UMSI 363 Nancy A. Benovich Gilby Busting Myths and Pursuing Information Innovations with Mobile Apps in SWIFT Week 7 Nancy A. Benovich Gilby Ehrenberg Director of Entrepreneurship Clinical Associate Professor  University of Michigan School of Information 650-539-8376 nabgilby@umich.edu

Readings From each of the readings share one meaningful quote, write it on the white board Crossing the Chasm: Chpt 1 & 2 Inside the Tornado: Chpt 1-2 The Tipping Point: Chpts1, 4-5 Peopleware Chpt 18 & 23

Today The Adoption cycle of a product Your Project has gone through 2 weeks: You should have 12 interviews, 6 more to go, 18 total Share out on your value hypothesis, quotes, decide if you will pivot on target user, problem and value hypothesis Potentially revise Target User, Problem or Value Hypothesis Start/continue prototyping your application, using the MyBanks code as scaffolding. Competition Research, Matrix

Team Project Overview Project Week: Form your team, establish ground rules, Interviews round 1, build app scaffolding, interview 6 target users Review Customer Development Round 1 and Potentially Pivot, Competition, sketch/wireframe, interview 6 target users complete a full SWIFT/PARSE scaffolding to use in developing your apps MVP1 Review Customer Development Round 2, Pivot, Competition 2, sketch/wireframe,, interview final 6 target users (18 total) Review Customer Development Round 3 Draft pitch, MVP prototype 1 KJ Affinity Diagram, Business Model Canvas, final wireframe test with users All teams pitch and review, MVP prototype 2 Pitch and demo to VCs, Executives, Entrepreneurs

MYTH #6 MYTH: The idea is more important than the execution

Share Out: Customer Development Round 1 Each team will huddle for 15 minutes to identify quotes from interviews to share with the group. Each person should try to share one or two quotes with the group that reinforced or negated the target user or problem If possible, each team should plan to play a recorded quote from their interviews. Teams should identify a questions about the process so far they might want to ask Nancy, other teams, or lab assistants. They will capture these on sticky notes. SECOND STANDUP: Tell me, show me your scrum board What you did last week to get the interviews done What you will do this week to get 3 each, 6 more done What obstacles you have

Share Out target user description what is their urgent problem? What is your value hypothesis? Each partner shares (plays) ONE quote that either strongly support or negates their value hypothesis Group discussion

What ARE we doing?

We are building a TEAM … Importance of “Team”

Minimal Viable Product

Value for Who?

Business Model Canvas The Business Model Canvas, is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model.

Lean Model Canvas

What are we doing with these interviews?

KJ Method (Jiro Kawakita) and Questioning Obtain a 360 degree perspective of the actual environment in which the product or service would be used. You explore through: Open-ended inquiry Process observation Participant observation Build a team united around what’s meaningful to the users from a variety of perspectives….. REMEMBER DIVERSITY IN TEAMS……THIS IS WHY IT IS VITAL FOR INNOVATION

KJ Method (Jiro Kawakita) and Questioning Build an Affinity Diagram = KJ Diagram A “tool”, at some of my companies we fondly referred to it a “the bull's-eye” structures detailed objective data into more general conclusions. Used for providing initial structure in problem exploration. Often structures answers to a “WHAT” question e.g. “What is the major problem users have right now with Obama Care” EXAMPLE: Wildfire

Affect and Report Language In DESIGN THINKING – trying to get to what is MEANINGFUL to the user…..emotion, pain or joy Field of semantics distinguishes between two kinds of language Affective and Report Affective language – emotional information = context = WHY Report language – logical information = facts = 5 W 1H = WHO WHAT WHEN WHERE HOW

KJ Diagram

Simple Example

Reminders: Safe space and emotional ups and downs of entrepreneurship

Parse What is it? What will it do for you?

Building Blocks for a FULL App For an information app, it needs to have CRUDS Create, Read, Update, Delete and Search! You will bang your head, it will be frustrating but when you are done you will have a fully functioning app: Signup, Login, Password Recovery, Create/Update/Delete/Search (transactions), Search for Nearby Banks.

"BUILD SOMETHING FOR SOMEBODY INSTEAD OF EVERYTHING FOR NOBODY" - Geoffrey Moore in Crossing the Chasm

Chasm Terms The book: puts a vocabulary to the market development problem Customer Development Product Development Market Development Discontinuous Innovation Market/Marketing FUD Technology Adoption Lifecycle Whole Product Solutions Psychographic profile Innovators Early Adopters Early Majority Late Majority & Laggards

Discontinuous Innovations Electric car Facebook Better mileage cars Email Diesel cars SMS Messaging Entrepreneurial Marketing Specializes in Discontinuous Innovations

Chasm Model: The People The market waiting and watching…FUD!!

Marketing?

Aggregate sales, both past and present for products or services Market? Aggregate sales, both past and present for products or services

“taking actions to create, grow, maintain, or defend markets” Marketing “taking actions to create, grow, maintain, or defend markets”

MARKET!!! A set of actual or potential customers For a given set of products or services Who have a common set of needs or wants, and Who reference each other when making a buying decision.

Market Segment? Natural market boundaries within an aggregate of current and potential sales (boundaries around customers or users who reference each other) A group of people you can wrap your arms around and count

Classical diffusion theory Everett Rogers (1962) Synthesized research on adoption of innovation from several fields: Anthropology, Early sociology, Rural sociology, Education, Industrial sociology, Medical sociology Found that for most members of a social system, the adoption-decision depends heavily on the adoption-decisions of the other members of the system. The more people adopt an innovation, the lower the perceived risk. The result is an S-curve shaped pattern of innovation diffusion.

