Better by Measure: Value Creation (Class 2, SVA Products of Design 2014)

BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014

BETTER BY MEASURE

VALUE CREATION

Class 2 | September 11, 2014



OUTLINE

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BUSINESS MODEL CANVAS CRITIQUE

BUSINESS SCHOOL: BETTER KNOW A BUSINESS MODEL

TEAM ASSIGNMENTS

CONCEPT GENERATION


BUSINESS MODEL CANVAS CRITIQUE

STARTUPS



BUSINESS SCHOOL

BETTER KNOW A BUSINESS MODEL



FOR PROFIT, NON PROFIT OR SOMETHING ELSE?

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V. $


YOU USED TO HAVE TO PICK A LANE

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FOR PROFITMAKE MONEY

NON PROFITDO GOOD

V.

“The social responsibility of corporations is to increase profits.” – Milton Friedman, 1970

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NOW IT’S A PARADOX OF CHOICE

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501 (c) 3

501 (c) 4

501 (c) 7

501 (c) 9

Social Enterprise

Social Impact

Social Business

Sustainable Enterprise

S Corp

LLC

C Corp

B Corp

Coop

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YOU NO LONGER HAVE TO CHOOSE

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$NON PROFIT

with sustainable revenuesFOR PROFIT

out to change the world

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KEY DIFFERENCES

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$NON PROFIT

• Defined to fulfill a mission• Tax exempt• Does not retain profits• Does not distribute ownership• Assets belong to organization• Can’t use funds other than to

fulfill the mission for which it

was formed

FOR PROFIT• Pays taxes on profit• Can distribute ownership to

employees and investors• Assets belong to the owners• Can have a capital exit,

benefitting the owners of the

company

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BOTH REQUIRE MONEY (& LOVE) TO SUSTAIN AND GROW

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$ $

$$NON PROFIT



BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014 11

$FOR PROFIT


FOR PROFIT FUNDING SOURCES

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FOR PROFIT FUNDING SOURCES

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$


ARE YOU A STARTUP OR A SCALABLE STARTUP?

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• “A startup is a human institution designed to deliver a new product or service under

extreme uncertainty.” – Eric Ries

• “A startup is a company designed to grow fast.” – Paul Graham, Y Combinator

• For a company to grow bit, it has to make something a lot of people want. To reach

and serve all of those people.

• “A startup is a temporary organization formed to search for a scalable repeatable

business model.” – Steve Blank

• Most startups change their business model multiple times.

• A scalable startup is a special class of startup – world class team, large vision,

large target market, passionate belief and a reality distortion field.


STAGES OF INVESTMENT CAPITAL REQUIREMENTS

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NOT ALL NEW COMPANIES ARE GROWTH STARTUPS

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Consulting29%

Services: Other17%

Technology: Internet14%

Real Estate14%

Service: Business Service

13%

Retail Store13%

New companies formed in 2012

Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012


NOT ALL COMPANIES ARE GROWTH STARTUPS

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Consulting29%

Services: Other17%

Technology: Internet14%

Real Estate14%

Service: Business Service

13%

Retail Store13%

New companies formed in 2012

Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012


FOR PROFIT HYBRIDS

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• SOCIAL ENTERPRISE: Social or environmental

purpose, may be willing to limit scale opportunities

to meet more local goals, or directly serve the

need.

• B-CORPS: A type of social enterprise that also

agrees to transparently share financial results.

• SOCIAL BUSINESSES (Yunnus): For profits that

reinvest to meet a social need.

• SOCIAL IMPACT GROWTH: Aiming for scale and

for social/environmental outcomes, and high

growth returns to investors.

Source: http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal

http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal





BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014 19

$NON PROFIT


NON PROFIT FUNDING SOURCES

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NON PROFIT FUNDING SOURCES

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SCALE IS ALL THE RAGE IN NON PROFITS

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• The average founding year of the 10 largest U.S.

non profits is 1903

• Not for profits are one of the U.S.’s fastest growing

sectors, which grew 60% to more than 1MM

organizations from 1999 to 2011

• How more recent organizations got big:

1. Developed funding in one concentrated source

rather than across diverse sources

2. Found a funding source that was a natural match

to their mission and beneficiaries

3. Built a professional organization and structure

around this funding model

“The jury is out on whether

scaling organizations will

translate into scaling impact.

