Business Design (Beta)
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Business Design (Beta)

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Slides for a 5-days seminar at TU München: ...

Slides for a 5-days seminar at TU München:
- Introduction to Business Design
- Business ideas from different sources
- Designing winning business models
- Hypotheses and strategies to validate them
- "Lean" offerings / minimum viable products / services (MVP)
- ...and minimum viable businesses (MVB)
- "Agile" implementation projects

Check out our blog http://blog.orangehills.de (German) and our new software that helps you "design" your next business in your browser: http://www.rapidmodeler.de

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  • Full Name Full Name Comment goes here.
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  • Awesome stuff. I like your approach to cover the entire process from business models all the way through execution. You are great designers!!
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  • @peterm8726: Go to www.orangehills.de and click on 'Guiding Principles'. You will find a list of selected templates we often use in workshops and trainings
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  • Hey orangehillsgmbh, where do I get the worksheets from? PeterM. Thanks
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  • @dkoscio Hi, Sabine Schön is our expert for field research. You can reach her via schoen@orangehills.de Cheers, Bernhard
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  • Hi Bernhard, I really love the idea of the customer matrix. How does that work? How do you identify the dimensions to span the matrix? ps: Great work by the way. Dan
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Business Design (Beta) Business Design (Beta) Presentation Transcript

  • Business Design Executive MBA “Innovation & Business Creation” Technische Universität München (TUM) & University of California, Berkeley | May-June 2014 Bernhard Doll | doll@orangehills.de Note: optimized for presentation with tablets
  • Intro Education +  Ph.D. (Dr. rer. pol.) in Management from TU München +  M.Sc. (Univ.) in Psychology and Sociology +  Visiting Scholar at Hong Kong University of Science & Technology and Macquarie University Sydney +  Dipl.-Inf./B. Eng. (hons) in Software Engineering +  Research Fellow at Leipzig Graduate School of Management +  Research Fellow at Peter-Pribilla-Foundation Professional experience +  Founder and Managing Director of Orange Hills GmbH +  Founder, CTO, member of supervisory board or catalyst of many start-ups (including Webmiles AG, Interhyp AG, SiteForce AG, Treems AG, mybestbrands GmbH, coma AG) +  Director at Center for “Innovation & Business Creation” at TUM +  Head of Software Engineering at a.f.i.m. GmbH / TBWA +  Lecturer at TUM School of Management, University of St. Gallen, Leipzig Graduate School of Management, University Erlangen- Nuremberg, FH Salzburg, FH München among others About me 2
  • Intro Readings 3 Schrage, M. (1999): Serious Play – How the world’s best companies simulate to innovate, Boston: Harvard Business School Press ISBN-13: 978-0875848143 Kawasaki, G. (2004): The art of the start – the time-tested, battle-hardened guide for anyone starting anything, London: Penguin Books ISBN-13: 978-1591840565 Ries, E. (2011): The Lean Startup, New York: Crown Business ISBN-13: 978-0307887894
  • Intro 4 Agenda 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Intro WHY ARE YOU HERE? 5
  • Intro Day 1 Day 2-4 6 HOW IT FEELS UFF OHH YEAH“…let’s rock the world – but how?“ than expected“ “…good to have clear guidance” Day 5-6
  • Intro 7 What is design? “Design is the transformation of existing conditions into preferred ones.“ Herbert Simon “Design thinking is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.” Tim Brown, IDEO ”Design is not just what it looks like and feels like. Design is how it works.“ Steve Jobs, Apple
  • Intro 8 How designers work
  • Intro 9 How designers work ”Business people don‘t just need to understand designers better; they need to become designers.“ Roger Martin, Dean Rotman School
  • Intro 10 „Naked“ entrepreneur “I have a GREAT vision to change the world!” +  Corporate innovator +  Business developer +  Marketing expert +  Designer +  Researcher
  • Intro 11 „Naked“ entrepreneur Seed  /  startup  stage   Early  stage   Expansion    stage   Later  stage   “I have a GREAT vision to change the world!” +  Corporate innovator +  Business developer +  Marketing expert +  Designer +  Researcher
  • Intro 12 MOST OF THEM FAIL “I have a GREAT vision to change the world!”
  • Intro 13 BIGGEST PROBLEM? People   build     something     nobody   wants.  
  • Intro 14 BIGGEST PROBLEM? People   build     something     nobody   wants.   Discover Scope Business Case Execute Test Launch Gate Gate Gate Gate Gate
  • Intro IDEA: GOOD OR BAD? Discover Scope Business Case Gate Gate ?   Strategy Market strategy Product position USP Market entry Market Market size Competitors Market share Revenue goals Finance Relevant revenue Break even time Max. neg. NPV for life cycle Not clear Me-too-product Market occupied < 25 Mio. € 1-2 players < 10% < 3 Mio. € < 5% of branch > 6 years > 10 Mio. € < 5 Mio. € In discussion In discussion Some USP’s Market follower 25-50 Mio. € 2-5 players 10-25% 3-12 Mio. € 5-25% of branch 4-6 years 5-10 Mio. € 5-10 Mio. € Clear and communicated Clear, coordinated with SMP* Clear advantage in competition Market leader > 50 Mio. € > 5 players > 25% > 12 Mio. € > 25% of branch < 4 years < 5 Mio. € > 10 Mio. € Technology Technology basis Products basis / platform Variants /options Patent situation Process-to-market SMP* R&D conditions Transition to series 3rd party dependency Risks Technical risks Time risks Cost risks Others * Sales, Marketing, Production 0 15
  • Intro Challenge #1 ...at the very beginning Innovation = hard to imagine 16
  • Intro ULTIMATE CASH FORMULA 17 X
  • Intro VIENNA COFFEE HOTSPOT 18
  • Intro HOW TO DESIGN THE DIFFERENCE? 19 Hotel  Sacher   Selling  coffee,  cakes  and   a  tradi�onal  Viennese  coffee   house  atmosphere   Starbucks   Selling  Frappuccino   with  caramel   topping,  cakes  and  a   very  special  feeling  
  • Intro Challenge #2 ...at the very beginning Innovation = hard to predict 20
  • Intro Getting from plan A ...To something that really works 21 1 2 3 4
  • Intro Getting from plan A ...To something that really works 22 1 2 3 4 Pivot Pivot Pivot Additional reading: Mullins, J. & Komisar, M. (2011): Getting to plan B, Harvard Business Press. ISBN: 978-1422126691
  • Intro Knowledge landscape ”What we know is a drop, what we don’t now is an ocean.” Isaac Newton 2 unknownknown unknownknown Accessibility Availability 1 3 4 explicit knowledge implicit knowledge ? 23
  • Intro Challenge #3 ...at the very beginning Innovation = hard to Evaluate 24
  • Intro 25
  • Intro 26
  • Intro 27 1860 1900 1950 2000 2012 1 2 4 8 16 32 64 128 0 US$ per barrel Crude oil prices since 1861 Source: Wikipedia
  • Intro 28 DCF + NPV A   B   C   Companies should be making this comparison DCF and NPV methodologies implicitly make this comparison Assumed cash stream resulting from doing nothing innovation against the default scenario of doing nothing, assuming – incorrectly – that the present investment is not made. For a better assessment of the innovation‘s value, the comparison should be more likely scenario of a decline in performance in the absence of innovation investment.“ Source: Christensen (2008) NPV  =  DCF  –  required  investment   PV  =     1   1  +  r1   x  C1   DCF  =       Ct   (1+rt)t  
  • Intro 29 DCF + NPV A   B   C   Companies should be making this comparison DCF and NPV methodologies implicitly make this comparison Assumed cash stream resulting from doing nothing innovation against the default scenario of doing nothing, assuming – incorrectly – that the present investment is not made. For a better assessment of the innovation‘s value, the comparison should be more likely scenario of a decline in performance in the absence of innovation investment.“ Source: Christensen (2008) NPV  =  DCF  –  required  investment   PV  =     1   1  +  r1   x  C1   DCF  =       Ct   (1+rt)t   Source:  Christensen  (2008)   Example of the US music industry New market entrants: Established industry:
  • Intro PSYCHOLOGY OF EVALUATING IDEAS 30 Estimated Output Perceived Input Alternative A Alternative B Personal investment ratio Perceived Input Personal investment ratio Estimated Output What do These Guys have in COmMon? “ perilous to conduct, or more uncertain in success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. The coolness arises partly from the fear of opponents, who have the laws on their side and partly from the incredulity of men, who do not readily believe in the new things until they have long experienced them.” Niccolo Machiavelli (1469-1527) 1 2 3 4
  • Intro DEALING WITH UNCERTAINTY 31
  • Intro 32 Human- centered EvolutionaryContext- oriented Holistic Visual Team-oriented Six principles of Business Design
  • Intro WRAP UP 33
  • Ideas Agenda 34 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Ideas 35 HOW TO START?
