The BUSINESS MODEL PREMORTEM GAME: Why and How Your Business Model Could Crash

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Business & Mgmt

Published on January 8, 2014

Author: RodKing

Source: slideshare.net

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      ROD  U       Business  Model  Premortem  Game   Why  and  How  Your  Business  Model  Could  Crash   A  Holis(c  Perspec(ve   Dr.  Rod  King  

Following  Elements  of  a  Business  Model  Crash   Are  Based  on  the  Content  of     Saar  Gur’s  (DraC)  Presenta(on  to     Stanford  Graduate  School  of  Business     “WHY  MOST  STARTUPS  FAIL  AT  ACQUIRING  NEW  CUSTOMERS   (And  How  You  Can  Succeed!)”     January  2014     (h#p://www.slideshare.net/saarsaar/why-­‐most-­‐startups-­‐fail-­‐at-­‐acquiring-­‐new-­‐customers-­‐and-­‐how-­‐you-­‐can-­‐succeed)  

A  Business  Model   Illustrates   How  an  OrganizaYon   Creates,  Delivers,  and  Shares  Value  (Happiness)   A  Business  Model  consists  of  three  sub-­‐models  or  3  Ps:     q  P:  Provider’s  Model:  Create  Value   q  P:  Player’s  Model:  Deliver  Value   q  P:  Performance  Model:  Share  Value  (Happiness)     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Gary  Klein’s  Premortem  Technique   “We’re  looking  in  a  crystal  ball,  and   this  [business  model]  project  has  failed;   it’s  a  fiasco.   Now,  everybody,   take  two  minutes  and   write  down  all  the  reasons   why  you  think  the  project  failed.”    

