from the customer perspective.
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Is Kodak innovative? What were the tacit assumptions behind Kodak’s innovations? Take 5 min and discuss it with your neighbors.
Take-aways are in red
Exercises and questions for you
§ Dr. Patrick Stähler, Mr. Business Model Innovation
§ Founder & Partner von fluidminds GmbH, the business innovator, Zürich & Sydney
§ fluidminds invents and designs businesses
§ Example: Experteer.com (career portal) was founded with the help of fluidminds
§ »Inventor by chance« of the business model innovation concept during my Ph.D. at the University of St. Gallen.
§ Blogger on Blog.business-model-innovation, keynote speaker worldwide.
The times they are a-changin’ Today, we live in a world of too-much of everything. We have everything 100 times.
A recipe for successful entrepreneurs Follow the recipe and you will be successful! ���Your success is guaranteed! Guaranteed!
Sorry. There is no easy recipe. Good entrepreneurs but the customer in the middle of their thoughts and the value they create for customers..
Give Meaning to customer is the core to any good business
The reality: Nobody is waiting for you!
We have too much of everything.We have too much choice!We get bombarded by ads and PR!
500,000,000 182,500,000,000
How do you get heard in this noise of information?
Tweets per day
Tweets per year
Is Kodak innovative? What were the tacit assumptions behind Kodak’s innovations? Take 5 min and discuss it with your neighbors.
A good product is not enough
Bringing innovation to the market is not enough. Finding a business model your customers love is the real challenge
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What was one of the most successful aid programs for the developing world?*
*Actually, it has nothing to do with governmental aid or NGOs.
Which innovation expanded the global market for mobile communi-cation the most?*
* After the invention of the mobile telephone system itself.
„Wow, I have invented the future of advertising. We do not need any videos or pictures or even color anymore.
The future will be a text ad with maximal 95 characters.
It‘s brilliant, isn‘t it?
Would you have dared to say this?
§ Instead of looking at better products, Google Adwords brought back relevance to the ad industry
§ Google is blamed to be the killer of newspapers
§ Sales around 43 bn. USD
Really good ideas defy the accepted rules of an industry. Rethink from the customer perspective the business
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The best is if your customers love your innovation due to your fantastic value proposition and and your ability to deliver what you promise
Being just a bit better is not enough. You must have a clear and noticable unique-ness and magic. That’s your WOW!
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Customer job to be done We have to learn to unlearn. We have to learn to see beyond the product and understand what the customer really wants. Customer needs are to imprecise. Let’s talk about jobs-to-be-done.
Ready to unlearn?
Actually, accountants are just one mean to get our books done, manage cash or get expenses ready for taxes.
Customer job to be done We do not need a hotel. We need an accommodation plus extras like connecting to people. That are the jobs-to-be-done. 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 provide accommodation plus extra benefits like connecting to people. Potential solution: § 3* hotel § Formule 1 Hotel § AirBnB (accommodation
plus connection to people) § friend that lives in the city
It is of uttermost importance to understand the core job we solve for our customers
Start dreaming from badly solved jobs-to-be done of your customers. Use technology. Innovate your business model
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But he sold packaged servicesTetra Pack is not a product innovation but an implementation of an innovative business model
product/technology value
creates
X
business strategy
enables
defines
business model
Technology or a new produt does not create value. It is the business model
4 elements of a successful business:
What excites our customers?
Value Proposition
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How do we create value for our customers?
Value Architecture
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How do we earn money?
Revenue Model
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Who is on our team? What values do we pursue?
Team & Values
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product/services happy customers
creates
X
value proposition
solves
delivered by
business model
The customer perspective: A product does not create value. It is the value proposition the customer loves
job-to-be-done
addressed by
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?
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Customer job to be done Is it easy to put a Christmas tree straight up and keep it there safely and green?
Value architecture
Offer • What is our offer?
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 activities do
we have to do to produce our offer?
• How does our value chain look like?
Partner • What partners do
we need?
Core Capabilities • What are the core
capabilities we need?
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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?
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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?
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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?
OfferWhat is our offer?
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
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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?
OfferWhat is our offer?
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
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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 Geberit’s 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
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
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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!
