BNY Mellon

INCUBATION LAB

BNY Mellon Idea Development Training Session 2: Solution Development

Date: Tuesday, April 1, 2014 Virtual Bootcamp Session 2: Solution Development New York, NY Friday, March 21, 2014

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WARM UP EXERCISES

Four in One
On the next page there will be a box. Come up with as many ways as you can to divide the box into four equal parts. The person with the most solutions wins.

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WARM UP EXERCISES

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PRE-WORK POP QUIZ

Four in One

NOTES

How many boxes did you draw? a. Four Boxes b. Five Boxes c. Six Boxes d. Seven Boxes e. Eight Boxes f. More than Eight Boxes

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WARM UP EXERCISES

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In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei

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THINKING OUTSIDE THE BOX

Deductive Reasoning
Deductive reasoning, or deduction, starts out with a general statement, or hypothesis, and examines the possibilities to reach a specific logical conclusion. The scientific method uses deduction to test hypotheses and theories.

Inductive Reasoning
Inductive reasoning is the opposite of deductive reasoning. Inductive reasoning makes broad generalizations from specific observations. Even if all of the premises are true in a statement, inductive reasoning allows for the conclusion to be false.

Use this to narrow down on potential answers to a defined problem set and Problem Identification.

Use this to come up with multiple possibilities for solving the problem Solution Development.

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BIC CORPORATION THINKING OUTSIDE THE BOX

1945

1970 - Present

Low Cost Plastic Disposable Writing Instruments

Low Cost Plastic Disposable Instruments

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SESSION 1 REVIEW

Pop Quiz!
1. Which of the following is NOT one of the four steps of the idea development cycle: a. Problem Identification b. Solution Development c. Market Development d. Customer Development e. Business Model Development Which of the following is a source of startup ideas: a. Identified gap in a competitive solution b. Product line extension c. Repositioned solution d. Customer problem Which of the following is NOT one of the three steps of identifying the subproblem: a. Talking to customers b. Identifying the existing solutions c. Mapping the customer experience d. Identifying the customer utility gaps in the customer experience Which of the following is NOT one of the six customer utility gaps: a. Slow b. Expensive c. Complicated 10 d. Risky e. None of the above

NOTES

2.

3.

4.

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PROBLEM IDENTIFICATION PROCESS

Core Problem

Identify a problem, not an opportunity

Identify Existing Solutions

Every significant problem has an existing solution Find the solution (direct / indirect)

Map Customer Experience Against Existing Solution

Map the customer experience identify the end to end process of a customer using the product

Identify Utility Gaps

Identify the gaps in the current solution

The gaps in the existing solution become the specific sub problem you are solving
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EXAMPLE: CURVES GYM

How do you improve the female gym experience in order to increase the total number of women that come on a regular basis?

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EXAMPLE: CURVES GYM

1

Existing Customer Solutions Indirect Solutions

Direct Solutions

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EXAMPLE: CURVES GYM

2

Map the Customer Experience

Purchase Membership New Member Orientation

Cancel Membership

Achieve Goal / Drop Off

Go to gym and use equipment

Hire a Trainer

Attend Classes

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EXAMPLE: CURVES GYM

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Identify the Customer Utility Gaps

NEW MEMBER ORIENTATION GO TO THE GYM AND USE EQUIPMENT ATTEND GROUP CLASSES HIRE A TRAINER ACHIEVE GOAL/ DROP OFF CANCEL MEMBERSHIP

PURCHASE MEMBERSHIP CUSTOMER PRODUCTIVITY

SIMPLICITY

Equipment is difficult to use / complicated Available orientation times are inconvenient Finding someone to Popular classes help spot is difficult to get inconvenient reservation There is a risk of getting hurt on the equipment The gym environment is not woman friendly Large classes lack community feel / not comfortable

Difficult to find a trainer that fits the womans needs

Membership cancelation is difficult Membership cancelation takes a long time

CONVENIENCE

RISK

IMAGE & QUALITY

Inconsistent quality among trainers Individual trainers are expensive

COSTS

Membership is expensive

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Things should be made as simple as possible, but not any simpler.

