VeMBA Semester Project Business Plan

Final Innovation Project Describe An ‘innovative’ product or service Remember: Innovation = Invention + Commercialization Money is important Innovation  Utility  Commercial value A potential customer set This can sometimes the most difficult challenge; it is determined before determining the product The associated business model Track the value flows in the business model Please be prepared to hand-in your PPT slides at the time of the presentation

Activity #1: Identify your Customer Commercialization is about targeting a customer Determine the overlap of your Capabilities with your Potential Customer Base Describe the target customer for the company’s product (age, income, medical history, and other demographics Talk about what will differentiate your product from competitors’ in the customer’s minds, and list the three features that are important to the target customer. What will differentiate your product from competitors’ in the customer’s minds? List the three features that are important to the target customer, and rank them from most to least important.

Overview of Feature Set demanded by Customers Prioritize and choose the major features of your innovation from the main branches of the Mind Map Review the main innovation features with a feature-attribute map for the entire innovation Basic Discriminator Energizer Positive Nonnegotiable Differentiator Exciter Negative Tolerable Dissatisfier Enrager Neutral So What? Parallel

Quizzing Detailed look at target customer usage and decision making regarding your product Looks at the customers “stream of consciousness” Through a series of questions Looks for ideas to Change the Customer’s Experience (i.e., redifferentiate your product) Remember: Experience is dynamic So are the questions in quizzing Over a time period prior to the first time customer is exposed to the product To a time well after the customer has stopped using it

Toolsets Organize Answers with a Mind Map

Activity #2: Design a Product or Service Select a Product or Service that you are interested in turning into a business The design balances your market features (defined in step #1) And your Core Capabilities Capabilities =Assets + Competences Remember: Innovation = Invention + Commercialization Money is important Innovation  Utility  Commercial value

Activity #3: Define your Channels and Customer Relationship Management (CRM) 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)

Activity #4: Commercialization (Business Model) Create a Profitable Business Tell a good story Part of selling your strategy / investment Tying Narrative to Financial Numbers Strategy becomes less philosophy More performance and outcome When business models don’t work It’s because the fail either The ‘Financial Narrative’ test Or the ‘Story’ test Are you selling Low-cost or Differentiated Products?

They require complementary products from many firms to be of value Activity #5: Complementary Assets What else is needed to complete your Commercialization? Most economically significant modern products have little value on their own They require complementary products from many firms to be of 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

Activity #6: Market Entry Define how you will measure the usefulness or attractiveness of each of these features to the target customer. This performance metric should be a numerical measure Define your product’s top competitor in each of these 3 features A company marketing a competitive product or service Are these companies profitable? How big (approximately) is their business? How will you compete with these companies?

Activity #7: IP Protection (Outline your Patent) 1. Provide a short, descriptive and specific title for your invention. 2. Write a specification of the invention and of the manner and process of making and using the invention that concludes with the claims to the invention. 3. Use Google Patent Search to identify 3 related inventions, and specify any “prior art.” 4. Present the substance or general idea of your invention; for example, the advantages of the invention and how it solves previously existing problems 5. Explain the invention along with the process of making and using the invention. 6. Construct two independent claims, and one dependent claim for your invention.

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

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?"

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

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

Workout #2 Channels + Venture Capital Challenge Determine the main steps in consumption chain – conversion cone One of these should be your AdWords campaign Venture Capital Challenge What is your business worth, and why? Costs of each of the consumption chain activities How will these expenditures keep the customer from leaving the chain-cone Conversion value, rate and risk

Workout #3 Communication +Venture Capital Challenge Provide a brief ‘sales pitch’ to describe your product and the main points of the business Answer your investors’ question about customers: “Why do they want what you’re selling, and why should they pay for it?” Answer potential investors’ questions: Why should I give you My money?” How much money do you need, for what percentage of the company How will you negotiate? Your counteroffers?

Workout #3 Negotiations and Counteroffers (Shark Tank Part) Create pro forma financial statements for up to 3 years Balance Sheet containing cash, AR, Inventory, Fixed assets, Liabilities and RE Income Statement containing Sales, SG&A Expenses, Gross Margin, Net Profit Provide pro forma forecasts of ROI, and Scenarios (Best, Worst, Expected) Tie this to conversions, consumption chain & business model How will you deal with competitors and competitive forces outside management control