  • Ideas How to start 36 Markets & competitors What others are doing You & context What you can achieve with your resources Users & customers What people need …or want to become 1 2 3
  • Ideas How to start: OPTION 1 37 Markets & competitors What others are doing You & context What you can achieve with your resources Users & customers What people need …or want to become 1 2 3
  • Ideas The next big thing... 38 Trends  &  technology:   h�p://�ny.cc/18h15   Web  Trend  Map   Ex�nc�on  Timeline   Trends  and  Technology  Timeline   Ex�nc�on:   h�p://�ny.cc/uht29   Web  Trends:   h�p://�ny.cc/6ws7b   “The future is already here — it's just not very evenly distributed.“ (William Gibson)
  • Ideas COPY CAT 39
  • Ideas COPY CAT 40 Is Copy Cat a bad thing? Paradigm Position ProductProcess Innovation Do better... Do different... Source: Bessant (2007)
  • Ideas “Innovation isn‘t about coming up with the next big idea. It is about combining existing ideas and parts in a new way.“ Saul Kaplan, The Business Innovation Factory 41
  • Ideas How to start: OPTION 2 42 Markets & competitors What others are doing You & context What you can achieve with your resources Users & customers What people need …or want to become 1 2 3
  • Ideas Before you CAN pitch the “right” solution, you have to understand the “right” customer problem 43
  • Ideas Story of A milkshake 44 What’s the job this product helps you to get done? “With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension. If marketers understand each of these dimensions, then they can design a product that's precisely targeted to the job. In other words, the job, not the customer, is the fundamental unit of analysis for a marketer, who hopes to develop products that customers will buy.“ Clay Christensen, Harvard Business School (2006)
  • Ideas JOB(S) TO GET DONE 45 „When________,   they  want  to________,   so  they  can________.“   Context Job(s) to get done: 1.  “When I am hungry....” 2.  “When I'm in a rush and hungry....” 3.  “When I'm in a rush, starving and 'on the go'....” 4.  “When I'm in a rush, starving, 'on the go' and need something I can eat with one hand, not sure when the next time I'll be able to eat,...” Source: Klement (2013) Motivation (not action) Outcome „When I am sitting in my car commuting to work, so I can enjoy my trip and arrive at my workplace fresh and relaxed.“ Add as many details as possible to the context of your customers’ situation to design solutions that really help getting their job(s) done: Solution: Restaurant (with tasty food) Fast-food restaurant Fast-food restaurant with drive-through Fast-food restaurant with drive-through and food packaging that can be handled with one hand
  • Ideas #GOOT(F)B 46 = get out of the (fucking) building
  • Ideas “We don‘t know what we see, we see what we know.“ Johann Wolfgang v. Goethe 47
  • Ideas Understanding Customers: PROCESSCycle2 1 +  + Narrow down your target group(s) + Select method and process + Schedule your activities + Prepare interview guidelines and tools (cameras, audio recorders, etc.) Tip: Browse magazines for people who are pretty similar to your target group to sharpen your senses for them. Preparation 2 Data gathering I 3 Customer matrix 4 Data gathering II 65 Filling up Matrix analysis + Select participants for cycle 1 + Identify behavioral dimensions to span the market + Design of customer journeys and personas to capture the data ObservationsInterviews DimensionA Dimension B Persona   Persona   Persona   + Position personas on the matrix+  + Design of personas to capture the data DimensionA Dimension B Persona   Persona   Persona   Persona   Persona   Saturation Analyze customer matrix + to prioritize customer segments + to identify market niches or underserved markets + to unveil innovation potential + to understand competitive situation you are looking for. ObservationsInterviews + Overlay offerings / competitors etc. Cycle1 Persona   Persona  
  • Ideas VISUALIZING „FAKE“ CUSTOMERS 49 This is a persona: A persona is a archetypical description of customers / users . Personas are designed to capture and about customers / users. They help you and your team to understand what makes them tick and what they potentially need to improve their lives. It’s about getting a “professional” gut ultimate truth. Consumer behavior Personal quotes Demographics Preferences Key statement Pain points
  • Ideas VISUALIZING MARKETSDimensionA Dimension B Are there more customers of this type? 50 Products and services of your competitors Is there are market? Stop your research when your learning curve starts Products and services you offer
  • Ideas WHO IS YOUR PRIMARY CUSTOMER? 51 Source: amazon.com Source: marykay.com.au mission “to be the world’s most consumer-centric company. This unwavering focus on consumers has created innovations such as prime free shipping, detailed product reviews (including negative ones), look-inside-this- book, and the listing of lower-priced products from off-site competitors.“ - Robert Simons (2014)
  • Ideas ANOTHER TWIST: How to improve ProDuCts 52 How can we make better products for our target group?
  • Ideas WHY IMPROVE PRODUCTS? 53
  • Ideas Develop YOUR customers 54 Additional reading: Schrage, M. (2012): Who do you want your customers to become? HBR Press. ISBN: 978-1-4221-8785-2 Who do you want your customer to become? How do you make your customer more valuable? What customer journey can help „create“ this kind of customer?
