Telfer School of Management Course Outline, April 2012
Professor: Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD.
Office: 2525 Carling Avenue, Suite 23, Ottawa ON
Telephone: 613-422-6757 x 250
E-Mail: bmfirestone @ exploriem.org
Office Hours: After class for one hour
Class Location: DMS4170
Class Hours: Monday April 16th to Saturday April 21st, 2012 from 9 am to Noon
Advanced Business Models/MBA 6298 I/Winter 2012
Course Deliverable/Due Date/Weight on Final Grade
Record Elevator Pitch Explaining Value Proposition: April 17, 2012 20%
Construct Business Model and all Business Model Outputs: April 21, 2012 50%
Final Presentation: April 21, 2012 30%
Course Description
The Telfer MBA trains its students to found and create new high growth enterprises or create new products, services or divisions with high growth potential from within existing organizations. Recent research demonstrates that one of the key building blocks to such success is the business model.
The business model has progressed from a one page pictogram (or flowchart) of the ‘engine of an organization’ to a many faceted model that fully describes the entire ecosystem in which any enterprise exists.
Business models are not only important to for-profit businesses but also to Not-For-Profits, NGOs and charities. Those organizations are held to a high standard and managers there will seek to use their funds efficiently.
MBA6298I examines case studies of contemporary enterprises to understand the essence of these organizations—successful as well as unsuccessful ones. Appropriate elements are incorporated into student entrepreneur business models prepared by teams of MBA students.
This course is of interest to student entrepreneurs and also to those who will be intrapreneurs; persons who have the skill set of the entrepreneur but who work within established, often large-scale, enterprises. Product Managers and intrapreneurs who know how to deploy the entrepreneurs’ skill set are more likely to have their projects and products green lighted and more likely to be promoted.
Steve Jobs revolutionized the mobile phone industry when he launched the Apple iPhone—he insisted that AT&T give Apple a share of subscriber revenues in return for a two year exclusivity on the device. Cell phone manufacturers, specifically Apple, went from selling a ‘shrink wrapped’ device for a one-time payment in a brutally competitive market with poor margins that was racing to the bottom to a model with multiple sources of revenues including advertising on the iOS platform, iTunes downloads, application store sales and revenues, search fees, streaming and bandwidth charges, subscriber revenues, as well as the sale of the device itself. Some of these revenues streams are recurring which makes any enterprise more sustainable.
Research has shown that Apple’s IRR, Internal rate of Return, from the iPhone is in the order of 288% p.a. and is largely responsible for the rapid run up in the capitalization of that company. Wired.com (http://www.wired.com/gadgetlab/2012/01/iphone-att-q4-sales) reports that the iPhone represented 80% of all AT&T smartphone activations in the last quarter of 2011 during which they added 9.4 million new subscribers, 50% more than in any previous quarter in company history.
Sam Palmisano, former CEO of IBM told BusinessWeek (April 3rd, 2006) why he placed a great deal of emphasis on the importance of business model innovation: “…with product innovation, it’s a certainty that your competition is shortly going to copy what you have done. With business-model innovation, though, if you can come up with a unique way of doing things, it’s much tougher to react to.” Mr. Palmisano spent approximately 40% of his time as IBM CEO on their business models.
MBA6298I provides its students with tools to build world-class business models.
The pedagogical approach includes a series of lectures by the Professor and guest lecturers, workshop sessions with the Professor, in-class and after-class exercises/assignments as well as practice with tools needed to create complex and complete business models. Students are also required to submit written material as well as provide both video and oral presentations.
Links to the Telfer School of Management MBA Learning Goals
This course links to Telfer MBA Learning Goal 2, 3, 4 and 5: Understanding and Integrating Business Functions, Developing a Strategic Perspective, Developing Leadership, Communication and Teamwork Skills for High Performance Organizations and Unlocking the Value of Globalization.
More specifically, the course provides students an understanding of how to integrate business functions from supply chain to customer as well as a marketing dimension. Strategic relationships that perhaps can only be discovered in the process of building complex models and communities based on these are also a crucial outcome.
Students work in teams and learn to lead or follow as the case may be.
Focus is on high growth enterprises—ones that are sustainable and provide significant value for its stakeholders.