3P-­‐BUSINESS  MODEL  NETWORK:  Anatomy  of  Business  Model   Profitably  Create,  Deliver,  and  Share  Happiness   requires   1 2 3 4 5 drives   delivers   P:  PROVIDER’S   MODEL   Level   P:  PLAYER’S   MODEL   requires   P:  PERFORMANCE   MODEL     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level   3P-­‐BUSINESS  MODEL  NETWORK:  Anatomy  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   drives   delivers   P:  PROVIDER’S   MODEL   requires   Inputs/Partners   q  Few  or  no  mentors/guides/ coaches/partners   q  Inadequate  funding   Internal  Resources   q  Team  with  inadequate   competence/synergy  for   doing  con(nuous  innova(on   and  improvement  projects   Processes/AcYviYes   1 2 3 4 5 P:  PLAYER’S   MODEL   requires   Product/Service;   Value  ProposiYon   q Bad,  “buggy”,  or  poor  quality   product/service   q No  or  Bland  Value  Proposi(on   Channels  &  RelaYonships   P:  PERFORMANCE   MODEL   Cost  (Pain):   q High  Admin/Staff  Cost   q Costly  infrastructure   q High  Customer  Life(me   Cost  (CLC)   Revenue  (Delight):   q Poorly  selected/sub-­‐op(mal   channels   q Poor  customer  rela(onships   q Declining  or  no  sales   (revenue  streams)   q Poor  customer  engage-­‐ ment/acquisitn/retentn   Player/Gamer/Customer/   Job-­‐To-­‐Get-­‐Done   PERFORMANCE   (PROFIT;  VALUE)   q  Focus  on  Waterfall  (Sequen-­‐ q High  Unit  Cost  or  CLV   (al)  Planning/Execu(on   q Undefined  customer  persona   q  Poor  Strategy/Execu(on   q Liele  Sales  or  No  Profit   q Undefined  customer  problem,   q Bankruptcy/Failure   q  Slow  or  inadequate  learning   needs,  or  job  to  get  done     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level   3P-­‐BUSINESS  MODEL  NETWORK:  Anatomy  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   drives   delivers   Inputs/Partners   q  Few  or  no  mentors/guides/ coaches/partners   q  Inadequate  funding   Internal  Resources   q  Team  with  inadequate   competence/synergy  for   doing  con(nuous  innova(on   and  improvement  projects   Processes/AcYviYes   P:  PERFORMANCE   MODEL   requires   Cost  (Pain):   Product/Service;   Value  ProposiYon   q Bad,  “buggy”,  or  poor  quality   product/service   q No  or  Bland  Value  Proposi(on   Channels  &  RelaYonships   q Poorly  selected/sub-­‐op(mal   channels   q Poor  customer  rela(onships   Player/Gamer/Customer/   Job-­‐To-­‐Get-­‐Done   q High  Admin/Staff  Cost   q Costly  infrastructure   q High  Customer  Life(me   Cost  (CLC)   Revenue  (Delight):   q Declining  or  no  sales   (revenue  streams)   q Poor  customer  engage-­‐ ment/acquisitn/retentn   drive(s)   requires   P:  PLAYER’S   MODEL   (NO  Problem-­‐Solu(on  Fit;    NO  Product-­‐Market  Fit)   P:  PROVIDER’S   MODEL   1 2 3 4 5 PERFORMANCE   (PROFIT;  VALUE)   q  Focus  on  Waterfall  (Sequen-­‐ q High  Unit  Cost  or  CLV   (al)  Planning/Execu(on   q Undefined  customer  persona   q  Poor  Strategy/Execu(on   q Liele  Sales  or  No  Profit   q Undefined  customer  problem,   q Bankruptcy/Failure   q  Slow  or  inadequate  learning   needs,  or  job  to  get  done     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level   3P-­‐BUSINESS  MODEL  NETWORK:  Anatomy  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   drives   delivers   Inputs/Partners   q  Few  or  no  mentors/guides/ coaches/partners   q  Inadequate  funding   impact(s)   affect(s)   Internal  Resources   q  Team  with  inadequate   competence/synergy  for   doing  con(nuous  innova(on   and  improvement  projects   impact(s)   deliver(s)   Processes/AcYviYes   requires   Product/Service;   Value  ProposiYon   q Bad,  “buggy”,  or  poor  quality   product/service   q No  or  Bland  Value  Proposi(on   impact(s)   affect(s)   Channels  &  RelaYonships   q Poorly  selected/sub-­‐op(mal   channels   q Poor  customer  rela(onships   impact(s)   P:  PERFORMANCE   MODEL   affect(s)   Player/Gamer/Customer/   Job-­‐To-­‐Get-­‐Done   Cost  (Pain):   impacts   q High  Admin/Staff  Cost   q Costly  infrastructure   q High  Customer  Life(me   Cost  (CLC)   Revenue  (Delight):   q Declining  or  no  sales   (revenue  streams)   q Poor  customer  engage-­‐ ment/acquisitn/retentn   drive(s)   requires   P:  PLAYER’S   MODEL   (NO  Problem-­‐Solu(on  Fit;    NO  Product-­‐Market  Fit)   P:  PROVIDER’S   MODEL   1 2 3 4 5 PERFORMANCE   (PROFIT;  VALUE)   q  Focus  on  Waterfall  (Sequen-­‐ q High  Unit  Cost  or  CLV   (al)  Planning/Execu(on   q Undefined  customer  persona   affects   q  Poor  Strategy/Execu(on   q Liele  Sales  or  No  Profit   q Undefined  customer  problem,   q Bankruptcy/Failure   q  Slow  or  inadequate  learning   needs,  or  job  to  get  done     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level   3P-­‐BUSINESS  MODEL  NETWORK:  Anatomy  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   drives   delivers   q  Few  or  no  mentors/guides/ coaches/partners   q  Inadequate  funding   requires   q Bad,  “buggy”,  or  poor  quality   product/service   q No  or  Bland  Value  Proposi(on   Channel  Management   Internal  Resources   q  Team  with  inadequate   competence/synergy  for   doing  con(nuous  innova(on   and  improvement  projects   Cost  (Pain):   Product/Service;   Value  ProposiYon   Channels  &  RelaYonships   q Poorly  selected/sub-­‐op(mal   channels   q Poor  customer  rela(onships   Customer  Rel.  Management   Processes/AcYviYes   Player/Gamer/Customer/   Job-­‐To-­‐Get-­‐Done   q High  Admin/Staff  Cost   q Costly  infrastructure   q High  Customer  Life(me   Cost  (CLC)   Revenue  (Delight):   q Declining  or  no  sales   (revenue  streams)   q Poor  customer  engage-­‐ ment/acquisitn/retentn   drive(s)   Inputs/Partners   P:  PERFORMANCE   MODEL   MarkeYng/Sales  Management   requires   P:  PLAYER’S   MODEL   (NO  Problem-­‐Solu(on  Fit;    NO  Product-­‐Market  Fit)   P:  PROVIDER’S   MODEL   1 2 3 4 5 PERFORMANCE   (PROFIT;  VALUE)   q  Focus  on  Waterfall  (Sequen-­‐ q High  Unit  Cost  or  CLV   (al)  Planning/Execu(on   q Undefined  customer  persona   q  Poor  Strategy/Execu(on   q Liele  Sales  or  No  Profit   q Undefined  customer  problem,   q Bankruptcy/Failure   q  Slow  or  inadequate  learning   needs,  or  job  to  get  done     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Environmental  Constraints   Influencing   A  Business  Model  Crash  

