BUSI 2800 Final Exam Notes

Lecture 1

Entrepreneurship is an OUTCOME & a PROCESS. An outcome as when an Org is created & a process as when specific conditions are present like
exploitation of an opp regardless of the outcome. Modern literature takes a more liberal process approach. An Entrepreneur: A person who exploits opp &
pursues them to create “G” & “S” to produce value. Characteristics: sharing, motivated doers, agents of change, opportunistic, persistent, passionate.
Successful one’s are moderate risk takers NOT extreme risk takers. Being an entrepreneur means 4 aspects: 1) Value creation both for me as an
entrepreneur & audience 2) Devoting time/effort 3) Assuming risk 4) Expecting reward. Intrapreneur: A person who behaves like an entrepreneur
within a large NON-ENTREPRENEURAL org or A person within a large corporation who takes direct responsibility for turning an idea into a profitable
FG through assertive risk-taking/innovation”

Difference btw entrapreneurs & traditional managers? Managers just like entrapreneurs assume risk & create value BUT the difference is Managers
answer bosses, work within existing structures, their risks & rewards are limited to jobs so they are CAREFUL risk takers, have access to corporate
resources that reduces risk & they DO NOT create corporate culture.

Social entrepreneurship: An Org that seeks to bring about social/societal change or solve community based problems. Ex: Ben Gulak, a social
entrepreneur, who invented the UNO to bring about social change in the automobile industry and go green or or Mohammed Yunus, a social entrepreneur,
who invented the Grameen bank Org to help poorer entrepreneurs who do not qualify for traditional-based loans. Social entrepreneurs: A person who
creates value & assumes risk like all entrepreneurs. Characteristics: Ambitious, mission driven with less focus on wealth, strategic, resourceful, driven
& motivated.

Some psychology, In big 5 personality traits, we see conscientiousness & openness to experience +vely linked w/h successful entrepreneurs. Rest 3 are
inconsistently linked. Openness to experience; however, -vely effects long-term survival of firms in initial phase but also linked to creativity. Cognition
includes heuristics (short cuts) & mental models from past experience that bias our decisions +vely/-vely. Biases: Entrepreneurs have biases like
overconfidence so we fail to see the limits of our own knowledge, illusion of control so we overemphasis our ability to control/predict, representativeness
so we are willing to accept small non-random/biased data as legitimate & self-serving bias so we attribute +ve outcomes/successes to internal causes but -ve
outcomes/failures to external causes. So cognition BETTER explains why some entrepreneurs take actions on opp whereas others don’t compared to
the big 5 personality traits & the errors in cognitive processing enables them to do their work.

3 types of entrepreneurs: 1) Craftspeople: Person driven by mastery of craft/challenge & works with their hands. 60% of small businesses 2) Freedom
fighters: Person driven by money & freedom & in it for themselves. 30% 3) Mountain climbers: Person driven by achievement/growth/Hussle/purpose.
10%.. But why do ppl start businesses? 82% (MOST) To achieve accomplishment, 73% (second most) be their own boss, others To have element of
variety/adventure, others make use of training, others to adapt approach to work, LEAST to be challenged. Canada: Canada has 2wice % of self-employed
ppl compared to US. In fact 2.6M ppl of which 65% male & 35% female. MOST of self-employed (60%) have post-secondary educ. 1/3 are serial
entrepreneurs ( an entrepreneur who consistently comes up with new ideas). In employee-employer businesses, most are micro with 1-4 employees & 98%
of all employee businesses have <100 employees. Some Stats: Most businesses will last for 6yrs only, 20% fail first yr, 40% of business last for 5 years,
25% of businesses last 10 years. MOST LASTING are finance, insurance & real estate businesses then education/health then agriculture then services &
LEAST LASTING is information. Major causes for failure? 1) Incompetence (BIGGEST cause) 2) Unbalanced/lack of managerial experience 3) Lack of
experience in line with “G” or “s”

Top mgmt. mistakes? 1) Going into business for wrong reasons 2) Advice from family & friends 3) Being at wrong place at wrong time 4) getting
worn out by underestimating time constraints 5)family pressure (time/money) 6)Pride 7) no market awareness. Myths on entrepreneurs: Risk
Takers: Nope, they take no more risk than others. They are moderate risk takers. Gifted visionaries: Not all, some are hard working adapters. Great
leaders: Nope, not all. Money driven: Daniel H. Pink found if u were to pay people just enough so that money was taken out of the equation, what truly
motivates us is autonomy, mastery & purpose motives: Lifestyle & personal accomplishments NOT money.

