Tessa: Food for thought blog cuatro

This is going to be a disjointed post because that’s how my brain feels at the moment. Also, I apologize for the lateness.

I’ll start with Mark’s visit. One, I thought he was awesome. Very personable and eager to help with our ventures in any way he could. He certainly restored my faith in the Heinz community for a second. Two, he talked about his venture (real life) so effortlessly. I was really impressed and took notes. His visit also reminded me that people are people and it really isn’t that scary to have conversations with them. The worst-case scenario is never that bad…

In terms of class reading reflections… I have a lot to digest and think about, which is why this post is kind of a hot mess. My two biggest areas of thought right now are: competitors and AAA stakeholders. I feel like stakeholders can really make or break my venture so I’m looking forward to talking to potential advocates, adversaries and agnostics. My venture idea certainly has competition it just depends on how broadly I want to define that competition, which is interesting to think about. Arguably, 11^th AP English class could be a competitor.

I did a fair amount of extra reading this week that related to my venture:

1.     A Texas Community Takes On Racial Tensions Once Hidden Under the Surface

Texas for the win? A very progressive neighborhood in Austin has created a forum to talk about race after a few profiling incidents occurred. The article talks about how the conversations were born not out of “capital R” racism, but microagressions. This article made me feel even more secure in my ventures goal.

http://www.npr.org/2015/02/13/385495327/a-community-takes-on-racial-tensions-once-hidden-under-the-surface

2.     Problems Too Disgusting To Solve

This article reminded me of how social ventures sometimes try to tackle really big and important problems. In class we talked about climate change and how it’s difficult to impact it because it’s so large and overwhelming. Nelson Mandela said “It seems impossible until it’s done.” Race relations isn’t something one venture is going to cure, but a small dent is better than tip-toeing around.

http://www.newyorker.com/science/maria-konnikova/recycled-water-problems-disgusting-solve

3.     At New York Private Schools, Challenging White Privilege From The Inside

The curriculum in this article is what I’m envisioning for my venture. It will somewhat different because the audience in Pittsburgh certainly is not upper west side NYC… Some parents were NOT feeling this, though.

http://www.nytimes.com/2015/02/22/nyregion/at-new-york-private-schools-challenging-white-privilege-from-the-inside.html?_r=0

Five forces for a market

For a designer like me, the biggest question while contemplating a venture is, where to start? How do I analyze whether my idea is worth a shot considering similar products, competition (both local and global), current business environment etc. My research into this threw up Michael E. Porter and his seminal work - “Competitive Strategy”. The current Bishop William Lawrence University Professor at The Institute for Strategy and Competitiveness, based at the Harvard Business School, Mr. Porter is thought of as the foremost word in competitive strategy. 

His book is an exhaustive work that lays barren how an enterprise (social or otherwise) can analyze its industry and competition in a systematic manner. His 5 Forces framework, can be a tool that can help would be entrepreneurs to analyze the industry that they intend to enter.

 Image courtesy : http://en.wikipedia.org/wiki/Porter_five_forces_analysis

This simple concept can be used to decide whether to enter a certain market with a certain product. It forces us to ask the following questions –

1.     How easy is the industry for other competitors to enter?

If your product is not patent-able or can be easily copied by others, then it may not be wise to proceed. If your industry is less capital intensive or low tech, it may be easy for many others to enter and set shop.

2.     How much bargaining power do suppliers have? 

If your enterprise or product is dependent on a single or few suppliers, then you run the risk of being under the price power of your suppliers. They may look to use it to their advantage, by charging you higher, driving your costs upward.

3.     How much bargaining power do buyers have? 

Here we need to analyze not just availability similar products, but also existence of rules or laws that can enable governments to put a cap on the price to charge.  In general, the lesser the bargaining power of a buyer, the better. This implies you will be able to set a price for your product without it being eroded by competition or law.

4.     Threat of substitutes? 

Here we should look to analyze whether our product can be substituted by other products that address the same need. If so how easily? Some products like cement have almost no substitute. Others, like matchboxes, can have multiple, like gas lighters, electric lighters etc. In general, a good product should not be easily substitutable.

