Business Design (Part 1) WT2012

Wie alles beginnt... Why are you here? …to discuss and experience processes, methods & tools to be�er design business opportuni�es and bring them into prac�ce. The focus will be on (design) doing – rather than (design) thinking. Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 2

Recommended books Kawasaki, G. (2004): The art of the Schrage, M. (1999): Serious Play – Ries, E. (2011): The Lean Startup, start – the �me-‐tested, ba�le-‐ How the world’s best companies New York: Crown Business hardened guide for anyone star�ng simulate to innovate, Boston: anything, London: Penguin Books Harvard Business School Press ISBN-‐13: 978-‐0307887894 ISBN-‐13: 978-‐1591840565 ISBN-‐13: 978-‐0875848143 Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 3

Agenda 1 2 3 4 Intro Opportunity Team Business Realiza�on Wrap-‐up Day 1 Day 2 Day 3 29.05. 30.05. 31.05. “How can we iden�fy “How can we turn a “How can we tailor “How can we transfer and develop group of people into a business models business models into promising energe�c and around opportuni�es the real world – opportuni�es to start a passionate team?” that allow us to earn despite constraints?” new business?” money?” Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 4

„Design is the transforma�on of exis�ng condi�ons 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

„Business people don‘t just need to understand designers be�er; they need to become designers.“ Roger Mar�n, Dean Rotman School

How to evaluate ideas? Criteria -‐-‐ 0 ++ Criteria -‐-‐ 0 ++ Strategy Technology “I have got a GREAT vasics Technology b ision change Market strategy clear and basics must be workings on basics not defined yet in discussion exis�ng communicated worked out started Product posi�on clear and to Product basis / pla�orm development not clear in discussion coordinated with not exis�ng exis�ng the world!” sales & marke�ng started USP clear advantage in Variants / op�ons me-‐too product some USPs many some few compe��on Market entry Patent situa�on without market occupied market follower market leader threaten known, no risk difficulty Market Process-‐to-‐Market Market size Sales, product marke�ng no prepara�ons essen�al everything < € 25 mio € 25 .. 50 mio > € 50 mio & produc�on done prepara�ons done prepared Compe�tors R&D condi�ons essen�al specifica�on specifica�on work 1-‐2 player 2-‐5 player > 5 player requirements not clear & in process clear coordinated Market share Transis�ons to series similar essen�al condi�ons < 10% 10..25% > 25% produc�on working started products / missing processes exist Revenue goals 3rd party dependency support & based on external < € 3 mio p.a. € 3..12 mio p. a. > € 12 mio p. a. coordina�on none know-‐how necessary Finance Risks Relevant revenue Technical risks very high, success < 5% of branch 5..25% of branch > 25% of branch ambi�ous small unclear Break even �me Time risks resources not probably under all resources > 6 years 6 -‐ 4 years < 4 years available control available Max. nega�ve cashflow Cost risks 30 .. 15% of total <15% of total > € 10 m € 5..10 mio < € 5 mio unclear situa�on costs costs NPV for life cycle Others based on external external partners < € 5 m € 5..10 mio > € 10 mio none support on board Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 9

How to evaluate ideas? DCF + NPV „Most execu�ves compare the cash flows from innova�on 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 be�er assessment of the innova�on‘s value, the DCF and NPV comparison should be between its projected discounted methodologies cash flow and the more likely scenario of a decline in implicitly make this performance in the absence of innova�on investment.“ A comparison Assumed cash stream resul�ng from doing nothing B Companies should be making this comparison C Source: Christensen (2008) Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 14

How to evaluate ideas? DCF + NPV „Most execu�ves compare the cash flows from innova�on 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 be�er assessment of the innova�on‘s value, the DCF and NPV comparison should be of the US music industry Example between its projected discounted methodologies cash flow and the more likely scenario of a decline in implicitly make this performance in the absence of innova�on investment.“ Established industry: A comparison Source: Christensen (2008) Assumed cash stream resul�ng from doing nothing B New market entrants: Companies should be making this comparison C Source: Christensen (2008) Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 15