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Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
Why plumbers love Geberit?
• Plumbers Job-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 mgm’t
• 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
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The Hotel Exercise
Innovate the hotel industry and design a hotel. Chose from the following hotel segments • Hotel in City • Holiday resort • Hotel for Seminars
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
different option
6
Build & Learn - execute business model - learn continuously from
customer feedback and control KPIs
- adjust and refine continuously the business model
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
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
different 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
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture Use the canvas to develop your business model!
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
Where do we get a Value Innovation from? Let‘s find new customer insights as a starting point
Business model innovation
New value proposition
Customers’ insight
Customer Insights Do you want fast delivery of the goods you order online?
Is asking customers the right approach?
Customer Insights Is faster really better? Or was this already the wrong question. What would be the right question to figure out the importance of time in the delivery process?
Is asking customers the right approach?
CustomersWho are our customers?What job do we solve for our customers?
Value PropositionThe best way is to start with the job we solve for our customers?
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Many customers have the job-to-be-done to fix something to the ground. Once Krinner provided a solution many new application were found
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 buyer‘s utility cycle?§ Can we do more for the customer?§ Can we leave something to the customer?
Where can I start in the buyer utility map? – ���The Dyson Vacuum Cleaner
DisposalService Complements Use DeliveryBuy
CustomerProductivity
Simplicity
Usability
Risk
Image & fun
Enviromental friendlyness
++
Starting���Points
Dyson = value
innovation
Dyson vacuum cleaner – inspired by technology The vacuum cleaner for men
Customer Insights§ Bags and filters get clogged and restrict
airflow. Loss of suction§ Vacuum cleaners are marketed as
household aids. Are there different segments?���
Value Proposition for customers§ Dyson vacuum cleaners have NO bags
and do NOT get clogged due Cyclone technology. Therefore, NO loss of suction.
§ Dyson positions itself as technical, highly engineered products that address men.
Revenue Model§ Dyson demands premium prices for its
vacuum cleaners.
Dyson =
Value Innovation
Blacksocks – we save the world from socks problems
DisposalPutting���in pairs Washing Use DeliveryBuy
CustomerProductivity
Simplicity
Usability
Risk
Image & fun
Enviromental friendlyness
Starting���Points
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
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.
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
Building trust by very personal reviews (peer-to-peer social control mechanism plus insurance coverage)
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
• 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 offer 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 offer
Help find right spot
Match needs &
offer Payment
& GTC Reputation
& Trust Mgmt
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
• Customer (Travelers) Job-to-be-done • Finding a special place to
stay • Getting to know the
hidden gems of destination
• Offer very special places that cannot booked anywhere else
• Connect with locals that share their insights
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
• Households that offer 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?
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Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture
• 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 offer 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 offer
Help find right spot
Match needs &
offer Payment
& GTC Reputation
& Trust Mgmt
Asset light business model
You do not need to own a place to provide awesome locations
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Understand - understand the current
solutions and their strength & weakness
- understand how the potential customer thinks and decides
- understand the market & market mechanism
Your point-of-view why you must exist:
...............................................
...............................................
...............................................
...............................................
...............................................
3
Ideate Develop as many ideas as possible in the area of - customers/ value
proposition - value architecture - revenue model
Think in options. Your current idea is not the only valid one. There are better ones. Search for them. Iterate
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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
Customers
Customer Benefit
Offer
Value Chain
Core Capabilities
Distribution & Communication Channels
Partner
Business Model:
Cost Structure Revenue Sources
Team Values
Revenue Model
Team & Values
Value PropositionValue Architecture Use the canvas to develop your business model!
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
different option
Fast learning what works with rapid prototyping of your minimal viable business model is the key to success
12
6
Build & Learn - execute business model - learn continuously from
customer feedback and control KPIs
- adjust and refine continuously the business model
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
different option
6
Build & Learn - execute business model - learn continuously from
customer feedback and control KPIs
- adjust and refine continuously the business model
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
different option
6
Build & Learn - execute business model - learn continuously from
customer feedback and control KPIs
- adjust and refine continuously the business model
Every startup is an iterative process with fast learnings and many pivots