Lecture 2

Team: small # of ppl with complementary skills with shared commitment to common purpose, goals & approach that are mutually accountable to collective
performance. Tim Brown depicted individual skills as T-shaped so when individuals are being recruited, employers look for T-shaped persons/individuals
with T-shaped skills which simply means they have 2 kinds of characteristics. Vertical bar on the T represents the depth of skills in a single field like a
mechanical engineer or a marketer or a scientist so What you can do urself/ ur core competencies, the horizontal bar represents the breadth or how well u
can do with others/or ur disposition for Generalizable skills so ur ability to collaborate across disciplines with experts in other areas where u don’t
necessarily have the expertise/skills. Team performance is about motivation + core competencies + resources + ability to work together. Teams brainstorm
as it breaks down all barriers to creativity such as Inhibition (fear of sounding silly), Tunnel” vision (too narrow focus), Premature idea selection

Lecture 3

Idea: Conception, thought or notion in the mind due to understanding, awareness, activity. Wantwish, NeedRequired, OppFavorable circumstance.
Entrepreneurs MUST focus on needs as opp build on needs NOT wants. Needs are not the same. Refer to Maslow’s hierarchy below (Figure 1 end of
document) (Figure 2). Needs are FINITE but wants are infinite. Marketers often force down our throats what we want rather than what we need & make us
mix wants with needs. Ex: “You need that massage chair for your tired back.” “You need vitamins to be healthy”-Placebo effect. Ex: FB filling teenagers’
need to belong but privacy is a risk that parents are concerned about which breaches their safety needs.

Exam QS: Market-sourced vs. Industry sourced: Ideas can be market-sourced so pulled by cust demand or industry-sourced so pushed by producers
without or ahead of cut demand. Techn & Innovation are typically industry-sourced as we never knew about them so we couldn’t demand them. Which is
better? Neither ! Ex: computers/desktops, CDs/casettes, cable tv, cellphones, skypes, autos/cars, digital cameras, transistors, Segway, UNO, Post-it
are industry-sourced. Post-it failed every survey but was HUGE success. Ex: laptops mp3s, Netflix, touch phones, green stuff, metal straws, SUVs, flu
vaccines, Coke are market-sourced. Coke passed all surveys but failed as a product. Coke & Post-it show us that Cust have limited knowledge, are
suspicious of the new, resist change, don’t always buy what they said, we may ask wrong qs

Market sourced ideas come from current or future cust needs or cust wants. Industry-sourced come from Rivalary, PESTEL or new industry/innovation. In
conclusion, ideas come from NEEDS (current/future), WANTS & Changes in environment (PESTEL or New industry/innovation). Tech-driven stuff or
industry-sourced have new markets, higher risk, fewer cust at first, longer adiption time, cust must be educated, cust target/niche are early visionaries, hard
to fund whereas market-sourced have existing markets, lower risk, lots of cust, instant adoption, suppliers need educating, cust target/niche are ALL
segments, easier to fund.

Where do most fruitful ideas come from? From domains (markets & industries) ur connected with so ur values, passions, experiences, domain expertise,
daily life. Some ppl react to change by DENIAL, some by avoidance, most by acceptance and entrepreneurs react opportunistically. New opp are created by
changes. Change can driven be any of the PESTEL. . Legal & Regulatory issues: Self-driving, autonomous cars. ON will become the first province
allowing self-driving cars. Several legal and regulatory issues.

Exam QS: Red ocean strategies vs Blue ocean.: Red ocean market refers to marketspace bloodied with intense competition. Most products today use red
ocean strategies where they they pick a promising market then MUST pick between the tradeoff of low-cost strategy and feature (differentiation) strategy so
to introduce value proposition, they must move along the axis of low cost variant to high performance variant (Figure 4) and they WRESTLE for market
share Ex: Android phones, Walmart, store-brand soda, BMW

Blue ocean market is a slang term referring to an uncontested marketspace/innovation with NO competition + HIGH profits. The strategy here is LOW cost
+ FEATURE/differentiation strategy (This is what we mean by NEW combinations instead of tradeoffs so u own 100% market share in blue ocean
markets/unknown markets.uncontested markets) and so they create new market spaces & unknown markets so blue oceans are about VALUE
INNOVATION or IMPROVING your value proposition so delivering MORE value for same price or less. Ex: Ford, Apple, Wii, Ebay, LubeExpress, FB,
Cirque du Soleil, Dell, AMC, Nintendo, Fidget spinners (Figure 5). Exam QS: Is a blue ocean market attractive initially? Usually NO! As its unknown.

