MANAGEMENT OF INNOVATION

A.Y. 2017/18

LECTURER: GUIDO BORTOLUZZI (Ph.D)

GROUP WORK INSTRUCTIONS

During the following weeks and months your group will analyse the (intended) business model of a real start-up incubated at the University of Trieste (Contamination LAB project) and then will help this start-up to innovate its (or to build a solid) business model.

1. Analyse (2 weeks maximum)

1. Being as objective as possible. Do not intervene in this phase. Do not provide any suggestion. Just collect data and information in order to describe (whether and) how the start-up is managing the 4Ps of innovation. And in particular:

- PRODUCT: Describe the offering as it is right now. What are the main benefits provided to client/users? Distinguish between core and extended benefits. Is the company aiming at providing a product, a service or what?

- PROCESS: What are the technologies involved in the realization of the offering? Does the start-up master and own such technologies? How do they plan to access the technology they need?

- POSITIONING: What is the intended positioning of the start-up in the market? Who are the competitors (real or potential) of the start-up? How does the start-up aim to position itself in the quality-price matrix?

- PARADIGM (business model):

  • Who’s the TARGET (MARKET SEGMENT) of the company?
  • What’s the “value-for-money” statement of the company? (the main reason why users should adopt their solution)
  • What are the most important benefits provided to the users? (see the “P” for PRODUCT)
  • What is the (intended or real) value chain? Who are/will be the suppliers? And who the distributors?
  • What is the revenue model of the company? How does the company aim to make money?
  • What is the value network of the company? (do they need the support of further stakeholders? Are the in control of the ecosystem? Do not ask “what is your value network”. It does not make any sense. You have to try to understand it!)

Prepare a short (2 pages maximum) but detailed (topic by topic) report in which you describe the state-of-art (what you found).

2. Intervene (4 weeks maximum)

Work with the start-up and organize with them at least 4 meetings (1 per week). In each meeting you’ll have to discuss the following subjects with them:

-What products under a marketing perspective: a bundle of core and extended benefits. After presenting and explaining the model of core/extended benefits to the start-up, you’ll have to discuss/identify together possible benefits to be provided to users. Such benefits will underpin also the competitive strategy (differentiation or cost-leadership) of the firm;

-Process and Positioning
Process: Discuss with the company about the technologies/infrastructures needed in order to realize the product/service they have in mind. What is the cost of such technologies? Would it be feasible to buy them? In alternative, who own such technologies? How much could it cost to access and use them? Make a list of technologies needed and identify potential suppliers (the typology, not their name)
Positioning: Show the quality/price model to the start-up and discuss with them about a potential positioning of the product/service they have in mind in such model.

-Business model: target, value for money and benefits, value chain
Clarify to the start-up the need to have an internally coherent business model. Start from discussing with them the need to identify a precise target/market segment (discuss and picture together who the user/client is, what his/her/its characteristics). Be precise. Vague descriptions are not allowed.
Move then to the benefits and the value for money statement. The benefits should be already clear. Identify together the value for money statement: what is the most important benefit provided to users/clients? What is the most important source of differentiation for the start-up? Discuss this together
Identify and discuss the value chain of the start-up, meaning suppliers and distributors. Clarify to the start-up the need to have a coherent value chain that underpins the competitive strategy of the firm. Discuss together about potential suppliers and distributors (just the type, not the name) and about their location (Locally? Nationally? Internationally?)

-Business model: revenue model and value network
Revenue model: Explain the concept of revenue model to the start-up. How do they plan to generate money? Check and discuss whether the use of a razor-and-blade or a freemium revenue model could make sense in such case.
Value network and ecosystem: This is where the majority of start-ups fall. They think they might be in control of the ecosystem. And 99% of the time this is not true. Explain the concept of ecosystem (the external conditions that favour/hamper the success of the company and on which the start-up does not have any control or any possibility to intervene). Is the ecosystem relevant to the start-up? Are they giving something for granted? Further, what’s the value network they could activate in order to increase their chances of success?

Prepare a short report (2 pages maximum) in which you highlight and discuss the most severe weaknesses of the business idea (topic by topic). Don’t forget to take some pictures of your group working with the start-up!

3. Measure (1 week)

After a while (2/3 weeks) organize a meeting with the start-up to check whether and how the company decided to modify its business model, given the clarifications and the suggestions provided by your group.

Prepare a short report (2 pages maximum) in which you summarize (topic by topic) the main changes occurring in the 4Ps and in the business model of the start-up.

4. Get ready for your final presentation

Put together the 3 reports and prepare also a Power Point presentation. You will have 8 minutes to present your case to the rest of the class. Organize your presentation in a clear and professional way:

-Show what the situation was BEFORE your intervention of what changed AFTERit;

-Organize the presentation TOPIC by TOPIC (product, process, positioning, business model, etc…).