Venture Design Module 3: Engineering Your Business Model (GA)

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Venture Design Module 3: Engineering Your Business Model (GA)

  1. 1. Alex Cowan VENTURE DESIGN IV ENGINEERING YOUR BUSINESS MODEL
  2. 2. copyright 2014 Cowan Publishing AGENDA Period Deliverables SESSION I: Achieving Customer Relevance Personas Problem Scenarios-Alternatives-Value Propositions Start Business Model Canvas Storyboards Customer Discovery Venture Design II: Iterating to Success Venture Planning- focal hypotheses, experiments, and minimum viable ‘product’ Venture Design III: Focusing & Validating Venture Progress Review of field work, refinements of approach, planning next iterations. Venture Design IV: Engineering Your Business Model Detailing your business model and remaining focal assumptions. Venture Design V: Designing the Right Product Pairing your learnings on personas & hypotheses with high quality, actionable inputs (stories & wireframes) for product development and product validation.
  3. 3. copyright 2014 Cowan Publishing This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  4. 4. copyright 2014 Cowan Publishing CUSTOMER DEVELOPMENT Personas MVP Nascent Product-Market Fit(?) Scale PIVOTAL ASSUMPTIONS PRODUCT ORG. PARTNERS, CHANNELS Founders N/A Probably too soon Test, revise, test... MVP Customer dev. team Probably too soon Validated- now tactical Focus: efficiency, extension Full functional organization Yeah, maybe? Validated- now tactical What would a startup do?? Scalable organization Yeah, definitely!
  5. 5. copyright 2014 Cowan Publishing CUSTOMER DEVELOPMENT & THE CANVAS MVP Product-Market Fit(?) Scale Thinking through what you want the business to be for a better idea of what you don’t know. Then use that to focus your discovery.
  6. 6. copyright 2014 Cowan Publishing CUSTOMER DEVELOPMENT & THE CANVAS MVP Product-Market Fit(?) Scale Focal point for managing your assumptions- which are open? closed? what are their inter-relationships?
  7. 7. copyright 2014 Cowan Publishing CUSTOMER DEVELOPMENT & THE CANVAS MVP Product-Market Fit(?) Scale Focal point for organizing incremental ‘growth hacking’ experiments.
  8. 8. copyright 2014 Cowan Publishing CUSTOMER DEVELOPMENT & THE CANVAS MVP Product-Market Fit(?) Scale Strategy management tool and jumping off point for new ‘intrapreneurial’ ventures and business model innovation.
  9. 9. copyright 2014 Cowan Publishing ALEX COWAN AlexanderCowan.com @cowanSF The Canvas is a housekeeping tool. It won’t hand you the gold but it will help you monitor how things are panning out.
  10. 10. copyright 2014 Cowan Publishing IT’S A PROCESS Some techniques are more effective than others. But they all require substantial, consistent exertion.
  11. 11. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking
  12. 12. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking ExperimentLearn Hypothesize Lean Startup- Style Assumptions
  13. 13. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking Business Model Canvas ExperimentLearn Hypothesize Lean Startup- Style Assumptions
  14. 14. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking User Stories & Test Cases Business Model Canvas ExperimentLearn Hypothesize Lean Startup- Style Assumptions
  15. 15. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking Product & Promotion User Stories & Test Cases Business Model Canvas ExperimentLearn Hypothesize Lean Startup- Style Assumptions
  16. 16. copyright 2014 Cowan Publishing VENTURE DESIGN Foundation in Design Thinking Product & Promotion User Stories & Test Cases Business Model Canvas ExperimentLearn Hypothesize Lean Startup- Style Assumptions
  17. 17. copyright 2014 Cowan Publishing THE CANVAS: 3 PARTS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. O ering Customers Infrastructure Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  18. 18. Copyright 2014 Cowan Publishing REALLY GETTING CUSTOMER SEGMENTS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  19. 19. copyright 2014 Cowan Publishing SEGMENT TO VALPROP MAPPING This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  20. 20. copyright 2014 Cowan Publishing THE INDEPENDENT VARIABLE Value Propositions Customer Segments This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  21. 21. copyright 2014 Cowan Publishing CUSTOMER SEGMENTS VS. PERSONAS ≈ g Customer Segments Personas
  22. 22. copyright 2014 Cowan Publishing REALLY GETTING RELATIONSHIPS & CHANNELS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  23. 23. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention How do they first find out that you, your proposition exist? How do you break through the noise floor?
