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Bootstrap Your Business Model
This document discusses business modeling and the lean startup methodology. It emphasizes that business plans often fail upon first contact with customers and that planning is not as important as taking action, validating assumptions, and iterating based on customer feedback. The business model canvas is presented as a tool to visualize a business model and its key elements in a simple format. The document advocates testing business model hypotheses through minimum viable products and customer experimentation to determine product-market fit. It stresses the importance of failing often through iterative experimentation in order to learn and succeed more quickly.
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Bootstrap Your Business Model
- 1. BOOTSTRAP YOUR BUSINESS MODEL BusinessAgility on the Back of a Napkin 1@berniemaloney
- 2. 2 Let’s start here… SO,WHAT IS A BUSINESS MODEL? @berniemaloney
- 3. SO, WHAT ISA BUSINESS MODEL? Better yet… 3@berniemaloney
- 4. EXPLAIN YOUR BUSINESS (MODEL)TO A NEIGHBOR Exercise 2 min each in pairs 4@berniemaloney
- 5. HOW MANY COULDACCURATELY DESCRIBE THEIR NEIGHBOR’S BUSINESS? 5@berniemaloney
- 6. OR, WAS YOUREXPERIENCE LIKE THIS? 6@berniemaloney
- 7. NO BUSINESS PLANSURVIVES FIRST CONTACT WITH A CUSTOMER Steve Blank 7@berniemaloney
- 8. PLANS ARE WORTHLESS, BUTPLANNING IS EVERYTHING Dwight D. Eisenhower 8@berniemaloney
- 9. HOW COULD WE DRINKOUR OWN CHAMPAGNE? Build Measure Learn 9@berniemaloney
- 10. ANY PROBLEM CANBE MADE CLEARER WITH A PICTURE Dan Roam 10@berniemaloney
- 11. Dan also wrotean earlier, worthwhile book: The Back of the Napkin 11@berniemaloney
- 12. HOW CAN ABUSINESS BE PICTURED? http://youtu.be/QoAOzMTLP5s 12@berniemaloney
- 13. BUSINESS MODEL CANVAS 13 PartnersOffer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
- 14. WHY IS AMODEL SIGNIFICANT? 14@berniemaloney
- 15. WHY IS AMODEL SIGNIFICANT? DESIGN THINKING 15@berniemaloney
- 16. DESIGN THINKING • Freezingan idea early risks falling in love with it • Refining an idea quickly risks become attached (sunk cost) • Objective: Defer judgment & emphasize crude prototypes to help avoid these pitfalls • Example: IDEO - an illustration of Design AND Agile http://youtu.be/M66ZU2PCIcM 16@berniemaloney
- 17. WHY IS AMODEL SIGNIFICANT? 17@berniemaloney
- 18. Build Measure Learn 18@berniemaloney Lean Startup /Eric Ries: Build-Measure-Learn
- 19. A MODEL MIGHTLOOK GREAT ON PAPER… 19@berniemaloney
- 20. … REMEMBER IT’SA SET OF HYPOTHESES guess 20@berniemaloney
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- 22. COST PER TEST/ LESSONS = ? 22 http://www.automobilesreview.com/uploads/2012/09/Mercedes-Benz-SLS-AMG-Coupe-Electric-Drive-651.jpg @berniemaloney
- 23. COST PER TEST/ LESSONS = ? 23 http://image.internetautoguide.com/f/auto-news/2010-mercedes-amg-sls-crash-test-videos/31178790/mercedes-sls-amg-crash-test-video-germany-tuv.jpg @berniemaloney
- 24. HOW ABOUT ANEXAMPLE? 24@berniemaloney
- 25. HOW ABOUT ANEXAMPLE? 25 Better yet… @berniemaloney
- 26. BUS 15 @STANFORD 26 Experience in Product Management & Agile Silicon Valley Prepare outline; develop materials; coordinate efforts; time to teach… Stanford Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want increased results Live Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing Experience @berniemaloney
- 27. BUS 15 @STANFORD 27 Experience in Product Management & Agile Silicon Valley Prepare outline; develop materials; coordinate efforts; time to teach… Stanford Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want > resultsLive Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing How could inspect/adapt be applied? Experience @berniemaloney
- 28. HOW ABOUT…? 28 Experience in Product Management &Agile East Bay Area Prepare outline; develop materials; coordinate efforts; time to teach… Berkeley Partners Offer Key Customers What we ‘get’What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts… Guest Speakers Curious about Prod Mgt &/or Agile Very Early Entrepreneurs Live Class Relationship Channel Experienced & want > resultsLive Class direct Personal (vs automated) Resources Activities Brand Rooms Equipment Marketing Experience Experience at Stanford @berniemaloney
