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BU121 - Functional Areas of the Organization (LA1)

Terms in this set (69)

How do new venture ideas affect the success of the venture?
The number one reasons startups fail is because of a bad idea, simply there was "no market need"
In the entrepreneurship success pie, what's the significance of the idea?
It isn't the biggest piece of the pie, but it is however the foundational piece
What's so different about the IDEATE Method?
The IDEATE Method allows for ideas to pass through numerous filters and helps to generate new ideas as well. By actively thinking about migraine headache problems, entrepreneurs can ensure that there is a market need for the product.
For the Identify in IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Distinguishing between high quality and low quality problems. What is truly a "migraine headache problem" vs a minor inconvenience that is worth solving.

Value in the process: Filters through so-called "low value ideas" which can be any of the following:
- Easily solved, tiny niche markets, unclear value props (who gets the value and why?), no differentiation, a focus on the symptom not the problem

How to apply it: Design by job, not by customer. Dig through to the root cause of a problem. Find problems first. Solve next. Look for problems that people have the solution to, paying for it but still unsatisfied. Identify real migraine problems.

Relevant examples:
- HiRide: Problem was people trying to get home on a weekend from Waterloo didn't have a ride. So the solution was to create a carpooling match system that matched you with people you might actually want to talk to during your ride to Toronto
For the Discover part of IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Actively search for ideas in problem environments

Value in the process: Actually find those migraine headache problems instead of doing business solutions first that you then have to search for a problem to fix

How to apply it: Use your means and your personal experiences. Actively work to find the idea. From "Where Big Ideas Come From", limiting your time and adding a sense of urgency can make you work at it.

Relevant examples: Starbucks
The founder of Starbucks he went to Italy and saw coffeehouses where people sat around to drink coffee and that wasn't something that was already in the U.S.

Dollar Shave Club
The founders of Dollar Shave Club hated the fact that they had to pay 100000000 bucks for blades and going out to go buy them was a PAIN you literally had to get a Walmart plastic casing thing open. So they came up with a subscription box
For the Enhance part of IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Add innovation and novelty to existing opportunities

Its value in the process: Expand your search to current ideas but still innovate on them. Proven market needs for existing opportunities,

How to apply it: 3-legged stool:
1. Provide significant value to customers by solving their problem efficiently
2. Add value to anyone else in the supply chain who helps you solve the customer's problem - supplier, distributor, delivery service etc. etc.
3. Make sure there's value for YOU the entrepreneur to benefit too! (iPad screens on shopping carts doesn't get you much value as the store)

Relevant examples:
1. Paypal coming from Ebay , they saw a need because now not all stakeholders were satisfied, transactions needed to be made in the supply chain online
2. Cirque du Soleil, consideration towards the venue because traditional circuses had animals, dangerous ones.
3. Silver Car, consideration towards customers who wanted the lowest cost option
4. E6PR - Biodegradable rings instead of plastic to better balance the environment as a stakeholder
5. SnappyScreen - a little automatic sunscreen blaster thing - resorts now have a problem solved, sunburnt people which didn't leave a good impression. Suppliers of sunscreen are happier coz now they're wholesaling large amounts to these resorts and people are ofc happy bc they can relax now
For the Anticipate part of IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Analyze the external environment to anticipate needs in the future.

Its value in the process: Stay on the cutting edge, first mover advantage, ensure a market need or look into the possibility of a need that is going to exist

How to apply it: Deliberately think about PEST and other external frameworks to see the trends, new technologies or old technologies that could have completely new use cases. Developing complimentary goods to things we will see in the future

Relevant examples:
Uber and Lime : Access > Ownership idea , its the trend with millennial and GenZs

Eversound: Silent disco headphones to connect seniors at retirement homes during covid times
For the Target part of IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Identify your target customers and their needs

Value in the process: Test out your ideas in the market, flesh out where the value is going to be. It also gives you the ability to find other needs those customers have and find out if what you thought of as a migraine problem was even a problem at all

How to apply it: Who has the problem and would pay for a solution? Find new products that the target market you chose also needs. Primary research to understand who the customer is and understand the distinction between influencer, user and customer.

