entrepreneurship_pdf.pdf

Entrepreneurship BMGT108L Dr. Vezhavendhan R SMEC, VIT- Vellore Assessment Configurations Final Assessment Test (FAT) = 40 Marks ( 100 marks exam → 40) CAT-1 15 Marks Cat-2 15 marks Quiz-1 10 Marks (09 Sep- Mon)...

Entrepreneurship BMGT108L Dr. Vezhavendhan R SMEC, VIT- Vellore Assessment Configurations Final Assessment Test (FAT) = 40 Marks ( 100 marks exam → 40) CAT-1 15 Marks Cat-2 15 marks Quiz-1 10 Marks (09 Sep- Mon) 60 Marks Quiz-2 10 Marks (28 Oct- Mon) DA-1 10 Marks (08 Nov- Fri) Activities: 1. General enterprising tendency test and formation of venture teams master class 2. Problem statement canvas, crafting the customer persona and market estimation 3. Build your VPC canvas, conduct compensation analysis and create MVP 4. Build lean canvas, MVP and conduct MVP validation 5. Business planning templates 6. Craft your brand positioning statement 7. Developing three – 5 year financial projections and examine unit economics craft your brand positioning statement and build your pitch deck Case studies 1. Desi hangover and Verloop Masterclass 2. Honey twigs and Inzpiria Masterclass 3. NUOS and Knorish Masterclass 4. Bodh Gems masterclass 5. Data Sutrum Masterclass 6. Torch-it and 100 Xvc Masterclass Text Books Innovation and entrepreneurship: practise and principles by Peter Drucker Entrepreneurship a South Asian perspective by DF Kuratko , T.V. Rao Cengage (2016) Entrepreneurship by Robert de Hisrich, Michael P Peters, Dean A Sheperd Sabyasachi Sinha, Mcgraw Hill 11th Edition 2020 Ries E 2011 the lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses? Blank S.G.. and Dorf B (2012). The startup owners manual. The step by step guide for building a great company. K&S Ranch Roy. R (2017). Indian Entrepreneurship. Theory and practice. New Delhi. Oxford University Press. Osterwalder and Pigneur Y (2010). Business model generation. A handbook for visionaries, game changers and challengers, John Wiley and sons.  Module-1 Introduction to Entrepreneurship Module-1: Introduction to entrepreneurship Entrepreneur and entrepreneurship Evolution of the concept and emerging trends in entrepreneurship Myths about entrepreneurship Role of entrepreneurial teams Entrepreneur vs Intrapreneur, creativity, innovation and inventions Diffusion of innovation Technology and innovation Types of technological innovation Disruption How technology is changing business models and the society Activity -General enterprising tendency test and formation of venture teams master class  Entrepreneur: (No specific definition) A person who undertakes the risk of starting a new business venture is called an entrepreneur. An entrepreneur is an Innovator, problem solver, risktaker, businessman, creator etc. Examples: Mukesh Ambani Gautam Adani C.K. Ranganathan P.C. Mustafa etc.  Entrepreneurship: Entrepreneurship refers to the process of creating and managing a business to achieve desired objectives. It involves identifying market needs, developing a business plan, acquiring the necessary resources, and managing the business’s operations to generate profit and growth The most prominent example of entrepreneurship is the starting of new businesses Airbnb - This is an example of entrepreneurship where the founders, Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, created a unique online marketplace for lodging, primarily homestays for vacation rentals, and tourism activities.  Evolution of the concept and emerging trends in entrepreneurship The roots of entrepreneurship stretch back to ancient civilizations, which established the initial frameworks for trade, nurtured the spirit of innovation, and embraced the concept of risk-taking. During the earliest human civilizations dealers and merchants traded to suit the needs of their societies. In ancient times, entrepreneurship was rooted in trade and craftsmanship. Traders traveled vast distances, overcoming geographical and cultural barriers to introduce their products to new markets. Craftsmen honed unique skills, producing goods that catered to local needs. The essence was survival and localized growth.  The Industrial Revolution The 18th and 19th centuries witnessed a shift. The invention of machinery transformed businesses. Factories emerged, leading to mass production and ushering in big corporations. Entrepreneurship was no longer just about individual tradesmen; it was about building vast empires, scaling industries, and employing thousands. The 20th Century — Silicon Valley Era The late 20th century marked the advent of technology entrepreneurship. Silicon Valley became synonymous with innovation. Companies like Apple, Microsoft, and later Google, shaped the tech-driven entrepreneurial spirit. Startups became the new buzzword, and venture capital transformed the funding landscape.  The Present Today, entrepreneurship has transcended physical products. The digital realm, particularly with platforms and apps, dominates. Companies like Uber and Airbnb, which own no cars or hotels, have revolutionized industries. Social entrepreneurship, focused on societal impact, has gained momentum. In short, Entrepreneurship has come a long way from ancient traders to tech magnates. As it continues to evolve, one thing remains constant: the spirit of innovation, resilience, and making a mark on the world.  Myths about entrepreneurship  Entrepreneurial teams: Entrepreneurial teams are pivotal in the inception and growth of startups. They are groups of individuals who pool their resources, ideas, and expertise to establish and manage a new business venture. Here are some key insights: Shared Vision: Successful teams are united by a common entrepreneurial passion and strategic vision, which are essential for superior performance. Diverse Skills: Members possess complementary skills, ensuring a well-rounded approach to business development, marketing, operations, finance, and management. Flexibility and Communication: These teams are adaptable and maintain open, effective communication, allowing them to quickly respond to market changes and collaborate efficiently. Leadership and Accountability: Strong leadership and individual accountability within the team are crucial for driving performance and achieving shared goals. These elements contribute to the formation of a robust entrepreneurial team capable of navigating the challenges of launching and growing a successful business.  Role or Entrepreneurial teams: Entrepreneurial teams play a crucial role in the success of startups & new business ventures. Here are some key functions they perform: Resource Pooling: They combine their resources, ideas, and knowledge to create a solid foundation for the business. Opportunity Identification: Teams with diverse experiences can better identify and seize business opportunities. Decision Making: A team with varied perspectives can make more informed and strategic decisions, avoiding groupthink. Risk Mitigation: By sharing the risk among team members, the impact of potential setbacks is minimized. Skill Diversity: Members bring different skills and expertise, which is vital for all aspects of business management. Adaptability: They are flexible and can pivot quickly in response to changing market conditions.  Effective Communication: Open and effective communication within the team ensures that ideas and feedback are shared freely. Leadership and Accountability: Strong leadership and individual accountability drive performance and goal achievement. In essence, entrepreneurial teams are the backbone of any startup, driving it towards growth and innovation. --------------------------------------------------------------- Microsoft: By Bill Gates and Paul Allen Google: By Larry Page and Sergei Brin Apple: By Steve Jobs and Steve Wozniak Flipkart: By Bansal Brothers- Sachin and Binny Zomato: By Deepinder Goyal and his colleague Pankaj Chaddah  Entrepreneur vs Intrapreneur Intrapreneur: An individual who works on developing new ideas and products within the confines of the business that they already work at. Intrapreneurs include any person within the company that applies entrepreneurial skills, vision, and forward thinking into the role that they have in the company. One of the more appealing reasons to be an intrapreneur is that it allows you to form new ideas, products, and business goals without taking on the risks that come with starting a new business as an entrepreneur. An intrapreneur can be anyone from an intern to the vice president of the company in question. Successful intrapreneurs will foster innovation in the company that they work for. In most cases, an intrapreneur will be given full control over the project that they are working on even though the project is usually designed to have a significant impact on the company itself.  