14 Tips to Entrepreneurs to start the Right Stuff

Doing the Right Thing is the essence of entrepreneurship

Universitt St. Gallen, START 2016 Patrick Sthler, fluidminds the business innovator

However, what is the

Right Thing?

Have you found the Right Thing?

Why should your business exist?

What do the colors mean?

Beyond optimization of the past

We have to unlearn the past and rethink our business from the customer perspective.

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Is Kodak innovative? What were the tacit assumptions behind Kodaks innovations? Take 5 min and discuss it with your neighbors.

Take-aways are in red

Exercises and questions for you

Dr. Patrick Sthler, Mr. Business Model Innovation

Founder & Partner von fluidminds GmbH, the business innovator, Zrich & Sydney

fluidminds invents and designs businesses

Example: Experteer.com (career portal) was founded with the help of fluidminds

Inventor by chance of the business model innovation concept during my Ph.D. at the University of St. Gallen.

Blogger on Blog.business-model-innovation, keynote speaker worldwide.

Startups in the past There was a need for new products since we lived in a world of scarcity.

The times they are a-changin Today, we live in a world of too-much of everything. We have everything 100 times.

A recipe for successful entrepreneurs Follow the recipe and you will be successful! Your success is guaranteed! Guaranteed!

Sorry. There is no easy recipe. Good entrepreneurs but the customer in the middle of their thoughts and the value they create for customers..

Give Meaning to customer is the core to any good business

The reality: Nobody is waiting for you!

We have too much of everything.We have too much choice!We get bombarded by ads and PR!

500,000,000 182,500,000,000

How do you get heard in this noise of information?

Tweets per day

Tweets per year

Why should I listen to you? Why should I engage with you? Do you have something relevant to say?

We have too much of everything. Be relevant for your customers, also in the long run!

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The company invented the digital camera in 1973

was the partner of choice for Apple to enter the digital camera market

invented an app so you can seamlessly print your pictures

..so you can easily hold your pictures in your hand.

With digital printing, your pictures can be printed on anything.

Even prints of the size of 45m x 64m are possible

Is Kodak innovative? What were the tacit assumptions behind Kodaks innovations? Take 5 min and discuss it with your neighbors.

Kodak was highly innovative, but did not understand that digital is more than product innovation

Digital was not about the best quality that the traditional customers of Kodak loved

From keeping to sharing memories Digital solves new jobs for customers

Customers discovered new uses, no sane person would have ever thought off

Too bad for Kodak that now even professional photographers love the quality of digital

A good product is not enough

Bringing innovation to the market is not enough. Finding a business model your customers love is the real challenge

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How many colors does a rainbow have?

A rainbow has eternal colors, but we reduce complexity and draw a rainbow with 5 or 6 colors

Depending from what background you have, you interpret the same information differently

You cant read it? Look from far away. See it now?

What is reality? You can shape your and your customers reality.

There is no reality in human systems

We see the world through our eyes and interpret reality

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What was one of the most successful aid programs for the developing world?*

*Actually, it has nothing to do with governmental aid or NGOs.

Which innovation expanded the global market for mobile communi-cation the most?*

* After the invention of the mobile telephone system itself.

Dr. Patrick Sthler | 42

Which innovation made this possible?

Prepaid

A small change in billing opened new markets in Africa, Asia, Latin America, Youths, etc..

There are so many more starting points for startups than just innovative products

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Wow, I have invented the future of advertising. We do not need any videos or pictures or even color anymore.

The future will be a text ad with maximal 95 characters.

Its brilliant, isnt it?

Would you have dared to say this?

Instead of looking at better products, Google Adwords brought back relevance to the ad industry

Google is blamed to be the killer of newspapers

Sales around 43 bn. USD

1 device

Really good ideas defy the accepted rules of an industry. Rethink from the customer perspective the business

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Innovation is all about being different

But if everybody is doing he same, you have to find something else

The best is if your customers love your innovation due to your fantastic value proposition and and your ability to deliver what you promise

Where is your wow? Why should your business exist from a customer perspective?

Being just a bit better is not enough. You must have a clear and noticable unique-ness and magic. Thats your WOW!

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Customer job to be done We have to learn to unlearn. We have to learn to see beyond the product and understand what the customer really wants. Customer needs are to imprecise. Lets talk about jobs-to-be-done.

Ready to unlearn?

Do we need trucks and truck drivers?

We need to move goods around. Human driven trucks are just one mean to do this.

Do we need accountants?

Actually, accountants are just one mean to get our books done, manage cash or get expenses ready for taxes.

Do we need taxis?

People want to move easily and with convenience in cities. Taxis are just one mean to do it.

