1. New Venture Development Week-4
Instructor: Bora ÖZKENT

2. Today’s Agenda Goals Discussion Topics
Discover Blue Ocean Strategy and Customer Experience Focused innovation concepts.
Discuss the pressures and demands in the marketplace that are driving opportunities for entrepreneurs with an eye toward sustainability.
Explain ways that entrepreneurial companies can gain competitive advantage by orienting products and processes that take environmental issues into account.
Explain how social entrepreneurship is both similar to and different from traditional entrepreneurship.
Offer a definition of social entrepreneurship that encompasses social ventures and enter-prising nonprofits.
Evaluate and discuss the Northwest Community Ventures Fund case.
Discussion Topics
Discussion-1: In what ways does looking through sustainability lens change how an entrepreneur approaches a new venture opportunity?
Discussion-2: How has the communications revolution become a major driver of entrepreneurial thinking and opportunities in sustainable, green business models?
Discussion-3: What is an example of a wicked problem facing humanity, and what types of opportunities might arise for social entrepreneurship in that space?

3. Ideo’s Innovation Path
Pre Study
Research
Analysis
Discusiion
Field
Observation
Interviewing
Recording
Brain Storming
Idea Generation
Idea Building
Selection
Prototyping
Quick Testing
Customer Testing
Iterating
Ideo’s Innovation Path

4. Sources of Ideas Opportunity Screening New Idea Creation
Sea (ecosystem) changes
Trend spotting
Pattern recognition
Cloning, Inspiring, Adapting
Social networks
Past Experience
New Idea Creation
Coincidence/Accident
Problem/need observation
Blue ocean strategy
Creative thinking
Customer development

5. The Book and the Authors
Prof Renee Mauborgne
© JOHN ABBOTT
Prof Chan Kim

6. Red Ocean vs. Blue Ocean Compete in existing market space
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost

7. Value Innovation: The Cornerstone of Blue Ocean Strategy
Creators of blue oceans follow value innovation
Value Innovation
Equal emphasis on value and innovation
Defies value-cost trade-off of competition-based strategy
Successful value innovation:
Drives down costs while driving up buyers’ value
Uses a whole-system approach
Follows reconstructionist view

8. Four Actions to create a Blue Ocean
What factors should be raised well beyond the industry standard?
Raise
What factors should be eliminated that the industry has taken for granted?
Eliminate
What factors should be created that the industry has never offered?
Create
What factors should be reduced well below the industry standard?
Reduce

9. Example: A highly competitive Industry
The American Wine Industry

10. What the industry offers
Premium Wines
Budget Wines
Massive Choice

11. American Wine Industry
3rd largest in world: worth $20 billion
Californian makes 66% - the rest is from Italy, France, Spain, Chile, Argentina, Australia
Exploding number of new wines – new vineyards in Oregon, Washington, New York
Customer base stagnant
31st in the world in per capita consumption!

12. American Wine Industry
Top 8 producers had 75% of the market; had the remaining 25%
$ millions spent in marketing - Titanic battles – intense competition
Sever price pressure
The dominant growth strategy was towards premium wines – more complexity, better image, more prestigious vineyards, number of medals won at wine festivals.

13. What wine customers said …
“It is too confusing and complex”
Wine descriptions and terminology
The shopping experience
The lack of clear guidance on what to buy and drink
Thus, massively intimidating for‘noncustomers’ (the large majority of the US population who were not wine drinkers)

14. Strategy Canvas High Low
The strategy canvas is both a diagnostic and an action framework for building a compelling blue ocean strategy. It captures the current state of play in the known market space. This allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, service, and delivery, and what customers receive from the existing competitive offerings on the market. The horizontal axis captures the range of factors the industry competes on an invests in. The vertical axis captures the offering level that buyers receive across all these key competing factors. The value curve then provides a graphic depiction of a company’s relative performance across its industry’s factors of competition.
High
Premium Wines
Budget Wines
Low
Above-the-line marketing
Vineyard prestige and legacy
Wine range
Price
Use of enological terminology
Aging quality
Wine complexity