5.     And finally, how competitive is the industry? 

More the competition, tougher the climb. This also means greater resistance to your product, smaller market and eventually lesser profits. The general thumb rule is to avoid entering an industry that has large competition.

Social enterprises are in the end businesses too. And Porter’s 5 forces, could be the first step in deciding whether the environment is conducive for such an enterprise. But is there a new 6^th Force? In 1990's a 6th force was proposed - "complementary products". If petrol cost rises, the automobile industry may suffer as fewer people look to buy cars and opt more for public transport. So the automobile industry might be healthily nor unhealthily dependent on the complementary product petrol. If many of today's cutting edge innovations and products are dependent on the omni present internet, is the 6th force - Inter-connectivity? Food for thought.

My strategies to address the drinking business culture in South Korea?

Did you know that South Korea drink heavier than Russia on average? Yes, heavier than Russia and Philippines (Source: http://www.dailymail.co.uk/news/article-2551059/South-Koreans-drink-TWICE-Russians-five-times-Brits.html). This is a social issue, because it affects not only individual heath but also aggregate productivity and family environment.

From the HBR readings this week, there could be three main strategies that fit emerging markets (Khanna, Palepu, and Sinha): (1) adopt your business model; (2) change institutional context; (3) stay away from the market. And I will choose the strategy of "changing institutional context" as a result of my social enterprise. I cannot stay away from the issue because I see the social need of changing it. I would rather not adopt business model, because if I also want to be driven by heavy drinking business culture, what is the point? Right?

But how? From the article called "Market Segmentation, Target Market Selection, and Positioning" by Sarvary, I need to: (1) analyze market segment, (2) select my target market, (3) do my own positioning, and (4) differentiate my product or service by product, price, or place.

I could possibly have three types of customers: individuals, family, or business entities. From them, "family" will be my target market. There can be other family counseling services or father school training for male employees to be a better father and husband. So, I need to differentiate my business with heavier emphasis on drinking business culture.

In order to do that, I plan to use the graph below (Source: Competitor Analysis: Understand Your Opponents (Marketer's Toolkit: The 10 Strategies You Need to Succeed (Harvard Business School Press), 2006)). I will make a similar competitor positioning analysis for myself later with current opponents in the market. My possible x-axis or y-axis could be: whether it deals with the current drinking business culture; whether it is family-oriented counseling or individual counseling; price-line; location... That is going to be exciting!

What would be your competitor analysis if you are to use this competitor positioning model??

Finding the right Fit

Connecting back to my last post, The Power of Planning for Allies, Opponents, and Indifference, about developing a socio-political strategy for my venture. Tarun Khanna, Krishna G. Palepu, and Jayant Sinha’s article, Strategies that Fit Emerging Markets, adds another layer of understanding to the development of my venture. While the authors focus on emerging markets, they do a great job at connecting many of their lessons to the developing world at large. Understanding my venture’s “fit” is the next step to my socio-political strategy.  Fit does not simply mean appropriate for geographical location. Fit means does my venture align with the political and social systems, openness, product markets, and labor markets[i] of my geographic location of choice.

Political and social systems, refers to how is power distributed among the central, state, and city governments; the laws that protect private property rights; and the independence of the judiciary system from corruption. By exploring the political and social systems, the political geographic climates and to what degree is corruption prevalent can be better understood. Both political climate and corruption have the ability to hamper venture growth, impact, and profitability.

Openness refers to restrictions the government place on foreign investment and how cumbersome the procedure for launching a venture is. These two areas have the potential to restrict the types of funding used to create a local presence and also delays venture launching.  Through diagnosing openness I am able to decide if a geographic partnership is the best way to launch my venture, based on funding restrictions and potential delays. When working in developing countries obtaining reliable consumer data can be challenging and transportation infrastructure conditions can be poor, all of which can further inhibit a venture from being context appropriate and with reliable transportation networks. Therefore it is important to conduct a product markets analysis.