  • Ideas How to start: OPTION 3 55 Markets & competitors What others are doing You & context What you can achieve with your resources Users & customers What people need …or want to become 1 2 3
  • ON THE GAME IS
  • Ideas 57
  • Ideas 58
  • Leaderboard BUSINESS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Game DateIteration 1 2 3 Team A Team B Team C Team D Team E Team F Team 1 Team Team 2 3 SILVERBRONZE GOLD Business Design GAME | Playing seriously with innovation Team A Strategy Sales Finance R&D Operations Project Manager “Best Judge” Badge Team B Strategy Sales Finance R&D Operations Team C Strategy Sales Finance R&D Operations Team D Strategy Sales Finance R&D Operations Team E Strategy Sales Finance R&D Operations Team F Strategy Sales Finance R&D Operations
  • GAMEBOARD BUSINESS © 2014 Orange HillsTM GmbH. All rights reserved. Game DateIteration 1 2 3 Business Design GAME | Playing seriously with innovation 1 Introduction + Mission + Team + Evaluation + Workspace 2 Reflection + Meaning + Pleasure + Strengths + Shared picture 3 Ideas + Customers + Scenarios + Offerings + Pains / gains 4 Business model + Target groups + Channels + Offerings + Profit formula etc. 5 Business model + Group work + Interventions + Reflection 6 Business DNA + Jobs(s) to get done + Core value + Unfair advantage 7 Business DNA + Group work + Interventions + Reflection 8 KPIs + Output + Learning + Team 9 KPIs + Group work + Interventions + Reflection 10 Hypotheses + Analogs + Antilogs + Exploration + Hypotheses 11 Hypotheses + Group work + Interventions + Reflection 12 Experiments + Methods + Tools + Measurements + Efficiency 13 Experi- ments + Group work + Interventions + Reflection 14 Review + Status quo + Feedback + Evaluation 15 Lean offerings + User stories + Non-functional requirements + Benchmark 16 Lean offerings + Group work + Interventions + Reflection 17 Action plan + Activities + Output + Teamwork 18 Action plan + Group work + Interventions + Reflection 19 Review + Status quo + Feedback + Evaluation 20 Execution + Group work + Interventions + Reflection 21 Review + Status quo + Feedback + Evaluation 22 Execution + Group work + Interventions + Reflection 23 Final + Results + Learnings + Evaluation + Award ceremony END START Consistency check http://bit.ly/UHYzra http://bit.ly/1lQHcf7 http://bit.ly/1rMo2hP http://bit.ly/1k5aV8O Interventions’ schedule 1 2 3 4 5 Team B C D E F A 1. PLAN 2. EXECUTE 3. LEARN 4. DECIDE This gameboard illustrates the flow of activities for interactive trainings based on the integrative process model called Business Design. The training is designed as a game and will be played in a workshop setting, allowing participants to turn ideas into business. They will work in teams, slip into team roles to invent and implement a new business model. They will face unexpected challenges on the way. A reward system will push them beyond limits for one goal: To provide participants with a unique learning experience and help them become successful innovators. optional Design your business in your browser | http://www.rapidmodeler.de Download | http://blog.orangehills.de/#gab_en Break-out Break-out Intro Break-out Intro Intro Intro Break-out Break-out Break-out Intro Break-out Intro Break-out Intro Break-out Break-out Break-out Plenum Plenum Plenum Plenum Intro
  • Ideas Causation VS. Effectuation 61 Causation Effectuation“...takes a particular effect as given and focuses on selecting between different set of means to create that effect.“ ”...takes a set of means as given and focus on selecting between possible effects that can be created with that set of means.“ Additional reading: Sarasvathy, S. (2009): Effectuation, Edward Elgar. ISBN: 978-1848445727
  • Ideas How do we design a value proposition for markets that do not exist yet? How do we make pricing decisions when the firm does not exist yet? How do we hire people for an organization that does not exist yet? How do we value firms in an industry that did not exist five years ago? 62 Effectuation approach helps you unveil your personal/organizational “unfair” advantage, which is something you do better than your competitors and hard to copy. Source: Egmont Ehapa Verlag
  • Ideas THE STORY OF „FREITAG“ BAGS 63
  • Ideas
  • Ideas
  • Ideas WRAP UP 66
  • Business Agenda 67 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Business BUSINESS Model innovation #bmi 68 Source: Osterwalder 2010 Additional reading: Osterwalder, A. (2008): Business Model Generation, Self Published. ISBN: 978-2-8399-0580-0
  • Business Example: XEROX 69 Pay per copy
  • Business Example: GILETTE 70 18,85 € Amazon.com 21,97 € (8 pcs.) Amazon.com Average lifespan: 6 weeks
  • Business Example: Happy Meal 71 Who values what?
  • Business Example: LINKEDIN 72 Upgrade to premium services
  • Business Example: AIRBNB 73
  • Business Example: INTERHYP.DE 74 “Interhyp is Germany‘s largest distributor of residential mortgages. As a broker, Interhyp does not act as a lender but instead selects the best mortgages for its customers among offers from over 250 commercial banks, saving banks and insurance companies. We focus on competent, personal and objective consulting by our approximately 316 mortgage consultants. Private customers receive advice from our homepage www.interhyp.de and key German cities.” Source: Interhyp Annual Report 2011
  • Business Example: MYBESTBRANDS 75 ~ 0,30 € per click-out
  • Business Example: MYBESTBRANDS 76 ~ 0,30 € per click-out Business model patterns Source:
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME | Playing seriously with innovation DNA Download | http://blog.orangehills.de/#bml_en BUSINESS Model...AS A TOOL 77 The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. URL: bit.ly/UHYzra
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME | Playing seriously with innovation DNA Download | http://blog.orangehills.de/#bml_en BUSINESS Model: EXTERNAL VIEW 78 Target groups Customers are people who are willing to pay for your offerings. Users eventually use it. It is crucial to know as much as possible about customers and users - who they are, what job(s) they are trying to get done, what they really need. Do you? Brand & messages It is not enough to develop a brilliant product. It has to be sold with a simple, clean and compelling message, wrapped in a brand that embodies your company’s values. Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and customers (and partners) is need to discover. Relationships Every business model requires its own type of relationship to customers and users. It can be very personal or automated. No matter what you choose, make sure you meet the expectations of your customers. Offerings Your offerings are the central part of your business model. What do your customers pay for? What do they get in return? Think about products, but also services and a combination of both to best serve your customers. The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. URL: bit.ly/UHYzra
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME | Playing seriously with innovation DNA Download | http://blog.orangehills.de/#bml_en The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. BUSINESS Model: INTERNAL VIEW 79 Partners Every successful business depends not only on the company‘s skills and resources but on reliable partners who do things, which are not core of the company. Managing these partners is key to your success. answers to the questions, how much money can be made in terms of revenue, how costs are allocated and transaction nets to achieve Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and customers (and partners) is need to discover. Resources To create and deliver your offering to customers and users, you need a certain set of resources. What are your key assets you need within your company for your business model – and what do you purchase from partners in the value chain. “Pattern” Pricing & revenue Investments Costs Processes The question seems to be simple, but the answer is very tough. You can‘t excel in every aspect of your business model. You have to decide, what is really core of your company - and what can be outsourced. URL: bit.ly/UHYzra
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME EXAMPLE: ITUNES 80 The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store? MP3 software player “1000 songs in your pocket” Hardware player iTunes store We deliver seamless music experience Wherever you are, enjoy all your music Website Retail stores Mac hardware (Premium) mass market Apple enthusiasts Automated Apple brand Record companies OEMs Technology providers (MP3 codec) Content Patents Soft- and hardware Cloud storage Soft- and hardware design Marketing & sales Content manage- ment Brand & access to customer base Key account Cloud storage People Hard- and software design Marketing campaigns Manufac- turing Hardware revenues 99 cent per songTransaction based Royalties URL: bit.ly/UHYzra
  • Business VIRTUAL BUSINESS MODELING 81 “Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs. For details visit: http://www.rapidmodeler.de View: Business Model
  • Business
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME | Playing seriously with innovation DNA Download | http://blog.orangehills.de/#bml_en BUSINESS DNA 83 The “Business DNA” is the very essence of your business model, which is the key to build your initial market offerings in later stages. If you only have 30 seconds to pitch your business, present the DNA. DNA „When___,   they  want  to___,   so  they  can___.“   „We  deliver___,   so  that___.“   „We  excel  in___,   which  is  unfair   because___.”   Primary   customer  /   user   Source: “Primary customer” according to Simons (2014) What is the core of your business model? URL: bit.ly/UHYzra
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME ”HOW“ AND “WHAT“ IS NOT ENOUGH 84 How? Why? 2 3 What? 1 Example: “Everything we do, we believe in challenging the status quo. We believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple and user-friendly. And we happen to make great computers. Wanna buy one?“ Apple’s mission statement Why?How?What? Additional reading: Sinek. S. (2009): Start with WHY, Portfolio / Penguin. ISBN: 978-1591846444 Differentiate here!
