CHAPTER 1 The Truths about Entrepreneurship

THE PRACTICE OFENTREPRENEURHSIP 1. It is Not Solely for Startups-

• A business does not remain to be a
The Start of Entrepreneurship in the
startup, because it can always
Philippines
develop and progress into
− Entrepreneurship has become the solution something bigger.
to poverty through job formation, wealth 2. Entrepreneurs Do Not Have Exceptional
creation and social empowerment. Personality Qualities
• Although without scientific proof,
− For now, the Philippine government sees
traditionally there are four
entrepreneurship as the sole means to
recognized qualities: achiever,
address the poverty problem.
influencer, risk- taker, and open-
The Skills Important in Entrepreneurship minded.
3. It can be Taught Yet Entails Practice
1. The Skill of Play
• Entrepreneurship requires a
- Allows imagination to explore, person to possess a set of skills that
expose the mind to a treasure of should be improved continuously
opportunities and potentials and is through practice that can be used
very innovative. for entrepreneurial action.
4. Entrepreneurs are Not So Much Risk
2. The Skill of Experimentation
Takers
- Calls to act so as to learn, meaning • They normally would make
attempting to do something, calculations first prior to taking the
learning from such attempts and next step and usually measure
structuring said learning when the every lose.
next thing similar happens. 5. Entrepreneurs Work in Partnership
More than They Compete
3. The Skill of Empathy
• Partnership usually brings about
- Being sympathetic with the feeling, more efficiency, additional fresh
situation, purposes, opinions, and ideas and produces ingenuity and
wants of other people. It is putting innovation.
one’s shoes in the shoes of others. 6. Entrepreneurs are More on Doing than
Planning
4. The Skill of Creativity
• Investors are more fascinated with
- Being open-minded and letting the ability of an entrepreneur to
loose one's ability to create, deal with a series of difficult
discover opportunities and resolve situations, able to solve problems
problems. and take positive feedback as he is
mentioned.
5. The Skill of Reflection
7. It is Truly a Life Skill
- Organizes all the four skills. The • Can offer the methodological way
discomfort handled, the feelings of thinking, opportunity
felt, and the knowledge possessed identification, specific way of
gives new perspectives and allow problem-solving, adapting to new
for more assessment of the results situations and governing ones’
and forming of conclusion. goals and ambitions.
 Life skills: 5. Social Entrepreneurship
1. Resilience 4. Problem solving - Pursuing innovative applications
2. Agility 5. Relationship building that have the likelihood of solving
3. Negotiating 6. Mindfulness community-based problems. Ex.
Bayani Brew
Types of Entrepreneurship
6. Family Business
1. Intrapreneurship
- Owned and managed by members
- Refers to encouraging people to
of the family that is usually handed
discover high-risk, high-reward
down from generation to
concepts with the support of a big
generation.
corporate organization
6. Serial Entrepreneurs
2. Entrepreneurs Inside
- Constantly crops up with fresh
- Similar with intrapreneurship, but
ideas and starts new businesses. A
the only difference between them is
habitual one who takes the
that entrepreneurs function inside
challenges of repeatedly initiating
any type of organizations such as
on putting up a business.
government agencies, non-profit
organizations, religious entities, Entrepreneurship as a Method
self-employed and even
1. Bird in Hand
cooperatives, whether they are big
or small. Ex. Puregold - Creating solutions using the
resources available at the disposal
3. Buying a Franchise
of entrepreneurs instead of having
- It is a type of license bought by an goals in mind.