Albert Einstein

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THINKING OUTSIDE THE BOX

Benefits
The Value Proposition your product offers the customer. A benefit is what your product does for the customer. The benefits are the ways that the features make your customers life easier by increasing pleasure or decreasing pain.
Ex. The product will reduce costs The product will save time The product is less complicated

Feature(s)
The physical or measurable characteristics of your product. A feature is a factual description of how your product works. The features are the functioning attributes of your product. The sum total of all the features make up the product.

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What is the value proposition of the three companies?

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THE VALUE PROPOSITION REFLECTS THE PRODUCT BENEFIT

Value Proposition

The solution to a customers problem

Gain / Improvement

Utility Gap

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CUSTOMER UTILITY GAPS BECOME OPPORTUNITIES Flipping the Customer Utility Matrix Results in Product Benefit
CUSTOMER UTILITY GAP CUSTOMER PRODUCTIVITY PRODUCT BENEFIT

Slow

Faster

SIMPLICITY

Complicated

Less Complicated

CONVENIENCE

Inconvenient

More Convenient

RISK

Risky

Less Risky

IMAGE & QUALITY

Bad Image / Quality Issue

Higher Quality Issue

COSTS

Expensive
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Cheaper

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FLIPPING THE UTILITY GAPS

Sub Problem
Purchase Membership New Member Orientation

Utility Gap
Membership is expensive

Product Benefit
Cheaper membership

Available orientation times are inconvenient

More convenient orientation process

Equipment is difficult to use / complicated

Easy to use equipment Dedicated trainers on the floor Safe equipment Woman friendly environment

Problem:
How do you improve the female gym experience in order to increase the total number of women that come on a regular basis?

Go to the Gym and Use Equipment

Finding someone to help spot is inconvenient There is a risk of getting hurt on the equipment The gym environment is not woman friendly

Attend Group Classes

Popular classes difficult to get reservation

Easy registration for classes Small membership to maintain community All trainers are women High quality trainers Low hourly price for trainers

Large classes lack community feel

Hire a Trainer

Difficult to find a trainer that fits the womans needs Inconsistent quality among trainers Individual trainers are expensive

Achieve Goal / Drop Off Cancel Membership

Membership cancellation is difficult Membership cancellation 21 takes a long time

Easy cancelation process Fast cancelation process

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FLIPPED UTILITY MATRIX

CUSTOMER UTILITY GAP PRODUCT BENEFIT

Problem: How do you get non wine buyers to start purchasing wine on a regular basis?

CUSTOMER PRODUCTIVITY Wine selection process is Narrow down the selection SIMPLICITY complicated with multiple categories process to make it easy to pick and vintages to choose from a bottle from the shelf CONVENIENCE RISK IMAGE & QUALITY Good wine is only for the rich and affluent Wine is expensive Good wine can be for everyone (doesnt have to be intimidating) Good wine can be under $15 / bottle

COSTS

CUSTOMER UTILITY GAP CUSTOMER PRODUCTIVITY It takes a long time to get used to playing a new game Complicated games and player requirements Game systems are built for 1-2 player games, making it inconvenient for multiple players

PRODUCT BENEFIT Designed games for quick learning curve

Problem: How do you encourage parents and children to play more video games?

SIMPLICITY

Simplified the game systems

CONVENIENCE

Increased the number of players at one time

RISK IMAGE & QUALITY COSTS Games were perceived to be for teenage boys Made it fun for families and younger children

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PRODUCTS TYPICALLY COMPRISE OF MULTIPLE FEATURES

Feature for trimming edges

Feature for cutting hair closer

Feature for maintaining an even shave

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Features describe what your product is and how it works.

