Flemp:

Design Innovation MethodsIndividual Assignment

Mathias Verheijden - 1234306

Question 1Use the Business Model Canvas to analyze the current status of your design.

For this assignment, I chose to use the design research prototype from my project 3 called ‘Flemp’ (Nachtegael, et al., 2019). Flemp is an ambient lighting device, that is meant to improve meeting experience and progression. The small design, as seen in picture on the cover, gives subtle light signals about the meeting progression, which live in the periphery of the meeting participants. Based on the meeting agenda, users enter the aimed for meeting duration, amount of subjects to discuss, and the rough duration of each subject (short, medium, long). Based on these variables, Flemp will calculate the available time for each subject. For each subject, the LED-ring of the device will then ‘fill up’ according to the corresponding time. When the time is up, the lights will start blinking, indicating that the group should finish the subject. This creates a distributed, social control over the meeting. When something takes too long for example, participants can refer to the remaining time and say that things should be sped up. To go to the next subject, users can press the button in the middle. When a subject is finished before the time is up, the remaining, unused time will be distributed over the remaining subjects, relative to their length. When more time for a subject is used than available, the extra time is subtracted from the remaining subjects, relative to their length.

What is important to note, is that a user interface to insert all the settings for Flemp was not developed during the project. However, if we would pursue Flemp as a business opportunity and actually develop it, we would of course also develop the software. This will be something like a mobile or desktop app, with which users can set up the physical device.As the results from our research paper pointed out, the concept actually worked! Flemp had a significant, positive effect on the meeting progression experienced by the participants (Nachtegael, et al., 2019). In fact, the design worked so well, and feedback was so positive, that I feel there is some real market potential for Flemp. Therefore, I chose to use this design for this assignment, despite it being a research prototype.

However, since Flemp was meant as a research artefact, nearly no time was spent on thinking about business strategies. Due to the overwhelmingly positive feedback from research participants, some very brief ideas about selling it as a product were shared, but were never elaborated or made concrete. Basically, we only really talked about who we could target with our design, and what we could offer those people. I put that information under the customer segment and value proposition in the business model canvas, and filled in some of the empty blocks on a very basic level. I decided to not go more in-depth for this original model, since that would no longer represent “the current status of your design”, as they business plan was originally unexplored. For the remainder of the assignment, I will see this business model as that current, original status.

Since the rest was not really explored in the project, I see the value proposition and the customer segments as the key elements of this business model, which I will further elaborate on. As mentioned before, Flemp could offer customers a way to make meetings more progressive, resulting in a better experience for the participants . Because of this, less time is wasted during the meeting, resulting in a decreased total meeting duration. In short, the research outcomes clearly showed the value we could offer customers. Although these values might be useful for any particular meeting, we did not want to focus on ‘anyone who has a meeting from time to time’. We reasoned that people who only meet incidentally, the value proposition would probably not be relevant enough to buy a dedicated meeting device. Instead, for people who are used to meeting regularly for their work, the added value and benefits from each meeting would add up, which would make their work significantly more pleasant in the long run. That is why we chose those people as our customer segment.

As I have learned from this course, we made a major mistake here. By choosing this customer segment, we assumed that our user is the same as our customer. In reality though, people who want to use Flemp in their work environment, probably do not want to buy their

own supplies. Instead, it usually is the company that buys supplies for its employees. Therefore, I figure this would be the same for Flemp. This changes the market approach from business to customer (B2C) to business to business (B2B). When taking something like ‘companies whose employees regularly participate in meetings’ as our new customer segment, suddenly the value proposition is not relevant anymore. In other words, the value proposition is still relevant for the user, but not for the customer per se. Therefore, an additional value proposition should be created that targets the customer instead of the user.

As said before, the rest of the original business model had no real strategy behind it, due to the project having a research nature. It is therefore not relevant to further discuss them in-depth. In the remainder of this assignment, I will develop new strategies for this product, inspired by the knowledge and examples shown in this course.

