THE CUSTOMER DEVELOPMENT ROADMAP FOR BLUE OCEAN STRATEGISTS

1. THE CUSTOMER DEVELOPMENT ROADMAP FOR BLUE OCEAN STRATEGISTS Dr. Rod Kuhn King Visual Problem Solver, Inventor, and Magician

2. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing GURUS CUSTOMER DEVELOPMENT ROADMAP (based on Steve Blank’s book: “The Four Steps To The Epiphany”) CUSTOMER DEVELOPMENT ROADMAP The 4 Stages of the Customer Development Journey for a Scalable Startup 1. CUSTOMER DISCOVERY 2. CUSTOMER VALIDATION 3. CUSTOMER CREATION 4. COMPANY BUILDING

3. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing GURUS CUSTOMER DEVELOPMENT ROADMAP (based on Steve Blank’s book, “The Four Steps To The Epiphany” and W. Kim & R. Mauborgne’s book, “Blue Ocean Strategy”) CUSTOMER DEVELOPMENT ROADMAP - Details The 4 Stages of the Customer Development Journey for a Scalable Startup 3. CUSTOMER CREATION 3.1 Get Ready 3.2 Position 3.3 Launch 3.4 Create Demand 1. CUSTOMER DISCOVERY 1.1 State Your Hypothesis - VISUAL AWAKENING: “As Is” Strategy Canvas (Office work) 1.2 Test “Problem” Hypothesis - VISUAL EXPLORATION: Four Actions Grid (Field work) - VISUAL STRATEGY FAIR: “To Be” Strategy Canvas - VISUAL COMMUNICATION: Comparison of Canvases 1.3 Test “Product” Hypothesis: Minimum Viable Product (MVP) - Build MVP: Prototype Ad/Headline/Web Page/Product/Service; Min. Feature Set - Test MVP - Test Hypotheses for Business Model 2. CUSTOMER VALIDATION 2.1 Get Ready to Sell 2.2 Sell to “Earlyvangelists” 2.3 Develop Positioning: Product-Market Fit - Proposed Strategy Canvas (Customer Experience Curve) - Proposed Scalable Business Model 2.4 Verify - Product-Market Fit - Scalable Business Model 4. COMPANY BUILDING 4.1 Mainstream Customers 4.2 Management/Culture Issues 4.3 Functional Departments 4.4 Fast Response Departments

4. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing GURUS THE 2 WORLDS OF CUSTOMER DEVELOPMENT THE 2 WORLDS OF CUSTOMER DEVELOPMENT CUSTOMER DISCOVERY CUSTOMER VALIDATION CUSTOMER CREATION COMPANY BUILDING WORLD OF SEARCH FOR SCALABLE BUSINESS MODEL (For ‘Startups/Entrepreneurs/Founders’) WORLD OF EXECUTION FOR SCALABLE BUSINESS MODEL (For ‘Established or Matured Companies/Accountants’)

5. CUSTOMER CREATION PYRAMID FOR THE BLUE OCEAN STARTUP Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing  Delighters  Satisfiers  Dissatisfiers  Delighters  Satisfiers  Dissatisfiers  Delighters  Satisfiers  Dissatisfiers NON-COMPETITORS (Remote Industries/Economy: Sectoral & Geographical Non-alternatives) DIRECT COMPETITORS (Core Sector/Strategic Groups: Substitutes) BUSINESS (New) Customer Value Proposition/Market: …………………………………………………………………..  NON- CUSTOMERS o Profitable o Break-even o Unprofitable Oh My God- Product/Service Why? How? Why? How? Why? How? INDIRECT COMPETITORS (Peripheral/Adjacent Industries: Alternatives/Value Chain Complements) Diffusion (Word-of-mouth) Potential = Delighters + Satisfiers - Dissatisfiers GURUS  Hypotheses vs. Reality  JTBD = Job To Be Done

