module - creativity, innovation & entrepreneurship

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Introduction to entrepreneurshipModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]

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?Discussion question: Which are the first names which come to your mind when you think of an entrepreneur?


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What is out understanding of an entrepreneur?The boss?The business owner?The risk taker?One who starts a small business?The resourceful guy?


DefinitionThere is no single definitionOrigion of the word:Entependre an undertaker

According to George Gilder from The Spirit of the EnterpriseIt is making the world forever new. It is taking aggressive actions.

According to Joseph SchumpeterIt is destroying the old order and creating new ones.

Entrepreneurship is the process of creating something new of value by devoting (giving) the necessary time and effort. By accepting and acknowledging the necessary financial, psychological, and social risks, andFinally receiving the resulting rewards be it monetary and personal satisfaction and freedom to do what you want. Robert D.Hisrich, M. Peters & D.A Shepherd


Benefits of entrepreneurshipOpportunity to make a difference Opportunity to reach your full potentialOpportunity to get unlimited profitsOpportunity to do what you enjoy doingOpportunity to contribute to society and be recognized for your effortsOpportunity to gain control over your own destiny


Drawback of entrepreneurshipHigh levels of stressComplete responsibilityDiscouragementLong hours and hard workUncertainty of incomeRisk of losing your entire invested capitalLower quality of life until the business gets established


Three masteries for an entrepreneurMastery of Selfthe mind, heart and gutMastery of OpportunityMastery of the Enterprise


?Discussion question: What characteristics describe an entrepreneur?


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Characteristics of entrepreneursInitiative Sees and Acts on OpportunitiesPersistenceInformation seekingConcern for High Quality Work and Output Increased Productivity.Commitment to Work ContractEfficiency OrientationSystematic and organized planningProblem SolvingSelf ConfidenceAssertiveness Negotiation with suppliers & customersPersuasive & Influential Peers and stakeholdersInspirational - employeesEffective Communicator external & internal of organization.


?Discussion question: What is the difference between an entrepreneur and a manager?


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Difference between an entrepreneur and a managerBasisEntrepreneurManagerVenture creationAn entrepreneur sets up a new venture and runs itA manager only runs an existing unitInnovationHe works to find new methods, products, etche deals with day to day affairs, need not be an innovatorRisk TakingHe takes calculated risks, he is responsible for failure and financial lossHe takes less risks as compared to an entrepreneur, does not share business risksStatusHe starts and runs his venture independently, self employedHe is an employee of the business organization

RewardMotivated by profitsMotivated by incentives ChangeAlways prepared to changeMay not be very receptive to change


The entrepreneurial processFirst Entrepreneurial Process:Creation Process creating something new of value.

Second Entrepreneurial Process:Requires the commitment of the necessary time and effort. Appreciate and understand the importance of time and effort devoted to create something new and make it workable.

Third Entrepreneurial Process:Involves the enjoyment of the rewards (Freedom, monetary) after the effort, followed by personal satisfaction.


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The entrepreneurial ecosystemModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



Entrepreneurial potentialWe need more opportunities

We need somebody to see those opportunities

Those somebodies are entrepreneurs

So simple!

Soruce: Norris Krueger, Entrepreneurship Northwest. Max Planck Institute of Economics


Where do entrepreneurs come from?[per Paul Reynolds 2010/2011]#1 Personal preparedness (HC?) mindset, role identityactually see personally-viable opportunity

#2: Cultural/social support (SC?)good career choice, mediaold-school values (success attributions)

#3: Perceived barriers (PC?)

Soruce: Norris Krueger, Entrepreneurship Northwest. Max Planck Institute of Economics


Policy implications derived from this?#1 Personal preparedness (HC?) Policy Conclusion: Grow the mindset. In EVERYONEExperiential; engage ecosystem!

#2: Cultural/social support (SC?)Policy Conclusions:Grow the ecosystem. Map it. Vision it. Align resources.


Please insert here slides from your national Global Entrepreneurship Montior results and discuss them with your students.

www.gemconsortium.orgGlobal Entrepreneurship Montior (GEM)


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?Discussion question: What are the factors and players facilitating entrepreneurial behaviour and success?


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Policy implications derived from this?



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Types of InnovationModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



Architectural and Modular InnovationHenderson & Clark (1990)ObservationNumerous technical innovations existed which had dramatic competitive consequences whilst having done only modest changes to the existing technology (Example Xerox)

Architectural InnovationInnovation that change the way in which the components of a product are linked together while leaving the core design concepts (and thus the basic knowledge underlying the components) untouched.

Modular InnovationInnovation that change only the core design concepts of a technology.

Component = physically distinct portion of a product that embodies a core design concept (Clark, 1995)Example: Room fan


Architectural and Modular InnovationHenderson & Clark (1990)


Architectural and Modular InnovationHenderson & Clark (1990)

According to Henderson & Clark incremental innovation build on core competencies architectural and component innovation build on already existing architectural / component knowledge radical innovation, on the other hand, destroy the usefulness of both architectural and component knowledge

Problems: Often a dominant design exists after great experimentation (e.g. car industry). A reason for this is also the opportunity to realise economies of scales. Having found a stable design, organisations often simply focus on component improvements.Hence, organisations develop component knowledge rather than architectural knowledge (competition on component performance).Creation of groups for component, e.g. blades, motor, housing (architectural knowledge depends on communication across these groups: How to make the fan more silent?)


Ten Types of Innovation in four categories








ROI Of The Ten Types of Innovation who wins?Business ModelNetworking

Enabling ProcessesCore Processes

Product PerformanceProduct SystemService

ChannelBrandCustomer Experience

What do you think? Which of these innovation types provides the best ROI?


ROI Of The Ten Types of Innovation who wins?


ROI Of The Ten Types of Innovation who wins?

Too much focus on product innovation compared to other innovation types.

What about combinations of innovation types?


Disruptive and Sustaining InnovationClayton Christensen

Radical Innovation Disruptive InnovationIncremental Innovation Sustaining Innovation

The terms incremental and radical innovation deal with the advance of a technology, disruptive and sustaining innovation on the other hand deal with the (market) impact of these technologies.

Hence, a disruptive innovation can also be based only on minor changes in technology.



Sustaining

Revolutionary or discontinuous Innovation creating a new market by allowing customers to solve a problem in a radically new way (e.g. automobile)

Evolutionary Innovation improving a product in an existing market in ways that customers are expecting.

Disruptive

Innovation creating a new (and unexpected) market by applying a different set of values. (e.g. the lower priced Ford Model T)




10 Commandments of Disruptive InnovationClayton Christensen

RationaleCommandments1. Make worse products than your competitorsDisruptive innovations begin with a lower cost/ lower functionality products; better products are part of sustaining trajectories, and in these the incumbents always win2. Ignore profitable customers; pursue instead those at the low end or who dont buy at all Incumbent companies will vigorously defend their most profitable customers, but they may not even miss their least profitable customers3. Ignore demographic segments figure out what jobs people need doneMarketing tends to center around the data that is available for existing customers but segments dont have needs, customers do4. Ignore your core competence follow valueValue in your business may or may not derive from the activities you are good at. Remaining competitive may require learning new skills5. Escape commoditization by following profits along the value chainCommoditization is inevitable staying in a commoditized business is not


10 Commandments of Disruptive InnovationClayton Christensen

6. The best managers are not necessarily the most successful onesYou need managers with the right type of experiences (learning from mistakes, reformulating and changing strategies) rather than managers who have always been successful7.No matter how good your company is, the new innovation may need a separate homeThe parent organizations processes and values may kill the disruptive potential of an innovation if so, a separate, independent organization is needed8. Let the new team make mistakes and figure it out on their ownManaging disruption requires attention to how consumer use new products and a lot of adaptability, rather than the development of and commitment to a long-term, detailed plan9. Be impatient for profits but patient for growthDipping into corporate coffers to fund losses only perpetuates a bad strategy, while forcing growth too fast makes it difficult to find how an innovation should develop10.Leaders must know when to break away from good ways of doing thingsThe leader/founder needs to step in to avoid the disruptive organization from being sucked in

RationaleCommandments


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Creativity techniquesModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



?Discussion question: Where are most ideas generated?


