Entrepreneurship Definitions Business Model Canvas and Environment Map

Value proposition design

Two schools of thought: Business model = the rationale of how an organization creates, delivers, Pains = anything that annoys your customers before, during,
1. Economic function = entrepreneurship is defined as an and captures value and after trying to get a job done or simply prevents them
economic function and entrepreneur is defined by the role in Business Model Canvas: from getting a job done. They also describe risks, that is,
society - customer segments, value positions, channels, customer relationships, potential bad outcomes, related to getting a job done badly or
- Flaw: doesn’t make sense to decide what economic revenue streams, key resources, key activities, key partnerships, cost not at all.
functions are “entrepreneurial” structure
- Customer segment: target groups of people (mass market, niche, Gains = outcomes and benefits your customers want. Some
2. Entrepreneurs have a common sets of individual traits
- Flaw: single psychological profile of an entrepreneur segmented, diversified, multi-sided platforms) gains are required, expected, or designed by customers, and
doesn’t exist. - Channels: how a company communicates/reaches customers (5 some would surprise them. Gains include functional utility,
Definition of entrepreneurship = the pursuit of opportunity phases: awareness, evaluation, purchase, delivery, after sales) social gains, positive emotions, and cost savings
without regard to resources currently controlled. - Customer relationships (personal or automated) Products/services are: physical, intangible (copyrights),
Promoter = driven by perception of opportunity (left) - Revenue streams: transaction or recurring revenues digital, financial
Trustee = driven by resources currently controlled (right) - Key resources: physical, intellectual, human, financial Problem solution fit = when customers get excited about your
6 dimensions of business practice = Strategic orientation, - Cost structure: all costs incurred to operate a business model value proposition which happens when you address important
commitment to opportunity, resource commitment process, 4 areas of a business: customers, offer, infrastructure, infancies viability jobs, alleviate extreme pains, and create essential gains that
control of resources, management structure, reward Environment Map = helps you understand the context in which you customers care about.
philosophy create - 3 types: (on paper) problem-solution fit, (in the market)
Rewards for entrepreneurs: growth, income, flexibility
product-market fit, (in the bank) business model fit
3 categories for business: small, traditional high growth
ventures, profitless high growth ventures
- Value map (left) meets your customer profile (right)
Customer Profiles
B2B: value propositions typically involve several
stakeholders in the search, evaluation, purchase, and use
of a product or service
- UCLA replacing CCLE involves faculty, students,
more
Customer profiles:
- decision makers = individuals who buy
- Economic buyers = people who control budget and
make the purchase
- Saboteurs = people/groups who can obstruct or derail
the process of searching, evaluating, and purchasing
- Influencers = opinions might count and decision
makers might listen to
- Recommenders = people carrying out search process
and make a formal recommendation for/against a buy
- End users = beneficiaries of product or service
B2C: might involve several stakeholders too
- a toy for a kid involves parents, kids, friends, siblings
Customer profiles:
- Decision makers = Chief information officer
- Economic buyers = chief financial officer
- Saboteurs = IT people might lose job from CCLE
Stevenson: - Influencers = colleagues at other institutions
Entrepreneurship: a behavioral phenomenon, an approach to - Recommenders = select committee of IT, staff, etc
management that is defined as the pursuit of opportunity - End users = students and faculty
without regard to resources currently controlled defined by
Example:
6 dimensions ^
Ralph want BB gun for Christmas:
2 historical definitions of entre:
In order ^ Dad, dad, friend at school or ads, mom or
Functional = role of entire in economy
teacher, Ralph, Ralph,
Personal (supply-side) = respect for achievement, control,
Customer Profiles
The Anthropologists = Observe potential customers in the real world to
get good insights into how they really behave
The Co-creator = Integrate customers in the process of value creation to
learn with them
The Impersonator = “Be your customer” – spend a day in your
customer’s shoes
The Data Detective = Build on existing work with desk research.
The Journalist = Talk to potential customers to gain customer insights.
The Scientists = Get customers to participate in an experiment
Hypothesis-Driven Entrepreneurship
3 other ways to launch a business:
- build it and they will come = relies on founders vision Other frameworks and perspectives
- Waterfall planning = product development divided into phases Resource-based view (RBV) = resources are
- Just do it! = improvisational approach what the company has and capabilities is what
Hypo-driven entre = maximizes feedback for resolving uncertainty Strategy = integrated set of choices that positions the business in its industry to
the company does with them
- Perseve, pivot, or perish generate superior financial returns over the long run - source of company advantage
- Not recommended if mistakes must be limited, unsure if demand is - has trade-offs and creates fit, is NOT operational effectiveness - interplay of 3 forces: market demand,
low, or long production cycles
- Where should we compete and how should we compete scarcity, appropriability
Lean startup = orgs that follow the principles of ^ Operational Effectiveness = Performing the activities of creating, producing,
Emergent strategy = view that a good strategy
Steps: extract hypo, prioritize hypo, design tests with testing cards, selling, and delivering a product or service “better” (e.g. faster, with fewer inputs,
is less the product of delibs and planning than
prioritize tests, run tests, capture learnings with cards, make progress defects, etc.) than rivals.
collisions of intentions and reality
Minimum viable product (MVP) = The smallest set of features and/or Competitive Advantage = generates superior, sustainable financial returns.
5 common business model patterns
activities needed to complete a “Build-Measure-Lean” cycle and thereby The goal is to maximize the gap, or the wedge, between a customer’s willingness
1. Unbundling business model
test a business model hypothesis to pay and the company’s cost.
2. The long tail = Business offers large
- can constrain product functionality or operational capability (only a 3 strategies:
number of niche products/services with
subset of the features envisioned) and/or operational capability (rely differentiation = creating something that is perceived industrywide as unique
low demand + high number of high
on temporary tech to deliver the functionality) overall cost leadership = offering a combo of cost benefits (low-cost)
demand products
- Smoke test = a product that is truly minimal because it does not yet focus = targets a buyer group, segment of product line, or geographic market - unlocks new revenue streams, expands
exist Industry competitors: substitutes, bargaining power of suppliers, potential
customer base, differentiates themselves in
- Can shorten product development cycle and release smaller batches entrants, bargaining power of buyers, complementary products/services
market
- Concerns about idea theft and reputational risk Blue ocean = all industries not in existence, industry can be reconstructed - Digital distribution, lower cost, shelf space
Parallel testing = software testing technique done simultaneously by expanding markets and creating new ones
3. Multi-sided platforms = facilitate (uber)
5 data traps to avoid: red ocean = all industries in existence, the known market space
4. interactions between multiple groups

÷
- false positive trap = seeing things that are not there Strategy canvas = both a diagnostic and an action framework for building a - network effect = up in value of platform
- False-negative trap = not seeing things that are there compelling blue ocean strategy, capturing the current state of market - Groups must be interdependent
- The “local maximum” trap = missing out on the real potential - x axis is range of factors the industry competes on, y is offering level 5. Free as a business model (google)
- The “exhausted maximum” trap = overlooking limitations of market Value curve = slope/depiction of company’s performance across industry - generate revue through alternate means
- The wrong data trap = searching in the wrong place - 4 actions framework of blue O: reduce, eliminate, create, raise standard -Advertising, features, subscriptions, etc
-Open source model = free to anyone
-Freemium model = basic version is free
but users can upgrade to premium
version with additional features (adobe)
-Razor-blade model = sells product
(razor) at low price, to drive demand for
the complementary product (blades) sold
at a higher margin
5.x6.Open business models = companies
embrace concept of open innovation,
source, collaboration, access,
partnerships to unlock new opportunities
for growth