the ideas to business

Idea to Business (Hint: it’s a journey not a task) Process Overview TL Faley, PhD Managing Director, ZLI April 3, 2008 Reality? 2 Idea Business Plan Venture Financing Successful Company … And the steps you skip will destroy any chance of success WRONG Non-Linear, Interdependent, Process Phases • Phase I: Business Design – Identifying opportunities and shaping business concepts • Phase II: Feasibility analysis and assessment • Phase III: Creating your business plan • Phase IV: Launching your business – Aligning the necessary resources (including money) • Phase V: Growing your business • Phase VI: Exiting your business – From succession planning to IPOs 3 Short Overview Articles • “The Process of Business Creation ,” TL Faley, Inc. Magazine (on-line), August 23, 2005. http://www.inc.com/resources/startup/articles/20050801/process.html • “Is your Business Idea Feasible?,” TL Faley, Inc. Magazine (on-line), October 4, 2005. http://www.inc.com/resources/startup/articles/20051001/analysis.html • “Creating Your Business Plan,” TL Faley & PS Kirsch, Inc. Magazine (on-line), November 3, 2005. http://www.inc.com/resources/startup/articles/20051101/bplans.html – Business Plan Guide: http://www.ey.com/global/Content.nsf/UK/_FG_-_Library_-_Guide_to_producing_a_business_plan • “Growing Your New Venture,” TL Faley, Inc. Magazine (on-line), February 21, 206. http://www.inc.com/resources/startup/articles/20060201/venture.html • “Making Your Exit,” TL Faley & TS Porter, Inc. Magazine (on-line), March 15, 2005. http://www.inc.com/resources/startup/articles/20060301/tfaley.html 4 5 A Staged, Gated Process to Plan Innovation Source Business Hypothesis Business Hypothesis Business Feasibility Study Business Feasibility Study Business Plan Other entrants Other entrants Hypothesis strong enough to merit deeper investigation? Business merit planning/launching? Opportunity What is the product or service? Who are your users? Why do they buy? How does your business make money? Customers Market Industry Company Team Full Plan and Investor Pitch Assessment Integration Levels of Thinking/Planning • Business Design – Vector Direction – Structured, Detailed, but Qualitative • Assessment - Vector Dimension – Quantitative • Business Plan – Operating document – Specific to You, Today 6 ZLI Programs that can help • Dare-to-Dream • Michigan Business Planning • Mingle ‘n Match • Others • Details: – http://www.zli.bus.umich.edu/events_programs/ 7 8 Dare to Dream encourages the thoughtful development of student-led businesses AND the development of student entrepreneurial skills and understanding 99 ZLI Activities for 2007-08 Frankel Commercialization Fund Wolverine Venture Fund Michigan Business Challenge & Intercollegiate Competitions Entrepreneurial MAP domestic & international opportunities Marcel Gani Internship Program (includes self-hosted internships) Williamson CoE/RSB E-education Initiative Entrepreneurial Studies Courses Action-based Learning New Business Development Seminars ZLI Office Hours, Coaching and Executive Consulting Counseling Michigan Growth Capital Symposium Private Equity Conference Entrepalooza: Exploration of entrepreneurship across multiple industries and business stages Symposia/Events Zell and Mondry Entrepreneurial Scholarships Mingle ‘n’ Match Academics Where you are • Some of you have identified a compelling unmet market need or emerging market • Some of you have identified a product that is the embodiment of some interesting technology or other innovation source • A rare few of you have product concepts targeted at specific users 10 [...]... None of you have a sustainable business design • So let’s first talk about how you get to a complete business design 11 Innovative New Business Design Process Pyramid Business Hypothesis Building the Iceberg from the bottom up • What is your product/service? (What does your company do?) • Who are your customers? • Why will they use your product? (Value proposition to the user?) • How does your company... Complimentary Assets • All those things necessary to transform the assets you have into the products/services your customers desire (and delivering it to them) • Advantaged Complimentary Assets: – Physical and intellectual assets: • • • • • • Brand name Manufacturing Plants Distribution channels Customer relationships IP that others may need (blocking their ‘freedom to practice’) Resources (ex: deep financial... The (product/brand) Is (most important benefits) Because (reason why, underlying enabler) Enabler (ex technology) Innovation Source(s) WHY NOW? Opportunity Drivers … which 7 sources of innovation 15 Take an initial guess at a business hypothesis Business Hypothesis Product Offering • Working through the business environmental influences • Finding the Path to Commercialization Influence Diagram Business. .. Refining the top of the Pyramid Business Formulation: • Explicitly determine Businesses’ Product Offering • Determine precisely what the business does • Determine Business Value Proposition • Both value creation & capture Product Concept Creation: • Determine core enabler benefits • Product concept brainstorming • Market segmentation (persona development for new markets) • Determine Product Benefit / Customer... Need Match(es) Bus Hypothesis Product Offering Business Environmental Influences Solution Positioning Statement Persona (target market segment) Timing Identify the Innovation source that enables the opportunity now BUSINESS HYPOTHESIS What is the product or service offered? (exactly what does the company do/provid Who are your users? Why will they use your product? How does your business make money?... complimentary needs of the customer? 28 Teece’s Framework: Determining the optimal value-capture vehicle for your Intellectual Asset Complementary Assets are: Intellectual Asset Position is: If control the IA and the CAs, then you have the potential to create an extremely well-positioned business Specialized Strong Weak Generic License to or Partner with CA holder Strong New Business Potential IAs have... Need Match(es) Bus Hypothesis Product Offering Business Environmental Influences Solution Positioning Statement Persona (target market segment) Timing Identify the Innovation source that enables the opportunity now BUSINESS HYPOTHESIS What is the product or service offered? (exactly what does the company do/pro Who are your users? Why will they use your product? How does your business make money? Community... internet) to get economy of scale of services (ex: call centers) 27 What? • What are does your company really have? • What is the driving need/desire of the proposed buyer ? • What complementary assess (CA) does your company need to deliver its product that fulfills this need? • What complementary benefits (CB) does the company’s product also need to deliver in order to satisfy the complimentary needs of the. .. in Perception 7 New Knowledge 13 Business Hypothesis: Core Elements of the Business Model Core Business Elements: Your Business Hypothesis •What is your product/service? •Who are your customers? •Why do they use your product? •How does your company make money? Marketing Strategy Distribution Strategy Product Strategy (leading edge, service, low cost?) Business Partnerships/Alliances Cost Structures... Marketing Sales Distribution 18 Less is more “I have often said there are three types of business : making stuff, selling stuff, and servicing stuff The usefulness of this for a startup is that too many business plans attempt to be in two or more different sorts of businesses Being good at one thing is tough enough Being good at two or more is even tougher! ” Charles Fry, serial entrepreneur 19 How do you . Gated Process to Plan Innovation Source Business Hypothesis Business Hypothesis Business Feasibility Study Business Feasibility Study Business Plan Other entrants Other entrants Hypothesis strong. Knowledge Business Hypothesis: Core Elements of the Business Model Core Business Elements: Your Business Hypothesis • What is your product/service? • Who are your customers? • Why do they use. a business hypothesis Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering 16 • Working through the business environmental influences • Finding the Path to