entrepreneur as the franchise from
2. Affordable Loss
an existing branded business
(franchisor) so that they may do - Investing much that an
business under the name of said entrepreneur is willing and can
brand. afford to lose. If it is an affordable
loss and the possible gains are big,
- Ex. 7-11, Ace Hardware, Pizza Hut,
then the decision can be
Jollibee, McDonalds and a lot more.
implemented.
4. Buying a Small Business
3. Crazy Quilt
- The entrepreneur buys out the
- Entering into new partnerships
existing owner and takes the
that can bring in new opportunities
management and operations of the
and reduces uncertainty.
small business.
4. Lemonade
- The new owner may be able to
acquire valuable patents or - Bad surprises and unexpected
copyrights, or have the opportunity turns are not always negative,
to drive an unprotective business in entrepreneurs see them as new
an exciting direction with his opportunities.
expertise.
 5. Pilot in the Plane 5. Reflect and Be Honest
- Future is really something that - Once an entrepreneur no longer
needs to be controlled and not try has the desired impact or has
to predict. Hence, the focus should exceeded his affordable loss, that
be on those entrepreneurial he may quit.
activities that are within the
- Otherwise, he must think of the
bounds of one’s control.
next step to do to sustain his
Components of the Entrepreneurship Model venture.
1. Identify Desired Impact 6. Take Small Action
- An entrepreneur must combine his - First action is just a small step to
curiosity, drive, and motivation to get going.
achieve something beyond the
- Each step must not be extreme but
bounds of himself.
still these can be done.
- Profit motive is not sustainable
- Once every step is properly
because entrepreneurship calls for
calculated and the affordable loss is
hard work and the satisfaction and
estimated, the entrepreneur can
desire come from deep inside.
control his risk.
2. Begins with Means at Hand
7. Network and Enjoin Others in Journey
- Current resources at hand are
- Practice of entrepreneurship is
important component that need to
about collaboration and co-
be ready for use to accomplish
creation.
immediate action.
- Sharing one’s ideas and joining
- “who am I” , “what do I know”, and
others to be part of the
“whom do I know”
entrepreneurship bandwagon shall
3. Describe the Idea Today also increase the entrepreneur’s
resources, expand the possibilities
- Desired impact and means at hand
available as well as confirm his
should be combined to fully
idea.
describe the idea.
8. Build and Learn from What Has Been
- Only then the entrepreneur could
Learned
start action today with the
resources he has today. - Evaluating performance is
improving one’s idea.
4. Estimate Affordable Loss
- At this step, nothing is right/wrong,
- Risk is difficult to calculate and be
just making things better.
used as an effective criterion for
decision-making. - It’s always best to celebrate when
success comes. However, when
- Instead of estimating risk,
failures happen, embrace them
entrepreneurs think about the
because of the learnings that come
things they are willing to lose.
from them.
 9. Managerial and Entrepreneurial
Thinking
- Managerial thinking is usually best
to apply during times of certainty. It
uses information and data as basis
for decision-making.
- Entrepreneurial thinking refers to
the ability to identify opportunities
in the marketplace and discover the
most fitting ways and time to take
advantage of them.
9. Managerial and Entrepreneurial
Thinking
Manage and mitigate Evaluate and embrace
risk. risk.
Safeguard inventions Exchange ideas and
and insights. share learnings.
Avoid failing Fail fast and try again.
Work within the Think in terms of
confines of the current possibilities.
environment.
Increase the bottom Create value and make
line. a diiference.