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Where are most ideas generated?

The 3 BsBed, bathroom, bus

And why?Because people can relax and reflect


Seven Sources of InnovationBy Peter DruckerIntrinsicThe unexpectedThe incongruityProcess needChanges in industry or market structure

ExtrinsicDemographicsChanges in perception, mood, and meaningNew knowledge


Focus the SearchThe six degrees of freedomNew or existing customersMoving into new competitive arenasExpansion into new geographiesImprovement in industry structureInnovation in value delivery systemInnovation in products or services


Search Areas for InnovationThe six degrees of freedom


?Getting creative: What is half of thirteen?


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What is half of thirteen?

6.56 or 7 (rounded)thir and teen1 and 3XIII = VIII and IIIV (split horizontal)

How many more can you come up with?

26 divided by 4Student suggestion


Creativity TechniquesAn overviewLots of different creativity techniques can be found online.

We will now apply the 6-3-5 method as an example


The 6-3-5 MethodOverviewThis method is among the creativity techniques an easy to use Brainwriting-technique and supports the creation of new and outstanding ideas to solve problems within a group.

Requirements:a large table6 people6 paper sheets.

In order to guarantee an appropriate course of action a moderator/team leader should guide the process.


The 6-3-5 MethodOverview

Course of action:

1. Everyone of the six team members gets a sheet of paper with three columns and six rows (= 18 boxes to write in).2. Now everybody writes an idea into the first box of every of the three columns (= three ideas).3. All six sheets of paper are handed clockwise to the next team member after a short period of time (about 3-6 minutes).4. The next team member now reads the given ideas and tries to complete or improve them. Also totally new ideas are allowed.5. All sheets of paper will be passed five times. Within this exchange process any form of communication is forbidden between the participants.

With this method you can create up to 108 ideas within 30 minutes(6 team members x 3 ideas x 6 rows/people).



Killer PhrasesBe aware of saying and hearing them!Lets shelve that for the time beingWho is going to do it?I have something betterWe tried that beforeIt wont fit our operationIts against all our combined logicNot enough return on investmentIts great, but Some must have already tried itI thought of that a long time agoWe cant afford thatYoull never get approvalYoure on the wrong trackDont rock the boatThe market is not ready yetIts not a new concept

Test with the market, then decide whether or not you go on!


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Outcome-drivenInnovationModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



What Customers WantThe Source

What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and ServicesBy Anthony W. UlwickISBN: 13-978-0-07-140867-7

Anthony Tony UlwickFounder & CEO, Strategyn, Inc.

The BookThe Author


BackgroundHistoric change in focus of technology innovation from:

Technology focus (focus on making technology)Customer focus (focus on the customer needs and wants)Task focus (focus on the functional dimensions that consumers use to get a job done)


BackgroundTechnology-drivenCustomer-drivenOutcome-drivenTimeBefore 19801980 to 2005From 2005General approachCreate a technology first and then try to find a market for this technologyAsk the customer what they want and then produce itFind out the criteria customers are going to use to judge a products value and produce a market offering that meets these criteriaProblemMarket demand unsure (risky)Creation of products which the customers do not want (costly)The customers often dont know what they want (the problem is the input: customer requirements)Unlikely creation of breakthrough innovationsFailure ratesCa. 90%Ca. 50% to 90%To be assessed


Language problem

Getting the real feedback is problematic:Standard definitions for requirements do not exist, therefore there is confusion about needs, wants, solutions, benefits etcCustomer statements are not requirements. Customers do not always have the best solutions to their own problems (otherwise they would be employed to create them!) so their suggested solutions are not always useful)The needs and benefits are mostly far too unspecific for a solution to be created (designers / engineers to work with)

LanguageProblems feedbackProblemSolutionE.g. I want triple razor bladesCustomer defines the solutionSpecificationsE.g. I want a wider handleCustomer defines the solutionNeedsE.g. I want it to be durableToo unspecificBenefitsE.g. I want it to be easy to useToo unspecific


Tenet 1 of the approach

Tenet 1:Customer buy products & services to help them get jobs done

Are you selling drills with bits?Or help me hanging a picture?


The core point is the unit of analysisUnit of Analysis

The job is the unit of analysis! NOT the customer!

Companies need to help customers get the job done

fastermore conveniently and/orless expensive

than before


?Discussion question: Select a product or service and state the primary job(s) your customers want to get done with this product.


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Tenet 2:Customers use a set of metrics (performance measures) to judge how well a job is getting done a how and product performs


MetricsCustomers use metrics as companies use them to measure the output quality of a business process

In the book What Customers Want these metrics are called the customers desired outcomes

Example: When cutting wood with a circular saw, carpenters may judge the product for their ability to

minimize the likelihood of loosing sight of the cut lineminimize the time it takes to adjust the dept of the blade orminimize the frequency of kickbacks

Ironically, these metrics are overlooked in the customer-driven approach


?Discussion question: Create 50 to 150 outcome statements for the job selected before


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Tenet 3:Customer metrics make possible the systematic and predictable creation of breakthrough products and services


OpportunitiesKnowing the metrics improved the companies ability to execute all other activities in the innovation process:

Identify opportunities for growthSegment marketsConduct competitive analysesGenerate and evaluate ideasCommunicate value to the customersMeasure customer satisfaction


?Discussion question: Discuss potential results (segments, communication options) for the job you have selected before


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Root cause analysisModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



If I had an hour to solve a problem I would spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.Albert Einstein

Problem / Root Cause Analysis MethodsProblem analysis can be defined as dissecting and thoroughly studying a problem with the objective to understand how the problem emerged and how it grew to its current proportions.- Coert Visser

Selected methods to analyse problems / root causes:Fishbone AnalysisBottleneck Analysis5 WHYsForce Field AnalysisCause and Effect Trail


Fishbone Analysis (1/2)General OverviewDeveloped by Dr. Kaoru Ishikawa.A methodical way of determining the causes that contribute to an identified effect. Its also known as cause and effect analysis.

Implementation:Draw the fishbone diagramList the problem at the head of that fishLabel each bone of the fish in one of the following formats or develop your own format:

- 4 Ps (Place, Procedure, Policies, People)- 4 Ms (Manpower, Materials, Methods, Machines)- 4 Ss (Suppliers, Skills, Surroundings, Systems)- PEMPEM (plant, equipment, materials, people, environment, methods)Use brainstorming to identify factors in each category that are causes of the problemUse brainstorming to identify sub-factors under each factorIdentify the main causes


Fishbone Analysis (2/2)


Bottleneck Analysis (1/2)General overviewA method to identify the root cause(s) of an issue by bringing all visible problems into relation

Implementation:Write down all specific issues you see in your current situation (related to the main subject of investigation, e.g. issues in becoming a more entrepreneurial university). These issues are shown in green boxes in the example on the next slide.Draw arrows between the issues to highlight the relationships between them (cause -> effect).Check if you already identified the main causes of every issue written down. For example, an issue such as unhappy customers is only the consequence; please write down the cause responsible for this consequence. In the example on the next slide, these newly added items are marked in yellow.Now having a detailed picture of your current situation, please identify:which element is / elements are the main cause(s), and those elements which are only consequences which elements you cannot control, partly control, and fully controlHighlight the main cause(s) which you can (partly) control, and are thus the basis of your future activity (highlighted with a red star on the next slide)


Bottleneck Analysis (2/2)


Force Field Analysis (1/2)General overviewDeveloped by Kurt Lewin.Based on the concept of dynamic balance of helping (driving) and hindering (restraining) forces, emphasizing that problem will only occur when theres imbalance between them.

