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Business Design
Executive MBA “Innovation & Business Creation” Technische Universität München (TUM) & University of California, Berkeley | May-June 2014 Bernhard Doll | [email protected]
Note: optimized for presentation with tablets
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Intro
Education + Ph.D. (Dr. rer. pol.) in Management from TU München + M.Sc. (Univ.) in Psychology and Sociology + Visiting Scholar at Hong Kong University of Science &
Technology and Macquarie University Sydney + Dipl.-Inf./B. Eng. (hons) in Software Engineering + Research Fellow at Leipzig Graduate School of Management + Research Fellow at Peter-Pribilla-Foundation
Professional experience + Founder and Managing Director of Orange Hills GmbH + Founder, CTO, member of supervisory board or catalyst of many
start-ups (including Webmiles AG, Interhyp AG, SiteForce AG, Treems AG, mybestbrands GmbH, coma AG)
+ Director at Center for “Innovation & Business Creation” at TUM + Head of Software Engineering at a.f.i.m. GmbH / TBWA + Lecturer at TUM School of Management, University of St. Gallen,
Leipzig Graduate School of Management, University Erlangen-Nuremberg, FH Salzburg, FH München among others
About me
2
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Intro
Readings
3
Schrage, M. (1999): Serious Play – How the world’s best companies simulate to innovate, Boston: Harvard Business School Press
ISBN-13: 978-0875848143
Kawasaki, G. (2004): The art of the start – the time-tested, battle-hardened guide for anyone starting anything, London: Penguin Books
ISBN-13: 978-1591840565
Ries, E. (2011): The Lean Startup, New York: Crown Business
ISBN-13: 978-0307887894
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Intro 4
Agenda
1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Intro
WHY ARE YOU HERE?
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Intro
Day 1 Day 2-4
6
HOW IT FEELS
UFF
OHH YEAH “…let’s rock the world – but how?“
than expected“
“…good to have clear guidance”
Day 5-6
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Intro 7
What is design?
“Design is the transformation of existing conditions into preferred ones.“ Herbert Simon
“Design thinking is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.” Tim Brown, IDEO
”Design is not just what it looks like and feels like. Design is how it works.“ Steve Jobs, Apple
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Intro 8
How designers work
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Intro 9
How designers work
”Business people don‘t just need to understand designers better; they need to become designers.“ Roger Martin, Dean Rotman School
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Intro 10
„Naked“ entrepreneur “I have a GREAT
vision to change the world!”
+ Corporate innovator + Business developer + Marketing expert + Designer + Researcher
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Intro 11
„Naked“ entrepreneur Se
ed / startup stag
e
Early
stag
e
Expa
nsion
stag
e
Later s
tage
“I have a GREAT
vision to change the world!”
+ Corporate innovator + Business developer + Marketing expert + Designer + Researcher
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Intro 12
MOST OF THEM FAIL “I have a GREAT
vision to change the world!”
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Intro 13
BIGGEST PROBLEM?
People build something nobody wants.
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Intro 14
BIGGEST PROBLEM?
People build something nobody wants.
Discover
Scope
Business Case
Execute
Test
Launch
Gate
Gate
Gate
Gate
Gate
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Intro
IDEA: GOOD OR BAD?
Discover
Scope
Business Case
Gate
Gate
?
Strategy
Market strategy
Product position
USP
Market entry
Market
Market size
Competitors
Market share
Revenue goals
Finance
Relevant revenue
Break even time
Max. neg.
NPV for life cycle
Not clear
Me-too-product
Market occupied
< 25 Mio. €
1-2 players
< 10%
< 3 Mio. €
< 5% of branch
> 6 years
> 10 Mio. €
< 5 Mio. €
In discussion
In discussion
Some USP’s
Market follower
25-50 Mio. €
2-5 players
10-25%
3-12 Mio. €
5-25% of branch
4-6 years
5-10 Mio. €
5-10 Mio. €
Clear and communicated
Clear, coordinated with SMP*
Clear advantage in competition
Market leader
> 50 Mio. €
> 5 players
> 25%
> 12 Mio. €
> 25% of branch
< 4 years
< 5 Mio. €
> 10 Mio. €
Technology
Technology basis
Products basis / platform
Variants /options
Patent situation
Process-to-market
SMP*
R&D conditions
Transition to series
3rd party dependency
Risks
Technical risks
Time risks
Cost risks
Others
* Sales, Marketing, Production
0
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Intro
Challenge #1 ...at the very beginning Innovation = hard to imagine
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Intro
ULTIMATE CASH FORMULA
17
X
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Intro
VIENNA COFFEE HOTSPOT
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Intro
HOW TO DESIGN THE DIFFERENCE?
19
Hotel Sacher
Selling coffee, cakes and a tradi�onal Viennese coffee house atmosphere
Starbucks
Selling Frappuccino with caramel topping, cakes and a very special feeling
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Intro
Challenge #2 ...at the very beginning Innovation = hard to predict
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Intro
Getting from plan A ...To something that really works
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1
2
3
4
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Intro
Getting from plan A ...To something that really works
22
1
2
3
4
Pivot Pivot Pivot
Additional reading: Mullins, J. & Komisar, M. (2011): Getting to plan B, Harvard Business Press.
ISBN: 978-1422126691
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Intro
Knowledge landscape
”What we know is a drop, what we don’t now is an ocean.” Isaac Newton 2
unknown known
unkn
own
know
n
Accessibility
Ava
ilabi
lity
1
3 4 explicit knowledge implicit knowledge
?
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Intro
Challenge #3 ...at the very beginning Innovation = hard to Evaluate
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Intro 25
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Intro 26
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Intro 27
1860 1900 1950 2000 2012
1
2
4
8
16
32
64
128
0
US$ per barrel
Crude oil prices since 1861
Source: Wikipedia
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Intro 28
DCF + NPV
A
B
C
Companies should be making this comparison
DCF and NPV methodologies implicitly make this comparison
Assumed cash stream resulting from doing nothing
innovation against the default scenario of doing nothing, assuming – incorrectly – that the present
investment is not made. For a better assessment of the innovation‘s value, the comparison should be
more likely scenario of a decline in performance in the absence of innovation investment.“
Source: Christensen (2008)
NPV = DCF – required investment
PV = 1
1 + r1 x C1 DCF =
Ct
(1+rt)t
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Intro 29
DCF + NPV
A
B
C
Companies should be making this comparison
DCF and NPV methodologies implicitly make this comparison
Assumed cash stream resulting from doing nothing
innovation against the default scenario of doing nothing, assuming – incorrectly – that the present
investment is not made. For a better assessment of the innovation‘s value, the comparison should be
more likely scenario of a decline in performance in the absence of innovation investment.“
Source: Christensen (2008)
NPV = DCF – required investment
PV = 1
1 + r1 x C1 DCF =
Ct
(1+rt)t
Source: Christensen (2008)
Example of the US music industry
New market entrants:
Established industry:
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Intro
PSYCHOLOGY OF EVALUATING IDEAS
30
Estimated Output
Perceived Input
Alternative A Alternative B
Personal investment
ratio
Perceived Input
Personal investment ratio
Estimated Output
What do These Guys have in COmMon?
“perilous to conduct, or more uncertain in success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.
The coolness arises partly from the fear of opponents, who have the laws on their side and partly from the incredulity of men, who do not readily believe in the new things until they have long experienced them.”
Niccolo Machiavelli (1469-1527)
1 2
3 4
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Intro
DEALING WITH UNCERTAINTY
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Intro 32
Human-centered
Evolutionary Context-oriented
Holistic Visual Team-oriented
Six principles of Business Design
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Intro
WRAP UP 33
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Ideas
Agenda
34
1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Ideas 35
HOW TO START?