Entrepreneurship Requires Deliberate

Practice
• Entrepreneurship method is both a
mindset and a practice.
• There is a certain type of practice that
makes a novice entrepreneur, be an expert
serial entrepreneur.
• Having a milestone today should not keep
anyone from becoming comfortable.
 CHAPTER 2 3. Optimism
Entrepreneurial Mindset and Opportunity - Tough attitude towards challenges
Recognition makes up successful
entrepreneurs.
What is Mindset? Fixed and Growth mindset
- Entrepreneur should be hopeful in
Mindset and Its Characteristics and Essentials
exploring its many learning
− Mindset is a belief that qualities like opportunities.
intelligence and talent are fixed or
- For a successful entrepreneur,
changeable traits.
there is always a solution to
− A mindset of abundance will consider every problem.
that there is plenty of resources for
4. Flexibility
everyone and that resources will not run
out because they are replaceable. - Helps to be supple to deal with a
However, a mindset of scarcity shall think series of difficult situations, solve
that there is inadequate amount of things problems easily and make progress
around, so some people can either benefit from obstacles.
or lose them.
- Make a journal and timeline to
− People with a fixed mindset perceive that overcome difficulties.
their talents and abilities are set.
5. Ownership
− People with a growth mindset trusts that
- Success comes from their own
traits can be changed, developed, and
ability.
strengthened by working on them.
- The attitude to be responsible for
Characteristics of an Entrepreneurial Mindset
the things you do.
1. Curiosity
- Be confident that you can always
- Leads to questions, and questions fulfill your dreams.
lead to answers.
6. Leadership
- Strengthens the ability to
- Guides, motivates, and
understand things with a new
empowers the team.
standpoint.
- Through convincing
2. Commitment
communication and involving his
- Continuing to keep going and team, an effective entrepreneur is
persist amidst problems. able to attain his visions.
- Rejection and disappointments are - Able to create visions by constantly
essential elements of an being the model of the team.
entrepreneur’s life which needs to
7. Connection
be endured.
- Entrepreneurs must choose those
- The focus should be on
people that would form his
achievements.
collective links so that he could
breed his idea.
 - There should be both emotional with, for, and through others
and financial bonds. pushes their potentials.
8. Self-respect 5. Live life to give
- It’s vital to take care both of the • As people in business profit more,
body, mind, and spirit. they tend to give more, or what is
known as corporate social
- Taking care of oneself daily through
responsibility
rest, exercise, and diet is essential.
• They believe that life is a cycle,
Essentials of the Entrepreneurial Mindset
hence those people with so much
1. Passion first need to give to people with less.

• The best ways to be involved and 6. Attitude of gratefulness

continue doing business during
• Seldom do people give their
difficult times is to have a sense of
attention to their accomplishments
meaning and purpose.
and their present experiences
• This is the intention for starting except for entrepreneurs.
businesses according to the
• Even during problematic
entrepreneur’s passion.
situations which entrepreneurs
2. Everything is possible recognized as opportunities to
learn and grow, they are still
• Believing that entrepreneurs are
grateful about these situations.
capable of accomplishing
unexpected results. 7. The time is now

• They trust that an idea could be • Recognizing that all their powers
possible to turn into reality. exist in the moment.

• They examine first their goals and • They believe that they cannot
set things bigger. change history and the future is
uncertain.
3. 100% accountable
• It is best to take action than simply
• The power to choose their
waiting on a perfect plan which
responses to any circumstance
does not exist.
because they have this 100%
Accountable mindset. What is a Habit?

• They need to build a new start and Entrepreneurship as a Habit

form a different conclusion.
• Habit is an unconscious behavior done
4. We are connected often and regularly.

• Entrepreneurs believe they can • Good habits can be acquired using “habit
achieve their dreams not by being loop”, a process wherein the brain makes
alone though they love to be decision whether to store or repeat such
independent. behavior.

• They take honor in competition • Rewarded behavior is most likely

because they believe that working repeated.
Three Habits that Required Most to be • Creative people are open to
Nurtured and be Practiced for experiments and do not fear to
Entrepreneurial Mindset commit mistakes.
1. Self-Leadership Habit • Example: The Aristocrat, the
famous restaurant for its world-
• Practice of purposely influencing
renowned Chicken BBQ & Java Rice
and controlling one’s behavior,
combination.
actions, thinking, and feeling.
3. Improvisation Habit
• Related to optimism, happiness,
consciousness, and emotional • Improvisation is the
intelligence among others. unstructured way of creating
something in the absence of
• 3 important strategies:
planning.
1. Behavior-focused
• Entrepreneurs though start with
- Concerns enhancing self- good ideas oftentimes possess
awareness to manage limited resources, unpredicted
behaviors especially when market situations or conflicts
dealing with essential but inside the company that hinder
not-so-good tasks. them to realize their initial plans.