Course Learning Objectives
At the end of this course, students will be able to:
1. Design a business model for the 21st Century that is scalable and is sustainable in the face of competitive threats.
2. Self capitalize new enterprises or products and services where appropriate.
3. Effectively connect with client and customers via advanced marketing strategies.
4. Understand and discover new relationships in their enterprise’s ecosystem.
5. Understand their own capabilities with respect to delivering high growth products and services.
6. Present their value proposition as well as quantify it.
7. Understand their enterprise’s financial model including its cash conversion cycle.
8. Introduce sources of leverage into their business models to enhance its profitability.
9. Provide a clear written summary of the above that succinctly sums up their model and its outputs.
Methods Used to Evaluate Student Performance
Record Elevator Pitch Explaining Value Proposition 20%
Each team will record its elevator pitch explaining its value proposition. These will be uploaded to YouTube and may either be public or unlisted.
Guidelines: The video should be no more than two minutes and may include props and data as required.
Expectations
Examples of previous MBA students include Crowd Angels:
For additional reference, students can download: How to construct an Elevator Pitch,
http://dramatispersonae.org/HowToMakeAGreatElevatorPitch.doc
Grading Rubric
Personal Pitch—
Strength of presentation: conveys confidence, enthusiasm and professionalism /5
Demonstrates strong skills and background necessary to launch and operate a venture /5
Stimulates interest and/or ability to maintain interest /5
Explains opportunity succinctly and understandably /5
Total /20
Notes:
________________________________________________________________________________________________________________________________________________
Idea Pitch—
Value proposition – problem being solved/differentiated value/negative cost for customer/innovation or ‘pixie dust’/competitive advantage /5
Size of opportunity /5
Cost of customer acquisition/use of guerrilla or social marketing /5
Cash conversion cycle—ability to generate cash /5
Ability to execute /5
Scalability/network effects/reversing out the work to customers or suppliers/custom outputs from standard inputs /5
Total /30
Notes:
________________________________________________________________________________________________________________________________________________
Grand Total ____/50
Video Capture
The pitches will be recorded and may be placed on the Internet for the purposes of education. If any participant is concerned about this, they should not make the pitch for their team.
AV Requirements
Projection Screen
PC and Projector
Access to Internet
Sound
Video camera
One wireless lapel microphone plus one wireless hand-held microphone
Lapel mike and hand-held mike to be connected to video camera
Laptop showing online egg timer/stopwatch set to 2 minutes:
http://www.online-stopwatch.com/eggtimer-countdown/full-screen/
Creativity
Each team is encouraged to add their own ideas to their value proposition—experiment and innovate.
Leadership and Acting
The elevator pitch is designed to develop leadership skills. Student entrepreneurs must be able to lead to be successful.
Leadership is different than management. Management skills are necessary for an enterprise to function well on a day-to-day basis. Student entrepreneurs also need to be sound managers. Leadership, however, is about the ability to: “create and sell an alternative vision of the world, a better one in which we are an essential part. Philosopher Isaiah Berlin wrote that Churchill idealized his countrymen with such intensity that in the end they rose to his ideal,” Warren Bennis said in The Essential Bennis.
According to Bennis most “leaders acquire greatness when a role requiring it is thrust upon them.” It is interesting that he uses the word ‘role’ because leadership is partly about acting the role of a leader. Most of us are not born leaders; we have to learn how to be one.
Bennis points out that leaders need:
· to be able to leap into the unknown;
· to accept the risk of failure;
· to show adaptability;
· to create and sell their vision;
· to inspire the people around them;
· be authentic;
· be consistent.
These are useful attributes to demonstrate when making an elevator pitch or any presentation.
Team Project—Construct Business Model and All Business Model Outputs (50%)
Teams will produce an elite level business model and accompanying outputs demonstrating:
· Ability to execute
· Differentiated value
· Low value or negative cash conversion cycle
· Benchmark
· Self Capitalize
· Effective marketing dimension
· Building cashflow
· Mass customize/integrate the Internet into business processes
Document instructions:
1.A one page Business Model Flow Chart
2.One page spreadsheet showing how value is created for one individual client or customer
3.A second spreadsheet is required that provides you with a Financial Model of your enterprise
4.Cash Conversion Cycle spreadsheet
5.2-munite video of your Elevator Pitch
6.Build leverage into your business model
7.Summary of your Business Model that is 2-pages or less
Grading Rubric
Business Model Evaluation
1. Executive Summary – The executive summary is thorough and informative as a stand-alone document. It encourages and entices the reader to read more. Maximum of two pages.
2. Industry & Organization – The industry and competitors are clearly understood. The enterprise, concept, business model, product or service are clearly described. It has high growth potential.
