Hello, I'm Solomo Maital. I'm an emeritus professor here at Technian Israel Institute of Technology in Haifa, Israel. I'm going make use of my notes briefly because I want to get this introduction exactly right. So, some of you took my earlier course Cracking the Creativity Code Part One, Discovering Ideas. If you did, welcome back. Welcome to Part Two, Delivering Ideas. Together with my colleague, my friend, my former student and coauthor Arie Ruttenberg who built Israel's largest advertising agency. I built a toolbox for startup entrepreneurs. In this course, in each of ten sessions, together we'll learn the theory behind a proven start up tool, a tool that's useful to help you build your business and we'll practice using it in action learning exercises. Then we'll head out into the world, we'll visit start up companies and innovative organizations and we'll learn first hand how entrepreneurs and intrepreneurs, inside big companies, create value and build businesses. Now, using your imagination, dreaming, inventing wonderful ideas for new products and services, that's a lot of fun. Discovering ideas is wonderful, and the more you practice using your brain muscles, the better and stronger they get. But the truth is, delivering ideas, implementing them, making them happen. So thousands and millions of people can enjoy them. Can be happier and better off. Making ideas happen, that's really hard. Dreaming alone, truth be told, isn't that much good for the world. So in this course, part two, we'll work through all the steps that you need to follow to build a business around your great creative ideas. Some of you may remember in part one, I used my friend, Matryoshka, the Russian dolls to illustrate this point and I said this tiniest Matryoska, the 10th Matryoska, you can barely see her. That's the idea. But in order to make that idea happen, and to create value for people. To make people happy you need to build a business. You need to have a team. You need to have production, you need to have marketing, distribution, strategic partners, and if you do all of those things, eventually you have a business. But you have to do all of them and you have to build a business around an idea. So that's what part two, Delivering Ideas is about. Taking this tiny germ of an idea and building a business around it to make it happen, just like Matyroska. So, where do we start? Well, I think we should start at the end. Let's start at the finish line. Let's imagine that we've built a business and then let's work backward in order to figure out how do we get there. How did we get to the finish line and build this great business around a idea? So I call this thinking ahead backward and this is part of the introduction to our ten tools. What is thinking ahead backwards? Thinking ahead forward, which is how we usually think, is looking into the future and figuring out exactly what we need to do. And of course, we need to do that. But let's begin part two, Delivering Ideas, by thinking ahead to our destination, to our finish line. Imagining our achievements, our dreams. In fact, let's take a camera and let's take a picture of the future. Let's take a photograph of the future and imagine exactly as our business will look after we've come up with this idea, built a business, hired people, produced the product, sold the product, marketed it, built a website. Let's imagine that and let's actually really picture every detail. Let's take a photograph of it. And keep that in our mind, that's our dream. But it's a real dream. And then let's go back step by step to figure out how did we get there? How do we build this great business that's creating so much happiness for so many people over the world? Let's begin by some definitions. Let's know for sure what we're talking about. Let's define a business design and a business plan because our final goal is to take our idea and create a roadmap which shows us how to implement it. And we call that a business plan. So I'm going to talk a bit later about what is a business plan and the tenth tool will be that business plan that will be based on the previous nine tools. So what is a business design? You know everything in the world is designed. This Matryoshka doll was designed and beautifully painted by someone. Every thing except trees and grass and nature was designed by someone. Businesses are designed as well and when you start a business you have a beautiful white page, completely white, and you start from scratch and design a business. So what is it? A business design is a plan showing how an idea for a new product or service can become a profitable, sustained, growing business. It includes engineering, which is R and D, marketing, sales, supply chain, production, human resources, finance, organizational structure, strategy, innovation, and of course the vision, the vision driving the business. And I think that in designing your business, you can be as creative as you are when you're coming up with your business idea for a new product or a new service. So, that's a business design. Some people think that business should be standard white sliced bread. I think there's room for creativity in everything. Including how you design your business. What is a business plan? It's a document, preferably short, that shows the basic outlines of your business design and how you will implement and deliver your idea. It's a kind of a road map. And first and foremost, the business plan is for you, the entrepreneur so that you can set down on paper clearly where you're heading, what's the road map, how you're going to implement your wonderful idea. Sometimes the business plan is meant for investors. An angel investor. Someone who has money and who likes your idea. Or a professional investor called a venture capitalist. But first and foremost, the business plan is for you and I'm going to show you how you build a good winning business plan. But let's begin with what underlies the business plan. What is a great business design? On the screen, you see the cover of our book in Mandarin, in Chinese the imagination elevator. In English it's called cracking the creativity code. What is a great business design? So, one of the great business designers was a banker, a Swiss banker of all things, named Nicolas Hayek. And Nicolas Hayek, a Swiss banker, was brought in to rescue the Swiss watch companies. The Swiss watch companies used to control the industry. They used to make watches for the world. And then Japan came along with quartz watches for it's movements, inexpensive, accurate timepieces. And the Swiss watch companies saw they were