Implementation:Identify a problemIdentify a better situationUse brainstorming to identify driving and restraining forces List the driving forces on opposite side of the restraining forcesScore each force on a scale of 1 to 5 in terms of ease of change (5 = easiest, 1 = hardest)Identify aggregate on each side (the highest are easier to deal with, while the lowest are more difficult to deal with)


Force Field Analysis (2/2)


Cause and Effect Trail (1/2)General overviewIt is a diagram that shows the interrelated causes of a problem and enables the identification of the key cause.

Implementation:List the effect or problem at the centreIdentify and list the causes of that problem around itUse a line from a cause to its effect, placing arrow towards the effectTrace out intervening steps, wherein cause leads to another.


Cause and Effect Trail (2/2)


The 5 WHYs Method (1/2)General overviewIt is a method of questioning that leads to the identification of a root cause(s) of a problem.Rather than taking actions that are merely Band-Aids, the methods helps to identify how to really prevent the issue from happening again / how to solve the problem.

Implementation:Write down the specific problem. Writing the issue helps you formalize the problem and describe it completely. It also helps a team focus on the same problem.Ask Why the problem happens and write the answer down below the problem.If the answer you just provided doesnt identify the root cause of the problem that you wrote down in Step 1, ask Why again and write that answer down.Loop back to step 3 until the team is in agreement that the problems root cause is identified. Again, this may take fewer or more times than five Whys.


The 5 WHYs Method (2/2)Problem Statement:Customers are unhappy because they are being shipped products that dont meet their specifications.1. Whyare customers being shipped bad products?Because manufacturing built the products to a specification that is different from what the customer and the sales person agreed to.2. Whydid manufacturing build the products to a different specification than that of sales?Because the sales person expedites work on the shop floor by calling the head of manufacturing directly to begin work. An error happened when the specifications were being communicated or written down.3. Whydoes the sales person call the head of manufacturing directly to start work instead of following the procedure established in the company?Because the start work form requires the sales directors approval before work can begin and slows the manufacturing process (or stops it when the director is out of the office).4. Whydoes the form contain an approval for the sales director?Because the sales director needs to be continually updated on sales for discussions with the CEO.In this case only four Whys were required to find out that a non-value added signature authority is helping to cause a process breakdown.


?Discussion question: When to best use which root cause analysis method?


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Blue ocean strategyModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert data]



Blue Ocean StrategyThe source

BLUE OCEAN STRATEGYHow to Create Uncontested Market Space and Make Competition Irrelevant

Anthony Tony UlwickFounder & CEO, Strategyn, Inc.

The BookThe Authors

W. Chan KimandRene Mauborgnewww.blueoceanstrategy.com/


BackgroundIn a study of Fortune 500 companies who continually created increased shareholder value over a 30 year period.The difference was in the companies fundamental, implicit assumptions about strategy. The thinking of the less successful companies was dominated by the idea of staying ahead of the competition.The high-growth companies paid little attention to matching or beating their rivals. Instead, they sought to make their competitors irrelevant through a strategic logic we call value innovation

Blue Ocean Strategy, W. Chan Kim and Rene Mauborgne


Blue Ocean StrategyIncrease value at lower costs

1. On the value side(customers value the innovation enough to pay extra for it)

eg Titanium golf clubs2. On the cost cutting side (A product or service offering a cheaper way)

Eg Ryan Air


Standard business strategySustainable value innovatorsCompete in existing market spaceCreate uncontested market spaceBeat the competitionMake the competition irrelevantExploit existing demand and compete for market shareCreate and capture new demandTrade-off between cost and valueBreak the value-cost trade off by improving on both levels Differentiation OR low costAlign the entire firms activities to pursue differentiation AND low cost

Standard business strategy vs value innovation


Sustainable innovationFour key points of a successful sustainable innovation strategy:Focus - focus on certain benefits (or areas of value) where you will add most valueDivergance A departure from the value that other competitors offerA strong tagline the focus and divergence from competitors allows you to say something strong about the value your offering gives the target audienceAdd new areas of value to the value curve Add new value elements that the customer currently doesnt receive


The value curve


Value InnovationFormula 1 Hotel/HostelsApproached the provision of accommodation from a whole new perspectiveAssessed what the market really wantedDelivered it in the form of:Quality bedsExcellent hygieneRoom quietness



ExcerciseCreate a value curve for a firm by:Try to identify the criteria your target market re using to evaluate your productPrioritise the criteria, selecting the most important 6 to 10 criteria (in the mind of your target market)Place these criteria on the value curveAssess your firm against these criteria (from the perspective of your target market)Identify your primary competitor s / competitor groups Plot your competitors on the value curveIdentify issues and opportunities

Select a case where you know both the company as well as the industry sector well!


The 4 action framework


ExcerciseTry to identify how you may be able to change your offering to:FocusDivergeCreate new value


?Discussion question: How can this method be combined with other marketing, management & innovation methods you know?


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Design thinking as a Strategy for innovationModule: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert date]



This video will give you a better understanding of what Design Thinking is all about

Trying to solve a problem or find better ways of getting work done? How would you go about it?

https://www.youtube.com/watch?v=Ee4CKIPkIik


In this course you will be introduced to design thinking as a skill to move beyond the traditional boundaries of entrepreneurshipBy the end of this session you should be able:to have an awareness of what design thinking is;to have an awareness of how design thinking can be applied in problem solving and idea generating;to understand the difference between analytical, design and intuitive thinking;to have an awareness of how design thinking process works


Table of Contents


The future is best found in the opportunities that go unnoticed in the present.Peter DruckerManagement consultant, educator and author

Design Thinking is a human centred and collaborative approach to problem solving that is creative, iterative and practicalThe designer knows that to identify the real problems and solve them most effectively, it is necessary to approach them from different perspectives and angles. When design principles are applied to strategy and innovation the success rate for innovation dramatically improves.Design is by nature a discipline that deals with meanings by challenging patterns of thought, behavior and feeling. Design Thinkers produce solutions that generate new meanings and activate diverse elements cognitive, emotional and sensory that are involved in the human experience.


Design Thinking is a practical tool for integrating 21st century skills and an innovators mindset into the classroom, school and workplace. It is a method of problem-solving strategy, wherein the data collected is expressed visually in order to create new strategies, ways and methods to solve problems, create opportunities or strengthen weaknesses.More concretely, Tim Brown of IDEO has written that design thinking is a discipline that uses the designers sensibility and methods to match peoples needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.AnnexDesign Thinking is a human centred and collaborative approach to problem solving that is creative, iterative and practical


Design Thinking combines business viability, people desirability, technology feasibility

peopledesirabilitytechnology feasibility

businessviability


In order to have a successful design process you need to keep in mind that exploration is governed by three basic constraints from which organizations cannot escape: desirability, viability and feasibility.

Innovation is driven by three forces: business, technology and people.Business investigates the viability of new products or services;Technology explores the feasibility of new products or services;People judge the desirability of new products or services.

peopledesirabilitytechnology feasibility

businessviability

Design Thinking combines business viability, people desirability, technology feasibility

Annex


Design Thinking is a balance of analytical and intuitive thinkingAnalyticalthinkingIntuitive thinkingDesignthinking

100% reliability50/50 mix100% validity


Design Thinking process includes 5 modes: empathize, define, ideate, prototype and test

EmpathizePrototypeDefineIdeateTest


During the Design Thinking process mindset goes broad or narrow in various periods

The design-thinking process begins with gaining empathy for the user and ends with the real-world implementation of products, services, processes, experiences and/or systems.

