Business Design (Beta)

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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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  • 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)

  1. Business Design Executive MBA “Innovation & Business Creation” Technische Universität München (TUM) & University of California, Berkeley | June 2015  Bernhard Doll | doll@orangehills.de Note: optimized for presentation with tablets
  2. 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 among others About me 2
  3. 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. (2015): The art of the start – the time-tested, battle- hardened guide for anyone starting anything, London: Penguin Books ISBN-13: 978-0241187265 Ries, E. (2011): The Lean Startup, New York: Crown Business ISBN-13: 978-0307887894
  4. Intro 4 Agenda 1 2 Intro 3 4 5 Ideas Business Validation Realization Reflection 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 gamified
  5. Intro WHY ARE YOU HERE? 5
  6. Intro Day 1 Day 2-4 6 HOW IT FEELS UFF OHH YEAH“…let’s rock the world – but how?“ “…way more difficult than expected“ “…good to have clear guidance” Day 5-6
  7. 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
  8. Intro 8 How designers work
  9. 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
  10. Intro 10 „Naked“ entrepreneur “I have a GREAT vision to change the world!” +  Corporate innovator +  Business developer +  Marketing expert +  Designer +  Researcher
  11. 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
  12. Intro 12 MOST OF THEM FAIL “I have a GREAT vision to change the world!”
  13. Intro BIGGEST PROBLEM? 13
  14. Intro 14 ...BUILDing THINGS NOBODY WANTS
  15. Intro 15 ...WITH A TOXIC STAGE-GATE PROCESS People   build     something     nobody   wants.   Discover Scope Business Case Execute Test Launch Gate Gate Gate Gate Gate
  16. 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. cashflow NPV for life cycle Not defined yet 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 16
  17. Intro Challenge #1 Innovation = hard to imagine 17
  18. Intro ULTIMATE CASH FORMULA 18 X
  19. Intro VIENNA COFFEE HOTSPOT 19
  20. Intro HOW TO DESIGN THE DIFFERENCE? 20 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  
  21. Intro Challenge #2 Innovation = hard to predict 21
  22. Intro Getting from plan A ...To something that really works 22 1 2 3 4
  23. Intro Getting from plan A ...To something that really works 23 1 2 3 4 Pivot Pivot Pivot Additional reading: Mullins, J. & Komisar, M. (2011): Getting to plan B, Harvard Business Press. ISBN: 978-1422126691
  24. 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 ? 24
  25. Intro Challenge #3 Innovation = hard to Evaluate 25
  26. Intro 26
  27. Intro 27
  28. Intro 28 1860 1900 1950 2000 2012 1 2 4 8 16 32 64 128 0 US$ per barrel Crude oil prices since 1861 Source: Wikipedia
  29. 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 ”Most executives compare the cash flows from innovation against the default scenario of doing nothing, assuming – incorrectly – that the present health of the company will persist indefinitely if the investment is not made. For a better assessment of the innovation‘s value, the comparison should be between its projected discounted cash flow and the 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  
  30. Intro 30 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 ”Most executives compare the cash flows from innovation against the default scenario of doing nothing, assuming – incorrectly – that the present health of the company will persist indefinitely if the investment is not made. For a better assessment of the innovation‘s value, the comparison should be between its projected discounted cash flow and the 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:
  31. Intro PSYCHOLOGY OF EVALUATING IDEAS 31 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? “…there is nothing more difficult to take in hand, more 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
  32. Intro DEALING WITH UNCERTAINTY 32
  33. Intro 33 Human- centered EvolutionaryContext- oriented Holistic Visual Team-oriented Six principles of Business Design
  34. Intro WRAP UP 34
  35. Ideas Agenda 35 1 2 Intro 3 4 5 Ideas Business Validation Realization Reflection 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 gamified