Entrepreneur Intrapreneur Entrepreneur refers to a person who Intrapreneur refers to an employee of the set up his own business with a new organization who is in charge of undertaking idea or concept. innovations in product, service, process etc. Follows Intuitive approach Follows Restorative approach Uses own resources. Use resources provided by the company. Raises the required capital by himself Financed by the company. Establishes new venture Works in an existing venture. Establishes new projects Independent Dependent Risk is borne by the entrepreneur Risk is taken by company himself. Takes profit or loss Takes a salary Works to create a leading position in Works to change and renew the existing the market. organizational system and culture.  Creativity Creativity in entrepreneurship involves generating novel and useful ideas to solve problems or meet market needs. It is the foundation of innovation and a critical skill for entrepreneurs. Creativity helps entrepreneurs identify unique opportunities, develop innovative products or services, and differentiate themselves from competitors. Importance: Competitive Advantage: Creative solutions can provide a significant edge over competitors. Adaptability: Creative entrepreneurs can quickly adapt to changing market conditions and customer needs. Sustainability: Innovative approaches can lead to sustainable business practices and long-term success. Techniques to Enhance Creativity: Brainstorming: Encourages free thinking and the generation of a large number of ideas without immediate criticism. Mind Mapping: Visual tool to organize thoughts and explore connections between ideas. SCAMPER: A technique that prompts creative thinking by asking questions related to Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, and Reverse. Design Thinking: A user-centered approach to innovation that involves empathizing with users, defining problems, ideating solutions, prototyping, and testing Barriers to Creativity Fear of Failure: Inhibits risk-taking and experimentation. Fixed Mindset: Belief that abilities are static and cannot be developed. Lack of Resources: Insufficient time, money, or support can stifle creative efforts. Conformity: Pressure to conform to norms and avoid standing out. Overcoming Barriers Encouraging a Growth Mindset: Belief that abilities can be developed through dedication and hard work. Creating a Supportive Environment: Providing resources, time, and encouragement for creative endeavors. Embracing Failure: Viewing failures as learning opportunities rather than setbacks. Promoting Diversity: Diverse teams bring different perspectives and ideas, enhancing creativity.  Innovation and Inventions Innovation: The process of translating an idea or invention into a good or service that creates value or for which customers will pay. It involves the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. Invention: The creation of a new product or process through the development of new ideas. It is the first occurrence of an idea for a new product or process. The Role of Innovation in Entrepreneurship Competitive Advantage: Innovation helps entrepreneurs create unique products or services that stand out in the market. Market Expansion: Innovative products can open up new markets and customer segments. Sustainability: Continuous innovation is essential for long-term business sustainability and growth. Problem Solving: Innovation allows entrepreneurs to solve problems in new and effective ways. Importance of innovation Innovation plays a crucial role in entrepreneurship for several reasons: 1.Driving Competitive Advantage: Entrepreneurs can set themselves apart from competitors by acquiring a competitive advantage in the market through innovation. Innovative entrepreneurship is crucial for identifying emerging trends and market demands, allowing businesses to create new and appealing goods or services for their target audience. 2.Identifying Opportunities: Innovation allows entrepreneurs to identify and seize market opportunities that others may overlook. It helps companies stay relevant in an ever-changing world, where customers are always on the lookout for the next big thing. 3. Creating Value: Innovation is doing something different to create value. Business innovation refers to the process of introducing new ideas, methods, products, or services that result in significant improvements or advancements within an organization. 4. Enhancing Efficiency and Productivity: Innovation often involves transforming creative ideas into new solutions that drive business growth, improve efficiency, and meet customers’ changing needs while improving decision-making and problem-solving across the organization. 5. Solving Societal Challenges: Innovation is also essential for solving societal challenges. Innovative ideas and approaches can help solve some of the world’s most pressing social and environmental problems. Innovation is more than just a buzzword—it’s a critical path to success. It’s a key driver of entrepreneurial success, and entrepreneurs play a critical role in bringing innovative ideas to life. They adapt to change, solve problems, and fuel business growth through innovation The role of invention in entrepreneurship Invention plays a pivotal role in entrepreneurship by driving the creation of new products, services, and processes. Here are some key points: Foundation for Innovation: Invention is the starting point for innovation, providing the raw ideas that can be developed into marketable products or services. Competitive Edge: Entrepreneurs who invent new solutions can gain a significant competitive advantage, differentiating themselves from others in the market. Economic Growth: Inventions lead to new businesses and industries, contributing to economic growth and job creation. Problem-Solving: Inventions often address unmet needs or solve existing problems, improving quality of life and driving societal progress Importance of inventions in entrepreneurship Improved Efficiency: Inventions can streamline processes, reduce costs, and enhance productivity, making businesses more agile and competitive. Enhanced Customer Experience: Inventions can lead to new and improved products or services, increasing customer satisfaction and loyalty. New Business Opportunities: Inventions can create new revenue streams and business models, enabling entrepreneurs to expand their offerings and reach new markets. Encourages Innovation Culture: Fostering a culture of invention and innovation within an organization encourages experimentation, risk-taking, and continuous improvement. Increases Brand Value: Inventions can enhance a company's reputation and brand value, attracting investors, partners, and top talent. Solves Societal Challenges: Inventions can address pressing societal issues, such as sustainability, healthcare, and accessibility, creating positive social impact. Drives Progress: Inventions propel human progress, transforming industries and improving lives, inspiring future generations of entrepreneurs and inventors. Encourages Creativity: Inventions foster creative thinking, encouraging entrepreneurs to think outside the box and explore new ideas. Develops New Skills: The process of inventing and innovating helps entrepreneurs develop new skills, such as problem-solving, critical thinking, and adaptability. Enhances Adaptability: Inventions enable businesses to pivot and adapt to changing market conditions, staying ahead of the competition. Fosters Collaboration: Inventions often require collaboration between individuals from diverse backgrounds, promoting teamwork and knowledge sharing. Encourages Risk-Taking: Inventions require entrepreneurs to take calculated risks, developing their risk-tolerance and resilience. Supports Sustainability: Inventions can lead to more sustainable solutions, reducing waste, conserving resources, and promoting eco- friendly practices. Improves Quality of Life: Inventions can improve people's daily lives, making tasks easier, saving time, and enhancing overall well-being. Increases Patent Value: Unique inventions can lead to valuable patents, providing a competitive advantage and potential revenue streams through licensing. Attracts Investors: Innovative inventions can attract investors, securing funding and support for further research and development. Inspires Future Generations: Inventions can inspire young minds, encouraging them to pursue careers in science, technology, engineering, and mathematics (STEM).  