rapidly losing their market. So Nicholas Hayek was brought in. And he became head of what was known as Swatch, the Swiss watch company. And he reinvented the product. He created a new category, fashion watches, beautifully designed fashion watches produced in limited quantities, rather than mass produced timepieces. Nicolas Hayek said that a company and a product must have a message, that it has to be a brand message. And the message should be strong, exciting, distinct, authentic, consistent, clear and credible. Those seven adjectives. So when you begin your business design, you build a business around a product, an idea, a service and a message that your product conveys. And your message should cover those seven clear adjectives given to us by Nicholas Hayek, who of course made Swatch into a great successful company, sustained profitable company to this day. What is a business design? Here I'd like to use a very good model or tool or approach by a strategy guru named Gary Hamel. Gary Hamel who used to teach at University of Michigan Business School later at London Business School. Now writes and speaks widely and consults companies, and wrote a book called Leading the Revolution. In this book he presents a very good definition of what a business is, basically four boxes and three connecting arrows. A business is core strategy, strategic resources, customer interface, and value network. What are those things? Core strategy is the business mission. Why does your business exist? What are you trying to do? What's your product? What's your market? What's the scope of the market? And most importantly, what is unique about your product, what is your differentiator? What do you have that others don't have that your customers find truly valuable? What are your strategic resources? What are the core competencies that you need to do really well? What are the things that you need to do well? Gary Hamel and his colleague, the late C.K. Prahalad wrote a wonderful article called the Core Competence of the Corporation. And they explained that every business has to have a core competency, something they do really that creates value. What is it for your business? What are you strategic assets? And what are you core processes? Third box, Customer interface. How do you interact with your client or your customer? How do you fulfill orders? How do you get insight into your clients? Many CEOs are in headquarters on the 30th floor in their glass office overlooking the city. Maybe they should spend more time out in the field talking to customers and trying to take the pulse of the market. Relationship dynamics, pricing structure, how does your business interface and interact with your clients? And finally, Value network. A business isn't an island. It's part of a whole ecosystem. You have to build that ecosystem. How will you build it? With people who supply you with components and parts. Your strategic partners, coalitions, your workers, the community, the country, the regulators, the investors, of course. All of these things are important. Those are the four boxes that comprise a business. And it's good to think in advance how you will fill those boxes and build your business even before you've hired a single person. And finally, there are three arrows or connecting links. So core strategy links to strategic resources by what we call configuration of activities. How do you set up the things that your business is going to do? Do you outsource it to a supplier? Do you do it inside the company? How do you organize that? Nike for example does a lot of its production in China which is semi-outsourced. Where will you produce your product? Who will produce it? Can you get someone to produce it for you on a contract basis? Core strategy is linked to customer interface through customer benefits. How do you really create value for your customer? Do you really know that? And I'll show you a tool, or tools that will help you figure that out well before you even launch your business. And finally, your strategic resources linked to your value network through company boundaries. Where do you put the borders around your company? What must you do in your company? R&D, product development, marketing, what can you do outside your company? Catering of food for your workers, even production that you can possibly outsource. That's a business design, the four boxes and those three errors. And if you can think of those seven things in advance and design your business well, you have a good start. So let's do some action learning, even before we start we start with the first of the ten tools. Can you build a business according to Hamel's definition around your idea? Do you have a business idea? What is your business idea? How will you build a business in order to deliver it to people? And can you fill in those boxes, or at least some of them, or at least the most important ones? How do you envision your business? Can you think ahead backward? Can you see your business? Can you see how it looks? Can you see the reception desk? And can you see how the business is organized, the structure, who reports to whom? How would you like to see your business? And how can you build your business in a way that delivers your idea? This is your action learning assignment. I'd like to mention that we have for each tool for each of our sessions, and there are ten sessions plus this one, the introduction. We have action learning that we ask you to do. And we also have a test your understanding quiz. Multiple choice questions that just check and see whether you really paid attention have grasped the key points of each of the ten tools. You'll find the tester understanding quizzes and the action learning [COUGH] in a separate place on the website for this course. [COUGH] So before we end our introduction together, our brief introduction, let me just briefly talk to you about, what is a great business plan? Our goal together in this course, is for you to take your business idea, this tiny little idea that we can barely, barely see, the tiniest Matryoshka doll and build around it a great business. And we do that by writing a business plan that tells everything we need to know about the product and it's unique features. So what is a great business plan? I think the best place to start is with a business plan that created a great business. And I very often in teaching my students in classrooms, I make use of the original business plan that created a world leader, a market leader, called Check Point. Which is the world leader in firewall protection for networks. Keeping hackers out. Keeping those