Entrance Strategy Innovation Workout

To Present Prepare for your group to present Prepare for your group to present –In 5-10 minutes –Describe your product, current competitors, history and future on 1 slide –Present a maximum of 1-2 slides per task (hand written)  For each of your conclusions from Tasks #1 to #7 For sake of time, please to not include anything else For sake of time, please to not include anything else

Setup for the Workout Pick a specific consumer product: Pick a specific consumer product: –Choose a product where you have a thorough knowledge of the market and competitors –This is likely to be something that would be involved in a sport, hobby, job or other personal interest Quickly think through: Why customers buy this product (be honest) How customers buy this product (i.e., the consumption chain Complementary products required to market this product Competences your firm needs to compete

Setup for the Workout : Assume your company is going to produce its own brand of this product Formulate an entrance strategy Formulate an entrance strategy –Anticipating competitive behavior and response –Planning to learn when uncertainty is high  Assessing your project as it unfolds  Rather than meeting objectives set in advance Remember Remember –You can’t be sure that your competitors will react as you expect –You can’t be sure that technology, markets, etc. will pan out as you hope (or promise) –You don’t want to be responsible for meeting ‘the numbers’  Where you have extreme uncertainty

Task #1: State your Vision The first step in an entrance strategy is your ‘vision’ What will this market look like in.2,.5, 1, 2, 5, 10 years What will this product look like in.2,.5, 1, 2, 5, 10 years What will your company look like in.2,.5, 1, 2, 5, 10 years

Task #2: Describe the Business Model Tell the ‘Story’ of how this Product becomes a profitable business Tell the ‘Story’ of how this Product becomes a profitable business Set target ‘Numbers’ for.2,.5, 1, 2, 5, 10 years Set target ‘Numbers’ for.2,.5, 1, 2, 5, 10 years –E.g., revenues, number of customers, market share, profit, etc. –These are your Benchmarks and Milestones How is your Business / Product different than everyone else’s How is your Business / Product different than everyone else’s

Task #3: List your major assumptions In any highly uncertain venture In any highly uncertain venture –You make considerable numbers of assumptions –Relative to the knowledge you have  Assumptions about –Technologies –Assets –Markets –People How will you test your Assumptions (at.2,.5, 1, 2, 5, 10 years) How will you test your Assumptions (at.2,.5, 1, 2, 5, 10 years) – Your business plan should organized around  converting the maximum number of assumptions  to knowledge  at minimum cost

Task #4: Specify your Major Milestones Task #4: Specify your Major Milestones What will be your Milestones=Deliverables in.2,.5, 1, 2, 5, 10 years What will be your Milestones=Deliverables in.2,.5, 1, 2, 5, 10 years Translate your strategy i nto specific accomplishments at specific times Translate your strategy i nto specific accomplishments at specific times Critical identifiable points in time at which key assumptions are tested Critical identifiable points in time at which key assumptions are tested –Usually these are events, e.g. complete design –Sequence these to minimize cash burn and corporate expectations while you are learning No Milestone should occur without triggering a test of assumptions No Milestone should occur without triggering a test of assumptions

For Task #4, Rememger that Sustainability is Industry Specific Different Industries Display Different Rates of Change in the Market Past is indicator of FutureFuture is Volatile

Task #5: Choose your first 5 Customers Specify your first five customers Specify your first five customers –Your Lead-steer customers  Opinion leaders in their industries  Highly regarded by peers  Customers with blogs, review or other sites –These will help you to test your assumptions about attribute maps and consumption chains Risk Low Risk High Benefit Low 2 nd Priority (make risk of not buying higher than of buying) Forget it! (postpone until value  or risk  Benefit High 1 st Priority (easy sell) 3 rd Priority (‘if it doesn’t work, send me the bill’)

Each choice in Task #5 has Risks; Describe These Risks that you will dissatisfy or enrage your customer Learning (experience) curve Learning (experience) curve Opportunity costs Opportunity costs Failure or uncertain operation Failure or uncertain operation Employee resistance Employee resistance Legal and Environmental Legal and Environmental Quality & Perception Quality & Perception

Task #6: Who are your Combatants ? (or sleeping dogs, bystanders and skirmishers)? List them by name List them by name State why you categorize them as such State why you categorize them as such  Usually because of their market power, the coreness of the product to their capabilities, and their interest in this market Capacity High Capacity Low Commitment Low Sleeping Dogs (track them) Bystanders(monitor) Commitment High Combatants (Your main focus) Skirmishers (selective in their responses due to resource limits; monitor)

Task #7: Choose your Entry Tactics Objective: Avoid debilitating competitive interaction Objective: Avoid debilitating competitive interaction –By using speed, skill and surprise –Use your imagination, innovation, creativity to outmaneuver your competitors –Rather than your scarce resources Remember: The last milestones to pursue Remember: The last milestones to pursue  Are those that make you commit to assets  And lose flexibility Assets should be bought only as a last resort Assets should be bought only as a last resort Fixed commitments should be kept variable Fixed commitments should be kept variable –By paying per use, or by subcontracting

Entry Tactics Offensive tactics Rapid dominance Rapid dominance Planned attack / frontal assault Planned attack / frontal assault Flanking maneuver Flanking maneuver Pincer movement Pincer movement Double envelopment Double envelopment Attrition warfare Attrition warfare Interdiction / control of lines of communication and supply Interdiction / control of lines of communication and supply Preemptive attack Preemptive attack Raiding Raiding Divide and Conquer Divide and Conquer Guerrilla Warfare Guerrilla Warfare Defensive tactics Mutual support Mutual support Scorched earth policy Scorched earth policy Booby traps Booby traps Center Peel Center Peel Trench warfare Trench warfare Hedgehog defense Hedgehog defense Deception Tactics Stealth and Camouflage Stealth and Camouflage Disinformation Disinformation Feint Feint Force multiplication Force multiplication

To Present Prepare for your group to present Prepare for your group to present –In 5-10 minutes –Each of your conclusions from Tasks #1 to #7 –Describe your product, current competitors, history and future on 1 slide –Present a maximum of 1-2 slides per task (hand written)