Apply the Get-Keep-Grow method to refine your strategy on customer relationships.

For a successful get-keep-grow strategy, we have to know our customer segment, and our value proposition. Since I already decided to focus on ‘companies whose employees regularly participate in meetings’, I need to define what value Flemp can bring to these customers. First of all, time equals money in the business world. By making meetings shorter and more progressive, employees can spend more time working on other things, and are less exhausted after the meeting. As can be read from out paper, Flemp decreased the total meeting duration with up to 50% (Nachtegael, et al., 2019). Let’s say all meetings in a company are shortened by even 20%, the labour costs can be significantly reduced. Reducing costs is therefore the first and main value proposition.

Secondly, since Flemp collects data about meetings like total duration, subjects, and subject duration, it creates a very large dataset that could give valuable insights to a company. What subjects require a lot of time and need extra attention or employees? Are there teams that spend much more or less time on meetings than other teams? And why is that? These questions can be answered by the data generated by Flemp. Getting valuable data about meetings is the secondary value proposition.

GETGetting customers is done by offering companies a small number of Flemp devices for free. To approach them, we use cold-calling and cold-emailing. We ask their employees how long their meetings usually take, and give them a Flemp device to try out for one month. This has very low threshold for the company, but allows us to easily reach the user. By doing this, we can create a double-sided customer acquisition strategy. From the one side, we let users experience the benefits of Flemp, after which they can then share that experience with the company. See it as internal word-of-mouth marketing. From the other side, we use the data Flemp collects and compare that with the

average time the meetings normally takes according to the employees. We can then show the company that Flemp has a real impact, and discuss the cost benefits it could deliver. By doing this, the benefits we claim Flemp to have are actually supported by real-world data, and by the employees’ experiences. I think that when the claims from an outside company are supported by your own employees and your own real-world data, you are much more easily convinced.

When Flemp would be in a further stage, having multiple customers, an additional get-strategy could be applied. At this stage, with an increasing amount of users, we could gather increasingly accurate data about how effective Flemp’s benefits are. These statistics can be presented and marketed through social media (LinkedIn) and our own website, along with experiences and reviews from existing customers. In the advertisements, we offer the option to do the pilot test like in the original get-strategy. With this additional strategy, we can reach a far larger public, while still offering real-world experiences and (non-privacy sensitive) data as proof for the concept. By making the pilot-test free and very low threshold, this additional get-strategy is meant to get companies to try our product, without the need of having to approach them ourselves.

KEEPAfter we have convinced a company of Flemp, I want to make sure we keep our customers; making sure it was not a one-time transaction. I want to show companies that we are in the business of making their work more efficient, instead of being in the business of selling an many devices as possible. To achieve that, we send the companies monthly newsletters containing fun/interesting statistics about their own meetings, fun/interesting tips and facts about meetings in general, as well as future plans for the development of Flemp. The fun/interesting facts are meant to create engagement with the product and awareness about users’ improved meeting progression. In other words, we want to consciously associate users’ positive, improved meeting experience with Flemp. The future plans section of the newsletter is based on a platform that we create for users and customers to give feedback and suggestions. On this platform, people can like/upvote other posts. We can then decide to adopt the most-liked features, and notify our users and customers in advance. The feedback will probably come the most from our users; the employees. However, when they really like the product because we listen to them and improve it, our customers, the companies, will see that too. It shows our existing customer base that we are still working on trying to improve their meeting experience, and thereby reducing their costs.

GROWWhen companies buy Flemp, the value proposition of reducing meeting time and therefore costs becomes available to them. The second value proposition of getting valuable data about meetings is used as a grow strategy, partly overlapping with the keep strategy. As mentioned before, the statistics in the newsletter are just fun/interesting snippets of data, meant to create engagement. However, no key insights or valuable data is shared. The second value proposition will be

Question 2

offered as a subscription service. In the newsletter, there will be a “See more”-like button under the statistics. When it is clicked, users are presented with a description of the service, the added value it could give, and a way to subscribe. In short, we create curiosity in the keep stage, of which we take advantage in the grow stage; we are cross-selling to our customers.