Fresh eyes thinking: Fresh eyes simply means going out there in anthropologist-mode or sherlock-Holmes detective mode to look at the world in a curious
sense or “think like a traveler”sense according to Tom Kelly so u can also think of this as pretending you’re in a foreign country: On a trip, we become our
own version of Sherlock Holmes, intensely observing the environment around us & using the power of observation to witness things u have seen before in a
sense as if u are seeing it for the very first time in order to understand things better. Ex: Tom Kelly witnessing how children brush their teeth & discovering
that they need fatter, thicker toothbrushes. Jobs to be done thinking: Why are u hiring a product? Are u buying the drill cz of the drill? NO ! You are hiring
the drill to make a hole. That is the job to be done. Ikea: you are not buying the furniture but the job to be done which is built-it-urself experience, the
shopping experience, the cheap food…etc. What is the best way to create new opportunities/ideas? Reverse Associations ! Take a product/service &
reverse its perceived association, BINGO u have a new opp/idea like Luxury’s perceived association are expensive, exclusive, guilt. Reverse these
associations, now u have Affordable Luxury, Inclusive Luxury or luxury for everyone, guilt-free luxury (all new categories). Ex: Cookies’ perceived
association is sugary, fatty…etc. Reverse these associations, now u have sugar-free cookies, fat-free cookies. Ex: Beer’s perceived association is alcoholic,
hangover…etc. Reverse these associations, now u have alcoholic-free beer, hangover-free beer. Ex: Expresso’s perceived association is coffee, energy,
hyper-alert, no sleep. Reverse it Decaff-expresso. Ex: Exercise clothing’s perceived association is sweat, stink. Reverse itSweat-free clothing, absorbant
clothing (Lululemon).

Lecture 4

Customer pain point are UNMET wants/needs, they are the FIRST question to ask every entrepreneur, the STRONGEST rationale of an opp. Without pain

relief/delightno customers. No customersno business. Ex: Would u rather make vitamins or antibiotics ? Vitamins are a want that are
pushed by marketers as a need. Antibiotics are a need. Wants Ex: Rolls Royce have a fickle market, dependent on economy, longer adoption time,
branding is critical, harder to fund, higher risk. Needs Ex: Coat have a consistent market, economy is NOT factor as they are needed regardless of
economy’s state, instant adoption (who will wait to buy a coat in Canada in winter?), branding is generic, easy to fund, lower risk. IDEA+NEED like
pill to cure dementia + need to cure dementia is a sure opp. IDEA+WANT like Gucci + want to feel supreme = possible opp, IDEA + no need/want = still an
idea !

Seven Domains of Attractive Opportunities If u are thinking of starting a new business, Mullins recommends to take ur business on a test drive just like u
would when buying a new car so his book is a new business road test to test whether ur idea is an attractive opportunity & he develops the “Seven Domains
of Attractive Opportunities” (Figure 3) for opportunity-assessment & opportunity-shaping of ur idea so that individuals, entrepreneurial teams or investors
can assess opportunities before they build a busi plan or startup venture. It also provides basis for customer-driven feasibility study by its 3 CRUCIAL
ELEMENTS: markets, industries & 1 or more key people that make up an entrepreneurial team.

Exam QS: At the macro-level, the Seven domains of attractive opp talks about market attractiveness & industry attractiveness. Markets consists of
buyers not products, Industry consists of sellers. Ex: Apple marketspace is brand-conscious individual buyers while their industry sector is computer &
mobile tech sellers. For market attractiveness: u want to do secondary data research on market size + growth potential + historical forecasts + scan
environment for shifts/changes (PESTEL). For industry attractiveness: u want to use Porter’s 5 forces of supplier power, buyer power, threat of
substitutes, threat of new entry, competitive rivalry to determine the PROFITABILITY of industry. Remember that PESTEL is for market attractiveness
while Porter is for industry attractiveness

