How to understand how design and business fit together (and don't). Understanding how a market changes everything about how you design. From my General Assembly User Experience Class Series

1. Understanding and Designing
Business
with “requirements gathering”

2. Last week
• Questions?

3. Tomorrow
• Bring your all the post its with user needs and
desires
• Bring all the post its you’ll generate tonight of
what the business currently has, and what it
plans to build
• Reading: Chapt 6 of Design is Job (preferably
the whole thing– 9 bucks for the digital copy!)

4. Discuss
• Questionaire

5. 10 Questions
1. Exactly what problem will 6. Why now? (market window)
this solve? (value 7. How will we get this product
proposition) to market? (go-to-market
2. For whom do we solve that strategy)
problem? (target market) 8. How will we measure
3. How big is the opportunity? success/make money from
(market size) this product?
4. What alternatives are out (metrics/revenue strategy)
there? (competitive 9. What factors are critical to
landscape) success? (solution
5. Why are we best suited to requirements)
pursue this? (our 10. Given the above, what’s the
differentiator) recommendation? (go or no-
go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html

6. Business is from Mars, Design from Venus
Deductive Reasoning Abductive Reasoning
“Traditional firms utilize and “Designers value highly a
reward the use of two kinds third type of logic: abductive
of logic. The first, inductive, reasoning. Abductive
entails proving through reasoning, as described by
observation that something Darden professor Jeanne
actually works. The second, Liedtka, embraces the logic
deductive, involves proving -- of what might be.
through reasoning from
principles -- that something This style of thinking is
must be.” critical to the creative
process.”
http://www.businessweek.com/innovate/content/aug2005/di20050803_823317.htm

7. Designers can make great leaps forward

8. But the business folks can be left behind

9. Critical thinking can also help you with
their ideas
How many have you thought about a
client or a boss “That’s a moronic idea”
Can you build a bridge to their goal?

11. Yes, and
AND
7

12. Step Back
Think
Organize
Proceed
The Inner Game of Stress: Outsmart Life's Challenges
and Fulfill Your Potential
by W. Timothy Gallwey
8

13. Tools for Thinking
• Clarification:
Do I understand what you are saying?
• Understanding:
Do I understand your thinking
• Context:
Do I understand the world we are acting in?
• Evidence:
What tells me this is right?

14. For Clarification, try Active Listening
• Repeat
• Paraphrase
• Extend

15. For Understanding, try Five Whys
My car will not start. (the problem)
Why? - The battery is dead. (first why)
Why? - The alternator is not functioning. (second why)
Why? - The alternator belt has broken. (third why)
Why? - The alternator belt was well beyond its useful
service life and has never been replaced. (fourth why)
Why? - I have not been maintaining my car according to the
recommended service schedule. (fifth why, a root cause)
Why? - Replacement parts are not available because of the
extreme age of my vehicle. (sixth why, optional footnote)

16. A little about Markets
CONTEXT

17. One Word:
Plastics

18. Why the one word?
• Opportunity
• Brand Completeness
• Blocking competition
• Raising money
• Curiosity

19. Types of Opportunities/Ideas
Better Cheaper Niche New
I can do it I can do it I can do it You never
better cheaper for you knew
you needed it

20. How big is the opportunity?
Total Available Market (TAM)
• How many people would
want/need
the product?
Total Available • How large is the market
Market (TAM) be
(in $’s) if they all bought?
• How many units would
that be?
How Do I Find Out?
• Industry Analysts –
Gartner, Forrester
• Wall Street Analysts –
Goldman, Morgan

21. How big is my slice?
Served Available Market
(SAM)
• How many people need or
Served can use product?
Total Available
Available • How many people have
Market
Market (TAM) the money to
(SAM) buy the product
• How large would the
market be
(in $’s) if they all bought?
• How many units would
that be?
How Do I Find Out?
• Talk to potential customers

22. Your idea is worthless alone
Idea Execution Timing Dumb Luck

23. What business will you be in?
MARKETS

24. Customer Development
Customer Development
Customer Customer Customer Company
Discovery Validation Creation Building
Steven Gary Blank, Four Steps to the Ephinany

25. Who are your customers?
• How many of them are
there?
• Are they price sensitive?
• How big is their problem?
• How often do they have
the problem?
• How do they solve it
today?

26. New Product Conundrum
• New Product Introductions sometimes work,
yet sometimes fail
– Why?
– Is it the people that are different?
– Is it the product that are different?
• Perhaps there are different “types” of
ventures?