As I am exploring setting up shop in a developing country it is important that I gain an understanding of how strong a country’s educational institutions are, and if people do business in English. The strength of educational institutions indicates the type of training the labor force has received, and understanding if business is done in English, helps when navigating negotiations with opponents and needed indifferents.

I plan to conduct an analysis of what my venture plans to offer and not offer to its target market. Once this is completed I will combine all three strategies (allies, opponents, and needed indifferents; Fit analysis; and venture offerings analysis) to develop a comprehensive socio-political strategic plan. Please stay tuned and comment if there is something in my post that sticks out to you.

 

---

[i] “Strategies That Fit Emerging Markets” by Tarun Khanna, Krishna Palepu and Jayant Sinha (HBS R0506C) 

There is SO much I don't know...but I'm figuring out better questions to ask.

Every time I meet with the existing team, I have a million more questions.  Which I guess is a good thing.  Sometimes I feel like, I'm not asking the right ones with the time we have and we jump all over the place.  Over the weekend, I think we pretty much all agreed that crowdfunding is still a really good, possibly the most viable option for getting this off the ground and it will take a very committed person to run it (possibly me, but we are going to have to talk about getting paid). Meanwhile, for this tiny essentially family business lab, the bootstrapping stage is getting a little tapped.  Also, this notion  of trying Indiegogo comes from being in contact with their leadership and more so, from the tons of little tests I've been doing soft-pitching everyone I've seen in the past month, in addition to some pretty broad market research I've been too informally conducting...up until today.

After coming to the agreement that we'd like to try crowdfunding again, discussing the ways we would make it attractive this potential market, it was getting clear to me that we might be on very different pages about where they want it to go vs. what my sometimes too easily excited self was thinking.  

Here's the thing though, we have yet to discuss the real end game.  Is this going to be a business? Are we going to have a final product, or just scientific knowledge to sell/license to a company, ie GNC (whom the lab already has a business relationship with). 

Our 3-person conversations tend to move very quickly from topic to topic and involve a lot of each of us getting clarification on jargon and concepts and all the while I had been assuming I knew the goal, or that there was an actual defined one

 I finally remembered to squeezed in the "What is the goal here?   Do you actually want to make the supplement for pets? Can we offer maybe a trial of it to everyone who donates a specific amount?  Is this separate from the lab's main business?  If we just crowdfund for the purpose of the research, is this a missed opportunity to both make money and impact the lives of animals nearly immediately? Is GDF11 going to cause cancer? What should we call it, just GDF11? If we do, are we taking all the responsibility of creating mass literacy in the market in terms what it even is?"  

The meeting ended with a a decision to have a more formal meeting at the labs offices' this Thursday with the lab's CEO, and so I'm looking forward to more clarity on the goals.  Since ALL of the marketing/communication strategy will be based on it.  I'm feeling a little ridiculous that it took this long to realize what a key component was missing.

We read and talked a lot about Marketing Strategy last week and this probably my favorite part of a venture, and really a place where I have the most related experience.  Very basically, I feel like I have good sense of different market segments and how we can connect to each of them, who our target market should be to start and at least a sense of how to research competition.  But branding is where I start to feel really unsure, probably because I don't know what our goal is.  I have a sense of what my vision, mission and goals would be but I won't know until Thursday if those are truly realistic.

In preparation for this meeting, I wanted to look at some of the Unreasonable Institute Fellows have put together their concepts and teams.  I really like the direct and simple questions they have their fellows answer, here is a link to Mingawale's questiosn and answers, which was one of the more related ventures I read about.  http://unreasonableinstitute.org/profile/mingawale/  

Meanwhile, since most of the above reflections stemmed from our readings and Mark Heckmann's presentation.  I had some thoughts on that as well, it'll be interesting to talk about as a class.  

What stuck with me the most from Mark's experience was how much funders/markets almost seem to want you to give them something like something else, which is why eventually the unique idea of hooking up students with freelance opportunities has turned into what looks like a lot of of other things.  Flexibility is important, but since the original unique vision/mission and corresponding goals are gone, does it still stand a chance against a pretty saturated market full of similar tools?