  • Business „WHY“ = SOURCE OF TRANSFORMATION 85 1997 2013
  • Business “MARKETING IS ABOUT SELLING MORE STUFF TO MORE PEOPLE MORE OFTEN FOR MORE MONEY MORE EFFICIENTLY.” Sergio Zyman, CMO Coca-Cola 86
  • Business HOW CAN WE MEASURE SUCCESS? 87 Relevant metricsQuestions Acquisition Acquisition costs for customers, users and etc. How do customers and users become aware of you? SEO, SEM, widgets, email, PR, campaigns, blogs, etc. Number of completed onboarding processes, enrollments, sign-ups, used the offering at least once, etc. Engagement, daily and monthly active uses, churn/attrition rate, etc. Daily/monthly revenue per segment, customer lifetime value, conversion rate, shopping cart size etc. Invites sent, number of referrals, mentions in the press / blogs, viral cycle time etc. Do drive-by visitors subscribe, buy, use, etc.? Features, design, tone, Does a one-time customer or user alerts, reminders, emails, updates, etc. Do you make money from customer activity? Transactions, volume, costs, resource velocity, subscriptions, etc. Do customers and users promote your offering? Email, widgets, conferences, Activation Retention Revenue Referral Source: according to Croll / Yoskowitz (2013) Ask yourself: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about. Focus on a small number of KPIs to increase your focus. Don’t get lost in too much data. KPIs have to lead to action and you can’t affect dozen of KPIs simultaneously. Daily Weekly Monthly Quarterlyterm targets: E.g. 10% more active users every week. Sounds boring? You will be surprised how quickly the numbers get large…
  • Business BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups Who are our sales targets and who will be using our offerings? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME | Playing seriously with innovation DNA Download | http://blog.orangehills.de/#bml_en BUSINESS KPIs 88 Again: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about. The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. URL: bit.ly/UHYzra
  • Business Example: GOOGLE ANALYTICS / GECKOBOARD 89
  • Business
  • Business WRAP UP 91
  • Validation Agenda 92 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Validation BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups What things are new to us but we can learn from others, because they have proven that it just works? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME EVERY PLAN IS BASED ON UNKNOWNS 93 The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company. URL: bit.ly/10cz2TI MP3 software player “1000 songs in your pocket” Hardware player iTunes store Website Retail stores Mac hardware (Premium) mass market Apple enthusiasts Automated Apple brand Record companies OEMs Technology providers (MP3 codec) Content Patents Soft- and hardware Cloud storage Soft- and hardware design Marketing & sales Content manage- ment Brand & access to customer base Key account Cloud storage People Hard- and software design Marketing campaigns Manufac- turing Hardware revenues 99 cent per song Transaction based Royalties Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store? ?   ?   ?   We deliver seamless music experience Wherever you are, enjoy all your music ?   ?  
  • Validation LEARN TO PLAN PLAN TO LEARN 94
  • Validation HYPOTHESES & EXPERIMENTS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Team DateIteration 1 2 3 Analogs What things are new to us but we can learn from others, because they have proven that it just works? What hypotheses grow out of relevant antilogs that are critical for our business? What things are new to us and new to the entire market, which is why we can’t learn from anyone? + Customers + Users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + Profit formula + Business DNA Look at every single element of your business model to find analogs and antilogs: Antilogs Exploration Experiments How can we test the identified hypotheses with the least effort? Test focus Importance Uncertainties Make sure your analogs are reliable sources to learn from others. In many cases, analogies eventually turn out to be somehow different to your business when you look under the hood. A+ A- How to test hypotheses? 1. Try to break down a high-level hypothesis into a set of low-level hypotheses. 2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way. 3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling. LO/MVP Business Design GAME | Playing seriously with innovation Validation ExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVP Hypotheses What experiments are required to explore antilogs even further before you turn them into testable hypotheses? pre-launch post-launch Experiments Download | http://blog.orangehills.de/#hyp_en Hypotheses…AS A TOOL 95 URL: http://bit.ly/1lQHcf7 The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how possible. Don’t test ideas! Test the assumptions of your ideas, systematically!
  • Validation HYPOTHESES & EXPERIMENTS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Team DateIteration 1 2 3 Analogs What things are new to us but we can learn from others, because they have proven that it just works? What hypotheses grow out of relevant antilogs that are critical for our business? What things are new to us and new to the entire market, which is why we can’t learn from anyone? + Customers + Users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + Profit formula + Business DNA Look at every single element of your business model to find analogs and antilogs: Antilogs Exploration Experiments How can we test the identified hypotheses with the least effort? Test focus Importance Uncertainties Make sure your analogs are reliable sources to learn from others. In many cases, analogies eventually turn out to be somehow different to your business when you look under the hood. A+ A- How to test hypotheses? 1. Try to break down a high-level hypothesis into a set of low-level hypotheses. 2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way. 3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling. LO/MVP Business Design GAME | Playing seriously with innovation Validation ExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVP Hypotheses What experiments are required to explore antilogs even further before you turn them into testable hypotheses? pre-launch post-launch Experiments Download | http://blog.orangehills.de/#hyp_en Hypotheses…AS A TOOL 96 Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn. Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to). The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how possible. Don’t test ideas! Test the assumptions of your ideas, systematically! In some cases, the difference between analogs and antilogs is blurred. Exploration Some antilogs (both uncertain and important) require an exploration phase translate them into focused and testable hypotheses. Plan simple experiments around that to learn as quick as possible. Show- stoppers Experiments Some hypotheses can be tested with simple means, such as interviews, prototyping or advanced experimental settings including A/B, multivariate testing and crowd sourcing. Plan your tests carefully to looking for. Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down. URL: http://bit.ly/1lQHcf7
  • Validation HYPOTHESES & EXPERIMENTS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Team DateIteration 1 2 3 Analogs What things are new to us but we can learn from others, because they have proven that it just works? What hypotheses grow out of relevant antilogs that are critical for our business? What things are new to us and new to the entire market, which is why we can’t learn from anyone? + Customers + Users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + Profit formula + Business DNA Look at every single element of your business model to find analogs and antilogs: Antilogs Exploration Experiments How can we test the identified hypotheses with the least effort? Test focus Importance Uncertainties Make sure your analogs are reliable sources to learn from others. In many cases, analogies eventually turn out to be somehow different to your business when you look under the hood. A+ A- How to test hypotheses? 1. Try to break down a high-level hypothesis into a set of low-level hypotheses. 2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way. 3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling. LO/MVP Business Design GAME | Playing seriously with innovation Validation ExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVP Hypotheses What experiments are required to explore antilogs even further before you turn them into testable hypotheses? pre-launch post-launch Experiments Download | http://blog.orangehills.de/#hyp_en EXAMPLE: AIRBNB 97 Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down. H1   H2   H3   H4   H5   H6   H7   Level  1   Level2   Level  3   Hypotheses hierarchy Details   Scope   ”We will reach 5 million nights booked by 2012.“ ”Hosts with professional photography will get 2-3 times more bookings than the market average.“ ”Number of hosts signing up is 10x higher than the market average, because they are enthusiastic to receive professional photos.“ Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn. Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to). In some cases, the difference between analogs and antilogs is blurred. Show- stoppers
  • Validation 98 What is YOUR BET ON THE FUTURE? In other words: “What are your your future business model? Yep, just 5…” The “killer question” to challenge every innovation team
  • Validation
  • Validation 100 ONE OF THE WORST PRODUCT FLOPS
  • Validation THEY TESTED A LOT: the right thing? 101 The Pepsi Challenge back in the late 80’s WWhhiicchh CCoollaa ddoo yyoouu pprreeffeerr??