6. CORE VALUES (Incentives/Penalties) STAKEHOLDER IMPACTS [Profit (Margin); Revenue /Cost ; Unit Price; Volume; Speed; Trade-off] GOALS, OBJECTIVES, STRATEGIES & TACTICS (PLAN) CUSTOMER PROBLEM (BIG URGENT MARKET PROBLEM: BUMP) RESOURCES (GLOBAL VALUE CHAIN/Bus. Model)  S: Suppliers  E: Employees (Core Competencies)  M: Machinery/Equipment/Facility  P: Processes  O: Output (Product/Service)  R: Retailers/Distributors/Channels  C: Consumer/Customer Segments  E: Environment: Competitors, etc. COMPANY BUILDING BLUEPRINT (Version X) MISSION/VISION CUSTOMER VALUE PROPOSITION GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

7. ITENNE: ENVIRONMENT P: PROCESSES S: SUPPLIERS/MATERIALS R: RETAILERS/DISTRIBUTORS/ CHANNELS O: OUTPUTS (PRODUCT/ SERVICE) E: EMPLOYEES/KNOWLEDGE ASSETS/CULTURE GLOBAL VALUE CHAIN: OUTCOMES/GOALS  Customer Value Proposition (Job)  Business Value = Revenue/Cost  Customer Value (Experience) = Customer Delight/Customer Pain M: MACHINERY/EQUIPMENT/ FACILITY/LOCATION C: CUSTOMERS/CONSUMERS & RELATIONSHIPS GLOBAL VALUE CHAIN Zoomable Elements of a Value Chain or Business Model: “SEMPORCE” GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

8. ITENNE: ENVIRONMENT/INVESTOR  Revenue (Sales)  Cash Burn Rate  Month of Cash Left  Time to Cash Flow-Breakeven  Contribution Margin P: PROCESSES  Cycle Time for Pivots/Prototyping/ Versioning/Product Releases  Average Time to First Order  Average Time to Follow-on Order  Customer Feedback/Voice S: SUPPLIERS/MATERIALS R: RETAILERS/DISTRIBUTORS/ CHANNELS  Advertising Expenses  Viral Coefficient O: OUTPUTS (PRODUCT/ SERVICE)  No. of Minimum Viable Products  No. of Prototypes/Releases  Average Size Order  Average Selling Price per Order  Web Page/Site: Total Visits; Total Page Views E: EMPLOYEES/KNOWLEDGE ASSETS/CULTURE  Agile/Lean (‘Small’) Teams  Lessons Learned/Insights  No. of Experiments/Interviews  Effectiveness/Proficiency of Sale Person  Revenue per Sale Person CUSTOMER DEVELOPMENT DASHBOARD (CDD) OUTCOMES/GOALS:  Customer Value Proposition  Business Value = Revenue/Cost  Customer Value (Experience) = Customer Delight/Customer Pain M: MACHINERY/EQUIPMENT/ FACILITY/LOCATION C: CUSTOMERS/CONSUMERS & RELATIONSHIPS  No. of Prospects/Registrations  No. of Customers/Referrals  Cost per Acquisition (Paid/Net)  Customer Lifetime Value  Customer Loyalty/Retention: Net Promoter Score (NPS) CUSTOMER DEVELOPMENT DASHBOARD FOR THE BLUE OCEAN STARTUP GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

11. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing A Blue Ocean Startup Is a “Value Innovation” Business That Creates an Uncontested Market Space and Makes Competitors Irrelevant

12. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing Eventually, a Blue Ocean Startup has  a Profit Margin of, at least, 20% p.a.  not more than 3 Direct Competitors in a Fast-growing Market (Niche) a Market Share of, at least, 3 Times That of Nearest Competitor