At the micro-level, u want to determine ur target-market/niche size +growth rate & benefits or attractiveness so are ur benefits perceived in customers’
minds superior to competitors?, will ur target segment facilitate option of growth to other segments?. Most preneurs make mistake of examining only
macro-level. Also u want to determine ur competitive/economic sustainability. Angel investors are high net worth friend or family indiv that will invest a
one-time huge capital investment or ongoing injection to give ur busi wings to fly. They expect high returns more than u will usually make year in, year out
so most startups return this by making a lot of cash & selling off the business or exiting & so investors want to know that any adv u possess will have staying
power or sustainability for a successful exit. This is where competitive and economic sustainability are crucial to ensure that the business is sustainable
enough until the market conditions are available for a sell off. Patents, trade secrets, proprietary knowledge, economically viable business model helps
protect sustainability. Competitive sustainability: any proprietary elements (patents), any superior organizational processes, capabilities or resources.
Economic sustainability: revenue forecast; customer acquisition and retention costs, and time required to obtain a customer, gross margins; capital
investment required; break-even analysis; operating cash cycle characteristics

At the heart of Mullins’ “Seven domains of attractive opp,” u 3 EXTRA domains that makeup ur entrepreneurial team: 1) Mission, aspirations & propensity
for risk, 2) ability to execute on critical success factors (factors if done right guarantee superior perf) 3) connectedness up, down, across value chain.
Entrepreneurs must be VERY clear on their target market & provide tangible evidence on why will they buy so the benefits (cheaper, better, faster) so how
they relief pain or offer delight. So, Step 1: Investors want to know that the entrepreneur has identified the CSFs. Step 2, the entrepreneur has then assembled
a team that can execute on each and every one of the CSFs that the venture’s Or the entrepreneur has identified what’s necessary & lacking in their team and
acknowledged the need to fill that gap. Connections down the value chain with potentially large & sign cust is crucial, connections up the value chain with
suppliers allows u to get input at favorable costs, connections across the value chain with substitute industries will enhance ur understanding of the
competitive situation. Investors wanna know how ur team measures up to those connections. In summary, investors like to see what? 1) Large, growing
markets supported by favourable macro trends; 2) Attractive, competitively forgiving industries 3) Market offerings that resolve real customer pain 4)
Innovations that can be defended through patents/superior organizational processes+economically viable business models; 4) Entrepreneurial teams whose
missions/aspirations/ propensities for risk are compatible w/h their own, can execute on their industry’s CSFs & are well connected up, down and across
value chain.

Most attractive industries are ones with low threat of entry, low supplier power, low buyer power, low threat of substitutes, low competitive rivalary.

Lecture 5
Features vs Benefits: Marketers sell u the benefits not the product itself so they sell u benefits that exploit an opportunity serving to a target market/niche an
unmet need or want which is a cust painpoint (IDEA+need = sure opp whereas IDEA+want = possible opp). A feature is a factual statement about ur product
like its specs/details. Benefit answers WIFM-What is in it for me? So it is what entices ur cust to buy. Ex: Drill. Feature: 118* point angle. Benefit: Quick,
break-free hole. Ex: Computer. Feature: 64-bit, intel core-i5, 190* flex. Benefit: Quick, fast, excellent computer to game.

Exam QS: Why do producers tend to build products loaded with features you don’t care about? As: Some products are industry-sourced not market
sourced. A feature that doesn’t give a benefit is USELESS. Cust are the ppl who buy the products while consumers are the ppl who use the product so for
Cereals, cust are the parents while consumers are the children. Who buys toys? Parents. They are the customers, children are the consumers. Exam QS: So
u need to satisfy the needs of both groups to create a sellable product & the BENEFITS (NOT THE FEATURES) must be CLEAR to both groups. Exam QS:
Why are large & growing markets attractive? Large markets offer opp to build large company, one worth much more tomm than today + they offer the
chance for multiple ppl to be successful each serving a diff segment that reduces risk cz it offers many pathways to success. Exam QS: Can it be said that an
industry consists of customers & products of goods or services that meet the kinds of customer needs that you hope to satisfy? NO ! It consists of sellers
NOT customers NOT products. Exam QS: According to Silicon valley investor Bob Zider, what industries are best/most attractive to venture
capitalists/inverstors? The reality is that they invest in good industries – those that are more competitively forgiving. In five forces terms: industries with
little threat of entry, weak supplier & buyer power, little threat of substitutes, little competitive rivalry are best. Exam QS: Is having a product that cust want
to buy & an attractive market sufficient to build an entrepreneurial startup in the longterm? No!. Exam QS: What is the MOST attractive industry?
Pharmaceutical. Exam QS: Can u make money in an unattractive industry? Yes u can !