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Ideas
How to start
36
Markets & competitors
What others are doing
You & context
What you can achieve with your resources
Users & customers
What people need …or want to become
1 2
3
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Ideas
How to start: OPTION 1
37
Markets & competitors
What others are doing
You & context
What you can achieve with your resources
Users & customers
What people need …or want to become
1 2
3
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Ideas
The next big thing...
38 Trends & technology: h�p://�ny.cc/18h15
Web Trend M
ap
Ex�nc�on Timeline
Trends and Technology Timeline
Ex�nc�on: h�p://�ny.cc/uht29
Web Trends: h�p://�ny.cc/6ws7b
“The future is already here — it's just not very evenly distributed.“ (William Gibson)
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Ideas
COPY CAT
39
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Ideas
COPY CAT
40
Is Copy Cat a bad thing?
Paradigm
Position
Product Process Innovation
Do better...
Do different...
Source: Bessant (2007)
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Ideas
“Innovation isn‘t about coming up with the next big idea. It is about combining existing ideas and parts in a new way.“ Saul Kaplan, The Business Innovation Factory
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Ideas
How to start: OPTION 2
42
Markets & competitors
What others are doing
You & context
What you can achieve with your resources
Users & customers
What people need …or want to become
1 2
3
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Ideas
Before you CAN pitch the “right” solution, you have to understand the “right” customer problem
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Ideas
Story of A milkshake
44
What’s the job this product helps you to get done?
“With few exceptions, every job people need or want to do has a social, a functional, and an emotional dimension. If marketers understand each of these dimensions, then they can design a product that's precisely targeted to the job.
In other words, the job, not the customer, is the fundamental unit of analysis for a marketer, who hopes to develop products that customers will buy.“
Clay Christensen, Harvard Business School (2006)
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Ideas
JOB(S) TO GET DONE
45
„When________, they want to________, so they can________.“
Context
Job(s) to get done: 1. “When I am hungry....” 2. “When I'm in a rush and hungry....” 3. “When I'm in a rush, starving and 'on the go'....” 4. “When I'm in a rush, starving, 'on the go' and
need something I can eat with one hand, not sure when the next time I'll be able to eat,...”
Source: Klement (2013)
Motivation (not action) Outcome
„When I am sitting in my car commuting to work,
so I can enjoy my trip and arrive at my workplace fresh and relaxed.“
Add as many details as possible to the context of your customers’ situation to design solutions that really help getting their job(s) done:
Solution: Restaurant (with tasty food) Fast-food restaurant Fast-food restaurant with drive-through Fast-food restaurant with drive-through and food packaging that can be handled with one hand
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Ideas
#GOOT(F)B
46
= get out of the (fucking) building
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Ideas
“We don‘t know what we see, we see what we know.“ Johann Wolfgang v. Goethe
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Ideas
Understanding Customers: PROCESS Cy
cle
2
1 + + Narrow down your target group(s) + Select method and process + Schedule your activities + Prepare interview guidelines and tools
(cameras, audio recorders, etc.)
Tip: Browse magazines for people who are pretty similar to your target group to sharpen your senses for them.
Preparation 2 Data gathering I 3 Customer matrix
4 Data gathering II 6 5 Filling up Matrix analysis
+ Select participants for cycle 1 + Identify behavioral dimensions to span the market
+ Design of customer journeys and personas to capture the data
Observations Interviews
Dim
ensi
on A
Dimension B
Persona
Persona
Persona
+ Position personas on the matrix +
+ Design of personas to capture the data
Dim
ensi
on A
Dimension B
Persona
Persona
Persona
Persona
Persona
Saturation
Analyze customer matrix + to prioritize customer segments + to identify market niches or
underserved markets + to unveil innovation potential + to understand competitive situation
you are looking for.
Observations Interviews
+ Overlay offerings / competitors etc.
Cycl
e 1
Persona
Persona
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Ideas
VISUALIZING „FAKE“ CUSTOMERS
49
This is a persona: A persona is a archetypical description of customers / users . Personas are designed to capture and
about customers / users. They help you and your team to understand what makes them tick and what they potentially need to improve their lives. It’s about getting a “professional” gut
ultimate truth.
Consumer behavior
Personal quotes
Demographics
Preferences
Key statement
Pain points
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Ideas
VISUALIZING MARKETS D
imen
sion
A
Dimension B Are there more
customers of this type?
50
Products and services of your competitors
Is there are market?
Stop your research when your learning curve starts
Products and services you offer
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Ideas
WHO IS YOUR PRIMARY CUSTOMER?
51
Source: amazon.com Source: marykay.com.au
mission “to be the world’s most consumer-centric company. This unwavering focus on consumers has created innovations such as prime free shipping, detailed product reviews (including negative ones), look-inside-this-book, and the listing of lower-priced products from off-site competitors.“ - Robert Simons (2014)
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Ideas
ANOTHER TWIST: How to improve ProDuCts
52
How can we make better products for our target group?
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Ideas
WHY IMPROVE PRODUCTS?
53
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Ideas
Develop YOUR customers
54
Additional reading: Schrage, M. (2012): Who do you want your customers to become? HBR Press.
ISBN: 978-1-4221-8785-2
Who do you want your customer to become?
How do you make your customer more valuable?
What customer journey can help „create“ this kind of customer?
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Ideas
How to start: OPTION 3
55
Markets & competitors
What others are doing
You & context
What you can achieve with your resources
Users & customers
What people need …or want to become
1 2
3
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ON THE GAME IS
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Ideas 57
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Ideas 58
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Leaderboard BUSINESS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Game DateIteration 1 2 3
Team A
Team B
Team C
Team D
Team E
Team F
Team
1
Team Team
2 3
SILVERBRONZE GOLD
Business Design GAME | Playing seriously with innovation
Team A
Strategy
Sales
Finance
R&D
Operations
Project Manager
“Best Judge” Badge
Team B
Strategy
Sales
Finance
R&D
Operations
Team C
Strategy
Sales
Finance
R&D
Operations
Team D
Strategy
Sales
Finance
R&D
Operations
Team E
Strategy
Sales
Finance
R&D
Operations
Team F
Strategy
Sales
Finance
R&D
Operations
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GAMEBOARD BUSINESS
© 2014 Orange HillsTM GmbH. All rights reserved.
Game DateIteration 1 2 3
Business Design GAME | Playing seriously with innovation
1 Introduction+ Mission+ Team+ Evaluation+ Workspace
2Reflection+ Meaning+ Pleasure+ Strengths+ Shared picture
3 Ideas+ Customers+ Scenarios+ Offerings+ Pains / gains
4Businessmodel+ Target groups+ Channels+ Offerings+ Profit formula etc.
5 Businessmodel+ Group work+ Interventions+ Reflection 6
BusinessDNA+ Jobs(s) to get done+ Core value+ Unfair advantage
7 BusinessDNA+ Group work+ Interventions+ Reflection
8 KPIs+ Output+ Learning+ Team
9 KPIs+ Group work+ Interventions+ Reflection
10Hypotheses+ Analogs+ Antilogs+ Exploration+ Hypotheses
11Hypotheses+ Group work+ Interventions+ Reflection
12Experiments+ Methods+ Tools+ Measurements+ Efficiency
13 Experi-ments+ Group work+ Interventions+ Reflection
14 Review+ Status quo+ Feedback+ Evaluation
15 Lean offerings+ User stories+ Non-functional requirements+ Benchmark
16Lean offerings+ Group work+ Interventions+ Reflection
17 Action plan+ Activities+ Output+ Teamwork 18
Actionplan+ Group work+ Interventions+ Reflection
19 Review+ Status quo+ Feedback+ Evaluation
20Execution+ Group work+ Interventions+ Reflection
21Review+ Status quo+ Feedback+ Evaluation
22 Execution+ Group work+ Interventions+ Reflection
23 Final+ Results+ Learnings + Evaluation+ Award ceremony
END
STAR
T
Consistency check
http://bit.ly/UHYzra
http://bit.ly/1lQHcf7
http://bit.ly/1rMo2hP
http://bit.ly/1k5aV8O
Interventions’ schedule1 2 3 4 5
Team
B
C
D
E
F
A
1. PLAN2. EXECUTE
3. LEARN4. DECIDE
This gameboard illustrates the flow of activities for interactive trainingsbased on the integrative process model called Business Design.