Level    3P-­‐BUSINESS  MODEL  NETWORK:  “SWOT”  Factors  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   1 2 3 4 5 W:  Weaknesses   P:  PROVIDER’S   MODEL   Value  Delivery:   PLAYER   P:  PLAYER’S   MODEL   T:  Threats   Value  Sharing  (Happiness):   PERFORMANCE   P:  PERFORMANCE   MODEL   O:  OpportuniYes   S:  Strengths   Value  Crea)on:   PROVIDER     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level    3P-­‐BUSINESS  MODEL  NETWORK:  Environmental  Factors  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   Value  Crea)on:   PROVIDER   P:  PROVIDER’S   MODEL   Value  Delivery:   PLAYER   P:  PLAYER’S   MODEL   ENVIRONMENT   1 2 3 4 5 Value  Sharing  (Happiness):   PERFORMANCE   P:  PERFORMANCE   MODEL     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level    3P-­‐BUSINESS  MODEL  NETWORK:  Environmental  Factors  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   1 2 3 4 5 Value  Crea)on:   PROVIDER   P:  PROVIDER’S   MODEL   Value  Delivery:   PLAYER   P:  PLAYER’S   MODEL   Value  Sharing  (Happiness):   PERFORMANCE   P:  PERFORMANCE   MODEL   Macro-­‐Economic  Influencers  (MEI):  Global  Economy   Market  Ecosystem  (ME):  Demand   Industry  Ecosystem  (IE):  Supply   Key  Trends  &  Complementors  (KTC):  PESTLIED  (-­‐/+)     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

Level    3P-­‐BUSINESS  MODEL  NETWORK:  Local  Industry  Factors  of  a  Business  Model  Crash   Profitably  Create,  Deliver,  and  Share  Happiness   1 2 3 4 5 Value  Crea)on:   PROVIDER   P:  PROVIDER’S   MODEL   Value  Delivery:   PLAYER   P:  PLAYER’S   MODEL   Value  Sharing  (Happiness):   PERFORMANCE   P:  PERFORMANCE   MODEL   Threat  of  SubsYtute  Products  or  Services   Bargaining  Power  of  Customers   Bargaining  Power  of  Suppliers   Threat  of  New  Entrants     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  hSp://businessmodels.ning.com  &  hSp://twiSer.com/RodKuhnKing  

On  Tools  for   The  Business  Model  Premortem  Game  

TRADE-­‐OFF  MAP:  Tools  for  the  Business  Model  Premortem  Game   Big  Urgent  Market  Problem  (BUMP):  …………………………………………………………………………………………………………………………   Job  To  Get  Done  (Market/Goal/Mo(va(on):  ………………………………………………….………………………………………………………….   Ideal  Final  Result  (IFR):  Insanely  Great  Experience  (Happiness)  or  Ideal  Business  Planning  and  Management   (+):  DELIGHT:    Reward  (Pay-­‐off)   High   (10)   LEAN  STARTUP-­‐SIX  SIGMA   GAME   (Business  Model   Premortem  Story)   AGILE  DEVELOPMENT   SIX  SIGMA  METHOD   LEAN  STARTUP  METHOD   Low   (1)   WATERFALL  PLANNING   Low   (1)   (-­‐):  PAIN:  Cost  (Time)   High   (10)  

Guy  Kawasaki   on  the  Premortem  Technique   “A  premortem   is  the  best  way  that  I  know   to  increase  the  probability  of  a  project's  success.   It  means  you  tell  the  team   to  assume  that  the  project  failed  and  then   come  up  with  the  reasons  why  it  failed.   Then  you  eliminate  as  many  of  those  reasons  as  possible.”    

Daniel  Kahneman,  2002  Nobel  Prize  Winner  in  Economics,   on  the  Premortem  Technique   “The  premortem  is  a  great  idea.   I  menYoned  it  at  Davos—giving  full  credit  to  Gary—and   the  chairman  of  a  large  corporaYon  said   it  was  worth  coming  to  Davos  for.   The  beauty  of  the  premortem  is  that   it  is  very  easy  to  do.   My  guess  is  that,  in  general,   doing  a  premortem  on  a  plan  that  is  about  to  be  adopted   won’t  cause  it  to  be  abandoned.   But  it  will  probably  be  tweaked  in  ways  that     everybody  will  recognize  as  beneficial.   So  the  premortem  is  a  low-­‐cost,  high-­‐payoff  kind  of  thing.”    

Business  Model  Premortem  Game   “Playing  Dead  in  Business  and  Life”  

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