Why do we segment? to identify common needs/wants/buying preferences. How? By customer profiling/segmenting as Customer profiling helps
pinpoint needs into target groups so Who the cust are? (demograohics are facts/data), Where the cust are?(geo), How the cust behave? (psychographics are
choices, buying behaviors). We have “heavy customers” which are our primary & secondary customers that every entrepreneur should profile + invisible
customers may appear that lead to an opp. In customer profiling, we look at demo, geo, psycho, socio & behavioral. Demo looks at the WHAT/WHO & is
very easy to get from primary research like stats Canada, census BUT not necessarily useful. Psycho looks at the WHY & is MUCH harder to obtain & is
from surveys, focus groups..etc using models like VALS & Goldfarb model. Surveying has pitfalls.

Lecture 6

3 Elements of Innovation: Conception (need, novelty), Invention (application), Commercialization (execution). Innovation is CONTEXT-DEPENDANT
( has time+place) & must create value that is REALIZABLE asno value creationno innovationno opp. No realizableno actionable opp. If u change
one dimension of a product like price, packaging, features…etc. u automatically have a new product.

Disruptive (DT) & Sustaining Innovation: The Innovator’s Dilemma Exam QS: Why do LARGE TITANS like Ford/Kodak/IBM/Xereox/GM fail
to innovate? Professor Clayton Christensen explains this through what he dubs as the Innovator’s dilemma is Should we continue producing ST or Start
producing DT ? Most larger incumbants focus on sustaining innovation. That is, making their existing products better & better by adding bells & whilstles
that aren’t necessary hence over-serving the market. Thus, smaller entrepreneurial businesses target those average cust looking for lower-cost alternatives
thus disrupting the entire market & eventually growing and adding all the higher quality stuff to steal the entire market share & dominate. Proff Christenson
says that its those titans’ inability to recognize and adapt to technological change so they become dinosaurs failing to modify/abandon the very
strategies that made them once successful so are subsequently replaced by smaller entrepreneurial firms. Innovation, thusly, can be 1) Sustaining
(Continous or discontinous). Sustaining seeks to improve the performance from the status quo but sticks to same markets & same cust. Continous:
incremental perf improvements like fuel injections, faster wipers, faster computers, flex laptops, more flavored vitamin waters. Discontinous: Revolutionary
innovation like contact lenses, internet stores, aircraft travel. But all this is just bells & whistles 2) Disruptive innovation is when those smaller
entreprenerial firms come in and see the opp to serve those cust looking for a simpler, lower-cost alternative. It is NOT a revolutionary
breakthrough techn but it transforms a historically expensive/complex product that can only be made by the biggest titans to a more more
affordable product accessible by a large # of the pop. So, it seeks to disrupt the status quo by creating completley NEW value propositions to target
lower-perf end categories/LESS profitable categories & displace existing tech. So the only way for bigger titans like we saw with Intel & Ford/GM was to
REALLY go back down to the lower-end markets & confront their competitors (Toyota & Hundi) that were producing economy subcompact cars &
disrupting entire market. Toyota & Hundi created disruptive tech by creating economy cars & built up to create luxury cars slowily stealing the market
share. Most of those incumbants (Ford/GM) face the Innovators dilemma which: should we really sell the disruptive tech that so much more affordable &
simpler that toyota/hundi is selling that is very low profit to us & will make us go after newer markets & newer cust that we aren’t familiar with at the cost
that our current cust won’t buy it so it’s the dilemma btw should we make better products to sell for better profits for newer cust or make those better
products that our old cust will never buy and will ruin our current margins of current products? Bcz some companies failed to capitalize on this & modify
their old strategies, they persihed & smaller businesses took over. First those new lower-cost alternatives will ONLY be good for new markets but will slowil
built up to other markets. Ex: Email disrupted postal service, Ex: Google voice disrupted telephones, Ex: Messenger voice calls disrupted Etisalat &
Du in Dubai & so was banned.

Why do established orgs stick to Sustaining Tech? It is NOT bad mgmt., it is how it was traditionally due to Cultural, Risk aversion, rigid competencies,
narrow focus, Incentive/reward systems, lack of control controls, Mission/vision/strategies alignment to status quo reasons. So, What to do when
implementing DT? Know its usually initially technology driven, outcomes hard to predict with DT, cust & market data are scarce or misleading,
uncontested space means u need alliances so it is Very important to validate experimentally by having an early prototype & frequently using MVP.
Exam QS: Do DT always surpass existing techn in perf? Not necessarily !