Examples to go through: Stethoscope, Toys, Instagram
In the Target aspect, explain what the difference is between the user, the influencer and the customer and some relevant examples
User: The person who uses the product
Influencer: The person who will influence the decision to purchase
Customer: person who actually buys it from you.

Examples:
Instagram, User is you, influencers are also us, customers are the advertising companies

Stethoscopes, user is doctor, influencer is sort of the doctor but not really and the customer is the hospital
In the Evaluate aspect of IDEATE, explain what is involved, its value in the process, how to apply it and some relevant examples.
What is involved: Practice scoring, and defending high value ideas

Value in the process: By the end of it, you have your final big, profitable, thought-out idea

How to apply it:
1. Creating concepts for your top 10 ideas
2. Rank order them again
3. Now google/gut-check them and fix around the rankings
a) Idea has been done: Proven market need, can you differentiate?
b) Nothing comes up - Could also mean no market, remember that
4. Choose the highest ranked idea

Relevant examples: N/A
Why is ideation only the first step?
Because although it is foundational, there is much more to the entrepreneurial success pie, especially the team and the execution of your idea
What is a migraine headache problem? (3 characteristics)
A problem that customers are trying to solve and spending money solve and still aren't satisfied
Classify the following into headache and non-headache problems
1. People Get Dizzy while playing VR Games
2. Cleaning your house is a hassle
3. You burn your toast everyday
1. Non-headache
2. Headache
3. Non-headache
Come up with a migraine headache problem, 3 underlying causes of that problem and ways you might fix them (even if the solutions already exist)
Sample Answer:
Problem: Healthy eating is a pain
Reason 1: Expensive -> Allowing people to buy bulk
Reason 2: Information Overload -> Crowdsourced info
Reason 3: Accesibility -> Healthy vending machines for on-the-go eating
Why do we start with Value prop Assumptions?
It allows for an admittance of your bias at the very beginning to ensure that it does not influence your decisions

Its at the point in the process where you think there's a market but you need to get a deeper view which comes in the step after.
Identify and explain the 6 pieces of the value prop canvas
Customer Job (s): What customers are trying to get done in their work and in their lives
Correlates with Products/Services that you create to get those jobs done
3 Types of Jobs
1. Functional -> Hole in the Wall
2. Social -> Looking Trendy
3. Emotional -> Peace of mind, job security

Gains: The positive outcomes/concrete benefits customers would like to achieve that go BEYOND expectations
Gain Creators: what you're doing to go beyond the expectations bar that you defined

Pains: Potential bad outcomes, risks, obstacles related to customer jobs
Pain Relievers: What you're doing to alleviate the pains that the product creates
Are gains the opposite of pains?
No, there's a certain expectations bar that you have to define. sometimes that bar is super low in which gains > pains but sometimes the bar is rly high so any pain would offset your whole business
Analyze uber through the value prop canvas
Pain Relievers: Vetting drivers

Gain Creator: Manage your trip, social gain of a nice car and being a flexer

Job to be done: get from point a to point b
What example was given of a company that completely changed their business model using the value prop canvas? Identify and explain what parts of the canvas they changed through the process
Company was Hitlist

They went from building tools to having a tool subscription service for their same customers, construction companies.

Old Model: Provide the top quality product

Gains customers wanted: 100% uptime - no one sitting around waiting for tools, predictable costs and access to the newest tools

Pains customers hated: Upfront investments, delays and penalty costs

Job they had to get done: Plan their fleet schedule, respect deadlines and execute contracts
Identify and define the different types of research (3 pairs of them)
Primary research: Firsthand experience talking to customers
Secondary research: going online and looking at other people's data and such

Problem research: research solely to figure out the problem and not to find a solution just yet

Solution research: what is already being done in the market and where are gaps in the current solutions

Qualitative vs Quantitative research (who doesn't know what this is)
Who are you looking to interview in your primary research? Identify who they are, and define them with respect to your role.
Early adopters: People who are actively searching for a solution to their problem.
These are the people who are likely to buy your product once it does come out.
When do you know if you have the wrong idea and when do you know if you have the wrong person in primary market research
Wrong idea: If the intensity of the problem is low. This means that when you are asking questions about how they feel about something they mentioned as a problem, if its something they flagged off as a minor inconvenience you have the wrong idea.