In a further stage of Flemp, when it has gained trust among multiple users, we can start offering referral programs. We ask companies to recommend Flemp to their relations directly, or publish something about Flemp on their social media for example. In the end, when we acquire new customers through existing customers, the existing customer will get an additional free trial period for the statistics subscription, which again helps with cross-selling. When they already have a subscription, customers get a discount. Because of our free trial period, new potential customers that hear about our product are probably less hesitant to approach us. If they are not immediately convinced by the company that referred them to us, they can always try the product for free. This increases the chance that we get our product in the hands of employees, who can help convincing the company.

Additionally, we can create a set of big data that is gathered across different companies to gain new knowledge and insights about meetings in general. By collaborating with existing experts, we can create valuable expertise and theory on meetings that is based on real-world data. We can then use this expertise to host workshops and lectures at companies to improve their meeting progression and efficiency. These workshops and lectures could then also serve as marketing channels for the Flemp concept. So after we share our expertise and knowledge, we can offer a device that helps companies to put it into practice.

CHANNELSSince Flemp is a B2B-specific product, which is sold through direct contact with the customer, sales will not go through a retailer channel of any sort. Instead, the product will be sold through our own website and direct contact. I feel this also strengthens the relationship with the customer, since you become a centralized point of contact for all aspects like sales and support. There is no retailer in the middle that puts a gap in the relationship.

Develop alternative revenue streams and estimate how much you could gain with each stream per year.

In the original business model, the only revenue stream came from single product sales. This revenue stream is still present, however a new revenue stream from the statistics subscription is added. The initial revenue from the company will come from the direct product sales, as those are used to get potential customers familiar with our product, as said before. In accordance with the get-keep-grow strategies, the revenue streams will presumably become more balanced in terms of sales numbers, as we more often try to cross- or up-sell new customers with the statistics subscription.

Next to the product sales and subscription, the workshops and lectures discussed in the grow strategy could possibly be seen as the third revenue stream. In that case, we would see our knowledge as a product that we can sell. However, we would probably decide to solely use the workshops and lectures as a customer acquisition channel for Flemp. In that case, they would not generate any revenue.

PHYSICAL PRODUCTSince the Flemp device does not really have any competitors as of this moment, I figured to estimate an appropriate revenue by determining the costs, and then adding a margin. Since it is not really in the scope of this assignment to call manufacturers and transport companies to calculate costs, I decided to estimate the costs of the physical device by adding up the retail prices of all components. Since I am using retail prices instead of pre-market prices, I try to compensate for the fact that I have no knowledge about the costs of large volume manufacturing processes or shipping for example. The necessary components are an ESP32 (Tinytronics, n.d.-b), an LED-ring (Tinytronics, n.d.-c) and a battery (Promostore, n.d.), with a combined cost of €25,96. We add an additional €3,00 for the internal wiring (Tinytronics, n.d.-a; Allekabels, n.d.). For the housing of the device, we originally had 3D printing in mind. In the project, we eventually used MDF laser cutting, but for a real product 3D printing would be better. To estimate the printing costs, I made a rough 3D model of Flemp which I sent to a fellow student that has a 3D printing company (Bananaquarium, n.d). He made an estimation of about €15,00 for the printing costs, including all aspects like material-, machine- or even energy costs. These costs might be slightly higher than normal, since it is based on a single, low-volume order, but as mentioned before, this might compensate for the fact I am not able to make a good estimation for aspects like manufacturing, packaging, labour or shipping. Combining the numbers above gives us a total cost of €43,96. To aim for a good profit margin, and to take into account that we have other costs which are not directly related to the physical product, I set the price at €60,00. I feel this is a very reasonable price for a product that can quite significantly reduce a company’s costs.

