MGT 420 Module 4: Developing the Solution and Strategy (2024-2025) PDF

Module 4: Developing the Solution and Strategy Dr. Kipp A. Krukowski MGT 420 – New Venture Creation Why is today’s topic important? We will learn a methodology to quickly and inexpensively test our product ideas allowing us to make improvements before we get too far invested in a solution...

Module 4: Developing the Solution and Strategy Dr. Kipp A. Krukowski MGT 420 – New Venture Creation Why is today’s topic important? We will learn a methodology to quickly and inexpensively test our product ideas allowing us to make improvements before we get too far invested in a solution that might not be what a customer really wants. Review of Important Tools – Lean Canvas Review of Important Tools - BMC Macro Environmental Factors & the Business Model  Design Thinking and Opportunity Identification Design thinking - process and approach that looks at the world from the customer’s perspective Opportunity is the intersection of an idea and a customer Discovery theory sees opportunity arising from shifts in external factors in the market or industry, such as regulation, technological changes, and changes in customer preferences With creation theory, entrepreneurs create opportunities via their actions, reactions, and experiments around new products, services, and business models. The “seeds” exist within the entrepreneur, not the external environment. Ideate is Prototype is Define is brainstorming building a Empathy is defining a getting out lots of ideas crude version Test is problem and talking to that could of the getting out statement help you solution that and testing your from your customers solve the you want to with users empathy directly problem you test with discoveries identified users Sources: Hasso Plattner Institute of Design at Stanford. (n.d.). An introduction to design thinking: Process guide. M. Neck, P. Neck, and Murray, Entrepreneurship: The Practice and Mindset, 2e. © SAGE Publications, 2020. Customer Validation and Design Before developing a product (a solution), you must identify a problem that potential customers have In looking at potential solutions, you will consider: – Whether your solution currently exists in some form. – Whether the solution is a way to actually solve the problem. – Whether your solution can be produced. – Whether it can be protected. – How much the solution will cost to produce. – How much time it will take to bring it to market. Product design is the activity that transforms a set of requirements into a format that brings all the elements together in a system. A product life cycle is analogous to an industry life cycle, with periods of new product development, market introduction, growth, maturity, and decline. Use the following New Product/Service Feasibility Checklist to help develop your riskiest hypotheses New Product/Service Feasibility Checklist NEEDS MORE YES NO STUDY THE MARKET Is there an existing need for this product in the marketplace? A first customer? Will I be first in the marketplace with this product? Will this product disrupt the market? Can the product be protected through intellectual property rights? Can market entry barriers be erected? Is there a path to multiple customers? What specific and highly valued benefits will customers derive from this product (validated by primary research with customers) Do customers have to change their behavior to adopt this product? New Product/Service Feasibility Checklist NEEDS MORE YES NO STUDY SWOT ANALYSIS (STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS) Do the strengths of this product exceed any weaknesses? Are there various opportunities for commercializing this product? Do any significant threats exist to the development of this product? Does the product create network effects? New Product/Service Feasibility Checklist NEEDS MORE YES NO STUDY DESIGN/DEVELOPMENT/MANUFACTURING Is the product innovative? Can it be developed quickly to market-ready state? Can it be easily manufactured? Do I have the resources to manufacture the product? Is it more practical to subcontract the manufacturing? Are there ways to enhance the product over time? Is there a possibility for spin-off or complementary products? New Product/Service Feasibility Checklist NEEDS MORE YES NO STUDY FINANCIAL Is the return on this investment sufficient to justify the effort? Are the development costs within reason? Will it be possible to minimize the manufacturing investment through outsourcing, while still maintaining quality and control? Is money available to produce the product? Can the product achieve high gross margins? Is there a viable business model for this product? Product Development Trade-offs Throughout the product development process, you will encounter trade-offs such as: –Product features –Cost –Capital expenditures –Development costs –Timing Trade-offs involve compromise: something must be sacrificed to gain something else. MVP = Minimum Viable Product MVP = Minimum Viable Product Outsourcing Product Development Both large and small companies