15. WHY (PROBLEMS)? RED OCEAN  Overcrowded Industries  Commoditized Products/Services  Similar Customer Exp. Curves  Globalization  Accelerated Technological Adv. HOW MANY? HOW MUCH?  INSEAD, France (Europe)  UCSI (Asia)  Kimberly Clark-BOSI  Many Communities of Practice for Blue Ocean Strategy on the Web WHAT (PROBLEMS)? RED OCEAN (BLOODY COMPETITION)  Head-to-head Competition  Price Wars  Shrinking Business Profit  ‘Fixed’ Market Boundaries HOW (SOLUTION)? BLUE OCEAN (STRATEGY)  Create Uncontested Market Space: ‘Category of One’  Make Competitors Irrelevant  Use Value Innovation: Resolve Cost vs. Differentiation Trade-off WHAT NEXT? See www.blueoceanstrategy.com WHERE (PROBLEMS)?  Overcrowded Industries  Slow Growing/Matured Sectors THE METHODOLOGY OF BLUE OCEAN STRATEGY (based on W. Chan Kim & Renee Mauborgne’s book: “Blue Ocean Strategy”) WHEN? See www.blueoceanstrategy.com WHO? W. Chan Kim & Renee Mauborgne  Professors at INSEAD (France)  Authors of “Blue Ocean Strategy” OVERVIEW OF THE METHODOLOGY OF BLUE OCEAN STRATEGY “How to Create Uncontested Market Space and Make the Competition Irrelevant” GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

16. WHY (PROBLEMS)?  Use of Waterfall Model for Product Development  Having Little or No Customers: Product-Market Misfit HOW MANY? HOW MUCH? Growing Communities of Practice for  Customer Development Model  Lean Startup Model WHAT (PROBLEMS)?  9 out of 10 New Products are Failures (Unprofitable)  High Mortality Rate of Scalable Startups HOW (SOLUTION)?  Customer Development Model (Steve Blank): Customer Discovery; Customer Validation; Customer Creation; Company Building  Lean Startup Model (Eric Ries): Continuous & Rapid Deployment WHAT NEXT? See http://steveblank.com/ WHERE (PROBLEMS)?  Scalable Startups especially in Silicon Valley, California  World of Business (Startups) THE METHODOLOGY OF CUSTOMER DEVELOPMENT (based on Steve Blank’s book: “The Four Steps To The Epiphany”) WHEN? See http://steveblank.com/ WHO? Steve Blank  Retired Serial Entrepreneur  Author of “The Four Steps To The Epiphany”  Creator of “Customer Dev. Model”  Entrepreneurship Professor OVERVIEW OF THE METHODOLOGY OF CUSTOMER DEVELOPMENT “Successful Strategies for Products That Win” GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

17. ITENN GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing BUSINESS MODEL DEVELOPMENT TOOLS FOR SYSTEMATICALLY CREATING BLUE OCEAN STARTUPS WISDOMSOURCING MAP (Rod King) CUSTOMER DEVELOPMENT (Steve Blank) BLUE OCEAN STRATEGY (W. Chan Kim & Renee Mauborgne) Blue Ocean Startup Market Types (Customer Experience Map) Value Innovation VoC Note VoC: Voice of Customer LEAN STARTUP (Eric Ries)

18. (-): PAIN (+): DELIGHT Disruption Spot Luxury Spot Strategic Choice Key OMG-Experience: Undesirable Experience: Profit Margin No. of Direct Competitors (Level of Commoditization) Blue Ocean (“Practical Impossibility”) Luxury Spot Disruption Spot Green Ocean Red Ocean JOURNEY OF THE BLUE OCEAN STARTUP 3 100% 6 10% 20% 10 (Global) Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

19. (-): PAIN (+): DELIGHT Disruption Spot Luxury Spot Strategic Choice Profit Margin No. of Direct Competitors (Level of Commoditization) COMPANY BUILDING COMPANY SCALING/ ACQUISITION CUSTOMER CREATION CUSTOMER DISCOVERY & VALIDATION ‘CUSTOMER DEVELOPMENT’ JOURNEY OF THE BLUE OCEAN STARTUP 3 100% 6 10% 20% 10 (Global) Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

20. (-): PAIN (+): DELIGHT Disruption Spot Luxury Spot Strategic Choice Key OMG-Experience: Undesirable Experience: GURUS Sweet Spot STARTUP Blue Ocean STARTUP (“Practical Impossibility; Value Innovation”) Luxury Spot STARTUP (“Existing Market”) Disruption Spot/ Lean STARTUP (“Resegmented/Reframed Market; Lean/No-frills Niche”) Volcano STARTUP Oasis STARTUP Green Ocean STARTUP Red Ocean STARTUP No-Man’s-Island STARTUP 3 10 6 3 6 10 Ideal Value Space (Ideal Market/ Ideal Impossibility/ Ideal Tool/ Ideal Universe/ New Market STARTUP) Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 10 ARCHETYPAL STARTUPS & MARKET TYPES “What Kind of a Startup Are We? What Kind of a Startup Must We Be? How?” Differentiation (Performance) Cost