The training is designed as a game and will be played in a workshop setting, allowing participants to turn ideas into business. They will work in teams, slip into team roles to invent and implement a new business model. They will face unexpected challenges on the way. A reward system will push them beyond limits for one goal: To provide participants with a unique learning experience and help them become successful innovators.
optional
Design your business in your browser | http://www.rapidmodeler.de Download | http://blog.orangehills.de/#gab_en
Break-out
Break-out
Intro
Break-out
Intro
Intro
Intro
Break-out
Break-out
Break-out
Intro
Break-out
Intro
Break-out
Intro
Break-out
Break-out
Break-out
Plenum
Plenum
Plenum
Plenum
Intro
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Ideas
Causation VS. Effectuation
61
Causation Effectuation “...takes a particular effect as given and focuses on selecting between different set of means to create that effect.“
”...takes a set of means as given and focus on selecting between possible effects that can be created with that set of means.“
Additional reading: Sarasvathy, S. (2009): Effectuation, Edward Elgar.
ISBN: 978-1848445727
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Ideas
How do we design a value proposition for markets that do not exist yet?
How do we make pricing decisions when the firm does not exist yet?
How do we hire people for an organization that does not exist yet?
How do we value firms in an industry that did not exist five years ago?
62
Effectuation approach helps you unveil your personal/organizational “unfair” advantage, which is something you do better than your competitors and hard to copy.
Source: Egmont Ehapa Verlag
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Ideas
THE STORY OF „FREITAG“ BAGS
63
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Ideas
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Ideas
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Ideas
WRAP UP 66
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Business
Agenda
67
1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Business
BUSINESS Model innovation #bmi
68
Source: Osterwalder 2010
Additional reading: Osterwalder, A. (2008): Business Model Generation, Self Published.
ISBN: 978-2-8399-0580-0
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Business
Example: XEROX
69
Pay per copy
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Business
Example: GILETTE
70
18,85 € Amazon.com
21,97 € (8 pcs.) Amazon.com
Average lifespan: 6 weeks
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Business
Example: Happy Meal
71
Who values what?
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Business
Example: LINKEDIN
72
Upgrade to premium services
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Business
Example: AIRBNB
73
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Business
Example: INTERHYP.DE
74
“Interhyp is Germany‘s largest distributor of residential mortgages. As a broker, Interhyp does not act as a lender but instead selects the best mortgages for its customers among offers from over 250 commercial banks, saving banks and insurance companies. We focus on competent, personal and objective consulting by our approximately 316 mortgage consultants. Private customers receive advice from our homepage www.interhyp.de and
key German cities.”
Source: Interhyp Annual Report 2011
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Business
Example: MYBESTBRANDS
75
~ 0,30 € per click-out
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Business
Example: MYBESTBRANDS
76
~ 0,30 € per click-out
Business model patterns
Source:
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME | Playing seriously with innovation
DNA
Download | http://blog.orangehills.de/#bml_en
BUSINESS Model...AS A TOOL
77
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
URL: bit.ly/UHYzra
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME | Playing seriously with innovation
DNA
Download | http://blog.orangehills.de/#bml_en
BUSINESS Model: EXTERNAL VIEW
78
Target groups Customers are people who are willing to pay for your offerings. Users eventually use it. It is crucial to know as much as possible about customers and users - who they are, what job(s) they are trying to get done, what they really need. Do you?
Brand & messages It is not enough to develop a brilliant product. It has to be sold with a simple, clean and compelling message, wrapped in a brand that embodies your company’s values.
Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and
customers (and partners) is
need to discover.
Relationships Every business model requires its own type of relationship to customers and users. It can be very personal or automated. No matter what you choose, make sure you meet the expectations of your customers.
Offerings Your offerings are the central part of your business model. What do your customers pay for? What do they get in return? Think about products, but also services and a combination of both to best serve your customers.
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
URL: bit.ly/UHYzra
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME | Playing seriously with innovation
DNA
Download | http://blog.orangehills.de/#bml_en
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
BUSINESS Model: INTERNAL VIEW
79
Partners Every successful business depends not only on the company‘s skills and resources but on reliable partners who do things, which are not core of the company. Managing these partners is key to your success.
answers to the questions, how much money can be made in terms of revenue, how costs are allocated and
transaction nets to achieve
Channels One of the most valuable assets of any company are established channels to customers. To know which channel is effective and
customers (and partners) is
need to discover.
Resources To create and deliver your offering to customers and users, you need a certain set of resources. What are your key assets you need within your company for your business model – and what do you purchase from partners in the value chain.
“Pattern” Pricing & revenue Investments
Costs
Processes The question seems to be simple, but the answer is very tough. You can‘t excel in every aspect of your business model. You have to decide, what is really core of your company - and what can be outsourced.
URL: bit.ly/UHYzra
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
EXAMPLE: ITUNES
80
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store?
MP3 software player
“1000 songs in your pocket”
Hardware player
iTunes store
We deliver seamless music experience
Wherever you are, enjoy all your music
Website
Retail stores
Mac hardware
(Premium) mass market
Apple enthusiasts
Automated
Apple brand
Record companies
OEMs
Technology providers (MP3 codec)
Content
Patents
Soft- and hardware
Cloud storage
Soft- and hardware design
Marketing & sales
Content manage-ment
Brand & access to customer base
Key account
Cloud storage
People
Hard- and software design
Marketing campaigns
Manufac-turing
Hardware revenues
99 cent per song Transaction
based
Royalties
URL: bit.ly/UHYzra
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Business
VIRTUAL BUSINESS MODELING
81
“Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs.
For details visit: http://www.rapidmodeler.de
View: Business Model
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Business
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME | Playing seriously with innovation
DNA
Download | http://blog.orangehills.de/#bml_en
BUSINESS DNA
83
The “Business DNA” is the very essence of your business model, which is the key to build your initial market offerings in later stages. If you only have 30 seconds to pitch your business, present the DNA.
DNA
„When___,
they want to___,
so they can___.“
„We deliver___,
so that___.“
„We excel in___,
which is unfair because___.”
Primary customer /
user
Source: “Primary customer” according to Simons (2014)
What is the core of your business model?
URL: bit.ly/UHYzra
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
”HOW“ AND “WHAT“ IS NOT ENOUGH
84
How?
Why?
2
3
What?
1
Example:
“Everything we do, we believe in challenging the status quo. We believe in thinking differently.
The way we challenge the status quo is by making our products beautifully designed, simple and user-friendly.
And we happen to make great computers. Wanna buy one?“
Apple’s mission statement
Why?
How
? W
hat?
Additional reading: Sinek. S. (2009): Start with WHY, Portfolio / Penguin.
ISBN: 978-1591846444
Differentiate here!
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Business
„WHY“ = SOURCE OF TRANSFORMATION
85
1997 2013
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Business
“MARKETING IS ABOUT SELLING MORE STUFF TO MORE PEOPLE MORE OFTEN FOR MORE MONEY MORE EFFICIENTLY.” Sergio Zyman, CMO Coca-Cola
86
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Business
HOW CAN WE MEASURE SUCCESS?
87
Relevant metrics Questions Acquisition Acquisition costs for customers, users and
etc.
How do customers and users become aware of you? SEO, SEM, widgets, email, PR, campaigns, blogs, etc.
