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

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  • Startup 101: Validate Your Business Ideas12 October 2016 | Jozihub

  • Tools & Methods for Generating,

    Prototyping, and Testing Business Ideas

  • Village offers design thinking & strategic design services to help you transform

    complexity into unique opportunities for innovation and change.

    design. innovation. change

    khaya@villagedesign.co.za

  • - Charles Spurgeon

    The way to do a great deal is to keep on doing a little. The way to do nothing at all is to be continually resolving that

    you will do everything

  • image source: http://www.economist.com/news/essays/21676961-inner-lives-animals-are-hard-study-there-evidence-they-may-be-lot-richer-science-once-thought

    http://www.economist.com/news/essays/21676961-inner-lives-animals-are-hard-study-there-evidence-they-may-be-lot-richer-science-once-thought

  • 1. Design Thinking 2. Business Model Canvas 3. Customer Development

  • 01 The Design

    Thinking Process Using design to create, innovate and solve problems

  • Design Thinking is a way of applying design methods to problem solving and innovationThere are many models and versions of the design process

  • empathise define ideate prototype test iterate

    Source: Tim Brown, Change By Design

  • desirabilityhuman

    viabilitybusiness

    feasibilitytechnicalinnovation

    Source: Tim Brown, Change By Design

  • 02 The Business Model CanvasA tool to organise your business model hypothesis

  • empathise define ideate prototype test iterate

  • 01 Customers

    03 Infrastructure

    04 Financial Viability

    02 Offer

    Business Model Design Logic

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • 01 Customers

    03 Infrastructure

    04 Financial Viability

    02 Offer

    Business Model Design Logic

    Cost Structure

    C$Key Resources

    KR

    Key Partnerships

    KPKey Activities

    KA

    Revenue Streams

    R$

    Value Proposition

    VP

    Customer Channels

    CC

    Customer Relationships

    CRCustomer Segments

    CS

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • Hypothesis: a guess about how you will create, deliver, and capture value

  • C$

    KR

    KP KA

    R$

    VP

    CC

    CR CS

    Example: Apple iPod

    seamless music experience

    hardware design

    marketing

    people

    record companies

    manufacturers

    content &

    agreements

    apple brand

    iTunes Software

    iPod hardware

    lovemark

    switching costs

    retail stores

    apple stores

    iTunes store

    apple.com

    mass market

    hardware

    revenues

    music revenuesmarketing

    & sales

    manufacturing

    people

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • desirabilityhuman

    viabilitybusiness

    feasibilitytechnicalinnovation

    Design Thinking

  • desirabilitycustomers

    viabilityfinances

    feasibilityinfrastructurevalue proposition

    Business Model

  • Value Proposition

    VP

    The Offering / Value Proposition What value do we deliver to

    customers

    Which of our customers

    problems do we solve

    Which bundles of products/

    services are we offering to

    different customer segments

    A. Performance of product/service

    B. Newness

    C. Customisation and co-creation

    D. Getting the job done

    E. Design

    F. Brand/status

    G. Better pricing

    H. Cost reduction

    I. Risk reduction

    J. Accessibility (e.g. fractional ownership

    etc.)