- Ways to accomplish this Opportunity Recognition Using Mindset

include: Self-observation,
• Opportunity is a means to generate profits
Self-goal setting, Self -
by creating unique, innovative, and
reward, Self-punishment.
desirable products or services which are
2. Natural Reward not being found in the market yet.

- About making every task • Opportunity recognition is a process by

enjoyable by emphasizing which individuals and businesses make
the positive aspects of each use their entrepreneurial mindset to
task and its importance. establish new businesses or ideas.

3. Constructive Thought • Entrepreneurs are able to see problems as

opportunities. They consider each
- Creating positive and
problem, frustration , or unmet need
productive means of
they face as a possible opportunity.
thinking that are
advantageous to the • However, if the right mindset is not
performance of utilized, then a missed opportunity is
entrepreneurs. expected.

2. Creativity Habit
• Creativity is the capacity of
turning fresh ideas, insights,
inventions, products or artistic
objects that are considered to be
unique, useful, and of value to
others into reality.
How to Start with Ideas 6. Development
1. Analytical • Employs the modification of
existing concepts to make
• Breaking a problem into details or
improved choices and new
looking at a problem in a common
potentials.
way to produce ideas on improving
or innovating products or services. • One way to do this is to brainstorm.
2. Search 7. Interpersonal
• Linking personal experiences that • Needs interaction with a group to
are significant to the existing generate ideas.
problem.
• Brainstorming is also commonly
• Illustrates the ability to be used to highlight creativity towards
resourceful in looking for new opportunities.
connections between objects that
Four Pathways to Opportunity Identification
appears to have no obvious
relationship at first. An opportunity could be in the form of a new
product and/or service, new found markets,
3. Imagination-Based
newly opened distribution channels, new ways of
• Interrupting doubts and dropping production or supply or new methods of
restrictions to produce fantasies or organizing.
make believe situations.
1. Find Pathway
• Sometimes, entrepreneurs need to
• Assumes that opportunities exist
be playful in their minds so they
independent of entrepreneurs and
can think of ways that are
are waiting to be found.
impossible.
• Generally, an opportunity is found
4. Habit-Breaking
when the entrepreneur sees a
• To explore a new perspective, clear problem and develops a
entrepreneurs should think of the solution.
opposite of something.
• The problem is known to most, but
• The ideas of a person not part of a the entrepreneur is “the one who
situation could also be taken acts on the potential solution”.
particularly those admirable
• This is the experience of Socorro
personalities.
Ramos, the owner of National
5. Relationship-seeking Bookstore. She opened National
Bookstore in Escolta with her
• Establishing a link between
husband with a capital of P200,
concepts that are not usually
selling books and school supplies to
connected.
students. At that time, Manila was
• Intention is to fuel the mind into under the control of the Japanese,
making connectivity that seems to who imposed censorship on books
be unnoticed. and periodicals. To augment their
earning, she and her husband
 resorted to selling other items like • Such opportunity comes from the
candles and soaps. experiences, abilities, networks,
and entrepreneur’s confidence to
Find- I saw a problem and developed a solution.
make action especially during
Search- I knew what I wanted to start a business, times of uncertainty.
but was unsure what business to start. I
intentionally searched for different opportunities.
• With only 2 cake displays and 10
Effectuate- I thought about what I know, my
employees, Milagros, Clarita, and
skills, experiences, and abilities and developed an
Doris Leelin started Goldilocks at a
idea that matched and just started testing it.
70-sq-m building space in Makati.
Design- I wanted to create something innovative. Sisters Milagros and Clarita loved
I started looking around, observed and talked to baking and decided to pursue their
some people and identified new, unmet needs. passion into business. With the
Then I created something to meet these needs. help of their sister-in-law Doris, the
Leelin’s opened their first branch.
2. Search Pathway
In 1991, Goldilocks launched its
• Used when entrepreneurs are not
franchising program. As of 2015, the bakeshop
quite definite what type of business
chain had almost 400 stores across the
they want to jump in. Hence, they
country, with other branches in the USA, Canada,
engage in an active search to