Diffusion of innovation Definition: Diffusion of innovation is the process by which an innovation is communicated through certain channels over time among the members of a social system. Elements: Innovation: An idea, practice, or object perceived as new by an individual or other unit of adoption. Communication Channels: The means by which messages get from one individual to another. These can be interpersonal (face-to-face) or mass media (radio, TV). Time: The duration over which the innovation is adopted. Social System: The group of individuals who adopt the innovation. Attributes of Innovation: Relative Advantage: The degree to which an innovation is perceived as better than the idea it supersedes. Compatibility: How consistent the innovation is with the values, experiences, and needs of potential adopters. Complexity: How difficult the innovation is to understand and use. Trialability: The extent to which the innovation can be experimented with on a limited basis. Observability: The extent to which the results of the innovation are visible to others1. Adopter Categories: Innovators: The first individuals to adopt an innovation. Early Adopters: Respected individuals who adopt new ideas early but carefully. Early Majority: Individuals who adopt new ideas just before the average person. Late Majority: Skeptical individuals who adopt new ideas just after the average person. Laggards: The last individuals to adopt an innovation Technology and innovation Technology and innovation are the key drivers of entrepreneurship and Entrepreneurship acts as a catalyst for economic growth and development Technology helps in Identifying opportunities and solving problems Technology help leveraging to create new products, services, and business models Enhances efficiency, productivity, and competitiveness through technology adoption Technology and innovation are closely related and interdependent concepts:- Technology enables innovation: New technologies and advancements provide the tools and infrastructure for innovative ideas to emerge and develop. Innovation drives technology: The need for innovative solutions and new products/processes motivates the development of new technologies. Technology can lead to incremental innovation: Improving existing products/processes through technological advancements. Innovation can lead to disruptive technology: Creating new markets/business models that disrupt existing ones.  Technology can facilitate innovation by: Providing new materials, processes, and tools Enhancing data analysis and decision-making capabilities Facilitating collaboration and communication Enabling prototyping and testing Innovation can drive technological advancements by: Identifying new problems to solve Creating new markets and business models Encouraging R&D investments Fostering competition and entrepreneurship Technology provides the foundation for innovation, while innovation drives the development and application of new technologies. They are interconnected and feed into each other, leading to exponential growth and progress.  Types of technological innovation 1. Product Innovation- New or improved products Examples: iPhone, Tesla electric cars, 3D printing 2. Process Innovation- New or improved production processes- Examples: Lean manufacturing, Six Sigma, automation 3. Service Innovation- New or improved services- Examples: Netflix streaming, Uber ride-sharing, mobile banking 4. Business Model Innovation- New or improved business models- Examples: Airbnb (platform business model), Spotify (subscription- based), Warby Parker (try-before-you-buy) 5. Disruptive Innovation- New products, services, or business models that disrupt existing markets- Examples: Amazon (disrupted retail), Apple (disrupted music industry), Airbnb (disrupted hospitality) 6. Sustaining Innovation- Improvements to existing products, services, or processes- Examples: New features on a smartphone, improved fuel efficiency in cars, upgraded software 7. Incremental Innovation- Small, continuous improvements to existing products, services, or processes- Examples: Bug fixes, minor updates, tweaks to existing products 8. Platform Innovation- New platforms that enable new products, services, or business models- Examples: Apple App Store, Google Play Store, Amazon Web Services (AWS) 9. Open Innovation- Collaborative innovation with external partners, customers, or suppliers- Examples: Crowdsourcing, co-creation, open-source software 10. Radical Innovation- Revolutionary new products, services, or business models that transform industries- Examples: Electric cars (transforming transportation), 3D printing (transforming manufacturing), blockchain (transforming finance) Disruption Disruption in entrepreneurship refers to the process of creating a new market segment in an existing industry by targeting unserved or underserved customers Here are some key points related to disruption in entrepreneurship Types of disruption: There are three types of disruption innovation: sustaining innovation, low-end disruption and new-market disruption, and low-end disruption and new-market disruption  Characteristics of disruption: The three main characteristics of new-market disruption are: it targets non-consumption, it makes a profit at lower prices per unit sold than the incumbent businesses, and it provides lower performance for existing customers but higher performance for non- customers. Examples of disruption: Netflix, King Price Insurance, Wikipedia, LEDs, Skype, personal computers and smartphones, transistor radios, shared-mobility services are some examples of new-market disruption. How technology is changing business models and the society Business models:- New business models like freemium, software-as-a-service, and subscription services have emerged Traditional models like retail, manufacturing, and service- based businesses have evolved to integrate technology Businesses can now focus on customer experience, convenience, value, and efficiency New revenue streams and opportunities have emerged- New challenges like data privacy, security, and regulatory compliance have arisen  Personalization and customization are becoming increasingly important Businesses are leveraging data and analytics to make data- driven decisions The gig economy and remote work are becoming more prevalent- Blockchain and cryptocurrency are enabling new forms of transactions and investments Artificial intelligence and machine learning are automating processes and enhancing decision-making Society:- Digital transformation is changing how people live, work, and interact- E-commerce and online shopping have become the norm- Services like healthcare, education, and finance are now available online- New jobs and industries have emerged, while some traditional ones have declined- There are growing concerns about data privacy, cybersecurity, and the digital divide  Social media has transformed the way we communicate and interact Online learning and education platforms are making knowledge more accessible Telemedicine and digital health platforms are improving healthcare access and outcomes Smart cities and IoT technologies are making urban living more efficient and sustainable Cybersecurity threats and data breaches are becoming more common and concerning The digital divide and unequal access to technology are exacerbating social and economic inequalities Virtual and augmented reality are changing the way we experience entertainment, education, and other aspects of life End of Module-1  Module - 2 Evaluating Entrepreneurial Opportunities Module-2: Evaluating Entrepreneurial opportunities Understanding the problem and opportunity Define problem using design thinking principles and validate problem Recognising the market opportunity Environment scanning Market types Identifying customers and estimating the market size Activity - Problem statement canvas, crafting the customer persona and market estimation Case Study- Desi hangover and Verloop Masterclass  Understanding the problem and opportunity A problem is a gap between a current situation and a desired outcome. Problem identification is a fundamental way of identifying the issues at hand so that we can comprehend the objective that we are trying to achieve or the issue we are trying to address. Types of problems: Pain points: specific, tangible issues that cause frustration or difficulty Latent needs: underlying, unarticulated desires or aspirations Problem identification allows us to go to the source of the issue, learn how it affects us or others, and develop a viable solution.  Sometimes, deep research and development can identify problems, whereas problems can be identified by chance at other times. The process of problem identification should help in clearly stating the problem. It should also help identify the target group of people facing this problem. Importance of Problem Identification Problems arise from time to time, and the client expects an immediate solution. The entrepreneur solves the problem by introducing new items or services. The entrepreneur is usually the one who recognizes the issues. Learning the concept of problem identification is crucial for all entrepreneurs since without identifying a practical problem, no effective product can be produced. Some reasons which define the importance of problem identification are as follows: 1.The entrepreneur can use problem identification to identify the market’s needs and challenges and introduce new products. 2.Problem identification helps in developing creative abilities. 3.Once the problem is identified, it boosts the number of jobs created in the economy. 