Transcript
E245 Value PropositionAnn Miura-Ko
January 2011
The Business Model Canvas
Test Hypotheses:•Product•Market Type•Competition
How to Build A Startup
IdeaSize of the Opportunity
Business Model(s)
Customer Discovery
Customer Validation
Theory Practice
We start with the theory…
Key Questions for Value Prop
Problem Statement: What is the problem?
Technology / Market Insight: Why is the problem
so hard to solve?
Market Size: How big is this problem?
Competition: What do customers do today?
Product: How do you do it?
Inspiration
Where do these ideas come from?
Flickr Image: Jeff Kubina
The Authentic Entrepreneur
Technology and Market Insight
Technology Insight Moore’s Law New scientific
discoveries Typically applies to
hardware, clean tech and biotech
Market Insight Value chain disruption Deregulation Changes in how people
work, live and interact and what they expect
Examples of Market Insight
People want to play more involved games than what is currently offered
Facebook can be the distribution for such games
Masses of people are more likely to micro-blog than blog
The non-symmetric relationships will allow companies and individuals to self-promote
European car sharing sensibilities could be adopted in North America
People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.
Insight Characteristics
Non-Consensus
Consensus
Wrong Right
Biggest Potential Wins
Mindless Competition
Key Thought
What insight do I have that is not yet conventional wisdom?
Market TypeExisting Resegmented New
Customers Known Possibly Known Unknown
Customer Needs Performance Better fit Transformational improvement
Competitors Many Many if wrong, few if right
None
Risk Lack of branding, sales and distribution ecosystem
Market and product re-definition
Evangelism and education cycle
Examples Google Southwest Groupon
Market Type determines: Rate of customer adoption
Sales and Marketing strategies Cash requirements
Existing MarketCharacteristics: Customers are always hungry
for better performance Incumbents exist Usually technology driven
Positioning driven by product and how much value customers place on its features
Risks: Incumbents will defend their turf Network effects of incumbent Continuing innovation
Resegmented Market Low cost provider (Southwest) Unique niche via positioning
(Whole Foods)
What factors can you eliminate that your industry has long competed on?
Which factors should be reduced well below the industr’s standard?
Which factors should be raised well above the industry’s standard?
Which factors should be created that the industry has never offered? (blue ocean)
New Market Customers don’t exist today How will they find out about
you? How will they become aware of
their need? How do you know the market
size is compelling?
Which factors should be created that the industry has never offered? (blue ocean)
The ProblemThe “problem” justifies why the product is valuable to someone
The Problem Statement:For whom?What issue do they face?
Note: Doesn’t reference the product
Potency of the Problem
Competition
Are substitute products and services available? Are competitors threatening to offer better price or value? How saturated is our market? How likely are customers to defect?
The Ecosystem (“Customers”)
End User
Day to day users May actually have zero influence in buying
process
Preferences and decisions influence or impact buying decisions
The person who controls the purse strings or is in charge of the budget
The buck stops here
Influencer / Recommender
Economic Buyer
Decision Maker
Types of Product Value
Faster
More Efficient
More Simple
Lower Cost
Smaller
The Ecosystem (The Rest)
Group or organization that installs, distributes or sells the product in your place
Suppliers
Channels
Government
Partners
Entity that provides parts or services needed to manufacture your product
Organizations responsible for monitoring trading and safety standards related to your product
Other entities that provide products related to delivery of your final product
Wait! I thought this lecture was about products?!?
Product
Service Hardware
NetworkData
Knowledge Resources
Minimum Viable Product (MVP)
A product that solves a core problem for customers
The minimum set of features needed to learn from earlyvangelists- Avoid building products nobody wants- Maximize the learning per dollar spent
The Art of the MVP
A MVP is not a minimal product “But my customers don’t know what they want!”At what point of “I don’t get it!” will I declare defeat?
Testing the MVP
Smoke testing with landing pages using AdWords In-product split-testing Prototypes (particularly for hardware) Removing features Continued customer discovery and validation Surveys Interviews
Testing the MVP (Web Example)
Can you get customers to pay for a product that doesn’t yet exist (or barely does)?
Interview customers to make sure they have a matching core problem
Set up web site landing page to test for conversion See what offers are required to get customers to use the
product (e.g. prizes, payment) Use problem definition as described by customers to
identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness
Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through
Example: Chegg
Testing the MVP (Non-Web)
Can you get customers to pay for a product that doesn’t yet exist (or barely does)?
Interview customers to make sure they have a matching core problem
Set up web site landing page to test for conversionSet up a Lighthouse Customer Program where
potential customers pay to get early access to product prototypes
The Pivot
The heart of Customer Development
Iteration without crisis
Fast, agile and opportunistic
The Value Proposition Pivot
UK-92480 Problem: Angina (chest
pains) Selectively blocking an
enzyme called PDE5 could expand blood vessels and treat angina.
Nuf said
The Value Proposition Pivot
Craigslist for Colleges College students have
unique sets of goods and services they need to trade, buy and sell at a local level
Textbook rentals College students have
unique sets of goods and services they need to trade, buy and sell at a local level
Test these hypotheses for next week:
Problem Statement: What is the problem? For
whom?
Technology / Market Insight: Why is the problem
so hard to solve?
Competition: What do customers do today?
Product: How do you do it? Is this valuable or
unique? What is the MVP?
TEST THE MVP!
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