designing and understanding business
Post on 17-Oct-2014
6.322 views
DESCRIPTION
How to understand how design and business fit together (and don't). Understanding how a market changes everything about how you design. From my General Assembly User Experience Class SeriesTRANSCRIPT
Understanding and Designing Business
with “requirements gathering”
Last week
• Questions?
Tomorrow
• Bring your all the post its with user needs and desires
• Bring all the post its you’ll generate tonight of what the business currently has, and what it plans to build
• Reading: Chapt 6 of Design is Job (preferably the whole thing– 9 bucks for the digital copy!)
Discuss
• Questionaire
10 Questions1. Exactly what problem will this
solve? (value proposition)2. For whom do we solve that
problem? (target market)3. How big is the opportunity?
(market size)4. What alternatives are out
there? (competitive landscape)
5. Why are we best suited to pursue this? (our differentiator)
6. Why now? (market window)7. How will we get this product to
market? (go-to-market strategy)8. How will we measure
success/make money from this product? (metrics/revenue strategy)
9. What factors are critical to success? (solution requirements)
10. Given the above, what’s the recommendation? (go or no-go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html
Deductive Reasoning
“Traditional firms utilize and reward the use of two kinds of logic. The first, inductive, entails proving through observation that something actually works. The second, deductive, involves proving -- through reasoning from principles -- that something must be.”
Abductive Reasoning
“Designers value highly a third type of logic: abductive reasoning. Abductive reasoning, as described by Darden professor Jeanne Liedtka, embraces the logic of what might be.
This style of thinking is critical to the creative process.”
http://www.businessweek.com/innovate/content/aug2005/di20050803_823317.htm
Business is from Mars, Design from Venus
Designers can make great leaps forward
But the business folks can be left behind
Critical thinking can also help you with their ideas
How many have you thought about a client or a boss “That’s a moronic idea”
Can you build a bridge to their goal?
Yes, and
7
AND
8
Step Back
Think
Organize
ProceedThe Inner Game of Stress: Outsmart Life's Challenges and Fulfill Your Potential by W. Timothy Gallwey
Tools for Thinking
• Clarification: Do I understand what you are saying?
• Understanding: Do I understand your thinking
• Context: Do I understand the world we are acting in?
• Evidence: What tells me this is right?
For Clarification, try Active Listening
• Repeat• Paraphrase• Extend
For Understanding, try Five WhysMy car will not start. (the problem)
Why? - The battery is dead. (first why)Why? - The alternator is not functioning. (second why)Why? - The alternator belt has broken. (third why)Why? - The alternator belt was well beyond its useful service life and has never been replaced. (fourth why)Why? - I have not been maintaining my car according to the recommended service schedule. (fifth why, a root cause)Why? - Replacement parts are not available because of the extreme age of my vehicle. (sixth why, optional footnote)
CONTEXTA little about Markets
One Word: Plastics
Why the one word?
• Opportunity• Brand Completeness• Blocking competition• Raising money• Curiosity
Types of Opportunities/Ideas
Better Cheaper Niche New
I can do itbetter
I can do itcheaper
I can do itfor you
You neverknewyou needed it
How big is the opportunity?
Total Available Market (TAM)
Total Available Market (TAM)• How many people would want/needthe product?• How large is the market be(in $’s) if they all bought?• How many units would that be?
How Do I Find Out?• Industry Analysts – Gartner, Forrester• Wall Street Analysts – Goldman, Morgan
How big is my slice?
Total Available Market (TAM)
Served Available Market (SAM)
• How many people need or can use product?• How many people have the money tobuy the product• How large would the market be(in $’s) if they all bought?• How many units would that be?
How Do I Find Out?• Talk to potential customers
Served Available Market (SAM)
Your idea is worthless alone
Idea Execution Timing Dumb Luck
MARKETSWhat business will you be in?
