Term
| Two basic questions you need to ask to identify real needs |
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Definition
1. Do customers have an unsolved problem that no exisiting product or service solves?E.G. Netflix
2. Is there a significantly better way of solving a customers problems?Andy Grove, Intel |
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Term
| Why are most customers not helpful to entrepreneurs? |
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Definition
| Because most do not understand the capabilities of new products/services. To overcome this issue have deep involvement with customers, take clues and use own intitution |
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Term
| Large firms and new firms: difference in market research |
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Definition
| Large firms spend a lot of money on large samples. Not good for uncertain new products. New start-ups have a high involvement with firm. |
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Term
| 3 important facts about gathering Info About Customer Preferences |
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Definition
Most customers can not be relied on for new product market research
No basis exists for most customers to examine what a new product or service might mean to them
Key is to find a lead user and observe and interact with customer to find out about product capabilities |
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Term
| When assessing needs what are four questions you must ask? |
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Definition
Where does your product/service fit on the continuum?
Now, can you produce this product or service in a way to make profit?
If product is brand new, at what point is at on S-Curve?
What is your business model? |
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Term
| Shane's three categories for customer needs? |
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Definition
| Absolute necessities, nice to haves, and things that are unnecessary |
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Term
| Why is the process of developing an economical solution to your customer's needs tricky? |
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Definition
| You can only make money with a solution to customers needs in which a profit can be made on some transactions. if each transaction creates a loss then scaling will create bigger loss. |
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Term
| What is a Business Model Anyway? |
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Definition
“The totality of how a company selects customers, defines/differentiates offerings, defines tasks performed in house vs outsourcing, gathers resources, goes to market, creates utility for customers and captures profit” Slywotsky 1996
More than a business concept/idea
Less than a business plan
Captures essence of how it will work |
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Term
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Definition
Primarily products/primarily Services/ or mix
Standardization/some customization/high customization
Internal manufacturing/service delivery; outsourcing; licensing; reselling
Direct distribution/indirect distribution |
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Term
| How do you learn alternative solutions to customers needs? |
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Definition
| Social network, find out what competition is doing, potential customers, venture captialists |
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Term
| Marketing in start-ups depends heavily on ... |
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Definition
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Term
| What should you beware of marketing? |
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Definition
| Hiring professionals in marketing |
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Term
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Definition
1. Customer Credit
2. price of substitutes
3. Lower price over time
4. Trade-off factor to other products, true value of your product. |
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Term
| Precentage of Nature of Customer Adoption |
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Definition
Innovators (16% of market)
Mainstream adopters (68% of market)
Laggards (16% of market) |
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Term
| Two key points of customer adoption curve |
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Definition
Key point: dole out resources to match customer adoption
Key point: understand motives of different groups and sell accordingly |
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Term
| Crossing the Chasm reffers to... |
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Definition
| Entrepreneurs struggle to transition from selling to innovators to selling to mainstream (the key to profitability) |
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Term
| What factors make it so difficult to cross this chasm? |
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Definition
1. Need for strong evidence to demonstrate value
2. packaged easy solutions |
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Term
| How do entrepneurs mess up in customer selection? |
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Definition
Most ENTS do not have the resources to target all mainstream adopters—they usually have to pick a niche
...yet all these ENTS go for the entire market. |
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Term
| How do you decide which niche to pursue? |
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Definition
Pick niche where you can satisfy greatest need
Improves productivity
Cuts costs
Allows them to do something they could not do |
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Term
| Static estimates fail to: |
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Definition
Estimate market changes
Rates of growth
Causes you to make assumptions about product as substitute/complement
Eg email as a substitute for telephone |
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Term
| How to more accurately assess market potential... |
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Definition
Diffusion- first estimate how rapidly new technology will be adopted
Estimate market at different points
If you can accurately assess diffusion, you can make a better estimate of growth—remember S-Curve & Eager Sellers article |
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Term
| This info will help ENT budget resources accordingly and will hurt the incumbents due to scale losses |
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Definition
Must accurately determine if your product/service is a substitute or complement
Must accurately determine how quickly your product/service will unseat existing product |
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Term
| Why Established Firms Win Most of the Time |
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Definition
The learning curve
Reputation effects
Cash flow from Ops vs. external financing
Scale economies
Complementary assets |
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Term
| Established Company Weaknesses |
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Definition
The focus on Efficiency
The exploitation of existing capabilities
The need to satisfy existing customers
The constraints of existing organizational structure
The need to reward people for doing their jobs
The difficulty of product development in a bureaucracy |
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Term
| Why is focus on efficiency sometimes negative in big firm? |
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Definition
This focus leads firms astray from R&D because R&D is often inefficient
Every unsuccessful R&D effort leads to unrecoverable costs
Thus, by minimizing or eliminating R&D, established firms become unable to develop new products or services…thus opening window for ENTs |
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Term
| Big firms use manufacturing and marketing to exploit what kind of innovation? |
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Definition
Incremmental. lose sight of radical innovations.
A competence destroying new product or service causes an existing firm to cannibalize an existing revenue stream—not so for start up.
Barnes & Noble books had to cannibalize existing customers when they opened up online—not so for Amazon |
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Term
| Opportunities that Favor New Firms |
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Definition
Discreteness
Discrete (new drug) vs. systemic (windshield wiper) markets
Human Capital Intensity
Better than physical for two reasons: cost of capital and legal system/taking property
General Purpose
Ents have better chance with multiple market applications—such as the laser than with specific market applications—then established firms because of inherent flexibility
Uncertainty
Start ups perform better when demand is uncertain because the uncertainty works against the established firms strengths |
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