4.An increase in the number of jobs leads to a boost in the country’s national revenue. Entrepreneurial opportunity The concept of a company should be unique; it should help the business to survive. Most young businesses begin by identifying and clearly describing an entrepreneurial opportunity and then attempt to craft a strong vision after recognizing the existence of the opportunity. Opportunities are perishable; they require work and must create some customer value. The point at which recognized consumer demands meet the practicality of delivering the demanded services or products are entrepreneurial opportunities. Opportunity gaps: Untapped markets, Unmet needs, or unserved customers Opportunity types Market opportunities: untapped markets, trends, or customer segments Technological opportunities: new technologies, tools, or platforms Social opportunities: emerging social trends, needs, or concerns Importance of understanding problems: Identifying real needs and wants Creating solutions that resonate with customers Differentiating yourself from competitors Identifying areas for innovation and growth Capitalizing on trends and momentum Creating new value and competitive advantage Framework for Understanding Problems and Opportunities Empathize: understand the customer's perspective and experiences Define: define the problem or opportunity statement Ideate: generate ideas for solutions Prototype: create a prototype or test solution Test: test and validate the solution with customers Empathize Define Ideate Prototype Test  Define problem using design thinking principles and validate problem Define Problem:- Use empathy to understand the user's perspective and experiences Define a problem statement that is SMART: - Specific - Measurable - Achievable - Relevant - Time-bound Focus on the user's needs, wants, and pain points Frame the problem as an opportunity for innovation and growth Problem Statement Template:- "How might we do something [specific goal or outcome] for a user/group by a specific means [specific solution or feature]? Example: "How might we reduce the time it takes for busy professionals to prepare healthy meals at home by designing a meal planning and grocery delivery service?" Validate Problem: 1. Conduct User Research: - Interviews - Surveys - Observations - Focus groups 2. Analyze Data: - Identify patterns and themes - Determine the severity and impact of the problem - Develop a user persona 3. Validate Assumptions: - Test hypotheses with users - Gather feedback and insights - Refine the problem statement 4. Check for Alignment: - Ensure the problem aligns with business goals and objectives - Verify the problem is worth solving (feasible, viable, desirable) 5. Refine and Iterate: - Continuously refine the problem statement based on new insights and feedback Iterate on the solution until it meets user needs and expectations By following these steps, you can define and validate a problem using design thinking principles, ensuring that you're solving a real problem that matters to your users.  Recognising the market opportunity Recognizing a market opportunity refers to the process of identifying a gap in the market that can be filled with a product, service, or solution that meets the needs and wants of potential customers. To recognize a market opportunity, you can: 1. Conduct market research: Analyze trends, customer needs, and competitor activity. 2. Identify pain points: Determine the problems or challenges your target audience faces. 3. Look for untapped markets: Identify areas with little competition or unmet needs. 4. Analyze customer feedback: Listen to customer complaints, suggestions, and ideas. 5. Stay up-to-date with industry trends: Attend conferences, read industry reports, and follow thought leaders. The need for recognizing market opportunities arises from: 1. Competitive advantage: Identifying opportunities first can give you a competitive edge. 2. Innovation: Recognizing opportunities leads to innovative solutions and products. 3. Customer satisfaction: Meeting unmet needs and wants leads to increased customer satisfaction. 4. Business growth: Capitalizing on opportunities can drive revenue and business expansion. 5. Adaptation to change: Recognizing opportunities helps businesses adapt to changing market conditions. Some examples of recognized market opportunities include: 1. Netflix (streaming services) 2. Uber (ride-sharing) 3. Airbnb (home-sharing) 4. Apple (smartphones) 5. Warby Parker (affordable, fashionable eyewear) By recognizing market opportunities, businesses can create innovative solutions that meet customer needs, drive growth, and stay ahead of the competition.  Environment scanning Definition: The process of gathering, analyzing, and interpreting information about the external environment to identify opportunities and threats. Importance in Entrepreneurship: Helps entrepreneurs understand the market, industry, and competitors. Identifies potential opportunities and threats. Informs business strategy and decision-making. Enhances adaptability and resilience. Key Components of Environmental Scanning: 1. Macro-Environment: - Economic factors (GDP, inflation, interest rates). - Political factors (laws, regulations, trade policies). - Social factors (demographics, culture, lifestyle). - Technological factors (innovations, trends, disruptions). 2. Micro-Environment: - Customers (needs, preferences, behaviors). - Competitors (strengths, weaknesses, strategies). - Suppliers (reliability, quality, pricing). - Partners and collaborators (networks, alliances). 3. Industry Analysis: Market size, growth, and trends. Competitor analysis (market share, strengths, weaknesses). Regulatory environment (laws, regulations, standards). 4. Competitor Intelligence: Identifying direct and indirect competitors. Analyzing their strategies, strengths, and weaknesses. Monitoring their market movements and innovations.  Tools and Techniques for Environmental Scanning: 1. SWOT Analysis. 2. PESTLE Analysis. 3. Porter's Five Forces. 4. Market Research Reports. 5. Social Media Listening. 6. Industry Associations and Networks. SWOT: Strength-Weakness-Opportunity-Threat PESTLE: Political- Economic- Social- Technological- Legal- Environmental. 5 Forces: Competition, the threat of new entrants to the industry, supplier bargaining power, customer bargaining power, and the ability of customers to find substitutes for the sector's products. By conducting environmental scanning, entrepreneurs can gain valuable insights to inform their business strategies, mitigate risks, and capitalize on opportunities.  Market types 1. Perfect Competition: Agricultural markets (e.g. wheat, corn) Stock markets 2. Monopoly: Utility companies (e.g. electricity, water) Patent holders (e.g. pharmaceuticals) 3. Monopolistic Competition: Fast food industry (e.g. McDonald's, Burger King) Coffee shops (e.g. Starbucks, Dunkin' Donuts) 4. Oligopoly: Automobile industry (e.g. Ford, GM, Toyota) Tech industry (e.g. Apple, Google, Amazon) 5. Monopsony: - Labor markets (e.g. a single employer in a small town) - Government contracts s. 7. Dual Monopoly: A single buyer and seller in a specific market Bilateral monopoly in a specific industry 8. Market Monopoly: Google in the search engine market Facebook in the social media market 9. Contestable Market: Airlines industry Telecommunications industry 10. Segmented Market: Luxury car market Budget airline market 11. Niche Market: Vegan food market Outdoor gear market 12. Global Market: International trade Global e-commerce 13. Local Market: Farmers' markets Local convenience stores 14. National Market: Domestic airlines National retail chains 15. Online Market: E-commerce platforms (e.g. Amazon, eBay) Digital marketplaces (e.g. Upwork, Fiverr) 16. Offline Market: Brick-and-mortar stores Physical markets (e.g. flea markets, swap meets) 17. Services Market: Healthcare industry Financial services industry 18. Product Market: Consumer goods industry Industrial goods industry 19. Financial Market: Stock exchange Bond market 20. Labor Market: Job market Human resources market Note that these examples are not exhaustive and some markets may overlap between categories  Identifying customers and estimating the market size Identifying customers and estimating market size are crucial steps in understanding your target audience and potential market reach. Here are some steps to help you do so: Identifying Customers: 1. Conduct market research: Surveys, focus groups, online polls, and customer interviews can help you understand your target audience's demographics, needs, and preferences. 2. Analyze your competition: Research your competitors' customer base and identify similarities and differences. 3. Use online tools: Utilize online resources like Google Analytics, social media insights, and customer review websites to gather data about your target audience. 4. Create buyer personas: Develop detailed profiles of your ideal customers, including age, gender, occupation, income level, and pain points. Estimating Market Size: 1. Define your market scope: Determine the geographic area, industry, and specific market segment you're targeting. 