  • Validation 102 TESTING ≠≠REALITY
  • Validation Business experiments 103 Source: Thomke (1998), p. 745 (1) Design (2) Build (3) Run (4) Analyze DESIGN REQUIREMENTS DONE Use learning from previous cycle(s) to conceive and design an improved solution. Develop models and / or build prototypes to be used in running experiments. Test model / prototype in real or simulated use environment. previous step and learn. Changesinexogenous information DESIGN ACTIVITY Examples: +  Landing page (+ “notify me when you release”): Will anyone actually buy this? +  Crowd testing: How much will customers pay? +  Demo/video: Does this solution resonate with people? +  E-mail marketing: Do customers like your story (and do something to be part of it)? +  Sales prelaunch: Will customer buy (before you have even built it)? +  Lean version 1.0: Will customers use it and come back? (à MVP, see next chapter)
  • Validation PROTOTYPES AS Shared spaces 104 Source: According to Schrage (1999), p. xv a) Transactional model of communication b) Collaborative model of communication Receiver / senderSender / receiver Information source / destination Destination / information source audible Message MessageSignal Received signal Noise source Source: According to Shannon (1948), p. 380 „shared space“ visual tactile Receiver / senderSender / receiver Information source / destination Destination / information source Message Message Signal Received signal Noise source audible Additional reading: Schrage, M. (1999): Serious play, Harvard Business Press. ISBN: 978-0875848143
  • Validation PROTOTYPE = INTERACTION 105 ...to simulate, embrace and discuss what the future reality might be
  • Validation SOCIAL PROTOTYPING 106 +  Do you remember? ...to simulate, embrace and discuss what the future reality might be
  • Validation PROTOTYPE? YES 107 This is the traditional (engineering-driven) perspective on of its kind, the pre- version for mass production.
  • Validation PROTOTYPE? YES 108 Source: Calgraphix Many mechanical models and prototypes can be easily manufactured with low-cost 3D printers.
  • Validation PROTOTYPE? YES 109 Source: UIStencils Storyboards can help visualize customer encounters or entire customer experience at early stages.
  • Validation PROTOTYPE? YES 110 Role plays are a cheap and easy way to prototype services. If played by yourself, you get a good understanding how a customer might feel like.
  • Validation PROTOTYPE? YES 111 Source: UIStencils Even rough sketches of a new product, service or software UI is a prototype. With a different purpose, however.
  • Validation Prototype? YES 112 A   B   C   D   E   F   G   H   I   1   2   3   4   5   6   7   8   9   10   1   2   Marke  des  Unternehmens  mit   hoher  Strahlkra�  in  den  Markt;   verkörpert  Innova�on   („orange“)   ...  zeigt  Kunden  unseren  USP   Schnelligkeit,  um  Inves��ons-­‐ entscheidungen  für   Innova�onen    vorzubereiten   Nutzer/Endkunde,  für  den  wir   innova�ve  Geschä�smodelle   entwickeln,  eingebunden  in   den  Innova�onsprozess   Zentrale  Steuerung  von   Innova�onsprojekten  in   Anlehnung  an  Kanban   Mitarbeiter  für  Vorbereitung   neuer  Kundenprojekte:   Bedarfsanalyse,  Projekt-­‐  und   Zielplanung   Key  Account  Management  für   die  persönliche  Betreuung  von   Kunden   Endkunde   Kunde   Projek�eam   PM   K   Zufriedener  Kunde  mit   „grei�aren“  Ereignissen  und   fer�g  entwickeltem  MVP   Projek�eam  unserer  Kunden   bei  der  Arbeit,  Prototypen  zu   entwickeln  und  systema�sch  zu   testen   Methodische  Toolbox  zur   Unterstützung  von  „lean“   Innova�onsprojekten   Kid toys are powerful tools to make the intangible of innovation tangible. Use the power of metaphors to express aspects beyond words.
  • IntroSource: LEGO© Serious Play™ 3D modeling can help you +  build your company’s vision +  model service encounters +  design business models +  support interdisciplinary teamwork and personal engagement What do you see in this model?
  • Validation EVOLUTION OF PrototypeS 114 Source: UnternehmerTUM (2006) Failed start-up project, founded by three TUM engineering graduates prototypes by yourself. You will get a better feeling for your product, improve teamwork and customer interactions.
  • Validation PROTOTYPING TOOLS 115 +  Microsoft Powerpoint: Flexible tool to create visuals of different kinds +  Storyboards 3D: Create stunning storyboards, even if you lack drawing skills +  eMachineShop.com: Order CNC machine custom parts online (waterjet, plasma, laser cutting, etc.) +  MakerBot Industries: Desktop 3D printing +  Fab@Home: Open source 3D printing +  Ponoko.com: Design, make and build your own custom products +  Phidgets.com: Plug & play building blocks for low cost USB sensing and control +  NI LabView: Visual development environment for electronic systems +  Protoshare.com: Website wireframing / prototyping +  Balsamiq.com: Rapid wireframing and mockups for websites & mobile apps +  Axure: Interactive HTML prototypes +  Microsoft Visio: Clickable web demos +  Prototypes: Create functional click- dummys for tablets and smartphones +  DjangoProject.com: Web framework to build functional web platforms +  Node.js: Event-driven I/O system to build scalable server software +  jQuery: UI library for web applications +  UserVoice.com: Online user feedback system Great inspiration: Make:magazine
  • Validation EXAMPLE: 3D PRINTING FOR EVERYONE 116
  • Validation HYPOTHESES & EXPERIMENTS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Team DateIteration 1 2 3 Analogs What things are new to us but we can learn from others, because they have proven that it just works? What hypotheses grow out of relevant antilogs that are critical for our business? What things are new to us and new to the entire market, which is why we can’t learn from anyone? + Customers + Users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + Profit formula + Business DNA Look at every single element of your business model to find analogs and antilogs: Antilogs Exploration Experiments How can we test the identified hypotheses with the least effort? Test focus Importance Uncertainties Make sure your analogs are reliable sources to learn from others. In many cases, analogies eventually turn out to be somehow different to your business when you look under the hood. A+ A- How to test hypotheses? 1. Try to break down a high-level hypothesis into a set of low-level hypotheses. 2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way. 3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling. LO/MVP Business Design GAME | Playing seriously with innovation Validation ExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVP Hypotheses What experiments are required to explore antilogs even further before you turn them into testable hypotheses? pre-launch post-launch Experiments Download | http://blog.orangehills.de/#hyp_en EXAMPLE: ITUNES 117 The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how to test the assumptions as Users love to listen to their favorite tunes on the way Users are used to load music online Users manage their music on their PCs How are the music rights (DRM) enforceable? How likely is the antitrust approval? How important is the look & feel of CD boxes? Is 128 Kbit/s 16 bit sufficient? How important is qrtwork and bonus material? Are customers ready to pay for music downloads? Do customers accept the limited usage rights? How big is negotiating power of record companies? 60% of our test customers pay 99 cent per song Two big music labels give access to > 5.000 songs… 75% of our test customers accept terms & conditions Test POS with download possibilities of TOP 40 songs Negotiations with record companies Test POS with iPod customers Back in 2003: Which hypotheses were Apple facing when they were about to launch iTunes? URL: http://bit.ly/1lQHcf7
  • Validation …AND ONLINE 118 “Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs. For details visit: http://www.rapidmodeler.de URL: bit.ly/q7slqa View: Hypotheses & Experiments
  • Validation TRACK YOUR LEARNING PERFORMANCE 119 URL: bit.ly/q7slqa Home screen
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  • Validation
  • Validation WRAP UP 122
  • Realization Agenda 123 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Realization “IDEAS ARE WORTH NOTHING, UNLESS EXECUTED.“ Jason Fried, 37signals 124
  • Realization Process paradigms 125 Things you know Things you don‘t know Personality More deterministic Less predictable Innovation Innovation Process Objective Paradigm Control Metaphor Prototype Patron Result Sequential Implements „knowns“ Seeks simplicity Top-down Clock-wise Is driven by process Newton Perfectionist Iterative Reduces „unknowns“ Embraces complexity Buttom-up Ecologies Drives the process Darwin Optimalist
  • Realization BIRTH OF “WATERFALL“ Model? 126 p.  2   p.  3   p.  4   p.  5   p.  9   Source: Royce, W. (1970): Managing the development of large software systems, IEEE WESCON, pp. 1-9.