Do we need hotels?

Do we just need a bed like at Formule 1?

Or do we need a place with lovely people in order to connect to the place like at AirBnB?

Customer job to be done We do not need a hotel. We need an accommodation plus extras like connecting to people. That are the jobs-to-be-done. Customers hire a product or service to get a job done. The products are a means to an end, not an end in themselves.

The value proposition creates the value for the customer, not the product!

Value Proposition The job-to-get-done is solution neutral. The job is to provide accommodation plus extra benefits like connecting to people. Potential solution: 3* hotel Formule 1 Hotel AirBnB (accommodation

plus connection to people) friend that lives in the city

It is of uttermost importance to understand the core job we solve for our customers

Start dreaming from badly solved jobs-to-be done of your customers. Use technology. Innovate your business model

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Do you know this man?Hans Rausing = Inventor of the Tetra Pack Systems

He could have sold his packaging machines, but

But he sold packaged servicesTetra Pack is not a product innovation but an implementation of an innovative business model

product/technology value

creates

X

business strategy

enables

defines

business model

Technology or a new produt does not create value. It is the business model

Beyond product innovation

Your business model is decisive for value creation, not new technology

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The business

model

A

The business model is the DNA of your business

Are you aware of your DNA?

The business model gives meaning to your employees and customers

4 elements of a successful business:

What excites our customers?

Value Proposition

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Werkzeugkasten fr Unternehmer

How do we create value for our customers?

Value Architecture

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How do we earn money?

Revenue Model

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Who is on our team? What values do we pursue?

Team & Values

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What industry are we in? Who are our competitors?

In which industry are we in?


That was the job the customer wanted to do.

product/services happy customers

creates

X

value proposition

solves

delivered by

business model

The customer perspective: A product does not create value. It is the value proposition the customer loves

job-to-be-done

addressed by

Value Proposition

Customer Who is our

customer? What job do we

solve for them?

Value What value do we

create for our customers? What value do we create for our partners?

What excites our customer?

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Customer job to be done Is it easy to put a Christmas tree straight up and keep it there safely and green?

There was no big market for Christmas tree stands until Mr Krinner saw the badly solved job

Value architecture

Offer What is our offer?

Distribution & Communication Channels

How do we reach our customers?

How do we communicate with our customers?

How do we create the value?

Value Chain What activities do

we have to do to produce our offer?

How does our value chain look like?

Partner What partners do

we need?

Core Capabilities What are the core

capabilities we need?

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Architectural innovation Customers have to transport and assemble the furniture by themselves, thereby saving IKEA two expensive steps in their value chain Value Proposition A new value proposition beyond price and good design is created: Instant satisfaction without waiting for the later delivery of the furniture

2 AA-488228-2

Revenue Model

Cost Structure Cost structure is

defined by your value architecture.

Revenue Sources With what do we

earn money?

How do we earn money?

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Revenue Model Innovation Power-by-the-hour: Jet engine maintenance paid by the hours in service Value Proposition Airlines get variable costs that depend on their business success.

Team & Values

Team Who is in our

team? What

competencies do we have in our team?

Values What values do we

life in our team? How do we

interact with each other and with customers?

Who is on our team? What values do we live?

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CustomersWho are our customers?What job do we solve for our customers?

Customer BenefitWhat benefit do we create for our customers?What benefit do we create for our partners?

OfferWhat is our offer?

Value ChainWhat are our value creating steps?What is our value chain?

Core CapabilitiesWhat are the core capabilities we need?

Distribution & Communication ChannelsHow do we reach our customers?How do we communicate with our customers?

PartnerWhich partners do we need?

Questions for a Successful Business Model

Cost StructureCost structure is defined by the value architecture.

Revenue SourcesWith what do we earn money?

TeamWho is on our team?What competencies do we have on the team?

ValuesWhat values do we pursue?How do we interact with each other and the customers?

Revenue Model

Team & Values

Value PropositionValue Architecture

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Geberit a product innovator or is there more?

From plumber supply to under-the-wall systems for baths

Customer job to be done Geberit understood that the badly solved job in the sanitary industry was, how fast a bath room can be renovated. With Geberits products you can renovate bathrooms faster and in better quality. And they understood that plumbers are their core sales channel.

Geberit is the master in understanding how to build and use bathrooms.

Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:

Cost Structure Revenue Sources

Team Values

Revenue Model

Team & Values


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Why homeowners love Geberit?