2. Use market research reports: Leverage reports from reputable firms like IBISWorld, Statista, or Euromonitor to estimate market size. 3. Analyze industry trends: Identify growth trends, market drivers, and potential barriers to estimate future market size. 4. Calculate market size: Use formulas like: Market size = Number of potential customers x Average revenue per customer Market size = Total addressable market (TAM) x Market share End of Module-2  Module - 3 Problem - Solution Fit  Module-3: Problem Solution fit Importance of value proposition Knowing cust. job pains & gains using value proposition canvas Developing problem- solution fit Differentiating features and benefits of the product / service Competition analysis Competitive positioning Understanding unique selling points Activity - Build your VPC canvas, conduct compensation analysis and create MVP Case study- Honey twigs and Inzpiria Masterclass.  Importance of value proposition Value Proposition: A value proposition is a statement that clearly communicates the unique benefits and value that your product or service offers to customers, differentiating it from competitors. A good value proposition should answer the question: "Why should a customer choose your product/service over others?“ Examples: Warby Parker (online eyeglasses retailer) Value Proposition: "Try before you buy. Get 5 pairs of glasses for $95, shipped to your door. Keep the ones you like, return the rest. No risk, no hassle.“ Dollar Shave Club (subscription-based razor delivery service) Value Proposition: "Get high-quality razors delivered to your door for just $1/month, no more overpaying for razors at the drugstore.“ Flipkart, Oyo rooms, paytm, ola etc. A value proposition is crucial for any business as it: 1. Differentiates your brand from competitors. 2. Communicates unique benefits to customers. 3. Creates a competitive advantage. 4. Drives customer engagement and loyalty. 5. Increases sales and revenue. 6. Helps in positioning your brand in the market. 7. Guides product development and innovation. 8. Enhances customer experience. 9. Supports marketing and sales efforts. 10. Provides a framework for measuring success.  Knowing customer job pains and gains using value proposition canvas The Value Proposition Canvas (VPC) is a tool that helps marketers and product developers understand customer needs and pains and gains. The VPC has two parts: A Customer Profile and a Value Map. The Customer Profile helps identify customer problems, while the Value Map visualizes the value created for the customer Steps to take to use the VPC to understand customer jobs, pains, and gains: Pick a target customer: Consider their daily activities and goals, and try to think like them.  Identify jobs-to-be-done: These are the functional, social, and emotional tasks customers are trying to perform, problems they're trying to solve, and needs they want to satisfy. Identify pains: These are the negative experiences, emotions, and risks customers face while trying to get the job done. Pains can include unpleasant situations, time, money, or effort, mistakes, inadequate organization, and lack of knowledge. Identify gains: These are the benefits customers expect and need, and the things that would delight them. Gains can include pleasant situations, adequate quality, satisfying the customer, and saving time and money. Pick the top 3-5 most important pains and gains Define your value map: List the products and services you want to offer, and classify their features as pain relievers or gain creators.  Connect the pains and gains: Connect the pain relievers from the value map with the corresponding pains from the customer profile, and do the same for the gain creators. This will show how you create value for the customer. Test your proposition(s) with customers: Get feedback from customers and validate the canvas with the market. Continuously learn and adapt: Use the insights from the VPC to refine your value propositions. The 6 components that are highlighted in the Value Proposition Canvas Customer Profile 1.Customer Jobs: Tasks or problems customers are trying to solve (e.g., functional, social, emotional jobs). 2.Pains: Challenges or obstacles customers face while trying to complete their jobs. 3.Gains: Benefits or positive outcomes customers seek. Value Proposition 1.Products & Services: What the business offers to help customers complete their jobs. 2.Pain Relievers: How the products or services alleviate customer pains. 3.Gain Creators: How the products or services create customer gains.  Developing problem- solution fit Developing a problem-solution fit is a crucial step in the early stages of a startup or when launching a new product. Here’s a step-by-step guide on how to achieve it: 1.Identify the Problem: Validate that the problem you’re trying to solve actually exists. This involves gathering real-world data and feedback from potential users. 2.Understand the Customer: Identify your target customers and understand their needs, tasks, and the problems that hinder their progress. 3.Analyze Existing Solutions: Understand the current solutions available in the market and identify what they lack. This will help you understand the gaps your solution could fill. 4.Develop Your Solution: Based on the information gathered, develop a solution that addresses the identified problem. Validate that your solution effectively solves the problem for your target audience. 5. Test Your Solution: Once you’ve developed your solution, test it with a small group of early adopters. Their feedback can help you refine your solution before a full-scale launch. Achieving a problem-solution fit is essential for the success of any business. It ensures that your solution is built based on real data and actual user needs, rather than assumptions. This process forms the foundation upon which a company is built. Once you’re satisfied with the problem-solution fit, you can proceed to develop a saleable product and start acquiring customers  Differentiating features and benefits of the product / service Also called product/service differentiation Product differentiation is what makes your product or service different and more appealing to customers than other options in your category. Product differentiation is what gives you a competitive advantage in your market. Product differentiators can include better quality and service as well as unique features and benefits.  It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth. Example: If your software company provides customer support account managers but your competitors don’t, that’s a differentiator. Or, if your athletic wear company offers customization unlike competitors, you’d want to highlight this as a product differentiator. The goal of product differentiation is to create a competitive advantage or to make your product superior to alternatives on the market. In other words, you don’t just want to stand out from the competition, you want to stand above it. It’s important to differentiate your product in any industry, but especially if you’re in a crowded market with lots of competitors. The goal is to show potential customers what you can offer that other businesses can’t—and why that’s valuable to them. Need for product differentiation Competitive Advantage: Differentiation helps a business gain a competitive advantage over rivals. Customer Loyalty: Unique products or services foster customer loyalty and retention. Premium Pricing: Differentiated products often command higher prices due to their perceived value. Market Share: Differentiation can lead to increased market share as customers seek out unique offerings. Importance of Product Differentiation: 1. Standout in a Crowded Market: Differentiation helps businesses stand out in a crowded and competitive market. 2. Increased Customer Value: Differentiated products provide unique benefits, leading to increased customer value. 3. Brand Identity: Differentiation helps establish a strong brand identity and reputation. 4. Long-Term Success: Differentiation is key to long-term success, as it creates a sustainable competitive advantage 5. Narrowing down your target audience: Focusing on a niche group of consumers often leads to better sales and return on investment (ROI) for marketing spend than trying to market to the general public Types of Product Differentiation 1. Unique Features: Distinctive product features, such as design, functionality, or technology. 2. Quality: Superior quality materials, craftsmanship, or performance. 3. Service: Exceptional customer service, support, or warranties. 4. Brand Image: Strong brand reputation, values, or associations. 5. Innovation: Pioneering new products, features, or categories.  