Business Model Canvas Workshop

Venture Design Workshop IV Engineering Your Business Model

(Key Partners)

(Key Activities)

(Key Resources)

(Cost Structure)

(Value (Customer Propositions) Relationships)

(Customer Segments)

(Channels)

(Revenue Streams)

The templates here are made available on the same CC license terms as the original canvas.

This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

Copyright 2014 Cowan Publishing

ABOUT ME

Entrepreneur (5x) Intrapreneur (1x) ALEX COWAN AlexanderCowan.com @cowanSF Copyright 2014 Cowan Publishing

ABOUT ME

ALEX COWAN AlexanderCowan.com @cowanSF Copyright 2014 Cowan Publishing

ABOUT ME

www.alexandercowan.com Copyright 2014 Cowan Publishing

AGENDA Period! Venture Design I: Achieving Customer Relevance

Deliverables! Personas Problem Scenarios-Alternatives-Value Propositions Start Business Model Canvas Storyboards Customer Discovery

Venture Design II: Iterating to Success

Venture Planning- focal hypotheses, experiments, and minimum viable ‘product’

Venture Design III: Focusing & Validating Venture Progress

Review of field work, refinements of approach, planning next steps.

Venture Design IV: Engineering Detailing your business model and remaining focal Your Business Model! assumptions. Venture Design V: Designing the Pairing your learnings on personas & hypotheses with high Right Product! quality, actionable inputs (stories & wireframes) for product development and product validation. Copyright 2014 Cowan Publishing

THE BUSINESS MODEL CANVAS (Key Partners)

(Key Activities)

(Key Resources)

(Cost Structure)


(Customer Segments)

(Channels)

(Revenue Streams)




CUSTOMER DEVELOPMENT MVP

Product-Market Fit(?)

Scale

PIVOTAL ASSUMPTIONS

Nascent

Test, revise, test...

Validated- now tactical

Validated- now tactical

PRODUCT

N/A

MVP

Focus: efficiency, extension

What would a startup do??

ORGANIZATION

Founders

Customer dev. team

Full functional organization

Scalable organization

PARTNERS, CHANNELS

Probably too soon

Probably too soon

Yeah, maybe?

Yeah, definitely!


CUSTOMER DEVELOPMENT & THE CANVAS MVP


Scale

Thinking through what you want the business to be for a better idea of what you don’t know. Then use that to focus your discovery.




Scale

Focal point for managing your assumptions- which are open? closed? what are their inter-relationships?




Scale

Focal point for organizing incremental ‘growth hacking’ experiments.




Scale

Strategy management tool and jumping off point for new ‘intrapreneurial’ ventures and business model innovation.


The Canvas is a housekeeping tool. It won’t hand you the gold but it will help you monitor how things are panning out.


IT’S A PROCESS

Some techniques are more effective than others.

Personas

But they all require substantial, consistent exertion. Copyright 2014 Cowan Publishing

VENTURE DESIGN

Foundation in Design Thinking


VENTURE DESIGN

Hypothesize

Learn

Lean StartupStyle Assumptions

Experiment



VENTURE DESIGN

Hypothesize

Lean StartupStyle Assumptions Business Model Canvas

Learn

Experiment



VENTURE DESIGN

Hypothesize


Learn

Experiment

User Stories & Test Cases



VENTURE DESIGN

Hypothesize


Learn

Experiment

User Stories & Test Cases

Product & Promotion



VENTURE DESIGN

Business Model Canvas


THE CANVAS: 3 PARTS Partner_1 Partner_2 Partner_3

Activity_1 Activity_2 Activity_3

Proposition_1 Proposition_2 Proposition_3

Relationship_1 Relationship_2 Relationship_3

Resource_1 Resource_2 Resource_3

Cost_1 Cost_2 Cost_3


Oﬀering Customers Infrastructure

Persona_1 Persona_2 Persona_3

Channel_1 Channel_2 Channel_3

Revenue_1 Revenue_2 Revenue_3



REALLY GETTING CUSTOMER SEGMENTS (Key Partners)

(Key Activities)

(Key Resources)

(Cost Structure)


(Customer Segments)

(Channels)

(Revenue Streams)




SEGMENT TO VALUE PROPOSITION MAPPING Partner_1 Partner_2 Partner_3







Segment_1 Segment_2 Segment_3





THE INDEPENDENT VARIABLE Customer Segments

Value Propositions

(Key Partners)

(Key Activities)

(Key Resources)

(Cost Structure)


(Customer Segments)