Architects Plumbers

Homeowners Job-to-be done: Get my bathroom renovated very

well (design & quality) with as little hassle as possible

Faster and more convenient renovation of baths

Actually, it needs a lot of initiative not to get Geberit (Plumbers offer only Geberit)

Installation systems are more expensive than pure toilette tanks

Willingness of homeowners to pay more is higher due to the benefits speed & design

Deep understanding how baths are renovated & used

Understanding how homeowners decide to procure sanitary equipment

Plumbers are the sales channel Architects are used for direct

communication with homeowner

Plumbers, Engineers, Marketeers Diverse team

high quality long lasting products looking for better solution. Always!

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Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Why plumbers love Geberit?

Plumbers Job-to-be done: Have little hassle as possible with

a customer job and still earn a high margin

Easy to plan, order, prefabricate and install all components

All components from one supplier

Satisfied homeowners that pay a higher price

New products for upselling

All these tools for plumbers cost money

Geberit earns money via end customers Some income for trainings

Deep understanding how plumbers work and think about their business

Training know-how Partner & eco system mgmt

Plumbers are reached with direct sales, classical marketing

via training

trade schools (Handwerkerkammern)

Planning tools (CAD, product handbook)

integrated logistics trainings, material, certificates

long-term thinking, willingness to invest long-term in relationship with plumbers

innovative solutions

Plumbers, Engineers, Marketeers Diverse team

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The Hotel Exercise

Innovate the hotel industry and design a hotel. Chose from the following hotel segments Hotel in City Holiday resort Hotel for Seminars

The design process

B

1

Customer Insight - Observe your customers

What job is not yet or badly solved?

- How does the Customer Experience Cycle look like?

- On what customer insights is your idea based?

- validate customer insight

2

Understand - understand the current

solutions and their strength & weakness

- understand how the potential customer thinks and decides

- understand the market & market mechanism

3

Ideate Develop as many ideas as possible in the area of - customers/ value

proposition - value architecture - revenue model

4

Design - decide for three or four

options - design the business

models for the options - check the

interdependencies in the business models

- work on the uniqueness (positioning)

- optimize the building blocks

5

Decide & Prototype - decide for the best

model to go for - build prototype - test prototype with

customers - write business case - decide again or work on

different option

6

Build & Learn - execute business model - learn continuously from

customer feedback and control KPIs

- adjust and refine continuously the business model

Point of View

Designing is a process of opening your mind and focusing at the end

1

Customer Insight

3

Ideate 2

Understand 4

Design 5

Decide & Prototype

6

Build & Learn

Design Thinking Process

The right culture & values Multidisciplinary Teams

1






2





3



4







5




different option

6




Business Model Canvas

Tools for Entrepreneurial Design

Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values

Value PropositionValue Architecture Use the canvas to develop your business model!

1






Where do we get a Value Innovation from? Lets find new customer insights as a starting point

Business model innovation

New value proposition

Customers insight

Please make a typical hand movement to show how you opend this sugar sachet

Customer Insights Do you want fast delivery of the goods you order online?

Is asking customers the right approach?

Customer Insights Is faster really better? Or was this already the wrong question. What would be the right question to figure out the importance of time in the delivery process?

Is asking customers the right approach?

CustomersWho are our customers?What job do we solve for our customers?

Value PropositionThe best way is to start with the job we solve for our customers?

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Dont ask your customers. Observe their jobs-to-be-done

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Customer job to be done Is it easy to fix a fence to the ground?

There was no market for temporary fixing something to the ground before Krinner invented it.

Many customers have the job-to-be-done to fix something to the ground. Once Krinner provided a solution many new application were found

Buy Delivery/ Assembly Usage Comple-ments Service Disposal

How can we find systematically new customer insights?

Understand how the customers are buying, using and disposing the product

Understand the whole lifecycle of customers utility

Source: cp. Kim, W.C., Mauborgne, R., Knowing a Winning Business Idea when you see one, HBR Sep-Oct. 2000

Customer Experience Map

How can we improve the buyers utility cycle? Can we do more for the customer? Can we leave something to the customer?

Unsolved job-to-be-done What is the biggest hassle with vacuum cleaning?

Where can I start in the buyer utility map? The Dyson Vacuum Cleaner

DisposalService Complements Use DeliveryBuy

CustomerProductivity

Simplicity

Usability

Risk

Image & fun

Enviromental friendlyness

++

StartingPoints

Dyson = value

innovation

Dyson vacuum cleaner inspired by technology The vacuum cleaner for men

Customer Insights Bags and filters get clogged and restrict

airflow. Loss of suction Vacuum cleaners are marketed as

household aids. Are there different segments?

Value Proposition for customers Dyson vacuum cleaners have NO bags

and do NOT get clogged due Cyclone technology. Therefore, NO loss of suction.

Dyson positions itself as technical, highly engineered products that address men.

