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14 Tips for Entrepreneurs for Starting the Right Stuff

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Doing the Right Thing is the essence of entrepreneurship Universität St. Gallen, START 2016 Patrick Stähler, fluidminds – the business innovator


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However, what is the Right Thing?


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Have you found the Right Thing? Why should your business exist?


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What do the colors mean? Beyond optimization of the past We have to unlearn the past and rethink our business from the customer perspective. 3 Is Kodak innovative? What were the tacit assumptions behind Kodak’s innovations? Take 5 min and discuss it with your neighbors. Take-aways are in red Exercises and questions for you


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§  Dr. Patrick Stähler, Mr. Business Model Innovation §  Founder & Partner von fluidminds GmbH, the business innovator, Zürich & Sydney §  fluidminds invents and designs businesses §  Example: Experteer.com (career portal) was founded with the help of fluidminds §  »Inventor by chance« of the business model innovation concept during my Ph.D. at the University of St. Gallen. §  Blogger on Blog.businessmodel-innovation, keynote speaker worldwide.


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


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


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


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Sorry. There is no easy recipe. Good entrepreneurs but the customer in the middle of their thoughts and the value they create for customers.. Give Meaning to customer is the core to any good business


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The reality: Nobody is waiting for you! We have too much of everything. We have too much choice! We get bombarded by ads and PR!


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500,000,000 182,500,000,000 How do you get heard in this noise of information? Tweets per day Tweets per year


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


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We have too much of everything. Be relevant for your customers, also in the long run! 1


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The company invented the digital camera in 1973 …


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


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…invented an app so you can seamlessly print your pictures…


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


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


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


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


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


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


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From keeping to sharing memories – Digital solves new jobs for customers


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


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


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A good product is not enough Bringing innovation to the market is not enough. Finding a business model your customers love is the real challenge 2


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How many colors does a rainbow have?


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A rainbow has e ternal colors, but we r educe complexity and draw a rainbow with 5 or 6 colors


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Depending from what background you have, you interpret th e same information dif ferently


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You can’t read it? Look from fa r away. See it now?


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


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There is no reality in human systems We see the world through our eyes and interpret reality 3


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What was one of the most successful aid programs for the developing world?* *Actually, it has nothing to do with governmental aid or NGOs.


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Which innovation expanded the global market for mobile communication the most?* * After the invention of the mobile telephone system itself.


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Which innovatio n made this possible? Dr. Patrick Stähler |


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A small c ha opened n nge in billing ew mark ets in Africa, A sia Youths, e , Latin America , tc.. Prepaid


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There are so many more starting points for startups than just innovative products 4


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Would yo u have dared t o say this? „Wow, I have invented the future of advertising. We do not need any videos or pictures or even color anymore. The future will be a text ad with maximal 95 characters. It‘s brilliant, isn‘t it?


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§  Instead of looking at better products, Google Adwords brought back relevance to the ad industry §  Google is blamed to be the killer of newspapers §  Sales around 43 bn. USD


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Dr. Patrick Stähler |


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1 device


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Really good ideas defy the accepted rules of an industry. Rethink from the customer perspective the business 5


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Innovation is all about being different


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


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


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


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6 Being just a bit better is not enough. You must have a clear and noticable uniqueness and magic. That’s your WOW!


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


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Do we need trucks and truck drivers?


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


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Do we need accountants?


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


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Do we need taxis?


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


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Do we need hotels?


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Do we just need a bed like at Formule 1?


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


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


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Value Proposition The job-to-get-done is solution neutral. The job is to provide accommodation plus extra benefits like connecting to people. Potential solution: §  3* hotel §  Formule 1 Hotel §  AirBnB (accommodation plus connection to people) §  friend that lives in the city It is of uttermost importance to understand the core job we solve for our customers


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Start dreaming from badly solved jobs-to-be done of your customers. Use technology. Innovate your business model 7


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Do you know this man? Hans Rausing = Inventor of the Tetra Pack Systems Dr. Patrick Stähler | 68


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He could have sold his packaging machines,  but…


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But he sold packaged services Tetra Pack is not a product innovation but an implementation of a n innovative business mod el


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Technology or a new produt does not create value. It is the business model X product/technology value creates enables business model defines business strategy


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Beyond product innovation Your business model is decisive for value creation, not new technology 8


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The business model A


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The business model is the DNA of your business Are you aware of your DNA?