(Channels)

(Revenue Streams)




CUSTOMER SEGMENTS VS. PERSONAS

reCustomer motsuC Segments stnemgeS

Personas

≈ ALEX COWAN AlexanderCowan.com @cowanSF Copyright 2014 Cowan Publishing

DESIGN THINKING

Empathy

Creativity Copyright 2014 Cowan Publishing

DESIGN THINKING- APPLICATIONS


DESIGN THINKING- APPLICATIONS

Empathy

1

Entry

2

Urinate as they go

3

Edges preferred

4

Speedy

5

PB > cheese


DESIGN THINKING- APPLICATIONS Check & Repair

1

UV Validation

2

Relevant Placement

3

A Better Mouse Trap

4

Powered by Better Bait

5

Creativity


DESIGN THINKING- PERSONAS

Personas

Problem Scenarios Alternatives Your Value Propositions







DISCOVERY & LEARNING: THINK-SEE-FEEL-DO


DISCOVERY & LEARNING: PROBLEM SCENARIOS

PROBLEM SCENARIO

X



PROBLEM SCENARIO What job(s) are you doing for the customer? What existing need or behavior are you fulfilling?

X



PROBLEM SCENARIO

X

ALTERNATIVE(S)

? ALEX COWAN AlexanderCowan.com @cowanSF Copyright 2014 Cowan Publishing


PROBLEM SCENARIO

X

ALTERNATIVE(S)

?

If they currently use spreadsheets, watch them use it and get a copy of it. If they currently put notes on the family fridge, ask about it, photograph it.



PROBLEM SCENARIO

X

ALTERNATIVE(S)

?

YOUR VALUE PROPOSITIONS

!



PROBLEM SCENARIO

X

ALTERNATIVE(S)

?

YOUR VALUE PROPOSITIONS Are they better enough than the alternative(s)?

!


ENABLE QUIZ: EXAMPLE PROBLEM SCENARIOS PERSONA

Helen the HR Manager

Frank the Functional Manager

PROBLEM SCENARIO

“It’s hard for me to screen on technical skill sets and I end up sending Frank unqualified recruits.”

“I have limited time and I don’t want to be a jerk. It’s hard to screen for all the relevant technical skill sets.”

ALTERNATIVE(S)

- Call references - Take their word for it

- A few probing questions - Take their word for it

VALUE PROPOSITIONS

New ability for meaningful screening of technical candidates, increasing % of successful hires and lowering Frank’s workload on recruiting.

Less time doing interviews, and better hires sooner.

X

? !


STORYBOARDING A PROBLEM SCENARIO BEFORE

BEFORE (using the Alternative) AFTER

AFTER (with the Value Proposition)


EXERCISE- PERSONA CREATION List at least 3 personas Mary the Working Mom Susan the Stay-at-Home Mom Douglas the Dad Nathan the Nanny Ivan the Infant

use 1 index card/ persona

…

(4 min) Copyright 2014 Cowan Publishing

EXERCISE- PERSONA CREATION Which are buyers? Users? Both? Note with a ‘B’ and/or a ‘U’ on the Index Card Mary the Working Mom (B, U) Susan the Stay-at-Home Mom (B, U) Douglas the Dad (U) Nathan the Nanny (U) Ivan the Infant (U) …


EXERCISE- PERSONA CREATION Can you think of 5 real examples for each? Use the back of your index cards


EXERCISE- PERSONA CREATION Which have the most compelling need, desire? If you could only pitch 1 persona type, which? Sort top to bottom


EXERCISE- VALUE PROPOSITIONS

X ? !

Brainstorm Problem ScenarioPROBLEM SCENARIO Alternative-Value Proposition Trios.

ALTERNATIVE(S)

Problem: Mary would like to be more structured and consistent in her use of allowances to teach the link between work and financial rewards. Alternative: Track the completion of chores, homework, etc. manually using paper, boards, notes on her phone.

YOUR VALUE PROPOSITIONS

Value Proposition: Use our app to easily and consistently implement best practices tailored to your situation.

(7 min.) Copyright 2014 Cowan Publishing

EXERCISE- VALUE PROPOSITIONS Prioritize your value propositionsif you could only pitch one, which? After that? Etc.

