Hello. Welcome to our final, concluding session in Cracking the Creativity Code, Part Two: Delivering Ideas. This session is about designing your business and about building a winning business plan, a winning roadmap to show exactly how you're going to take your idea and turn it into a successful, sustained, growing business that creates value for many, many people. And in this session, number 10, I hope that we'll pull together all the tools, the nine tools that we went through together in the previous nine sessions to create our winning business plan. I'd like to first define our terms here. What is a business plan? A business plan is a document that shows the basic outlines of a business design. Remember everything man-made, human-made, is designed. Businesses are designed as well. So think about how you design your business, every aspect of it, and then build a document that acts as a blueprint, showing how you plan to do that. In one of our earlier tools, we talked about a business as being those four boxes taught to us by Gary Hamel, the strategy expert. Hopefully that's helpful for you to think about what you need to design for your business. What is a business design? It's a plan showing how an idea for a new service or a new product or a process, how you can make it into a successful, profitable, growing business, including product development, marketing, sales, pricing, production, human resources, hiring people, money, finance, organizational structure, the strategy, the vision, the mission and of course innovation, always, always innovation. Personally I believe that you need to have creativity in your business design, just as you need creativity in your new product idea, but not all people agree. Some experts, and I respect their view, think that the business should be done conventionally. Ideas, radical, innovative, creative. Business, do business the way everybody does business. I leave this issue to you to your judgment whether we need creativity in business as well as in our product. If you really do want to use design thinking in building your business design, here are some of the principles used by industrial designers who design beautiful things. For example this tool box, that I used as a metaphor for this whole course, I think it's beautifully designed. It's very convenient. It has a very nice set of compartments. It lifts out. It's spacious. It's strong. It's sturdy. This is good industrial design. Can you design your business to be beautiful and functional? There are four principles of design thinking based on an article by Hasso Plattner and some others. Hasso Plattner you may recognize as a German entrepreneur who was among the founders of SAP, the great software company. The human rule, all design activity is social in nature. People need to work together. Think about how people work together to use your design, your business. Ambiguity rule, it's nice to have a little mystery, a little ambiguity in your design, a little flexibility. The re-design rule, when I write my books, I write them and then re-write them, and re-re-write them and the result is always better than the original version. Design your business and then redesign it, change it, improve it, think about it constantly improving. And finally, tangibility, take abstract ideas, openness, a flat organizational structure. Take an abstract idea and then make it concrete. Show it to people, do a picture. Remember all of our tools basically are pictures so that we can communicate our ideas to our team members and to other people. Now, I'd like to digress here and include something I think is very important. And it doesn't seem directly related to a business plan, but I think it is. So one of my heroes is a man called Dave Kelly. Dave Kelly, like me, was a professor, is a professor at Stanford University, a professor of engineering. Very successful. Now he had a passion for design and the thought he had a better way to design things, a process for designing beautiful, functional things. So he left his comfortable position as professor and started a design company with his brother, Tom, called IDEO, in Palo Alto, California. And IDEO has developed a winning process for designing creative, beautiful things and they've become one of the leading companies in the area of industrial design. And they actually now help companies design their innovation process, not just design their products and their services. And here are the principles of IDEO that are mentioned in a wonderful ABC video called The Deep Dive, A Simulation of an IDEO Design Process. Some of these IDEO principles that you can use in your business, in your innovation process, in the process for designing your great start-up business. Delay judgement, so brainstorm ideas, put the ideas up on the wall but never kill an idea when it's born. It's a little baby, it has to grow, we gotta think about it and let it grow. So in the stage where you're coming up with ideas, delay judgement, never kill an idea when it's born. Better to ask forgiveness than to seek permission, it's, empower your people to try things rather than waiting to get permission, cuz that takes time, and it destroys creativity. Fail often to succeed faster, try things and regard failure as a step to success, as Edison did when he tried thousands of different ways to build filaments for the electric lightbulb. And therefore celebrate success but also celebrate failure cuz failure is someone who tried something that didn't work but they have the guts to try it. Build on data, collect data rather than sitting in your comfortable office as I do as a professor. Get into the world, and observe real things, real people, collect data. Try to have a flat organization so people are more or less equal. Creativity flourishes in a democracy. Focused chaos, so you need to have openness, and a lot of freedom to suggest ideas but you need to have someone who focuses the chaos toward a goal. Prototyping, you gotta build things, we have to build tangible prototypes to implement, to embody our idea, rather than just drawings or pieces of paper. Function follows form This is a bit of a tricky one I don't have time to go into. But we often hear about the principle of form follows function, that design follows what a thing is meant to do. But sometimes function follows form. You