This diagram shows the design thinking process translated into the various periods when a team should go broad or narrow in their mindset.

URL: http://ux.stackexchange.com/questions/73630/how-does-the-d-schools-framework-for-design-thinking-map-onto-ideos


Design Thinking process begins with the Empathize mode. Empathy is the centrepiece of a human centred design process EMPATHYWhen you feel what the other person is feeling and can mirror their expression, their opinions and their hopes.

WHY?To discover people's explicit and implicit needs so that you can meet them through your design solutions



EmpathizePrototypeDefineIdeateTestTo empathize, you:Observe. View users and their behavior in the context of their lives. As much as possible do observations in relevant contexts in addition to interviews. Some of the most powerful realizations come from noticing a disconnect between what someone says and what he does. Others come from a work-around someone has created which may be very surprising to you as the designer, but she may not even think to mention in conversation.Engage. Sometimes we call this technique interviewing but it should really feel more like a conversation. Prepare some questions youd like to ask, but expect to let the conversation deviate from them. Keep the conversation only loosely bounded. Elicit stories from the people you talk to, and always ask Why? to uncover deeper meaning. Engagement can come through both short intercept encounters and longer scheduled conversations. Watch and Listen. Certainly you can, and should, combine observation and engagement. Ask someone to show you how they complete a task. Have them physically go through the steps, and talk you through why they are doing what they do. Ask them to vocalize whats going through their mind as they perform a task or interact with an object. Have a conversation in the context of someones home or workplace so many stories are embodied in artifacts. Use the environment to prompt deeper questions.

EmpathizeDesign Thinking process begins with the Empathize mode. Empathy is the centrepiece of a human centred design process

Annex


The Define mode of the design process is all about bringing clarity and focus to the design space DEFINEDefining the problem using a unique reframing of the problem that is grounded in user needs and insights.

WHY?To expose new opportunities by looking at things differently; guide innovation efforts; make sure weve identified something worth working on.



EmpathizePrototypeDefineIdeateTestConsider what stood out to you when talking and observing people. Develop an understanding of the type of person you are designing for your USER. Synthesize and select a limited set of NEEDS that you think are important to fulfill; you may in fact express a just one single salient need to address. Work to express INSIGHTS you developed through the synthesis of information your have gathered through empathy and research work. Then articulate a point-of-view by combining these three elements user, need, and insight as an actionable problem statement that will drive the rest of your design work.

A good point-of-view is one that:Provides focus and frames the problemInspires your teamInforms criteria for evaluating competing ideasEmpowers your team to make decisions independently in parallelCaptures the hearts and minds of people you meetSaves you from the impossible task of developing concepts that are all things to all people (i.e. your problem statement should be discrete, not broad.)

DefineThe Define mode of the design process is all about bringing clarity and focus to the design space

Annex


Ideate is the mode of the Design Thinking process in which you concentrate on idea generationIDEATEGenerating many possible solutions to a problem.

WHY?To generate maximum innovation potential in a short amount of time; to incorporate different perspectives; to build excitement.



EmpathizePrototypeDefineIdeateTestYou ideate by combining your conscious and unconscious mind, and rational thoughts with imagination. For example, in a brainstorm you leverage the synergy of the group to reach new ideas by building on others ideas. Adding constraints, surrounding yourself with inspiring related materials, and embracing misunderstanding all allow you to reach further than you could by simply thinking about a problem.

Another ideation technique is building that is, prototyping itself can be an ideation technique. In physically making something you come to points where decisions need to be made; this encourages new ideas to come forward.

There are other ideation techniques such as bodystorming, mindmapping, and sketching. But one theme throughout all of them is deferring judgment that is, separating the generation of ideas from the evaluation of ideas. In doing so, you give your imagination and creativity a voice, while placating your rational side in knowing that your will get to the examination of merits later.

IdeateIdeate is the mode of the Design Thinking process in which you concentrate on idea generation

Annex


The Prototype mode is the iterative generation of artefacts intended to answer questions that get you closer to your solution PROTOTYPEIs creating a concrete embodiment of a concept which becomes a way to test hypotheses get closer to your final solution.

WHY?To gain empathy, to explore, to test, to inspire.



EmpathizePrototypeDefineIdeateTestStart building. Even if you arent sure what youre doing, the act of picking up some materials (post-its, tape, and found objects are a good way to start!) will be enough to get you going.

Dont spend too long on one prototype. Let go before you find yourself getting too emotionally attached to any one prototype.

ID a variable. Identify whats being tested with each prototype. A prototype should answer a particular question when tested. That said, dont be blind to the other tangential understanding you can gain as someone responds to a prototype.

Build with the user in mind. What do you hope to test with the user? What sorts of behavior do you expect? Answering these questions will help focus your prototyping and help you receive meaningful feedback in the testing phase.

PrototypeThe Prototype mode is the iterative generation of artefacts intended to answer questions that get you closer to your solution

Annex


The Test mode is when your solicit feedback, about prototypes you have created, to have another opportunity to gain empathy TESTTest your concept with users using your prototypes.

WHY?To gain empathy, to explore, to test, to inspire.



EmpathizePrototypeDefineIdeateTestShow dont tell. Put your prototype in the users hands or your user within an experience. And dont explain everything (yet). Let your tester interpret the prototype. Watch how they use (and misuse!) what you have given them, and how they handle and interact with it; then listen to what they say about it, and the questions they have.

Create Experiences. Create your prototypes and test them in a way that feels like an experience that your user is reacting to, rather than an explanation that your user is evaluating.

Ask users to compare. Bringing multiple prototypes to the field to test gives users a basis for comparison, and comparisons often reveal latent needs.

TestThe Test mode is when your solicit feedback, about prototypes you have created, to have another opportunity to gain empathy

Annex


Design thinking is a human-centered approach to innovation that draws from the designer's toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.Tim BrownPresident and CEO of IDEO, design thinking pioneer

Watch IDEO recreate the old shopping cart: the case of IDEOIDEO Shopping Cart

The recipe for innovation? IDEO has a process that works.

https://www.youtube.com/watch?v=GYkb6vfKMI4


One project changes the entire organization: the case of DERDACKDERDACK designs software for real-time alert notifications and anywhere incident response.

There was need of:New ways to address the users needs in a more structured and systemic way.Redesign of a specific feature (the planning of on-call duty) of the companys overall software product.

The project started well. The management was convinced of the method, which also seemed a good match with the mindset and the already existing manner of operation. In addition, they received support from an external coach.


One project changes the entire organization: the case of DERDACKObstacles and ChallengesBeing forced to work in a new way in non-hierarchical and heterogeneous teams sometimes caused additional discomfort.A wide gap between the idea as a raw invention and the product as an implemented innovation. Project did not take the estimated 3 months to implement, but rather nearly 9 months were required.

Learning and Expanding They used feedback from their customers as a yardstick of performance (overall positive feedback). The key to scale Design Thinking from an idea generator to a driving force of organizational change was to customize Design Thinking to the specific requirements of the company and adapt goals and resources appropriate to the given scope of application.


One project changes the entire organization: the case of DERDACKHire specialists. The areas of focus: planning and organizing work-sessions, setting up customer interviews and co-working sessions and keeping track of parallel projects and pushing the teams to work on them.Create a space. Derdack redesigned the office space collaboratively. The specific space and environment there helps to work with the method by putting it into a physical and mental setting.Adapt design thinking to your needs. One important change in using design thinking on a regular basis was to break down the design thinking sessions from whole days once a week into one or two sessions from 2 to 4 hours per week. These sessions could be integrated more easily into everyday work and felt more natural to the participants.Keep the team united. When starting new projects, Derdack carefully pays attention to make sure that every team member can contribute to the team during the complete project.