  24. 24. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention What is it that engages them with your proposition? How will you connect?
  25. 25. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention Are you connecting with an important problem scenario? Is your VP better enough than the alternative?
  26. 26. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention What is absolute minimum set of actions required by the customer to have you reward them by delivering on their problem?
  27. 27. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention What is the full set of things they need to do to be fully operational with the product?
  28. 28. copyright 2014 Cowan Publishing AIDA(OR) FRAMEWORK Attention Interest Desire Action Onboarding Retention How do you deepen their involvement? Investment? How do you get them talking about it?
  29. 29. copyright 2014 Cowan Publishing STORYBOARDING AIDA(OR)
  30. 30. copyright 2014 Cowan Publishing EXERCISE- AIDA STORYBOARD guideline: 1 panel per item (A, I, D …) (10 MIN)
  31. 31. copyright 2014 Cowan Publishing EXERCISE- CUSTOMER RELATIONSHIPS Customer Relationships GETTING STARTED 1. Bounce off your take on AIDA(OR) 2. Decouple any concierge/hand-holding actions you use for discovery from your target steady state 3. Variation by segment? 4. How will you know if it’s working? EXAMPLES ‘dedicated personal service’ (onsite? offsite?) ‘personal service’ ‘phone support’ ‘web/email based tickets’ ‘web self-help and forums’ (3 min)
  32. 32. copyright 2014 Cowan Publishing EXERCISE- CHANNELS (3 min) GETTING STARTED 1. Bounce off your take on AIDA(OR) 2. Variation by segment? 3. How will you know if it’s working? EXAMPLES SALES hand sales (direct or indirect?) retail web phone delivery Channels PROMOTION personal (direct vs. indirect?) specialty media television radio AdWords + SEO
  33. 33. copyright 2013 Cowan Publishing CLASS PRESENTATIONS (5 MIN EACH) As Presenter POSITIONING STATEMENT PERSONAS <> VALUE PROP.’S Who is/are the top persona(s)? What’s cool about the value prop.? If applicable, how do they differ between the personas? RELATIONSHIPS & CHANNELS 1) What’s the AIDAOR journey? 2) How do the Relationships & Channels work for that? As Audience - Focus on the process; avoid editorial - Ask a lot of questions - Think about it like an investor
  34. 34. copyright 2013 Cowan Publishing REVENUE STREAMS Don’t overcomplicate it. When a plumber does something, you pay them. If a sink garbage disposal lasts twice as long, you’d pay more, right?
  35. 35. copyright 2013 Cowan Publishing DON’T MAKE BIG BETS- CREATE EXPERIMENTS TO TEST FOR VALUE VS. PRICE ELASTICITY Base Camp Hootsuite
  36. 36. copyright 2014 Cowan Publishing EXERCISE- REVENUE GETTING STARTED 1. Where are you providing value? When? 2. How does the customer’s perception of value change over the course of their experience with the product? 3. How will you collect revenue, administratively? EXAMPLES price/unit access/subscription fees utilization fees support & maintenance contracts hourly billing fixed price services billing royalties/revenue share (3 min)
  37. 37. copyright 2014 Cowan Publishing EXERCISE- SEGMENT TO VALPROP TO REVENUE (2 min)This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  38. 38. copyright 2014 Cowan Publishing THE CANVAS: 3 PARTS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. O ering Customers Infrastructure Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  39. 39. copyright 2014 Cowan Publishing THE CANVAS: 3 PARTS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. O ering Customers Infrastructure Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  40. 40. copyright 2013 Cowan Publishing 3 BUSINESS MODEL TYPES This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments) 1. INFRASTRUCTURE-DRIVEN 2. CUSTOMER SCOPE-DRIVEN 3. PRODUCT-DRIVEN