15. Four Actions Framework + Eliminate/Reduce/Raise/Create Grid
The four actions framework offers an technique that breaks the trade-off between differentiation and low cost and to create a new value curve. It answers the four key questions of what industry takes for granted and needs to be eliminated; what factors need to be reduced below industry standards; what factors need to be raised above industry standards; and what should be created that the industry has never offered.
Which factors should be reduced well below industry standards?
Eliminate
A New Value Curve
Create
Which of the factors that the industry takes for granted should be eliminated?
Which factors should be created that the industry has never offered?
Raise
Which factors should be raised well above the industry’s standard?
The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who are only raising and creating thereby raising costs; makes it easier for managers to understand and comply; and it drives companies to scrutinize every factor the industry competes on.

16. Eliminate Raise Reduce Create Enological terminology and distinctions
Aging qualities
Above-the-line marketing
Raise
Price versus budget wines
Retail store involvement
Reduce
Wine complexity
Wine range
Vineyard prestige
Create
Easy drinking
Ease of selection
Fun and adventure

17. To Be Canvas

18. Yellow Tail Only 2 types initially – Chardonnay and Shiraz
Fruity, soft on palette, sweet-ish – great for those who had not drunk wine before
Same bottle for red and white – low logistics costs
Simple vibrant packaging – lower case letters/kangaroo
Un-intimidating
They were selling “The essence of a great land … Australia” – ie they were not selling the wine
Australian clothing for the retail staff – they enthusiastically promoted a wine they could understand.

19. Value Innovation of [yellow tail]
Utility proposition
(customers, distributors and retailers)
Creating of a social drink that is accessible to anyone
Easy drinking, ease of selection, sense of fun and adventure
Limit number of SKUs
Price to move at volume
Price proposition
Targeted at the mass of customers
Priced against the alternative (6-pack)
Cost structure
Elimination of working capital tied up in aging wines
Fast product turnover

20. Results
No 1 imported wine (outsells France and Italy)
Fastest growing imported wine in the history of the USA industry
New consumers of wine
Jug drinkers trade up
Premium wine drinkers trade down
Industry criticizes them mercilessly at first
Now wine press blurb gives it a “best buy” for value; winning wine awards.

21. Four Actions to create a Blue Ocean
What factors should be raised well beyond the industry standard?
Raise
What factors should be eliminated that the industry has taken for granted?
Eliminate
What factors should be created that the industry has never offered?
Create
What factors should be reduced well below the industry standard?
Reduce

22. Optional Assignment:
Choose a real product that is already on the market (it can be either one of the above or your own preferences of product), brainstorm the value factors of the product and develop the Strategy Canvas

23. Customer Experience Focused Innovation

24. Experience Insight Model24

25. The Party Checklist Create a guest list Create a party budget
Pick theme or decor
Order party supplies
Decide menu & drinks
Create menu & grocery list
Create party supply shopping list
Decide activities & games
Send party invitations
Book entertainment
Order party favors
Buy birthday games & game items
Order balloons
Enlist party helpers
Gather owned party supplies (banners, utensils, platters)
List other supplies needed
Order rental equipment
Buy film & video tape
Buy piñata, candy & fillers
Place RSVP guest list & pen by the phone
Order Flowers
Buy non-perishable food & beverages
Buy candles
Procure matches
Bake & freeze unfrosted cake if making your own
Schedule activities
Decorate party room
Gather birthday games or activities
Set out party favors
Prepare food that will refrigerate well overnight
Arrange food delivery
Defrost cake before bed
Pick up cake, ice, balloons
Frost & decorate homemade cake
Decorate outdoor areas
Set up birthday games
Gather serving pieces
Have camera ready
Prepare perishable food
Check bathroom for needed supplies (toilet paper, hand towels, soap)
Smile and have fun! 25 25

26. Reframing the Problem – Redefining the Experience
Percent of Solution
Category
Emotion
Price
Complete Party
Total
Relief
Smile
$750
Ready Made Cake + Party Theme items
Enhanced Service
Busy
$75
Ready Made
Cake
Service
Stressed
$30
Ingredients
Commodity
Overwhelmed $7
90% %
30% %
15% 85%
10% % 26