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The business model gives meaning to your employees and customers


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4 elements of a successful business: PATRICK PATRICK STÄHLER PATRICK STÄHLER STÄHLER PATRICK STÄHLER DAS RICHTIGE DAS RICHTIGE DAS RICHTIGE DAS RICHTIGE GRÜNDEN GRÜNDEN GRÜNDEN GRÜNDEN What excites our customers? How do we create value for our customers? How do we earn money? Who is on our team? What values do we pursue? Werkzeugkasten für Unternehmer Werkzeugkasten für Unternehmer Werkzeugkasten für Unternehmer Werkzeugkasten für Unternehmer Value Proposition Value Architecture Revenue Model Team & Values


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„ What industry are we in? Who are our competitors? “


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„ In which industry are we in? “


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„That was the job the customer wanted to do. “ Dr. Patrick Stähler |


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The customer perspective: A product does not create value. It is the value proposition the customer loves product/services X happy customers solves creates job-to-be-done business model addressed by delivered by value proposition


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DAS RICHTIGE GRÜNDEN What excites our customer? Werkzeugkasten für Unternehmer Value Proposition Customer •  Who is our customer? •  What job do we solve for them? Value •  What value do we create for our customers? What value do we create for our partners?


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


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


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S RICHTIGE RÜNDEN How do we create the value? Value architecture Offer •  What is our offer? Distribution & Communication Channels •  How do we reach our customers? •  How do we communicate with our customers? Core Capabilities •  What are the core capabilities we need? Partner •  What partners do we need? ugkasten für Unternehmer Value Chain •  What activities do we have to do to produce our offer? •  How does our value chain look like?


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


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ICHTIGE ÜNDEN How do we earn money? en für Unternehmer Revenue Model Cost Structure •  Cost structure is defined by your value architecture. Revenue Sources •  With what do we earn money?


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


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HTIGE EN Who is on our team? What values do we live? Team & Values nternehmer Team •  Who is in our team? •  What competencies do we have in our team? Values •  What values do we life in our team? •  How do we interact with each other and with customers?


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Questions for a Successful Business Model Value Architecture PATRICK STÄHLER Value Proposition DAS RICHTIGE PATRICK STÄHLER GRÜNDEN AS RICHTIGEUnternehmer Werkzeugkasten für GRÜNDEN Offer What is our offer? Distribution & Communication Channels How do we reach our customers? How do we communicate with our customers? Value Chain What are our value creating steps? What is our value chain? Core Capabilities What are the core capabilities we need? Customer Benefit What benefit do we create for our customers? What benefit do we create for our partners? Partner Which partners do we need? kzeugkasten für Unternehmer Revenue Model Cost Structure Cost structure is defined by the value architecture. Customers Who are our customers? What job do we solve for our customers? 3 Revenue Sources With what do we earn money? Team & Values Team Who is on our team? What competencies do we have on the team? Values What values do we pursue? How do we interact with each other and the customers?


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Questions for a Successful Business Model Value Architecture PATRICK STÄHLER Value Proposition DAS RICHTIGE PATRICK STÄHLER GRÜNDEN AS RICHTIGEUnternehmer Werkzeugkasten für GRÜNDEN Offer What is our offer? Distribution & Communication Channels How do we reach our customers? How do we communicate with our customers? Value Chain What are our value creating steps? What is our value chain? Core Capabilities What are the core capabilities we need? Customer Benefit What benefit do we create for our customers? What benefit do we create for our partners? Partner Which partners do we need? kzeugkasten für Unternehmer Revenue Model Cost Structure Cost structure is defined by the value architecture. Customers Who are our customers? What job do we solve for our customers? 3 Revenue Sources With what do we earn money? Team & Values Team Who is on our team? What competencies do we have on the team? Values What values do we pursue? How do we interact with each other and the customers?


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Geberit – a product innovator or is there more? From plumber supply to under-the-wall systems for baths


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


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Business Model: Why Value Architecture Offer homeowners love Geberit? PATRICK &STÄHLER Distribution Communication Channels Value Proposition Customers •  Homeowners Job-to-be done: •  Get my bathroom renovated very well (design & quality) with as little hassle as possible DAS RICHTIGE PATRICK STÄHLER GRÜNDEN DAS RICHTIGE Unternehmer Werkzeugkasten für GRÜNDEN •  Plumbers are the sales channel •  Architects are used for direct communication with homeowner Value Chain Customer Benefit Core Capabilities •  Faster and more convenient renovation of baths •  Actually, it needs a lot of initiative not to get Geberit (Plumbers offer only Geberit) Partner •  Deep understanding how baths •  Architects are renovated & used •  Plumbers •  Understanding how homeowners decide to procure sanitary 3 equipment Revenue Model erkzeugkasten für Unternehmer Cost Structure •  Installation systems are more expensive than pure toilette tanks Revenue Sources •  Willingness of homeowners to pay more is higher due to the benefits speed & design Team & Values Team •  Plumbers, Engineers, Marketeers •  Diverse team Values •  high quality •  long lasting products •  looking for better solution. Always!


