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Starting a new business is not the same as running an operating business. As Steve Blank puts it "a startup is an idea looking for a business model". Over the last decade a number of management practices have emerged that recognizes the particular challenges facing new ventures. In particular, Blank's Customer Development Model and the related "Lean" movement are increasingly popular with entrepreneurs of all sorts. This lecture introduces and define the key concepts of the new entrepreneurial management practices and illustrate how startups can utilize them at any step of their process.
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Entrepreneurial Management
Entrepreneurship 101 October 24 2012 Jon E Worren
About you
Idea?
Product?
Business?
Established pracBces not working
Share of Voice
Share of Mind
Share of Market
The Emergence of New PracBces
1911 ScienBfic Mgmt
1948 Toyota
ProducBon System
2001 Agile Development
2003 Lean
Thinking
2005 Customer
Development
2009 Lean
Startup Mvmt
A set of principles and frameworks that helps startups iden5fy a sustainable business model
with the least amount of waste possible
Entrepreneurial Management
ApplicaBon
Startup Phase
Entrepreneurial Management
TradiBonal
Management
Growth Phase
Search
Business Model?
ExecuBon
PRINCIPLES Entrepreneurial Management
ScienBfic Management
• Time & Work Studies (measurement)
Toyota ProducBon System
• Muda – EliminaBon of waste
• Hansei -‐ learning • Kaizen – conBnuous improvement
• Jidoka – self-‐learning
Agile Development
• Customer CollaboraBon • IteraBon (short Bme frames)
Lean Thinking
• GeneralizaBon of TPS • Increased focus on “Value”
Customer Development
• New 1: De-‐risking a new venture by breaking up the commercializaBon process and prioriBze business problems to solve
• New 2: Focus on Customer AcquisiBon
Customer Discovery
Customer ValidaBon
Customer CreaBon
Company Building
Lean Startup
• Lean Startup = Customer Development + Agile development
• Strong build+ measure focus
• Popularized approach – created Lean Movement
Build
Test
Measure
Learn
PROCESS Entrepreneurial Management
Process
AssumpBons
Test problem AssumpBons
Measure
Evaluate
Step 0-‐ Describe Idea § What kind of problem do you solve for the
customer? Is this an important problem for these customers? "
"§ Is there a big potential market for your idea? ""§ What is your competition and how do they solve
this problem for their customers today? ""§ What is unique about your way of solving the
problem?"
Step 1 – Review AssumpBons • Is the customer problem you are solving validated by a measurable fact?
• Are you able to idenBfy which customers are suffering the most from this problem?
• Do you understand how the problem impacts the customer and their business?
• Do you have evidence that links the customer problem to the target customer?
Step 2 –Test
• What key piece of informaBon would validate or invalidate the assumpBon?
• Where does that informaBon reside? • What is the best way to gather that informaBon?
Step 3 & 4 – Measure & Evaluate
• Is the customer problem urgent? • Is the problem pervasive? • Will customers pay to have the problem solved?
How do these answers measure against your iniBal assumpBons?
3 outcomes
Evaluate
Validate: Confirmed value of MVP
Iterate: Change your product features
Exit: Don’t spend any more money!
The Pivot
Easier when…. • You have invested liile to this point
• You are gejng absolutely no tracBon
Harder when……. • High noise to signal raBo ( no clear feedback)
• Next step is unclear
Entrepreneurs are eternal opBmists – choose to persist: -‐ Tweak a liile: Our next version will take off! -‐ Easy: Our next campaign/trade show will land key customers!
THE 3 STAGES OF THE PROCESS The quest for a Business Model
The 3 stages of the search process
Customer Problem
Product SoluBon
Business Model
Business Model Canvas
What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?
Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?
For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?
For whom are we creating value?Who are our most important customers?
What type of relationship does each of our CustomerSegments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?
What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?
What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?
Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?
What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?
Day Month Year
No.
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Value ProposiBon
• What you offer and how you offer it to customers
• What type of value or benefit is associated with your offering (e.g., cost savings, Bme savings, revenue increase, customer/employee saBsfacBon) and how much of it the customer can expect
• How the value is generated • Why it differs from anything else on the market
Examples
Winners Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.
Google Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily
CONCLUSION & SUMMARY Final two slides
Summary
• Startups are different • Search is about learning • Lean is about minimizing waste
• CDM: De-‐risk your venture by breaking up the process
• Test for customer problem first
• Test soluBon/MVP • Test customer acquisiBon
• Human element: Give someone the task to keep you accountable!
Conclusion
• Entrepreneurial Management offers a set of tools and processes that makes the process of starBng up more manageable:
• The philosophy brings clarity to the skillset required to succeed: – Less persistence – more percepBon – Stack the odds in your favour – rather than trying to win against all odds
– Commit to the process – not the idea
Thank You!
www.marsdd.com/entrepreneurs-‐toolkit