Number of completed onboarding processes, enrollments, sign-ups, used the offering at least once, etc.
Engagement, daily and monthly active uses, churn/attrition rate, etc.
Daily/monthly revenue per segment, customer lifetime value, conversion rate, shopping cart size etc.
Invites sent, number of referrals, mentions in the press / blogs, viral cycle time etc.
Do drive-by visitors subscribe, buy, use, etc.? Features, design, tone,
Does a one-time customer or user
alerts, reminders, emails, updates, etc.
Do you make money from customer activity? Transactions, volume, costs, resource velocity, subscriptions, etc.
Do customers and users promote your offering? Email, widgets, conferences,
Activation
Retention
Revenue
Referral
Source: according to Croll / Yoskowitz (2013)
Ask yourself: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about.
Focus on a small number of KPIs to increase your focus. Don’t get lost in too much data. KPIs have to lead to action and you can’t affect dozen of KPIs simultaneously.
Daily Weekly Monthly Quarterly term targets: E.g. 10% more active users every week. Sounds boring? You will be surprised how quickly the numbers get large…
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Business
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
Who are our sales targets and who will be using our offerings?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME | Playing seriously with innovation
DNA
Download | http://blog.orangehills.de/#bml_en
BUSINESS KPIs
88
Again: “Can I measure the metrics?” and “Does the metrics help me decide what to do differently?” If the answer to one of these questions is “No”, it is very likely not a good metrics you should care about.
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
URL: bit.ly/UHYzra
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Business
Example: GOOGLE ANALYTICS / GECKOBOARD
89
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Business
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Business
WRAP UP 91
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Validation
Agenda
92
1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Validation
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
What things are new to us but we can learn from others, because they have proven that it just works?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
EVERY PLAN IS BASED ON UNKNOWNS
93
The “Business Model Canvas” has been designed to visualize the essential ingredients of a business model on one page. The left part is focused on external components that can be “seen” from customers and users, the right part on internal components within the company.
URL: bit.ly/10cz2TI
MP3 software player
“1000 songs in your pocket”
Hardware player
iTunes store
Website
Retail stores
Mac hardware
(Premium) mass market
Apple enthusiasts
Automated
Apple brand
Record companies
OEMs
Technology providers (MP3 codec)
Content
Patents
Soft- and hardware
Cloud storage
Soft- and hardware design
Marketing & sales
Content manage-ment
Brand & access to customer base
Key account
Cloud storage
People
Hard- and software design
Marketing campaigns
Manufac-turing
Hardware revenues
99 cent per song
Transaction based
Royalties
Back in 2003: What was the business model of Apple iTunes when they started the iTunes music store?
?
?
? We deliver seamless music experience
Wherever you are, enjoy all your music
? ?
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Validation
LEARN TO PLAN PLAN TO LEARN
94
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Validation
HYPOTHESES & EXPERIMENTS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Team DateIteration 1 2 3
Analogs
What things are new to us but we can learn from others, because they have proven that it just works?
What hypotheses grow out of relevant antilogs that are critical for our business?
What things are new to us and new to the entire market, which is why we can’t learn from anyone?
+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA
Look at every single element of your business model to find analogs and antilogs:
Antilogs Exploration
Experiments
How can we test the identifiedhypotheses with the least effort?
Test focus
Impo
rtan
ce
Uncertainties
Make sure your analogs are reliable sources to learn from
others. In many cases, analogies eventually turn out to be somehow
different to your business when you look under the hood.
A+ A-
How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.
LO /
MVP
Business Design GAME | Playing seriously with innovation
Validation
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Hypotheses
What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?
pre-launch
post-launch
Expe
rimen
ts
Download | http://blog.orangehills.de/#hyp_en
Hypotheses…AS A TOOL
95
URL: http://bit.ly/1lQHcf7
The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how
possible.
Don’t test ideas! Test the assumptions of your ideas, systematically!
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Validation
HYPOTHESES & EXPERIMENTS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Team DateIteration 1 2 3
Analogs
What things are new to us but we can learn from others, because they have proven that it just works?
What hypotheses grow out of relevant antilogs that are critical for our business?
What things are new to us and new to the entire market, which is why we can’t learn from anyone?
+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA
Look at every single element of your business model to find analogs and antilogs:
Antilogs Exploration
Experiments
How can we test the identifiedhypotheses with the least effort?
Test focus
Impo
rtan
ce
Uncertainties
Make sure your analogs are reliable sources to learn from
others. In many cases, analogies eventually turn out to be somehow
different to your business when you look under the hood.
A+ A-
How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.
LO /
MVP
Business Design GAME | Playing seriously with innovation
Validation
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Hypotheses
What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?
pre-launch
post-launch
Expe
rimen
ts
Download | http://blog.orangehills.de/#hyp_en
Hypotheses…AS A TOOL
96
Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn.
Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to).
The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how
possible.
Don’t test ideas! Test the assumptions of your ideas, systematically!
In some cases, the difference between analogs and antilogs is blurred.
Exploration Some antilogs (both uncertain and important) require an exploration phase
translate them into focused and testable hypotheses. Plan simple experiments around that to learn as quick as possible.
Show- stoppers
Experiments Some hypotheses can be tested with simple means, such as interviews, prototyping or advanced experimental settings including A/B, multivariate testing and crowd sourcing. Plan your tests carefully to
looking for.
Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down.
URL: http://bit.ly/1lQHcf7
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Validation
HYPOTHESES & EXPERIMENTS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Team DateIteration 1 2 3
Analogs
What things are new to us but we can learn from others, because they have proven that it just works?
What hypotheses grow out of relevant antilogs that are critical for our business?
What things are new to us and new to the entire market, which is why we can’t learn from anyone?
+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA
Look at every single element of your business model to find analogs and antilogs:
Antilogs Exploration
Experiments
How can we test the identifiedhypotheses with the least effort?
Test focus
Impo
rtan
ce
Uncertainties
Make sure your analogs are reliable sources to learn from
others. In many cases, analogies eventually turn out to be somehow
different to your business when you look under the hood.
A+ A-
How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.
LO /
MVP
Business Design GAME | Playing seriously with innovation
Validation
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Hypotheses
What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?
pre-launch
post-launch
Expe
rimen
ts
Download | http://blog.orangehills.de/#hyp_en
EXAMPLE: AIRBNB
97
Hypotheses Hypotheses are assumptions that grow out of critical antilogs (both uncertain and important). Make sure your hypotheses are simple, focused and can be tested with simple means. Otherwise, you need to narrow them down.
H1
H2 H3
H4 H5 H6 H7
Level 1
Level2
Level 3
Hypotheses hierarchy
Details
Scope
”We will reach 5 million nights booked by 2012.“
”Hosts with professional photography will get 2-3 times more bookings than the market average.“
”Number of hosts signing up is 10x higher than the market average, because they are enthusiastic to receive professional photos.“
Antilogs Antilogs are aspects in your business model, which are new to you and new to the market, which is why you can’t learn from anyone. If some antilogs are very critical for your success and you know only little about it, put them into your test focus and learn.
Analogs Analogs are aspects in your business model, which are new to you but you can learn from others, because they have proven that it works. Don‘t reinvent the wheel. If someone has already proven something you need, take it (if you are allowed to).
In some cases, the difference between analogs and antilogs is blurred.
Show- stoppers
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Validation 98
What is YOUR BET ON THE FUTURE?
In other words: “What are your
your future business model? Yep, just 5…”
The “killer question” to challenge every innovation team
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Validation
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Validation 100
ONE OF THE WORST PRODUCT FLOPS
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Validation
THEY TESTED A LOT: the right thing?
101
The Pepsi Challenge back in the late 80’s
WWhhiicchh CCoollaa ddoo yyoouu pprreeffeerr??