Competition analysis Competition: Competition in business refers to the rivalry between companies or organizations that sell similar products or services to the same target market. It is a fundamental aspect of a free market economy, driving businesses to innovate, improve quality, and reduce prices. Competition Analysis: A process of analyzing and evaluating the strengths and weaknesses of competitors in a market or industry It helps businesses understand their position in the market and make informed decisions Tools for Competition Analysis: SWOT Analysis: Evaluates a company's strengths, weaknesses, opportunities, and threats Competitor Profiling: Creates detailed profiles of competitors' business strategies and market positions Market Share Analysis: Examines competitors' market share and growth trends Competitive Intelligence: Gathers and analyzes data on competitors' business strategies and tactics Steps in Conducting Competition Analysis: Identify Competitors: Determine who your competitors are, both direct and indirect Gather Information: Collect data on competitors through market research, online reviews, financial reports, etc. Analyze Competitors' Strengths and Weaknesses: Evaluate their market share, pricing strategies, product offerings, marketing tactics, and customer service Assess Competitive Advantage: Determine what sets your business apart from competitors Develop a Competitive Strategy: Use analysis to inform business decisions and stay ahead of competitors Advantages: Informed Decision-Making: Competition analysis provides valuable insights, enabling informed business decisions. Market Advantage: Identifies opportunities to gain a competitive edge. Improved Product Development: Informs product innovation and differentiation. Enhanced Customer Understanding: Helps businesses better understand customer needs and preferences. Resource Optimization: Encourages efficient resource allocation. Benchmarking: Establishes performance benchmarks. Risk Management: Identifies potential risks and threats. Disadvantages: Time-Consuming: Competition analysis can be a lengthy and resource- intensive process. Costly: Gathering and analyzing data can be expensive. Data Quality Issues: Inaccurate or outdated data can lead to flawed conclusions. Overemphasis on Competition: Focus on competitors might distract from customer needs. Static Analysis: Competition analysis may not account for dynamic market changes. Paralysis by Analysis: Overanalyzing competitors can lead to indecision. Unethical Practices: Some businesses might engage in unethical practices to gain a competitive advantage.  Competitive positioning Competitive positioning refers to the process of creating and maintaining a unique position for a product, service, or brand in the minds of customers, relative to competitors. Types of Competitive Positioning: 1. Cost Leadership: Focus on being the lowest-cost provider in the industry. → Achieved through efficient operations, economies of scale, and cost-reduction strategies. Examples: Walmart, Ryanair, and Amazon 2. Differentiation: Emphasize unique features, benefits, or attributes that set the product or service apart. → Can be based on quality, design, innovation, or brand identity. Examples: Apple (innovation and design), Mercedes-Benz (quality and luxury), and Nike (brand identity and innovation). 3. Focus: Concentrate on a specific market segment or niche. → Tailor products or services to meet the unique needs of that segment. Examples: Harley-Davidson (motorcycle enthusiasts), Starbucks (coffee connoisseurs), and LinkedIn (professional networking). 4. Hybrid Positioning: Combine multiple positioning strategies, such as cost leadership and differentiation. → Offers a unique value proposition that balances competing demands. Examples: Southwest Airlines (low-cost and friendly service), Toyota (quality and affordability), and Amazon (low-cost and innovative services). Additionally, there are other types of competitive positioning, including: 1. Experiential Positioning: Focus on creating memorable customer experiences. 2. Sustainability Positioning: Emphasize environmental and social responsibility. 3. Technology Positioning: Leverage cutting-edge technology to differentiate products or services. 4. Service Positioning: Focus on exceptional customer service and support. 5. Quality Positioning: Emphasize superior product or service quality. 6. Brand Positioning: Establish a strong brand identity and reputation. Advantages of Competitive Positioning: 1. Differentiation: Establishes a unique identity and sets the business apart from competitors. 2. Targeted Marketing: Helps focus marketing efforts on specific customer segments. 3. Increased Brand Awareness: Enhances brand recognition and reputation. 4. Improved Customer Loyalty: Encourages customer loyalty and retention. 5. Competitive Advantage: Creates a sustainable competitive advantage. 6. Better Resource Allocation: Guides resource allocation and investment decisions. 7. Increased Market Share: Can lead to increased market share and revenue growth. Disadvantages of Competitive Positioning: 1. Overemphasis on Competition: Might lead to an excessive focus on competitors rather than customers. 2. Static Positioning: Fails to account for dynamic market changes and evolving customer needs. 3. Difficulty in Re-positioning: Can be challenging and costly to re-position a product or brand. 4. Limited Flexibility: Restricts flexibility in responding to market changes or new opportunities. 5. Risk of Being Copied: Competitors may copy or imitate the positioning strategy. 6. Resource Intensive: Requires significant resources and investment to maintain positioning. 7. Potential for Mis-positioning: If not executed correctly, can lead to mis- positioning and loss of market share.  Understanding unique selling points A USP is a feature, benefit, or attribute that sets a product, service, or brand apart from competitors and makes it more attractive to customers. Importance of USPs: 1. Differentiation: USPs help differentiate a business from competitors. 2. Competitive Advantage: USPs create a sustainable competitive advantage. 3. Customer Attraction: USPs attract and retain customers. 4. Marketing Focus: USPs guide marketing efforts and messaging. 5. Revenue Growth: USPs can lead to increased revenue and market share. Examples of USPs: 1. Domino's Pizza: "30 minutes or less" delivery guarantee. 2. Apple: Innovative design, user-friendly interface, and ecosystem. 3. Amazon: Fast and reliable shipping, competitive pricing, and personalized recommendations. 4. Nike: High-quality, stylish, and innovative athletic wear. 5. Zappos: Exceptional customer service, free returns, and wide selection. 6. Sony: Miniaturization Types of USPs: 1. Product-Based USPs: Unique features, quality, or functionality. 2. Service-Based USPs: Exceptional customer service, support, or experience. 3. Brand-Based USPs: Strong brand identity, reputation, or values. 4. Price-Based USPs: Competitive pricing, discounts, or promotions. 5. Convenience-Based USPs: Easy access, fast delivery, or streamlined processes. How to Identify USPs: 1. Market Research: Analyze customer needs, preferences, and pain points. 2. Competitor Analysis: Identify gaps and weaknesses in competitors' offerings. 3. Self-Analysis: Evaluate your business's strengths, skills, and resources. 4. Customer Feedback: Gather insights from customer reviews, surveys, and feedback. End of Module-3  Module – 4 Understanding Business Model and Build your MPV Module-4: Understanding business model and Build your MVP Introduction to business model and types Lean approach 9 block lean canvas model Building a minimum viable product MVP validation Importance of build- measure -learn approach Activity - Build lean canvas, MVP and conduct MVP validation Case study -NUOS and Knorish Masterclass  Introduction to business model and types A business model describes how a company creates, delivers, and captures value. It outlines the key elements of a business, including revenue streams, cost structures, and value propositions. NEED FOR A BUSINESS MODEL: 1. Clarifies Business Purpose: Defines the company's mission, vision, and objectives. 2. Guides Decision-Making: Informs strategic decisions, resource allocation, and prioritization. 3. Communicates Value Proposition: Explains how the business creates value for customers. 4. Identifies Revenue Streams: Determines how the business generates revenue. 