Relational leadership

Editor's Notes

• #2: These are all graduate students: 1/3 MBA and 2/3 counseling and industrial psych students.A small number are older adult students. Most are late 20s and mid 30s. The MBAs are working now and the psych students will be moving into various careers though most are working at some job now.Room 5224.
• #3: My story + my experience coming to Silicon Valley
• #4: The topic for that class is "The nature of relational leadership." The class will address the relational competence of the leader and why the nature of this relationship is key to follower performance and organizational performance. You might also address the outcomes on performance when the leader does not build effective relationships with followers. Connect all of this to your expertise in any way that makes sense.
• #16: A business model describes how value is created, delivered, and captured in an organization.
• #17: The framework was created by Alexander Osterwalder who says that “any company can be described in 9 building blocks”. We will now show you a quick video that explains the canvas and then we will have a chat about the different components *play video‘Go through the following slides one by one and free to add good examples
• #18: Every business – even though you think it starts with the product –starts with the customers. Who is your customer? Do you have more than one customer? What is their pain (the problem you are solving)?Maybe you are creating a non-profit organization where you have both non-paying customers who receive help, and another customer segment who are able to pay you (paying customers). It can be a good idea to differentiate between non-paying and paying customers, so try to call the non-paying customers for USERS and the paying customers for CUSTOMERS.
• #19: What is the value that you are offering to your users and customers? How does your product help them? Why are they willing to pay you?
• #20: How are you delivering your product or service to the customer/user? Is it an online service or a physical product that has to be delivered?
• #21: How are you going to make the customers come back to you? You don’t want the customers to only stop by once, so you need them to fall in love with you and your company and find a way to build those relationships.
• #22: How are you going to make money? How much are the customers willing to pay? How does the customer like to be charged? It’s not that great to have a one-time transaction so maybe you want to find a way to get recurring revenue from the customers - like a license model where the customers pay you every week/months/year?
• #23: Which key resources to you need to have in your company in order to win in the market? It is engineering talent? It is lean manufacturing?
• #24: What key activities are your doing in order to create and deliver value to the customer?
• #25: Mostbusinesses need a number of key partners in order to succeed. You need to identify which partners that are crucial for your business and create a strategy on how to convince these partners to work with you. Who are your partners? What do the partners get out of the deal? Why do they want to work with you?
• #26: Now you can get an overview of the cost structure of your business. What will it cost to build the first version of your product? What are the ongoing maintenance costs? What about staff and marketing?
• #27: So this is what it looks like – the entire canvas with all the 9 building blocks
• #28: This is the version that we will hand out to you in a minute so you can start sketching out your own business model..
• #29: *Ask how they are doing, if they have any questions and if they got some good feedback from their buddy teams..As you can see they business model canvas is a great tool for prototyping and describing your business. It can also be a powerful tool to understand your competitors and create competitive advantage. Some companies use the canvas to sketch out the business model of their competitors and thereby gain new insights about how to differentiate their products and services from those of their competitors.*clickWhereas traditional innovation has been around a service of a new product *click
• #30: You can also innovate around your business model. You need to create a good business model around your products, otherwise you will never be able to make money in a sustainable way.
• #31: You have now sketched out the very first version of your business model, but it’s important to know that there can be many alternative models that might work even better…
• #32: Therefore we well shortly start sketching out some alternative models and see if we can find an even better model..
• #33: And maybe it will take many different versions before you find the perfect model..
• #34: I will now introduce three generic business models for your inspiration.
• #35: The first one is called The Bait and Hook model. The concept is that you throw out the bait and try to hook the customers.. The bait is one type of products that you sell very cheaply to the customers in order to get their attention and afterwards be able to sell more products at a higher margin (where you earn more money).
• #36: *explain the drawing…Your company is on the left hand side.. You can see how you have a one-time transaction with the customer where you sell one type of products at a low margin.. And then afterwards your customers will continue to buy another type of products from you where you earn a higher margin.*ask the students: Can you think of any companies that use the bait and hook model?*typical examples: games (buy the game for $1 and then buy more upgrades in the game), buy a car and then you need to pay for ongoing service, Cell phones you buy with a 2-year plan, playstation/Xbox where you buy the console very cheap and then you spend a lot of money on games that fit your console..
• #37: A classic example is how Gillette makes money.. Their customers on the right hand side are males age 16-99 who need a good shave.In this model you can see that Gillette has two different products – the razor handle that they sell very cheaply to the customers in order to hook the customers and then make the customers pay loads of money on overprized razor blades for the rest of their lives pretty smart right!