(2 min.) Copyright 2014 Cowan Publishing

EXERCISE- MAPPING PERSONAS, VALUE PROP’S 1. List your prioritized personas (Customer Segments block) and Value Propositions 2. Map your personas to your Value Propositions







PEER PRESENTATIONS PREP! For [target customer] who [statement of the need or opportunity], the [product name] is a [product category] that [statement of key benefit/ key reason to buy]. unlike [primary alternative], our product [statement of primary differentiation]. EXAMPLE For [hiring managers] who [need to evaluate technical talent], [Enable Quiz] is a [talent assessment system] that [allows for quick and easy assessment of topical understanding in key engineering topics]. Unlike [formal certifications or ad hoc questions], our product [allows for lightweight but consistent assessments of technical talent]. (4 min.) Copyright 2014 Cowan Publishing

EXERCISE: PEER PRESENTATIONS (4 MIN/EACH)

As Presenter PERSONAS & VALUE PROPOSITIONS 1) Intro. with your positioning statement. 2) Who is/are the top persona(s)? 3) What’s cool about the value prop.? 4) If applicable, how do they differ between the personas?

As Audience - Focus on the process; avoid editorial - Ask a lot of questions - Think about it like an investor


REALLY GETTING RELATIONSHIPS & CHANNELS (Key Partners)

(Key Activities)

(Key Resources)

(Cost Structure)


(Customer Segments)

(Channels)

(Revenue Streams)




Attention I nterest D esire A ction Onboarding R etention

How do they first find out that you, your proposition exist? How do you break through the noise floor?



What is it that engages them with your proposition? How will you connect?



Are you connecting with an important problem scenario? Is your VP better enough than the alternative? Copyright 2014 Cowan Publishing


What is absolute minimum set of actions required by the customer to have you deliver on their problem?



How do they become a regular, habitual user? How will you know if that’s happening?



How do you deepen their involvement? Investment? How do you get them talking about it? Copyright 2014 Cowan Publishing

STORYBOARDING AIDA(OR)


STORYBOARDING AIDA(OR)


EXERCISE: AIDA STORYBOARD (10 MIN)

Using the squares, create a 6-panel AIDA(OR) storyboard (10 min) Copyright 2014 Cowan Publishing

EXERCISE- CUSTOMER RELATIONSHIPS

Customer Relationships

GETTING STARTED 1. Bounce off your take on AIDA(OR) 2. Decouple any concierge/hand-holding actions you use for discovery from your target steady state 3. Variation by segment? 4. How will you know if it’s working?

EXAMPLES ‘dedicated personal service’ (onsite? offsite?) ‘personal service’ ‘phone support’ ‘web/email based tickets’ ‘web self-help and forums’


EXERCISE- CHANNELS

Channels

GETTING STARTED 1. Bounce off your take on AIDA(OR) 2. Variation by segment? 3. How will you know if it’s working?

EXAMPLES SALES hand sales (direct or indirect?) retail web phone delivery

PROMOTION personal (direct vs. indirect?) specialty media television radio AdWords + SEO



As Presenter RELATIONSHIPS & CHANNELS 1) What’s the AIDAOR journey? 2) How do the Relationships & Channels work for that?



REVENUE STREAMS Don’t overcomplicate it. When a plumber does something, you pay them. If a sink garbage disposal lasts twice as long, you’d pay more, right?


CREATE PRICING THAT TESTS ELASTICITY

Base Camp

Hootsuite Copyright 2014 Cowan Publishing

EXERCISE- REVENUE

Revenue Streams

GETTING STARTED 1. Where are you providing value? When? 2. How does the customer’s perception of value change over the course of their experience with the product? 3. How will you collect revenue, administratively?

EXAMPLES price/unit access/subscription fees utilization fees support & maintenance contracts hourly billing fixed price services billing royalties/revenue share


EXERCISE: SEGMENT TO VALPROP TO REVENUE Partner_1 Partner_2 Partner_3









(2 min) The templates here are made available on the same CC license terms as the original canvas.





























3 BUSINESS MODEL TYPES (Key Partners)

(Key Activities)


(Customer Segments)

1. INFRASTRUCTURE-DRIVEN 2. CUSTOMER SCOPE-DRIVEN (Key Resources)

(Channels)

3. PRODUCT-DRIVEN (Cost Structure)

(Revenue Streams)




3 BUSINESS MODEL TYPES UTILITIES

TELECOM

COMMODITIES

RETAIL

BANKING

CORP. LAW

APP. SOFTWARE

MEDIA

Infrastructure-Driven

Scope-Driven PACKAGED GOODS

Product-Driven Copyright 2014 Cowan Publishing

3 BUSINESS MODEL TYPES

INFRASTRUCTURE Kimberly-Clark: paper pulp DuPont: plastics and polymers SCOPE Procter & Gamble: cradle to grave products Baby Store: everything for babies in one place PRODUCT EarthBaby, TinyTots, Honest Company: compostable diapers and service


EXERCISE- KEY ACTIVITIES

Key Activities

GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. How will you do these things? 4. Will partners be involved? Should they be?