Revenue Model Dyson demands premium prices for its

vacuum cleaners.

Dyson =

Value Innovation

Unsolved job-to-be-done What is the biggest hassle with socks?

Blacksocks we save the world from socks problems

DisposalPuttingin pairs Washing Use DeliveryBuy

CustomerProductivity

Simplicity

Usability

Risk

Image & fun

Enviromental friendlyness

StartingPoints

Blacksocks We solve the world from its socks problems

10'000 12'000

25'000

40'000

0

10'000

20'000

30'000

40'000

2001 2002 2005 2008

Socks subscription(2001-2008) Customer Insights

Buying socks is no fun Putting socks in pairs even less fun Good socks are a sign of Being well

dressed

Value Proposition Blacksocks subscription solves all

problems Always enough new socks No pairing needed since all socks are

identical

Revenue Model Upfront payment Easy planning and negative working

capital

Blacksocks =

revenue model

innovation

20% market share in Switzerland*

* premium segment starting at 9CHF

Customer job to be done I want a very special place to stay, at a good price, and want get local insights where to go out, to eat and to shop. Of course, I want to know if I can trust the person I stay with.

AirBnB opened a whole new segment of offers to the individualistic traveler of today

Even more individual choice for the traveler who looks for the special place to stay AND connect to the people of the place he visits: AirBnB

Easy to book, transparent pricing: AirBnB

Building trust by very personal reviews (peer-to-peer social control mechanism plus insurance coverage)

Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Website, App to connect B&Bs with customers word-of-mouth

sales crew for BnB owners

running site & acquisition costs of BnBs (PH)

asset light

Acquisition of BnB places Quality & Trust Mgmt Know-how of locations

Customers pay BnB owner Takes services fees from the rent the

households get (app. 15%)

Customer (C) looking for special place to stay

Private households (PH) who offer BnB

PH: Income and international contacts for BnB owners

C: places to stay that are outside the norm

Contacts with locals

n/a

n./a.

Travel like a human

Build up BnB offer

Help find right spot

Match needs &

offer Payment

& GTC Reputation

& Trust Mgmt

Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customer (Travelers) Job-to-be-done Finding a special place to

stay Getting to know the

hidden gems of destination

Offer very special places that cannot booked anywhere else

Connect with locals that share their insights

Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Households that offer BnB Job-to-be-done Earning money Have the world at home

Refinancing rent Trust provided by platform Risk of damage is insured Connecting with people from

abroad

Why do customers like airbnB?

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Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values


Website, App to connect B&Bs with customers word-of-mouth

sales crew for BnB owners

running site & acquisition costs of BnBs (PH) asset light

Acquisition of BnB places Quality & Trust Mgmt Know-how of locations

Customers pay BnB owner Takes services fees from the rent the

households get (app. 15%)

Customer (C) looking for special place to stay

Private households (PH) who offer BnB

C: places to stay that are outside the norm

Contacts with locals PH: Income and international

contacts for BnB owners

n/a

n./a.

Build up BnB offer

Help find right spot

Match needs &

offer Payment

& GTC Reputation

& Trust Mgmt

Asset light business model

You do not need to own a place to provide awesome locations

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Your point-of-view why you must exist:

...............................................

...............................................

...............................................

...............................................

...............................................

You must have a clear point of view why your business should exist

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Think in options. Your current idea is not the only valid one. There are better ones. Search for them. Iterate

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Customers

Customer Benefit

Offer

Value Chain

Core Capabilities


Partner

Business Model:


Team Values

Revenue Model

Team & Values

Value PropositionValue Architecture Use the canvas to develop your business model!

5

Decide & Prototype - decide for the best model

to go for - build prototype - test prototype with


different option

Fast learning what works with rapid prototyping of your minimal viable business model is the key to success

12

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Always question your core assumption and adapt to real life. Prototype fast. Learn fast

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3



4







5




different option

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3



4







5




different option

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Every startup is an iterative process with fast learnings and many pivots

Entreprenurship is eternal learning what the customer really wants and what works and what not

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What is a good strategy for startups?

Differen-tiation

Trend

Build on strengths

Focus

Its about finding the right trend to surf!

Be different and be loved by your customers!

Scary to be this nail. Where will the hammer hit next time?

Doing is the essence of entrepreneurship

JUST DO IT.

More Information on http://blog.business-model-innovation.com

Dr. oec. Patrick Sthlerfluidminds GmbHKreuzstrasse 2CH-8008 ZrichPatrick.Staehler@fluidminds.chwww.fluidminds.chblog.business-model-innovation.com@business_inno

Small Business & Entrepreneurship

14 Tips to Entrepreneurs to start the Right Stuff