OpenIDEO is an open innovation platform, where designers and other creative thinkers create together

OpenIDEO is part ofIDEO, a design and innovation firm that uses a human-centered, collaborative approach to solving complex issues design thinking.

https://openideo.com/


The Human-Centered Design (HCD) Toolkit was designed to solve the world's most difficult problems

The Human-Centered Design (HCD) Toolkit was designed specifically for NGOs and social enterprises that work with impoverished communities in Africa, Asia, and Latin America.

http://www.ideo.com/by-ideo/human-centered-design-toolkit


Design Thinking booksTim Brown (2009): Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperCollins Publishers. Roger L. Martin (2009): The Design of Business: Why Design Thinking is the Next Competitive Advantage. Boston: Harvard Business School Publishing.Marc Stickdorn, Jakob Schneider (2012): This is Service Design Thinking: Basics Tools Cases. Amsterdam, BIS Publishers.

Thomas Lockwood (2009): Design Thinking: Integrating Innovation, Customer Experience, and Brand Value. New York: Allworth Press. Steven Johnson (2011): Where Good Ideas Come From: The Natural History of Innovation. London: Penguin Books.Tom Kelley, Jonathan Littman (2001): The Art of Innovation: Lessons in Creativity from IDEO, America's Leading Design Firm. New York: Doubleday.


Key TakeawaysDesign Thinking is a human centred and collaborative approach to problem solving that is creative, iterative and practical.Design Thinking combines business viability, people desirability, technology feasibility.Design Thinking is a balance of analytical and intuitive thinking.Design Thinking process includes 5 modes: empathize, define, ideate, prototype and test. Design Thinking process begins with the Empathize mode. Empathy is the centrepiece of a human centred design process.The Define mode of the design process is all about bringing clarity and focus to the design space.Ideate is the mode of the Design Thinking process in which you concentrate on idea generation.The Prototype mode is the iterative generation of artefacts intended to answer questions that get you closer to your solution.The Test mode is when your solicit feedback, about prototypes you have created, to have another opportunity to gain empathy.


THANK YOU

FOR YOUR ATTENTION


MARKET VALIDATION FOR ENSURING COMPANY SUCCESS

Module: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert date]



Creativity & Innovation / Entrepreneurial and market-oriented thinking and acting

Market validation LO:- be able to assess the market potential of entrepreneurial ideas - opportunity identification, opportunity development and opportunity exploitation. - learn what the product needs to be- to develop a product with unique, differentiating features that will compel customers to purchase.

Introduction to Innovation & Entrepreneurship IIntroduction to Innovation & Entrepreneurship IIEntrepreneurial thinking and behaviour The innovation processDesign thinkingCreativity approaches Analytical approaches towards idea generation (e.g. root cause analysis)Idea management and evaluationIdea Management (gate-stage model) and evaluation (ROI)Market validation Lean start-up approach Open innovation and opportunity exploitation strategiesBuilding an organisation-wide innovation program/corporate entrepreneurshipSocial entrepreneurship

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A major example of market validation failure is Iridium, a satellite-based phone system


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Iridium, a satellite-based phone system from the 1990sIdea: worldwide phone calls for business travellers$5 billion investment Problems: large and bulky handsets, bad quality calls due to the distance the signals had to travel, no use indoors, high systems costs and operating expenseshigh price and high operating expenses (8 $/min)Result: instead of the expected 2 million customers only 55.000 customers While Iridium tried valiantly to address these shortcomings while they were in the Fire, Fire, Fire step, ultimately the company was forced into bankruptcy by its creditors.

Other examples: New Coke or Ford Edsel

A major example of market validation failure is Iridium, a satellite-based phone system for worldwide callsAnnex


Iridium, a satellite-based phone system from the 1990sEnd of story: In 2001 the company was purchased out of bankruptcy for half a cent on the dollar of the original investment. The new company was able to analyze the market and realized that the real market demand was around a submarket of the original target market. Real demand existed in remote areas without any phone communications, in disaster and war zones where the existing phone infrastructure was not functioning, and at sea as emergency communications backup for ships and ocean-based oil rigs. This new target market was willing to pay the premium for the system over the cost of cell phones, because they had no other option. So, in the end, the company had demand, just not at the level the original investment demanded in order to make a profit.Biggest single customer (13% revenue share) is the military. Other customers are shipping companies, airlines, scientists and companies funding natural resources.

Another example: New CokeNew Coke provides another example of how analyzing broad market data can yield one set of conclusions that does not match what you can find when you go deep into understanding your market. Coke was smarting from the Pepsi wars of the mid-1980s. In those, Pepsi would do blind taste tests of affirmed Coke drinkers to see if they could tell Coke from Pepsi. Pepsi would typically win these tests by a small margin. Coca-Cola had an understandably strong reaction to this campaign, feeling that they were losing share to a new generation of Cola drinkers based on Pepsis sweeter taste, and their share numbers were starting to back up this view. Coca-Colas reaction was to reformulate its offering to a sweeter taste, what it saw as a key reason for its losing share to the younger Cola market that was actively forming its nascent brand preferences. The results were dismal. The company suffered a significant negative reaction to the newly formulated taste in the market. Despite an expensive and well-crafted rollout campaign, market share plunged almost immediately. The company was in turmoil and under heavy pressure to react. It ultimately did, brought its original formula back, and eventually regained market share against Pepsi.

Other examples: The Ford Edsel is a famous example from the late 1950s.The new features that were expressed in market research came out in a car that the consumer viewed as overpriced.

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At the end of this lecture you will be able to...

...define what market validation is...name an example of market validation failure...outline the importance of market validation...understand the objectives of market validation...know the process/steps of market validation...understand the underlying concept of the theory of planned behaviour...name market validation methods...discuss what to validate at which stage/ ...discuss which market validation methods are used for which purpose (at which stage of the process)


Table of Contents

Next lecture


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Market validation follows the idea of selling the product before you build it


market validation to reduce risk, shorten your time to market and secure paying customers as soon as you launch. (McCombs School of Business, n.d.)

Market validation is one of the most exciting and critical phases of business development. (Grow Wellington, n.d.)

Entweder definition plus quoteOder mehrere quotes die sich ergnzen oder widersprechenFrage an audience: what do you think?

Dont spend a year building your ark, and then hope the animals jump aboard. Instead, make sure the rain is falling hard and the animals want to buy tickets to your ark before you build it.

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You build it, will they come?The competitive advantage has shifted from having manufacturing capabilities to having market insights


Lewis, R., & Dart, M. (2010). The new rules of retail. (pp. 32-52)

Adams,R. (2010). If you build it will they come?: Three steps to test and validate any market opportunity. (pp. 4-5)

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The competitive advantage has shifted from having manufacturing capabilities to having market insights Changes in the market place:Wave I: demand > production power resided with the manufacturerWave II: demand had to be artificially createdFacilitated by technological advancement and mass production, abundance grew to overabundance, which provided consumers with unlimited selection. Wave III: hypercompetitive economy/oversaturated market/ final shift to total consumer power

Changes in competitive advantage:20th century: manufacturing capabilities, the ability to effectively design and subsequently manufacture products The global economy and the efficiency that it brings with it have made outsourcing an integral part of any effective companys strategy. If youve discovered a market need, you can outsource the design and manufacturing of the product or service to meet that market demand. No longer are design and manufacturing proprietary to large companies. 21st-century: insights into a market outsourcing as an integral partAnnex


Changes in the marketplace:Lewis, R., & Dart, M. (2010). The new rules of retail. (pp. 32-52).

Changes in competitive advantage:Adams,R. (2010). If you build it will they come?: Three steps to test and validate any market opportunity. (pp. 4-5).

Web 2.0 Example: The question is not can we build it, the question is should we build it.