3. Market Research and Marketing- The market size and trends are understood. What is the company’s value proposition? The model provides linkage between supply chain, enterprise and customers. Pricing scenarios are realistic, as are marketing tactics. Is there demand for the product/service?
4. Innovation and Differentiated Value – Does the business concept demonstrate innovation and creativity? The competitive advantages of the specific opportunity are well articulated. Is there a short time to market and high growth potential? There is a clearly articulated entry and growth strategy.
5. The Economics of the Business – There is clear and logical cost, margin and profitability.
6. Financial Model – the financial model presented links customer acquisition to top line and bottom line performance.
7. Ability to Execute – Why you and your team? Founders have skills and experience appropriate to the opportunity.
8. Capitalization – Feasible for entrepreneurial or intrapreneurial startup?
9. Mass Customization – Scalable, high growth enterprise?
10. Viability & Overall Impression – Reflects overall quality and articulation of model. Is the enterprise going to be around in 5, 7, 10 years? The venture makes sense and could be a real business.
Due Date: April 21st, 2012
Practice Assignments
Each student will complete assignments in IRR, CCC, NCM (Negative Cost Marketing). CPM (Optional).
Final Presentation (30%)
This will be held on the final day of class in teams.
Date: April 21st, 2012
Grading Rubric
Marking Scheme
Each team is scored on the basis of the following criteria using a scale of 1 to 10 where 10 represents perfection. These criteria are guidelines and other factors may be given weight in final grading.
Team Participants:
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Project Name: ____________________________________________________________
Presentation Skills
Did the presentation tell a complete and cogent story
Did the presentation inspire confidence in the principals and their plan
Score:___________
Presentation Materials and Business Model—quality and completeness
Score:___________
Business Model, Overall Viability, Self Capitalization
Score:___________
Originality
Score:___________
Degree of Difficulty
Score:___________
Q & A—ability to think-on-your-feet
Did the responses adequately address the concerns that were raised
Did the responses inspire confidence in the principals and their plan
Score:___________
Size of Opportunity
Score:___________
Internet Integration
Score:___________
Marketing Viability
Score:___________
Other
Score:___________
Total
Score:___________ /100
Comments: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Textbook/Course Package
Entrepreneurs Handbook II. Cost of $35.00 + HST. Reference manual. Available from Professor.
Course Schedule/Topics/Readings
Lecture 1
Business Modeling in the 21st Century—Integrating the Internet into the business model of your enterprise http://dramatispersonae.org/SlideDecks/L1-GTBMR.Finished.pdf
Lecture 2
Case Studies of Self-Capitalized Enterprises—Creating Powerful, Innovative Value Propositions and Sustainable Competitive Advantage through Differentiation.
http://dramatispersonae.org/SlideDecks/L2-Case-Studies-Of-Self-Capitalized-Enterprises.pdf
Self-Capitalization for the Modern Enterprise
http://dramatispersonae.org/SlideDecks/L3-Bootstrap-Finance.pdf
Lecture 3
Strategic Partnerships/Guest Lecturer—Ted Wagstaff
Lecture 4
Effective Customer Acquisition
http://dramatispersonae.org/SlideDecks/L4-TurnSellingIntoBuyingBruceFirestonePresentation.pdf
Startups and Business Law Basics/Guest Lecturer—Harley Finkelstein
Slide Deck: http://dramatispersonae.org/harley-finkelstein-MBA-6298-I-startups-business-law-basics.ppt
Lecture 5
Corporate Organization and Structure for Entrepreneurs, Intrapreneurs and high growth
enterprises
http://dramatispersonae.org/SlideDecks/L5-creditor-proofing.pdf
Lecture 6
Student Entrepreneur Presentations/ Submission of Business Model and Related Outputs
Course Pre-Preparation
1. Please get a Twitter account and follow: @ProfBruce. We will be using the hashtag #MBA6298. Please read Twitter Nation (http://www.eqjournal.org/?p=2080).
2. Take the ECQ Test (http://dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm). Send your score to tscholtes @ exploriem.org.
3. Give thought to the Business Model you wish to build during this course. Please read: The Complete Business Model (http://www.eqjournal.org/?p=692). The more of these elements that you can incorporate in a new or existing model, the more you are likely to build a sustainable enterprise.
4. Practice using our online Business Model Generator: BMG (http://www.dramatispersonae.org/bmg/)
5. Get ready to make a 2-minute YouTube elevator pitch video (public or private) by reading ‘How to Make a Great Elevator Pitch’: Word Doc (http://dramatispersonae.org/HowToMakeAGreatElevatorPitch.doc)
6. Please also read: Should Every Person on the Planet have a Personal Business For Life (PB4L)? http://www.eqjournal.org/?p=421
Bibliography (Additional Reading)
Blink, Malcolm Gladwell, Little, Brown and Company, 2005.
Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne, Harvard Business School Press, 2005.
Co-Creating Unique Value with Customers, The Future of Competition, C.K. Prahalad and Venkat Ramaswamy, Harvard Business school Press, 2004.
Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, Geoffrey A. Moore, Harper, 1999.
Delivering Happiness: A Path to Profits, Passion, and Purpose, Tony Hsieh, Hachette Books, June 2010.
Entrepreneurs Handbook II: You can Think your Way to Wealth a lot Faster than You can Work your Way There, Bruce M. Firestone, Exploriem Publications, 2012.
Predictably Irrational: The Hidden Forces That Shape our Decisions, Dan Ariely, Harper-Collins, 2008.
Quantum Entity, We Are All One, Bruce M. Firestone, Exploriem Publications, 2012.
ReWork, Jason Fried and David Heinemeier Hansson, Crown Publishing Group, New York, 2010.
Seizing the White Space: Business Model Innovation for Growth and Renewal, Mark W. Johnson, Harvard Business School, 2010.
Success Made Simple: An Inside Look at Why Amish Businesses Thrive, Erik Wesner, Wiley, John & Sons, Incorporated, 2010.
The Black Swan, The Impact of the Highly Improbable, Nassim Nicholas Taleb, Random House, New York, 2007.
The E Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, Michael E. Gerber, HarperCollins, NY, 1995.
The Facebook Effect: The Inside Story of the Company That is Connecting the World, David Kirkpatrick, Simon and Schuster, NY, 2010.
The Ingenuity Gap: How can we solve the Problems of the Future, Thomas Homer-Dixon, Alfred A. Knopf, New York, 2000.
The Power of Nice, How to Negotiate so Everyone Wins–Especially You!, Ronald M. Shapiro and Mark A. Jankowski with James Dale, Revised Edition, John Wiley & Sons, Inc., NY 2001.
The Tipping Point, Malcom Gladwell, Little Brown and Company, 2000.
What They Don’t Teach You at the Harvard Business School, Mark H. McCormack, Bantam Books, New York, 1984.
What They Don’t Still Teach You at the Harvard Business School, Mark H. McCormack, Bantam Books, New York, 1989.
Beware of Academic Fraud
Academic fraud is an act committed by a student to distort the marking of assignments, tests, examinations and other forms of academic evaluation. Academic fraud is neither accepted nor tolerated by the University. Anyone found guilty of academic fraud is liable to severe academic sanctions.
Here are a few examples of academic fraud:
• engaging in any form of plagiarism or cheating;
• presenting falsified research data;
• handing in an assignment that was not authored, in whole or in part, by the student;
• submitting the same assignment in more than one course, without the written consent of the professors concerned
In recent years, the development of the Internet has made it much easier to identify academic plagiarism. The tools available to your professors allow them to trace the exact origin of a text on the Web, using just a few words.
In cases where students are unsure whether they are at fault, it is their responsibility to consult the University’s Web site at the following address, where you will find resources, tips and tools for writing papers and assignments: http://web5.uottawa.ca/mcs-smc/academicintegrity/home.php
Persons who have committed or attempted to commit (or have been accomplices to) academic fraud will be penalized. Here are some examples of the academic sanctions, which can be imposed:
• a grade of “F” for the assignment or course in question;
• an additional program requirement of between three and thirty credits;
• suspension or expulsion from the School.
Please be advised that professors have been formally advised to report every suspected case of academic fraud. In most cases of a first offence of academic fraud, the sanction applied to students who have been found guilty is an “F” for the course with an additional three credits added to their program requirements. Repeat offenders are normally expulsed from the School of Management.
Finally, The Telfer School of Management asks that students sign and submit with their deliverables the Personal Ethics Agreement form. Two versions of this form exist: one for individual assignments, and one for group submissions. Assignments will not be accepted or marked if this form is not submitted and signed by all authors of the work. We hope that by making this personal commitment, all students will understand the importance the School places on maintaining the highest standards of academic integrity. The forms are accessible on doc-depot:
En français: http://doc-depot.gestion.uottawa.ca/ (et suivez le lien ‘Intégrité Académique’)
In English: http://doc-depot.management.uottawa.ca/ (then click on ‘Academic Integrity’)
@ProfBruce
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