Features Benefits
Convenient / Simple Convenient Fast / Convenient Convenient Convenient Fast / Convenient Image

Describe the features of the prepaid card product:

Reloadable Card No Bank Account Requirement No Credit Check Required Free Text Messages & Email Alerts Free Cash Back at Retailers Pay Check Direct Deposit Personalized Cards to Fit Your Style

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THINKING OUTSIDE THE BOX

Which name does not belong in the group:

Goldman Sachs

American Express

Deutsche Bank

Pfizer

What framework did you use to determine the answer?

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DIFFERENT WAYS TO SKIN A CAT

Problem: How do you get a smoother face in the morning?

When identifying the potential features of your product, it is important to use inductive reasoning for expanding the solution set. Sometimes its a matter of asking the question a different way.
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THERE ARE MANY SOLUTIONS TO A SINGLE BENEFIT

Customer Experience
Purchase Delivery Use

Supplements

Maintenance

Disposal Utility Gaps

Slow

Inconvenient

Complicated

Risky

Bad Image / Quality Issue

Expensive

Fast

Convenient

Easy

Less Risky

Good Image/High Quality

Potential Feature

Cheaper

Product Benefits

Potential Feature Potential Feature Potential Feature

Potential Feature

Potential Feature

Potential Feature

Potential Feature Potential Feature Potential Feature

The aggregate of product features become Potential Potential Potential Potential your product
Feature Feature Feature Feature Potential Feature Potential Feature

Potential Product Features

Potential Feature

Potential Feature

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FEATURE IDENTIFICATION

Pop Quiz!
5. Inductive reasoning helps you: a. Narrow down on one solution b. Break down the core problem into its sub-problems c. Identify potential solutions d. Communicate your logic to managers 6. The benefit of the new solution would be _________ , if the existing solution is complicated: a. Simple b. Convenient c. Faster d. Less expensive Product features represent: a. The value proposition of your product b. The physical or measurable characteristics of your product c. The minimal viable product d. The reason why customers purchase your product

NOTES

7.

8.

True or false, a product feature is the solution to the customers problem: a. True b. False
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Don't make something unless it's both necessary and useful. But if it is both necessary and useful, don't hesitate to make it beautiful."

- Josh Porter

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QUICK NOTE: EMOTIONAL VALUE PROPOSITIONS

How people feel about your product will affect your ability to deliver value:
1

Remove resonance, and people just won't buy what you're selling.

Remove differentiation, and they'll pressure your price or attempt to get your service someplace else.

Remove your ability to substantiate your claims, and while clients may want what you sell (you resonate) and may perceive you to be the only people on the planet that do what you do (you differentiate), they don't believe you and won't risk working with you.

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Its simple: Focus and do one thing better than anyone else.

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SAY NO TO 1,000 THINGS

Steve Jobs took Apple from 350 products to 10 within the first two years of his 2nd and lasting reign. Why did this work?

Problem Solving

Speed

Focus

During the journey of starting a business, you will be faced with many problems

and time is of the essence for survival; therefore, solving one problem at a time is faster than trying to solve two, which requires

you to be extremely focused on solving the most important problems first.

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When they first started, what ONE thing were these companies known to do well?

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WHATS YOUR PRIMARY PRODUCT FEATURE? Outside the Circle: A waste of time, focus on the core utility of the product

Additional Features

Core Utility (Primary Product Feature)

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PRODUCT FEATURE PRIORITIZATION

Creating a prioritization matrix will:

Help you decide on where to allocate time / resources Provide a quick and consistent method for evaluating options Take some of the emotion out of deciding where to start

Quantify decision making

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STEPS FOR CREATING A PRIORITIZATION MATRIX

Prioritization Matrix Development Time Required

Long to develop and does not solve a critical customer problem

Long to develop but solves a major customer problem

Steps for Creating the Prioritization Matrix

1. Identify the most important criteria for selecting your product focus: 1. Development costs 2. Development time 3. Customer pain 4. Revenue potential Select two of the most important criteria
Compare your products (features) using these two criteria and force rank the products Create a grid by plotting the results of the two criteria

Quick to develop but does not solve a critical customer problem

Quick to develop and solves a major customer problem

2.
Severity of Customer Pain 3.

4.

