Corporate ventures face extreme pressure to succeed early and often. From the outset, it’s important to confirm that there is a real pain the venture is solving for and that it makes sense for your organization to solve it. How do you test for a pain point? In-market experimentation.
2. Meeting Logistics
›› 35 minute presentation
›› 25 minutes for Q&A
›› Submit questions through QA widget at anytime—some answered during
webinar and some post-webinar
›› Slides and replay of event available after webinar
›› Download our first webinar, Design Thinking for the Business Case:
http://peerinsight.com/downloads/dt4bcwebinar.pdf
ABOUT TODAY’S WEBINAR
3. 1
Tim Ogilvie is co-founder of Peer Insight. He is keen on helping
large organizations create new experiences, services, and
business models.
Tim is co-author of Designing for Growth but spends most of
his time practicing in the field, not writing or teaching. Tim is
passionate about entrepreneurship and placing small bets fast.
Jessica Dugan is a Senior Design Consultant at Peer Insight
with a passion for people and their stories. Drawing on her
background in design research and strategy, Jessica uses this
passion to collaborate in the creation of innovative services that
improve the quality of the life. She holds a Masters of Design
and MBA from the Institute of Design in Chicago.
TODAY’S PRESENTERS
4. 2
HOW DO LEAPS OF FAITH OCCUR?
Progressive:
Rate Comparison
“Ticker” (2001)
HP: Snapfish
1-hour print
(2006)
The Hartford:
FleetAhead
(2009)
AARP: Life
Reimagined
(2011)
Will side-by-side
quotes drive away
customers we want
to win?
If we refer our
customer to a
nearby retail photo
finisher, do we
lose her for life?
Will our fleet
customers trade
privacy for
lower insurance
premiums?
If we offer a
different kind
of service, can
we expand our
customer base?
5. 3
Asked to describe design, Tim Brennan of
Apple’s Creative Services drew the following picture:
DESIGN THINKING IS OFTEN
TREATED AS A MYSTERY
? $
6. 4
WE SEE DESIGN THINKING AS
A PROBLEM-SOLVING PROCESS
What is? What if? What wows? What works?? $
7. 5
OUR BUSINESS CASE METHOD
FOLLOWS FIVE STEPS
*Adapted from Rita McGrath, “Discovery-driven Planning”
1. Formulate a novel value proposition
2. Define future success as an income statement*
3. Spell out the assumptions
›› What would have to be true?
4. Test the make-or-break assumptions
›› Thought experiments
›› In-market experiments
5. Based on test results, refine the model,
refine the value proposition, or re-assess the
investment potential of this opportunity
8. 6
1. Formulate a novel value proposition
2. Define future success as an income statement*
3. Spell out the assumptions
›› What would have to be true?
4.
5. Based on test results, refine the model,
refine the value proposition, or re-assess the
investment potential of this opportunity
4. Test the make-or-break assumptions
›› Thought experiments
›› In-market experiments
OUR BUSINESS CASE METHOD
FOLLOWS FIVE STEPS
*Adapted from Rita McGrath, “Discovery-driven Planning”
9. 7
Thought Experiments
Hypothetical experiments that use
logic and existing data.
›› Envisioned experiences,
require imagination
›› Set in the future
›› 2D and 3D
In-Market Experiments
Experiments conducted in the
marketplace with actual partners
and customers.
›› Live experiences, meant to feel real
(even if some elements are faked)
›› Set in the present
›› 4D, persist over time (even in brief)
THERE ARE TWO WAYS TO TEST ASSUMPTIONS
10. 8
Progressive:
Rate Comparison
“Ticker” (2001)
HP: Snapfish
1-hour print
(2006)
The Hartford:
FleetAhead
(2009)
AARP: Life
Reimagined
(2011)
REMEMBER THESE LEAPS OF FAITH?
Will side-by-side
quotes drive away
customers we want
to win?
If we refer our
customer to a
nearby retail photo
finisher, do we
lose her for life?
Will our fleet
customers trade
privacy for
lower insurance
premiums?
If we offer a
different kind
of service, can
we expand our
customer base?
12. 10
SIX SINS OF IN-MARKET EXPERIMENTS
1. Hi-Fidelity
Believing it has to look and feel
real/polished
2. Quantifying
Thinking it must yield quantitatively
significant (and repeatable) results
3. Going Solo
Using only your firm’s resources
and IP to stand up the experiment—
even if it takes longer
4. Business Model Next
Focusing on the user experience
and technical solution now and
worrying about defensibility and
scalability later
5. IP Protection
Keeping all the ideas concealed
until they are patent-protected
6. 100% Belief
Committing to a specific vision of
the solution and looking only for
signs of success
13. 11
tantalizing
possibility
A B
PARALYSIS
what lies beneath
chasm of unintended
consequences
potential
reward
POUNCE
A B
PARALYSIS POUNCE
TWO POSSIBLE RESULTS – BOTH BAD
67%Unexplored
opportunities
33%Large bets placed slowly
(too-big-to-fail)
16. 14
INSTEAD OF HI-FIDELITY
TRY LOW-FIDELITY
Key Assumption
Customers who
see a slightly
lower price from a
competitor will still
favor Progressive.
