Global Innovation Management Final Project Business Plan for Your New Venture

Global Innovation Management Final Group Project Organize into groups –Projects will be graded by group For your innovation –Complete Activity 1 through Activity 6 below –Prepare a 15 minute PPT presentation summarizing your decisions in Activity 1 through Activity 6 –Turn in a report summarizing your decisions in Activity 1 through Activity 6 This could be your PPT presentation with any additional tables and figures you think might be needed

Global Innovation Management Activity 1: Select a Product or Service Design a Product or Service Innovation that you are convinced can “Be Successful“ (however you define success) in the next 5 years –Clearly articulate the necessary Core Capabilities (Capabilities =Assets + Competences) required by this business –Describe its significant features-attributes –Briefly articulate its main customer channels (markets)

Global Innovation Management Activity 2: Define your Product Attributes and Value Proposition

Global Innovation Management Activity 2: Customer Centered Product Innovation Detailed look at target customer usage and decision making regarding your product Looks at the customers “ stream of consciousness ” Who? –… is with customers while hey use the product »How much influence do they have –If we could arrange it, who would we want the customer to be with … –What? … Do our customers experience when the use the product … needs provoked our offering –What else? … might customers have on their minds –When? … do our customers use this.. –Where? … are our customers when they use this –How? … do customers learn to use the product.. Looks for ideas to Change the Customer ’ s Experience (i.e., redifferentiate your product) Experience is dynamic

Global Innovation Management Toolsets Organize Answers with a Mind Map

Global Innovation Management Summarize Product and Customer Value Proposition in the Attribute Map The Attribute Map compares your product to those of others Do not fill in all of the 3*3 cells –let this be a map where you locate the characteristics of your 3 to 4 key features or attributes of your product or service BasicDiscriminatorEnergizer PositiveNonnegotiableDifferentiatorExciter NegativeTolerableDissatisfierEnrager NeutralSo What?Parallel

Global Innovation Management Activity 3: Identify your Customer Relationship Management Functions

Global Innovation Management CRM = Channels+Customer Segments + Customer Relationships Determine the main steps in consumption Each step on the consumption chain has an attribute map You should only list the 3 or 4 most important steps These will determine whether the potential customer proceeds to the next step (good) –Or leaves the consumption process (not good)

Global Innovation Management Toolsets CRM = Channels+Customer Segments + Customer Relationships Customer Relationship Management can be defined in terms of Discriminators and Energizers Describe how you will Manage each of these Customer Relationships BasicDiscriminatorEnergizer PositiveNonnegotiableDifferentiatorExciter NegativeTolerableDissatisfierEnrager NeutralSo What?Parallel

Global Innovation Management Activity 4: Cooperate with Complementary Asset Holders Compete for Customers

Global Innovation Management Complementary Assets Capabilities held by others that you need for your business What else is needed to complete your Commercialization? Complementary products create value Petroleum has little use without internal combustion engines Or Cars without Roads (US Road costs are around $5-10 per gallon of gasoline) Or Electricity without Electric Motors Or iPods without MP3s … you get the idea What are your ‘Killer Apps’? –The complements that sell your product

Global Innovation Management Adaptive Execution Where the competition changes rapidly Firms cannot compete with a static strategy that will remain valid for years Rather strategy must be stated in terms of: –Condition  Response –Each competitive event needs to be met with a managerial response –These responses are the ‘Real Options’ that a manager has to respond to competition

Global Innovation Management First 3 Customers Lead-steer customers –Opinion leaders in their industries –Highly regarded by peers –Customers with blogs, review or other sites

Global Innovation Management When to be a ‘First Mover’ Many dot-com investments were predicated on getting the money to become a ‘first mover’ in a field –In order to compete for ‘eyeballs’ (network effects) –Faith in the ‘first mover advantage’ is usually misplaced

Global Innovation Management Who are your Competitors ? How do you expect them to respond to your entry? Other firms in your market, or producing substitutes for your product –Will try to limit your success in the best way they can. Depending on the scale of their business And their commitment to this market Capacity to produce is High Capacity to produce is Low Commitment to enter market is Low Sleeping Dogs (track them) Bystanders (monitor) Commitment to enter market is High Combatants (Your main focus) Skirmishers (selective in their responses due to resource limits; monitor)

