New Venture Development

Transcription

1 New Venture Development KIEI-940-0: Winter 2017 Day: Tuesdays 6:30 9:30 pm Location: TBD Faculty: Linda Darragh Executive Director, Kellogg Innovation & Entrepreneurship Initiative Clinical Professor of Entrepreneurial Practice Jacobs Room Rick Desai Adjunct Lecturer Overview: This course is the logical continuation of New Venture Discovery (KIEI 462). Student teams entering this course are expected to have done extensive market research, especially consumer-focused interviews to understand the potential product-market fit for their business concept. This course is focused on further testing and validating product-market fit, user interfaces and experience, and advancing to the development of a refined MVP concept. Teams are not expected to have programmers at this point as the focus is on using a variety of free ware and processes to test the product/service. A significant portion of the workload for this course will occur outside of the classroom. Students must be prepared to test and validate their business model hypotheses by engaging with potential customers and industry experts as well as using digital tools. Within the classroom, students will be encouraged to share learning experiences and help other student teams. The course work will be supplemented by guest speakers who are experts in specific industries as well as functional areas and a pool of alumni and local mentors who can assist in the development of student businesses. Admittance to New Venture Development is by application only. The application is available here: application link. If a student wants to by-pass KIEI 462, they must identify that they are well versed in the process of design thinking and have already conducted significant market research to validate their business concept. Other courses that are beneficial to take in advance of this course are: MKTG 961: Entrepreneurial Tools for Digital Marketing and KIEI 952-5: Building Innovation, Teams, and Cultures Upon the completion of New Venture Development, student teams and faculty will determine whether a team should move to New Venture Launch. It is anticipated that several teams will realize significant challenges with their concept resulting in questions regarding the future viability of the business.

2 Students whose businesses are not viable will not be penalized with respect to their grade if they have shown a committed effort throughout the course to test their business concept. New Venture Development Objectives: Continue to validate the value proposition, customer segment and go-to-market strategy. Research, define, prototype and implement an initial product offering and iterate as necessary. Obtain experiential learning in the process of testing and re-fining a business concept. Create a MVP that demonstrates customer engagement. (see below) MVP for Customer Engagement MVP is often described as a product that has just enough features to gather learnings on how to advance product development. The focus is more often on the product and not the learnings. In New Venture Development we want to focus on how to structure a series of tests to gather 'learnings' around customer engagement. To accomplish this, students can develop a product (wireframe, landing page, video, physical prototype) that tests customer engagement or obtain a sale or commitment to purchase, broker an exchange or partnership, or anything else that indicates that customers value your business concept and mitigates the biggest near-term risks of the venture. Weekly Progress Reports and Meetings: Each week student teams will be expected to submit a progress report that includes: Hypothesis they were testing the previous week Details on the tasks that were undertaken to test the hypothesis Insights obtained Plans for the following week Assistance required 2 points - Tasks accomplished. Number of interviews. Resourcefulness of interviews (not classmates) 2 points - Insights. Are the tasks providing meaningful insight into hypotheses that are being tested. 1 point - Writing. Are all 5 parts of the progress report included? Effort put into writing progress report. Progress reports should be posted on Canvas by Monday at noon. Every other week, student teams will meet with the professor to review progress to date, discuss challenges and brainstorm on next steps. The team and professor will determine a grade that reflects the effort and resourcefulness of the team during the previous two weeks. Team Building: One of the key determinants of a positive experience throughout the course is the quality of team interaction. A great team almost always yields great results. We strongly believe that class participants need to learn from/share with their team members and also interact with members of other teams. In order to enhance communications, we will be using Canvas this quarter. We will be evaluating how individuals provide constructive criticism, referrals and ideas to their classmates as part of the participation grade for the course. Grading: Individual grades for the course will be based on both the team s performance and the individual s contribution to the team:

3 Team Grading Progress Reports and Assignments: How has the team externally tested assumptions to validate the market, how has the team iterated to improve customer acquisition, how has the team leveraged resources to do more faster, how well has the team kept professors informed through Progress Reports Week 8-9 Class Presentations This is not an investor presentation but an overview of the business concept and validation. Team will be evaluated on the progress and research they have done to date, the quality of the presentation and the ability to answer questions from the judges/mentors. Final Paper 1) Next Steps Paper should briefly describe the key learnings that led to the final MVP for the course and then a detailed plan for the next steps you plan to take in the immediate future to advance your business. 2) Put it to Bed Paper is for student teams who realize that their business concept is not profitable/scalable/feasible. The paper should describe the tests and research that was conducted in the quarter and that led to this final decision. Individual Grading Class Participation and Peer Evaluations do you contribute to robust discussion in the classroom by asking thoughtful questions and sharing personal experiences, are you contributing value to your team and other teams (including participation on the online class discussion forums) Final Assessment this paper (2-3pages) should focus on your individual reflection on the key insights into entrepreneurship gained during the course. 55% 10% 15% 15% 5% Technology Usage: Students will be allowed to use laptops in the classroom ONLY when the professor allows. Primarily this will be when students are learning new testing tools and techniques. All laptops must be powered down during any guest speaker presentations. No exceptions! All mobile phones/pda must be muted during class. Failure to do so may impact a student s class participation grade. Required Reading before the first class: Business Model Generation, Alexander Osterwalder & Yves Pigneur, 2010 John Wiley and Sons The Lean Startup, Eric Ries, 2011 Crown Business Udacity.com EP245 Or The Start-up Owner s Manual: The Step-by-Step Guide for Building a Great Company, Steve Blank & Bob Dorf, 2012 K & S Ranch Required reading for the course: UX for Lean Start-ups, Laura Klein, 2013 Recommended Books for the course: See articles and books listed in the class schedule below.

4 Class Schedule The class schedule outlined below may change slightly during the course as it relates to guest speakers. Please Note: It is understood that student teams in class will be at different points in their development and teams will also have a variety of pathways for testing based on the nature of their product/service. We will customize homework and work plans as much as possible to each teams development process. January 3 Week 1: Minimial Viable Overview: This first class will discuss the broader vision of a MVP that drives customer engagement. As described above this could be a product (wireframe, landing page, video, physical prototype) that tests customer engagement or a sale, commitment to purchase or partnership, or anything else that indicates that customers value your business concept and mitigates the biggest near-term risks of the venture. To develop your MVP, New Venture Development focuses on how to structure a series of tests to gather 'learnings' around customer engagement. Diuring the first class we will also provide an overview on types of testing techniques as well as providing some examples of micro-pilots. The balance of the class will be devoted to short presentations from each student team. Students are encouraged throughout the course to provide constructive advice to other teams by challenging hypotheses, identifying opportunities, sharing resources, offering referrals and other respectful guidance. a) Introduction: Introduction of professors and overview of the objectives of the course. b) Student team presentations: Each team will prepare a 5-minute presentation. The presentation should include the following slides. 1) The problem 2) Your solution (no more than 2 slides) 3) Profile of target customer 4) Competition 5) Team 6) The one key hypothesis that you must test to determine if the business is viable. Assignment: 1) Update your business model canvas. 2) For the one key hypothesis identified in your presentation, outline how this hypothesis will be tested. 3) Porter s 5 Forces please review if you are not familiar with this framework.

