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Simon Entrepreneurs Presents Articulating Your Concept and Constructing Business Model Prototypes Instructor: Adam Bates ( [email protected] ) "Smart people (like smart lawyers) can come up with very good explanations for mistaken points of view.“ - Richard P. Feinman

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Simon Entrepreneurs

Presents

Articulating Your Concept and Constructing Business Model Prototypes

Instructor: Adam Bates ([email protected])


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"Smart people (like smart lawyers) can come up with very good explanations for mistaken points of view.“

- Richard P. Feinman


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Purpose of the Workshop good explanations for mistaken points of view.“

  • Support ideas with fact and demonstrated results

  • Introduce a “Scientific” approach

    • Identify a need/issue in a market

    • Make educated assumptions

    • Prove/disprove them in an objective manner

  • Provide frameworks for:

    • Articulating your idea and validating market demand for it

    • Constructing your business model and validating its underlying assumptions

  • Answer questions:

    • Is my idea a viable business opportunity?

    • Am I ready and able to play a role in its implementation? If so, what is that role?


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Workshop Format good explanations for mistaken points of view.“

  • Introduce concepts and questions you need to answer

  • Provide practical guidance in doing so through examples and introduction of resources you can tap into

  • Will require independent research that you'll need to coordinate on your own

  • Reach out to instructor and/or Simon Entrepreneurs with questions


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Iterative Ideation good explanations for mistaken points of view.“

Brilliant Idea

Brick Wall

Eventually Leads to…

Research

Breakthrough!!


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Business Model Prototype good explanations for mistaken points of view.“

  • Need early focus, but…

  • Solution: develop 2-3 business model prototype designs

    • Market potential, risks, viability, key assumptions and issues

  • Goal is to find the optimal business model

    • Optimal business model = highest reward/risk ratio


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What exactly is a business model? good explanations for mistaken points of view.“

  • More succinctly: “How you gonna make money”

  • - Lil John (2008)


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Components of a business model good explanations for mistaken points of view.“

Don’t get caught up in the terminology…just try to get a feel for how to connect the dots between you, your partners & suppliers, and your customers

Infrastructure

* core capabilities: The capabilities and competencies necessary to execute a company's business model.

* partner network: The business alliances which complement other aspects of the business model.

* value configuration: The rationale which makes a business mutually beneficial for a business and its customers.

Offering

* value proposition: The products and services a business offers.

Customers

* target customer: The target audience for a business' products and services.

* distribution channel: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy.

* customer relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.

Finances

* cost structure: The monetary consequences of the means employed in the business model. A company's DOC.

* revenue: The way a company makes money through a variety of revenue flows. A company's income.

Source: http://en.wikipedia.org/wiki/Business_model


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Example Prototype – OSA online music service good explanations for mistaken points of view.“


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What is the critical need? good explanations for mistaken points of view.“

  • Is there a known or accepted problem? For example:

    • “Many service and retail businesses want to provide an experience that is enhanced with just the right music. However, dealing with administration of performance royalties is a hassle, and non-compliance can result in fines.”


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What is your hypothesis? good explanations for mistaken points of view.“

  • What do you think will satisfy the need or solve the problem? For example:

    • “By packaging customizable, performance-rights-compliant music into a single service, businesses can have the music they want and not have to worry about royalty payments.”

    • (It also doesn’t hurt that <company> already has contractual relationships with tens of thousands of these potential customers and they can undercut their competition’s cost structure through an Internet-based service)


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Articulation of the business idea (1): Say it simply good explanations for mistaken points of view.“

  • Now bring it all together:

    • “OSA provides an online music delivery service targeting retail and service outlets. Its product also includes administration of performance rights royalties, removing this ‘hassle’ from its customers. Using an Internet-based distribution and service mechanism, OSA not only provides a more customizable solution than competitors, but it is also able to do so at dramatically lower costs.”


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Articulation of the business idea (2): Draw it. good explanations for mistaken points of view.“

  • If you can’t draw it, you can’t sell it.

  • a few examples…

Product Sketch

Web page mockup

Service Diagram

Nightclub Promotional Flyer


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Summary of Assignments good explanations for mistaken points of view.“

  • Answer the questions:

    • What is the critical need?

    • What is my hypothesis for addressing that need?

  • Sketch out 2-3 business model prototypes.

  • Articulate your business idea simply.

  • Draw/depict your product or service.

  • Know your industry and be able to summarize it with an overview statement and current trends.


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Resources to build the knowledge base good explanations for mistaken points of view.“

  • Where do you learn about your industry?

    • http://www.library.rochester.edu

      • click “Databases”, then “Business”

      • Many to choose from depending on industry, but “NetAdvantage Industry Surveys” and “Marketline” provide good overviews

      • “Lexis Nexis” is a good source for trends

    • Do some Googling

    • http://finance.yahoo.com -> provides company and industry information

    • Look at competitors websites and annual reports

  • Where do you learn about consumers?

    • Encyclopedia of Associations

    • American Demographics: http://adage.com/americandemographics

    • More Googling and above-mentioned databases

    • Direct contact, surveying, and prototyping -> this is the topic of the next workshop


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Appendix good explanations for mistaken points of view.“

A couple of aids to ideation


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Knowledge Base First good explanations for mistaken points of view.“Thinking through the venture with using four knowledge groups

  • General Business Knowledge - an understanding of conventional business functions: Marketing, finance, operations, people topics, business law and accounting.

  • General Entrepreneurship Knowledge –Specialized information within each functional base.

  • Opportunity-Specific Knowledge- Knowledge of existing industry gaps based on observations and research

  • Venture-Specific Knowledge- Functional knowledgeneeded to understand key variables that influence outcomes. (Food & Beverage, Broadcasting, Thixo)

    Learning curves are costly and may result in venture failure


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D.I.V.E. Model good explanations for mistaken points of view.“

  • Discover an industry gap that is not being delivered or is delivered poorly

  • Innovate a venture solution that may respond to the gap

  • Validate your hypothesis through research and make clear, defined assumptions

  • Evaluate the findings and engage in planning


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Why you? Why now? good explanations for mistaken points of view.“

  • Who needs it?

  • Why do they want it?

  • What’s better?

  • Who gives it to them now?

  • How do they get it?

  • What could change?

  • When could I deliver?

  • How could I deliver?


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S.C.A.M.P.E.R. good explanations for mistaken points of view.“

Isolate the challenge or subject you want to think about.

Ask SCAMPER questions about each step of challenges and see what new ideas emerge.

  • S Substitute

  • C Combine

  • A Adapt

  • M Modify/ Magnify

  • P Put to other uses

  • E Eliminate

  • RRearrange


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SCAMPER Questions good explanations for mistaken points of view.“

  • What procedures can I substitute?

  • How can I combine prospecting with another procedure?

  • What can I adapt to the website to make it user friendly?

  • How can modify existing hair salons to improvethe experience?

  • What can I magnify to impress consumers about Eastman?

  • What other uses can be applied to the widget?

  • Should we eliminate packaging from deodorant?

  • Could we rearrange schedules to accommodate more part-time students.

  • One manufacturer substituted plastic for metal, added color and produced multi-colored paper clips so that papers could be color-coded, applying another use!


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