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Validation 102
TESTING ≠≠REALITY
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Validation
Business experiments
103
Source: Thomke (1998), p. 745
(1) Design
(2) Build
(3) Run
(4) Analyze
DESIGN REQUIREMENTS
DONE
Use learning from previous cycle(s) to conceive and design an improved solution.
Develop models and / or build prototypes to be used in running experiments.
Test model / prototype in real or simulated use environment.
previous step and learn.
Cha
nges
in e
xoge
nous
in
form
atio
n
DESIGN ACTIVITY
Examples:
+ Landing page (+ “notify me when you release”): Will anyone actually buy this?
+ Crowd testing: How much will customers pay?
+ Demo/video: Does this solution resonate with people?
+ E-mail marketing: Do customers like your story (and do something to be part of it)?
+ Sales prelaunch: Will customer buy (before you have even built it)?
+ Lean version 1.0: Will customers use it and come back? (à MVP, see next chapter)
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Validation
PROTOTYPES AS Shared spaces
104 Source: According to Schrage (1999), p. xv
a) Transactional model of communication
b) Collaborative model of communication
Receiver / sender Sender / receiver Information
source / destination
Destination / information
source audible
Message Message Signal Received signal
Noise source
Source: According to Shannon (1948), p. 380
„shared space“
visual tactile
Receiver / sender Sender / receiver Information
source / destination
Destination / information
source
Message Message
Signal Received signal
Noise source
audible
Additional reading: Schrage, M. (1999): Serious play, Harvard Business Press.
ISBN: 978-0875848143
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Validation
PROTOTYPE = INTERACTION
105
...to simulate, embrace and discuss what the future reality might be
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Validation
SOCIAL PROTOTYPING
106
+ Do you remember?
...to simulate, embrace and discuss what the future reality might be
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Validation
PROTOTYPE? YES
107
This is the traditional (engineering-driven)
perspective on
of its kind, the pre-version for mass
production.
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Validation
PROTOTYPE? YES
108 Source: Calgraphix
Many mechanical models and
prototypes can be easily manufactured
with low-cost 3D printers.
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Validation
PROTOTYPE? YES
109 Source: UIStencils
Storyboards can help visualize
customer encounters or entire
customer experience at early
stages.
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Validation
PROTOTYPE? YES
110
Role plays are a cheap and easy way
to prototype services. If played by
yourself, you get a good understanding
how a customer might feel like.
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Validation
PROTOTYPE? YES
111 Source: UIStencils
Even rough sketches of a new product,
service or software UI is a prototype. With a different
purpose, however.
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Validation
Prototype? YES
112
A B C D E F G H I
1
2
3
4
5
6
7
8
9
10
1
2
Marke des Unternehmens mit hoher Strahlkra� in den Markt; verkörpert Innova�on („orange“)
... zeigt Kunden unseren USP Schnelligkeit, um Inves��ons-‐entscheidungen für Innova�onen vorzubereiten
Nutzer/Endkunde, für den wir innova�ve Geschä�smodelle entwickeln, eingebunden in den Innova�onsprozess
Zentrale Steuerung von Innova�onsprojekten in Anlehnung an Kanban
Mitarbeiter für Vorbereitung neuer Kundenprojekte: Bedarfsanalyse, Projekt-‐ und Zielplanung
Key Account Management für die persönliche Betreuung von Kunden
Endkunde
Kunde
Projek�eam
PM
K
Zufriedener Kunde mit „grei�aren“ Ereignissen und fer�g entwickeltem MVP
Projek�eam unserer Kunden bei der Arbeit, Prototypen zu entwickeln und systema�sch zu testen
Methodische Toolbox zur Unterstützung von „lean“ Innova�onsprojekten
Kid toys are powerful tools to
make the intangible of innovation
tangible. Use the power of metaphors to express aspects
beyond words.
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Intro Source: LEGO© Serious Play™
3D modeling can help you
+ build your company’s vision + model service encounters + design business models + support interdisciplinary teamwork
and personal engagement What do you see in this model?
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Validation
EVOLUTION OF PrototypeS
114
Source: UnternehmerTUM (2006)
Failed start-up project, founded by three TUM engineering graduates
prototypes by yourself. You will get a better feeling for
your product, improve teamwork
and customer interactions.
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Validation
PROTOTYPING TOOLS
115
+ Microsoft Powerpoint: Flexible tool to create visuals of different kinds
+ Storyboards 3D: Create stunning storyboards, even if you lack drawing skills
+ eMachineShop.com: Order CNC machine custom parts online (waterjet, plasma, laser cutting, etc.)
+ MakerBot Industries: Desktop 3D printing
+ Fab@Home: Open source 3D printing
+ Ponoko.com: Design, make and build your own custom products
+ Phidgets.com: Plug & play building blocks for low cost USB sensing and control
+ NI LabView: Visual development environment for electronic systems
+ Protoshare.com: Website wireframing / prototyping
+ Balsamiq.com: Rapid wireframing and mockups for websites & mobile apps
+ Axure: Interactive HTML prototypes
+ Microsoft Visio: Clickable web demos
+ Prototypes: Create functional click-dummys for tablets and smartphones
+ DjangoProject.com: Web framework to build functional web platforms
+ Node.js: Event-driven I/O system to build scalable server software
+ jQuery: UI library for web applications
+ UserVoice.com: Online user feedback system
Great inspiration: Make:magazine
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Validation
EXAMPLE: 3D PRINTING FOR EVERYONE
116
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Validation
HYPOTHESES & EXPERIMENTS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Team DateIteration 1 2 3
Analogs
What things are new to us but we can learn from others, because they have proven that it just works?
What hypotheses grow out of relevant antilogs that are critical for our business?
What things are new to us and new to the entire market, which is why we can’t learn from anyone?
+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA
Look at every single element of your business model to find analogs and antilogs:
Antilogs Exploration
Experiments
How can we test the identifiedhypotheses with the least effort?
Test focus
Impo
rtan
ce
Uncertainties
Make sure your analogs are reliable sources to learn from
others. In many cases, analogies eventually turn out to be somehow
different to your business when you look under the hood.
A+ A-
How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.
LO /
MVP
Business Design GAME | Playing seriously with innovation
Validation
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Hypotheses
What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?
pre-launch
post-launch
Expe
rimen
ts
Download | http://blog.orangehills.de/#hyp_en
EXAMPLE: ITUNES
117
The “Hypotheses Canvas” can help you reveal critical assumptions in your business model, which are both uncertain and important for the success of the innovation endeavor. Moreover, you have space to plan how to test the assumptions as
Users love to listen to their favorite tunes on the way
Users are used to load music online
Users manage their music on their PCs
How are the music rights (DRM) enforceable?
How likely is the antitrust approval?
How important is the look & feel of CD boxes?
Is 128 Kbit/s 16 bit sufficient?
How important is qrtwork and bonus material?
Are customers ready to pay for music downloads?
Do customers accept the limited usage rights?
How big is negotiating power of record companies?
60% of our test customers pay 99 cent per song
Two big music labels give access to > 5.000 songs…
75% of our test customers accept terms & conditions
Test POS with download possibilities of TOP 40 songs
Negotiations with record companies
Test POS with iPod customers
Back in 2003: Which hypotheses were Apple facing when they were about to launch iTunes?
URL: http://bit.ly/1lQHcf7
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Validation
…AND ONLINE
118
“Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs.