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There is plenty of evidence that the customers do not necessarily come

More than 65 percent of new products fail. If we switch over to start-ups, the failure rate takes a huge leap to 90 percent. (Rob Adams, 2010)


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There is plenty of evidence that the customers do not necessarily come

Why do 90% of new businesses and 70% of new products fail? Companies focus on operational issuesEducated to manage, not createTendency to gravitate to data so it can be analyzedDevelopment is a process with an endpointEngineers work in the world of the tangibleNone of the above issues are critical to product sales Companies dont focus on marketsProducts fail because they dont sell85% of product failure can be traced to market related issues

Annualized investment in failed products: $260 billion in the United States alone - expand this worldwide and new product failures add up to trillions of dollars; dollars right down the drain.

Why do products fail?: They dont generate enough money/revenue

Why dont they generate enough revenue?: they dont sell well enough as there are not enough customers willing to pay for it. Customers feel theyre not compelling enough or not worth the value, given the price.

So, it is not about not finding investors as youll find investors if you have a compelling product. But you have to prove that customers want the products.

Annex


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Business failures can be avoided by validating the market before making major investmentsMarket validation facilitates to:learn about your customers and marketdetermine whether the market likes your product and whether the market is willing to pay for your productreduce risk, shorten your time to market and secure paying customers develop and refine your value propositiondifferentiate you substantially from other startups

Entrepreneurship involves recognizing, and being willing to accept the risk that the venture may fail. Market validation keeps this risk as low as possible.

Without a market there is no business.Without customers there is no market.


Sources: http://www.businessinsider.com/what-is-your-market-validation-plan-2011-5?IR=Thttp://seedcamp.com/resources/market-validation-is-your-route-to-success/https://www.theicehouse.co.nz/startup/market-validation/141

In order to assure that theyll come market validation is of major importance.Ensure product-market fitClassic market research causes you to target a wide range of features for broad markets. Market Validation gets you to a targeted market faster, with a narrower feature set, to get a strong hold in a portion of the broader market.to reflect must-have features demanded by the market versus nice-to-have features that matter but are not critical to your target markets usersisolate your emotions from the decision-making process.

Annex


Product-price-market/Timing/Product-market-competion

to reflect must-have features demanded by the market versus nice-to-have features that matter but are not critical to your target markets usersdevelop product specification and delivery documentationEvaluate the options for the Do you want it right, or do you want it Friday? trade-offsCustomers can have a full understanding of the product and evauate it upfront

The benefit of a known product with a known ship date is invaluable as the sales and marketing investment starts to be made.

Entrepreneurship involves recognizing, and being willing to accept, the risk that the venture may fail. For the entrepreneur, failure could mean a loss of the money he has put into the company, a loss of the time he has devoted to creating the business, as well as the personal disappointment that comes from business failure.

Asking for funding when you have customers and a revenue stream makes you a much more unique and interesting investment option to VCs

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Market validation means Ready, Aim, Fire instead of a Ready, Fire, Fire, Fire, Aim process

A fast triage of your idea to understand if more time and effort should be invested Time investment of 2 days

A deep dive into the target market to develop a product with unique, differentiable featuresTime investment of 60 days

The art of converting market data into product features and getting a product out the door quickly


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ReadyA fast triage of your idea to understand if more time and effort should be invested Time investment of 2 days

AimA deep dive into the target market to develop a product with unique, differentiable featuresTime investment of 60 days

FireThe art of converting market data into product features and getting a product out the door quickly

Market validation means Ready, Aim, Fire instead of a Ready, Fire, Fire, Fire, Aim process

Ready, Aim, Fire are the three steps to test and validate any market opportunity and cut your chance of failure.

Market Validation provides a systematic way to evaluate the market opportunity before the investments are made in designing, building, and launching the product or service. This ensures that you are developing the right set of features for a targeted audience.

A complete Market Validation process takes 60 days and has a budget of 5% of the expected cost of developing the product.

Annex


Ready Step : qualifying a market to see if theres enough potential to invest more time and effort



Ready step:2 days, quick-hitting, back-of-the-envelope process that really represents a market triageinitial evaluations of idea, market, competition, and of how others have evaluated the marketextensive use of secondary research about the market from standard industry publications and analyst reports from the major brokerage houses and major players in the overall market/ industry specific reports prepared by third party consulting firmsKeep in mind: The key to success is fast failures.

Domain knowledge: Where did you get your idea?Where does your idea come from? Where the knowledge originates from? (job experience, experience as a consumer, the law of large numbers)Demonstrate that you understand what it takes to make moneyExamples Consumer: margins are tight, marketing is expensive Medical: Large volumes of money do not mean success


Ready Identify a market: extensive use of secondary research about the market from standard industry publications and analyst reports from the major brokerage houses and major players in the overall market/ industry specific reports prepared by third party consulting firmsThe purpose of this stage is to quickly identify if there is sufficient cause in terms the available opportunity to undertake an in-depth analysis under Stage 2 AimTopics to Cover Domain Knowledge (->Demonstrate that you understand what it takes to make money)Market size and growth rate (market size, sub-markets, growth rates, why was the respected sub-market selected, outlook)Lifecycles and trends (CLC stage of market, key external trends impacting the market: Population, Expanding and contracting industry sectors, Technology adoption, Competition), primary business model used)Competitive analysis (identify and analyse competition, potential substitutes, economics involved in using the proposed product, effort involved in getting the customer to part with their money External data sources: estimated size of the market in terms of dollars, major trends and customers

DK Examples Consumer: margins are tight, marketing is expensive Medical: Large volumes of money do not mean success China: Big markets do not mean easy money Real Estate: Lots of diffuse transactions are hard to standardize

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Market size and growth rate: How Big is it and how Fast is it growing?What is the size of the overall market? Is it big enough for your ambitions?What are the submarkets? What are the sizes of the submarkets?What are the growth rates? Is the market growing?What to measure your growth rate against? What is the growth rate of the economy? What is the growth of your market relative to the economy?

Lifecycles and trends: How are these affecting your market? Where is your entry point?(Early Adopter, The Early Majority, Late Majority, Laggards)What is the lifecycle of your market? What are the trends affecting your market? (Population, Expanding and contracting industry sectors, Technology adoption, Competitive rivalry) What business model does your industry use? (Consumer, manufacturing, life sciences, technology, Services)Example: Baby Boomers

Annex


LC&T:Its much easier to sell your product to a new customer than to your competitors customer.The back-of-the-envelope method that savvy business people and investors use involves cutting the lifecycle normal distribution curve in half at the peak, and then assessing which half the target market resides inthe first half being the growth segment, and the latter half the decline segment. 147


Competitive analysis: What are they doing?Who are your competitors?Why are they successful?What do their customers think of them?Substitute analysis: What are substitutes for your product?Economic analysis: What are the economics of your product?How much competition is the customer keeping their money?

Examples What is the current substitute for a new car?What is the current substitute for a classic 4 year undergraduate degree?

Annex


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Outside data sources: Secondary Market Research: What do experts say? Is your market established enough to have analyst firms? What other sources of data can give your market data credibility? What analyst firms follow your market? What are the names of the analysts? How big do they say the market is? What do they say the trends are? How do you get your hand on their reports? Examples Why you need someone else to make your points for you

Examples : e.g. Statistical abstract of the United States and Internet sources (Marketresearch.com -Firstresearch.com - Finance.Yahoo.com)

Annex


Workshop questions to answer Domain knowledge What is the source of the domain knowledge for your product or service? Market size and growth rate How big is the market and how fast is it growing? Lifecycles and trends What are the affects of current lifecycles and trends? Competitive analysis Who are your competitors? What are your substitutes? Outside data sources What are your sources of information?