Steps to create DT: 1. Start with established industries and entrenched players-The more inertia, the better 2. Look for cases where performance exceeds
users’ needs (at higher cost) 3. Explore offering a lower cost, lower performance alternative

Lecture 7,8

Tech usually follow an S-shaped curve/Wave of innovation so we can predict trends & chaos. start picking up slowly then grow, peak and might die or
stabilize-peak is ALWAYS temporary. Simon Sinek talks about the Diffusion of Innovation (Roger’s Curve) & tells us that key growth or mass market
acceptance/penetration is in the early majority (34%) & late majority (34%) and that is where real profit exists because 50% of ur market share is in the
MIDDLE btw early & late majority. Most businesses will tell u oh my conversion rate is 10% but the reality is those 10% might buy their product for no
reason at all. It is about being able to cross that chasm or close that gap in order to reach that tipping point after which the system tips and u are able to reach
the early majority. The innovators & early adopters are those that make intuitive decisions. They are those that stood in line for 6 hrs infront of the Apple
store for an iphone to be the FIRST to buy cz they are driven by the why factor. They do it for themselves. People don’t buy what you do, they buy why you
do it. They do it to prove what they believe-they are first, they are the best. This period of disruption & the time to reach the early majority is KEY. Not all
companies reach early majority (Figure 6)

The Long-tail strategy: This long-tail represents the 2nd ½ of roger’s curve where revenues shrink but are long-lived residual opp at the tail end of product
lifecycles like netflix utilizes a long-tail strategy which is a strategy that allows busi to realize consistent residual profits by selling low volumes of hard-to-
find items, less popular items to many customers, niches, markets that eventually exceed/rival the demand altogether of mainstream markets. This is seen
mostly with ecommerce websites that sell so many less popular hit items in very low volume to many customers and this combination of many low volume,
less popular items eventually exceeds the demand of mainstream items and makes Amazon so successful. So it sells LOW VOLUME OF LESS POPULAR
STUFF instead of HIGH VOLUME OF MORE POPULAR STUFF. Ex: Coca-Cola’s many drinks, Amazon’s many products, Ebay, Airbnb, Online
shopping, mobile smartphone apps, tablet computers. So when u have a product in early stages of decline, it is a GOOD idea to convert to a long-tail strategy
(Figure 7).

3 Phases from ideainnovation: 1) Creativity (idea generation) 2. Entrepreneurship (idea selection). 3) Innovation (realization & adoption). The
Idea selection phase has 3 stages which are opp selection where u do an initially feasibility test that is SMART, business model hypothesis where u
develop a testable business model that is really in itself a hypothesis & customer validation where u test ur busi model/prototype on real customers. If it
looks like its not workable, u go back to stage 1 or 2 & iterate on ideas & models-this is called pivoting. A Pivot is a change to one or more of the
9 business model canvas components so u go find new cutomers, new markets, new business model…etc. Value prop again is a promise of value & a belief
of delivery so an offer. Defining ur value prop: Before u create a busi model, u must define ur value prop. How to define ur value prop: Statement of
unique benefits (The What) delivered by your offering to a target customer (The Whom) segment that offers them compelling value. Most value
propositions are QUALITY (WE ARE BETTER, MORE CONVINIENT) OR PRICE POINT (WE ARE CHEAPER, BETTER PRICES).Ex: Petco is a pet
grooming company (The What) that offers strict pet-owners (The Whom) prestigious & more knowledgeable service (The compelling value). Ex: Winners is
a department store(The What) that offers fashion conscious consumers (The Whom) the latest brand names for up to 60% off (Compelling value).

Business Model Canvas : A Rational/theory to create, deliver & Capture value. It is the underlying logic/theory for how companies keep satisfying
customers and making money. It consists of 9 building blocks used to describe a business model: customer segment, value proposition, channels,
revenue streams (rev model or how u make $), key resources, key activities, key partners and the cost structure (fixed/variable costs). After u
enumerate them, u map out the entire business model in one image (Figure 8). 3 Mistakes of BMC: Prove in advance the BM would work, Copy from
competitors, . Focus on innovation alone. Which elements of the BM canvas are crucial for sustainable growth? Value prop & Cust relationships cz new
cust comes from actions of past cust.