PROGRESSIVE
484
AM. FAMILY
562
000
STATE FARM
525
ALLSTATE
644
000
000 000
18. 16
INSTEAD OF QUANTIFYING
TRY BUILD ONE
Key Assumption
Customers who
try the kiosk for
2-hour service will
return to Snapfish.
19. 17
INSTEAD OF QUANTIFYING
TRY BUILD ONE
Tool: Alpha-Beta Planning Table
Number
of
Installations
Number
of
Participants
Dollar
Investment
Build
Time
Test
Time
Fulfillment
Partners
Testing
What?
Is
it
Scalable?
Is
there
a
Hard
Stop?
What
is
the
Feature
Set?
Is
the
Technology
viable? No
none
Key
assumptions
No
Yes
Hypothesized
Features
0
$500
5
days 30
days
3
weeks
Beta
Feature
Set
+
Same
...
...
IN-‐MARKET
EXPERIMENTS
Yes
(back-‐end
platform+year
1
biz
model)
Yes
Same
as
Beta,
plus
No
Full
Scale
No
Specific,
Limited
Features
Yes
No
Key
assumptions
Small
only
5
months
9
weeks
Branded,
if
possible
150
days
(+option
to
extend)
Yes
Initial
Feature
Set
Full
Initial
Feature
Set
No
COMMERCIAL
LAUNCH
30X
30X
$5M+
DETAILS ALPHA
2
sites
$750k-‐$1.5M
150-‐200
THOUGHT
EXPERIMENTS
15-‐20
$500k
10
sites
BETA
0
sites
20. 18
SIN #3: GOING SOLO
Hi-Fidelity
Quantifying
Going Solo
Business Model Next
IP Protection
100% Belief
Other People’s Money
(and IP)
instead of try this
21. 19
INSTEAD OF GOING SOLO
TRY OTHER PEOPLE’S MONEY
Key Assumption
Fleet customers
will incur the
inconvenience of
telematics to get a
lower premium.
22. 20
INSTEAD OF GOING SOLO
TRY OTHER PEOPLE’S MONEY
Key Assumption
Customers will
engage in peer-
to-peer mentoring
in an environment
hosted by AARP
and its partners.
23. 21
SIN #4: BUSINESS MODEL NEXT
Hi-Fidelity
Quantifying
Going Solo
Business Model Next
IP Protection
100% Belief
Control Points Nowinstead of try this
24. 22
UBIQUITOUS CONSTRAINED
Free,
available
to all Commodity
Many
providers
exist
Several
providers
exist
Possible
to observe
+ copy
Branded +
expensive
to copy
Producible
by only a
few firms
Protected by
contractual
secrecy
Protected
by patent
Protected
by concealment
Brand
Device
Data transmission
Display/cues to drivers
Display/cues to manager
Historical data
Customized interventions
Re-pricing algorithms
Revenue sharing model
Architecture control
INSTEAD OF BUSINESS MODEL NEXT
TRY CONTROL POINTS NOW
Tool: Control Point Grid
?
?
?
25. 23
OTHER COMMON SINS
Hi-Fidelity
Quantifying
Going Solo
Business Model Next
IP Protection
100% Belief
IP Connection
Services IP table; 3-ring template
instead of try this
Innovation Accounting
Split tests
Reverse income statement
instead of try this
26. 24
RECAP: SIX SINS OF IN-MARKET EXPERIMENTS
1. Hi-Fidelity
2. Quantifying
3. Going Solo
4. Business Model Next
5. IP Protection
6. 100% Belief
27. 25
BUT THEN THE WORLD LOOKS LIKE THIS
tantalizing
possibility
A B
PARALYSIS
what lies beneath
chasm of unintended
consequences
potential
reward
POUNCE
A B
PARALYSIS POUNCE
28. 26
INSTEAD: USE IN-MARKET EXPERIMENTS
the
science
of placing
small
bets fast
Hi-Fidelity
Quantifying
Going Solo
Business
Model Next
IP Protection
100% Belief
instead of
Low-Fidelity
Build One
Other People’s
Money
Control Points
Now
IP Connection
Innovation
Accounting
try this using these tools!
Key assumptions list
Alpha-Beta table
Control point grid
Services IP table
3-ring template
Split tests
Reverse income statement
29. 27
IN-MARKET EXPERIMENTS IN PERSPECTIVE
IN-MARKET
EXPERIMENTS
TECHNICAL BUILD +
QUANTITATIVE RESEARCH
WHAT HOW
“building the right thing” “building things right”
30. TIM OGILVIE
togilvie@peerinsight.com
703 314 3123
JESSICA DUGAN
jdugan@peerinsight.com
312 532 8729
CHECK OUT OUR BLOG
peerinsight.com/musings
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@peerinsight
Thank you!