  • Realization EVOLUTION OF IDeas 127 „shadow beliefs“ of entrepreneurs Business strategy 1 Business strategy 2 Business strategy 3 „We know exactly what we are doing!“ „We know what our customers want!“ „We can accurately predict the future!“ „Advancing the plan is progress!“ Businesspotential Pivot Pivot Change strategic directions, but stay grounded in what you have learned. A pivot is not a mistake! Examples: +  Zoom-in pivot +  Zoom-out pivot +  Value capture pivot +  Engine of growth pivot TimeSource: “shadow beliefs” according to Eric Ries (2009)
  • Realization 128 If  you  don‘t  know  what  you  are   doing,  you  be�er  do  it  fast!  
  • Realization EVOLUTION OF IDeas 129 „shadow beliefs“ of entrepreneurs Business strategy 1 Business strategy 2 Business strategy 3 „We know exactly what we are doing!“ „We know what our customers want!“ „We can accurately predict the future!“ „Advancing the plan is progress!“ Businesspotential Pivot Pivot Change strategic directions, but stay grounded in what you have learned. A pivot is not a mistake! Examples: +  Zoom-in pivot +  Zoom-out pivot +  Value capture pivot +  Engine of growth pivot TimeSource: “shadow beliefs” according to Eric Ries (2009) +  Customer discovery: Captures the founder’s vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts. +  Customer validation: Tests whether the resulting business model is repeatable and scalable. If not, return to customer discovery. +  Customer creation: Is the start of execution. It builds end-user demand and drives it into the sales channel to scale the business. +  Company building: Transitions the organization from a start-up to a company focused on executing a validated model. Customer development process by Steve Blank Pivot Search Customer discovery Customer validation Customer creation Company building Execute Source: Blank/Dorf (2012) „lean“ „fat“ Product/
  • Realization EVOLUTION OF IDeas „shadow beliefs“ of entrepreneurs Business strategy 1 Business strategy 2 Business strategy 3 „We know exactly what we are doing!“ „We know what our customers want!“ „We can accurately predict the future!“ „Advancing the plan is progress!“ Businesspotential Pivot Pivot Change strategic directions, but stay grounded in what you have learned. A pivot is not a mistake! Examples: +  Zoom-in pivot +  Zoom-out pivot +  Value capture pivot +  Engine of growth pivot Source: “shadow beliefs” according to Eric Ries (2009) Pivot?   Build-measure-learn cycle by Eric Ries Phase 1 “Customer discovery” Phase 2 “Customer validation” Phase 3 “Customer creation” Growth Source: Ries (2012) The fundamental activity of a startup or corporate innovator is to turn ideas into products and services, to measure how customers respond and then to learn what works and what doesn‘t. This may eventually lead to a pivot of your strategy or to preserve elements of your future model that have been proven right. All successful innovation processes should be geared to accelerate that feedback loop. Idea Build Launch Measure Analyze Learn 130 Time
  • Realization “If you freeze an idea too quickly, you fall in love with it. If you refine it too quickly, you become attached to it and it becomes very hard to keep exploring, to keep looking for better. The crudeness of the early models in particular is very deliberate.” Jim Glymph, Gehry Partners 131
  • Realization LeanTraditional traditional VS. LEAN 132 Strategy Business model Hypotheses-driven Business plan Implementation-driven Customer development Agile development Build the product iteratively and incrementally Customer and agile development teams Hire for learning, nimbleness and speed Metrics that matter Customer acquisition cost, lifetime customer value, churn, viralness Expected Fix by iterating on ideas and pivoting away from ones that don‘t work Rapid Operates on good-enough data Product Management; prepare offering for market following a linear, step-by-step plan Agile or waterfall development; build the product iteratively, or fully specify the product before building it Department by function Hire for experience and ability to execute Accounting statement Exception Measured Operates on complete data New-Product Process Engineering Organization Financial Reporting Failure Speed Source: Blank (2013)
  • Realization ”An organization can never know what it thinks or wants until it sees what it does.” Karl E. Weick, Sociologist 133 Additional reading: Ben-Sahar, T. (2009): The pursuit of perfect, McGraw Hill. ISBN: 978-0071629034 Additional reading: Beinhocker, E. (2004): The origin of wealth, Harvard Business Press. ISBN: 978-1422121030
  • Realization LEAN OFFERINGS / MVP 134 In other (my) words: A new product or service with a minimum set of +  Are your hypotheses covered? +  Can you charge your cu$tomer? +  Is your DNA embedded? +  Does your mother like it? If yes, SHIP IT & LEARN! “The Minimum Viable Product (MVP) is that version of a new product, which allows a team to collect the maximum amount of validated learning about customers with the least effort.” - Eric Ries #hypo #bm #bm
  • Realization ”No matter how well you perform, there's always somebody of intelligent opinion who thinks it's lousy.“ Sir Laurence Olivier 135
  • Realization MVP FOR… 136
  • Realization LEAN OFFERINGS / MVP Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Functional requirements Non-functional requirements Competitive benchmark Must have What is the minimal set of user stories customers and users expect to be implemented in order to deliver the core value of the product and/or service? Should have What is the extended set of user stories that increases the value of the product and/or service to the next level? What is a lean offering / MVP (= Minimum Viable Product)? Minimal set of user stories that fulfills at least the following requirements: + Are your hypotheses covered? + Can you charge your customers? + Is your DNA embedded? + Does your mother like it? To define user stories, look through the lenses of customers and users. Could have What are optional user stories that can help us better serve our customers and users in the future? F Hypotheses Keep in mind that each user story should be independent of any other user story. What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users? Fc What non-functional requirements should be embedded in our product and/or service? NF ...what non-functional requirements do they fulfill? NFc DNAfit Ease of implementation DNA What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offering? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME LEAN OFFERINGS…AS A TOOL 137 URL: http://bit.ly/1rMo2hP The “Lean Offerings / MVP Canvas” gives you guidance to decide, which launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype. Rule of thumb: Do you want users to switch from existing offerings to your products? +  Yes: Features are an important part of people’s decision to try it. +  No: Simplicity is usually much more important for users than being feature rich.
