Key take-aways from AICD Director Download: Lean / Design Thinking Part 1

Lead Change from the Top – PART 1

In this 3-Part series I’ll share key take-aways from a recent keynote address at the Australian Institute of Company Directors, covering much of my work with universities and organisations.

 

There was some important research published by Simon – Kucher and Partners in 2014 (and Strategyzer and 100firsthits.com) where they looked at the top 10 business mistakes, with #1 being actually building the wrong thing, building something no one wants. It’s not hiring the wrong people, or lack of focus, or failing to execute sales and marketing. All of those things are key, however the number one mistake is building something no-one wants.

 

The number one business mistake = building something no-one wants.

 

Companies are constantly developing products and services to launch into the market. However, around 72% of new product and service innovations fail to deliver on customer expectations (Simon – Kucher and Partners 2014). Or you can say that customers don’t care about 7 out of 10 new products or new services introduced to the market.

 

Lean thinking, in Value Proposition Design and Business Model Design, is a customer-centric method for the design of new products and new services. Design Thinking is a method for practical, creative resolution of problems incorporating the strategies designers use during the process of designing (Wikipedia definition). The key feature with Lean / Design Thinking from a business perspective is that it is now used very effectively in the design and validation of problem solution fit, product market fit, value proposition design and business model design.

 

Leading the work in this field are Alexander Osterwalder and Yves Pigneur authors of “Business Model Generation” and “Value Proposition Design” (with co-authors Greg Bernarda and Alan Smith). Other important references are Eric Ries with his book “The Lean Startup” and Steve Blank with his book “The Startup Owner’s Manual”. These books are all great references for looking at how you can validate problem solution fit, validate product market fit, design new business models and validate those business models and value propositions before embarking on taking products or services out into the market.

 

Using this method and the frameworks, and doing the work, allows you to understand the customer deeply, as well as identifying the early adopters and innovators in your market. You can greatly enhance the launch of a new product or new service in this way. It can also, and usually does, significantly reduce risk to your organisation or company.

 

Alexander Osterwalder and Yves Pigneur with their book “Business Model Generation” have described a visual design tool to design and test business models in a ‘business model canvas’, and with “Value Proposition Design” have described a visual design tool to design and test value propositions in a ‘value proposition canvas’.

 

Through the work that I do with CSIRO, universities, organisations and companies across the country, I translate and witness this methodology in action. These workshops are designed to focus on team work, understanding the customer, problem discovery, value proposition design, validating and de-risking, taking new products and new services out into the market, and maximising the impact of publicly funded research.

 

In these workshops, we use the above-mentioned frameworks for visualising and testing the assumptions that we have about the customer. These frameworks are central to the teaching and learning. A development team can use the value proposition canvas to articulate all the information they have on the customer; what they believe is the job the customer is trying to get done; the pains and gains that the customer has. This allows the development team to design a product or service that truly serves the customer.

ON Prime teams present promising innovations to the business community

Last month members of Perth research, science and business communities met at Curtin Business School to hear about the work of the latest cohort of research teams to graduate from CSIROs ON Prime programme. The teams presented their projects, and their learning from the ON Prime 4, and how their innovations will benefit business in Australia and impact the world.

 

I thought I’d share a quick overview on what the teams have been working on and what’s next for them on the commercialisation journey. If you’re interested in getting involved to assist any of the teams, in any way, please get in contact with me.

 

Eco-Ore is providing a safe and cost-effective process to extract rare earth metals, which are used in all our technology. The team has gained valuable insights into their potential customers priorities and a lot of information that has informed the final formulation of the solution. The Eco-Ore team’s next steps will include building a pilot plant and validating their solution at scale.

 

MicroBright has developed a strengthening toothpaste which is less damaging to enamel than products currently on the market. The Team has gained valuable insights into the barriers in the market, the importance of user-friendly language, and clearly defining market segments. The MicroBright team will incorporate all of the inputs into the next stage of development.

 

On-Farm Grain Storage, developed by researchers at Curtin University and existing business GGHS, is providing advantages in agriculture like decreased yield/quality losses and lower operational costs for farmers. The team has gained valuable insights into the real main concerns for farmers, with some previous assumptions challenged! This has enabled the team to develop a plan for infield trials and to reformulate a marketing strategy for the new storage solution.

 

Insight from Imagery has created sophisticated video mapping and object recognition technology to quantify the changing planet and help solve problems and make decisions in business. They offer increased data quality and accuracy. This team is exploring different markets such as building inspection companies, oil and gas and environmental, with plans to take a look at other industries such as forestry and agriculture.

 

The Ceramic Membrane Filter development team have developed a product for faster filtration, lower energy consumption and easy, lower-cost maintenance. Solutions base on the technology opens up opportunities in a range of industries such as water filtration and wineries – growing industries in key market around the world. The teams learnings included the necessity to develop the whole filtration solution rather than just the filter membrane and that different customer segments have different needs.

 

So what’s next for these teams? That largely depends on industry support, grant funding and investment opportunities to develop their products further to commercialisation. But as ON Programme coordinator David Bird said at the event, ‘ON Prime never finishes’, and teams have the opportunity to continue their research and development with the support of the ON Tribe alumni programme, and for some, to attend the ON Accelerate intensive programme. The advice was, ‘Identify your support people and keep the communication flow going.’

 

It’s great fun being part of CSIRO’s ON Prime and ON Accelerate programmes and I am looking forward to ON Prime 5, which is just around the corner. Applications for ON Prime 5 close on July 13.

Valuing Early Stage Companies

I am currently helping a team calculate the pre-money valuation of their company before they go out and raise additional equity funds. This is not an easy exercise to do on your own company. However, it made me go back to one of my favourite references, an article called, “Valuation For Startups  – 9 Methods Explained”, co-written and published in French by Augustin de Cambourg and in Portuguese by Raphael Mielle. Link below in English.

 

The article does a great job of explaining all of the methods that can be used. They can be used to estimate the value now and to estimate the value once a key milestone or inflection point is reached. In fact, you can map out the whole journey you plan to take and value the company at each key milestone or inflection point.

 

At the end of the article, Augustine and Raphael pinpoint what they see as the best valuation method: “Having said that, I find that the best valuation method is the one described by Pierre Entremont, early-stage investor at Otium Capital, in this excellent article. According to him, you should start from defining your needs and then negotiate dilution: The optimal amount raised is the maximal amount which, in a given period, allows the last dollar raised to be more useful to the company than it is harmful to the entrepreneur.”

 

Here is the article on valuation…

https://startupsventurecapital.com/valuation-for-startups-9-methods-explained-53771c86590e