Example: Dynamics of Riots Consider a hypothetical mob. Each person's decision to riot or not is dependent on what everyone else is doing. Instigators will begin rioting even if no one else is, while others need to see a critical number of trouble makers before they riot, too (reduces risk of getting caught). This threshold for rioting is assumed to follow some (e.g. normal) distribution. Result: S-curve.

Adoption of New Technologies

Classical Diffusion Theory When faced with discontinuous innovations, customers fall into five broad categories along an axis of risk-aversion. Innovators Early Adopters Early Majority Late Majority Laggards

Technology Adoption Life cycle In high-tech, the categories have been given more specific names (Geoffrey Moore). Innovators Early Adopters Early Majority Late Majority Laggards = Technology Enthusiasts = Visionaries = Pragmatists = Conservatives = Skeptics

Pragmatists create the dynamics of market development. Technology Adoption Life Cycle – Types of Consumers Discontinuous Innovation Innovators Early Adopters Early Majority Late Majority Laggards Techies: Try it! Pragmatists: Stick with the herd! Conservatives: Hold on! Skeptics: No way! Visionaries: Get ahead of the herd! Pragmatists create the dynamics of market development.

Hockey Stick The VC Revenue Curve Expectation: What is Success?? Big Enough Idea That It’s not Just Another Mouse Trap Users/ Revenue Go public, everyone makes millions $100M In the Tornado, can barely keep up with customer growth Everything is going according to plan First batch of users 1 3 5 Time (years)

Point of Peril Users/ Revenue Time Oh no, What’s wrong, I’m scared First batch of users Time

Point of Peril – the Chasm Innovators Early Adopters Early Majority Late Majority Laggards

Techie Innovators Primary Motivation: Key Characteristics: Learn about new technologies for their own sake Key Characteristics: Strong technical aptitude Like to test new products Can ignore any missing elements Like to help Want no-profit pricing (preferably free) Key Role: Gatekeeper to the Early Adopter

Early Adopters - Visionaries Primary Motivation: Visionaries Highly motivated, driven by a revolutionary breakthrough Key Characteristics: Visionary executives going ahead of the herd Driven by competitive advantage Will help pay for new paradigm Demand “what ever it takes” commitment Rely on their own judgment Strategic thinkers, not from technology itself Think project not product Key Role: Fund the development of the early market

Early Majority Primary Motivation: Key Characteristics: Pragmatists Gain sustainable productivity improvements via evolutionary change Key Characteristics: Astute managers of mission-critical applications Understand real-world issues and tradeoffs Focus on proven applications Like to go with the market leader Must have complete whole products Insist on good references from trusted colleagues Key Role: Bulwark of the mainstream market

Main Street – Late Majority Primary Motivation: Conservatives Against discontinuous innovations Stay even with the competition Key Characteristics: Want better values, no disruption If it works, they stay Risk averse Highly reliant on a single, trusted advisor Need assembled solutions Key Role: Extend Product life cycles

Laggards Primary Motivation: Skeptics Maintain status-quo Key Characteristics: Disbelieve productivity-improvement arguments Seek to block purchases of new technology Good at debunking marketing hype Can be formidable opposition to early adoption Key Role: Retard the development of new markets

Four Value Propositions Go ahead of the herd for competitive advantage. Go ahead of the herd to fix a broken business process. Go with the herd to create new infrastructure. Go after the herd to get better values. Early Majority

Problem: First Crack, then The Chasm Early Market Chasm Bowling Alley Tornado Main Street Total Assimilation

Why: Pragmatists Don’t Trust Visionaries as References!!! New & revolutionary Unique functionality Horizontal references Willing to take risk Want rich tech-support Revolutionary processes Tolerate bugs Standard Third party supporters Vertical references Little risk Great quality of support Enhance established processes Bug free

How do you Cross the Chasm? ????

How Do You Cross the Chasm? Early Market Chasm Bowling Alley Tornado Main Street Total Assimilation Go Bowling!!

Where Do You Think These Are? Oculus Rift Nest Mongo DB Oracle iPhone Android

Assignments (POUNDING PAVEMENT 3: Last round) Team, Based on strength of quotes, refine your target user and customer hypothesis. Find and interview 6 additional target users (3 for each team member) for your refined niched: Validate Niche, Problem (add details of interview structure, recording, ). Team update Trello, track progress over the week, mark interview completion on cards. Assignment #17 Submit your REVISED:          - target user description (at least 3 bullet points)          - what is their urgent problem?          - What is your value hypothesis?          - 3 ADDITIONAL audio quotes from this week's interviews, one each from your target user interviews          (you and your partner will pick one to play for the class) Each person submits this separately.  Partners will pick one each of the 6 quotes to play in class. #18 Update your trello board for standup #19 Each students selects top 3-5 quotes, ensures they are written properly on a sticky. Every team should have 18-30 stickies total for class next week (reviewed at standup) Assignment #14 Competition matrix part 1 Assignment #15 Team Wireframe prototype sketch draft 1 – hits top 3 problems you’ve identified so far

Readings The Second Machine Age: Chpt 1, Chpt 4 & 6 Business Model Generation Chpt 1 The Lean Startup: Chpts 1-4 Coffee Break EP33: Design Thinking with Tim Brown Value Proposition: Chpt 1 The Four Steps to the Epiphany Chpts 1-4, Appendix A-B Business Model Generation Chpt 2 ------- The Entrepreneur's Guide to Customer Development: 1-5 Peopleware Chpt 1-6 The Entrepreneur's Guide to Customer Development: Chpt 8 The Lean Startup: Chpt 5-8 Peopleware Chpt 14-17