21. (-): PAIN (+): DELIGHT Disruption Spot Luxury Spot Strategic Choice Resegmented/ Reframed/Low-cost Market; Lean/No-frills Niche Cost (Adoption Barrier; Complexity; Inaccessibility; Delay) Existing High end- Market Performance (Functionality; Quality; Differentiation) Key OMG-Experience: Undesirable Experience: GURUS Cost-Performance Map for ‘Market Types’ Collaboratively Design Oh My God-Vision, Strategies, Products, Services, and Business Models Market Segment (Customer Problem/Goal): ……………………………………………………… Ideal Value Space (Ideal Market/ Ideal Impossibility/ Ideal Tool/ Ideal Universe/ Entirely New Market) Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 3 10 6 3 6 10 Blue Ocean Strategy (“Value Innovation”)

22. ITENNE: ENVIRONMENT • Competitors/Industry/Economy • Partners/Complementors • Investors/Board of Directors • Public/Society/Enemies/Non-customer • Government/NGOs/Environment P: PROCESSES • Preparing/Searching/Discovering • Purchasing/Leasing • Receiving/Delivering/Learning/Installing • Using/Sharing/Complementing • Maintaining/Storing/Managing/Disposing S: SUPPLIERS/MATERIAL E: EMPLOYEES/KNOWLEDGE ASSETS/CULTURE GLOBAL VALUE CHAIN (PERFORMANCE DASHBOARD) OUTCOMES/GOALS  Customer Value Proposition (Job)  Business Value = Revenue/Cost  Customer Value (Experience) = Customer Delight/Customer Pain M: MACHINERY/EQUIPMENT/ FACILITY/LOCATION C: CUSTOMERS & CONSUMERS RELATIONSHIPS  Core Customers/Users/Influencers  Peripheral Customers/Users/Influ.  Remote Customers/Users/Influ. GENERIC ELEMENTS OF GLOBAL VALUE CHAIN Collaboratively List, Sketch, Organize, and/or Manage Metrics for Elements of Value Chain GURUS R: RETAILERS/DISTRIBUTORS/ CHANNELS  Retailers/Distributors/Channels  Place/Warehousing/Location  Promotion/Buzz  Branding/Marketing  Advertising  Selling/Relationship Management O: OUTPUTS (PRODUCT/ SERVICE)  Product/Service  Pricing  Packaging  Display  Design  Plan Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

23. ITENNE: ENVIRONMENT  Key Partners (KP) P: PROCESSES  Key Activities (KA) S: SUPPLIERS/MATERIALS  Key Resources (KR) – Suppliers R: RETAILERS/DISTRIBUTORS/ CHANNELS  Channels (CH) O: OUTPUTS (PRODUCT/ SERVICE)  Key Resources (KR) – Product/ Service E: EMPLOYEES/KNOWLEDGE ASSETS/CULTURE  Key Resources (KR) – Employees GLOBAL VALUE CHAIN FOR “BUSINESS MODEL CANVAS”: GOALS  Customer Value Proposition (VP)  Revenue Streams (R$)  Cost Structure (C$) M: MACHINERY/EQUIPMENT/ FACILITY/LOCATION  Key Resources (KR) – Machinery C: CUSTOMERS/CONSUMERS & RELATIONSHIPS  Customer Segments (CS)  Customer Relationships (CR) GLOBAL VALUE CHAIN FOR “BUSINESS MODEL CANVAS” Visually Observe Similarities and Differences Between Global Value Chain & Business Model Canvas GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