Value proposition Canvas is prepared in sync to the business model canvas to visualize, design and test how we can create value. 2 parts: Cust profile &
Value Map. Cust profile, we describe jobs cust try to get done like functional, social or emotional jobs. Next, we Highlight cust pains (negative outcomes)
that get in the way of getting a job done. Next outline the possible gains (positive outcomes) like benefits if a cust can get the job done. In the value map,
we list our prod (your offering), describe how ur product is a pain reliefer or minimizes pain & how it is a gain creator or maximizes gains. Best value prop
achieve a FIT btw the value map & cust profile (Figure 9). Functional Job is convenience, keeping dry/warm. Social job: Fashion/social statement.
Emotional Job: Going green, saving the environment, social responsibility. Exam QS: Identify which of the following is a value prop: A)
Product/Technology/Service B) Brand, slogan, tag line C) Ad/collateral D) Mission statement E) “Secret sauce” F) Fans, “Likes”G) A statistic ? None of
the above. Exam QS: Do Business Models or Valu prop canvas’ evolve? Both & Companies can have MANY business models operating simultaneously.
Ex: storefront, online, B2B…etc. (Figure 11 for example on BMC).

What is a startup? Steve Blank said it is Temporary Org in search of successful busi model so they are in temporary state with 2 outcomes: success or
failure. Their primary activity is to search for busi model(s) (NOT ALL busi models are successful ones) then PROVE business model(s) Thru testing a
MVP with cust (cust validation). A minimum viable product (MVP) is a product with just enough features to satisfy early customers, & to provide
feedback for future product development (Figure 12 shows different MVP iterations of light bulb). If it fails to pass cust validation then u PIVOT & iterate
back to different busi models & modify ur MVP (Figure 10). There is NO SUBSTITUE to proving a busi model other than cust validation thru MVPs. Ex of
MVPs: Screenshots, landing pages, mockups, graphic renderings, 3D models. One way to test ur startup idea is to use a Validation board. When a
lean startup is in a blue ocean market, they must BUILD repeated BM experiments as baseline, MEASURE those experiments, LEARN then pivot thru
feedback & edit ur MVP or Persevere & continue into production. SO: BUILD-MEASURE-LEARN-(PIVOT)-PERSEVERE

Lecture 9

As an entrepreneur, u must Segment, Target, Profile & Position. You have the entire population as ur market first but targeting the entire pop is the biggest
mistake of many preneurs. So, u must start by segmenting the market into into distinct groups/classes like segment 1, 2, 3, 4…etc. based on demographic,
psychographic, technological, sociocultural, economic, technological, natural trends so each segment is different than the other. Market segments are classes
of buyers that are similar in one or many of the above trends. Next, is targeting so u evaluate the attractiveness of each segment and u make ur decision
which one to target & pursue. Next, u profile ur ideal customer (Customer Profiling) & Finally u position ur product offering in the minds of ur target
customers to occupy a clear, distinctive and favorable place relative to competition.

2 Methods of Market Analysis (Focus here is Market domain/market estimation)Top-down: takes a quantitative analytical approach based on
segmentation & is literally the macro-level so it looks at market attractiveness & industry attractiveness of the 7 domains so market size, growth, potential,
PESTEL (Figure3). Remember that PESTEL is for market attractiveness while Porter is for industry attractiveness. Bottom-down: takes a experimental,
discovery approach based on ur customer so customer validation of ur value proposition & is literally the micro-level so target-market/niche size +
competitive/economic sustainability. How do we find out Market Size?

Total available Market (TAM): My entire available market so ALL potential customers. We assume 100% market share as there is NO competition and a
perfect distribution & can be estimated in either unitary terms or revenue. Very theoretical figure. Can arrive at it using a top-down or bottom-up approach.
Served Available Market (SAM): how many people I can reach/serve? We have an X% achievable figure of market share with competition & an actual
distribution & can be estimated again in either unitary terms or revenue. Very achievable figure but the pitfall is usually entrepreneurs put unrealistic SAM
that leads to faulty decisions. Can arrive at it using a top-down or bottom-up approach. Ur SAM expands as ur business grows. Target market: Who will
buy from me? Ex: Lets say I want to determine the TAM, SAM & Target of my vending machines at Carleton. My TAM would be all possible ppl who can
buy a drink so ALL 20,000 students. But then I know that my vending machines are only in UC & Tory so now my SAM limited by actual distribution of
who I can reach so 10,000 students but the people who I sell to or my target is only 4000 students.

Industry Screening: Best industries are low-competition/muted forces/low concentration. Competition can be direct/indirect. Direct is like coke vs. pepsi.
Indirect is like all the different foods in Carleton food court or coke vs carbonated water or even a share of wallet/budget like going on a ski vacation vs
buying a house. Preneurs usually focus on direct & forget indirect. Exam QS: Do blue oceans have competition? YES ! They aren’t purely blue ocean.
Competitive Test Matrix: Lists all the benefits & compares ur busi to competitors to test competition

NOT RECOMMENDED: Direct imitation, Sustaining innovation, low-price strategy, creating new ecosystems, Razors and Blades, Freemium
(without upgrade) or Donation strategies.