How to communicate ideas? “OK, my vision is to establish the premier purveyor of the ﬁnest coﬀee in the world that inspires and nurtures the human spirit – one person, one cup and one neighborhood at a �me!” Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 16

Example: Vienna coffee hot spot Hotel Sacher Starbucks Selling coﬀee, cakes and Selling coﬀee, cakes a tradi�onal and a very special atmosphere feeling Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 17

Example: Vienna coffee hot spot Hotel Sacher Starbucks Selling coffee, cakes and Selling coffee, cakes a tradi�onal and a very special atmosphere feeling What kind of tools help us to understand and design the difference? Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 18

For corporates: Looks familiar? „What is our „How can we earn strategy for 2014?“ more money?“ „How can we work smarter?“ „How can social innova�on improve our business?“ „What the hell are they talkin‘ about?“ „What is our brand percep�on?“ Big (wo)man approach „How do we organize our next BI project?“ Project Status TUM EMBA 2012 Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 19

How to convince others (with just a vision)? “I am sorry, we can’t “To be honest, I don’t issue you a credit know what you are card!” talking about!” “I could invest in you, “I would love to buy but your idea will your product, but never work!” where is your track-‐ record?” “Darling, why do you put all our savings “Dude, why should I into your company?” quit my 180k$ job to join your team?” “Hey, daddy, why is it you have so li�le �me for me?” “Well, I can oﬀer you all … a GREAT vision!” Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 20

How to know what you know? “What we know is a drop, what we don’t now is an ocean.” ? Isaac Newton General knowledge unknown 2 1 + Availability Individual knowledge known 3 4 explicit knowledge implicit knowledge known unknown Accessibility Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 21

”…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 introduc�on of a new order of things. Because the innovator has for enemies all those who have done well under the old condi�ons, 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 un�l they have long experienced them.” Niccolo Machiavelli

Business Design: Dealing with complexity Human-‐centered Holis�c Context-‐oriented Evolu�onary Visual Team-‐oriented Source: UnternehmerTUM 2008 Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 23

How to apply to new venture processes? Commitment Supply & demand barrier boundary Business Organiza�on created Product or First concept & produc�on service customers technology → market Externally or „Crossing the internally Opera�onal feedback (How?) chasm“ s�mulated opportunity Commitment to recogni�on venture crea�on Strategic feedback (What?) „Technology setup / Organiza�on „Opportunity stage“ crea�on stage“ „Exchange stage“ Source: Bhave 1994 Project TUM EMBA 2012 Status Version 1.0 | Final © 2012 Orange HillsTM GmbH. All rights reserved. Date May 29th, 2012 24

Wie alles beginnt... The Case Project Agile new business dTools Orange Hills Service esign Status Version 1.0 | Final laufend © 2012 Orange HillsTM GmbH. All rights reserved. Date March 05th, 2009 01. Oktober 2011 25

A new approach to a sustainable and economically worthwhile protec�on of threatened tropical rainforest with an emo�onal appeal. It is Treems` vision to create the largest privately held and long-‐term protected tropical rainforest area. © 2012 Orange HillsTM GmbH. All rights reserved.

The Treems solu�on On the market for natural preserva�on, Treems generates a signiﬁcant value from preserved rainforest through crea�ng and bundling of a three-‐component product. Treems` oasis Protec�on Online connec�vity Buy your individual tree and its Choose your individual protec�on Show your commitment online and surrounding environment period for up to 30 years mo�vate others to be part of Treems The product`s components bring the rainforest to “life” and enable the customer to experience the possibili�es of nature preserva�on © 2012 Orange HillsTM GmbH. All rights reserved.

The Treems business model Treems acts as an intermediary between customers and local partners to assure the exchange of ﬁnancial compensa�on and product. Tree data, protec�on, land lease Unique Treems Oasis product Land partner Inventory partner Customers (B2C & B2B) Protec�on partner Compensa�on for services Product price The Treems` business model is a simple system that transports trust and transparency to both par�es involved. © 2012 Orange HillsTM GmbH. All rights reserved. 28

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Business Design (Part 1) WT2012

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