5. Manages Risk: Helps mitigate risks by identifying potential challenges and opportunities. IMPORTANCE OF A BUSINESS MODEL: Competitive Advantage: A well-designed business model can be a sustainable competitive advantage. Innovation: Encourages innovation by identifying new opportunities and revenue streams. Efficient Resource Allocation: Ensures resources are allocated effectively to drive growth. Scalability: Supports business growth and scalability by identifying key drivers. Investor Attraction: Attracts investors by demonstrating a clear and viable business strategy. Customer Acquisition: Helps acquire and retain customers by understanding their needs. Partnership Opportunities: Identifies potential partnership opportunities. Adaptability: Enables businesses to adapt to changing market conditions and customer needs. TYPES OF BUSINESS MODELS: 1. Product-Based Model: Sell physical or digital products to customers. Ex: - Tata Motors (automobiles)- Hindustan Unilever (consumer goods)- Infosys (software products) 2. Service-Based Model: Offer intangible services to customers. Ex: Tata Consultancy Services (IT services)- HDFC Bank (banking services)- Apollo Hospitals (healthcare services) 3. Subscription-Based Model: Charge customers recurring fees for access to products or services. Ex: Netflix India (streaming services)- Amazon Prime India (e- commerce and streaming services)- Zee5 (streaming services) Money control (Stock advice) 4. Freemium Model: Offer basic products or services for free, with premium features or upgrades available for a fee. Ex: Zoho (software products, free version available)- Paytm (digital payments, free version available)- True caller( Caller identification free version available, premium service available) 5. Advertising-Based Model: Generate revenue through advertising, such as Google or Facebook. Ex:Times of India (newspaper and online advertising)- NDTV (news channel and online advertising)- Google India (online advertising) 6. Affiliate Model: Earn commissions by promoting other companies' products or services. Ex: Flipkart Affiliate Program (e-commerce affiliate marketing)- Amazon Associates India (e-commerce affiliate marketing)- Paytm Affiliate Program (digital payments affiliate marketing) 7. Franchise Model: License business models or trademarks to independent operators. Ex: Green trends, Lakme (salon), McDonald's India (fast food franchise)- Domino’s Pizza India (fast food franchise) 8. Razor-Razorblade Model: Sell a product at a low price, then generate revenue through sales of complementary products or services. Ex: Gillette India (razors and blades)- HP India (printers and ink cartridges)- Epson India (printers and ink cartridges) 9. Data-Driven Model: Collect and analyze data to create value, such as data analytics or market research firms. Ex: Mu Sigma (data analytics services)- Fractal Analytics (data analytics services)- AbsolutData (data analytics services) 10. Platform-Based Model: Create a platform for others to buy, sell, or interact, such as Airbnb or Uber. Ex: Ola (ride-hailing platform)- Flipkart (e-commerce platform)- Paytm (digital payments platform) OTHER BUSINESS MODEL TYPES: 1. B2B (Business-to-Business): Sell products or services to other businesses. Ex: Tata Steel (steel products for businesses)- Reliance Industries (petroleum products for businesses)- HCL Technologies (IT services for businesses) 2. B2C (Business-to-Consumer): Sell products or services directly to individual consumers. Ex: Reliance Retail (consumer goods)- Big Bazaar (consumer goods)- Myntra (e-commerce, consumer goods) 3. C2C (Consumer-to-Consumer): Facilitate transactions between individual consumers. Ex: OLX (online marketplace for consumers)- Quikr (online marketplace for consumers)- Facebook Marketplace (online marketplace for consumers) 4. Social Enterprise Model: Prioritize social or environmental impact alongside profit. Ex: Aravind Eye Hospital (eye care services for underserved communities)- Narayana Health (healthcare services for underserved communities)- SELCO India (sustainable energy solutions for underserved communities) 5. Cooperative Model: Member-owned businesses that prioritize member benefits. Ex: Amul (dairy cooperative)- IFFCO (fertilizer cooperative)- KRIBHCO (fertilizer cooperative)  Lean approach: 9-block lean canvas model The Lean Canvas model is a business model that uses nine blocks to help build a business. The blocks are: 1. Key partners: Strategic relationships with other companies or people 2. Key activities: Tasks that are essential to running the company 3. Key resources: Assets needed to deliver the company's value proposition 4. Value proposition: The fundamental need the company is trying to fulfill for its customers 5. Customer relationships: The type of interactions the company has with its customers and the level of support it provides 6. Customer segments 7. Channels 8. Cost structure 9. Revenue streams 1. Key Partners The Key Partners Building Block describes the network of suppliers and partners that make the business model work. Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies create alliances to optimize their business models, reduce risk, or acquire resources. We can distinguish between four different types of partnerships: Strategic alliances between non-competitors Co-operation: strategic partnerships between competitors Joint ventures to develop new businesses Buyer-supplier relationships to assure reliable supplies 2. Key Activities The Key Activities Building Block describes the most important things a company must do to make its business model work. Every business model calls for a number of Key Activities. These are the most important actions a company must take to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues. And like Key Resources, Key Activities differ depending on business model type. For software maker Microsoft, Key Activities include software development. For PC manufacturer Dell, Key Activities include supply chain management. For consultancy McKinsey, Key Activities include problem solving. 3. Key Resources: The Key Resources Building Block describes the most important assets required to make a business model work. These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Different Key Resources are needed depending on the type of business model. A microchip manufacturer requires capital-intensive production facilities, whereas a microchip designer focuses more on human resources. Key resources can be physical, financial, intellectual, or human. Key resources can be owned or leased by the company or acquired from key partners. 4. Value proposition: The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment. The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment. The Value Proposition is an aggregation, or bundle, of benefits that a company offers customers. Some Value Propositions may be innovative and represent a new or disruptive power. Others may be similar to existing market offers, but with added features and attributes. 5. Customer Relationships: The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated. Customer relationships may be driven by the following motivations: Customer acquisition Customer retention Boosting sales (up-selling) In the early days, for example, mobile network operator Customer Relationships were driven by aggressive acquisition strategies involving free mobile phones. When the market became saturated, operators switched to focusing on customer retention and increasing average revenue per customer. The Customer Relationships called for by a company’s business model deeply influence the overall customer experience. 6. Customer segments The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long. In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviors, or other attributes. A business model may define one or several large or small Customer Segments. An organization must make a conscious decision about which segments to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs.  Customer groups represent separate segments if: Their needs require and justify a distinct offer They are reached through different Distribution Channels They require different types of relationships They have substantially different profitabilities They are willing to pay for different aspects of the offer 7. Channels The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition Communication, distribution, and sales Channels comprise a company’s interface with customers. Channels are customer touch points that play an important role in the customer experience. Channels serve several functions, including: Raising awareness among customers about a company’s products and services Helping customers evaluate a company’s Value Proposition Allowing customers to purchase specific products and services Delivering a Value Proposition to customers Providing post-purchase customer support 8. Cost structure The Cost Structure describes all costs incurred to operate a business model. This building block describes the most important costs incurred while operating under a particular business model. Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs. Such costs can be calculated relatively easily after defining Key Resources, Key Activities, and Key Partnerships. Some business models, though, are more cost-driven than others. So- called “no frills” airlines, for instance, have built business models entirely around low Cost Structures. 9. Revenue streams The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings). If customers comprise the heart of a business model, Revenue Streams are its arteries. A company must ask itself, For what value is each Customer Segment truly willing to pay? Successfully answering that question allows the firm to generate one or more Revenue Streams from each Customer Segment. Each Revenue Stream may have different pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, volume dependent, or yield management. A business model can involve two different types of Revenue Streams: Transaction revenues resulting from one-time customer payments Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support The Business Model Canvas (BMC) offers numerous benefits, including: 1. Clarifies Business Structure: Visualizes and organizes key business elements. 