Wrong person: when you ask questions like "what does the typical week look like for you" and encountering your problem hypothesis isn't it, you may have the wrong person
Identify and describe the 5 different customers at the different stages of the "law of diffusion of innovation"
Innovative Adopters: They'll buy literally anything the second its out

Early adopters: people who have an issue, feel a headache and are actively trying to solve it

Early and Late majority: Those that will make up the 68% of your overall adoption

Legends: even after your product has faded they'll still buy
Identify and explain some guidelines of how to conduct an effective customer interview
1. Consider them the expert on the problem
2. Don't multitask, don't ask leading questions
3. Use their words, don't try to force your idea down their throats nor try to pull something out of em
4. Pay attention to body language
Why should we really listen to customers anyway?
Customers are the expert on the problem. You are to be the expert on finding the right solution. But if you don't have the problem right in the first place you are fulfilling a need no one has. There will be no market for your business.
Where could you find early adopters?
"Watering holes" (ngl this term is so savage like Laura rly called early adopters savannah animals)
- Find where they go to talk about their problem(s) and more importantly, where they go to find solutions.

Examples: Social media, reddit, quora, any kind of forum, straight up google, blogposts, influencer pages etc etc etc.
What are three main types of bias you have to avoid? And why should you avoid them
1. Selection bias: Don't pick based on a particular set of criteria that is not representative

2. Social acceptability: They'll give you answers that you/society wants to hear so it's never accurate

3. Confirmation bias: Don't just pick people that agree with you, look to be surprised.
Identify the 3 elements that make up who you are
IQ -> Basic human intelligence and reasoning ability
Personality - Combination of qualities that Make up your character
EQ: Your emotional intelligence, how self aware, self managing, socially aware and socially managing you are
Why is EQ so different from Personality and IQ?
EQ can change based on effort. IQ and Personality are for the most part fixed.
Why should companies care about EQ?
1. Impacts business performance
2. People with average IQ but higher EQ tend to perform really well
3. Truly distinguishing qualities come from EQ
How do you measure group EQ? How do you not measure it?
Group EQ is not the sum of its parts, instead you have to recognize how individual EQs work and respond to each other
What is the process of building the EI in groups?
Group EQ ->
Mutual Trust, Group Identity and Efficacy -> Participation, Cooperation, Collaboration ->
Creative solutions, better decisions and higher productivity
What are the 4 DISC styles and give a short explanation as to who they are
D(Dominant): Actively task focused, Ds are the person in the elevator who are spamming the button because they gotta get to their job

I(Influencer): Actively people focused, Is will start talking to everyone else in the elevator as it closes, it's their time to shine

S(Style): Passively people focused, usually the most chilled out, issoki come on in there's plenty of room kinda people.

C(Compliant): Passively task focused, this elevator said 4500kg, if one person comes in I am out bc I will follow the rules and get stuff done
Describe each of the fears of the 4 personality types and how that motivates their behaviour
D - Being taken advantage of: This leads them to always want control in the situation so no one can ever do this to them

I - Rejection from others: This leads them to constantly ensure that everyone around them likes them, and they do this by being super extroverted and friendly

S - Loss of security: This leads them to be sorta the most easy-going let it go type people, as long as nothing changes please!

C - Criticism: This causes them to look through every last detail and to ensure, ENSURE they are correct
For the D personality, identify their best played role in a team, some of their characteristics, and how you should communicate with them
Role: Bottom Line Organizer, they will keep everyone on task at all times, if you want something done, they will ensure it gets done.

Characteristics: Desires change, impatient, multitask like crazy, they are active and aggressive

Communication: be brief do not ramble, focus on results and highlight logical benefits

Antagonized Response: Aggressive
For the I personality, identify their best played role in a team, some of their characteristics, and how you should communicate with them
Role: Negotiating conflict, in any situation, they are able to understand others and actively pursue this

Characteristics: People oriented, disorganized, optimistic and encouraging, verbal and persuasive

Communication: Let them talk, allow for social time, create incentives, build a favourable environment, share testimonials

Antagonized Response: Negotiate
For the S personality, identify their best played role in a team, some of their characteristics, and how you should communicate with them
Role: Reliable and dependable

Characteristics: High level of trust, loyal and gentle team player, person of substance, resist change

Communication: Give them time to adjust, build a safe environment, minimize perceived risk and assure a personal follow-up

Antagonized response: Passive
For the C personality, identify their best played role in a team, some of their characteristics, and how you should communicate with them
Role: Conscientious and thorough

Characteristics: Perfectionist, sensitive, asks many questions, require details, comply with rules, avoid independence

Communicate: Prepare in advance, use accurate data, no "surprises", be specific

Antagonized response: Passive
Describe the pairs of personalities and the conflict they have and why they have those conflicts
D and S: Ds like to be forward moving, aggressive change-seeks and S are stable, people focused. a D would find an S lazy, compliant etc.

