Students will be exposed to methods for screening entrepreneurial ideas and evaluating its “business potential”. Students will be introduced to data collection methodologies and evaluate some of the challenges associated with synthesizing market data and applying this data to business decisions.

1. APS 1015: Social Entrepreneurship
Class 6: Validation of Market-Based
Solutions
Tuesday, May 27, 2014
1
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Alex Kjorven (alex@socialentrepreneurship.ca)

2. © Norm Tasevski
Agenda
• Recap of Business Modeling (Class 5)
• Screening Entrepreneurial Ideas
• Break
• Validation Techniques
• Tomorrow
2

3. © Norm Tasevski
Recap: Business Modelling

4. Screening Social Enterprise Ideas
4

5. © Norm Tasevski
The Idea Funnel
5
Idea Brainstorm
Internal
Screen
External
Screen
Validated
Solution
# Ideas = Dozens
# Ideas < 10
# Ideas = 1 to 3

6. © Norm Tasevski
Step 1: Idea Brainstorming
• Our idea jam…
6

7. © Norm Tasevski
Step 2: Internal Screen
• Goal: assess the quality of the entrepreneurial idea
before conducting market research
• Why screen internally first?
• 2 Parts:
– Assessment of Business Potential
– Assessment of Social “Fit”
7

8. © Norm Tasevski
Business Potential
• Evaluate based on:
– Potential financial performance/sustainability of the
venture (and scalability)
– External need/want of the product/service
– Market barriers
8

9. © Norm Tasevski
Business Potential
9
Measure
Rating
0 1 2 3
Level of Customer
Need
Not a significant need
Need that is addressed
by others reasonably well
Unmet need and strong
customer base willing to
pay for it
High level of unmet need
amongst people with the
ability to pay
Competitive
Advantage
Competitive
disadvantage – many
other competitors are
serving needs well
No significant difference
from competitors
Good value proposition
but could easily be
matched
No other competitors,
and sustainable unique
solution for niche
Profit/Surplus
Potential
Likely loss $0 - $50,000 $50,000 - $100,000 $100,000 +
Additional
Investment
Required
Major investment
required (>$20,000)
Moderate investment
required ($10,000-20,000)
Little investment required
(<$10,000)
Could be done with
existing resources
Return on
Investment
Timeframe
Long payback period
not justified by return
Reasonable ROI over 2 or
3 years
First year profit = first year
investment
Strong positive return on
investment in first year
Access to Required
Start-Up Funds
Not fundable
Could be fundable but
unsure of sources and or
%; funding difficult to
attain
Relatively easy to find
funding for start-up costs,
but for a smaller
proportion
Very easy to get funding
for start-up costs

10. © Norm Tasevski
Social “Fit”
• Evaluate based on:
– Desired social outcomes
– Internal capacity to deliver value
10

11. © Norm Tasevski
Social “Fit”
11
Measure
Rating
0 1 2 3
Fit with Desired
Mission/Vision
Does not fit with mission
and values
Minimal link to mission
and vision
Some fit with mission and
values
Strong fit with mission
and values
Ability to Generate
Social Benefit
None Low Medium High
Existence of Skills
and Capacity
Large amount of skills
missing
Skills available from
partners and/or
consultants
Minimal training
necessary
Current team already
has the necessary skills
Risk High risk Moderate risk
Manageable risk
(strategies to address)
No risk
Partnership/Collabo
ration Opportunity
No probable partners
exist
No partnership
needed, or probable
partners exist and are
interested
Advances Our
Name/Reputation/V
alues
Potential for negative
impact
Slight increase in
awareness of org
Moderate increase in
awareness of org
Direct significant
increase in awareness of
org
Other Barriers
Significant cultural or
other changes required
Some barriers which may
be difficult to address
Some barriers, but likely
to be able to address
No significant barriers

12. © Norm Tasevski
Screening Matrix
12
BusinessPotential
Social “Fit”
Low social
impact/internal
capacity
High social
impact/internal
capacity
High
Financial &
Market
Potential
Low
Financial &
Market
Potential
Consider Second Top Priority
Not Strategic
Do Not Consider
Further
Possible Quick Win

13. © Norm Tasevski
Now…
• Screen your initial ideas according to social fit and
business potential
13

14. © Norm Tasevski
Initial Reactions
• What assumptions did you make that drove either
high or low ratings of your ideas?
• Were any ideas ranked artificially high or low due to
a misperception of the opportunity? If so, would a
change in perception change your rating?
• What info do we not know now that are important
in confirming the potential of the idea?
14

15. Break
15

16. Validation Techniques
16

17. © Norm Tasevski
Data Sources
17
Call key industry players
(suppliers, competitors, etc)
Search databases
(industry, scholastic, etc)
Conduct web search
(Google, etc)
Ask people!!!
(friends, potential customers, etc)

18. © Norm Tasevski
Primary Research Methods
Step 1: Identify people to speak with
– Create a spectrum of participants based on desired
criteria (e.g. gender, age, socio-economic status)
– Identify sources/places to meet participants
– Identify community contacts to arrange meetings with
participants
Tip: identify participants on the “extremes”
– E.g. if spectrum is based on “adoption of technology”, pick
the quickest technology adopters and those who are
resistant to new technology
18

19. © Norm Tasevski
Primary Research Methods
Step 2: Determine your method
– Individual interview
– Group interview
– In-context immersion
– Self-documentation
– Community-driven discovery
– Expert Interviews
19

20. © Norm Tasevski
Primary Research Methods
Individual Interview: one-on-one gathering of rich/deep information on
the behaviours, reasoning and daily realities of the interviewee
Group interview: one-to-many gathering of information focused on
understanding group dynamics/community life
In-context immersion: meeting people where they live/work/socialize
(i.e. observing their context directly, walking “in their shoes”)
Self-documentation: empowering the participants to document their
own experience (e.g. through journal writing, note taking)
Community-driven discovery: empowering participants to also be
researchers (e.g. have them conduct interviews)
Expert Interviews: one-on-one gathering of info with academics, industry
experts, other researchers, etc
20

21. © Norm Tasevski
The Interview Guide
• A semi-structured set of questions that allow for dialogue while
retaining focus on a specific topic
• What to ask?
– Start by listing the assumptions you’ve made in your idea screen. Turn these
assumptions into research questions
– Categorize the questions by topic. For instance, you may want to ask participants
several questions on “livelihood” or on “cultural dynamics”
• How to ask?
– Start specific (e.g. “yes/no”, simple-answer questions)
– Then ask broader questions (e.g. “how”, “what” questions)
– Then probe deeper (e.g. “why” questions)
• Tips:
– Avoid “abstract” questions (e.g. “how much would you pay for…”). Instead, create
a scenario (e.g. “you have a choice between A & B…”)
21

22. © Norm Tasevski
Some other Techniques
22

23. © Norm Tasevski
A Point on Asking People…
23
There are…
Lovers Don’t give a
%&$#ers
Haters
Listen to HALF of what they say!!!

24. © Norm Tasevski
What did we learn?
24