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Business Model: Value Architecture Offer Why plumbers love Geberit? PATRICK &STÄHLER Distribution Communication •  Planning tools (CAD, product Channels •  Plumbers are reached with handbook) direct sales, classical •  integrated logistics •  trainings, material, certificatesmarketing Value Chain •  via training Value Proposition Customers •  Plumbers Job-to-be done: •  Have little hassle as possible with a customer job and still earn a high margin DAS RICHTIGE PATRICK STÄHLER GRÜNDEN DAS RICHTIGE Unternehmer Werkzeugkasten für GRÜNDEN Customer Benefit Core Capabilities •  Deep understanding how plumbers work and think about their business •  Training know-how •  Partner & eco system mgm’t Partner •  trade schools (Handwerkerkammern) 3 Revenue Model erkzeugkasten für Unternehmer Cost Structure •  All these tools for plumbers cost money •  Easy to plan, order, prefabricate and install all components •  All components from one supplier •  Satisfied homeowners that pay a higher price •  New products for upselling Revenue Sources •  Geberit earns money via end customers •  Some income for trainings Team & Values Team •  Plumbers, Engineers, Marketeers •  Diverse team Values •  long-term thinking, willingness to invest long-term in relationship with plumbers •  innovative solutions


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


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The design process B


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1 2 3 Customer Insight Understand Ideate -  -  Develop as many ideas as possible in the area of -  customers/ value proposition -  value architecture -  revenue model -  -  -  Observe your customers What job is not yet or badly solved? How does the Customer Experience Cycle look like? On what customer insights is your idea based? validate customer insight 4 -  -  understand the current solutions and their strength & weakness understand how the potential customer thinks and decides understand the market & market mechanism 5 6 Design Decide & Prototype Build & Learn -  -  -  -  -  -  -  -  decide for three or four options design the business models for the options check the interdependencies in the business models work on the uniqueness (positioning) optimize the building blocks -  -  -  -  decide for the best model to go for build prototype test prototype with customers write business case decide again or work on different option -  execute business model learn continuously from customer feedback and control KPIs adjust and refine continuously the business model


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Designing is a process of opening your mind and focusing at the end Point of View 1 2 Customer Insight 4 3 Understand Ideate 5 Design 6 Decide & Prototype Build & Learn


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Tools for Entrepreneurial Design Business Model Canvas Business Model: Value Architecture Offer Design Thinking Process 1 Use the canvas to develop your business Distribution & Communication model Channels 2 Customer Insight Value Proposition -  Customers -  -  Value Chain -  3 Ideate Understand Observe your customers What job is not yet or badly solved? How does the Customer Experience Cycle look like? On what customer insights is your idea based? validate customer insight -  -  -  Develop as many ideas as possible in the area of -  customers/ value proposition -  value architecture -  revenue model understand the current solutions and their strength & weakness understand how the potential customer thinks and decides understand the market & market mechanism Customer Benefit Core Capabilities Partner 4 5 6 Design Decide & Prototype -  -  -  -  Revenue Model Cost Structure Revenue Sources -  -  -  Team & Values Team decide for three or four options design the business models for the options check the interdependencies in the business models work on the uniqueness (positioning) optimize the building blocks -  -  -  decide for the best model to go for build prototype test prototype with customers write business case decide again or work on different option Build & Learn -  -  -  execute business model learn continuously from customer feedback and control KPIs adjust and refine continuously the business model Values Multidisciplinary Teams The right culture & values


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1 Customer Insight -  Observe your customers What job is not yet or badly solved? -  How does the Customer Experience Cycle look like? -  On what customer insights is your idea based? -  validate customer insight


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Where do we get a Value Innovation from? Let‘s find new customer insights as a starting point Customers’ insight New value proposition Business model innovation


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


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Customer Insights Do you want fast delivery of the goods you order online? Is asking customers the right approach?