I and C: Is are social beings and they love being talkative, Cs are reserved and they like to focus on their task at hand. a C will find an I overwhelming and too loud for the room
How do purpose-driven businesses differ from others? Identify the 2 ways they differ and why that is the way it is
Longevity: Products are part of a finite game, eventually products become obsolete. Purposes can be infinite, they last a lot longer than any particular product and stay through many iterations of different businesses

Authenticity: People are less deterred from businesses with a purpose. They can relate to them more than solely monetary related effects
How can a business become more purpose driven? (4 ways)
1. Tell your story, make it powerful. When people can understand where you came from, you have a stronger purpose

2. Be transparent, be authentic: You have to have a purpose you are willing to tell the world and be honest when your business is still working on getting in the right direction to that purpose. And you definitely cant make up a purpose just because it sounds better.

3. Consider all stakeholders (self explanatory)

4. Let your purpose evolve with the organization. Let it be infinite
What is a finite and infinite game? Identify the distinguishing characteristics and give examples of each
Finite game: Known players, known rules, almost all sports are finite games.

Infinite games: Known AND unknown players, no agreed upon rules.
BUSINESS is a real infinite game b/c of barriers to entry, exiting companies, changing industries etc etc
What are the 5 elements of a just cause?
1. Stand for something, not against something (e.g) fighting against poverty is acting like you can solve it but you cant. Fighting for the right for families to provide for themselves: now that's affirmative and optimistic

2. Inclusive - All stakeholders should be considered

3. Service - Oriented: Don't make a product for yourself, get the thing that can do the job that people want to get done

4. Resilient: Has to be able to resists disruption. Products get disrupted, your just cause should not

5. Idealistic: inspiring, and ultimately unachievable. Achievable is finite. unachievable is the infinite game
What is NOT a just cause?
1. Any goal with a finite end, "putting a man on the moon" is a finite game

2. "Being the best" it's too vague and in a game without known rules, you can't agree with what that is.

3. Growth

4. CSR. CSR is an add-on to your purpose, not the just cause itself.
What are the two companies that were talked about and how their just cause (or lack thereof) was completely different
Apple - " Help teachers teach and help students learn"
Microsoft -" To beat apple"
Why was our old model of the KSFs flawed?
Because it makes it seem like financial performance is the most important, when it is not. You cannot focus on financial performance and expect to get it, you have to focus on the other 5 factors.
How does the just cause relate to the KSFs?
Employees: a just cause inspires employees to have better ideas

Customers: a just cause inspires contribution from their wallets

Quality products: a just cause inspires value for your products because its bigger than just your product

Innovation and Creativity: Follows from employees, a just cause unbinds you from the shackles of any particular product

Competitive Advantage: a just cause is what keeps longevity and authenticity for you as a company.
Identify and explain the 3 parts of the business model spectrum
Traditional Charities -> Social Enterprises -> Traditional Business.

Explanation: Traditional charities are run solely on grants and donations and they are 100% focused on their social goal. Traditional business is based on profit, their goal is to continue to make more profit. a social enterprise has 3 stages to it, some get grants like a charity and some are more profitable like a business a.k.a. B Corp
What is a business model?
"A business model describes the rationale of how an organization creates, delivers, and captures value"
Describe how Gilette and Electric Shavors differ in their business model.
Gilette - Practically give away the handle for free, charge more on the blades, multiple purchases

Electric Shavers - One time purchase
Example from lecture: Talk through the different business models behind Q Water (monthly fee for restaurants), Aqua Ovo (Household filter), Event Water Solutions (Bottle filling station at events)
Expectation: Filtered Water