2. Simplifies Complexity: Breaks down complex business concepts into manageable components. 3. Facilitates Communication: Enhances collaboration and understanding among team members. 4. Encourages Innovation: Identifies areas for innovation and improvement. 5. Supports Strategic Decision-Making: Informs strategic decisions with a comprehensive business overview. 6. Enhances Flexibility: Adapts to changing market conditions and customer needs. 7. Fosters Alignment: Ensures alignment among team members, stakeholders, and business objectives. 8. Streamlines Processes: Optimizes business processes and operations. 9. Identifies Revenue Streams: Reveals potential revenue streams and opportunities. 10. Manages Risk: Highlights potential risks and challenges. 11. Facilitates Scaling: Supports business growth and scaling. 12. Improves Customer Understanding: Develops a deeper understanding of customer needs and preferences. 13. Enhances Competitiveness: Creates a competitive advantage by identifying unique value propositions. 14. Supports Fundraising: Helps secure funding by presenting a clear and compelling business case. 15. Encourages Continuous Improvement: Fosters a culture of continuous learning and improvement. By using the Business Model Canvas, businesses can create a shared understanding of their business model, drive innovation, and make informed strategic decisions.  Building a minimum viable product (MVP) A Minimum Viable Product (MVP) is a version of a product or service that has just enough features to satisfy early customers and provide feedback for future development. It's a way to test and validate assumptions about your product and market with minimal resources. Pager Steps to build an MVP: 1. Define your product vision: Identify your target audience, their needs, and your unique value proposition. 2. Identify the core features: Determine the essential features that solve the customer's problem or meet their needs. 3. Prioritize features: Focus on the most critical features and eliminate non-essential ones. 4. Create a prototype: Build a basic version of your product, using tools like wireframes, mockups, or a functional prototype. 5. Test with a small group: Release your MVP to a small, targeted group of customers and gather feedback. 6. Iterate and refine: Use customer feedback to refine and improve your product, adding features and functionality as needed. 7. Continuously test and learn: Repeat the process, iterating and refining your product until you reach product-market fit. Building an MVP Define your product vision Identify the core features Prioritize features Iterate and refine Test with a small group Create a prototype Continuously test and learn Improved products Best practices for building an MVP: 1. Start small: Focus on a limited set of features and customers. 2. Be flexible: Be prepared to pivot or adjust your product based on feedback. 3. Use agile development: Iterate quickly and respond to changing requirements. 4. Gather feedback: Engage with customers and gather feedback through surveys, interviews, or usability testing. 5. Measure and evaluate: Track key metrics to evaluate your MVP's success and identify areas for improvement. By building an MVP, you can reduce risks, conserve resources, and create a product that meets customer needs and sets you up for success  MVP Validation Validating a Minimum Viable Product (MVP) involves testing and confirming assumptions about your product and market. Need for MVP 1. Reduces uncertainty: Validates assumptions about the product and market. 2. Saves resources: Minimizes investment in unproven ideas. 3. Faster time-to-market: Quickly releases a basic version to test and learn 4. Customer feedback: Collects valuable feedback from early customers. 5. Iterative improvement: Enables continuous refinement and improvement. Importance of MVP: 1. Mitigates risk: Reduces the risk of launching a failed product. 2. Validates demand: Confirms demand for the product or service. 3. Identifies opportunities: Reveals opportunities for growth and improvement. 4. Builds momentum: Creates a foundation for future development and growth. 5. Attracts investment: Demonstrates potential to investors and partners. 6. Enhances customer satisfaction: Ensures the product meets customer needs and expectations. 7. Fosters innovation: Encourages experimentation and innovation. 8. Supports data-driven decisions: Provides valuable data for informed decision-making. An MVP is essential for reducing uncertainty, saving resources, and quickly testing assumptions about a product or market. Its importance lies in mitigating risk, validating demand, and building momentum for future growth and success. A step-by-step guide to validate an MVP: 1. Define validation criteria: Establish clear metrics and benchmarks to measure success. 2. Identify target customers: Determine the ideal customer segment for your MVP. 3. Gather feedback: Collect feedback through surveys, interviews, usability testing, or focus groups. 4. Test core assumptions: Validate assumptions about your product's value proposition, features, and pricing. 5. Measure key metrics: Track metrics such as customer acquisition, retention, revenue, and user engagement. 6. Analyze results: Evaluate data and feedback to determine if your MVP is meeting validation criteria. 7. Iterate and refine: Make adjustments to your MVP based on feedback and data analysis. 8. Continuously validate: Repeat the validation process to ensure ongoing alignment with customer needs. Validation criteria: 1. Customer adoption: Are customers using and engaging with your MVP? 2. Revenue growth: Is your MVP generating revenue? 3. Customer retention: Are customers returning and continuing to use your MVP? 4. User engagement: Are customers actively using and interacting with your MVP? 5. Net Promoter Score (NPS): Are customers likely to recommend your MVP? Validation methods: 1. Customer interviews: In-depth discussions with target customers. 2. Surveys and questionnaires: Online or offline surveys to collect feedback. 3. Usability testing: Observing customers using your MVP. 4. A/B testing: Comparing different versions of your MVP. 5. Landing page testing: Validating demand and interest through landing pages. 6. Prototype testing: Testing early prototypes with customers. 7. Market research reports: Analyzing industry trends and market data. 8. Competitor analysis: Evaluating competitors' strengths and weaknesses.  Importance of Build- Measure -Learn approach The Build-Measure-Learn approach is a iterative product development methodology popularized by Eric Ries in his book "The Lean Startup". It's a cyclical process that helps teams build and refine products based on customer feedback and data-driven insights. Build: 1. 1. Develop a minimum viable product (MVP) or a small feature set. 2. 2. Focus on building a functional product with core features. Measure: 1. Release the MVP to a small group of customers or users. 2. Collect data and feedback on how they interact with the product. 3. Measure key metrics such as user engagement, retention, & revenue. Learn: 1. Analyze the data and feedback collected during the Measure phase. 2. Identify insights and patterns that inform product decisions. 3. Refine or pivot the product based on what was learned. Repeat: 1. Continuously cycle through the Build-Measure-Learn process. 2. Refine and iterate on the product based on new insights and feedback. This approach helps teams: 1. Reduce uncertainty and risk 2. Validate assumptions about the product and market 3. Develop a product that meets customer needs 4. Iterate and improve the product quickly 5. Make data-driven decisions The Build-Measure-Learn approach is a fundamental component of the Lean Startup methodology and is widely adopted in product development, entrepreneurship, and innovation. Importance: The Build-Measure-Learn approach is crucial for product development and entrepreneurship because it: 1. Reduces uncertainty: Validates assumptions about the product and market. 2. Minimizes risk: Iterative approach reduces the risk of launching a failed product. 3. Fosters innovation: Encourages experimentation and learning. 4. Ensures customer-centricity: Develops products that meet customer needs. 5. Drives data-driven decisions: Informed decisions based on data and feedback. 6. Promotes agility: Quickly responds to changing market conditions. 7. Encourages continuous improvement: Refines and iterates on the product. 8. Enhances customer satisfaction: Develops products that meet customer expectations. 9. Supports scalability: Builds a solid foundation for future growth. 10. Fosters collaboration: Encourages teamwork and cross-functional collaboration. By adopting the Build-Measure-Learn approach, teams can create successful products that meet customer needs, reduce risk, and drive innovation. End of Module-4