  36. Ideas 36 HOW TO START?
  37. Ideas How to start 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
  38. Ideas How to start: OPTION 1 38 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
  39. Ideas The next big thing... 39 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)
  40. Ideas COPY CAT 40
  41. Ideas COPY CAT 41 Is Copy Cat a bad thing? Paradigm Position ProductProcess Innovation Do better... Do different... Source: Bessant (2007)
  42. 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 42
  43. Ideas How to start: OPTION 2 43 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
  44. Ideas Before you CAN pitch the “right” solution, you have to understand the “right” customer problem 44
  45. Ideas Story of A milkshake 45 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)
  46. Ideas JOB(S) TO GET DONE 46 „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, I want to fight boredom, 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
  47. Ideas 47 CUSTOMER SCENARIO...AS A TOOL The “Customer Scenario Canvas” is a great tool to visualize today’s or future customer behavior as scenarios. Focus on one target group at a time, either customers or users, describe a sequence of activities with pains and gains and a first idea, what job(s) your target groups tries to get done in that sequence. 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? Sequence of activities We need to understand the behavior of our target group(s) in many details in order to create innovation for them. What do they do? What impedes them (pains), what might create extra value (gains)? Job(s) to get done People usually want to achieve something when they invest time and effort. What do they have in mind here? What job(s) do they want to get done?
  48. Ideas #GOOT(F)B 48 = get out of the (fucking) building
  49. Ideas “We don‘t know what we see, we see what we know.“ Johann Wolfgang v. Goethe 49
  50. Ideas Understanding Customers: PROCESSCycle2 1 + Scope field research + 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+ Select participants to fill up 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 …and try to find answers you are looking for. ObservationsInterviews + Overlay offerings / competitors etc. Cycle1 Persona   Persona  
  51. Ideas VISUALIZING „FAKE“ CUSTOMERS 51 This is a persona: A persona is a archetypical description of customers / users . Personas are designed to capture and visualize qualitative field research 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 feeling and not finding the ultimate truth. Consumer behavior Personal quotes Demographics Preferences Key statement Pain points
  52. Ideas VISUALIZING MARKETSDimensionA Dimension B Are there more customers of this type? 52 Products and services of your competitors Is there are market? Stop your research when your learning curve starts to flatten out Products and services you offer
  53. Ideas WHO IS YOUR PRIMARY CUSTOMER? 53 Source: amazon.com Source: marykay.com.au “The strategic choice of primary customer – with special emphasis on “primary” – defines the business. This is certainly true at Amazon. [...] The company‘s choice of primary customer is reflected clearly in its well-known 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)
  54. Ideas ANOTHER TWIST: How to improve ProDuCts 54 How can we make better products for our target group?
  55. Ideas WHY IMPROVE PRODUCTS? 55
  56. Ideas Develop YOUR customers 56 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?
  57. Ideas How to start: OPTION 3 57 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
  58. ON THE GAME IS
  59. Ideas 59
  60. Ideas 60
  61. © 2015 Orange HillsTM GmbH. All rights reserved. LEADERBOARD BUSINESS Game DateIteration 1 2 3 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#leb_en Team 1 Team Team 2 3 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 Team A Team B Team C Team D Team E Team F SILVERBRONZE GOLD Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh
  62. © 2015 Orange HillsTM GmbH. All rights reserved. GAMEBOARD BUSINESS Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#gab_en 1 Introduction + Mission + Team + Evaluation + Workspace START 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. 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 DNA + Jobs(s) to get done + Core value + Unfair advantage 6 Business ecosystem + Actors + Relationships + Exchange 7 KPIs + Performance + Threshold + Measurement 8 Visual storytelling + Storyline + Visuals + Video production 9 Review + Status quo + Feedback + Evaluation 10 Hypotheses + Analogs + Antilogs + Prioritization 11 Hypotheses + Exploration + Assumptions + Results 12 Experiments + Methods + Tools + Measurements + Efficiency http://bit.ly/UHYzra 14 Lean offerings + User stories + Non-functional requirements 15 Lean offerings + Market analysis + Competitive benchmark 16 Social prototyping + UI / software development + Modeling + Simulation 17 Action plan + Tasks + Output + Teamwork 18 Review + Status quo + Feedback + Evaluation 19 Execution + Group work + Interventions + Reflection 20 Review + Status quo + Feedback + Evaluation 21 Execution + Group work + Interventions + Reflection 22 Review + Status quo + Feedback + Evaluation 23 Final + Results + Learnings + Award ceremony END Consistency check http://bit.ly/1lQHcf7 http://bit.ly/1rMo2hP http://bit.ly/1k5aV8O optional READY-SET-GO Game DateIteration 1 2 3 13 Field research + Execution of experiments + Data analysis + Reflection optional Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh 0 55 50 45 40 3525 30 20 15 10 5 Time management We organise our teamwork in 20 min. units dedicated to one topic. During these units, we focus 100% on the topic. No phone calls, no other issues or distractions. After each unit, take a break of 5 min. to relax. Interventions’ schedule 1 2 3 4 5 Team B C D E F A Time Focus 5 5 20 min. 20 min. 20 min.