SUBSCRIPTIONJust as for the physical device, I was not able to find any direct competitors for the statistics subscription. However, there is existing software that helps to increase meeting progression, like pinstriped.com, stratsys.com, or getminute.com. What these programs have in common with our subscription service, is that they also save metadata from meetings such as the subjects (agenda), duration of subjects, total meeting duration, and attendees. Therefore, they also have costs on data collection and storage, just as we would. However, whereas they have costs on developing and maintaining features like adding notes or documents to meetings, we would have to develop and maintain features for getting user friendly statistics and recommendations. Since this assignment is a revenue estimation, rather than a calculation, I make the bold assumption that our software would roughly have the same running and developments costs as theirs. All the examples mentioned above charge a monthly

Question 3

fee per meeting organizer, where Pinstriped charges $5,00 (Pinstriped, n.d.), Stratsys charges $30,00 for 5 organizers and $10,00 for additional organizers (Stratsys, n.d.), and Minute charges $7,49 (Minute, n.d.). In our case however, we would not charge a fee per meeting organizer, but per Flemp device you would like to see statistics from. Not taking into account the ‘additional users’ from Stratsys, we come to an average of $6,16, which I will round up to and convert to €6,50. Assuming the other companies use their price to cover the costs and have a profit margin, I will use this number as the price and revenue for the statistics subscription.

REVENUE SIZEInitially, these revenue streams will not be pursued to be as large as possible. Instead, Flemp would start with a small team of four founders; two designers and two developers. In this very early stage, we would develop and manufacture the products ourselves, serving our early sales. The investments of a simple 3D printer and a simple web server, as well as the materials for the physical product as relatively small and can be made by the founders privately. This strategy reduces costs in terms of a manufacturing partner for example. It also allows to easily respond to customer feedback make quick pivots, both in the design, business model. As we have found the right configuration for all of those aspects, the sales and revenue increase, and the business grows, we can start outsourcing the manufacturing of the design and the hosting of the database. By doing this, it becomes more difficult to make rapid changes to the business and design. Therefore, it makes sense to scale the business after

the right configuration is found and a stable revenue stream is created. In the next part, I will describe the business model as I envision it for the next five years. As might be expected, this business model will presumably change or pivot throughout the development of the business.

Revisit the whole Business Model Canvas and make the second version you plan to proceed in the next five years.

Prior to this section, the value proposition, customer relationships, channels, revenue streams, and customer segments have already been discussed in detail. Therefore, I will not discuss those subjects here. For any clarification on those blocks, please refer to the previous sections of this assignment. However, I did make some slight changes to the new customer segment I as seen in the business model, where I specify the size of the teams and the length of the meetings for the companies we are targeting. Given my experience from the research project, I feel this segment has the most benefit from Flemp.

As mentioned before, the value proposition consists out of two parts; reducing cost and getting valuable insights from meeting data. I will explain how I use the partners, activities and resources to configure each value separately. Combined with the get-keep-grow strategies discussed earlies, this section should give a specific explanation on the envisioned business strategies.

Question 4

MAIN VALUE PROPOSITIONThe main value of ‘reducing costs’ is the direct result of employees using Flemp. As explained in the previous section, we start out on a small scale in the early stage, where we would work with a team of two designers and two developers. This is where we create and gain the key resources for the Flemp device; the physical design and the software. By manufacturing and developing the product by ourselves in this stage, we can quickly iterate and improve based on customer feedback, which brings me to the key activities. The first activity is directly contacting our customers by means of cold-calling, cold-emailing, or just showing up at the front door where we ask for a meeting. This is to get our product to the customer. As described in the get-strategy, we would offer them a free trial with Flemp. In a physical sense, we would send our product to the customer by partnering with PostNL, a well-established, go-to postal service in the Netherlands. The free trial allows for us to carry out the next activity of collecting and implementing user feedback from the trial participants and, eventually, customers. As described in the keep-strategy, feedback would be gathered through our website, which offers a dedicated feedback platform. We will partner with Amazon AWS for hosting, since their services are easily scalable, flexible and reliable. Using feedback to quickly improve the product helps us to further configure the value proposition of reducing costs, and shows our customers we care about making their work more efficient; thereby realizing our value proposition. Therefore, the customer feedback is seen as a key resource. To make sure users and customers know their feedback is listened to, we will keep them up-to-date about future development plans in a monthly newsletter, which is the next key activity. When we are implementing direct suggestions from our users or customers, we will also publish their name and the company’s name in the newsletter, which will encourage others to also post their ideas and feedback.