and Southeast Asia. From the modest capital of
discover new opportunities.
P66,000, Goldilocks is now a multi-million food
• The story of Ragnarok by the enterprise with more than 4,000 employees.
company LevelUp! is a good
3. Design Pathway
example. During a business trip in
Korea, Nonoy Colayco smelled the • Most difficult yet the most-value
opportunity of online gaming in the creating pathway.
Philippines. He knew very well that
• By focusing on the unsatisfied need
Filipinos are fond of gaming.
of the market particularly the latent
Through the help of his son Ben
ones, the entrepreneur is able to
Colayco, a person passionate with
discover valuable opportunities
games, the father and son team
brought gaming to a whole new • Here the entrepreneur is really
level called Massively Multiplier creating a new market
On-line Games (MMOG).
Latent needs- needs that customers do have but
The Internet and gaming was really progressing do not know they have.
that time with Counterstrike as the popular online
The craze for potato fries is everywhere now.
game. They got the publishing rights with Oz
Perhaps, this craze evolved from the
World and 3D Chat, but it was with Ragnarok
Westernization of the Philippines through the
from Korea that served as the
entry of foreign companies in the country
accomplishment of LevelUp!
introducing American-style meals such as
3. Effectuate Pathway burgers and fries. Seeing an opportunity for
success, a local entrepreneur developed an idea
• Uses the entrepreneur’s skills,
instead of competing against these much larger
knowledge, and abilities to unearth
companies with the same product.
an opportunity that suits him.
An entrepreneur of humble beginnings, Jose products as a unique experience of a locality that
Magsaysay Jr., is the current president of Potato highlighted his jump-off concept and his dynamic
Corner. He worked at Wendy's as a dishwasher, personality, hence Island Souvenirs was born.
eventually climbing his way up to become a Today he has more than 110 branches in the
district manager of Wendy's before opening his country.
first Potato Corner stall in 1992.
2. Prior Knowledge
A unique selling proposition is what makes
• Information gathered from the
a given product one of a kind like Potato Corners.
combined life and work experiences.
The factors inherent in Potato Corner's USP are
low costs and high efficiency. • Studies show that entrepreneurs that have
knowledge about the industry and
What Potato Corner did in order to
market in combination with broad
increase sales and further expand the company
network are able to recognize better the
was by introducing franchising to the company. By
opportunities around them.
means of franchising, interested partners could
help expand the business by paying royalties, and • Victoria Belo, more commonly known in
this in turn made Potato Corner an even more the Philippines as Dra. Vicki Belo, was a
publicly-recognized company. As a result, Potato victim of bullying in her childhood years.
Corner became a 75% publicly-owned company She was usually pestered for being ugly
with franchisees from all over the globe. and fat. This experience made her all the
more fascinated in the field of beauty. She
Alertness, Prior Knowledge and Pattern
imagined herself of becoming somebody
Recognition
who could make people feel gorgeous and
1. Alertness adored.
• Ability to easily pinpoint opportunities This led her to be in the medical profession,
in the environment. particularly in the field of dermatology. Hence, she
obtained a Diploma in Dermatology in Bangkok,
• Information is everywhere and are just
Thailand in 1990. It was in 1990-when Dra. Belo
waiting to be discovered. However, only
established her first clinic at the Medical Towers
entrepreneurs that possess alertness
in Makati. The clinic was the first to make known
could possibly do this thing.
liposuction and lasers in the Philippines.
• With their usual activities everyday,
The Dra. Belo's Belo Medical Group was also the
entrepreneurs turn to be alert to existing
first recognized "ambulatory cosmetic surgi-
opportunities.
center in the Philippines" and certified by the
Like many travelers Mr. Jonathan Jay Aldeguer has Department of Health (DOH). She is now the
a natural impulse to purchase souvenirs. With his noted dermatologist and "Doctor to the Stars". In
entrepreneurial eye, he spotted the universality addition, Dr. Belo was hailed "Ambassadress of
and huge potential for a new business with Beauty" for the Philippines and tasked to endorse
souvenirs. The souvenir industry from his the country as a world-class cosmetic surgery
entrepreneurial lenses could become a multi- destination.
billion-dollar industry given the twist.
In the Philippines, the industry lacked creativity
in design, visual merchandising, quality and