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STEPS FOR CREATING A PRIORITIZATION MATRIX

Criteria 1: Severity of Customer Sub-Problem Being Solved by the Product Ranking System 10 = Higher Pain 5 = Equal Pain 1 = Lower Pain
Product 1 Product 2 Product 3 Product 4 Product 1 Product 2 Product 3 Product 4 Total

10 1 5 10 5 10

5 5 5

1 1 5

16 7 15 25

Criteria 2: Estimated Time to Develop the Product Ranking System

Product 1 Product 1 Product 2 Product 3 Product 4 Total

10 = More Time 5 = Equal Time 1 = Less Time

5 5 1 5
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10 5

5 1 10

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Product 2 Product 3 Product 4

5 10 1

STEPS FOR CREATING A PRIORITIZATION MATRIX

Prioritization Matrix
Long to develop and does not solve a critical customer problem Long to develop but solves a major customer problem

Product 1
(16, 20)

Development Time

Product 3
(15, 16) Quick to develop but does not solve a critical customer problem

Product 4
(25, 16)
Quick to develop and solves a major customer problem

MVP

Product 2
(7, 11)

Severity of Customer Pain

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MINIMUM VIABLE PRODUCT (MVP) The term minimum viable product is thought of as the smallest iteration of work you can do to validate your assumptions.

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THREE PRIMARY CATEGORIES FOR MVPS A minimum viable product has just those features that allow the product to be deployed, and no more.

Problem Exploration
An interaction with the customer that focuses on investigating his or her problems to understand past behavior and see if it is topof-mind.

Product Pitch
An interaction with the customer that attempts to sell the product to a customer in exchange for some form of currency: time, money, or work.

Concierge
Delivering the product as a service to the customer to see if the delivery matches the customers expectations.

Example: Survey, Interview

Example: Landing Page, Wireframes

Example: Zappos

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CUSTOMER PROBLEM PRESENTATION

The Customer Problem Presentation is a scripted interview with your target customers done either face-to-face or over the phone.

1. 2.

Interview one person at a time. Outline the top 3 sub-problems you are addressing, the current solutions to those problems, and then your solutions to those problems. Pause after each section and listen for the following: 1. Customer worldview 2. The pain of the problem 3. Missed sub-problems and utility gaps 4. Other potential solutions missed Prioritize the problem solution under must have, nice to have, and dont care.

3.

4.

RememberThis not a pitch

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PRODUCT PITCHES OF SUCCESSFUL STARTUPS

Basic Web Page with Minimal Functioning Wire Frames

Offline to Online

Video Explanation

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CONCIERGE SERVICE OF SUCCESSFUL STARTUPS

Wizard of Oz Manual Execution

Wizard of Oz + Manual

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PRODUCT FOCUS

Pop Quiz!
9. It is difficult to have product focus because: a. You try to satisfy the needs of all your potential customers b. You are unsure which product benefit matters most to customers c. Saying no to customer demands is challenging d. All of the above 10. Which is not a step of the product prioritization process: a. Identify your prioritization criteria b. Select the product feature that is easiest to build c. Rank the product features (or benefits) based on your criteria d. Plot the scores on a prioritization matrix 11. True or false, your MVP should always be the cheapest feature you can develop: a. True b. False 12. Which of the following statements is NOT true: a. You should always charge customers to use your minimal viable product. b. The minimal viable product is the smallest iteration of work you can do to validate your assumptions. c. Delivering the product as a service to the customer to see if the delivery matches the customers expectations is a type of minimal viable product. d. Your MVP can be a non working prototype. 44

NOTES

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POST MVP PRODUCT ROADMAP

The product roadmap is a strategic communication document based on the prioritization of product features