For details visit: http://www.rapidmodeler.de
URL: bit.ly/q7slqa
View: Hypotheses & Experiments
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Validation
TRACK YOUR LEARNING PERFORMANCE
119
URL: bit.ly/q7slqa
Home screen
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Validation
WRAP UP 122
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Realization
Agenda
123
1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Realization
“IDEAS ARE WORTH NOTHING, UNLESS EXECUTED.“ Jason Fried, 37signals
124
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Realization
Process paradigms
125
Things you know Things you don‘t know
Personality
More deterministic Less predictable
Innovation Innovation
Process
Objective
Paradigm
Control
Metaphor
Prototype
Patron
Result
Sequential
Implements „knowns“
Seeks simplicity
Top-down
Clock-wise
Is driven by process
Newton
Perfectionist
Iterative
Reduces „unknowns“
Embraces complexity
Buttom-up
Ecologies
Drives the process
Darwin
Optimalist
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Realization
BIRTH OF “WATERFALL“ Model?
126
p. 2 p. 3 p. 4
p. 5
p. 9
Source: Royce, W. (1970): Managing the development of large software systems, IEEE WESCON, pp. 1-9.
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Realization
EVOLUTION OF IDeas
127
„shadow beliefs“ of entrepreneurs
Business strategy
1
Business strategy
2
Business strategy
3
„We know exactly what we are doing!“
„We know what our customers want!“
„We can accurately predict the future!“
„Advancing the plan is progress!“
Busin
ess p
oten
tial
Pivot
Pivot
Change strategic directions, but stay grounded in what you have learned.
A pivot is not a mistake!
Examples: + Zoom-in pivot + Zoom-out pivot + Value capture pivot + Engine of growth pivot
Time Source: “shadow beliefs” according to Eric Ries (2009)
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Realization 128
If you don‘t know what you are doing, you be�er do it fast!
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Realization
EVOLUTION OF IDeas
129
„shadow beliefs“ of entrepreneurs
Business strategy
1
Business strategy
2
Business strategy
3
„We know exactly what we are doing!“
„We know what our customers want!“
„We can accurately predict the future!“
„Advancing the plan is progress!“
Busin
ess p
oten
tial
Pivot
Pivot
Change strategic directions, but stay grounded in what you have learned.
A pivot is not a mistake!
Examples: + Zoom-in pivot + Zoom-out pivot + Value capture pivot + Engine of growth pivot
Time Source: “shadow beliefs” according to Eric Ries (2009)
+ Customer discovery: Captures the founder’s vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts.
+ Customer validation: Tests whether the resulting business model is repeatable and scalable. If not, return to customer discovery.
+ Customer creation: Is the start of execution. It builds end-user demand and drives it into the sales channel to scale the business.
+ Company building: Transitions the organization from a start-up to a company focused on executing a validated model.
Customer development process by Steve Blank
Pivot
Search
Customer discovery
Customer validation
Customer creation
Company building
Execute
Source: Blank/Dorf (2012)
„lean“ „fat“
Prod
uct /
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Realization
EVOLUTION OF IDeas
„shadow beliefs“ of entrepreneurs
Business strategy
1
Business strategy
2
Business strategy
3
„We know exactly what we are doing!“
„We know what our customers want!“
„We can accurately predict the future!“
„Advancing the plan is progress!“
Busin
ess p
oten
tial
Pivot
Pivot
Change strategic directions, but stay grounded in what you have learned.
A pivot is not a mistake!
Examples: + Zoom-in pivot + Zoom-out pivot + Value capture pivot + Engine of growth pivot
Source: “shadow beliefs” according to Eric Ries (2009)
Pivot? Build-measure-learn cycle by Eric Ries
Phase 1 “Customer discovery”
Phase 2 “Customer validation”
Phase 3 “Customer creation” Growth Source: Ries (2012)
The fundamental activity of a startup or corporate innovator is to turn ideas into products and services, to measure how customers respond and then to learn what works and what doesn‘t. This may eventually lead to a pivot of your strategy or to preserve elements of your future model that have been proven right. All successful innovation processes should be geared to accelerate that feedback loop.
Idea
Build
Launch
Measure
Analyze
Learn
130 Time
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Realization
“If you freeze an idea too quickly, you fall in love with it. If you refine it too quickly, you become attached to it and it becomes very hard to keep exploring, to keep looking for better. The crudeness of the early models in particular is very deliberate.” Jim Glymph, Gehry Partners
131
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Realization
Lean Traditional
traditional VS. LEAN
132
Strategy Business model Hypotheses-driven
Business plan Implementation-driven
Customer development
Agile development Build the product iteratively and incrementally
Customer and agile development teams Hire for learning, nimbleness and speed
Metrics that matter Customer acquisition cost, lifetime customer value, churn, viralness
Expected Fix by iterating on ideas and pivoting away from ones that don‘t work
Rapid Operates on good-enough data
Product Management; prepare offering for market following a linear, step-by-step plan
Agile or waterfall development; build the product iteratively, or fully specify the product before building it
Department by function Hire for experience and ability to execute
Accounting
statement
Exception
Measured Operates on complete data
New-Product Process
Engineering
Organization
Financial Reporting
Failure
Speed
Source: Blank (2013)
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Realization
”An organization can never know what it thinks or wants until it sees what it does.” Karl E. Weick, Sociologist
133
Additional reading: Ben-Sahar, T. (2009): The pursuit of perfect, McGraw Hill.
ISBN: 978-0071629034
Additional reading: Beinhocker, E. (2004): The origin of wealth, Harvard Business Press.
ISBN: 978-1422121030
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Realization
LEAN OFFERINGS / MVP
134
In other (my) words: A new product or service with a minimum set of
+ Are your hypotheses covered? + Can you charge your cu$tomer? + Is your DNA embedded? + Does your mother like it?
If yes, SHIP IT & LEARN!
“The Minimum Viable Product (MVP) is that version of a new product, which allows a team to collect the maximum amount of validated learning about customers with the least effort.” - Eric Ries
#hypo
#bm
#bm
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Realization
”No matter how well you perform, there's always somebody of intelligent opinion who thinks it's lousy.“ Sir Laurence Olivier
135
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Realization
MVP FOR…
136
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Realization
LEAN OFFERINGS / MVP
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Functional requirements
Non-functional requirements
Competitive benchmark
Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?
Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?
What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:
+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?
To define user stories, look through the lenses of customers and users.
Could haveWhat are optional user stories that can help us better serve our customers and users in the future?
F
Hypotheses
Keep in mind that each user story should be independent of any other user story.
What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?
Fc
What non-functional requirements should be embedded in our product and/or service?
NF
...what non-functional requirements do they fulfill?
NFc
DNA
fit
Ease of implementationDNA
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offering?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
LEAN OFFERINGS…AS A TOOL
137
URL: http://bit.ly/1rMo2hP
The “Lean Offerings / MVP Canvas” gives you guidance to decide, which
launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype.
Rule of thumb:
Do you want users to switch from existing offerings to your products?
+ Yes: Features are an important part of people’s decision to try it.
+ No: Simplicity is usually much more important for users than being feature rich.
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Realization
LEAN OFFERINGS / MVP
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Functional requirements
Non-functional requirements
Competitive benchmark
Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?
Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?
What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:
+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?
To define user stories, look through the lenses of customers and users.
Could haveWhat are optional user stories that can help us better serve our customers and users in the future?
F
Hypotheses
Keep in mind that each user story should be independent of any other user story.
What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?
Fc
What non-functional requirements should be embedded in our product and/or service?
NF
...what non-functional requirements do they fulfill?
NFc
DNA
fit
Ease of implementationDNA
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offering?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
LEAN OFFERINGS…AS A TOOL
138
Functional requirements
functional requirements as user stories, which will be categorized based on how easy they can be implemented and how well
business model.
Non-functional requirements Apart from the functional requirements, we translate the DNA of the business model into a bunch of non-functional factors to make sure the MVP looks the way it is supposed to and is built with the right tool.
DNA The DNA of the underlying business model is key to prioritize functional and non-functional requirements of
before you start thinking
service.