27. Three Types of Markets
Existing Market Resegmented New Market
Market
• Who Cares?
• Type of Market changes EVERYTHING
• Sales, marketing and business development
differ radically by market type

28. Existing: founded 1938

29. Competitor founded 1972

30. Competing in an Existing Market
• Faster/Better
• High end
• Somewhere else

31. Resegmented

32. Gap’s new entry

33. Competing by resegmenting
• Niche =
marketing/branding
driven
• Cheaper = low end

34. New Market?

35. New
New Existing Resegmented

36. New Market
• Cheaper/good enough
can create a new class
of product/customer
• Innovative/never
existed before

38. John Gourville, Eager Sellers and Stony Buyers (2006)

39. Deadpool

40. Type of Market Changes Everything
Existing Resegment New
Market ed Market Market
• Market • Sales • Customers
– Market Size – Sales Model • Needs
– Cost of Entry – Margins • Adoption
– Sales Cycle
– Launch Type
– Chasm Width
– Competitive • Finance
Barriers • Ongoing Capital
– Positioning • Time to Profitability

41. Choose your idea
stupid The holy grail
Ability
to
provide
unique
product bankrupt compete on price
or
service
Value to customer
From Guy Kawasaki, Art of the Start

42. Who are your customers?
What is your market?
How big is the opportunity?
Exercise
WHAT IS YOUR IDEA?

43. How do we make money?
BUSINESS MODELS

45. Business creates value for which
they receive money
Money allows them the
resources to provide value

47. Who are you users?
WHAT DO YOU USERS HAVE TO DO?

48. Marketplace Model
Advertising Model
Affiliate Model
Community Model
Subscription Model

49. I have always been a woman who arranges
things,
for the pleasure–and the profit–it derives.
I have always been a woman who arranges
things,
like furniture and daffodils and lives.
Marketplaces bring buyers and
sellers together and facilitate
transactions. They can play a role in
business-to-business (B2B), business-
to-consumer (B2C), or consumer-to-
consumer (C2C) markets. Usually a
marketplace charges a fee or
commission for each transaction it
enables.

51. Can I trust I want the
this seller? best price!
I want to find
things!
I’ll go where
the buyers are
Users must find products, evaluate seller, and make a purchase

52. Advertising Model
The web advertising model is an
update of the one we’re familiar
with from broadcast TV. The web
“broadcaster” provides content
and services (like email, IM,
blogs) mixed with advertising
messages. The advertising
model works best when the
volume of viewer traffic is large
or highly specialized.

54. Users must:
• Notice advertising
• Interact with ad
Preconditions: User must
visit advertising location
Share their demographic
information
Types:
CPM
CPC
CPA

55. Community Model
The viability of the community
model is based on user loyalty.
Revenue can be based on the sale
of ancillary products and services or
voluntary contributions; or revenue
may be tied to contextual
advertising and subscriptions for
premium services. The Internet is
inherently suited to community
business models and today this is
one of the more fertile areas of
development, as seen in rise of
social networking.
Open Source Red Hat, OpenX
Open Content Wikipedia,
Freebase

57. Users need to
• Create an identity
• Connect with other users
• Build a reputation
• Create and share
content/work/etc
Users must care

58. Subscription Model
Users are charged a periodic—daily,
monthly or annual—fee to subscribe
to a service. It is not uncommon for
sites to combine free content with
“premium” (i.e., subscriber- or
member-only) content. Subscription
fees are incurred irrespective of
actual usage rates. Subscription and
advertising models are frequently
combined.
Content Services
Software as a Service
Internet Services Providers

60. User must:
• Able to evaluate the
offering
• Subscribe and
unsubscribe to offering
• Realize value offered

61. Combos
Advertising Community

62. Combos
Advertising Community
Subscription

63. Combos
Marketplace Community
Affiliate

64. Prioritize and Sequence
Pattern: Wikipedia:
User gets value Looks up content
User returns, gets more Keeps finding more
value content
User reciprocates Sees error, corrects
User adds content User donates
User contributes money

65. Marketplace Model
Advertising Model
Affiliate Model
Community Model
Subscription Model
Exercise
HOW DO YOU MAKE MONEY?

66. 10 Questions
1. Exactly what problem will 6. Why now? (market window)
this solve? (value 7. How will we get this product
proposition) to market? (go-to-market
2. For whom do we solve that strategy)
problem? (target market) 8. How will we measure
3. How big is the opportunity? success/make money from
(market size) this product?
4. What alternatives are out (metrics/revenue strategy)
there? (competitive 9. What factors are critical to
landscape) success? (solution
5. Why are we best suited to requirements)
pursue this? (our 10. Given the above, what’s the
differentiator) recommendation? (go or no-
go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html

67. Questions?
@cwodtke
cwodtke@eleganthack.com