Validating Your Business Ideas Using Design Thinking, Business Model Innovation, and Customer Development: Summary

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Startup 101: Validate Your Business Ideas12 October 2016 | JozihubTools & Methods for Generating, Prototyping, and Testing Business IdeasVillage offers design thinking & strategic design services to help you transform complexity into unique opportunities for innovation and change. design. innovation. changekhaya@villagedesign.co.za- Charles SpurgeonThe way to do a great deal is to keep on doing a little. The way to do nothing at all is to be continually resolving that you will do everything image source: http://www.economist.com/news/essays/21676961-inner-lives-animals-are-hard-study-there-evidence-they-may-be-lot-richer-science-once-thoughthttp://www.economist.com/news/essays/21676961-inner-lives-animals-are-hard-study-there-evidence-they-may-be-lot-richer-science-once-thought1. Design Thinking 2. Business Model Canvas 3. Customer Development01 The Design Thinking Process Using design to create, innovate and solve problemsDesign Thinking is a way of applying design methods to problem solving and innovationThere are many models and versions of the design processempathise define ideate prototype test iterateSource: Tim Brown, Change By DesigndesirabilityhumanviabilitybusinessfeasibilitytechnicalinnovationSource: Tim Brown, Change By Design02 The Business Model CanvasA tool to organise your business model hypothesisempathise define ideate prototype test iterate01 Customers03 Infrastructure04 Financial Viability02 OfferBusiness Model Design LogicSource: Alex Osterwalder & Yves Pigneur, Business Model Generation01 Customers03 Infrastructure04 Financial Viability02 OfferBusiness Model Design LogicCost StructureC$Key ResourcesKRKey PartnershipsKPKey ActivitiesKARevenue StreamsR$Value PropositionVPCustomer ChannelsCCCustomer RelationshipsCRCustomer SegmentsCSSource: Alex Osterwalder & Yves Pigneur, Business Model GenerationHypothesis: a guess about how you will create, deliver, and capture valueC$KRKP KAR$VPCCCR CSExample: Apple iPodseamless music experiencehardware designmarketingpeoplerecord companiesmanufacturerscontent & agreementsapple brandiTunes SoftwareiPod hardwarelovemarkswitching costsretail storesapple storesiTunes storeapple.commass markethardware revenuesmusic revenuesmarketing & salesmanufacturingpeopleSource: Alex Osterwalder & Yves Pigneur, Business Model GenerationdesirabilityhumanviabilitybusinessfeasibilitytechnicalinnovationDesign Thinkingdesirabilitycustomersviabilityfinancesfeasibilityinfrastructurevalue propositionBusiness ModelValue PropositionVPThe Offering / Value Proposition What value do we deliver to customers Which of our customers problems do we solve Which bundles of products/services are we offering to different customer segmentsA. Performance of product/service B. Newness C. Customisation and co-creation D. Getting the job done E. Design F. Brand/status G. Better pricing H. Cost reduction I. Risk reduction J. Accessibility (e.g. fractional ownership etc.) K. Convenience/usabilityKey ResourcesKRKey PartnershipsKPKey ActivitiesKAInfrastructure: Feasibility The network of suppliers and partners that will make the business model work The most important assets to create value, reach customers, and earn revenue What must the company do deliver value and operate successfullySource: Alex Osterwalder & Yves Pigneur, Business Model GenerationCustomer ChannelsCCCustomer RelationshipsCRCustomer SegmentsCSCustomers: Desirability The types of relationships or service that will drive acquisition, retention, and salesA. Personal assistance B. Dedicated personal assistance C. Self-service D. Automated service E. Community of interest F. Co-creation G. Direct sales force H. Direct web sales I. Own stores J. Partner stores K. WholesalerRelationship Types Channel Types How you communicate and reach customers with value proposition For who are you creating valueCost StructureC$Revenue StreamsR$Finances: Viability What you capture from delivering value to customers Can be one-time or recurring sources Fixed pricing or Dynamic pricing What it costs to operate the business model Cost driven to minimise costs Value driven to maximise valueSource: Alex Osterwalder & Yves Pigneur, Business Model GenerationCost StructureC$Key ResourcesKRKey PartnershipsKPKey ActivitiesKARevenue StreamsR$Value PropositionVPCustomer ChannelsCCCustomer RelationshipsCRCustomer SegmentsCSEfficiency Value03 Customer Development ProcessGoing from startup to building a great companyimage source: http://imgur.com/gallery/NI3w8http://imgur.com/gallery/NI3w8empathise define ideate prototype test iterate- Steve