5 Required Reading: UX for Lean Start-Ups: Part I, Laura Klein, 2013 January 10 Week 2: Why Now, Why Me? Overview: Far too often entrepreneurs are so focused on the day-to-day operations of launching or growing their business that they do not take time to analyze the external forces and stakeholders that are affecting their industry and their business. External factors can include legislation that may be months in deliberation or an economic adjustment that abruptly affects the market. Many entrepreneurs do not know nor understand all the stakeholders involved in their industry. This lack of understanding can present challenges in the future when trying to launch and/or grow the business. In many cases, it is a different set of stakeholders that may offer the greatest opportunity for the business to succeed. Identification of the stakeholders is not only important, but one must also understand their motives and possible incentives. We also probe into the question about where you fit into the landscape. How did you identify the problem? What do you bring to the table? a) Lecture: Frameworks to analyze external forces and stakeholders Lecture will include strategic frameworks that can assess factors that impact the viability and feasibility of a business concept. b) Guest Speaker: Nicole Staple: Brideside.com Nicole will provide an in-depth look at the evolution of customer acquisition at Brideside, a B2C company. Elements of digital marketing, testing of various messaging options and improving customer experience will be discussed. Assignment: 1) PEST Analysis (Political, Economic, Societal, Technological factors) i. Identify relevant factors that could affect your business. ii. Identify the importance of each factor high, medium or low iii. Identify whether this factor is affecting the business currently or could have an impact in the future. 2) Draw your industry map. Additional information on various stakeholders, areas of competition or opportunity can be described in an attachment. Required Reading: UX for Lean Start-Ups: Part II, Laura Klein, 2013

6 January 17 Week 3: Two-sided Marketplaces Overview: With the success of Uber, AirBnB, Instacart and may other marketplaces, there is a plethora of new entrants leveraging this business model for every type of interest and industry. This class will take a deep dive in analyzing what makes a two-sided marketplace successful. Areas covered will include customer acquisition, growth model and revenue models. 1. Lecture: Two-sided marketplace 2. Guest Speakers: TBD 3. Rick Desai: How to Hack Required Reading: Read Hub-Spot case UX for Lean Start-Ups: Part III, Laura Klein, 2013 Janaury 24 Week 4: Customer Acquisition Overview: A key metric used to evaluate the potential success of a company is the relation of the cost of acquiring one customer (CAC) to that customer s life time value (LTV). If CAC<LTV, you are likely to have a successful business. If CAC>LTV, you might want to consider some kind of pivot or to put the company to bed. Given that early stage ventures are testing a variety of customers, it is important to apply this metric to each customer segment in order to determine which customer is most valuable to the business. The first part of this class will discuss the HubSpot case which provides a framework to analyze and evaluate this key metric for different customer segments. The second part of this class will start with a discussion of the testing culture in early-stage ventures, and then provide a deep dive on how to measure and calculate the cost of customer acquisition. Assignment: 1. Case Discussion: Hub-spot case 2. Customer Acquisition Funnel: 1. Draw the customer acquisition funnel for your business 2. Identify key metrics to monitor along the funnel 3. Describe how you are going to test these metrics Required Readings Watch Dave McClure's Startup Metrics that Matter -

7 Identify your One Metric that Matters - January 31 Week 5: What is the Key Metric for your Business? Overview: Being test-driven is essential and understanding customer acquisition metrics is important, but unfocused testing and analysis can lead to paralaysis and a wealth of un-actionable data. Often the data being collected will not provide critical insight into the potential success of your business model. Entrepreneurs must identify a key set of metric(s) by which they can monitor their business on an ongoing basis. a) Student Team Presentations on Customer Acquisition Metrics (or Personas) Each team will prepare a 5-minute presentation about their proposed approach to capturing customer acquisition metrics. b) Key Metrics Review Each team presents the key metric or set of key metrics they will focus on, and why. We review these metrics and dive into the details of how best to measure them, and with what methods, tools, and frequency. Required Reading: Beginner's Guide to CRO - The Definitive How-To Guide for CRO - February 7 Week 6: Build Something Small Overview: Now that teams have clarified their value proposition and target customer, how can you design a great customer experience? This class will discuss the basics of great UI/UX and how that can be applied to creating a high quality design for a product, presentation, pitch or demo process. 1. Lecture: Creating and testing user interfaces 2. Design for America: Rebecca Breuer and team members from Design for America will help each team with design. February 14 Week 7: Expanding Your Customer Base: Partnerships & Building a Brand