Ultimately I'm thinking about how HARD but how still cool it seems to do the whole entrepreneur thing, yet relatedly to how much Mark must have had to come to terms with how much everyone will inevitably be judging everything you do and say.  Even being conscious of this, as a member of the audience, I was judging Mark from the moment he walked in the room to the moment we left, and it definitely a mix of objectively positive and negative.   As so much of your venture depends the impression you give people, and we read so much about it, but when you go over the top to follow all the advice out there, I think thats when you start to feel like that used car salesmen.  There's some balance between being credible/engaging and giving that egotistical/not really listening impression that this short but sweet video below talks about.  No question that he's accomplished a lot, but how do you guys feel about Mark's style?

http://www.businessinsider.com/great-first-impression-people-like-you-instantly-2014-6#ooid=15bGJhbjqzCQBdKMttUddWFXmhum3Grg

The Baloney Detection Kit

While reading articles on how to develop a killer product, I came across a piece titled “The Baloney Detection Kit: Necessary cognitive fortification against propaganda, pseudoscience, and general falsehood”.

http://www.brainpickings.org/2014/01/03/baloney-detection-kit-carl-sagan/

This article outlined the types of deceptions a person is vulnerable to and helped me improve my social venture because it cautioned me against biases and prejudices. The most comprehensive tools from this kit that were of relevance for me to develop “healthy skepticism” were:

1.     “Wherever possible there must be independent confirmation of the “facts.””

2.     “Encourage substantive debate on the evidence by knowledgeable proponents of all points of view.”

3.     “Spin more than one hypothesis. If there’s something to be explained, think of all the different ways in which it could be explained. Then think of tests by which you might systematically disprove each of the alternatives. What survives, the hypothesis that resists disproof in this Darwinian selection among “multiple working hypotheses,” has a much better chance of being the right answer than if you had simply run with the first idea that caught your fancy.”

This point particularly caught my eye and I realized that I had to modify my venture because to some extent I was unable to disprove other alternatives and felt conflicted that I was running with the “first idea that caught my fancy”.  Hence I started looking deeper into the objective I wanted to achieve and my concept has seen a new iteration because of this critical thinking process.

4.     “Try not to get overly attached to a hypothesis just because it’s yours. It’s only a way station in the pursuit of knowledge. Ask yourself why you like the idea. Compare it fairly with the alternatives. See if you can find reasons for rejecting it. If you don’t, others will.”

5.     “Quantify. If whatever it is you’re explaining has some measure, some numerical quantity attached to it, you’ll be much better able to discriminate among competing hypotheses.” I realized that my venture was vague and mostly qualitative but it would be more useful to quantify some aspects such as: How many people would this impact? How would it improve their future? How will I determine if my venture has been successful? What ROI do I expect in the future?  While I am hammering out more details of my venture I feel more confident and knowledgeable about my product.

Social networks are intricate networks of beauty

Social media is a tool for self-expression and promotes mutual understanding. These tools can create revolutions as they have the power to reach out to individuals personally. This week's reading had a very interesting article about how Mr Bhatia mobilized an entire movement in a matter of days to find a bone marrow donor for himself.

As I began researching about the impact and the influence that individuals have on each other in this network I came across an intriguing TED talk.

 http://www.ted.com/talks/nicholas_christakis_the_hidden_influence_of_social_networks?language=en#t-949239

In this talk Nicholas gives evidences that show that birds of a feather flock together. He basically shows that people with similar emotions or eating habits are found to exist closer together in the social network. Therefore reaching out to a target audience using this network should be relatively easy. Given that social media has reduced our degrees of separation from 6 to 3, the reach we have for each of our ventures is large.

However, the main question lies in triggering action. Each project that aims to sell on social media must first attract the audience but then subsequently must trigger a response.  

A simple triggered action would do wonders.

Here is an interesting campaign which became hugely popular in 2014

https://www.youtube.com/watch?v=xB0wN1Pa8Mw 

Paint Social Media Purple: Chevrolet gave people the opportunity to “purple” their Facebook profile, and pledged to donate $1 to the American Cancer Society for each person that participated. This campaign went viral and raised over $1.3 million dollars. The intention behind the campaign coupled with a simple triggered action, led to an instant success.It also resulted in an increase  in cancer awareness by 397% and increased the number of likes by 467%. 