24. ITENNE: ENVIRONMENT  Key Partners (KP)  Record Companies  Original Equipment Manufactur- ers (OEMs) P: PROCESSES  Key Activities (KA):  Hardware Design  Software Design  Marketing S: SUPPLIERS/MATERIALS  Key Resources (KR) – Suppliers R: RETAILERS/DISTRIBUTORS/ CHANNELS  Channels (CH)  iTunes Store  www.apple.com  Apple Stores  Selected Retail Stores O: OUTPUTS (PRODUCT/ SERVICE)  Key Resources (KR) – Product/ Service  iPod Hardware  iTunes Software  Content & Agreements E: EMPLOYEES/KNOWLEDGE ASSETS/CULTURE  Key Resources (KR) – Employees  Staff  Apple Brand APPLE INC.: iPod (2001)  Customer Value Proposition (VP): “A Thousand Songs in Your Pocket”  Revenue Streams (R$): iPod Hard- ware; iTunes Store; Commissions  Cost Structure (C$): Employees; Manufacturing; Marketing & Sales M: MACHINERY/EQUIPMENT/ FACILITY/LOCATION  Key Resources (KR) – Machinery C: CUSTOMERS/CONSUMERS & RELATIONSHIPS  Customer Segments (CS)  Luxury Spot; Mass Market  Customer Relationships (CR)  “Lovemark”  Switching Costs GLOBAL VALUE CHAIN FOR APPLE INC.: iPod Visually Observe Similarities and Differences Between Global Value Chain & Business Model Canvas GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

25. FOCUS “PIVOT” PROCESS: VALUE INNOVATION TACTICS (What if … E.R.I.C.?) OUTCOME: FUTURE (DISRUPTIVE) BUS. MODEL BUSINESS/ GLOBAL VALUE CHAIN GIVEN BUSINESS MODEL E: Eliminate R: Reduce/Replace I: Increase C: Create INPUT (SUPPLIERS/ MATERIALS/ENERGY) ELEMENTS (EMPLOYEES/ MACHINERY) Staff/ Apple Brand PROCESS (Bus. Process/ Strategies) Hardware Design/ Software Design/ Marketing OUTPUTS: PRODUCT/SERVICE iPod Hardware/ iTunes Software/ Content & Agreements RETAILERS/DISTRIB./ CHANNELS iTunes; apple.com; Apple Stores/Others CONSUMERS/ CUSTOMERS (Experience) Luxury Spot/ Mass Market ENVIRONMENT - COMPETITORS (Industry) - PARTNERS (Complementors) - INVESTORS (Revenue/Cost) - PUBLIC/SOCIETY/Enemies - GOVERNMENT/NGOs Record Companies/ Original Equipment Manufacturers (OEMs)/… BUSINESS MODEL PIVOT FOR APPLE INC.: iPod - 2001 Collaboratively Design Oh My God-Vision, Strategies, Products, Services, and Business Models SYSTEM (INDUSTRY/BUSINESS) GURUS Market Segment (Customer Problem): ‘Fragmented’ Music ExperienceMission/Vision: “… Apple leads the digital music revolution. …”

26. HYPOTHESES PROBLEMS/ PAIN (WEAKNESS- ES/THREATS) GOALS/Objectives/ Strategies/Tactics/ Initiatives/ Projects Key Metrics/ Performance Indicators/ Targets Business Experiences (Impacts) Description of BUSINESS/ GLOBAL VALUE CHAIN Delight (Revenue) Pain (Cost) S: Suppliers E: Employees/ Knowledge Assets Staff/ Apple Brand/ Staffing Cost M: Machinery/ Infrastructure Hardware Design/ Software Design/ Marketing P: Processes Marketing Sales Marketing Cost Sales Cost O: Outputs (Product/Service) iPod Hardware/ iTunes Software/ Content & Agreements R: Retailers/ Distributors/ Channels iTunes; apple.com; Apple Stores/ Other Retailers C: Consumers/ Customers Luxury Spot/ Mass Market High Revenue (Hardware) E: Environment Record Companies/ Original Equipment Manufacturers (OEMs)/… Commissions VALUE CHAIN (“SEMPORCE”) BUSINESS ECOSYSTEM Customer Value Proposition: “A Thousand Songs in Your Pocket” BUSINESS VALUE (PROFIT MARGIN) BUSINESS MODEL PLAN FOR APPLE INC.: iPod - 2001 Collaboratively Design Oh My God-Vision, Strategies, Products, Services, and Business Models GURUS Mission/Vision: “… Apple leads the digital music revolution. …” Market Segment (Customer Problem): ‘Fragmented’ Music Experience