branding. Filipinos are used to the ethnic-looking
designs which were the norm. He showcased his
3. Pattern Recognition earn profit. Not all idea could be an
opportunity.
• Happens when people make connections
of dots to pinpoint and create • The best ideas are those that could be
opportunities. transform into doable opportunity.
• Often, when “connecting dots” there are • The IDEATE Method is an ideation
constraints that block the way. Real process empirically proven to help
entrepreneurs ignore these things and try budding entrepreneurs recognize
to find ways to look beyond constraints. problems, cultivate innovative solutions,
and choose the best creative
Filipina scientist Aisa Mijeno is an example of an
entrepreneurial idea.
entrepreneur that knows pattern recognition.
After resigning from her job in the IT industry and • This model follows the process of Identify,
volunteering with Greenpeace, Mijeno was Discover, Enhance, Anticipate, Target,
exposed to "off-grid" living conditions. Once she and Evaluate.
had seen the restrictions no electricity had on
1. Identify
day-to-day living. Hence, she decided to find a way
to figure out how to produce a light source that • Identifying problems that
did not depend on electricity, batteries or fuel to customers are trying to solve, are
work. spending money to solve, but still
unsolved to the satisfaction of
In partnership with Philippine incubator,
customers.. This is also about
Ideaspace Foundation, Mijeno was able to design
identifying solutions to this
and create Sustainable Alternative Lighting or
problem
simply SALt. The SALt Lamp is an environment-
friendly and viable alternative light source that • After quitting his job, Brian Chesky
makes use of saltwater, making it appropriate to drove to San Francisco to crash
those residing in coastline areas. It can also with a college friend, Joe Gebbia,
function well in far-flung barrios. Using only two who also recently quit his job. They
table spoons of salt and one glass of tap water, this were both having trouble making
ecologically designed lamp lights for eight hours. the upcoming rent payment. Then
they realized that the 2007
The concept of the SALt lamp is the chemical
Industrial Design Society of
conversion of energy. It uses the scientific process
America conference was coming up
behind the Galvanic cell. However, in place of
and that hotel rooms would be hard
electrolytes, the SALt lamp utilizes saline solution,
to get.
thus it is harmless and non-toxic.
2. Discover
From Idea Generation to Opportunity
Recognition • Actively searching for ideas in
problem-rich environment where
• In order for an idea to be feasible, it must
there is social and demographics
be fresh or inimitable or at least a twist
change, technological change,
from an existing concept that will be
political and regulatory change
acceptable and adoptable in the market.
and/ or change in the industry
• The concept should be something of structure.
value to consumers, because it is a need,
a desire, useful and has the capacity to
 • Gebbia, who had three air
mattresses suggested they turn
their apartment into an "air bed
and breakfast."
3. Enhance
• Taking the ideas and expanding to
new applications or adding
innovative twists. Or simply
enhancing existing ideas.
• After setting up a simple website
(airbedandbreakfast.com), they
managed to book out their whole
apartment in three days, solving
their rent problem.
4. Anticipate
• Studying change and analyzing
future scenarios as they relate to
social, technological, and other
global changes and trends.
• The duo, who had met at college at
the Rhode Island School of Design,
thought acting as tour guides to
designers would be a fun way to
make money.
5. Target
• Defining and understanding a
particular target market, validating
new ideas with early adopters.
• A customer for Airbnb is the one
who adds up to the company's
revenue. He can be a host who
offers his space for rent and lists it
on the platform or he can be a
traveler who books a space.
• Airbnb – Stay in a home away
from home wherever you travel
 Chapter 3 Therefore, design thinking is a combination of
desirability, feasibility and viability based from
Design Thinking
the definition of Brown.
IDEO’s Desirability, Viability, Feasibility
Framework
Desirability refers to how much people want the
product and whether it meets their needs and
desires.
Feasibility refers to whether it is technically
possible to create the product.
Viability refers to whether the product is
financially sustainable.
This thinking also involves experimentation and
trying out concepts and ideas.
Airbnb made use of design thinking from the
human insights that people wanted to share and
leverage their assets, hence the birth of "shared
economy”