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


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Value Proposition Werkzeu Customers Who are our customers? What job do we solve for our customers? The best way is to start with the job we solve for our customers?


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Don’t ask your customers. Observe their jobs-to-be-done 9


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


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


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


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How can we find systematically new customer insights? Customer Experience Map Buy Delivery/ Assembly Usage §  Understand how the customers are buying, using and disposing the product §  Complements Service Disposal Understand the whole lifecycle of customers‘ utility §  How can we improve the buyer‘s utility cycle? §  Can we do more for the customer? §  Can we leave something to the customer? Source: cp. Kim, W.C., Mauborgne, R., Knowing a Winning Business Idea when you see one, HBR Sep-Oct. 2000


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


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Where can I start in the buyer utility map? –  The Dyson Vacuum Cleaner Starting Points Buy Delivery Use lue Dyson = va innovation Complements Service Customer Productivity Simplicity Usability Risk Image & fun Enviromental friendlyness ++ Disposal


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Dyson vacuum cleaner – inspired by technology The vacuum cleaner for men Dyson = ation Value Innov Customer Insights §  Bags and filters get clogged and restrict airflow. Loss of suction §  Vacuum cleaners are marketed as household aids. Are there different segments? Value Proposition for customers §  Dyson vacuum cleaners have NO bags and do NOT get clogged due Cyclone technology. Therefore, NO loss of suction. §  Dyson positions itself as technical, highly engineered products that address men. Revenue Model §  Dyson demands premium prices for its vacuum cleaners.


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


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Blacksocks – we save the world from socks problems Starting Points Customer Productivity Simplicity Usability Risk Image & fun Enviromental friendlyness Buy Delivery Use Washing Putting in pairs Disposal


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Blacksocks – We solve the world from its socks problems Socks subscription (2001-2008) 40'000 40'000 20% market share in Switzerland* 25'000 20'000 10'000 Revenue Model §  Upfront payment §  Easy planning and negative working capital 12'000 0 2001 2002 Customer Insights §  Buying socks is no fun §  Putting socks in pairs even less fun §  Good socks are a sign of „Being well dressed“ Value Proposition §  Blacksocks subscription solves all problems §  Always enough new socks §  No pairing needed since all socks are identical 30'000 10'000 = Blacksocks l ode revenue m innovation 2005 2008 * premium segment starting at 9CHF


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


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


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


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Easy to book, transparent pricing: AirBnB


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


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Business Model: Value Architecture Value Architecture Offer Offer Why do customers like airbnB? PATRICK &STÄHLER Distribution Communication Distribution & Communication Channels Value Proposition Value Proposition Customers Customers •  Customer (Travelers) Households that offer •  • Customer (C) looking BnB Job-to-be-done Job-to-be-done to for special place •  Finding a special place to Earning money • stay •  stay the world at home Have •  Private households • (PH) who to know the Getting offer BnB hidden gems of destination DAS RICHTIGE PATRICK STÄHLER GRÜNDEN DAS RICHTIGE Unternehmer Werkzeugkasten für GRÜNDEN •  Website, App to connect B&Bs with customers Value Chain Value Chain Build up BnB offer Help find right spot •  word-of-mouth •  sales crew for BnB owners Match needs & offer Core Capabilities Core Capabilities •  Acquisition of BnB places •  Quality & Trust Mgmt •  Know-how of locations Reputation Payment & GTC & Trust Mgmt Partner Partner •  n./a. Customer Benefit •  PH: Income and international •  Offer very rent Refinancing • contacts for special places that BnB owners •  cannot booked by platform Trust provided anywhere else •  C: places to stay that are •  Connect with locals that share Risk of damage • outside the norm is insured •  their insights Connecting with people from •  Contacts with locals abroad 3 Revenue Model Revenue Model erkzeugkasten für Unternehmer Cost Structure Cost Structure •  running site & acquisition costs of BnBs (PH) •  asset light Revenue Sources Revenue Sources •  Customers pay BnB owner •  Takes services fees from the rent the households get (app. 15%) Team & Values Team & Values Team Team Values Values •  n/a Travel like a human