Helps keep track of product feature development after prioritization Shows your team and other stakeholders what your product vision is and what the high-level initiatives will be Provides focus for the product manager to develop, one feature at a time Articulates execution timing

Note: The roadmap needs to be flexible in timing to account for the iterations associated with testing and learning

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CASE STUDY: FINANCIAL MARKET RESEARCH PROVIDER

Benefit
Increase the speed of locating private company transactions More convenient to locate certain companies by specific criteria Easier to compare multiple companies across different industries Easier to calculate relevant transaction statistics More statistics for niche industries

Product Feature
1. Search database of private technology companies 2. Transaction criteria screening tool

3. Company comparison tool

4. Valuation statistics calculator

5. Sub industry deal transaction database

More convenient to access detailed summaries 6. Individual private company research reports of individual private companies

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CASE STUDY: FINANCIAL MARKET RESEARCH PROVIDER

Criteria 1: Severity of Customer Sub-Problem Being Solved by the Product

Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Total

Ranking System 10 = Higher Pain 5 = Equal Pain 1 = Lower Pain

Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 1 1 1 5 10

10

10 10

10 10 5

5 1 1 1

1 1 1 1 1

36 23 9 9 36 50

1 1 10 10 5 10 10

10 10 10

Criteria 2: Product Development Time

Ranking System
Product 1
Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Total

10 1 1 5

10 5

10 5 5

1 1 1

1 1 1

32 13 13

10 = More Time 5 = Equal Time 1 = Less Time

Product 2 Product 3

Product 4
Product 5 Product 6

1
5 10

5
10 10 47

5
10 10 5 10

10

1
5

22
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CASE STUDY: FINANCIAL MARKET RESEARCH PROVIDER

Prioritization Matrix

Potential Product Features

1. Search database of private technology companies

Long to develop and does not solve a critical customer problem

Long to develop but solves a major customer problem

Product 5
(36 35)

Product 6
(50, 45)

2. Transaction criteria screening tool

Development Time

Product 1
(36 32) Quick to develop but does not solve a critical customer problem Quick to develop and solves a major customer problem

3. Company comparison tool

4. Valuation statistics calculator

Product 4
(9, 22)

5. Sub industry deal transaction database

Product 3
6. Individual private company research reports (9, 13)

Product 2
(23, 13)

Severity of Customer Pain

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CASE STUDY: FINANCIAL MARKET RESEARCH PROVIDER

1 Private Company Database
and Screening tool
In 2008 CB Insights aggregated private company data from across the web and from public filings to create a large database of private companies. Then they created an algorithm to search for specific companies based on criteria (e.g., last venture funding)

Start with the Primary Product Feature Create a Product Roadmap Only release the additional features once you have nailed the primary feature

2 Multiple Company Selector

CB Insights released the option to select multiple companies and compare specific company information.

3 Investor Selector
CB Insights released a tool to track other investors and search companies by the investors.

4 Industry Analytics Release Schedule

CB Insights released a service called Industry Analytics, which aggregates private company information into search industry views.

6 CB Insider
In spring 2013, CB Insights launched a tool that makes predictive recommendations based on market research and analytics.

5 Valuation / Multiples
In the spring of 2013, CB Insights launched a tool to compare individual companies funding / M&A statistics to 49 the industry and or other companies.

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SESSION 2: SOLUTION DEVELOPMENT SUMMARY

1 2 3 4 5

Solve problems with deductive reasoning; think outside the box with inductive reasoning.

Two components for describing a product: benefits and features.

Finding the value proposition is a result of flipping the utility matrix.

Focus on doing one thing well, and do it better than everyone else.

Use the prioritization matrix to narrow down on your MVP.

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SESSION 2: OUT-OF-CLASS ASSIGNMENTS

Create a customer utility matrix by identifying the existing solution, the customer experience with the existing solution and the customer utility gaps. Post your answer on the Incubation Lab portal by end of day today.

Assignment 1

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