APS1015 Class 6: Validation of Market-Based Solutions

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APS1015 Class 6: Validation of Market-Based Solutions

  1. 1. APS 1015: Social EntrepreneurshipClass 6: Validation of Market-BasedSolutionsWednesday, June 12, 20131Instructors:Norm Tasevski (norm@socialentrepreneurship.ca)Karim Harji (karim@socialentrepreneurship.ca)
  2. 2. © Norm Tasevski & Karim HarjiAgenda•  Recap of Idea Jam(Class 5)•  Screening Entrepreneurial Ideas•  Break•  Validation Techniques•  Next week2
  3. 3. Idea Jam (Recap from Last Week…)3
  4. 4. © Norm Tasevski & Karim HarjiIdea Jam Part 1: Empathy Mapping•  What key insights emerged about your targetbeneficiary groups?4
  5. 5. © Norm Tasevski & Karim HarjiIdea Jam Part 2: Idea Generation•  What solutions (if any) did you begin to identify?5
  6. 6. Screening Social Enterprise Ideas6
  7. 7. © Norm Tasevski & Karim HarjiThe Idea Funnel7Idea BrainstormInternalScreenExternalScreenValidatedSolution# Ideas = Dozens# Ideas < 10# Ideas = 1 to 3
  8. 8. © Norm Tasevski & Karim HarjiStep 1: Idea Brainstorming•  Our idea jam…8
  9. 9. © Norm Tasevski & Karim HarjiStep 2: Internal Screen•  Goal: assess the quality of the entrepreneurial ideabefore conducting market research•  Why screen internally first?•  2 Parts:–  Assessment of Social “Fit”–  Assessment of Business Potential9
  10. 10. © Norm Tasevski & Karim HarjiSocial “Fit”•  Evaluate based on:–  Desired social outcomes–  Internal capacity to deliver value10
  11. 11. © Norm Tasevski & Karim HarjiSocial “Fit”11MeasureRating0 1 2 3Fit with DesiredMission/VisionDoes not fit with missionand valuesMinimal link to missionand visionSome fit with mission andvaluesStrong fit with mission andvaluesAbility to GenerateSocial BenefitNone Low Medium HighExistence of Skillsand CapacityLarge amount of skillsmissingSkills available frompartners and/orconsultantsMinimal trainingnecessaryCurrent team alreadyhas the necessary skillsRisk High risk Moderate riskManageable risk(strategies to address)No riskPartnership/CollaborationOpportunityNo probable partnersexistNo partnership needed,or probable partners existand are interestedAdvances OurName/Reputation/ValuesPotential for negativeimpactSlight increase inawareness of orgModerate increase inawareness of orgDirect significantincrease in awareness oforgOther BarriersSignificant cultural orother changes requiredSome barriers which maybe difficult to addressSome barriers, but likelyto be able to addressNo significant barriers
  12. 12. © Norm Tasevski & Karim HarjiBusiness Potential•  Evaluate based on:–  Potential financial performance of the venture–  External need/want of the product/service12
  13. 13. © Norm Tasevski & Karim HarjiSocial “Fit”13MeasureRating0 1 2 3Level of CustomerNeedNot a significant needNeed that is addressedby others reasonably wellUnmet need and strongcustomer base willing topay for itHigh level of unmet needamongst people with theability to payCompetitiveAdvantageCompetitivedisadvantage – manyother competitors areserving needs wellNo significant differencefrom competitorsGood value propositionbut could easily bematchedNo other competitors,and sustainable uniquesolution for nicheProfit/SurplusPotentialLikely loss $0 - $50,000 $50,000 - $100,000 $100,000 +AdditionalInvestmentRequiredMajor investmentrequired (>$20,000)Moderate investmentrequired ($10,000-20,000)Little investment required(<$10,000)Could be done withexisting resourcesReturn onInvestmentTimeframeLong payback periodnot justified by returnReasonable ROI over 2 or3 yearsFirst year profit = first yearinvestmentStrong positive return oninvestment in first yearAccess to RequiredStart-Up FundsNot fundableCould be fundable butunsure of sources and or%; funding difficult toattainRelatively easy to findfunding for start-up costs,but for a smallerproportionVery easy to get fundingfor start-up costs