27. ITENN2001  Nike’s PSA Play120 (for customers who workout; has armband)  Apple iPod (5GB; seamless inte- gration with iTunes music library for use on Mac computers) 2002  Apple iPod (20GB; Windows compatibility; iTunes Music Store) 1998  Eiger Labs releases MP3 player: - MPMan F10 (Flash drive capacity of 32MB) - Diamond Rio PMP300 (32MB Capacity) 2006  Mainstream popularity of Music- phones 2007  Apple iPhone (Multi-touch screen; etc.)  Apple iPod Touch Phone (Multi- touch screen; etc.) 1999  Release of Sensory Science Rave MP 2100 (64MB; voice recorder; FM tuner)  Creative Labs’ Nomad (docking)  PJB-100 (Internal hard disk: 4.8GB) EVOLUTION OF THE DIGITAL MUSIC PLAYER 2000  I2Go eGo (Micro-drive: 2GB; pocket size; high price)  Creative Labs’ Nomad Jukebox (6GB; clunky; high quality sound) 2005  Apple iPod (60GB; color screen)  Emerging popularity of music – telephones: Motorola; Samsung; LG; Nokia; Sony Ericksson GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing EVOLUTION OF THE DIGITAL MUSIC PLAYER

28. IMPACTS SYSTEM VOICE OF THE CUSTOMER IN CORE & PERIPHERAL INDUSTRIES: Hypotheses vs. Reality CUSTOMER DELIGHT (+) CUSTOMER PAIN (-) Decision Criteria: Needs & Barriers COMPETITORS Function/ Content/ Perf/ Knowledge Quality/ Reliability/ Accuracy/ Efficiency Brand/ Emotion/ Style/Aura/ Prestige Customization/ Personalization/ Interactivity/ Fun/Entertain. Cost (Price) Inaccessibility/ Unavailability/ Inflexibility/ Friction/Scale Complexity/ Difficulty/ Support/ Range/Risk Process Time/ Delay/ Age IMPORTANCE Given Product: iPod Nano Hold 1,000 songs (4 GB) Watch Photos/Video High quality Apple Brand Color Capacity Choice $149 Pocketable No Wireless Connection Simple to use Store-Service Support 24hr Music Playback CORE COMPETI- TORS: iPod Shuffle Hold 240 songs (1 GB) High quality Apple Brand Color Capacity Choice $79 Ultra-pocketable No Wireless Connection Simple to use Store-Service Support 12hr Music Playback PERIPHERAL COMPETITORS iPod Classic Hold 20,000 songs (80 GB) Watch Photos/Video High quality Apple Brand Color Capacity Choice $249 Pocketable No Wireless Connection Simple to use Store-Service Support 40hr Music Playback REMOTE COMPETI- TORS: iPod Touch Hold 1,750 songs (8 GB); Watch Video/ Photos; Multi- touch Screen High quality Apple Brand Color Capacity Choice Multi-touch Screen $299 Pocketable Wi-Fi Connection Simple to use Store-Service Support 22hr Music Playback CUSTOMER EXPERIENCE OF COMPETITORS FOR APPLE’S IPOD NANO GURUS Market Segment (Customer Problem/Goal): Listen to Music/View Photos/Watch Videos/Manage Personal Info’ Mission/Vision: “… Apple leads the digital music revolution. …”