- 29. OTHER VALUES OFTHE BM CANVAS • Ecosystems Win – Microsoft Office – iTunes – Search + Ads • Canvas Maps an Ecosystem Fits a single visual field = shifts brain processes • Looks at Market & Opportunity over chasing a competitor’s ‘tail lights’ 29@berniemaloney
- 30. Ready for aGroup Exercise? 30 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
- 31. EXERCISE: BUSINESS MODELCREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 31 http://www.naparecycling.com/uploads/plastic%20bag.png @berniemaloney
- 32. BUSINESS MODEL CANVAS 32 PartnersOffer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
- 33. INSIGHTS: CREATING ABUSINESS MODEL @berniemaloney 33 http://www.garabatosydibujos.com/wp-content/uploads/2015/01/conocer.jpg
- 34. This is acrude prototype 34 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
- 35. EXERCISE: BUSINESS MODELCREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 35 How could you “unit test” the product? @berniemaloney
- 36. THERE ARE NOFACTS IN THE BUILDING …SO GET OUT AND TALK TO CUSTOMERS Steve Blank 36@berniemaloney
- 37. CUSTOMER DEVELOPMENT Customer Discovery Customer Validation Customer Creation Company Building pivot 37 Source: SteveBlank The Four Steps to the Epiphany @berniemaloney
- 38.
- 39. ENLIGHTENED TRIAL &ERROR SUCCEEDS OVER THE PLANNING OF LONE GENIUS Peter Skillman 39@berniemaloney
- 40. APPLY THE SCIENTIFICMETHOD: RUN EXPERIMENTS test 40@berniemaloney
- 41. WITH VALIDATION, ITERATE(PIVOT) MODEL AND RUN FURTHER EXPERIMENTS valid 41@berniemaloney
- 42. PIVOTING: LEARNING CHEAPLY FROMFAILURE 42@berniemaloney
- 43.
- 44. THE WAY TOSUCCEED IS TO DOUBLE YOUR FAILURE RATE Thomas Watson Founder of IBM 44@berniemaloney
- 45. HP MEDIASMART (RETAIL)TVS 45 American Brand CircuitCity Cost-plus Mat’l; Design; Supply Chain; Placements Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Just enough to break even at intro, Not enough to sustain price drops CinemaNow Best Buy Relationship Channel Direct Direct B2C Indirect B2B2C Resources Activities Glass TV KnowHow Microsoft Internet Content Asian TV Brand New to USA Netflix Retail Electronics Leading Edge Internet TV Known Brand IPTV Visionary Adopters Manufacturing Set Devel’mnt Licensing Volume Retail future proofing @berniemaloney
- 46. HP COMMERCIAL TVS 46 American Brand HPSales Cost-plus Mat’l; Design; Supply Chain; Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Sustainable Margin CDW Relationship Channel Direct B2B Indirect B2B2B Resources Activities Glass TV KnowHow Asian TV Brand New to USA Commercial Suppiers Known Brand Manufacturing Set Devel’mnt Competive Price Direct HP Accounts @berniemaloney
- 47. VIZIO TVS (2006) 47 American Brand Costco CompetitiveMat’l; Design; Supply Chain; Asian TV Brand You know Partners Offer Key Customers RevenuesCosts Sustainable Margin Sustainable Volume Relationship Channel Direct Direct B2C Indirect B2B2C Resources Activities Glass TV KnowHow Asian TV Brand New to USA Warehouse Clubs Value PricingManufacturing Set Devel’mnt Value Buyers @berniemaloney
- 48. LAYERING IN MARKETRESEARCH 48 Partners Offer Key Customers RevenuesCosts Relationship ChannelResources Activities Retail Electronics Leading Edge Internet TV IPTV Visionary Adopters Value BuyersCommercial Suppiers Value Pricing 1Ks 100s @1Ks 10s @1Ks 1M+ @berniemaloney
- 49. PIVOTS ARE BUSINESSMODEL CHANGES WITHOUT CRISIS Steve Blank 49@berniemaloney
- 50. Customer Discovery Customer Validation Customer Creation Company Building pivot 50 Test & Adaptthe model until you can prove it works @berniemaloney
- 51. HOW TO PROVEIT WORKS? • MVP – Minimum Viable Product – Sale of a Product (it’s viable!) • PMF – Product Market Fit – Is it the right customer segment? – Is the segment sustainable? – Is the product / model sustainable? 51@berniemaloney
- 52. Build Measure Learn Release Measure Earn $ Noted byJeff Patton (Aug ‘12 DFWScrum) 52@berniemaloney
- 53.