Generalized searches: e.g. Size of bicycle industry, iPod accessory market, Analysts covering Time Warner, Airline industry statistics, Size of the beverage industry, Jdpowersmarketresearch

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Aim Step: Designing a robust offering


Aim Step: Designing a robust offering

Primary market research: Learning what you really need to know & Getting to the market painFace-to face interviews, Phone Surveys, (Internet Surveys), focus group for finalizing stage (expensive)The starting interviews for broadly assessing the market, the mid-point interviews for analysing the gap and narrowing your concept, the finishing interviews to finalizing and testing conceptsSelecting who to interview: Finding your target audienceWho to interview, Sourcing names, Magazines and list brokers, trade groups, trade shows, social media, commercial databasesInterviewing, interpreting the data and analysing the resultsTurning data into results (how to practically apply all that youve learnedOutside helpUsing outside firms/research professionalsPreparing the market for your productGetting the market ready for your product

Annex


Aim: primary market researchEmploy market research firm to develop the methodology, questions and data analysisDescription of the type of data to be collected. At this stage, you are looking to collect data on the following: Market segments in your overall market and their relative sizes in terms of number of customers, Addressable market (e.g. due to resources available), An identification of light, medium and heavy users in the addressable segment and their estimated spendings, ...A discussion of the types surveys that will be used to conduct this research: Qualitative (Executive interviews or focus groups) or Quantitative (formal questionnaires, conducted in-person or electronically)- Types of questions: open ended / closed endedTopics to Cover:Primary market research Selecting who to interview Conducting the interviews, interpreting the data and analysis of results Use of outside firms Preparing the market for your product Developing an interview methodology: Initial Interviews, Mid-stage interviews, Late stage interviews Selecting interview subjectsInterviewing, Interpreting and Analyzing ResultPreparing the MarketCustomer Use and Success StoriesPress and Industry Analysis

Primary market research What kind of data were after Types of surveys Types of questions Developing and conducting interviews Initial interviews Mid-stage interviews Late-stage interviews Who to interview Sourcing names

Who to interview Sources Commercialdatabases Tradeorganizations Specializedmagazines

Doing the math on the available listings Howmanynamestogetoneinterview? Howlongbeforeyourunoutofnames?

Similarity to the sales process Whichsourcesofnamesproducethebestresults?

Interviewing, interpreting the data and analyzing the results Conducting the interviews Analyzing the data Interpreting the data Using the data to target your market Using the data to design your product

Using outside firmsMultifaceted process Assembling questionnaires Conducting interviews Crunching data Analyzing data

Objectivity You cant outsource the whole process

Getting the market ready for your product Similarity to the sales process Target market Suspects Prospects Closing

Customer use and success stories Case studies References Credibility

Press, industry analysts and pundits included Up to speed on your product Know the approach youve taken in evaluating the market

Examples Internetsources Allconferences.com Tradeevents.com Hoovers.com Freetrademagazines.com Surveymonkey.com

Generalizedsearches Tradeevents Marketinglists

Workshop questions to answer Who to interview What will be your sources for names to interview Interviewing, interpreting the data and analyzing the results Build an interview guide Using outside firms Will you do this work internally or use outside resources What will you do internally versus externally

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Fire Step: Transitioning from gathering information to translating it into usable deliverables


A rule of thumb to use is to allocate an equal amount of funding for the fully loaded cost of development and for the cost of sales and marketing. This assumes you will be spending aggressively to launch your product once it is available. It also leaves enough budget to assure a sustained sales and marketing effort over the first year.152


How to get a market oriented product out quicklyTightly targeted, narrow marketsMinimally acceptable feature setsFast product iterations Why quality doesnt always matter Written product specifications and schedulesMarket Validation team of engineering and marketing talent Written product specifications and written schedulesKilling features early in the development processDesign Partner ProgramsDrawn from target marketProduct usage and design10-20% of your primary research baseComplete understanding of usability usage, and support issues Early sales pipeline Case studies for launch efforts

Annex


Fire (asap to take advantage if the identified opportunity)QuickRelease WrittenSpecifications Design Partner ProgramsAdvisoryBoardProgramsLaunch

Sales and Marketing: Budget for itThe details: write product specs and schedulesFast to market: Get a market-oriented product out quicklyEarly customers: Recruit design partners and advisory boardShowtime: Launch, market and sell the product

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Advisory Board Programs Drawn from target market and analysts Executives in your buying chain: Economic buyer, user buyer, installer, supporter, budget owner, etc. Sales pipeline Case studies for launch efforts Launch Large amount of supporting content: Ready step data - Aim step data - Early users, analysts and executive Fact based approach to product development should be emphasized Budget is a critical universal benchmark for success.Sustained sales and marketing efforts Budget for first year sales and marketing needs to equal the budget for development No excuses; this is the only way to assure the market is made aware of what youre offering

Annex


We will continue with market validation in the next lecture!

Next lecture


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THANK YOU

FOR QUESTIONS OR RECOMMENDATIONS PLEASE CONTACTThorsten Kliewe, Project [email protected]+49 (0) 251 83-65594FOR YOUR ATTENTION


Ease-of-Use: Degree to which a person has a favorable or unfavorable evaluation of the behavior of interest

The theory of planned behaviour explains customers decision making process/purchasing behaviour

Peer Influence: Our belief about what valued others expect us to do

Self-efficacy and Controllability: A persons perceptions of their ability to perform a given behaviour

Intention: Internal decleration to act. Behaviour: The actual observable thing you do.


Without a market there is no business.Without customers there is no market.How to validate that customers will purchase the product?

Lange,P.A., Kruglanski,A.W., & Higgins,E.T. (2011). Handbook of Theories of Social Psychology: Volume One. London: SAGE Publications.

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The TPB has been used to understand and address many societal problems, such as:Premarital sex without condomsObesityAlcohol abuse Cigarette abuse

Discussion question: How? Name examples.

Theory of Planned Behaviour (TPB) (by Icek Ajzen, a Professor of Psychology) is the notion of behavioural intention. It is a theory that links beliefs and behaviour. It is an extension of the Theory of Reasoned Action (TRA), which only refers to the persons attitude ad subjective norms.It is based on the premise that the best predictor of an actual behaviour is the behaviour a person actually intends to do.Favourable attitudes/favourable subjective norms/greater perceived behavioural control toward specific act strengthen the intention to perform the behaviour. Annex



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Attitude toward the behaviour: Certain attitudes are present before and while behaviours are performed. An attitude is basically an evaluative judgement about a stimulus object.Expectany and valueSubjective Norm: How important people in the subjects life would view the behaviourNormative beliefs and motivationPBC: It refers to the peoples perceptions of their ability to perform a given behaviour. Self Efficacy (the difficulty of performing the action) and Controllability (the belief that one has control over the behaviour)Resources and opportunity

Subjective norms:Perceived behavioural control: Directly related to behavioural intentions and the actual behaviour

Annex


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???ExampleNewspaper


Evaluate the intentions to buy a daily newspaper from your grandparent generation perspective and from your genrations perpective

Evaluate the intentions to join social media platforms such as twitter or facebook.

Evaluate the intentions of preparing for an upcoming exam.

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I buy it because I want to I buy it because my friends do soI buy it because I can ExampleNewspaper

Annex


Without a market there is no business.Without customers there is no market.How to validate that customers will purchase the product?

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Market validation can be processed by many different methods

Living labLead user methodSell to EarlyvangelistsPrototyping and experimentationEmpathy mapShadow/Observe customers at work or day-to-day activitiesTalk to the customerSurveyData from external sourcesFind partners and profit from their experiences


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Living lab: user-centric approachend-users are important informants in the testsA Living Lab is a gathering of public, private partnerships in which businesses, authorities and citizens work together with the creation, validation, and test of new services, business ideas, markets and technologies in real-life-contexts. According to Ballon et al., (2005), a standardized laboratory environment used for testing new technologies, products and services and protected from the hazards of testing in a live or production environment (p2). This definition implies that the environment, in which the tests are performed, is a closed and controlled environment. Ballon et al. (2005), continue by giving a definition of Living Labs as follows: An experimentation environment in which technology is given shape in real life contexts and in which (end) users are considered co-producers. (p3).