Most individuals all over the world can be moved by a social cause and like to participate in social campaigns. As each one of us as targetting a social issue which would benefit the society in some way, leveraging the benefits of social network could greatly help us.

But how should we use social media to make my idea marketable?
What kind of triggered response should we urge our users to follow up with?

Keep the spark alive

"I took the path less travelled by,

And that has made all the difference" - Robert Frost

I might be considered an odd fit into this classroom filled with students from Public Policy. For these  students entered into grad school with the objective of making social impact.

My story however is quite different. The boredom and monotony of my professional life propelled me to apply to grad school.  After obtaining admission into my top choice CMU, I decided to take a back seat

and travel the world before I get sucked into the hardships of grad school. I decided to meet a friend in Pune, India who was working with Teach For India. The one week spent with her, was a life changing experience for me.   

I was exposed to a different side of the world where morals and ethics were held at a higher pedestal than money. I was happy. The experience pushed me beyond my safe zone and helped me discover my passion for social work. The experience also triggered some questions:

Would I be happy long-term without monetary benefits?

Or would earning truckloads of money amount to the ultimate happiness?

I still do not have answers to these questions. In my process of self-discovery I decided to go to grad school to gain an experience that would teach me a little bit about myself and help me choose a path into future.   The Information Systems Management program is highly competitive and  I soon succumbed to the pressure of obtaining a high paying job. The experience in Pune was overshadowed by the fancy dinners and hotels by potential employers.

Then came an email from Tim about the course 'Social Innovation Incubator', which was in line with my passion for social work. I was extremely excited to take up this course.

In the last 6 weeks, this course has given me a platform to formalize my venture plan and helped me transform it into a tangible service. The optimistic vibe and the energy in the classroom also enables me to think beyond limits and urges me to think of ways to formulate my ideas.

I hope I have the courage to deviate from the traditional practice of obtaining monetary benefits and work on obtaining gratifying experiences.

But what we need to ponder over is how to keep the spark alive and chase our dreams……

Market Orientation and Google Glass

It came as a pleasant surprise that this week’s reading included excerpts from Creating a Marketing Plan: An Overview (Marketer’s Toolkit: The 10 Strategies You Need to Succeed). I came across this book when I was tasked with designing a communication strategy for a job I had accepted and sought assistance from this book to aid my analysis. The most important finding of this book was the lesson on market orientation. It makes you question your assumptions about your target market and your product which is extremely important to "acquire, retain and develop" your customer.

Recently I read an article on Google Glass and how the product’s design ignored the consumers experience with them. http://www.technologyreview.com/featuredstory/532691/google-glass-is-dead-long-live-smart-glasses/ The article outlines how the glasses were designed to help learning and increase productivity instead it has had a social backlash as people who put them on seem to disturb others around. This article highlighted Google Glass ineffectiveness at understanding its market orientation as their consumers came to be known as “glassholes” because people around them “could not understand why you’d want to have that thing on your face, in the way of normal social interaction. Glass does a handful of things—it can take videos, give you turn-by-turn directions, make phone calls, or search the Web.” Similarly, as discussed in class a social innovation has to be extremely prudent in its assumption of how stakeholders will be affected by the intervention as often it may affects a large number of people who may not be direct consumers.

This book cautions against assumptions and emphasizes heavily on understanding particular needs of your target market and provides strategies to acquire, retain and develop your customer. The “Calculate the value of a customer” section of the book was especially helpful because it helps you understand and document your potential user’s needs. This book also raises interesting questions about the difference between communication and marketing. It’s a great read and enables a company or an individual to evaluate and sell their product/ service.