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Business Model: Value Architecture Offer Asset light business model PATRICK &STÄHLER Distribution Communication Channels Value Proposition Customers •  Customer (C) looking for special place to stay •  Private households (PH) who offer BnB DAS RICHTIGE PATRICK STÄHLER GRÜNDEN DAS RICHTIGE Unternehmer Werkzeugkasten für GRÜNDEN •  Website, App to connect B&Bs with customers Value Chain Build up BnB offer Help find right spot •  word-of-mouth •  sales crew for BnB owners Match needs & offer Core Capabilities •  Acquisition of BnB places •  Quality & Trust Mgmt •  Know-how of locations Reputation Payment & GTC Customer Benefit & Trust Mgmt •  C: places to stay that are outside the norm •  Contacts with locals •  PH: Income and international contacts for BnB owners Partner •  n./a. 3 Revenue Model erkzeugkasten für Unternehmer Cost Structure •  running site & acquisition costs of BnBs (PH) •  asset light Revenue Sources •  Customers pay BnB owner •  Takes services fees from the rent the households get (app. 15%) Team & Values Team •  n/a Values You do not need to own a place to provide awesome locations


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2 Understand -  understand the current solutions and their strength & weakness -  understand how the potential customer thinks and decides -  understand the market & market mechanism


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Your point-of-view why you must exist: ............................................... ............................................... ............................................... ............................................... ...............................................


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You must have a clear point of view why your business should exist 10


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3 Ideate Develop as many ideas as possible in the area of -  customers/ value proposition -  value architecture -  revenue model


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


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4 Design -  decide for three or four options -  design the business models for the options -  check the interdependencies in the business models -  work on the uniqueness (positioning) -  optimize the building blocks Business Model: Value Architecture Offer Use the canvas to develop your business Distribution & Communication model Channels Value Proposition Customers Value Chain Customer Benefit Core Capabilities Partner Revenue Model Cost Structure Revenue Sources Team & Values Team Values


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5 Decide & Prototype -  decide for the best model to go for -  build prototype -  test prototype with customers -  write business case -  decide again or work on different option


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Fast learning what works with rapid prototyping of your minimal viable business model is the key to success 12


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6 Build & Learn -  execute business model -  learn continuously from customer feedback and control KPIs -  adjust and refine continuously the business model


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Always question your core assumption and adapt to real life. Prototype fast. Learn fast 13


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1 2 3 Customer Insight Understand Ideate -  -  Develop as many ideas as possible in the area of -  customers/ value proposition -  value architecture -  revenue model -  -  -  Observe your customers What job is not yet or badly solved? How does the Customer Experience Cycle look like? On what customer insights is your idea based? validate customer insight 4 -  -  understand the current solutions and their strength & weakness understand how the potential customer thinks and decides understand the market & market mechanism 5 6 Design Decide & Prototype Build & Learn -  -  -  -  -  -  -  -  decide for three or four options design the business models for the options check the interdependencies in the business models work on the uniqueness (positioning) optimize the building blocks -  -  -  -  decide for the best model to go for build prototype test prototype with customers write business case decide again or work on different option -  execute business model learn continuously from customer feedback and control KPIs adjust and refine continuously the business model


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1 2 3 Customer Insight Understand -  -  -  -  -  Observe your customers What job is not yet or badly solved? How does the Customer Experience Cycle look like? On what customer insights is your idea based? validate customer insight 4 -  -  understand the current solutions and their strength & weakness understand how the potential customer thinks and decides understand the market & market mechanism 5 E startu i s a as iteratias manypideas n Develop v e possible in proce s fast learthe areasof with -  customers/ value nin many pivo gs and proposition ts -  value architecture very Ideate -  revenue model 6 Design Decide & Prototype Build & Learn -  -  -  -  -  -  -  -  decide for three or four options design the business models for the options check the interdependencies in the business models work on the uniqueness (positioning) optimize the building blocks -  -  -  -  decide for the best model to go for build prototype test prototype with customers write business case decide again or work on different option -  execute business model learn continuously from customer feedback and control KPIs adjust and refine continuously the business model


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Entreprenurship is eternal learning what the customer really wants and what works and what not 14


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What is a good strategy for startups? Differentiation Focus Trend Build on strengths


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It’s about finding the right trend to surf!


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Be different and be loved by your customers!


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


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Dr. Patrick Stähler | 142


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Doing is the essence of entrepreneurship


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JUST DO IT.


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More Information on http://blog.business-model-innovation.com Dr. oec. Patrick Stähler fluidminds GmbH Kreuzstrasse 2 CH-8008 Zürich Patrick.Staehler@fluidminds.ch www.fluidminds.ch blog.business-model-innovation.com @business_inno


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