29. IMPACTS SYSTEM VOICE OF THE CUSTOMER IN CORE & PERIPHERAL INDUSTRIES: Hypotheses vs. Reality CUSTOMER DELIGHT (+) CUSTOMER PAIN (-) Decision Criteria: Needs & Barriers CURVES Function/ Content/ Perf./ Knowledge Quality/ Reliability/ Accuracy/ Efficiency Brand/ Emotion/ Style/Aura/ Prestige Customization/ Personalization/ Interactivity/ Fun/Entertain. Cost (Price) Inaccessibility/ Unavailability/ Inflexibility/ Friction/Scale Complexity/ Difficulty/ Support/ Range/Risk Process Time/ Delay/ Age WEIGHT (IMPORTANCE) Given Product: iPod Nano Hold 1,000 songs (4 GB) High quality Apple Brand Color/ Capacity Choice $149 Pocketable/ No Wireless Simple to use/ Store-Service 24hr Music Playback CUSTOMER EXPERIENCE CURVES 10 8 6 4 2 0 CUSTOMER EXPERIENCE CURVES FOR APPLE’S IPOD NANO How to Zoom In and Out of BUMPs in Core & Peripheral Industries? KEY -> 1: Low level; 10: Extraordinary level of customer experience iPod Nano “iPod Shuffle “iPod Classic GURUS Market Segment (Customer Problem/Goal): Listen to Music/View Photos/Watch Videos/Manage Personal Info’ Mission/Vision: “… Apple leads the digital music revolution. …”

30. IMPACTS SYSTEM VOICE OF THE CUSTOMER IN CORE & PERIPHERAL INDUSTRIES: Hypotheses vs. Reality CUSTOMER DELIGHT (+) CUSTOMER PAIN (-) Decision Criteria: Needs & Barriers TACTICS Function/ Content/ Perf./ Knowledge Quality/ Reliability/ Accuracy/ Efficiency Brand/ Emotion/ Style/Aura Prestige Customization/ Personalization/ Interactivity/ Fun/Entertain. Cost (Price) Inaccessibility/ Unavailability/ Inflexibility/ Friction/Scale Complexity/ Difficulty/ Support/ Range/Risk Process Time/ Delay/ Age WEIGHT (IMPORTANCE) Given Product: iPod Nano 6 8 8.5 2 7 6 3 8 Core Compet. iPod Shuffle 5 8 8.5 2 4 6 2 5 Peripheral Compet. iPod Classic 8.5 8.5 8.5 6 9 6 4 9 E: Eliminate R: Reduce I: Increase Screen Size Storage Quality of Sound Fun Entertainment Price Thickness Weight C: Create Multi-touch Screen Digital Media Hub Wi-Fi Multi-touch Navigation CUSTOMER EXPERIENCE TACTICS FOR APPLE’S IPOD NANO Collaboratively Design Oh My God-Vision, Strategies, Products, Services, and Business Models GURUS Market Segment (Customer Problem/Goal): Listen to Music/View Photos/Watch Videos/Manage Personal Info’ Mission/Vision: “… Apple leads the digital music revolution. …”

31. FOCUS “PIVOT” PROCESS: VALUE INNOVATION TACTICS (What if … E.R.I.C.?) OUTCOME: FUTURE (DISRUPTIVE) BUS. MODEL BUSINESS/ GLOBAL VALUE CHAIN GIVEN BUSINESS MODEL E: Eliminate R: Reduce/Replace I: Increase C: Create INPUT (SUPPLIERS/ MATERIALS/ENERGY) ELEMENTS (EMPLOYEES/ MACHINERY) Staff/ Apple Brand PROCESS (Bus. Process/ Strategies) Hardware Design/ Software Design/ Marketing OUTPUTS: PRODUCT/SERVICE iPod Hardware/ iTunes Software/ Content & Agreements Screen Size; Storage; Fun; Entertainment; Thickness; Weight; Price Multi-touch screen; Digital Media Hub; Wi-Fi RETAILERS/DISTRIB./ CHANNELS iTunes; apple.com; Apple Stores/Others CONSUMERS/ CUSTOMERS (Experience) Mass Market ENVIRONMENT - COMPETITORS (Industry) - PARTNERS (Complementors) - INVESTORS (Revenue/Cost) - PUBLIC/SOCIETY/Enemies - GOVERNMENT/NGOs Record Companies/ Original Equipment Manufacturers (OEMs)/… BUSINESS MODEL PIVOT FOR APPLE INC.: iPod - 2001 Collaboratively Design Oh My God-Vision, Strategies, Products, Services, and Business Models SYSTEM (INDUSTRY/BUSINESS) GURUS Market Segment (Customer Problem): Commoditized ProductsMission/Vision: “… Apple leads the digital music revolution. …”