  14. 14. © Norm Tasevski & Karim HarjiScreening Matrix14BusinessPotentialSocial “Fit”Low social impact/internal capacityHigh social impact/internal capacityHighFinancial &MarketPotentialLowFinancial &MarketPotentialConsider Second Top PriorityNot StrategicDo Not ConsiderFurtherPossible Quick Win
  15. 15. © Norm Tasevski & Karim HarjiNow…•  Screen your initial ideas according to social fit andbusiness potential15
  16. 16. © Norm Tasevski & Karim HarjiInitial Reactions•  What assumptions did you make that drove eitherhigh or low ratings of your ideas?•  Were any ideas ranked artificially high or low due toa misperception of the opportunity? If so, would achange in perception change your rating?•  What info do we not know now that are importantin confirming the potential of the idea?16
  17. 17. Break17
  18. 18. Validation Techniques18
  19. 19. © Norm Tasevski & Karim HarjiData Sources19Call key industry players(suppliers, competitors, etc)Search databases(industry, scholastic, etc)Conduct web search(Google, etc)Ask people!!!(friends, potential customers, etc)
  20. 20. © Norm Tasevski & Karim HarjiPrimary Research MethodsStep 1: Identify people to speak with–  Create a spectrum of participants based on desiredcriteria (e.g. gender, age, socio-economic status)–  Identify sources/places to meet participants–  Identify community contacts to arrange meetings withparticipantsTip: identify participants on the “extremes”–  E.g. if spectrum is based on “adoption of technology”, pickthe quickest technology adopters and those who areresistant to new technology20
  21. 21. © Norm Tasevski & Karim HarjiPrimary Research MethodsStep 2: Determine your method–  Individual interview–  Group interview–  In-context immersion–  Self-documentation–  Community-driven discovery–  Expert Interviews21
  22. 22. © Norm Tasevski & Karim HarjiPrimary Research MethodsIndividual Interview: one-on-one gathering of rich/deep information onthe behaviours, reasoning and daily realities of the intervieweeGroup interview: one-to-many gathering of information focused onunderstanding group dynamics/community lifeIn-context immersion: meeting people where they live/work/socialize(i.e. observing their context directly, walking “in their shoes”)Self-documentation: empowering the participants to document theirown experience (e.g. through journal writing, note taking)Community-driven discovery: empowering participants to also beresearchers (e.g. have them conduct interviews)Expert Interviews: one-on-one gathering of info with academics, industryexperts, other researchers, etc22
  23. 23. © Norm Tasevski & Karim HarjiThe Interview Guide•  A semi-structured set of questions that allow for dialogue whileretaining focus on a specific topic•  What to ask?–  Start by listing the assumptions you’ve made in your idea screen. Turn theseassumptions into research questions–  Categorize the questions by topic. For instance, you may want to ask participantsseveral questions on “livelihood” or on “cultural dynamics”•  How to ask?–  Start specific (e.g. “yes/no”, simple-answer questions)–  Then ask broader questions (e.g. “how”, “what” questions)–  Then probe deeper (e.g. “why” questions)•  Tips:–  Avoid “abstract” questions (e.g. “how much would you pay for…”). Instead, createa scenario (e.g. “you have a choice between A & B…”)23
  24. 24. © Norm Tasevski & Karim HarjiSome other Techniques24
  25. 25. © Norm Tasevski & Karim HarjiA Point on Asking People…25There are…Lovers Don’t give a%&$#ersHatersListen to HALF of what they say!!!
  26. 26. © Norm Tasevski & Karim HarjiWhat did we learn?26

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