Tessa R Blog #4: Marketing and Sales- It's all about the Value Prop

Last week and this week in class, our discussions have focused around marketing and sales. Often over-looked or undervalued for social ventures, and owned by the "for-profit" domain, marketing and sales is really the driver for any and all enterprises. Without sales or trade of some kind, a venture can not continue to operate. For businesses selling physical products or services in traditional asset sale scenarios, marketing and sales have well established chains of supply and implementation. But social ventures have the ability to change the game and invent entirely new business models that hinge on innovative value exchanges.

But this can not be done if a venture does not fully understand the essence of their value proposition- what it is that customers or users value in your offering. This translates directly into the customer's willingness to pay for your offering, and thus drives your market standing. Key to a strong value proposition is an "unfair advantage"- something that you offer that no one else can. This unique offering is at the heart of your pricing strategy. But for social ventures, articulating this exact advantage can be difficult. Moreover, it may be different depending on the user or buyer in question.

I've been very lucky to have been selected for ThrillMill's 3rd Entrepreneurship Class and we have recently been working in our seminars to develop our business models. We have been using templates similar to those shown in our SII course that model the different segments of a business model. However,last week we were given a template with a slight modification that helps to outline a company's exact "unfair advantage".

The gray bar along the top of the canvas allows the company to examine its unique offerings in every segment of their business model. When looking at key partnerships an exclusive relationship may enable offering a unique product or service package unavailable anywhere else in the market. For example, Uber's recent investment in CMU to develop autonomous taxi cabs will surely give it an unfair advantage in the autonomous car market in 10 years time. Through this process a company may find it has many unique advantages that appeal to a range of users and buyers. Articulating this knowledge helps companies better understand their value propositions and establish stronger market positions.

While developing a full business model canvas may be a bit premature for some of the early-stage ventures we have in class, thinking through these items early on can help develop more robust solutions. I encourage my classmates to work through a first draft of their business model using this "unfair advantage bar" along the top to begin thinking about the different facets of their business that may be able to be leveraged for increased value. How can you use connections you have on campus (other students, professors/advisers/campus resources) to develop unique offerings in your business model? How can you develop your business to be unlike any other companies operating in your industry? These ideas do not have to be concrete, and in fact should be flexible, but beginning this ideation process now will save lots of pain and stress later on.

Bonnie Gloris: How Stuff Gets Cheaper

The article Pricing New Products, by Michael V. Marn, Eric V. Roegner, and Craig C. Zawada, describes the various methods for setting the price for your innovation, at a time when consumers are “demanding more for less”. The incremental approach uses existing products as a reference point – which may be close to the optimal price for “me-too” products and evolutionary products. A broader view is necessary for products that have few comparables – a price ceiling may need to be established based on the product’s benefits. 

Creating a Marketing Plan: An Overview, from Marketer’s Toolkit: The 10 Strategies You Need to Succeed, also expounds on the complexities of pricing – if you price too low, your unit sales will increase, but your profits will decrease; too high, and your sales will decrease as customers opt for your competitors. The article recommends pricing for your objective (to increase unit sales? profits? market share? etc.) and designing products with your price targets in mind.

What if you’ve done your market research, set the optimal release price, and then… you get undercut? Planet Money’s podcast How Stuff Gets Cheaper (http://www.npr.org/blogs/money/2014/11/28/366793693/episode-586-how-stuff-gets-cheaper) explains exactly how this might happen. They profile a company called Monoprice, which takes popular products and figures out how to make them for less. The Monoprice warehouse, which is the size equivalent of three football fields, includes a test lab/playroom where tinkerers dismantle electronics and investigate if they can be tweaked to be made cheaper and (sometimes) better.

A fancy Apple brand monitor, for example, originally retailed at around $1,000, but by investigating the source of its component panels (a factory in Korea), Monoprice was able to offer a remake for $425.99. A few years later, about five companies are offering a similar monitor, so the monitors continue getting better, and continue getting cheaper – which equals more price competition. The product has moved from the category of being too expensive, into the category of being a good deal. The price of the monitor is now pretty close the cost of production.

As an entrepreneur, what are your thoughts on how to stay ahead of the price-cutting race? Or do you imagine yourself on the other side of the fence – tweaking existing products to come up with a cheaper alternative?