  • Realization LEAN OFFERINGS / MVP Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Functional requirements Non-functional requirements Competitive benchmark Must have What is the minimal set of user stories customers and users expect to be implemented in order to deliver the core value of the product and/or service? Should have What is the extended set of user stories that increases the value of the product and/or service to the next level? What is a lean offering / MVP (= Minimum Viable Product)? Minimal set of user stories that fulfills at least the following requirements: + Are your hypotheses covered? + Can you charge your customers? + Is your DNA embedded? + Does your mother like it? To define user stories, look through the lenses of customers and users. Could have What are optional user stories that can help us better serve our customers and users in the future? F Hypotheses Keep in mind that each user story should be independent of any other user story. What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users? Fc What non-functional requirements should be embedded in our product and/or service? NF ...what non-functional requirements do they fulfill? NFc DNAfit Ease of implementation DNA What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offering? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME LEAN OFFERINGS…AS A TOOL 138 Functional requirements functional requirements as user stories, which will be categorized based on how easy they can be implemented and how well business model. Non-functional requirements Apart from the functional requirements, we translate the DNA of the business model into a bunch of non- functional factors to make sure the MVP looks the way it is supposed to and is built with the right tool. DNA The DNA of the underlying business model is key to prioritize functional and non- functional requirements of before you start thinking service. Hypotheses MVPs are designed not only service, but also to test hypotheses in reality, which can’t be tested in an experimental setting. Be aware of these hypotheses when you design your MVP. Competitive benchmark What do other players in the market offer to their customers and users, which is similar to your offering? This analysis is especially important, when you want them switch from existing offerings to yours. The “Lean Offerings / MVP Canvas” gives you guidance to decide, which launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype. Rule of thumb: Do you want users to switch from existing offerings to your products? +  Yes: Features are an important part of people’s decision to try it. +  No: Simplicity is usually much more important for users than being feature rich. URL: http://bit.ly/1rMo2hP
  • Realization LEAN OFFERINGS / MVP Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Functional requirements Non-functional requirements Competitive benchmark Must have What is the minimal set of user stories customers and users expect to be implemented in order to deliver the core value of the product and/or service? Should have What is the extended set of user stories that increases the value of the product and/or service to the next level? What is a lean offering / MVP (= Minimum Viable Product)? Minimal set of user stories that fulfills at least the following requirements: + Are your hypotheses covered? + Can you charge your customers? + Is your DNA embedded? + Does your mother like it? To define user stories, look through the lenses of customers and users. Could have What are optional user stories that can help us better serve our customers and users in the future? F Hypotheses Keep in mind that each user story should be independent of any other user story. What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users? Fc What non-functional requirements should be embedded in our product and/or service? NF ...what non-functional requirements do they fulfill? NFc DNAfit Ease of implementation DNA What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offering? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME EXAMPLE: ITUNES 139 The “Lean Offerings / MVP Canvas” gives you guidance to decide, which launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype. Seamless music experience Enjoy all my music, everywhere Brand & access to customer base Users want to play their entire music Users want to purchase music Users want to rate songs Users want to organize music with folders Users want to pay for purchases Users want to search for new music (free text + categories) Users want to copy songs on their iPod Users want to listen to music with high quality Users want to share their personal profile Users demand bonus material and artwork Users want to manage their personal profile Users want to connect with other users Users need music recommen- dations Users want to archive music Users want to recommend music to friends Users want to adjust the sound quality (equalizer) Back in 2003: Which user stories were able to represent best the DNA of the iTunes business model? Great design Easy to use Seamlessly integrated hard- and software Users want to play selected songs from their library Users want to organize music with folders Users want to listen to their favorite tunes on the go URL: http://bit.ly/1rMo2hP
  • Realization …AND ONLINE 140 “Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs. For details visit: http://www.rapidmodeler.de View: MVP
  • Realization
  • Realization FROM MVP TO MVB (= Business) 142 on the market is not enough. Consider with your team, which elements of your underlying business model are needed to create and deliver your offering to the market – your “Minimum Viable Business” (MVB). Which customer channels are the most effective ones for the start? Which partners do you resources and processes are eventually needed to kick-off your business tomorrow? Your thinking at this stage should be very focused and more detailed than ever before, when you sketched out your business model with the “Business Model Canvas”. Point out everything needed to tap into your market and get rid of the “waste” that is not essential to get YOUR job done. External elements of your business model … and internal elements LEAN OFFERINGS / MVP Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Functional requirements Non-functional requirements Competitive benchmark Must have What is the minimal set of user stories customers and users expect to be implemented in order to deliver the core value of the product and/or service? Should have What is the extended set of user stories that increases the value of the product and/or service to the next level? What is a lean offering / MVP (= Minimum Viable Product)? Minimal set of user stories that fulfills at least the following requirements: + Are your hypotheses covered? + Can you charge your customers? + Is your DNA embedded? + Does your mother like it? To define user stories, look through the lenses of customers and users. Could have What are optional user stories that can help us better serve our customers and users in the future? F Hypotheses Keep in mind that each user story should be independent of any other user story. What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users? Fc What non-functional requirements should be embedded in our product and/or service? NF ...what non-functional requirements do they fulfill? NFc DNAfit Ease of implementation DNA What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offering? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME
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  • Realization LET‘S DO SOME “LEAN“ PROJECT MANAGEMENT 144
  • Realization ACTION PLAN Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Activities Output Experiments Lean offerings Each post-it represents one activity with an effort of 2-3 mandays What activities need to be carried out to build the lean offerings / MVP / B? What activities need to be carried out to run the defined experiments? + Exploration + Validation What tangible output do we want to achieve after 7 weeks? What have we learned and do we have to change our strategy? Analogs Are there any activities needed to investigate around analogs? Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07 Halftime F + NF A+ How is your team doing? Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en Reflection Team ACTION PLAN…AS A TOOL 145 URL: http://bit.ly/1k5aV8O The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team. Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each
  • Realization ACTION PLAN Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Activities Output Experiments Lean offerings Each post-it represents one activity with an effort of 2-3 mandays What activities need to be carried out to build the lean offerings / MVP / B? What activities need to be carried out to run the defined experiments? + Exploration + Validation What tangible output do we want to achieve after 7 weeks? What have we learned and do we have to change our strategy? Analogs Are there any activities needed to investigate around analogs? Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07 Halftime F + NF A+ How is your team doing? Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en Reflection Team ACTION PLAN…AS A TOOL 146 Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the these activities for the entire cycle and adapt the plan week by week due to new requirements. Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle whether changes are required. Output output for each cycle is before you start working. In many cases, the development of your MVP The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team. Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary. After each cycle, it is essential to sit down with you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead. Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information. URL: http://bit.ly/1k5aV8O
  • Realization ACTION PLAN Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Activities Output Experiments Lean offerings Each post-it represents one activity with an effort of 2-3 mandays What activities need to be carried out to build the lean offerings / MVP / B? What activities need to be carried out to run the defined experiments? + Exploration + Validation What tangible output do we want to achieve after 7 weeks? What have we learned and do we have to change our strategy? Analogs Are there any activities needed to investigate around analogs? Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07 Halftime F + NF A+ How is your team doing? Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en Reflection Team REFLECT WHAT YOU HAVE LEARNED 147 Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the these activities for the entire cycle and adapt the plan week by week due to new requirements. Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle whether changes are required. Output output for each cycle is before you start working. In many cases, the development of your MVP Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary. After each cycle, it is essential to sit down with you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead. Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information. 1.  Kill project: We have learned that our new offering doesn’t help our customers and users to get a meaningful job done. 2.  Fix problem: We have learned that we did something wrong from a methodological perspective. 3.  Pivot MVP: We have learned that our initial offering needs urgent 4.  Pivot strategy: We have learned that our initial strategy doesn’t work. 5.  Carry on: We have learned that we can create value for customers and us, which is good enough to carry on.