out who shouldn't be in the network and letting other people who should be in it, access the network easily, quickly, and conveniently. So three young men in Tel Aviv in a hot July 1993 summer sat around had a dream, a big dream. They had an idea that the world needed firewall protection for company networks, and they started a company they called NSK, which became Check Point, and they wrote the business plan in July, 1993. [COUGH] Fast forward 22 years, in July 2015, roughly now, when I'm building this course, the market value of Check Point stocks is $14.5 billion. You can see the stock price chart on your screen. During the Dot Com Bubble the stock price soared to over $100. In March 2000, the NASDAQ stock market crashed. The Dot Com Bubble burst. The stock fell, plummeted, and then as gradually now recovered not quite to $100 but getting close. What was the business plan that created Check Point? Here is the five part structure for a good business plan. I think you can follow this to write a powerful, persuasive business plan. [COUGH] Part one, the need. Why do we need firewall protection? Because, some people may penetrate your network who really shouldn't be there and they may steal your list of clients. They may steal the designs for your next new product. So, we need firewall protection because our networks have valuable information and we wanna keep bad guys out. The product firewall bad guys stay out, good guys are allowed in. The unique features, something in our business idea has to be really special. Better than what is available now, ten times better. What is the unique feature of our product or service that is ten times better than anything else available? If you don't have a wow, a unique ten times better feature, you may not have a sustainable, successful business idea. Future developments, you need to look into your crystal ball and see where the market is heading. What will your new products be? How will you adapt to changes in the world and in technology? And finally, the market. Who will buy your product? Why will they buy it? How many people are there who will buy your product? [COUGH] Can you name some of them? Have you talked to a real client? Who said they really liked your product. And sometimes we add exhibits to our business plan, possibly a project plan and some data about revenue and costs. So we have test your understanding. In each of our sessions together, we'll ask you to, if you wish, go to the place on the website, find your assignments, your action learning assignment and your quiz, and go through the quiz. See if you've grasped the main points for this session together, what is thinking ahead backward? What's a business design? What are the seven elements of a clear value message? What's a business plan? What are the five elements of a business plan? What's the purpose of a business plan? And what comprises an effective business plan? We have an action learning assignment as well. Imagine, use your imagination. Think of something you want or need. Or a family member wants and needs, and it doesn't exists. Or something your country needs, or the world. And then imagine ways to meet that need. And cultivate wild ideas. And then, as we explained in part one, bring your feet down to the ground and think about how you might implement your idea, make it happen and bring it to millions of people. And then do a photograph of the future. Imagine you've created a real business, and you're providing people with your wonderful idea and you're making it happen. And millions of people are enjoying your creativity. And this is what we call think ahead backwards. Imagine the future and then work back step by step by step. All the hard work that it takes in order to make that happen. Very briefly, here's where we're going in our course, in our ten sessions together. In our ten sessions, we'll have a kind of a classroom chat, a fireside chat you might call it. And I'll explain the tool and illustrate it, and tell you some stories. And we'll do that quite briefly. Then we'll take our trusty camera-man and go out into the field, and we'll visit real companies, real entrepreneurs, real startup entrepreneurs. And they'll tell us how they built their business, how they used the tools, and you'll get to see actual startups out in the field and how they work. The ten tools in our toolbox. Remember, this course is about the toolbox. And, we're going to give you a toolbox with ten proven tools in it that you can use to build your startup business and the ten proven tools very briefly. Price cost in value those three numbers that you need to know if you have a viable business idea. Strategy and I'll give you a really simple tool for doing a strategy for your idea. Value profiles, all of our tools are visual cuz you need to communicate them to your people. Activity maps, how do you draw, how do you diagram the operations that you need to do in order to create value and deliver your product? Platforms, can you build a platform meaning something that creates a whole series of products rather than just one product? Learning organizations. The world is very uncertain. All kinds of things happen out there. Can you create an organization that learns rapidly. Gets better all the time. Learns from experience. Uses experience to improve itself and continually reduces its cost and increases its value. Tracking money. What do you need to know about this complicated discipline called accounting? How do you keep track of money in your business? How can you do that simply and clearly? We'll show you a tool for doing that. Risk analysis. [COUGH] A lot of bad things can happen. What are they? How do you analyze the risks? Should you share the risks with your investors and with your fellow employees? Can you prepare yourself for risks by analyzing what they might be in advance? Real options. Can you build windows and doors into your business idea? Can you create situations where one idea may not work so well, but in doing it, it's led us to another idea which is much, much, much more powerful, and I'll bring you some examples. And finally the tenth tool, preparing an effective business plan. Taking the other nine tools, put them together beautifully in a short, punchy tourist document, create a business plan, and then sell others in your team, investors, clients, on your idea and build your business. That ends our introduction, thanks a lot for joining my course, I hope you'll stick with us. And our next tool, 201, will be price cost value, the three numbers that you need to determine to see if you really have a viable business idea.