    K. Convenience/usability

  • Key Resources

    KR

    Key Partnerships

    KPKey Activities

    KA

    Infrastructure: Feasibility

    The network of suppliers and

    partners that will make the

    business model work

    The most important assets to

    create value, reach customers,

    and earn revenue

    What must the company do

    deliver value and operate

    successfully

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • Customer Channels

    CC

    Customer Relationships

    CRCustomer Segments

    CS

    Customers: Desirability The types of relationships or

    service that will drive

    acquisition, retention, and sales

    A. Personal assistance

    B. Dedicated personal assistance

    C. Self-service

    D. Automated service

    E. Community of interest

    F. Co-creation

    G. Direct sales force

    H. Direct web sales

    I. Own stores

    J. Partner stores

    K. Wholesaler

    Relationship Types Channel Types

    How you communicate and

    reach customers with value

    proposition

    For who are you creating value

  • Cost Structure

    C$Revenue Streams

    R$

    Finances: Viability

    What you capture from delivering

    value to customers

    Can be one-time or recurring

    sources

    Fixed pricing or Dynamic pricing

    What it costs to operate the

    business model

    Cost driven to minimise costs

    Value driven to maximise value

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • Cost Structure

    C$Key Resources

    KR

    Key Partnerships

    KPKey Activities

    KA

    Revenue Streams

    R$

    Value Proposition

    VP

    Customer Channels

    CC

    Customer Relationships

    CRCustomer Segments

    CS

    Efficiency Value

  • 03 Customer

    Development Process

    Going from startup to building a great company

  • image source: http://imgur.com/gallery/NI3w8

    http://imgur.com/gallery/NI3w8

  • empathise define ideate prototype test iterate

  • - Steve Blank & Bob Dorf

    A startup is a temporary organisation designed to

    search for a repeatable and scalable business model

  • Customer Discovery

    Customer Validation

    Customer Creation

    Company Building

    Source: Steve Blank & Bob Dorf, Startup Owners Manual

    Search Execute

  • Customer Discovery

    The beginning of a learning process

    Founders develop a vision, then find customers for that vision

    Get out of the building, talk to customers

    Try to learn in depth about their problem

    Learn what your customers care about

    Create low fi of minimum viable product

    Test customer reactions to slowly turn business model hypothesis into fact

    Learn how customers make buying decisions

    Customer discovery is complete when customers positively confirm the

    importance of the problem and the solution

  • 01 Customers

    03 Infrastructure

    04 Financial Viability

    02 Offer

    Business Model Design Logic

    Cost Structure

    C$Key Resources

    KR

    Key Partnerships

    KPKey Activities

    KA

    Revenue Streams

    R$

    Value Proposition

    VP

    Customer Channels

    CC

    Customer Relationships

    CRCustomer Segments

    CS

    Source: Alex Osterwalder & Yves Pigneur, Business Model Generation

  • Founders Vision the best coffee shop in town

    Value Proposition

    VP

    image source: https://stocksnap.io/photo/3QX7WQCK52

  • Learn about your customers know what they care about

    Value Proposition

    VPCustomer Segments

    CS

    image source: http://www.shutterstock.com/pic-385284079/stock-photo-coffee-tasting-with-baristas-smelling-the-aroma-of-many-cups.html

  • Minimum Viable Product: coffee in a cup

    Key Resources

    KR

    Key Activities

    KAValue Proposition

    VPKey Partnerships

    KP

    image source: http://www.gettyimages.com/photos/cup?sort=mostpopular&excludenudity=true&mediatype=photography&phrase=cup

    http://www.gettyimages.com/photos/cup?sort=mostpopular&excludenudity=true&mediatype=photography&phrase=cup

  • Customer Validation

    Test ability to repeat and scale with more customers

    Create high fidelity minimum viable product

    Test sales with paying customers or user engagement

    Prove that the market and customers exist with serious intent to purchase

    Verify core product features

    Test perceived value and demand for product

    Identify economic buyer

    Establish sales, pricing, and channel strategies

    Customer validation is complete when enough customers, with repeatable

    and scalable sales, make the business model profitable

  • High Fidelity MVP: build on the core

    Key Resources

    KR

    Key Activities

    KAValue Proposition

    VPCustomer Segments

    CSKey Partnerships

    KP

    Cost Structure

    C$

    image source: https://www.pexels.com/photo/restaurant-coffee-cup-cappuccino-2709/

  • Verify core features focus on what matters most

    Key Resources

    KR

    Key Activities

    KAValue Proposition

    VPCustomer Segments

    CS

    image source: http://www.eater.com/2016/3/13/11214194/how-to-taste-coffee

    http://www.eater.com/2016/3/13/11214194/how-to-taste-coffee

  • Establish Sales pricing, channels, cycles etc

    Key Activities

    KAValue Proposition

    VP

    Customer Channels

    CC

    Revenue Streams

    R$Cost Structure

    C$

    Customer Relationships

    CR

    image source: http://www.businessinsider.co.id/starbucks-ex-manager-describes-chaotic-working-conditions-2015-10/#ouZldGPFaP1GwIsy.97

  • Customer Creation

    The beginning of execution

    Build on initial sales success

    Step on the gas and drive scale

    Get serious about marketing activity: spend

    Drive demand into sales channel to scale the business

  • Drive Sales spend on marketing to drive demand

    Customer Channels

    CC

    Key Activities

    KAValue Proposition

    VP

    Key Resources

    KR

    Revenue Streams

    R$

    Customer Relationships

    CRCustomer Segments

    CS

    Cost Structure

    C$

    Key Partnerships

    KP

    image source: http://uiconstock.com/30-flyers-designers/free-coffee-shop-a4-flyer-preview-1/

  • Company Building

    When you know who your customers are

    You know what value to deliver to them

    The startup has found a predictable, repeatable, scalable business

    Begin transition from startup to company

    Set up structured departments to execute what has been validated in

    previous phases

    Hire people with clearly defined roles

  • Deliver, Scale, Repeat but dont forget to keep on learning

    Cost Structure

    C$Key Resources

    KR

    Key Partnerships

    KPKey Activities

    KA

    Revenue Streams

    R$

    Value Proposition

    VP

    Customer Channels

    CC

    Customer Relationships

    CRCustomer Segments

    CS

    image source: http://capturedmarin.com/

  • Become a lifelong student of your customers

  • Customer Discovery

    Customer Validation

    Customer Creation

    Company Building

    Take founders vision and turn it into a Business Model hypothesis

    Test business model for repeatability and scalability

    Build and drive user demand

    Scale and repeat the validated model

    Source: Steve Blank & Bob Dorf, Startup Owners Manual

  • - Charles Spurgeon

    The way to do a great deal is to keep on doing a little. The way to do nothing at all is to be continually resolving that

    you will do everything

  • Go!

  • khaya@villagedesign.co.za +27 82 669 0747

    design. innovation. change

    www.pexels.com

    mailto:khaya@villagedesign.co.za

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