Published on January 9, 2009
OpenTTO.org - DILIGENT Phase 2 – Market Value Proposition : ©2004 OpenTTO.firstname.lastname@example.org Slide 1 OpenTTO.org - DILIGENT Phase 2 – Market Value Proposition MVP Objective What is Value? Benefits are Business Needs A Day-In-The-Life Building The VP Is Difficult Confidence Index MVPObjective : ©2004 OpenTTO.email@example.com Slide 2 MVPObjective To develop a value proposition for the invention: What are the benefits? For which defined groups of customers? How to phrase that in business needs? The process comprises three sub-steps: Firstly – understanding features and advantages Secondly – framing the business benefits. Thirdly – formulating the value proposition. Only the existence of a market justifies commercialization! Market Value Proposition : ©2004 OpenTTO.firstname.lastname@example.org Slide 3 Market Value Proposition SUPPLIERS: INPUTS: OUTPUTS: CUSTOMERS: Researchers Patent Advisors IP Librarian Business Leads Partners Customers Product Forecasts Business Leads Governance Group Project Management Business Leads Partners Market Experts Researchers Partners Government Market Experts Researchers Patent advisors Funding Governance Group Governance Group Business Leads Researchers IP Librarian Government Executive Business Lead MVP SIPOC : ©2004 OpenTTO.email@example.com Slide 4 MVP SIPOC 2.1 Describe Customer 2.2 Features, Advantages, Benefits 2.3 Draft Business Need 2.4 Live DAY IN THE LIFE 2.5 Value Proposition 1.0 CPA Business Leads Customers Researchers Product Development IP Map Sales briefings Customer meetings Futurist Product Forecasts 2.1 Describe ultimate customer for the IP or the results or outcomes of application of the IP 2.2 Work through features, advantages, benefits for markets and then for customer segments 2.3 Draft the business need addressed or business opportunity created by the IP 2.4 Live a “day in the life” of the end-user customer in order to understand the business need/opportunity 2.5 Develop a succinct value proposition statement which portrays the economic value of the IP 2.6 Complete Confidence Index for MVP Value Proposition Business Needs Description Customer Description Elevator Pitch 3.O IDA Business Leads Market Experts Governance Group The end-customer need is examined from “living a day in the life”; the business need and value proposition for potential users & licensees is developed. Process Supplier Input Output Customer Overview MVPSuppliers and Inputs : ©2004 OpenTTO.firstname.lastname@example.org Slide 5 MVPSuppliers and Inputs Typical questions for suppliers and inputs: Is the definition of what constitutes the “customer” clear? Is the future customer distinct from the current customer? Does the invention create a new market - disruptive? Have the best technology and market sources been tapped? Which potential partner’s views can shed light on the market value? Is sufficient information known about? Primary customers for the technology? Secondary customers? Unexpected uses and customers? Is the market timing right? MVPProcess and Transformation : ©2004 OpenTTO.email@example.com Slide 6 MVPProcess and Transformation Analysing Market Value Proposition: Is this a compelling market value technology in terms of VP? Is it an improvement or ancillary technology? How would it be delivered to market to maximise the value? Would an “owner” wish to own it exclusively? Is is generic and would assist many firms to add value? Which current products/services point to similar value creation? How would firms capture the value this invention creates? Does it require a capital intensive development? When and how could prototypes be tested? Which specific customers would have the greatest need. MVPWhat is Value? : ©2004 OpenTTO.firstname.lastname@example.org Slide 7 MVPWhat is Value? Value is in the mind of a client: It is not features It is not advantages It is not for a market But it is for a client with a business need. Value = Benefits - Cost MVPBuilding Understanding of Value : ©2004 OpenTTO.email@example.com Slide 8 MVPBuilding Understanding of Value Generate insights by: Understanding the key “features” Features are an objective characteristic of the invention Moving from features to “advantages” Advantages indicate how the invention’s features might help someone in general e.g. a market segment (not a specific client) Then moving from advantages to “benefits” Value = Benefits - Cost MVPBenefits are Business Needs : ©2004 OpenTTO.firstname.lastname@example.org Slide 9 MVPBenefits are Business Needs Benefits exist only with a particular business: “Business needs” require a business, a market segment is an approximation “Benefits” for a market segment are only “features” or “advantages” speculating on the needs of a particular business That is one reason why product-oriented companies struggle to become service-oriented e.g. HP Be as specific as possible in defining a business or a tight market segment in order to test the invention in relation to the business needs MVPGenerate New Views of the “Market” : ©2004 OpenTTO.email@example.com Slide 10 MVPGenerate New Views of the “Market” Build on the research and other disclosures Lessons learned Be sure the ideas are not out of date Start in a related but new topical area GO to meetings and conferences in new fields Link up with a Senior faculty member Read books, journals, magazines, the paper Collaborate in interdisciplinary teams Talk with companies & partners of interest Assess the “Market” with an open mind MVPA Day-In-The-Life 1 : ©2004 OpenTTO.firstname.lastname@example.org Slide 11 MVPA Day-In-The-Life 1 The most powerful tool is a “Day in the Life”: Take a real day in the life of the customer Ideally work with industry customer Understand business needs and tensions Capture potential licensee’s mindset and foresight The assess importance and role of invention from their perspective Caveat: But don’t get locked in the day-to-day. MVPA Day-In-The-Life 2 : ©2004 OpenTTO.email@example.com Slide 12 MVPA Day-In-The-Life 2 Joint formulation of value proposition: Build the story step-by-step Understand