Global Innovation Management What Entry Tactics should you Choose? Objective: Avoid debilitating competitive interaction –By using speed, skill and surprise –Rather than your scarce resources Assets should be bought only as a last resort As in war, there are a limited set of battle proven tactics available for entry

Global Innovation Management Activity 5: Financial Forecast

Global Innovation Management Business Models Matter Telling a good story Part of selling your strategy / investment –Tying Narrative to Numbers Strategy becomes less philosophy More performance and outcome –When business models don’t work –It’s because the fail either The ‘Narrative’ test Or the ‘Story’ test (1) must produces revenue by satisfying customer demand –i.e., that meets the ‘Framing’ challenge; and (2) controls costs and generates a high return on investment, –where expected revenues significantly exceed expected costs, –and thus can be argued to meet the ‘Venture Capital’ challenge.

Global Innovation Management Draw your Business Model It doesn’t describe external forces: –Competition –Environment –Scaling It only depicts the systems that will be put into place to achieve a strategic objective A good model is not enough –The boxes on the value map need to be understood in depth –In order to develop a good strategy

Global Innovation Management Forecast your Revenues From CRM and Value Proposition

Global Innovation Management Forecast your Costs From Capabilities and Market Entry

Global Innovation Management Estimate the Profitability of your Venture 1.Put together your Value Proposition, Revenue forecast and Cost forecasts to estimate a time-series of expected profits 2.Draw a value map describing your companies proposed business model, and 1.provide some indication of the costs and revenues that will flow into and out of the parts of the business. 3.Define your product’s top competitor in each of these attributes or features. 4.Compute a Value for your Company

Global Innovation Management Activity 6: Challenges, Targets, Benchmarks and Goals ‘Vision’: Trajectory of your Markets and Capabilities Each new business model –will demand shifts in your firm’s capabilities –to allow you to compete in new markets –with unfamiliar competitors You will need to decide how ‘best’ to: –Choose your competitive terrain –To enter your chosen market(s) –And to marshal your assets, investments and competencies Where you think your firm, product and market will be at some point in the future Is how you summarize your view of the competitive trajectory you will take

Global Innovation Management How will you measure success? (at each milestone in your vision) If you were to do something in the next 3-5 years –That my firm and my company’s investors would regard as a major win –What would this performance record have to look like? If you were to do something in the next 3-5 years –That my customers would regard as a major (disruptive) innovation –How would I change their lives? And … most importantly –Why would you want to invest in this venture?

Global Innovation Management Presentation Each group will have around 25 minutes total time for presentation –I will monitor this strictly The project will comprise the following: –Work in groups of three to four –25 second ‘elevator pitch’ –5 minute summary of product and business model –15 Minutes for presentation and Q&A (by class and myself) for each group –Possible second round (time permitting) Please be prepared to hand-in your PPT slides at the time of the presentation

Global Innovation Management Presentation: The Communication Challenge Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch) Provide a brief ‘sales pitch’ presenting the major components of your innovation and business Consider what parts you most want to emphasize about the business model Describe your business in one paragraph (equivalent to the 25 second pitch) –Numbers –Behavioral model and capabilities required –Strategy model –Investment Risk –A summary financial analysis to show risk and ROI for the project Answer your investors question: –Why should I give you My money?"

Global Innovation Management Presentation: The Framing Challenge What Is the Real Business Problem? –Accurately define your customers and what motives them Properly framing a problem in terms of the reality of the situation and the objectives of the organization –is an important step in the decision-making process. –Mental frames act to channel our thinking and are important tools to help navigate complex decisions

Global Innovation Management Presentation: The Venture Capital Challenge What is your business worth, and why? Your new venture competes in two markets: Product Financial How will you tie this to your business model –tying narrative to numbers What are the activities, operations and products? What are the significant environmental influences? –major competitive forces outside management control How does value flow through your business model? What is the Net Present Value of future activities