Customer Development
Customer Development
CompanyBuilding
CustomerDiscovery
CustomerValidation
Customer Creation
Steven Gary Blank, Four Steps to the Ephinany
• How many of them are there?
• Are they price sensitive?• How big is their problem?• How often do they have
the problem?• How do they solve it
today?
Who are your customers?
New Product Conundrum
• New Product Introductions sometimes work, yet sometimes fail– Why?– Is it the people that are different?– Is it the product that are different?
• Perhaps there are different “types” of ventures?
Three Types of Markets
• Who Cares?• Type of Market changes EVERYTHING• Sales, marketing and business development
differ radically by market type
Existing Market Resegmented Market
New Market
Existing: founded 1938
Competitor founded 1972
Competing in an Existing Market
• Faster/Better • High end• Somewhere else
Resegmented
Gap’s new entry
Competing by resegmenting
• Niche = marketing/branding driven
• Cheaper = low end
New Market?
New
New Existing Resegmented
New Market
• Cheaper/good enough can create a new class of product/customer
• Innovative/never existed before
John Gourville, Eager Sellers and Stony Buyers (2006)
Deadpool
Type of Market Changes Everything
• Market– Market Size– Cost of Entry– Launch Type– Competitive
Barriers– Positioning
• Sales– Sales Model– Margins– Sales Cycle– Chasm Width
Existing Market
Resegmented Market
New Market
• Finance• Ongoing Capital• Time to Profitability
• Customers• Needs• Adoption
Choose your idea
From Guy Kawasaki, Art of the Start
Ability to provide unique product or service
Value to customer
compete on price
stupid
bankrupt
The holy grail
WHAT IS YOUR IDEA?Exercise
Who are your customers?What is your market?
How big is the opportunity?
BUSINESS MODELSHow do we make money?
Business creates value for which they receive money
Money allows them the resources to provide value
WHAT DO YOU USERS HAVE TO DO?Who are you users?
Marketplace ModelAdvertising Model
Affiliate ModelCommunity Model
Subscription Model
I have always been a woman who arranges things,for the pleasure–and the profit–it derives.I have always been a woman who arranges things, like furniture and daffodils and lives.
Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.
I’ll go where the buyers are
I want to find things!
I want the best price!
Can I trust this seller?
Users must find products, evaluate seller, and make a purchase
Advertising ModelThe web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.
Users must:• Notice advertising• Interact with ad
Preconditions: User must visit advertising location
Share their demographic information
Types:CPMCPCCPA
Community ModelThe viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.
Open Source Red Hat, OpenXOpen Content Wikipedia, Freebase
Users need to • Create an identity • Connect with other users • Build a reputation• Create and share
content/work/etc
Users must care
Subscription ModelUsers are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content ServicesSoftware as a ServiceInternet Services Providers
User must:•Able to evaluate the
offering• Subscribe and
unsubscribe to offering•Realize value offered
Combos
Advertising Community
Combos
Advertising Community
Subscription
Combos
Marketplace Community
Affiliate
1, 2, 3Prioritize and Sequence
Pattern:User gets valueUser returns, gets more
valueUser reciprocates
User adds contentUser contributes money
Wikipedia:Looks up contentKeeps finding more
contentSees error, correctsUser donates
HOW DO YOU MAKE MONEY?Exercise
Marketplace ModelAdvertising Model
Affiliate ModelCommunity Model
Subscription Model
10 Questions1. Exactly what problem will this
solve? (value proposition)2. For whom do we solve that
problem? (target market)3. How big is the opportunity?
(market size)4. What alternatives are out
there? (competitive landscape)
5. Why are we best suited to pursue this? (our differentiator)
6. Why now? (market window)7. How will we get this product to
market? (go-to-market strategy)8. How will we measure
success/make money from this product? (metrics/revenue strategy)
9. What factors are critical to success? (solution requirements)
10. Given the above, what’s the recommendation? (go or no-go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html
Questions?