27. Reframing the Problem – Redefining the Experience
Percent of Solution
Category
Emotion
Price
Total
Commodity
90% %
10% %
The Commodity Problem
The Commodity Solution
The Total Experience Problem
The Total Experience Solution 27

28. Your Customer Journey
13.
12.
11.
10. 9. 8. 7. 6. 5. 4. 3. 2. 1.

29. Customer Experience Journey
Contact
Dimension
Details
Customer asks..
Customer feels…
Customer sees (5 Sense)…
Customer says
Customer remembers…
Customer did…
Customer was challenged
Other observations

30. The Principles of Customer Experience
DEFINITION
YOUR EXPERIENCE
Complete Solution
Solve the complete problem
Authentic
Be real and genuine
Personalized
The customer as unique individual
Relevant
Make it relevant to their life
Timely
Be fast
Customized
Alter the experience to their needs
Visualize Value
Ensure that they see the value
Simple Language
Speak using clear language
Value Pre-Sale
Add value before you sell
Value Post-Sale
Add value after you sell
Shared
Allow to share with others
Expressive
Allow customers ability for self expression
Lasting
Make it last longer
Profitable
Ensure it is profitable to you
Emotionally Engaging
Evoke and engage emotions

32. Discussions 1& 2
In what ways does looking through sustainability lens change how an entrepreneur approaches a new venture opportunity?
How has the communications revolution become a major driver of entrepreneurial thinking and opportunities in sustainable, green business models?

33. Sea Change Increased global regulatory pressure
Demand for heightened transparency
Growing public concern about the environment and health
Environmental performance measures in procurement, from the investment sector, and in terms of public accountability

34. The Challenge
The major challenge of this century is how to create prosperity for more people worldwide given climate change, water short-ages, urban air pollution, energy supply challenges, and the ne-cessity of feeding and providing decent lifestyles for a world population that is expected to double by 2050.

35. Oportunites
Those ahead of the pack have grasped that the environment is a growing source of strategic opportunity for companies.
It is now clear that there is a revolution under way in business as entrepreneurial companies gain competitive advantage by orienting products and processes to take environmental issues into account.
“Green” is the new “black.”
Entrepreneurs now need to look at their industries through a sustainability lens to identify new opportunities and devise means of acting on them.
Sustainability includes the concept of economic viability.
Sustainability also refers to the role new ventures play in supporting communities, improving human health, and protecting ecological systems.

36. Cool: Patagonia

37. Social & Green

38. Facebook app drags up old photos to show clothes that could be given to charity -You Will Never Wear That Again

39. At Brazil-based fast food chain, packaging is edible – Bob’s

40. World’s first low-water, low-energy vertical farm opens in Singapore

41. To save water, an iPhone app that drowns out embarrassing bathroom sounds

42. Wind turbine turns airborne moisture into drinking water

45. 7-45

46. 7-46

47. 7-47

48. 7-48

49. Hybrid Models of Social Entrepreneurship
For profit – primarily achieving economic goals
For profit – primarily achieving social goals.
For profit – equally emphasizing social and economic goals
Not for profit, serving a social mission
7-49

50. 7-50

51. Business Plan Preparation: Executive Summary
In this phase of the course you should decide about the venture you would like to pursue as your business plan for the course.
You cannot choose to open a franchise since the franchiser would have already done the bulk of the business plan work for you.
During the course of the term, you will complete a Business Plan on your venture. There will be different portions of the assignment due each week from now on. You will follow the outline at the end of Chapter 08 in the Timmons and Spinelli textbook, starting on page 252.
For this week, complete a brief Executive Summary of your new venture using the guidelines listed on pages of the Timmons and Spinelli textbook (Sections A- The Opportunity F).
While I recognize that "some" of this information is not yet available, please offer a best guess in your submission.
The main purpose of this assignment is to have your "commit" to a business plan concept so that you can focus your efforts during the remainder of our course developing the complete plan.
This assignment allows me to review your chosen venture and offer some feedback to the team.