  • Realization ACTION PLAN Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Activities Output Experiments Lean offerings Each post-it represents one activity with an effort of 2-3 mandays What activities need to be carried out to build the lean offerings / MVP / B? What activities need to be carried out to run the defined experiments? + Exploration + Validation What tangible output do we want to achieve after 7 weeks? What have we learned and do we have to change our strategy? Analogs Are there any activities needed to investigate around analogs? Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07 Halftime F + NF A+ How is your team doing? Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en Reflection Team EXAMPLE: ITUNES 148 The “Project Dashboard” is a very simple but effective way to organize activities of a “lean” innovation project in your team. Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each Prepare sales process UI concept design Design sales presentation Sketch mock- ups Develop DRM concept Setup initial music lib Discuss sales presentation with marketing Publish job profiles Setup workplaces for new staff Call president of DMV Arrange meetings with record companies Design landing page for test POS Develop landing page Prepare test POS in Munich retail store Reorganize production for test POS Inform store staff Start test POS Negotiate DRM concept with record companies Sales presentation Landing page for test POS Initial music lib Back in 2003: How could implementation process look like? URL: http://bit.ly/1k5aV8O
  • Realization VIRTUAL TEAM MANAGEMENT 149 “Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs. For details visit: http://www.rapidmodeler.de View: Action Plan
  • Realization MANAGING PROJECT PORTFOLIO 150 Distance to success Long way to go, but promising market attractiveness and good r = Market potential / growth A   r   G   F   C   E   B   D   Kill these projects - today These projects are everybody’s darling Potential candidates for spin-offs?
  • Realization
  • Realization WRAP UP 152
  • HYPOTHESES & EXPERIMENTS Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Team DateIteration 1 2 3 Analogs What things are new to us but we can learn from others, because they have proven that it just works? What hypotheses grow out of relevant antilogs that are critical for our business? What things are new to us and new to the entire market, which is why we can’t learn from anyone? + Customers + Users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + Profit formula + Business DNA Look at every single element of your business model to find analogs and antilogs: Antilogs Exploration Experiments How can we test the identified hypotheses with the least effort? Test focus Importance Uncertainties Make sure your analogs are reliable sources to learn from others. In many cases, analogies eventually turn out to be somehow different to your business when you look under the hood. A+ A- How to test hypotheses? 1. Try to break down a high-level hypothesis into a set of low-level hypotheses. 2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way. 3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling. LO/MVP Business Design GAME | Playing seriously with innovation Validation ExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVPExperimentsLO/MVP Hypotheses What experiments are required to explore antilogs even further before you turn them into testable hypotheses? pre-launch post-launch Experiments Download | http://blog.orangehills.de/#hyp_en LEAN OFFERINGS / MVP Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Functional requirements Non-functional requirements Competitive benchmark Must have What is the minimal set of user stories customers and users expect to be implemented in order to deliver the core value of the product and/or service? Should have What is the extended set of user stories that increases the value of the product and/or service to the next level? What is a lean offering / MVP (= Minimum Viable Product)? Minimal set of user stories that fulfills at least the following requirements: + Are your hypotheses covered? + Can you charge your customers? + Is your DNA embedded? + Does your mother like it? To define user stories, look through the lenses of customers and users. Could have What are optional user stories that can help us better serve our customers and users in the future? F Hypotheses Keep in mind that each user story should be independent of any other user story. What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users? Fc What non-functional requirements should be embedded in our product and/or service? NF ...what non-functional requirements do they fulfill? NFcDNAfit Ease of implementation DNA What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offering? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME BUSINESS MODEL Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. Team DateIteration 1 2 3 Target groups What things are new to us but we can learn from others, because they have proven that it just works? Resources Partners Primary What is our primary customer and user segment that unlocks the most value in our business? Customers Users InvestmentsCostsPricing & revenuePattern How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings? Brand & messages Offerings Channels Relationships Channels Processes Profit formula What (internal) key resources do we need to create and deliver the offerings? Who are our (external) key partners to create and deliver the offerings? What bundle of products and services do we offer to our customers and users? How do we want our brand to be perceived and what is our story to sell the offerings? Through which channels do our customers and users want to be reached? What kinds of relationships do our customers and users expect? Through which channels do our partners want to be reached? What (internal) key processes do we need to create and deliver the offerings? Delivery R&D What job(s) are our customers and users trying to get done? Job(s) to get done What kind of value do we create for customers and users with our offerings? Core value What do we do better than our competitors, which is hard to copy? Unfair advantage Business Design GAME ACTION PLAN Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Team DateIteration 1 2 3 Activities Output Experiments Reflection Lean offerings Each post-it represents one activity with an effort of 2-3 mandays What activities need to be carried out to build the lean offerings / MVP / B? What activities need to be carried out to run the defined experiments? What tangible output do we want to achieve after 7 weeks? What have we learned and do we have to change our strategy? Analogs Are there any activities needed to investigate around analogs? Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07 Halftime F + NF A+ Team How is your team doing? Business Design GAME BUSINESS DESIGN PROCESS 153 Pivots / improvements Extensions / improvements B. Business model C. Hypotheses & experiments E. Action plan D. Lean offerings 1 2 3 Market & trends Customers & users You & context A. Business idea Cycle 1-x +  Analogs +  Antilogs +  Hypotheses +  Experiments +  Functional requirements +  Non-functional requirements & tools +  Competitive benchmark +  Activities “Lean offerings” +  Activities “Experiments” +  Output +  Team performance +  +  Customers & users +  Brand & messages +  Channels +  Relationships +  Offerings +  Resources +  Processes +  Partners +  +  Business DNA Business DNA = +  Job(s) to get done +  Core value +  “Unfair” advantage r = Market potential / growth Distance to success r   F. Portfolio KPIs Source: Orange Hills GmbH / Bernhard Doll (2013)
  • Realization Agenda 154 1 2 Intro 3 4 5 Ideas Business Validation Realization 6 Day 2-4 Day 5-6 Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries. Day 1
  • Realization
  • Any questions 156 ?Aristotle: “What does it mean to be a good person?” René Descartes: “What does it mean to be?” Friedrich Nietzsche: “What does it mean?” Bertrand Russell: “What does ‘it’ mean?” C.S. Lewis: “What does it?” Lil Jon: “What?”
  • JUNE 13 NEXT GIG
  • NOT ENOUGH? 158 ISBN:  978-­‐0262018494   Available  at     ISBN:  978-­‐3-­‐8349-­‐1943-­‐4   ISBN:  978-­‐0470510667   ISBN:  978-­‐0470847428   ISBN:  978-­‐0566092138  
  • Bernhard Doll Orange Hills GmbH Sendlinger Str. 29 80331 München, Germany E. doll@orangehills.de T. +49-89-4520545-0 F. +49-89-4520545-69 Follow us on Twitter: @orangehillsgmbh 159