  63. Ideas Causation VS. Effectuation 63 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
  64. 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? 64 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
  65. Ideas THE STORY OF „FREITAG“ BAGS 65
  66. Ideas
  67. Ideas
  68. Ideas WRAP UP 68
  69. Business Agenda 69 1 2 Intro 3 4 5 Ideas Business Validation Realization Reflection 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 gamified
  70. Business BUSINESS Model innovation #bmi 70 Source: Osterwalder 2010 Additional reading: Osterwalder, A. (2008): Business Model Generation, Self Published. ISBN: 978-2-8399-0580-0
  71. Business Example: XEROX 71 Pay per copy
  72. Business Example: GILETTE 72 18,85 € Amazon.com 21,97 € (8 pcs.) Amazon.com Average lifespan: 6 weeks
  73. Business Example: Happy Meal 73 Who values what?
  74. Business Example: LINKEDIN 74 Upgrade to premium services
  75. Business Example: AIRBNB 75
  76. Business Example: INTERHYP.DE 76 “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 through 23 regional offices in key German cities.” Source: Interhyp Annual Report 2011
  77. Business Example: MYBESTBRANDS 77 ~ 0,30 € per click-out
  78. Business Example: MYBESTBRANDS 78 ~ 0,30 € per click-out Business model patterns Source: http://www.boardofinnovation.com/downloads/bmp.pdf
  79. Business BUSINESS MODEL INSPIRATOR 79 The “Business Model Inspirator” has been designed to fuel your imagination and unleash your creativity helping to improve your business model in Business Design projects. Start by identifying the challenges you have in your current business model and find examples illustrating alternative ways of conducting your business in order to succeed. Please use our “Business Model Pattern Cards” if you need more information on how to apply a certain example to your specific situation.
  80. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA BUSINESS Model...AS A TOOL 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. URL: bit.ly/UHYzra
  81. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA BUSINESS Model: EXTERNAL VIEW 81 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 efficient to reach your customers (and partners) is one of the first things you 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
  82. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA 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 82 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. Profit formula The profit formula gives answers to the questions, how much money can be made in terms of revenue, how costs are allocated and how much profit each transaction nets to achieve the desired profit level. Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and efficient to reach your customers (and partners) is one of the first things you 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
  83. Business EXAMPLE: ITUNES 83 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? © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA 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 cam- paigns Manufac- turing Hardware revenues 99 cent per song Transactio n based Royalties URL: bit.ly/UHYzra
  84. Business VIRTUAL BUSINESS MODELING 84 “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
  85. Business
  86. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA BUSINESS DNA 86 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
  87. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA ”HOW“ AND “WHAT“ IS NOT ENOUGH 87 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!
  88. Business „WHY“ = SOURCE OF TRANSFORMATION 88 1997 2013
  89. Business “MARKETING IS ABOUT SELLING MORE STUFF TO MORE PEOPLE MORE OFTEN FOR MORE MONEY MORE EFFICIENTLY.” Sergio Zyman, CMO Coca-Cola 89
  90. Business HOW CAN WE MEASURE SUCCESS? 90 Relevant metricsQuestions Acquisition Acquisition costs for customers, users and partners, mentions, traffic, cost-per-click, open rate, 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, compensation, affirmation, etc. Does a one-time customer or user become engaged? Notifications, 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, campaigns, affiliates Activation Retention Revenue Referral Source: according to Croll / Yoskowitz (2013) Ask yourself: “Can I measure the metrics?” and “Does the metric help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metric 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 Quarterly At the start, define reachable short- term targets: E.g. 10% more active users every week. Sounds boring? You will be surprised how quickly the numbers get large…
  91. Business © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA BUSINESS KPIs 91 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
  92. Business Example: GOOGLE ANALYTICS / GECKOBOARD 92
  93. Business
  94. Business WRAP UP 94
  95. Validation Agenda 95 1 2 Intro 3 4 5 Ideas Business Validation Realization Reflection 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 gamified
  96. Validation © 2015 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com. BUSINESS MODEL 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 and is easily accessible? Customers Users InvestmentsCostsPricing & revenue streamsPattern How much money do we need to spend before we earn?What are our revenue streams and 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 Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#bml_en Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains What do we do better than our competitors, which is hard to copy? Unfair advantage What kind of value do we create for customers and users with our offerings? Core value DNA 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 cam- paigns Manufac- turing Hardware revenues 99 cent per song Transactio n based Royalties EVERY PLAN IS BASED ON UNKNOWNS 96 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 Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store? ?   ?   ?   ?   ?  