Annex


http://www.lltoolbox.eu/methods-and-tools/methodologies/living-labs163


Lead user methodThe methodology is based upon the idea that breakthrough products may be developed by identifying leading trends in the to-be-developed products associated marketplace(s). Once the trend or broader problem to be solved has been identified, the developers seek out Lead Users- people or organizations that are attempting to solve a particularly extreme or demanding version of the stated problem.

EarlyvangelistsEarlyvangelist is a term that is become more and more popular among the start-up community and was first used in a book written by Steve Blank called The Four Steps to the Epiphany. The term refers to the customers who commit to buying a company's product before there is a full product available and spread the news of the product to friends, family, or co workers.Annex


Sources:http://evhippel.mit.edu/teaching/ (Lead user handbook)https://www.youtube.com/watch?v=kbQ5mAEE1lkBlank, Steve (2013). The Four Steps To The Epiphany. Pescadero, California: K&S Ranch. ISBN978-0989200509.

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Prototyping and experimentationPrototyping is an approach to developing, testing, and improving ideas at an early stage before large-scale resources are committed to implementation. It is a way of project and team working which allows you to experiment, evaluate, learn, refine and adapt. Ensuring that ideas are fully explored before any conclusions are drawn.

Empathy mapGood design is grounded in a deep understanding of the person for whom you are designing. Designers have many techniques for developing this sort of empathy. An Empathy Map is one tool to help you synthesize your observations and draw out unexpected insights. By answering the following question you can identify needs and insights that help at designing the product:What are some quotes and defining words your user said?What actions and behaviours did you notice?What might your user be thinking? What does this tell you about his or her beliefs? What emotions might your subject be feeling?


Annex


Sources:http://www.nesta.org.uk/sites/default/files/prototyping_framework.pdfhttps://dschool.stanford.edu/wp-content/themes/dschool/method-cards/empathy-map.pdf165


Shadow/Observe customers at work or day-to-day activities

Talk to the customerYour customers can provide insights about how theyre using your product or service and why they would buy it (two key factors to on going success).

Survey (Primary research) Both quantitative and qualitative surveying helps to define customers desires. R. Adams suggests to interview 100 potential consumers to understand the market pain. 100 is not a theory backed up sample size but it should provide you with valuable insights without spending a fortune on surveying.

Data from external sources

Find partners and profit from their experiences/insights into the business

Annex


You should listen to your customers. No, you shouldnt, because if I asked my customers what they wanted, they would have said: faster horses (Henry Ford).166

Group work: When would you apply which kind of market validation method?

Living labLead user methodSell to EarlyvangelistsPrototyping and experimentationEmpathy mapObserve customers Talk to the customerSurveyData from external sourcesFind partners

ReadyAimFire


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Group work: When would you apply which kind of market validation method?

Living labEmpathy mapPrototyping and experimentationSell to EarlyvangelistsLead user methodExternal sourcesSurveyTalk to the customerObserve customers Find partners Annex


Here multiple soultions can apply.

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?Discussion question: How could Iridiums failure have been avoided by market validation?


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Market Validation in order to probe, test, and validate your market opportunitybefore you invest all that money in product development.

e.g. by a survey:target market: international business travellers purpose: better understand their usage patterns, how they currently handled international phone calls for business and what they were willing to pay for Iridiumsampling of the survey questions: How many days a year do you travel internationally? When you travel internationally, how to you handle phone communications? How much do you spend annually on international phone communications? Would you find it valuable to have one phone number at which to be reached when travelling internationally? Would you be willing to pay a premium for one international phone number? If yes, how much would that premium be?

AnnexDiscussion question: How could Iridiums failure have been avoided by market validation?


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Platforms such as kickstarter or selfstarter help to sell it before you build it Kickstarter is the world's largest funding platform for creative projects. As a start-up you have no idea if people will buy your product. You may spend countless months researching your customers. You may even get dozens of customers to say Yes, I would buy that if you made it. But until you ask them to put real money down you have no idea if it will sell. And without paying customers you dont have a business.It is a way to verify the market need, prove to investors this new product would sell, and ultimately generate cash to buy the product from our supplier.


http://marcbarros.com/should-you-sell-your-product-before-you-make-it/

Selfstarter is an open source starting point for building your own ad-hoc crowdfunding site. It was put together by Lockitron after they were turned down from Kickstarter. http://www.selfstarter.us

A few reasons you should:You want lots of customer feedback during the development process.You need to validate that people will buy your product, which can decrease your burn rate and increase your company valuation. Oftentimes investors, retailers, and even suppliers wont believe you until they see real sales.You want to know the customer demand before you spend money building it. Production costs are not cheap and spending money making the wrong product can kill you. Additionally you will learn what your early customers love, hate, and want in your product.You want to build community around your product. Having people cheering you on gives you a running start into the market. The large players will eventually copy you so the strength of your customer community matters. Assuming you have limited marketing dollars when you launch, you need every advantage you can get in reaching customer mind share.You believe in an open culture, customer relationship, and development process. If you want to build a totally open company there is no more open you can be, than allowing the world to watch as you create your product.171

By designing MVPs and using platforms like kickstarter you can literally sell it before you build it


https://www.youtube.com/watch?v=UvCri1tqIxQ

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?Discussion question: When rather not to use platforms such as kickstarter?


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Discussion question: When rather not to use platforms such as kickstarter?A few reasons why or when you shouldnt use kickstarter:You dont want to be open. If you want to keep new product ideas away from your competitors or large companies who can either copy you quickly or create a lot of distracting noise. You have an existing product in the market and the news about a next version has the risk to tank sales of your existing model.You just raised a significant round of capital and already set big expectations for your yet-to-be-released product. Every investor is different, but negative momentum before you ship can be a big problem, especially if your revenue plan and burn rate will be significantly different.If you dont understand what it really takes to make the product youre showing. If you dont deeply understand the open items and you dont have a supplier on board who you have validated can make this product, you could promote a product that cant actually be made.Annex


http://marcbarros.com/should-you-sell-your-product-before-you-make-it/174

Market Validation will significantly increase the likelihood your product will succeed in the market.


http://www.gov.mb.ca/jec/busdev/financial/csb/market_val.pdf

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LiteratureLewis, R., & Dart, M. (2010). The new rules of retail: Competing in the world's toughest marketplace. New York, NY: Palgrave Macmillan.


Adams,R. (2010). If you build it will they come?: Three steps to test and validate any market opportunity. Hoboken, NJ: Wiley.

Adams,R. (2002). A good hard kick in the ass: Basic training for entrepreneurs. New York: Crown Business.


THANK YOU

FOR YOUR ATTENTION


MARKET VALIDATION FOR ENSURING COMPANY SUCCESS

Module: Innovation & EntrepreneurshipLecturer: [Insert name]Date: [Insert date]



Creativity & Innovation / Entrepreneurial and market-oriented thinking and acting

Market validation LO:- be able to assess the market potential of entrepreneurial ideas - opportunity identification, opportunity development and opportunity exploitation. - learn what the product needs to be- to develop a product with unique, differentiating features that will compel customers to purchase.

Introduction to Innovation & Entrepreneurship IIntroduction to Innovation & Entrepreneurship IIEntrepreneurial thinking and behaviour The innovation processDesign thinkingCreativity approaches Analytical approaches towards idea generation (e.g. root cause analysis)Idea management and evaluationIdea Management (gate-stage model) and ev