  41. 41. copyright 2013 Cowan Publishing 3 BUSINESS MODEL TYPES Infrastructure-Driven UTILITIES TELECOM COMMODITIE S Scope-Driven RETAIL BANKING CORP. LAW Product-Driven PACKAGED GOODS APP. SOFTWARE MEDIA
  42. 42. copyright 2013 Cowan Publishing 3 BUSINESS MODEL TYPES INFRASTRUCTURE Kimberly-Clark: paper pulp DuPont: plastics and polymers SCOPE Procter & Gamble: cradle to grave products Baby Store: everything for babies in one place PRODUCT EarthBaby, TinyTots, Honest Company: compostable diapers and service
  43. 43. copyright 2013 Cowan Publishing EXERCISE- KEY ACTIVITIES GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. How will you do these things? 4. Will partners be involved? Should they be? Key Activities EXAMPLES INFRASTRUCTURE: a) industry participation b) supply chain management c) process design and iteration SCOPE: a) industry participation b) growth marketing online’ [SEO, web analytics..] c) supplier management PRODUCT: a) software product development b) growth marketing online’ [SEO, web analytics..] (4 min)
  44. 44. copyright 2013 Cowan Publishing EXERCISE- KEY RESOURCES (4 min) GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. How will you get it? EXAMPLES Key Resources INFRASTRUCTURE: a) ‘track record in [relevant topic]’ b) investment in infrastructure’ c)’supplier relationships/integration’ SCOPE: a) ‘track record with [customer segment]’ b) channel or partner relationships PRODUCT: a) proprietary technology b) rapid prototyping and validation methodologies c) expertise in [exotic technology]
  45. 45. copyright 2013 Cowan Publishing EXERCISE- KEY PARTNERSHIPS (4 min) GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. Are you comparatively good at it? 4. Where will partners make the business bigger and more effective? EXAMPLES ‘direct sales partners’ ‘content creators’ ‘retail or distribution’ ‘creative agency’ ‘subcontractors’ ‘referral network’ Key Partnerships
  46. 46. copyright 2013 Cowan Publishing COST STRUCTURE (4 min) Minimize: Obviously. Defer: MVP’s; don’t over invest for the sake of creating ‘output’ Link: To revenue as much as possible (variable vs. fixed).
  47. 47. copyright 2013 Cowan Publishing PROFIT DRIVERS: EXAMPLE Profit Drivers Revenue Drivers Tighter Proposition (website, pres., etc.) Finite Cost Finite Deliverables Increased Use of Channels Ease of Entry Easy to See What's on MenuUpsell Intellectual Property Multipliers Tighter Talent Definition Simpler Training, Eval., Promotion Cost of Delivery Cost Drivers Less Consultative Selling Simplified Contracting Cost of Sales Standard Project Management Comparable Post Mortems Engagement Management
  48. 48. copyright 2013 Cowan Publishing COST STRUCTURE (3 min) GETTING STARTED 1. How do you minimize? Use of partners? Off the shelf tech/ components? 2. How do you defer against customer development milestones? 3. How do you link to revenues? 4. Which are fixed vs. variable? How do they related to revenues? EXAMPLES ‘fixed cost product development’ ‘fixed cost infrastructure investment’ ‘variable cost marketing or commissions’ ‘variable cost customer onboarding and support’ ‘variable cost inputs’ Cost Structure
  49. 49. copyright 2013 Cowan Publishing EXERCISE: COST STRUCTURE & LINKAGES (3 min)This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3
  50. 50. copyright 2013 Cowan Publishing EXERCISE: PEER PRESENTATIONS (2 min) As Presenter As Audience RELATIONSHIPS & CHANNELS 1) What’s your business type (infrastructure, scope, product)? 2) What are the major cost drivers and linkages? How do they tie to revenue? 3) How do the key activities, resources, and partnerships help that? - Focus on the process; avoid editorial - Ask a lot of questions - Think about it like an investor
  51. 51. FINI @cowanSF www.alexandercowan.com/venture-design http://bit.ly/alexGAJune acowan@alexandercowan.com ref.alexandercowan.com/pdesignTEMPLATE: bit.ly/venturedesign

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