  97. Validation LEARN TO PLAN PLAN TO LEARN 97
  98. Validation © 2015 Orange HillsTM GmbH. All rights reserved. Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#hyp_en HYPOTHESES & EXPERIMENTS Analogs What things are new to us but we can learn from others, because they have proven that it just works? 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: Test focus Importance Uncertainties A+ A- 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. What experiments are required to explore antilogs even further before you turn them into testable hypotheses? Antilogs Exploration Validation Experiments How can we test the identified hypotheses with the least effort? Hypotheses Which antilogs are both very important and uncertain? Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...” What hypotheses grow out of relevant antilogs in our test focus? “We believe...” How to test hypotheses? 1. 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. Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh “...which will result in...”“We believe...” “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...”“We believe...” “...which will result in...”“We believe...” “...which will result in...”“We believe...” Team DateIteration 1 2 3 Hypotheses…AS A TOOL 98 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 to test the assumptions as efficient as possible. Don’t test ideas! Test the assumptions of your ideas, systematically!
  99. Validation © 2015 Orange HillsTM GmbH. All rights reserved. Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#hyp_en HYPOTHESES & EXPERIMENTS Analogs What things are new to us but we can learn from others, because they have proven that it just works? 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: Test focus Importance Uncertainties A+ A- 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. What experiments are required to explore antilogs even further before you turn them into testable hypotheses? Antilogs Exploration Validation Experiments How can we test the identified hypotheses with the least effort? Hypotheses Which antilogs are both very important and uncertain? Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...” What hypotheses grow out of relevant antilogs in our test focus? “We believe...” How to test hypotheses? 1. 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. Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh “...which will result in...”“We believe...” “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...”“We believe...” “...which will result in...”“We believe...” “...which will result in...”“We believe...” Team DateIteration 1 2 3 Hypotheses…AS A TOOL 99 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 to test the assumptions as efficient as 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 first before you are able to 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 find the answers you are 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
  100. Validation © 2015 Orange HillsTM GmbH. All rights reserved. Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#hyp_en HYPOTHESES & EXPERIMENTS Analogs What things are new to us but we can learn from others, because they have proven that it just works? 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: Test focus Importance Uncertainties A+ A- 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. What experiments are required to explore antilogs even further before you turn them into testable hypotheses? Antilogs Exploration Validation Experiments How can we test the identified hypotheses with the least effort? Hypotheses Which antilogs are both very important and uncertain? Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...” What hypotheses grow out of relevant antilogs in our test focus? “We believe...” How to test hypotheses? 1. 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. Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh “...which will result in...”“We believe...” “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...”“We believe...” “...which will result in...”“We believe...” “...which will result in...”“We believe...” Team DateIteration 1 2 3 EXAMPLE: AIRBNB 100 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
  101. Validation 101 What is YOUR BET ON THE FUTURE? In other words: “What are your five core hypotheses regarding your future business model? Yep, just 5…” The “killer question” to challenge every innovation team
  102. Validation
  103. Validation 103 ONE OF THE WORST PRODUCT FLOPS
  104. Validation THEY TESTED A LOT: the right thing? 104 The Pepsi Challenge back in the late 80’s WWhhiicchh CCoollaa ddoo yyoouu pprreeffeerr??