Gains -
Q Water : The job to be done of the restaurants they serviced was to give them the best dining experience possible
Aqua Ovo: your job to be done as an individual with filtered water is probably to impress other people so its a social gain
Event Water solutions: job to reduce the amount of plastic bottles bc its bad for the environment

Three completely different business models with the exact same product
Why do business models even matter?
Because business models are "at heart stories - stories that explain how enterprises work"
A successful business model represents a better way than the existing alternative
What are the elements of a good story and how they correlate to a business?
Precisely delineated characters ->
Who are our customers
Plausible Motivations ->
Would our customers really be willing to pay for what we are selling?
Plot that Twists ->
Better than what existed
Use the elements of a good story to analyze the American Express Travel Cheques we talked about in class
Context: People used to have to use bank drafts but international banks wouldn't cash them

Characters: Travellers
Motivation: Travellers don't want their cash stolen when they travel but still be able to make purchases
Plot Twist: Banks have already revised the cheque so it makes it easier when you cash it out in another country
Pick a company of your choice (if you can't choose one, feel free to use Netflix, Gamestop (lol) or Spotify)
And walk through the elements of a good story as it relates to a business model
And talk about how their business model is different to the alternative
Netflix : (Remember these are opinionated so feel free to disagree)
Characters: Homebodies, people not looking for the latest movie (although this is changing now)
Motivations: They're looking for variety instead of the next hit blockbuster
Plot Twist: Releasing an entire tv series on the same day instead of weekly releases.

Netflix's Business Model differs from regular television and tv because those are focused on creating hype for a particular set of IPs that the media company produces. Netflix however, focuses on offering variety, to try and get the most personalized shows to the right people
Talk through how Cinemas' business model works, and what kinds of key resources they then need to capitalize on
Cinemas sell tickets at cost, but the concessions are where they make money. for this reason they have to make sure that there is 100% uptime, no long lines and continue to upsell people
When do business models fail to work?
Two tests: Narrative or Numbers Test

Narrative Test: environmental logic of the firm is flawed, customers are not well understood and do not have plausible motivations

Numbers Test: Insufficient revenue streams and/or costs too high
Why do some companies have the same product but have completely different business models?
Because the product is the center of the business, but it isn't the business itself.
How do you pull out the insights you get from customer interview data?
Look for the following:
1. most extreme pains in common
2. Most essential gains in common
3. Remove ideas that are only mentioned once

Put all this on an Affinity Map, a large board full of post its so you can group ideas together to identify clouds

Rearrange the clouds to rank order how often you hear it
If you're interviewing a customer, and they haven't looked for a solution to their problem, what are the 2 things this could mean?
1. They're not an Early Adopter
2. Your idea does not address a Migraine headache Problem
why is it important to define your purpose as a company?
1. Create deeper connections with customers
2. Do more for the community
3. Attract and retain talent
4. Achieve greater results and impact
What is a purpose?
1. Organization's soul and identity
2. Articulates why an organization exists, what problems it is here to solve, and who it wants to be
What are the 4 entrepreneurial motivations?
1. To make a difference in the world
2. To build great wealth or very high income
3. To continue family tradition
4. To earn a living because jobs are scarce.
Why do you need to define your purpose before you choose a business model?
Your business model will reflect your purpose.
Where do purpose driven businesses fall in the business model spectrum?
On the right hand circle of the social businesses lie mission driven businesses that are still for profit enterprises, e.g B Corps
How do pure social enterprises differ from traditional purpose driven businesses
The profits in social enterprises are completely reinvested, they only look to make money as a way to be self sustaining
How do purpose driven businesses play an infinite game?
A purpose drives you to make long term decisions that develop your strengths as a company instead of focusing on short term success that ultimately weakens the firm
Why is business an infinite game?
1. Barriers to entry (or lack thereof) and exit
2. No fixed rules, other than legal parameters
3. No agreed-upon objective
4. Numerous metrics that can be used
5. There is no "end", business keeps going and when players stop playing, the game still goes
Which of the following is not a just cause?
1. Fighting for one's right to feed their family
2. The best product for our customers, making sure the environment is considered
3. A world without poverty
4. Inspire innovation among kids
3. A world without poverty.

This is fighting against something, not fighting for something. Implicitly also, you're assuming that this goal is achievable by having it which makes it a finite game and thereby not a just cause
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