• #38: Freemium is a business model by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, but a premium is charged for advanced features, functionality, or virtual goods
• #39: The business has two different customer segments – group 1 who are non-paying customers (users), and group 2 who are paying customers. In a freemium business the vast majority of your customers will be freemium users (non-paying), but over time you are hoping that an increasing number of users will convert and become paying customers. As you can imagine you will typically need a lot of funding to start a freemium business since the revenue doesn’t start coming in until your users over time see enough value in your product to convert and become paying customers. The paying customers can of course take advantage of the additional features you offer to those who pay (premium account) but most people will probably be happy just using the free version of your product, which is ok!Can you think of examples of companies that use the freemium model?*fx. Many web services like Dropbox (online storage), free online games where you can get more levels if you pay (angry birds),
• #40: Another classic example of freemium is SKYPE. They offer free VOIP (voice Over Internet Protocol) to most users *ask how many use skype… then ask how many pay for Skype?Some users convert into paying customers if they also want to use Skype to call cell phones or access wifi hot spots in airports and that is the way Skype make money.
• #41: The last model I want to present is the connection platform. It is also the most complex model to understand because the company is serving so many different customers and users. The economic logic is that you get a ton of users to use your platform and because you now own a lot of relevant data you can charge some customers who wants to gain access to your freemium users.
• #42: Here is a model where you as a company are providing value to group 2 and 3 without getting anything in return, but because you have all these users on your platform you can serve group 1 who are willing to pay you money to gain access to your freemium users – typically through targeted advertisement or by getting access to your data.Can you think of any business that use this model?*Fx. Most social networks like LinkedIn, Instagram, and Facebook
• #43: The example here is Facebook *ask how many who use Facebook, then ask how many who pay to use Facebook? *Point out that Facebook provides value to all their users without charging them.. But because they now have 900M users, they can earn a lot of money from advertisement by selling data and provide targeted adds on their platform.
• #44: So that’s it.. Any questions about the three models?I hope this inspired you to come up with some new ideas.. See you can use some components from these three models.
• #45: Good - now you have created a lot of alternative models and it’s time to take the best components from each of the models and merge them together into your final business model… you can work on this the rest of the day..
• #46: During the past stages of the process we have tried to understand the user’s core problem and we have come up with a great idea that we think can help solve this problem.. But it’s important to remember that all we have really done is sit here in this room and come up with a lot of assumptions (guesses) about the user – we now need to realize that there is no truth in this room, only guesses! The only way to make sure we are right about all our assumptions is to go out of the building and talk to the potential users of your product or service! This process is what we call Customer Development and it is one of the absolute most important parts of being an entrepreneur and innovator – cause as we’ve mentioned before “nobody will pay you to solve a non-problem” – you need to understand the real pain point before you can find the right solution.
• #47: One of the experts on customer development is a serial entrepreneur called Steve Blank, who is now a professor at UC Berkeley, Stanford and Columbia University in California. Steve describes a startup as “a temporary organization designed to search for a repeatable and scalable business model”. He stresses the importance of understanding that your role as a founder of a new company is to SEARCH – to write down all your hypothesis (guesses) about your business in the business model canvas and then go out and test them one by one.. Search for the truth about your idea before you start spending money on creating a product that nobody wants! So… *change slide
• #48: I now want you to spend the next hour on testing your guesses by getting out of this building! Go out and meet potential users of your product, present your idea to them, ask them if they experience the problem you want to solve for them and if it would be valuable to them if you could solve this problem. Would they be willing to pay you money for a solution to their problems? How much would they pay? Remember to take all criticism as a gift – smart entrepreneurs always realize that negative feedback is a gift.. That someone will spend the time to complain is GREAT for your business cause that is an opportunity for you to improve your product/service. If you can’t reach your customer physically within an hour then pickup your phone and call some potential users/partners – try to focus on testing your most critical components of your business model.. If you need a specific partner to work with you try to call them, if you need a certain supplier to produce your product – call them and ask if it’s possible and how much it costs.. Most importantly make sure to validate your value proposition for your users (test if the users want to use your product).
• #49: Our approach, however, asks you to consider yourself a one-person business. Then, it helps you define and modify your “personal business model” — the way you engage your strengths and talents to grow personally and professionally.
• #50: The Canvas works for describing personal business models just as it does for describing organizational business models. Note a couple of differences between the two, though: In a personal business model, the Key Resource is you: your interests, skills and abilities, personality, and the assets you own or control. In organizations, Key Resources often include a broader range of resources, such as other people. A personal business model takes into account unquantifiable “soft” Costs (such as stress) and “soft” Benefits (such as satisfaction). The organizational business model generally considers only monetary Costs and Benefits.