start with a tool box and then you think about how we can make different functions flow from the design. Think in the box, we praise thinking out of the box, but we need to think in the box as well. Meaning, there are always constraints, boxes, time, money, people, people hours, hours in the day. So we need to take into account the constraints that are real and be pragmatic, be real. Work within the constraints that we're given, but never invent a constraint that isn't really there. Create great ambiance for your creativity, an open place that people like to be in. Democracy, everybody is empowered to have ideas, and then create diverse teams. We need to have very different range of skills and personalities to have a really, really great team. These are the principles Ideo has used so successfully. And by the way, Dave Kelley has gone back to Stanford, is creating a design school, a school that basically teaches people how to apply these principles to become great designers. And now let's put our feet back on the ground and talk about, what's a business plan? And first of all, who is it aimed at? But before I talk about a business plan, I want to talk about a non-business plan. So, I’m a professor, I've spent my career in the academic world here at the Technion-Israel Institute of Technology. And in the academic world, we sometimes think that thought is a substitute for action. Meaning that our job here in the academic world is to think about things and to come up with different ideas and theories and then test them. So, our product is essentially distilled thought. But thought is not a substitute for action. It may be the basis for action, but the key is action and not thinking. Goethe once said, thinking is better than knowing, but looking and doing is best of all. So at one point, after assigning my students the task of writing business plans, and reading those plans, and some of them were wonderful. But I'm a fan of science fiction, I love reading science fiction. And some of those business plans were the best science fiction in the history of the world. So I told my students, look, thought is not a substitute for action. I want you to do a non-business plan. Go out into the world and do something every day for two weeks that advances your business and makes it happen. And then write a little diary and tell me what you did. So I have in front of me here a non-business plan by a young lady, a brilliant, talented young lady. One of my students who wanted to build a service that would help lonely older people and give them some companionship and assistance. Because her grandmother actually needed it. This is another example of a product where a person has a personal need and then builds a business idea around it. And so she went out into world, into the field, spoke to people, spoke to relatives, spoke to her father, spoke to experts. Collected information, gathered information about the market, spoke to people in her class. And wrote me a very interesting diary, a non-business plan about all the things she had done to move her business idea ahead. But now let's go back to the business plan, emphasizing that while you're doing your business plan, you should be doing a non-business plan. Out in the field, collecting real data, talking to people, moving your business ahead, gathering information to strengthen your business plan. Who is the business plan aimed at? It can be either internal or external, and it makes quite a difference. An external business plan is for potential investors, or for your board of directors. And here you focus on the business potential, the market need. And you make the case, why should I invest in this business? Why was this likely to justify my investment? Your audience may be internal, the team that implements the idea. Here you need to focus on strategy, strategy implementation, operational requirements on the project plan, what each person needs to do to implement the vision, to implement the idea. But I think first and foremost, when you write a business plan as an entrepreneur, I think the business plan is for you, yourself. To clarify your thinking about how you're going to build this startup and exactly what elements will be in it. You're going on a journey, an exciting difficult, difficult, long, hard journey. And it's very helpful if you have a roadmap. The roadmap won't always be accurate, sometimes there will be detours, there always be detours. But it's very good to have that roadmap before you start off on your journey. So, here's a simple outline for a business plan. You always include to one page summary because many of the people who will read a business plan are very impatient. And so you need to try to capture the essence of your business plan in one page. What's your differentiator, your value proposition? What is unique? How will you create value? How do you know that you're creating value? Do you have one client? And then the structure of the business plan, the opportunity and the need. Start with the need and then describe the product and the company. Describe the strategy, the differentiator. Who's the management team? I will put this very high up because investors often say, we're not investing in the product or an idea or a company, we're investing in people. And if we think those people can actually do what they promised, we're more likely to invest in them. Sell yourself more than even selling your idea or your business. Talk about marketing, how will people know about your idea? How will you reach them? What are your channels through which you deliver your product? What's your operational plan? How will you develop your product? How will you do the R and D? How long will it take? What's your financial plan? How much money do you need? Where will you get it? If you get the money, what will you do with it? What's your budget? And you can add some appendices, the CV of the team. And one of the most useful things, and I'm looking at this chart in a winning business plan I mentioned earlier, is something called a Gantt chart. A Gantt chart was invented by Henry Gantt over 100 years ago, and it's simply a project schedule. So you list all the things you need to do in your project, maybe 30 or more. To develop your product, to test it, alpha site, beta site. And then you have a bar chart, a horizontal