  105. Validation 105 TESTING ≠≠REALITY
  106. Validation Business experiments 106 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. Analyze findings from 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? ( MVP, see next chapter)
  107. Validation PROTOTYPES AS Shared spaces 107 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
  108. Validation PROTOTYPE = INTERACTION 108 ...to simulate, embrace and discuss what the future reality might be
  109. Validation SOCIAL PROTOTYPING 109 +  Do you remember? ...to simulate, embrace and discuss what the future reality might be
  110. Validation PROTOTYPE? YES 110 This is the traditional (engineering-driven) perspective on prototypes, the first of its kind, the pre- version for mass production.
  111. Validation PROTOTYPE? YES 111 Source: Calgraphix Many mechanical models and prototypes can be easily manufactured with low-cost 3D printers.
  112. Validation PROTOTYPE? YES 112 Source: UIStencils Storyboards can help visualize customer encounters or entire customer experience at early stages.
  113. Validation PROTOTYPE? YES 113 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.
  114. Validation PROTOTYPE? YES 114 Source: UIStencils Even rough sketches of a new product, service or software UI is a prototype. With a different purpose, however.
  115. Validation Prototype? YES 115 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.
  116. 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?
  117. Validation EVOLUTION OF PrototypeS 117 Source: UnternehmerTUM (2006) Failed start-up project, founded by three TUM engineering graduates Build your first prototypes by yourself. You will get a better feeling for your product, improve teamwork and customer interactions.
  118. Validation PROTOTYPING TOOLS 118 +  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
  119. Validation EXAMPLE: 3D PRINTING FOR EVERYONE 119
  120. Validation © 2015 Orange HillsTM GmbH. All rights reserved. Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#hyp_en HYPOTHESES & EXPERIMENTS Analogs What things are new to us but we can learn from others, because they have proven that it just works? 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: Test focus Importance Uncertainties A+ A- 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. What experiments are required to explore antilogs even further before you turn them into testable hypotheses? Antilogs Exploration Validation Experiments How can we test the identified hypotheses with the least effort? Hypotheses Which antilogs are both very important and uncertain? Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch Lean offerings post-launch Experiment pre-launch “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...” What hypotheses grow out of relevant antilogs in our test focus? “We believe...” How to test hypotheses? 1. 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. Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh “...which will result in...”“We believe...” “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “We do...” “We are convinced, if...” incl. + threshold + timeframe “...which will result in...”“We believe...” “...which will result in...”“We believe...” “...which will result in...”“We believe...” Team DateIteration 1 2 3 EXAMPLE: ITUNES 120 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 efficient as possible. 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 artwork 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? Our test customers pay 99 cent per song Record companies are happy to provide music Our test customers accept terms & conditions Test POS with download possibilities of TOP 40 songs Negotiation 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 60% of our test customers pay 2 companies are on board within 3 months 75% of iPod customers accept Sales voiume …give access to > 5.000 songs… Smooth sign- up process
  121. Validation …AND ONLINE 121 “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
  122. Validation TRACK YOUR LEARNING PERFORMANCE 122 URL: bit.ly/q7slqa Home screen
  123. Validation
  124. Validation
  125. Validation WRAP UP 125
  126. Realization Agenda 126 1 2 Intro 3 4 5 Ideas Business Validation Realization Reflection 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 gamified