When the company, sales and revenue have grown, the manufacturing will be outsourced to handle the sales volume. It is difficult to be specific with which manufacturer we would partner, as that would require to call and compare different manufacturers from different countries, to estimate the costs and practicalities for our specific product. Therefore, I deem that to be out of the scope of this assignment. What I can say, is that we would follow a low overhead strategy, where demand is carefully monitored to determine supply. This has two benefits: 1) when we want to make design changes based on customer feedback, we are not left with a pile of ‘old’ products, and 2) by not having to pay for a large stock of products before they are sold, we can reduce risk and costs. Since we have a B2B product, I feel we are not so dependent on the ‘ordered today, delivered tomorrow’ pressure like most B2C products are. This makes having a low product stock possible.

With an increased sales volume, the ‘running part’ of running a business also becomes larger. There is more feedback, more orders and more problems with products for example. Therefore, we would start hiring

employees, which are the final, human resource for the main value proposition. These employees would handle the increasing ‘running activities’ like customer support.

SECONDARY VALUE PROPOSITIONThe secondary value proposition of ‘getting valuable insights from meeting data’ is realized through the statistics subscription as mentioned in the growth stage. As mentioned above, the first key resource; the software to collect and analyze the data, will be developed in the (pre-)early stage of the company. The equally important, second key resource; the collected data itself, is gradually gathered and created throughout the usage of Flemp. The more Flemp is used, the more data it will generate, making the statistics more and more accurate and relevant. For that reason, this value proposition is offered in the grow-strategy instead of the get-strategy, as it takes time to gather the required key resources.

Getting the statistics subscription to the customer is achieved with two key activities. The first activity, similar to the physical device, is cold-calling or cold-emailing our existing customers. There, we would explain how the statistics would be valuable to the company, and show them some examples. Strengthening our arguments with their own real-world data makes it easier to convince companies to subscribe. The second activity to approach customers is like I explained in the keep- and grow-strategy. In the above mentioned newsletter, we would send basic, yet interesting statistic insights to get a company’s interest (as we would in a cold-call or -email). Below that, we would place a “See all”-like button, which opens a window with all benefits from the subscription and a way to subscribe. Again, this tries to convince customers with their own, real-world data.

A third key activity, to get but both value propositions to the customer, is hosting workshops and lectures about meeting progression at companies. To establish this, we would partner with leading experts on meetings and communication. Combining their expertise with our big data set, allows us to create a very accurate and up-to-date set of knowledge that we can share during those workshops and lectures. At these events, we can market our product with which companies can improve their meetings even further, and get valuable insights about them. Although we could charge money for these events, I feel it is best to use them as customer acquisition channels and make them free. This would be an activity in a later stage of Flemp, when we have gathered enough resources and made a name for ourselves. Otherwise, both companies and meeting experts would perhaps not recognize our knowledge. Therefore, deciding who we would partner with is not really relevant at this moment, since it would depend on which people would be interesting to work with in a further stage.

As mentioned before, we would buy a simple server to collect and analyze the data in the early days. However, when the sales volume and product usage increases, we will expand our partnership with Amazon AWS to also host our database for the same reasons we host our website and feedback platform there.

Something to keep in mind for this partnership is the aspect of privacy. Since we would store, although not personal, company data on external servers, we would have to make a very strict agreement about how the data is stored and protected.

In the next segment, I will explain how we will test and validate the product-market fit, which we can use to either pursue or change the current business strategies.