8 Overview: This class we will explore two methods to expand the customer base for your company. 1. Partnerships: All businesses should consider partnerships to access additional customers as soon as they have built some traction and credibility. B2C businesses should identify larger, complimentary businesses that serve their same customer base. Through partnerships, the business model evolves to B2B2C and can rapidly gain customers. For B2B companies, they can leverage other B2B companies to endorse, re-sell, or even integrate their product/services. 2. Building A Brand: With few resources and little if any, credibility or name recognition, how do you begin to build a brand? a) Partnerships Guest Panel: TBD b) Building a Brand Assignment for Next Week Prepare for presentation This presentation should consist of the following elements: The problem Your solution (no more than 2 slides) Addressable market/market size Profile of target customer Competition Team Key Hypotheses tested to date How these hypotheses were tested and initial results Next steps February 21 & 28 Week 8 & 9: Presentations Overview: On average, about 40% of the student teams identify issues with their business concept during the initial testing period. Problems can include less than ideal market size, the larger than expected cost of acquisition, challenges around operations or barriers posed by a set of stakeholders. The presentations allow students to critically assess their business models before they have to bid on courses for the next quarter. Successful entrepreneurs are brought into the class to hear and comment on the presentations.

9 Presentations will be scheduled for the entire class session. The length of each student s presentation and Q&A session with the guest entrepreneurs will be determined once the actual number of student teams in the course is known. All students are expected to attend both classes even if they are not presenting. Listening to the comments and suggestions of the entrepreneurs will be a learning experience in itself. Homework: Continue to test and refine the business model. Incorporate suggestions resulting from the presentation. March 7 Week 10: Failing with Integrity, the Entrepreneurial Mindet Overview: The first part of the class will highlight the stories of two entrepreneurs that have had businesses that failed. The focus of their story is not on why they failed but how they exited the business with integrity for all the stakeholders. The essence of the Lean Startup methodology is to learn and fail fast. By the end of New Venture Development a number of student teams will likely realize that their business concept should be put to bed. This end result is just as successful as a business concept that continues to New Venture Launch. The last part of this class will allow all teams to discuss their next steps and reflect on the importance of the entrepreneurial mindset in the context of being in a MBA program. a) Panel of Entrepreneurs This panel will be composed of entrepreneurs who have had to exit an early stage business as a result of problems in scaling the business. The entrepreneurs will discuss the origins of the business, how it evolved and where and when challenges began to arise. They will also describe how they exited the business and what they did afterwards. b) Student teams Each of the student teams will describe their next steps and the rationale behind this decision. c) Course Wrap-up and TCEs Homework: Work on the final paper for project (team paper) and your individual assessment. A. Project Team Paper 1) MVP Concept Paper: This option is for those teams that are ready to engage with an engineer to develop a working MVP. This paper should not only present the work flows, wire frames of the website/app, and technical requirements so that an engineer can begin to program, but there should also be descriptions of:

10 Go-to-market strategy (especially for the initial launch) Channel Partnerships (discussions/progress to date) Revenue models (first phase and potentially subsequent phases) Timeline of work to be performed in the next 10 weeks in New Venture Launch 2) Next Steps Paper: This option is for teams that are moving towards a launch but still need further testing to validate their customer segments or value propositions. This paper should describe in detail the business concept as it stands at the end of New Venture Development. The paper should include information on: Work flow and process Updated mock-ups of user interface Go-to-market strategy Possible partnerships Potential revenue models This paper should also detail the next steps and a timeline for work to be performed in the next 10 weeks (whether you are taking New Venture Launch or not). 3) Putting an Idea to Bed Paper: This option is for teams who have decided that their business concept is not viable at this point in time. This paper should outline the steps the team undertook to test and validate various hypotheses, opportunities to pivot that were explored, and the thought process behind the decision to not advance with the idea further. B. Final Individual Assessment Each individual student is required to complete this assessment. This paper (2-3 pages) should focus on your individual reflection on the key insights into entrepreneurship gained during the course. Questions that you can address include: What worked and what did not work with respect to advancing your business concept during the quarter. What would do differently if you were starting over now? What are the three key take-aways you have learned about starting a business? Week 11: Papers Due Please submit papers by Monday at noon of Exam Week.