the key drivers for the licensee Engage in positive inquiry Analyze how the purchasing decisions will be made Understand the channel to market Map the value chain and the “margin motivation” Revisit the IP Map and the Technology Roadmap MVPA Day-In-The-Life 3 : ©2004 OpenTTO.firstname.lastname@example.org Slide 13 MVPA Day-In-The-Life 3 Style of a value proposition: Business value Why should anyone want to use the system? What genuine value does it return? Examples of things to consider What problem does it solve for potential customers? Does it open a new market? Does it better exploit an existing market? Does it eliminate or reduce inefficiencies? Does it solve the same problem as competing systems but at less cost? MVPA Day-In-The-Life 4 : ©2004 OpenTTO.email@example.com Slide 14 MVPA Day-In-The-Life 4 Bring back clear picture of the business value: Refine the value proposition or propositions Build a value-focused “elevator conversation” This is the first “market pitch” to answer: What is the essence of the business solution? Why is this a business problem needing solving? How big is the market? What is the competitive edge? Different pitches for different audiences Try to make one sentence as a clarifying exercise Note priority areas where clarity is lacking MVPElevator Pitch : ©2004 OpenTTO.firstname.lastname@example.org Slide 15 MVPElevator Pitch Examples: 1989 - Our system uses $300 hand-held scanners to capture and store voter signatures so that you no longer have to distribute pollbooks to your precincts on election day. The signatures appear on screen with each voter’s record so that you can electronically verify absentee voter signatures and signatures on petitions without going to the affidavits. 2002 – Our system updates voter history and your signature database by scanning an entire pollbook into a document database. It automatically detects voter signatures, reads the voter barcode, and updates voter records without user intervention. A task that until now took weeks to complete is finished in less than a day. MVPBuilding the VP is Difficult : ©2004 OpenTTO.email@example.com Slide 16 MVPBuilding the VP is Difficult Potential customer benefits are often unclear: Core technology inventions have long lead-time to market End customer value may be unclear Potential of the invention unknown to potential licensees A solution is to: Focus on categories and segments of the market Categories and segments should have common business needs Extrapolate segments to individual customers Get the “day in the life” customer excited about the future The more specific the segmentation the better. MVPBusiness Feel : ©2004 OpenTTO.firstname.lastname@example.org Slide 17 MVPBusiness Feel Generating the VP is not a clear process: The people involved have to have “business feel” Requires inquiring minds and exploring customer needs Also requires “authenticity” and integrity An innovation begins in the eye#: Be able to express the idea appropriately Use language and examples from the customer’s domain Try to find the “eye” of one of the participants Have them describe their version of the benefits & value Accept negativity with good grace MVPOutputs and Customers : ©2004 OpenTTO.email@example.com Slide 18 MVPOutputs and Customers Present the Market Value Proposition: What is the most compelling proposition? Is there a layered set of VPs Short “elevator” pitch – one paragraph – four sentences Four paragraph version One page version plus quantitative data and justification. What further testing of the VP is needed? Document and quantify the core value proposition and the segmented and focused customer groups to which the value proposition applies. MVPBusiness Case 1 : ©2004 OpenTTO.firstname.lastname@example.org Slide 19 MVPBusiness Case 1 Not a business plan but “making the case”: Clarify the problem Certify domain expertise Outline key technical and business provisions Point of departure for additional documents What is it not: Not a business plan No a marketing plan Not a design document Awakening interest in the idea and the potential MVPBusiness Case 2 : ©2004 OpenTTO.email@example.com Slide 20 MVPBusiness Case 2 Suggested sections: Introduction and elevator pitch – ½ to 1 page Discussion of value proposition – 1 page Discussion of feasibility of idea/technology – 1 to 2 pages Overview of the resources needed – 1 to 2 pages Risk overview of commercialization – ½ to 1 page Plus conclusion: Summarize the benefits for an investor or collaborator Mention the timing of inputs and exits Back up with the funds or key first resources required MVPRisk Assessment : ©2004 OpenTTO.firstname.lastname@example.org Slide 21 MVPRisk Assessment Preliminary risk issues: Failure of the value proposition – too weak to attract partners Failure to complete the development Ability to establish measurable milestones Insufficient resources – will adding resources later work? Failure to deliver required quality Delivering the wrong system – market awareness, communication Outline the consequences and mitigation – avoid, transfer, reduce, accept, decline Describe how the benefits justify taking the risks MVPTemplates : ©2004 OpenTTO.email@example.com Slide 22 MVPTemplates Phase documents: Business Case Phase Summary report: Objective Conclusion Summary Actions Notes and carry-forward handover matters Actions for further work may precede or run in parallel with the next Phase - IDA MVP Confidence Index : ©2004 OpenTTO.firstname.lastname@example.org Slide 23 MVP Confidence Index How confident are you that: The market has been sufficiently focused and well-defined? The invention has been well understood in the context of the market? The business need of potential licensing customers has been well understood? The key features and advantages were defined adequately? The advantages were adequately distinguished from benefits? The Value Proposition is compelling for partners? The market timing is or will be optimum? The Elevator Pitch is compelling and tight? The potential benefits exceed costs by 3+ times? The time-to-market is expeditious and achievable?