Make a plan on how will you test your business model and validate the product-market fit.

Although the strategies behind the business model were elaborated quite extensively, some assumptions were made, especially with regard to the product-market fit. To test whether our business model is able to achieve a product-market fit, I drafted three hypotheses that need to be validated in a sequential field test with different stages:

1. Companies in our customer segment are willing to try our product for free, based on the value proposition of reducing costs.

2. Companies that have tried our product are willing to buy it for €60,00 or more (because they see the added value).

3. Companies that would buy the product would also buy a statistics subscription for €6,50 per device per month, based on the data and possibilities we show them.

The reason it will be a single test with multiple stages, instead of multiple sequential tests is that the above mentioned hypotheses are dependent on the companies that meet the previous hypothesis. Therefore, each stage aims to validate one of the hypothesis. As mentioned before, we would develop and manufacture the product ourselves in the earliest stage, using our own 3D printer and web server financed by the founders. However, since we are just testing the product-market fit, we could also develop a minimum viable product (MVP) like the MDF prototype used in the research project. This significantly reduces the costs and risk of buying an unnecessary 3D printer.

FIRST STAGEIn the first stage, we approach as much companies in our customer segment as we possibly can by cold-calling, cold-emailing, or even showing up at the front door. The point here is not to set up a free trial for all of those companies, but to get an estimate for how much of our customer segment is at least interested in our product. How far can we reach with our product? Additionally, this also validates the get-strategy, showing if a free trial works to get your product in the hands of users. If there is low to no interest, we know we have to either pivot or perish our business model or product. If there is medium or high interest, we can proceed to the next stage.

SECOND STAGEIn the second stage, we would buy simple web server financed by the founders, and start making the actual

product. A simple MVP of the software and data-collection platform can already be developed before and during the first stage. However, by buying the webserver after the first stage, we do not risk buying unnecessary equipment in case there is no market interest for our product. The same goes for the physical MVPs; we start making them after we confirmed there is enough interest. Since we already made a working version for our research project, making a test version should not take too long.

Similar to the get-strategy, we deploy the MVPs for one month at multiple companies. Before the test starts, we ask employees how long their meetings usually take. Then, during that month we regularly gather the employees’ experiences, as well as the data the Flemp produces. When the test period is over, we provide the company with a comprehensive, yet concise report of the amount of time Flemp saved, and the experiences of the employees. At that point we ask companies: 1) if they are willing to buy Flemp, and 2) if yes, how much they would be willing to spend on it. If the answer to the first question is mostly no, our product does not offer enough value for our customer segment and we should pivot or perish our business model or product. If the answer to the first question is mainly yes, but the amount they mention for the second question is mainly (far) below €60,00, we should try to reduce our price to that amount by pivoting our cost structure or entire business model. If that is not possible, we should perish our business since our price is above the willingness to pay. If the answer to the first question is mainly yes, and the amount they mention for the second question is mainly at least €60,00, we have validated the product-market fit for the physical Flemp device, which offers the main value proposition of reducing costs.

THIRD STAGEIn the third stage, we provide a comprehensive, yet concise report about the interesting data we have collected throughout the test month. The report also explains how this data could be valuable to the company. We would then ask: 1) whether they would by a subscription that provides this data in a clear way, and 2) if yes, how much they would be willing to spend on it per device per month. Similar to the physical product, we validate product-market fit if the answer to the first question is mainly yes, and the amount they mention for the second question is mainly at least €6,50.

If the physical device has product-market fit, and the subscription does not, the business model could still be viable when it is pivoted to only focus on the physical device. It is important to note that it could also happen that the physical device does not have a good product-market fit, while the subscription does. Perhaps after hearing about the subscription, a company could change its mind about the physical device. If that is not the case, selling the subscription without the device would not be possible since the former is dependent on the latter. In that case, the meeting progression software I mentioned in the revenue estimation would be more fitting. The new business model I drafted would therefore not be viable in this case.

Question 5

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