Lecture 10

Intellectual Property (IP): Intangible proprietary knowledge. 2 ways to protect ur IP: 1) Secrecy 2) Non-secrecy so letting the world know but legally
protecting it thru: Patents: Public disclosure of details of the invention! A 20 yr monopoly for new products/ processes/method/application or improvements
NOT known. Copyright: 50 yrs exclusive rights to creative indiv to protect people from COPYING literary or artistic prod. Trademark: A distinctive Word,
Design, Company Name, Slogan, Series of letters (BMW, VW), Numbers (6/49 lottery), Symbol (series of Chinese characters or Nike’s swooch),
Distinguishing guise (Coca-cola’s bottle, Pierrer’s bottle). Registered design: Registration of the outward appearance of an article. Protects the
design/features/shape of product BUT not the functionality of product for 25 yrs. Ex: Lululemon’s registered design, Shape of Crocks , Shape of a car.
VERY IMP is that the trade name of a company is NOT always the trademark like Nike is NOT trademark, the tick is its trademark. Mcdonald’s .

7/11’s Key way to know is what u first remember when u mention a company Ex: Snapchat . Things that are self-explanatory like All bran, 2
Scoops of Raisins are not trademarks while XEREOX, Hersheys are. LOT of times ppl confuse a trademark with the actual activity & companies go to court
to protect their trademark like Rollerskates isn’t an activity, it’s a trademark, Hoover isn’t an activity, it’s a trademark, Klenex isn’t a product, it’s a
trademark. If they win at court, it will be switched from unregistered trademark ™registered trademark “®”.

Sole proprietorship: OLDEST, most COMMON, CHEAPEST, NOT a legal entity, No Legal Regulations.Pros: Simple, FULL control, 100% Profit
motive, busi losses can be deducted from other income. Cons: Unlimited personal liability, limited access to capital, Limited lifespan, Income taxed at
personal rate. Partnership: NOT a legal entity BUT a legal relationship under Partnership Act, No Legal Regulations. Typically for professional
practice like dentists, doctors, accountants who pursue limited liability partnerships (LLPs). An association of two or more individuals carrying on a
business to earn an income.Pros: Simple & Inexpensive, New partners easily added, few legal requirements, Shared risk. Cons: Unlimited Personal
Liability, decision-making & dissolution can be difficult, Tax & estated planning are limited. Corporations: A Legal Entity, MOST expensive, LOTS of
Regulations. A legal entity with the authority to act and have liability separate and apart from its owners. Pros: Limited Liability, Greater Acces to Capital,
Continuous existence, Tax Benefits, upgrades ur image,common busi structure. Cons: Higher costs, fewer tax write-offs at the beg, more legal work &
complexity

Lecture 11

3 Types of SELLING: Tactical sales is the SELLING like making that phone call. Strategic sales is NOT SELLING but it’s the busi model. Tactical
Marketing is for Tactical sales & Strategic marketing is for strategic sales. Consultative selling is the new type of selling (not tactical or strategic) where
salesperson plans & prepares ahead of meeting with cust then spends time with the customer to listen clearly to them, understand the problem the cust is
trying to solve and then offers insight to cust. Buyer makes the pitch not the seller ! Best for building trust. Sales execution strategy depends on: 1) how
easily the prospect is accessed & engaged if complex process & lots of senior decision makersuse traditional sales model. 2) Price so if low
priceuse telephone sales/resellers 3) Market scale & relationships. If large market use web-based lead gen + nurturing tools.

Types of customers: A: ‘Bring me a proposal I can sign. B: I like the product, but I need to do more research. C: Yes, we have that problem, How does your
product relate to our situation? D: We have no problems like that. Close A, convince B with more info, Coach C&D by using public presence to gain
credibility. Tech increments (ST) is better for A & B as its shorter/immediate sales, direct sales model, prod level mark. DT is better for C&D as longer
sales, expertise mark, Evangelical sales model. Qualify ALL your leads or customers thru the sales cycle using BAT- Qualify all leads: Budget, Authority
and Timeline
 Appendix

Figure 1 Figure 2

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Figure 5 Figure 6 Figure 7

Figure 8 Figure 9
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