  127. Realization “IDEAS ARE WORTH NOTHING, UNLESS EXECUTED.“ Jason Fried, 37signals 127
  128. Realization Process paradigms 128 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
  129. Realization BIRTH OF “WATERFALL“ Model? 129 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.
  130. Realization EVOLUTION OF IDeas 130 „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)
  131. Realization 131 If  you  don‘t  know  what  you  are   doing,  you  be�er  do  it  fast!  
  132. Realization EVOLUTION OF IDeas 132 „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/ marketfit
  133. 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” Problem & solution fit Phase 2 “Customer validation” Product & Market fit 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 133 Time
  134. 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 134
  135. Realization LeanTraditional traditional VS. LEAN 135 Strategy Business model Hypotheses-driven Business plan Implementation-driven Customer development Get out of the office and test hypotheses 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 Income statement, balance sheet, cash flow statement Exception Fix by firing executives Measured Operates on complete data New-Product Process Engineering Organization Financial Reporting Failure Speed Source: Blank (2013)
  136. Realization ”An organization can never know what it thinks or wants until it sees what it does.” Karl E. Weick, Sociologist 136 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
  137. Realization LEAN OFFERINGS / MVP 137 In other (my) words: A new product or service with a minimum set of features that fulfills at least the following conditions: +  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
  138. Realization ”No matter how well you perform, there's always somebody of intelligent opinion who thinks it's lousy.“ Sir Laurence Olivier 138
  139. Realization MVP FOR… 139
  140. Realization © 2015 Orange HillsTM GmbH. All rights reserved. LEAN OFFERINGS / MVP Team DateIteration 1 2 3 Functional requirements Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#mvp_en 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. Competitive benchmark Non-functional requirements 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 Ease of implementation DNAfit 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? Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh 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 DNA What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains LEAN OFFERINGS…AS A TOOL 140 URL: http://bit.ly/1rMo2hP The “Lean Offerings / MVP Canvas” gives you guidance to decide, which features should be part of your first 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 greenfield users than being feature rich.
  141. Realization © 2015 Orange HillsTM GmbH. All rights reserved. LEAN OFFERINGS / MVP Team DateIteration 1 2 3 Functional requirements Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#mvp_en 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. Competitive benchmark Non-functional requirements 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 Ease of implementation DNAfit 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? Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh 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 DNA What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains LEAN OFFERINGS…AS A TOOL 141 Functional requirements We define a MVP in terms of functional requirements as user stories, which will be categorized based on how easy they can be implemented and how well they fit to the DNA of the 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 your MVP. Define it first before you start thinking about your first product or service. Hypotheses MVPs are designed not only to build your first product or 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 features should be part of your first 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 greenfield users than being feature rich. URL: http://bit.ly/1rMo2hP
  142. Realization © 2015 Orange HillsTM GmbH. All rights reserved. LEAN OFFERINGS / MVP Team DateIteration 1 2 3 Functional requirements Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#mvp_en 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. Competitive benchmark Non-functional requirements 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 Ease of implementation DNAfit 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? Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh 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 DNA What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains EXAMPLE: ITUNES 142 The “Lean Offerings / MVP Canvas” gives you guidance to decide, which features should be part of your first 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 (text + categ.) 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
  143. Realization …AND ONLINE 143 “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
  144. Realization
  145. Realization FROM MVP TO MVB (= Business) 145 Defining your first product or service 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 need first and which of the core 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 © 2015 Orange HillsTM GmbH. All rights reserved. LEAN OFFERINGS / MVP Team DateIteration 1 2 3 Functional requirements Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#mvp_en 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. Competitive benchmark Non-functional requirements 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 Ease of implementation DNAfit 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? Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh 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 DNA What job(s) are our customers and users trying to get done? Job(s) to get done Pains Gains
  146. Realization
  147. Realization LET‘S DO SOME “LEAN“ PROJECT MANAGEMENT 147
  148. 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 148 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 cycle that fulfills the given purpose.
  149. Realization © 2015 Orange HillsTM GmbH. All rights reserved. ACTION PLAN Team DateIteration 1 2 3 Tasks Design your business in your browser | http://www.rapidmodeler.deBusiness Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en Output Experiments Lean offerings Each post-it represents one single task with an effort of 2-3 mandays What tasks need to be carried out to build the lean offerings / MVP? What tasks 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 tasks 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 our team doing? Reflection Team Orange HillsTM GmbH | www.orangehills.de | Follow us on Twitter: @orangehillsgmbh ACTION PLAN…AS A TOOL 149 Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the identified hypotheses. Plan 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 and reflect every week, whether changes are required. Output The definition of a tangible output for each cycle is usually the first thing you do before you start working. In many cases, the development of your MVP will be your first goal. 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 cycle that fulfills the given purpose. 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. Reflection After each cycle, it is essential to sit down with your team and reflect what 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
  150. 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 150 Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the identified hypotheses. Plan 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 and reflect every week, whether changes are required. Output The definition of a tangible output for each cycle is usually the first thing you do before you start working. In many cases, the development of your MVP will be your first goal. 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. Reflection After each cycle, it is essential to sit down with your team and reflect what 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 modifications. 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. Reflection

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