Hypotheses MVPs are designed not only
service, but also to test hypotheses in reality, which can’t be tested in an experimental setting. Be aware of these hypotheses when you design your MVP.
Competitive benchmark What do other players in the market offer to their customers and users, which is similar to your offering? This analysis is especially important, when you want them switch from existing offerings to yours.
The “Lean Offerings / MVP Canvas” gives you guidance to decide, which
launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype.
Rule of thumb:
Do you want users to switch from existing offerings to your products?
+ Yes: Features are an important part of people’s decision to try it.
+ No: Simplicity is usually much more important for users than being feature rich.
URL: http://bit.ly/1rMo2hP
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Realization
LEAN OFFERINGS / MVP
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Functional requirements
Non-functional requirements
Competitive benchmark
Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?
Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?
What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:
+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?
To define user stories, look through the lenses of customers and users.
Could haveWhat are optional user stories that can help us better serve our customers and users in the future?
F
Hypotheses
Keep in mind that each user story should be independent of any other user story.
What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?
Fc
What non-functional requirements should be embedded in our product and/or service?
NF
...what non-functional requirements do they fulfill?
NFc
DNA
fit
Ease of implementationDNA
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offering?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
EXAMPLE: ITUNES
139
The “Lean Offerings / MVP Canvas” gives you guidance to decide, which
launch version of your product or service. Moreover, you can think about non-functional requirements and the development tool you need to translate the functional requirements into a visual model or prototype.
Seamless music experience
Enjoy all my music, everywhere
Brand & access to customer base
Users want to play their entire music
Users want to purchase music
Users want to rate songs
Users want to organize music with folders
Users want to pay for purchases
Users want to search for new music (free text + categories)
Users want to copy songs on their iPod
Users want to listen to music with high quality
Users want to share their personal profile
Users demand bonus material and artwork
Users want to manage their personal profile
Users want to connect with other users
Users need music recommen-dations
Users want to archive music
Users want to recommend music to friends
Users want to adjust the sound quality (equalizer)
Back in 2003: Which user stories were able to represent best the DNA of the iTunes business model?
Great design Easy to use
Seamlessly integrated hard- and software
Users want to play selected songs from their library
Users want to organize music with folders
Users want to listen to their favorite tunes on the go
URL: http://bit.ly/1rMo2hP
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Realization
…AND ONLINE
140
“Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs.
For details visit: http://www.rapidmodeler.de
View: MVP
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Realization
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Realization
FROM MVP TO MVB (= Business)
142
on the market is not enough. Consider with your team, which elements of your underlying business model are needed to create and deliver your offering to the market – your “Minimum Viable Business” (MVB). Which customer channels are the most effective ones for the start? Which partners do you
resources and processes are eventually needed to kick-off your business tomorrow?
Your thinking at this stage should be very focused and more detailed than ever before, when you sketched out your business model with the “Business Model Canvas”. Point out everything needed to tap into your market and get rid of the “waste” that is not essential to get YOUR job done.
External elements of your business model
… and internal elements
LEAN OFFERINGS / MVP
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Functional requirements
Non-functional requirements
Competitive benchmark
Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?
Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?
What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:
+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?
To define user stories, look through the lenses of customers and users.
Could haveWhat are optional user stories that can help us better serve our customers and users in the future?
F
Hypotheses
Keep in mind that each user story should be independent of any other user story.
What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?
Fc
What non-functional requirements should be embedded in our product and/or service?
NF
...what non-functional requirements do they fulfill?
NFc
DNA
fit
Ease of implementationDNA
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offering?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
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Realization
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Realization
LET‘S DO SOME “LEAN“ PROJECT MANAGEMENT
144
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Realization
ACTION PLAN
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Activities Output
Experiments
Lean offerings
Each post-it represents one activity with an effort of 2-3 mandays
What activities need to be carried out to build the lean offerings / MVP / B?
What activities need to be carried out to run the defined experiments?
+ Exploration+ Validation
What tangible output do we want to achieve after 7 weeks?
What have we learned and do we have to change our strategy?
AnalogsAre there any activities needed to investigate around analogs?
Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07
Halftime
F + NF
A+
How is your team doing?
Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en
Reflection
Team
ACTION PLAN…AS A TOOL
145
URL: http://bit.ly/1k5aV8O
The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team.
Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each
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Realization
ACTION PLAN
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Activities Output
Experiments
Lean offerings
Each post-it represents one activity with an effort of 2-3 mandays
What activities need to be carried out to build the lean offerings / MVP / B?
What activities need to be carried out to run the defined experiments?
+ Exploration+ Validation
What tangible output do we want to achieve after 7 weeks?
What have we learned and do we have to change our strategy?
AnalogsAre there any activities needed to investigate around analogs?
Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07
Halftime
F + NF
A+
How is your team doing?
Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en
Reflection
Team
ACTION PLAN…AS A TOOL
146
Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the
these activities for the entire cycle and adapt the plan week by week due to new requirements.
Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle
whether changes are required.
Output
output for each cycle is
before you start working. In many cases, the development of your MVP
The “Action Plan” is a very simple but effective way to organize activities of a “lean” innovation project in your team.
Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each
Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary.
After each cycle, it is essential to sit down with
you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead.
Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information.
URL: http://bit.ly/1k5aV8O
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Realization
ACTION PLAN
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Activities Output
Experiments
Lean offerings
Each post-it represents one activity with an effort of 2-3 mandays
What activities need to be carried out to build the lean offerings / MVP / B?
What activities need to be carried out to run the defined experiments?
+ Exploration+ Validation
What tangible output do we want to achieve after 7 weeks?
What have we learned and do we have to change our strategy?
AnalogsAre there any activities needed to investigate around analogs?
Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07
Halftime
F + NF
A+
How is your team doing?
Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en
Reflection
Team
REFLECT WHAT YOU HAVE LEARNED
147
Activities “Experiments” At the beginning of each cycle, we plan activities to run the experiments for the
these activities for the entire cycle and adapt the plan week by week due to new requirements.
Activities “Lean offerings” All activities related to the design and creation of the MVP / B are planned in this area. Plan these kind of activities for the entire cycle
whether changes are required.
Output
output for each cycle is
before you start working. In many cases, the development of your MVP
Team performance The team and the quality of your teamwork is the most important ingredient in these kind of projects. Track your team performance week by week and plan team interventions if necessary.
After each cycle, it is essential to sit down with
you have learned so far. It may happen that something need to be improved or a shift in long-term strategy is ahead.
Activities “Analogs” In some cases, investigations are required to collect additional information regarding the “analogs. Desk research and expert interviews are excellent tools to gather these information.
1. Kill project: We have learned that our new offering doesn’t help our customers and users to get a meaningful job done.
2. Fix problem: We have learned that we did something wrong from a methodological perspective.
3. Pivot MVP: We have learned that our initial offering needs urgent
4. Pivot strategy: We have learned that our initial strategy doesn’t work.
5. Carry on: We have learned that we can create value for customers and us, which is good enough to carry on.
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Realization
ACTION PLAN
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Activities Output
Experiments
Lean offerings
Each post-it represents one activity with an effort of 2-3 mandays
What activities need to be carried out to build the lean offerings / MVP / B?
What activities need to be carried out to run the defined experiments?
+ Exploration+ Validation
What tangible output do we want to achieve after 7 weeks?
What have we learned and do we have to change our strategy?
AnalogsAre there any activities needed to investigate around analogs?
Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07
Halftime
F + NF
A+
How is your team doing?
Business Design GAME | Playing seriously with innovation Download | http://blog.orangehills.de/#acp_en
Reflection
Team
EXAMPLE: ITUNES
148
The “Project Dashboard” is a very simple but effective way to organize activities of a “lean” innovation project in your team.
