vernon’s razor ©2007 patrick vernon busi 506 new venture analysis class 2 value proposition

Vernon’s Razor©2007 Patrick Vernon

BUSI 506New Venture Analysis

Class 2

Value Proposition


Imagine: Medieval Europe

WeatherZillow


Occam’s Razor Example

Solution A – 70%

Solution B – 90%

Solution C – 100%

Separate red circles from blue squares.

Effective? Replicable? Scalable?


Analogous to Business Planning

• Design prototype• Refine manufacturing process• Identify target market• Analyze competitive

landscape• Create financial model• …


or

Occam’s Razor for Business Plan


Go or No-Go?

Vernon’s Razor


Go or No-Go?


Vernon’s Razor1. Value Proposition2. Market Potential3. Return4. Team5. Competitive Advantage6. Business Model7. Customer Pain

DefiningOpportunity

MinimizingRisk


Value Proposition

• Your new venture should make the world a better place = you are creating value

• VP is brief description of the value that you will create with your new venture

• Begin thinking of your idea in terms of the value they create


Value Proposition

Kawasaki – 3 Ways to Make Meaning

• Increase quality of life

• Right a wrong

• Prevent end of something good

• video


Value Proposition• Riozen Video: get to VP quickly

– Goal is to get to next step– “Elevator Pitch”– Effective communications

• Kawasaki: make mantraWho is the mantra for? Customer? Employee? Investor?

Partners? Suppliers?

• Dilbert


Components of Good VP

• Problem solved (#1)

• Size of problem

• Target market

• Competitive advantage

• Team


Bad VPUniversity Biodiesel recognizes that reliance on petroleum to fuel our

nation’s vehicles is problematic in that domestic production is decreasing, and the petroleum that remains globally is increasingly difficult to extract. Dependence on foreign sources is also inherently costly, insecure and politically undesirable…

UniBio will address this opportunity through an integration of UNC-Chapel Hill (UNC) resources.

1. We will recycle waste vegetable oil (WVO) from UNC dining facilities

2. We will establish a collection system to likewise recycle WVO generated by the broader UNC community.

3. The biodiesel production facility and collection system will serve as educational resources, engaging and empowering faculty, students and staff in being part of the solution to an impending energy transition.


Good VP• University Biodiesel offers an educational

and operational package that allows universities to save cost on fuel and reduce greenhouse emissions by recycling waste vegetable oil into biodiesel fuel for use in university vehicles while teaching students the importance of environmental responsibility.


Bad VPCustomer service and efficiency best practices are defined by forward

thinking corporations who drive differentiation by their speed, flexibility and quality of service. Providing high levels of service (and “touch”) while driving profitability requires communications-enabled technologies. Such technologies implemented privately/individually by an enterprise are costly and typically out of reach for small and medium businesses – yet customer expectations don’t change. The new venture by NewCo will establish a delivery model and hosted infrastructure based on “software-as-a-service” (hosted/operated/ managed services) for communications enabled business applications. Where appropriate, the chosen applications will be from the opensource community to provide for customer access to business solutions heretofore too expensive and complex to integrate by the Small and Medium sized businesses.


Good VP

• Using NewCo software-as-a-service, small- to mid-sized businesses can offer world-class customer services previously only available to the Fortune 500.


VP for Google

“Organize the world’s information making it universally accessible and useful.”

Founder Larry Page

Not necessarily a great “value proposition” statement, but an interestingly bold one.


VP for eBay

“Making inefficient markets efficient.”

CEO Meg Whitman

Also, not necessarily great, but certainly bold.


Value Network

• The economy is too complicated to think of customers only as end-user (B2C) (Estrin Video)

• An overview of everyone who might be touched by your venture

• Your challenge: identify who in the network gets the most value


Caller New New GadgetGadget

Office PhoneCompany

Cell PhoneCompany

Home PhoneCompany

EndUser

Office PhoneCompany

Cell PhoneCompany

Home PhoneCompany

EquipmentRetailers

EquipmentManufacturers

EquipmentWholesalers

Following the Path of One Phone Call

NewPhoneChipCoA technology company that has a chip that can divert

phone calls to any of a customer’s telephones.


Assignment

Value Network for ReverbNation

vernon’s razor ©2007 patrick vernon busi 506 new venture analysis class 2 value proposition

Documents

vernons razor slide

patrick vernon vernons

patrick vernon analogous

patrick vernon busi

value proposition slide

risk slide

dilbert slide

value vp