bar. There's a start date and a finish date. And you stick that on a wall and you can see exactly how you need to run your project, and when each phase starts and when it ends. And you can track for milestones and see if you're sticking to your schedule. In that way, beautifully plan your project and the operational part of it. So a Gantt chart is very useful to have for yourself as part of your road map, and to show your investors that you know how to run projects, and you've organized very well to run this one. Startup entrepreneurship is really a combination of wild head in the clouds imagination and very hard-headed pragmatic feet on the ground operational capability, and those are what we call orthogonal. They're often conflicting in different characteristics. Very few people have both of them. So if you're the idea person, you need to have somebody who's the operational feet on the ground person or vice versa. That's why a team is so important. So the parts of the business plan, establishing market need, establishing value, are you creating value? We talked about that in the first tool, the price value cost tool. Do you have a customer? Do you have any hard data? How do you fit into the industry? We talked about the industry analysis that you could do, the activity analysis. How do you know if the business idea is a winner? Does your value proposition resonate? Do you create significant, immense value for relatively low cost? Try to address the issues that concern, or may concern the investor, who are, of course, on board of directors, because they have invested money and bought shares. If you are in an existing company, will this divert capital from your current core business? Will it divert man-hours? Sometimes I talk about intrepreneurship, many of you students who are talking my course will actually, or are actually working for large companies. But you can still be an entrepreneur. We call this an intrapreneur, building ideas and projects within a big company. So, sometimes there are advantages to that because in a big company you have resources, capital, people, channels, customers. You just need ideas. Sometimes you can advance ideas better in a big company than in the small one although you'll face many other obstacles within a big company. Do you have the core competencies? Can you justify the risk? You'll have very hard headed people challenging your idea and challenging you to make a strong business case if you're working within a big organization. So I have two case studies, two business plans in front of me here, and I've mentioned them earlier in one of the previous tools. And, they're very different. One of them is the business plan used by the founders of Checkpoint to start a great market leading company now worth over $10 billion in the market value of it shares. And this is a dry, boring [LAUGH] business plan, very short, 12 pages. But excellent because it does the job, and it got the money to start the company. And it has five parts. First of all, what is the need? Need for firewall protection to keep hackers out. What's the product? A firewall that goes on top of all other cyber security products. Easy to use, easy to install. Allows people easy access into the network when they should have access, and keeps the bad guys out. You need features. What is really, really special about this product? What's the future going to look like? How will we evolve our business? Make it into a platform, add new products, continue to innovate, and finally the market. Who will buy it? How large is the market, how many can we sell, what price, what's our revenue. Those five elements, those five key points comprise a basic business plan. The business plan that started Checkpoint written in 1993, fast forward to 2015, 22 years later, a market leading company. You too can do this. You can write a winning business plan, implementing your idea, and in 10, 15, 20 years you too can have a market leading company. Now the second example I gave of a business plan is quite different. I have it in front of me called Seahorse Power. I mentioned this was a business plan written for a competition, won the competition in 2004, won $20,000 of money helped start the business and today the company is successful making solar-powered trash compactors. Good for the environment, aesthetic for the city, keeping trash off the streets, and a successful company. This business plan is a little more dramatic, a little more photographic. It has pictures of trash, pictures of the product, a lot of financial calculations, and it's a different kind of business plan, one that's more perhaps visual also did the job very well and was suitable for its audience. This was a competition so obviously you need to do something beautiful, attractive, visual that sells the idea. But however you do your business plan keep in mind, 5 key elements and we'll go back and review that. The need. The product. Unique features. Future developments and the market. So, go to the assignment section. Please check your understanding. See whether you understand design thinking, the ideal principles. Can you apply those to your business plan? Do you know the five key elements of a business plan? And finally, Action Learning. So in Action Learning, take all the exercises you did, all your understanding of the previous nine tools. Prepare a terse, focused business plan. Less is better than more usually, shorter better than longer. Present the essence of your business idea, how you'll implement it, and deliver value to those who want and need your product. And then share your idea on your business plan with as many people as you can. I know there is a fear that someone will steal your idea, but you really need that feedback, you need that help and suggestions from experienced people in particular. So, submit your business plan, let your peers evaluate it, and I think you almost always find the suggestions you get really can greatly strengthen your business idea. This concludes the theory part of our course. I'm really glad that you've stuck through the ten tools. I hope that these ten tools will help you understand how to take an idea that you discover from part one, and here in part two, deliver the idea to create great value, and to change the world and make a lot of people happy. Thanks a lot for being with us.
