APS1015 Class 6: Validation of Market-Based Solutions

APS 1015: Social Entrepreneurship

Class 6: Validation of Market-Based Solutions

Wednesday, June 12, 2013

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Instructors: Norm Tasevski ([email protected]) Karim Harji ([email protected])

© Norm Tasevski & Karim Harji

Agenda

•  Recap of Idea Jam(Class 5) •  Screening Entrepreneurial Ideas •  Break •  Validation Techniques •  Next week

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Idea Jam (Recap from Last Week…)

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Idea Jam Part 1: Empathy Mapping

•  What key insights emerged about your target beneficiary groups?

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Idea Jam Part 2: Idea Generation

•  What solutions (if any) did you begin to identify?

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Screening Social Enterprise Ideas

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The Idea Funnel

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Idea Brainstorm

Internal Screen

External Screen

Validated Solution

# Ideas = Dozens

# Ideas < 10

# Ideas = 1 to 3


Step 1: Idea Brainstorming

•  Our idea jam…

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Step 2: Internal Screen

•  Goal: assess the quality of the entrepreneurial idea before conducting market research

•  Why screen internally first?

•  2 Parts: –  Assessment of Social “Fit” –  Assessment of Business Potential

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Social “Fit”

•  Evaluate based on: –  Desired social outcomes –  Internal capacity to deliver value

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Social “Fit”

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Measure

Rating

0 1 2 3 Fit with Desired Mission/Vision

Does not fit with mission and values

Minimal link to mission and vision

Some fit with mission and values

Strong fit with mission and values

Ability to Generate Social Benefit

None Low Medium High

Existence of Skills and Capacity

Large amount of skills missing

Skills available from partners and/or consultants

Minimal training necessary

Current team already has the necessary skills

Risk High risk Moderate risk Manageable risk (strategies to address)

No risk

Partnership/Collaboration Opportunity

No probable partners exist

No partnership needed, or probable partners exist and are interested

Advances Our Name/Reputation/Values

Potential for negative impact

Slight increase in awareness of org

Moderate increase in awareness of org

Direct significant increase in awareness of org

Other Barriers Significant cultural or other changes required

Some barriers which may be difficult to address

Some barriers, but likely to be able to address

No significant barriers


Business Potential

•  Evaluate based on: –  Potential financial performance of the venture –  External need/want of the product/service

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Social “Fit”

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Measure

Rating

0 1 2 3 Level of Customer Need

Not a significant need Need that is addressed by others reasonably well

Unmet need and strong customer base willing to pay for it

High level of unmet need amongst people with the ability to pay

Competitive Advantage

Competitive disadvantage – many other competitors are serving needs well

No significant difference from competitors

Good value proposition but could easily be matched

No other competitors, and sustainable unique solution for niche

Profit/Surplus Potential

Likely loss $0 - $50,000 $50,000 - $100,000 $100,000 +

Additional Investment Required

Major investment required (>$20,000)

Moderate investment required ($10,000-20,000)

Little investment required (<$10,000)

Could be done with existing resources

Return on Investment Timeframe

Long payback period not justified by return

Reasonable ROI over 2 or 3 years

First year profit = first year investment

Strong positive return on investment in first year

Access to Required Start-Up Funds

Not fundable

Could be fundable but unsure of sources and or %; funding difficult to attain

Relatively easy to find funding for start-up costs, but for a smaller proportion

Very easy to get funding for start-up costs


Screening Matrix

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Busi

ness

Po

tent

ial

Social “Fit”

Low social impact/internal capacity

High social impact/internal capacity

High Financial &

Market Potential

Low Financial &

Market Potential

Consider Second Top Priority

Not Strategic Do Not Consider

Further Possible Quick Win


Now…

•  Screen your initial ideas according to social fit and business potential

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Initial Reactions

•  What assumptions did you make that drove either high or low ratings of your ideas?

•  Were any ideas ranked artificially high or low due to a misperception of the opportunity? If so, would a change in perception change your rating?

•  What info do we not know now that are important in confirming the potential of the idea?

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Break

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Validation Techniques

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Data Sources

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Call key industry players (suppliers, competitors, etc)

Search databases (industry, scholastic, etc)

Conduct web search (Google, etc)

Ask people!!! (friends, potential customers, etc)


Primary Research Methods

Step 1: Identify people to speak with –  Create a spectrum of participants based on desired

criteria (e.g. gender, age, socio-economic status) –  Identify sources/places to meet participants –  Identify community contacts to arrange meetings with

participants

Tip: identify participants on the “extremes” –  E.g. if spectrum is based on “adoption of technology”, pick

the quickest technology adopters and those who are resistant to new technology

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Step 2: Determine your method –  Individual interview –  Group interview –  In-context immersion –  Self-documentation –  Community-driven discovery –  Expert Interviews

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Individual Interview: one-on-one gathering of rich/deep information on the behaviours, reasoning and daily realities of the interviewee Group interview: one-to-many gathering of information focused on understanding group dynamics/community life In-context immersion: meeting people where they live/work/socialize (i.e. observing their context directly, walking “in their shoes”) Self-documentation: empowering the participants to document their own experience (e.g. through journal writing, note taking) Community-driven discovery: empowering participants to also be researchers (e.g. have them conduct interviews) Expert Interviews: one-on-one gathering of info with academics, industry experts, other researchers, etc

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The Interview Guide

•  A semi-structured set of questions that allow for dialogue while retaining focus on a specific topic

•  What to ask? –  Start by listing the assumptions you’ve made in your idea screen. Turn these

assumptions into research questions –  Categorize the questions by topic. For instance, you may want to ask participants

several questions on “livelihood” or on “cultural dynamics”

•  How to ask? –  Start specific (e.g. “yes/no”, simple-answer questions) –  Then ask broader questions (e.g. “how”, “what” questions)

–  Then probe deeper (e.g. “why” questions)

•  Tips: –  Avoid “abstract” questions (e.g. “how much would you pay for…”). Instead, create

a scenario (e.g. “you have a choice between A & B…”)

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Some other Techniques

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A Point on Asking People…

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There are…

Lovers

Don’t give a %&$#ers

Haters

Listen to HALF of what they say!!!


What did we learn?

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APS1015 Class 6: Validation of Market-Based Solutions

Business

Transcript of APS1015 Class 6: Validation of Market-Based Solutions