The guest speaker was Mr. Eric Cheung (Consultant, IT & Business Management, HKPC) and he introduced the Business Model for smart startup. He told us two observations form his past projects below.
i) SMEs and startups are quicker in driving innovation, but lack brand presence in market.
ii) Large corporations’ strategic planning and market research takes months to complete, but the results are still “Hypothetical”.
Then Mr. Cheung briefed 5 steps of traditional Innovation process. There were two problems faced by enterprise during innovation:
i) Inertia and fear of change
ii) Long time for making decision
However, there are some opportunities included “Brand Identity”, “Incumbent in Market”, “Customer Relationship”, “Financial and Employee Resources”.
It observed a traditional approach as follows:
i) Market research or insight from senior management
ii) Develop an almost “ideal” product based on senior management’s view
iii) Market and promote the product
iv) Success or Fail
So that traditional corporate environment was not conducive to some type of innovation (Breakthrough)!
Mr. Cheung used Zappos (online shoe store) as example to analysis their Business Model using BMC. The Value Proposition has two Hypotheses:
i) Will people buy shoes without trying it on?
ii) Will people by shoes online with price same as in-shop?
It needed to test these hypotheses using Prototype that was no warehouses and measured if the visitors purchased the shoe online.
The following three key elements for quick hypothesis test were:
i) Hypothesis (Generation / Tune / Scrap)
ii) Build (Minimum Viable Product)
iii) Measure (Non-Vanity Metric - Data collected about a company or its users that should help entrepreneurs make decisions.)
Some cases were discussed below.
WebVan (fail): Lesson learnt that focus on attractive micro-segments & fix the business model before expanding
Dropbox (success): Using minimum viable product (MVP) to validate the assumption (e.g. video of prototype that product was not completed)
Kodak Gallery (fail): Don’t forget the big picture: Setting business hypothesis before testing
3M (success): Continuous supply of new ideas that 15% of all employee’s time is allowed to be on their pet projects (So called “3M Way”)
Zappos (success): Like a city and less like a bureaucratic corporation. They called their structure to be “Holacracy” that enable employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.
Finally, Mr. Cheung showed their Smart Startup Model from Crazy Idea to Business Hypothesis, then DOE and Measurement with IT solution, as well as, Tune or Scrap to innovate and get the final target.
During Q&A, Mr. Cheung answered lean was not only in process but also in innovation.
Lastly, he shared some project using Smart Startup Approach through 1. Set hypothesis; 2. Build minimum viable product (MVP) and 3. Learn by non-vanity measure.
Reference:HKSTP - http://www.hkstp.org
TecONE - http://tecone.hkstp.org/t1_web/