often outsource all or part of their product development to third parties. It is possible to reduce risk, lower costs, and decrease cycle times by factors of 60 to 90 percent by outsourcing product development. Outsourcing provides a young firm with a network of expertise that it couldn’t afford to hire in-house. Some of the areas of product development that require engineering analysis, design, and expertise and are suitable for outsourcing are: – Component design; Materials specifications; Machinery to process; Ergonomic design; Packaging design; Assembly drawings and specifications; Parts and material sourcing (suppliers); Operator’s and owner’s manuals Some things to keep in mind: – Do not outsource both the design and development of your product to the same firm unless they specializes in both – Spend enough time on the design of your product before you begin to build or code. – Break into meaningful parts to do early tests at low cost before incurring the expense of complete development. – Never choose an outsourced partner based solely on price. – Easier to manage product development locally versus overseas and protect IP. Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days Friday – Chapter 15 Small Data – Chapter 16 Interview – Chapter 17 Learn Know the Target Market – Harry Potter 8 experts in publishing children’s books turned down the book Grown ups tried to predict what children would like They were wrong A child read the book and loved it Dad signed the author to a modest contract and then published 500 copies Need to get data from your actual customers Don’t predict what they will like Interview 5 Target Customers Conduct hour long interviews We have a lot to learn from just 5 consumers 85% of product problems are identified by the first 5 users If 2 or 3 experience an issue then pay attention! Interview Setup (Sprint vs. MGT 420) MGT 420 Set-up – One lead interviewer, at least one additional observer / note taker – Videotaped interviews In person use computer or phone to record Online use MSTeams or Zoom to record – Similar interview style as Sprint (Direct interactions with your product prototype) The Five-Act Interview 1. Friendly welcome to start interview 2. A series of general, open-ended context questions about customer 3. Introduction to prototype(s) 4. Detailed tasks to get customer reacting to prototype 5. A quick debrief to capture customer overarching thoughts and impressions See Sprint videos at https://www.thesprintbook.com/the-design-sprint Specifically, watch the “Friday” videos: https://library.gv.com/sprint-week-friday-7f66b4194137 https://www.youtube.com/watch?v=U9ZG19XTbd4 Tips for the Five-Act Interviews Warm greeting & small talk Get OK to record interview (in advance) Be mindful of body language Ask customer questions about life, interests, and activities Ensure customer you didn’t design the prototype to get honest feedback Remind customer to think aloud Ask customer to perform tasks during interview (let them figure out prototype on their own) as you won’t be in a store when they are purchasing or next to them when using the product to explain things Interviewer should ask questions while customer is working on the tasks to help them think aloud Tips for the Five-Act Interviews Be prepared with good questions – Questions should be easy for customer to answer and not intimidating – Avoid leading questions – Don’t ask multiple choice or yes/no questions – Ask: Who, what, when, where, why, and how Should feel like natural conversation Explain how some parts may not work right – First prototype - will not be perfect – Encourages them to give blunt feedback Tell them “there are no right or wrong answers” Use the “how would you decide…” line – Open ended tasks are more interesting Tips for the Five-Act Interviews Use questions to have person think aloud: – “What is this? What is it for?” – “What do you think of that?” – “What do you expect that will do?” – “So, what goes through your mind as you look at this?” – “What are you looking for?” – “What would you do next? Why?” Tips for the Five-Act Interviews To wrap up, ask a few debriefing questions – Helps you sift through everything you heard – “How would you describe this product to a friend?” – “What did you like/dislike about this product?” After all interviews complete: Watching the interviews together is the most beneficial Conclusions will be a group effort Everyone can make informed decisions on what to do next Everyone writes observations on their own sheet about patterns they see Share patterns aloud with the group What do you need to validate your idea? The million-dollar question: What type of prototype do you need to develop to conduct these interviews to test and validate your idea? 3 Key Take-aways 85% of product problems are identified by the first 5 users. Follow the process. Watch and re-watch the Friday Sprint videos. Do not treat this as a “conventional” interview asking questions. You must have your customer interact with your prototype. Questions? Dr. Kipp A. Krukowski MGT 420 – New Venture Creation