Adapt the number of weeks per cycle to what is adequate in your industry. It is important that you create something tangible after each
Prepare sales process
UI concept design
Design sales presentation
Sketch mock-ups
Develop DRM concept
Setup initial music lib
Discuss sales presentation with marketing
Publish job profiles
Setup workplaces for new staff
Call president of DMV
Arrange meetings with record companies
Design landing page for test POS
Develop landing page
Prepare test POS in Munich retail store
Reorganize production for test POS
Inform store staff
Start test POS
Negotiate DRM concept with record companies
Sales presentation
Landing page for test POS
Initial music lib
Back in 2003: How could
implementation process look like?
URL: http://bit.ly/1k5aV8O
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Realization
VIRTUAL TEAM MANAGEMENT
149
“Rapid Modeler” is a real-time collaboration software for teams. The software allows you to develop ideas, business models and services with people across dispersed locations and helps you save travel time and costs.
For details visit: http://www.rapidmodeler.de
View: Action Plan
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Realization
MANAGING PROJECT PORTFOLIO
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Distance to success
Long way to go, but promising market
attractiveness and good
r = Market potential / growth
A
r
G F
C
E
B
D
Kill these projects - today
These projects are everybody’s darling
Potential candidates for spin-offs?
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Realization
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Realization
WRAP UP 152
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HYPOTHESES & EXPERIMENTS
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange HillsTM GmbH. All rights reserved.
Team DateIteration 1 2 3
Analogs
What things are new to us but we can learn from others, because they have proven that it just works?
What hypotheses grow out of relevant antilogs that are critical for our business?
What things are new to us and new to the entire market, which is why we can’t learn from anyone?
+ Customers+ Users+ Brand & messages+ Channels+ Relationships+ Offerings+ Resources+ Processes+ Partners+ Profit formula+ Business DNA
Look at every single element of your business model to find analogs and antilogs:
Antilogs Exploration
Experiments
How can we test the identifiedhypotheses with the least effort?
Test focus
Impo
rtan
ce
Uncertainties
Make sure your analogs are reliable sources to learn from
others. In many cases, analogies eventually turn out to be somehow
different to your business when you look under the hood.
A+ A-
How to test hypotheses?1. Try to break down a high-level hypothesis into a set of low-level hypotheses.2. Run experiments, if it is sufficient to reflect the status quo or possible to simulate affected parts of the future in a realistic way.3. In any other case, build a MVP first and test the hypotheses afterwards. Never let people predict the future – not even their own behavior. It‘s a waste of time! ...and keep in mind that most hypotheses can’t be proven “right”. It’s about getting a professional gut feeling.
LO /
MVP
Business Design GAME | Playing seriously with innovation
Validation
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Expe
rimen
tsLO
/ M
VPEx
perim
ents
LO /
MVP
Hypotheses
What experiments are required to explore antilogs even furtherbefore you turn them into testable hypotheses?
pre-launch
post-launch
Expe
rimen
ts
Download | http://blog.orangehills.de/#hyp_en
LEAN OFFERINGS / MVP
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Functional requirements
Non-functional requirements
Competitive benchmark
Must haveWhat is the minimal set of user storiescustomers and users expect to be implemented in order to deliver the core value of the product and/or service?
Should haveWhat is the extended set of user stories that increases the value of the product and/or service to the next level?
What is a lean offering / MVP (= Minimum Viable Product)?Minimal set of user stories that fulfills at least the following requirements:
+ Are your hypotheses covered?+ Can you charge your customers?+ Is your DNA embedded?+ Does your mother like it?
To define user stories, look through the lenses of customers and users.
Could haveWhat are optional user stories that can help us better serve our customers and users in the future?
F
Hypotheses
Keep in mind that each user story should be independent of any other user story.
What user stories has our No. 1 competitor (”DNA fit”) considered in its offering to their customers and users?
Fc
What non-functional requirements should be embedded in our product and/or service?
NF
...what non-functional requirements do they fulfill?
NFcDN
A fit
Ease of implementationDNA
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offering?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
BUSINESS MODEL
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved. Inspired by www.businessmodelgeneration.com.
Team DateIteration 1 2 3
Target groups
What things are new to us but we can learn from others, because they have proven that it just works?
Resources Partners
Primary
What is our primary customerand user segment that unlocks the most value in our business?
Customers Users
InvestmentsCostsPricing & revenuePattern
How much money do we need to spend before we earn?How much do our customers pay (per unit)?How, when and how often do we charge our customers? What are the most important costs to create and deliver the offerings?
Brand & messages Offerings
Channels
Relationships
Channels
Processes
Profit formula
What (internal) key resources do we need to create and deliver the offerings?
Who are our (external) key partners to create and deliver the offerings?
What bundle of products and services do we offer to our customers and users?
How do we want our brand to be perceived and what is our story to sell the offerings?
Through which channels do our customers and users want to be reached?
What kinds of relationships do our customers and users expect?
Through which channels do our partners want to be reached?
What (internal) key processes do we need to create and deliver the offerings?
Delivery R&D
What job(s) are our customers and users trying to get done?
Job(s) to get done
What kind of value do we create for customers and users with our offerings?
Core value
What do we do better than our competitors, which is hard to copy?
Unfairadvantage
Business Design GAME
ACTION PLAN
Design your business in your browser | http://www.rapidmodeler.de© 2014 Orange Hills GmbH. All rights reserved.
Team DateIteration 1 2 3
Activities Output
Experiments Reflection
Lean offerings
Each post-it represents one activity with an effort of 2-3 mandays
What activities need to be carried out to build the lean offerings / MVP / B?
What activities need to be carried out to run the defined experiments?
What tangible output do we want to achieve after 7 weeks?
What have we learned and do we have to change our strategy?
AnalogsAre there any activities needed to investigate around analogs?
Week 01 Week 02 Week 03 Week 04 Week 05 Week 06 Week 07
Halftime
F + NF
A+
TeamHow is your team doing?
Business Design GAME
BUSINESS DESIGN PROCESS
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Pivots / improvements
Extensions / improvements
B. Business model
C. Hypotheses & experiments
E. Action plan
D. Lean offerings
1
2
3
Market & trends
Customers & users
You & context
A. Business idea
Cycle 1-x
+ Analogs + Antilogs + Hypotheses + Experiments
+ Functional requirements
+ Non-functional requirements & tools
+ Competitive benchmark
+ Activities “Lean offerings”
+ Activities “Experiments”
+ Output + Team performance +
+ Customers & users + Brand & messages + Channels + Relationships + Offerings + Resources + Processes + Partners + + Business DNA
Business DNA = + Job(s) to get done + Core value + “Unfair” advantage
r = Market potential / growth
Distance to success
r
F. Portfolio
KPIs
Source: Orange Hills GmbH / Bernhard Doll (2013)
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Realization
Agenda
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1 2
Intro
3 4 5
Ideas Business Validation Realization
6
Day 2-4 Day 5-6
Please note: In this slide deck, many examples are taken from the IT industry. However, the core concept of Business Design can be applied to many other industries.
Day 1
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Realization
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Any questions
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? Aristotle: “What does it mean to be a good person?”
René Descartes: “What does it mean to be?”
Friedrich Nietzsche: “What does it mean?”
Bertrand Russell: “What does ‘it’ mean?”
C.S. Lewis: “What does it?”
Lil Jon:
“What?”
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JUNE 13 NEXT GIG
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NOT ENOUGH?
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ISBN: 978-‐0262018494
Available at
ISBN: 978-‐3-‐8349-‐1943-‐4
ISBN: 978-‐0470510667
ISBN: 978-‐0470847428
ISBN: 978-‐0566092138
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Bernhard Doll Orange Hills GmbH Sendlinger Str. 29 80331 München, Germany
E. [email protected] T. +49-89-4520545-0 F. +49-89-4520545-69
Follow us on Twitter: @orangehillsgmbh
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