EXAMPLES INFRASTRUCTURE: a) industry participation b) supply chain management c) process design and iteration SCOPE: a) industry participation b) growth marketing online’ [SEO, web analytics..] c) supplier management PRODUCT: a) software product development b) growth marketing online’ [SEO, web analytics..]


EXERCISE- KEY RESOURCES

Key Resources

GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. How will you get it?

EXAMPLES INFRASTRUCTURE: a) ‘track record in [relevant topic]’ b) investment in infrastructure’ c)’supplier relationships/integration’ SCOPE: a) ‘track record with [customer segment]’ b) channel or partner relationships PRODUCT: a) proprietary technology b) rapid prototyping and validation methodologies c) expertise in [exotic technology]

(3 min)


EXERCISE- KEY PARTNERSHIPS

Key Partnerships

GETTING STARTED 1. Bounce off your business type 2. What is particular, strategic to your business model? 3. Are you comparatively good at it? 4. Where will partners make the business bigger and more effective?

EXAMPLES ‘direct sales partners’ ‘content creators’ ‘retail or distribution’ ‘creative agency’ ‘subcontractors’ ‘referral network’


COST STRUCTURE Minimize: Obviously. Defer: MVP’s; don’t over invest for the sake of creating ‘output’ Link: To revenue as much as possible (variable vs. fixed).


PROFIT DRIVERS: EXAMPLE Tighter Proposition (website, pres., etc.) Ease of Entry

Finite Deliverables

Revenue Drivers

Increased Use of Channels Upsell

Profit Drivers

Finite Cost

Cost of Sales

Easy to See What's on Menu Less Consultative Selling Simplified Contracting Intellectual Property Multipliers

Cost Drivers

Cost of Delivery

Tighter Talent Definition Simpler Training, Eval., Promotion

Engagement Management

(example: product-driven consulting)

Standard Project Management Comparable Post Mortems


COST STRUCTURE

Cost Structure

GETTING STARTED 1. How do you minimize? Use of partners? Off the shelf tech/ components? 2. How do you defer against customer development milestones? 3. How do you link to revenues? 4. Which are fixed vs. variable? How do they related to revenues?

EXAMPLES ‘fixed cost product development’ ‘fixed cost infrastructure investment’ ‘variable cost marketing or commissions’ ‘variable cost customer onboarding and support’ ‘variable cost inputs’


EXERCISE: COST STRUCTURE & LINKAGES Partner_1 Partner_2 Partner_3













As Presenter INFRASTRUCTURE 1) What’s your business type (infrastructure, scope, product)? 2) What are the major cost drivers and linkages? How do they tie to revenue? 3) How do the key activities, resources, and partnerships help that?



AGENDA Period! Venture Design I: Achieving Customer Relevance

Deliverables! Personas Problem Scenarios-Alternatives-Value Propositions Start Business Model Canvas Storyboards Customer Discovery

Venture Design II: Iterating to Success

Venture Planning- focal hypotheses, experiments, and minimum viable ‘product’

Venture Design III: Focusing & Validating Venture Progress

Review of field work, refinements of approach, planning next steps.

Venture Design IV: Engineering Detailing your business model and remaining focal Your Business Model! assumptions. Venture Design V: Designing the Pairing your learnings on personas & hypotheses with high Right Product! quality, actionable inputs (stories & wireframes) for product development and product validation. Copyright 2014 Cowan Publishing

RECOMMENDED NEXT STEPS

Follow-On Workshops 1. For Creating Strong Personas Day in the Life Workshop: http://bit.ly/daynthelife 2. For Structuring Your Product Value Propositions into Testable Assumptions Venture Design II: Iterating to Success: http://bit.ly/vdesignII 3. For Designing a Profitable Business Model Venture Design IV: Engineering Your Business Model: http://bit.ly/vdesignIV 4. For Linking the Above to an Effective Product Development Program Venture Design V: Designing the Right Product: http://bit.ly/vdesignV Copyright 2014 Cowan Publishing

FINI bit.ly/vdesignIV

www.alexandercowan.com/venture-design

www.alexandercowan.com/startup-sprints

@cowanSF

[email protected] Copyright 2014 Cowan Publishing

Business Model Canvas Workshop

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