32. ITENN4 PART-WISDOMSOURCING MAP 5 PART-WISDOMSOURCING MAP 1 PART-WISDOMSOURCING MAP CLASSIC VERTICAL MAP PAIN-DELIGHT MAP 2 PART-WISDOMSOURCING MAP WISDOMSOURCING MAPS: Family of Wisdomsourcing Maps (Zoomable Idea Organizers) for Facilitating Collaboration, Ideas Management, Creativity, and Customer Problem Solving 3 PART-WISDOMSOURCING MAP CLASSIC HORIZONTAL MAP GURUS Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing WISDOMSOURCING MAPS FOR THE BLUE OCEAN STARTUP Visually Facilitate Collaboration, Ideas Management, Creativity, and Customer Problem Solving

34. Inventor of over 40 Tools for The Wisdomsourcing Trilogy – Facilitating work in the areas of  Business Model Development  Business and Strategic Planning  Product & Service Innovation  Performance Management Inventor of “The Fractal Grid” This technology, which has US and International patent-pending, can be used for visually organizing and Prioritizing massive amounts of information such as in search engines, social networks, and other communities on the Internet  Visual Problem Solver  Speaker & Consultant on Business Model Development  Inventor of The Wisdomsourcing Trilogy, a Customer Problem Solv- ing Suite for Collaboratively Designing Oh My God-Strategies, Products, and Business Models Founder of the Wisdomsourcing Group, an online Global Think Tank for collaboratively improving customer experiences and resolving tough dilemmas Organizer & Coordinator of Wisdom- sourcing survey involving over 200 professionals from over 30 countries CONTACT Dr. Rod King: California, USA Cell: (559) 248-6230 rodkuhnking@sbcglobal.net http://twitter.com/RodKuhnKing  B. Eng. (Hons) in Civil Eng.  Master of Infrastructure Planning  Ph.D. in Regional Dev. Planning  Postgraduate Certificate in Advanced Academic Studies  Over 20 years of experience in creative problem solving for multi-disciplinary projects Dr. Rod King Visual Problem Solver, Inventor & Magician  Inventor of first software that wholly invents magic tricks  Inventor of several magic tricks  Author of “Trickanalyzing the Close-up Magic of David Copperfield” & several articles  Winner of several championships in chess and table-tennis  Founder and former CEO of Galaxy IT, Inc., a venture-financed visual search engine business  Major contributor on creativity to the multi-author book, “Research Methods for Postgraduates”  Former Lecturer BIOGRAPHICAL SKETCH Background Information on Dr. Rod King, Creator of Business Model Development (BMD) GURUS

35. Copyright 2010. Dr. Rod King. rodkuhnking@sbcglobal.net & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing • Rod King (2009) • Global Collaboration • Visual Problem Solving • Practical Impossibility Thinking • Wisdomsourcing Maps • Wisdomsourcing Canvas • Customer Experience Map (Pain-Delight Evaluation of Trade-off) • Wisdomsourcing Deck • Manifesto for Wisdomsourcing Game • Alex Osborne (1953) • Rules for Brainstorming – No criticism during idea generation • ‘Blue Sky’ Thinking and Ideas • Jeff Howe (2006) • Crowdsourced Goods and Information Products • Off-site Tools for Strategic Analysis and Problem Solving • ‘Ad hoc’ Group • Unlimited Number of Volunteers • Peer Production; Documentation • Open Innovation and Value Chain • Prosumers: Consumers who participate like employees/producer in a business • Competitions; Contests; Prizes • Recognition; Reputation • Organic Process • Online Collaboration • Collaborative Idea Generation • 1D-Evaluation; Voting • Myriad Generated Ideas • Offline • 1 Physical Location • Formal Group WISDOMSOURCING 3. CROWDSOURCING 2. 1. BRAINSTORMING EVOLUTION OF WISDOMSOURCINGGURUS