Last week I had the pleasure of helping a client, IGO SAS, define their business model and prioritize their epics (high level features) for development, allowing them to be able to better explain to investors how they plan to spend "new" money to release value (and start making money for the investors). With the premission of IGO, I´d like to share some feedback from our workshop.
Paris-based IGO develop innovative 3D production and visualization tools for spatial information management markets (such as public administration, risk management, defense) and have developed a unique HTML5 / WebGL visualization tool that helps clients build and publish services across the web. IGO have a good project business but wish to enter a larger global "big 3D data" visualization market with their browser-based HTML5 platform. And to do that they need external investment.
The reason IGO seek support from improuv is:
- they are entering a new round of funding but don´t have a clear focus on their business model & vision
- they have crucial (money earning) projects running that suck resources from their product development initiatives
- they have a range of “must have” core product ideas (epics) and they know (even with funding) that they can´t do them all
We agreed a 1-day workshop to help IGO clarify their product offering and markets and create some focus. Participating in the workshop were the CEO, CTO and head of business development.
The core “tools” used were:
- Business Model Canvas (BMC)
- Value Proposition Canvas (VPC)
- Economic Prioritization
And this is how it went….
- Business Model Canvas – getting the business visualized
The business model canvas (ref: http://www.businessmodelgeneration.com/canvas) is a great tool to help visualize your current business (model) and allow you to test different alternatives. Its nice and simple and, for me the most important feature, it promotes a great deal of useful discussion and insight. Using a large blank canvas on the wall, we dug into the core elements of the IGO business and iterated a few alternatives. The session led to deeper insight into the core business model and brought out a need to create a a new product concept that would be better understood in the target markets.
Outcome: agreed business model and common understanding.
- Value Proposition Canvas - what value do we really deliver to customers?
A BMC is great for giving an overview of your business and for testing different scenarios. However in our case we needed to dig deeper to check that IGO are truly developing products that meet the needs and expectations of their target market segments. To visualise this we used a Value Proposition Canvas (ref: http://www.businessmodelgeneration.com/downloads/value_proposition_canvas.pdf).
We did this once for the most valuable market segment. Creating the VPC led to a great deal of discussion and debate - what do customers "really" want? what are the pains that can be relieved?, what tasks to they perform? what gains are they looking for, and/or could be delighted by? How does the product offering meet these needs & expecations? what could be the minimum viable product? This session brought out core new insight about the offering, market segments and geographic markets, and led to a new definition (and bundling) of the core product offering.
Outcome: deeper understanding of the market segment needs and new definition of core product offering.
- Economic Prioritisation - releasing value faster
Armed with a clearer understanding of the core business, value proposition and product proposition, the next step was to review the high level development initiatives (epics) and prioritise these based upon economic value (to remove the "all are must have" way of thinking). IGO have already defined the core epics that need to enter development to take their product to the next level. However they have experienced difficulty in determining what should be developed and when - often with the result that development is blocked at 100% capacity as numerous "must have" projects enter development and overload the system. To determine an economic prioritisation we borrowed a tool from Lean: Cost of Delay and Weighted Shorted Job First:
Cost of Delay (CoD) = relative value + relative time sensitvity + relative risk reduction/opportunity enablement
Weighted Shorted Job First (WSJF) = Cost of Delay / relative effort
To make this clearer we can take a look at what we did:
- list core epics on post-its (you can also do this with features)
- place sizing buckets as stickies on the wall (3,5,8,13,20)
Value: as a group (CEO, CTO, Sales) place epics on the wall within a "bucket" denoting the relative size in Value (monetray value, value to Brand etc.) in comparison to the other epics. After much discussion, the final order was agreed and the relative Value noted. (not "actual € value", but "is this epic more/less/same value than the other epics assessed so far?").
Time: repeat as per value. This time, however, the group considered how sensitive each epic was to time (e.g. if we release the epic late, or early, do we get more/less value? - there were clear cases where epics released "late" to the market would have significantly less value than if released early).
Risk/Opportunity: Again, the group reordered the epics to reflect the relative amount of risk each epic removes/addresses, or the new opportunities they might open up.
Level of Effort: finally, the group (led by the CTO) estimated the relative level of effort (work/resources) required to bring each epic to the market.
With values recorded for each of these areas, we then calulated the CoD and WSJF for the Epcis and listed them in decending order (by WSJF). WSJF gives a numeric value that means "from an economic standpoint, higher numbers should be released to the market sooner".
The results partly surprised IGO and, after discussion, they found the prioritization extremely beneficial. IGO liked the discussion it promoted and agreed in the overall prioritization - especially as it focused on releasing value faster through a couple of Epics that have tended to be lower prioritsied by the CTO/technical team (but, in fact, bring a quicker value win that will keep investors happy and build a customer base).
The final step was to look at the investment "ask" (the target € for the current investment round) and estimate how far down the priority list they can get with 1/3, 2/3 all funding. This estimation allows them to structure the discussion with investors around how much they can achieve at different levels of funding committment.
IGO found the day extremely beneficial and helped then clarifiy their business model and where they need to prioritise their develeopment. As is typical with a French customer, we then headed out for some "de-briefing" on a sunny terrace.... :)
I hope this provides some insight around how these tools can be used in real life. If you want support in creating a similar learning experience then call us and we will be more than happy to organise a workshop.
Philippe, the CTO, relaxing into a Pastis at the end of the day....