There is an emerging set of

questions about how to scale

links to local community

engagement, which may be the

linchpin of lasting social

change.”

-Bridgespan Group

Source: http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx#.U6RblY1dU7s

http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx%23.U6RblY1dU7s

http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx%23.U6RblY1dU7s


WHERE THE MONEY COMES FROM

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Fees for Services & Goods from Private

Sources53%

Other2%

Government Grants9%

Private Contributions13%

Fees for Services & Goods from Gov-

ernment23%

Sources of Revenue for Reporting Public Chari-ties, 2009

Source: The Nonprofit Sector in Brief, 2011. National Center for Charitable Statistics, The Urban Institute


STILL DON’T KNOW WHICH WAY TO GO?

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$NON PROFIT



V.$

WHAT DO I DO FIRST?


WHERE TO START? CUSTOMER DISCOVERY

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• Lean startup, lean

launchpad (the focus of the

next few classes, and the

approach in class)

• Form a hypothesis about

how you will grow

• Define your total

addressable market, or the

size of your total addressable

beneficiaries

• Business model canvas

• Validate your early

hypothesis

• Test and learn


TEAM ASSIGNMENTS

THE MOMENT OF RECKONING



THE PLATFORMS

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THE ACCELERATOR TEAMS

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May, George & Berk Eliz, Elisa & Heath Miguel, Lusha & Steve

Brandon, Andres & Lucy Lance, Julia & Vidhi

[See us after class if to know whether we categorized you as a Maker,

Mover Shaker or Marketer]


YOUR CHALLENGE

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• This semester, each team will launch a growth startup

• Each startup will be designed to either leverage and build off the platform of the

company you’ve been assigned (Uber etc.), or to disrupt the company you’ve been

assigned (you will make this choice next week)

• Your startups will be designed to build economic value by critically embracing civic,

environmental, and human health challenges


THE APPROACH

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• Following Lean startup model: Hypothesis driven, customer centric business model,

rapid iteration, designed for growth

• Use measured impact assessment as lens to build business: Will evaluate

scenarios for potential environmental, civic, and human health impacts your startup

may create, and refine your business models to:

• Redefine impact as opportunity: Reframe potential impacts as opportunities

to build stronger more resilient business models

• Create benefits: Create a demonstrable net positive impact to environmental,

civic, and/or human health challenges

• Adapt: Be flexible to build for unforeseen consequences


CONCEPT GENERATION

EXERCISE



BRAINSTORM TIME

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YOU HAVE FIVE MINUTES (PER PROVOCATION) TO BRAINSTORM NEW BUSINESS

MODELS BUILT OFF OF YOUR COMPANY’S PLATFORM, WHICH:

1. Create as much EVIL as possible – how could you destroy civic society, the

environment and human health at the same time?

2. Would make money THIS WEEKEND (aka in two days) – what could you get up and

running right away and how?


HOMEWORK

FIVE CONCEPTS



HOMEWORK

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FIVE NEW START-UP CONCEPTS (PER TEAM)

PRESENT VALUE PROPOSITION FOR EACH CONCEPT

SUBMIT TO CLASS DROPBOX FOLDER BY 4PM NEXT THURSDAY

READINGS: All about disruption – Reading: The Disruption Machine

http://www.newyorker.com/magazine/2014/06/23/the-disruption-machine– Reading: Clayton Christensen Responds to New Yorker Takedown of 'Disruptive

Innovation' http://www.businessweek.com/articles/2014-06-20/clayton-christensen-responds-to-new-yorker-takedown-of-disruptive-innovation

http://www.newyorker.com/magazine/2014/06/23/the-disruption-machine

http://www.businessweek.com/articles/2014-06-20/clayton-christensen-responds-to-new-yorker-takedown-of-disruptive-innovation

http://www.businessweek.com/articles/2014-06-20/clayton-christensen-responds-to-new-yorker-takedown-of-disruptive-innovation


FOLLOW THE CLASS UPDATES

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PRESENTATIONS: http://www.slideshare.net/Silvereb

http://www.slideshare.net/Silvereb

http://www.slideshare.net/Silvereb