Blank & Bob DorfA startup is a temporary organisation designed to search for a repeatable and scalable business model Customer Discovery Customer Validation Customer Creation Company BuildingSource: Steve Blank & Bob Dorf, Startup Owners ManualSearch ExecuteCustomer Discovery The beginning of a learning process Founders develop a vision, then find customers for that vision Get out of the building, talk to customers Try to learn in depth about their problem Learn what your customers care about Create low fi of minimum viable product Test customer reactions to slowly turn business model hypothesis into fact Learn how customers make buying decisions Customer discovery is complete when customers positively confirm the importance of the problem and the solution01 Customers03 Infrastructure04 Financial Viability02 OfferBusiness Model Design LogicCost StructureC$Key ResourcesKRKey PartnershipsKPKey ActivitiesKARevenue StreamsR$Value PropositionVPCustomer ChannelsCCCustomer RelationshipsCRCustomer SegmentsCSSource: Alex Osterwalder & Yves Pigneur, Business Model GenerationFounders Vision the best coffee shop in townValue PropositionVPimage source: https://stocksnap.io/photo/3QX7WQCK52Learn about your customers know what they care aboutValue PropositionVPCustomer SegmentsCSimage source: http://www.shutterstock.com/pic-385284079/stock-photo-coffee-tasting-with-baristas-smelling-the-aroma-of-many-cups.htmlMinimum Viable Product: coffee in a cupKey ResourcesKRKey ActivitiesKAValue PropositionVPKey PartnershipsKPimage source: http://www.gettyimages.com/photos/cup?sort=mostpopular&excludenudity=true&mediatype=photography&phrase=cuphttp://www.gettyimages.com/photos/cup?sort=mostpopular&excludenudity=true&mediatype=photography&phrase=cupCustomer Validation Test ability to repeat and scale with more customers Create high fidelity minimum viable product Test sales with paying customers or user engagement Prove that the market and customers exist with serious intent to purchase Verify core product features Test perceived value and demand for product Identify economic buyer Establish sales, pricing, and channel strategies Customer validation is complete when enough customers, with repeatable and scalable sales, make the business model profitableHigh Fidelity MVP: build on the coreKey ResourcesKRKey ActivitiesKAValue PropositionVPCustomer SegmentsCSKey PartnershipsKPCost StructureC$image source: https://www.pexels.com/photo/restaurant-coffee-cup-cappuccino-2709/Verify core features focus on what matters mostKey ResourcesKRKey ActivitiesKAValue PropositionVPCustomer SegmentsCSimage source: http://www.eater.com/2016/3/13/11214194/how-to-taste-coffeehttp://www.eater.com/2016/3/13/11214194/how-to-taste-coffeeEstablish Sales pricing, channels, cycles etcKey ActivitiesKAValue PropositionVPCustomer ChannelsCCRevenue StreamsR$Cost StructureC$Customer RelationshipsCRimage source: http://www.businessinsider.co.id/starbucks-ex-manager-describes-chaotic-working-conditions-2015-10/#ouZldGPFaP1GwIsy.97Customer Creation The beginning of execution Build on initial sales success Step on the gas and drive scale Get serious about marketing activity: spend Drive demand into sales channel to scale the businessDrive Sales spend on marketing to drive demandCustomer ChannelsCCKey ActivitiesKAValue PropositionVPKey ResourcesKRRevenue StreamsR$Customer RelationshipsCRCustomer SegmentsCSCost StructureC$Key PartnershipsKPimage source: http://uiconstock.com/30-flyers-designers/free-coffee-shop-a4-flyer-preview-1/Company Building When you know who your customers are You know what value to deliver to them The startup has found a predictable, repeatable, scalable business Begin transition from startup to company Set up structured departments to execute what has been validated in previous phases Hire people with clearly defined rolesDeliver, Scale, Repeat but dont forget to keep on learningCost StructureC$Key ResourcesKRKey PartnershipsKPKey ActivitiesKARevenue StreamsR$Value PropositionVPCustomer ChannelsCCCustomer RelationshipsCRCustomer SegmentsCSimage source: http://capturedmarin.com/Become a lifelong student of your customersCustomer Discovery Customer Validation Customer Creation Company BuildingTake founders vision and turn it into a Business Model hypothesisTest business model for repeatability and scalabilityBuild and drive user demandScale and repeat the validated modelSource: Steve Blank & Bob Dorf, Startup Owners Manual- Charles SpurgeonThe way to do a great deal is to keep on doing a little. The way to do nothing at all is to be continually resolving that you will do everything Go!khaya@villagedesign.co.za +27 82 669 0747design. innovation. changewww.pexels.commailto:khaya@villagedesign.co.za