Value Proposition - The University of North Carolina at Chapel Hill

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BUSI 506
New Venture Analysis
Class 2
Value Proposition
Vernon’s Razor
©2007 Patrick Vernon
Imagine: Medieval Europe
Weather
Zillow
Vernon’s Razor
©2007 Patrick Vernon
Occam’s Razor Example
Separate red circles from blue squares.
Solution A – 70%
Solution B – 90%
Effective? Replicable? Scalable?
Solution C – 100%
Vernon’s Razor
©2007 Patrick Vernon
Analogous to Business Planning
•
•
•
•
Design prototype
Refine manufacturing process
Identify target market
Analyze competitive
landscape
• Create financial model
• …
Vernon’s Razor
©2007 Patrick Vernon
Occam’s Razor for Business Plan
or
Vernon’s Razor
©2007 Patrick Vernon
Vernon’s Razor
Go or No-Go?
Vernon’s Razor
©2007 Patrick Vernon
Go or No-Go?
Vernon’s Razor
©2007 Patrick Vernon
Vernon’s Razor
1.
2.
3.
4.
5.
6.
7.
Value Proposition
Market Potential
Return
Team
Competitive Advantage
Business Model
Customer Pain
Defining
Opportunity
Minimizing
Risk
Vernon’s Razor
©2007 Patrick Vernon
Value Proposition
• Your new venture should make the world a
better place = you are creating value
• VP is brief description of the value that you
will create with your new venture
• Begin thinking of your idea in terms of the
value they create
Vernon’s Razor
©2007 Patrick Vernon
Value Proposition
Kawasaki – 3 Ways to Make Meaning
• Increase quality of life
• Right a wrong
• Prevent end of something good
• video
Vernon’s Razor
©2007 Patrick Vernon
Value Proposition
• Riozen Video: get to VP quickly
– Goal is to get to next step
– “Elevator Pitch”
– Effective communications
• Kawasaki: make mantra
Who is the mantra for? Customer? Employee?
Investor? Partners? Suppliers?
• Dilbert
Vernon’s Razor
©2007 Patrick Vernon
Components of Good VP
•
•
•
•
•
Problem solved (#1)
Size of problem
Target market
Competitive advantage
Team
Vernon’s Razor
©2007 Patrick Vernon
Bad VP
University Biodiesel recognizes that reliance on petroleum to fuel our
nation’s vehicles is problematic in that domestic production is
decreasing, and the petroleum that remains globally is increasingly
difficult to extract. Dependence on foreign sources is also inherently
costly, insecure and politically undesirable…
UniBio will address this opportunity through an integration of UNCChapel Hill (UNC) resources.
1. We will recycle waste vegetable oil (WVO) from UNC dining
facilities
2. We will establish a collection system to likewise recycle WVO
generated by the broader UNC community.
3. The biodiesel production facility and collection system will serve as
educational resources, engaging and empowering faculty, students and
staff in being part of the solution to an impending energy transition.
Vernon’s Razor
©2007 Patrick Vernon
Good VP
• University Biodiesel offers an educational
and operational package that allows
universities to save cost on fuel and reduce
greenhouse emissions by recycling waste
vegetable oil into biodiesel fuel for use in
university vehicles while teaching students
the importance of environmental
responsibility.
Vernon’s Razor
©2007 Patrick Vernon
Bad VP
Customer service and efficiency best practices are defined by forward
thinking corporations who drive differentiation by their speed,
flexibility and quality of service. Providing high levels of service (and
“touch”) while driving profitability requires communications-enabled
technologies. Such technologies implemented privately/individually
by an enterprise are costly and typically out of reach for small and
medium businesses – yet customer expectations don’t change. The
new venture by NewCo will establish a delivery model and hosted
infrastructure based on “software-as-a-service” (hosted/operated/
managed services) for communications enabled business applications.
Where appropriate, the chosen applications will be from the
opensource community to provide for customer access to business
solutions heretofore too expensive and complex to integrate by the
Small and Medium sized businesses.
Vernon’s Razor
©2007 Patrick Vernon
Good VP
• Using NewCo software-as-a-service, smallto mid-sized businesses can offer worldclass customer services previously only
available to the Fortune 500.
Vernon’s Razor
©2007 Patrick Vernon
VP for Google
“Organize the world’s information making it
universally accessible and useful.”
Founder Larry Page
Not necessarily a great “value proposition” statement,
but an interestingly bold one.
Vernon’s Razor
©2007 Patrick Vernon
VP for eBay
“Making inefficient markets efficient.”
CEO Meg Whitman
Also, not necessarily great, but certainly bold.
Vernon’s Razor
©2007 Patrick Vernon
Value Network
• The economy is too complicated to think of
customers only as end-user (B2C)
(Estrin Video)
• An overview of everyone who might be
touched by your venture
• Your challenge: identify who in the network
gets the most value
Vernon’s Razor
©2007 Patrick Vernon
NewPhoneChipCo
A technology company that has a chip that can divert
phone calls to any of a customer’s telephones.
Cell Phone
Company
Cell Phone
Company
Caller
Following the
Path of One
Phone Call
Home Phone
Company
New
Gadget
End
User
Office Phone
Company
Office Phone
Company
Equipment
Manufacturers
Home Phone
Company
Equipment
Wholesalers
Equipment
Retailers
Vernon’s Razor
©2007 Patrick Vernon
Vernon’s Razor
©2007 Patrick Vernon
Vernon’s Razor
©2007 Patrick Vernon
Assignment
Value Network for ReverbNation
Vernon’s Razor
©2007 Patrick Vernon
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