- 54. EXERCISE: BUSINESS MODELCREATION • Form Teams • Product: Biodegradable Bag (ok for fertilizer) • 5 minutes: Create (at least 1) business model 54 Want a model comparison? @berniemaloney
- 55. BASIC SANITATION 55 Image Source:http://www.whale.to/a/bangladesh.html @berniemaloney
- 56. ACCESS TO SANTIATION •4 out of 10 people lack even simple latrines (2.6 billion people) • A solution? 56@berniemaloney http://greenupgrader.com/files/2009/04/peepoo6.jpg
- 57. PEEPOO BAG • Singleuse toilet bag • Self sanitizing • Low production cost • Biodegradable – turns into fertilizer • (initially) targeted at poor people • People already pay for sanitation 57@berniemaloney
- 58. WHO / WHEREELSE COULD USE THIS? 58 Partners Offer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
- 59. MULTIPLE MODELS FOR1 PRODUCT 59@berniemaloney
- 60. This is acrude prototype of a business 60 Partners Offer Key Customers What we ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney
- 61. MULTIPLE MODELS FOR1 PRODUCT 61@berniemaloney Want another Group Exercise?
- 62. EXERCISE: BUSINESS MODELCREATION • Form Teams • Product: Coffee • 7 minutes: Create a business model AND 3 “systems” Tests of PMF 62 http://www.thecoffeebeanshop.com/images/CoffeeBeanCloseup6beansR.jpg @berniemaloney
- 63. BUSINESS MODEL CANVAS 63 PartnersOffer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf @berniemaloney
- 64. INSIGHTS: CREATE +TEST A BUSINESS MODEL @berniemaloney 64 http://www.garabatosydibujos.com/wp-content/uploads/2015/01/conocer.jpg
- 65. EXERCISE: BUSINESS MODELCREATION • Form Teams • Product: Coffee • 5 minutes: Create (at least 1) business model 65 http://www.thecoffeebeanshop.com/images/CoffeeBeanCloseup6beansR.jpg @berniemaloney Want a model comparison?
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- 70. BUSINESS VALUE CANVAS 70 PartnersOffer Key Customers What you ‘get’What it ‘costs’ Relationship ChannelResources Activities @berniemaloney gains pains customer jobs gain creators pain relievers products & services
- 71. EXTENDING THE BUSINESS MODELCANVAS 71@berniemaloney
- 72.
- 73. BUSINESS TO BUSINESSTO CONSUMER B2B2C 73@berniemaloney
- 74. OR AN ENTIREVALUE CHAIN 74@berniemaloney
- 75. OR MULTIPLE MODELSFOR 1 PRODUCT 75@berniemaloney
- 76. ARE PRODUCTS THISEASY TO ITERATE? 76@berniemaloney
- 77. WHICH ONE(S) BESTFIT MARKET? 77@berniemaloney
- 78. Customer Discovery Customer Validation Customer Creation Company Building pivot 78 Each Experiment amountsto an (Agile) Iteration of the Business the Ecosystem @berniemaloney
- 79. IF YOU DON’TWORK UNDER TIME CONSTRAINTS, YOU COULD NEVER GET ANYTHING DONE. IT’S A MESSY PROCESS, IT COULD GO ON FOREVER. Dave Kelley 79@berniemaloney
- 80. FAIL OFTEN, IN ORDERTO SUCCEED SOONER IDEO 80@berniemaloney
- 81.
- 82. @berniemaloney 82 Bernie Maloney,CSP PE, CSM, CSPO bit.ly/speedmygenius Agile Coach Accelerating Genius Turning Strategies into Results From Startup to Beyond $100M