The main tenet of design thinking is empathy for Apple did design thinking and made the phone a
the people you're trying to design for. Leadership remote control of everyone's lives.
is exactly the same thing - building empathy for Principles About Design Thinking
the people that you're entrusted to help. (David
Kelley, Founder of IDEO) 1. Human-centricity and Empathy - This is
about providing solutions to problems that
Design thinking is also known also as "outside the focuses on human needs and user response.
box thinking”.
2. Collaboration - Design thinking works well
The said process is not just merely a process, but with diverse composition of teams who would
completely opens a new way of thinking. cooperate with each other.
For the Chief Executive Officer, Tim Brown of 3. Ideation - The focus of design thinking is to
IDEO, design thinking is "a discipline that uses the come up with as many ideas and potential
designer's sensibility and methods to match solutions as possible.
people's needs with what is technologically
feasible and what a viable business strategy can 4. Experimentation and Iteration - Ideas are
convert into customer value and market turned into prototypes. Said prototypes are tested
opportunity". and feedback from users are taken.

IDEO is a consulting company founded in 5. A bias towards Action - Design thinking is an

California in 1991 that uses the design thinking applied and practical solution-based method that
approach to design products, services, is more focus on action rather than on discussion.
environments, and digital experiences.
 The Origins of Design Thinking 4. Ask what, how, and why in curiosity – The
what, how, and why of users’ behaviour must
In the 50s and 60s onwards, design-thinking
always be considered.
emerged because of the issues of collective
problem solving of significant societal changes by One method that can be used to record efficiently
engineers, architects and industrial designers at the information from the interview is the
that time. In his 1969 book entitled "The Sciences empathy map.
of the Artificial", Herbert A. Simon first mentioned
The empathy map helps gather and organize the
about design thinking as a way of thinking.
data from the interview that could lead to
The design thinking process has become popular surprising insights.
because it was strategic to the success of many
Four main components of the empathy map
prominent, international companies such as
Google, Apple and Airbnb. 1. Say - This quadrant covers what the user says
loudly in an interview or some other usability
This "outside the box thinking" is now taught
study.
at distinguished universities worldwide and is
promoted not only in business but to all types e.g. "I am loyal to Jollibee because I never have a
of organizations. bad experience.“
The Hasso Platter Institute of Design at 2. Think - This quadrant captures what the user
Stanford provides a five-step process in design is thinking throughout the experience.
thinking.
e.g. A user's thought could be expressed as "This
1. Empathize: Research About Users' Needs is really frustrating."
• Research allows to obtain 3. Do - This quadrant encompasses the actions
understanding of the people who the user undergoes.
experience a problem before
Possibly the user "Shops around to compare
designing a solution to serve them.
prices“
• Empathy describes the ability to
put oneself in another person's 4. Feel - This quadrant contains user's emotional
shoes to really see the world state such as his worries, excitement about a
through people's in a given context certain experience. This is often represented by
or situation. an adjective such as "confused of too many
contradictory prices".
Here are some key empathy-building methods to
gain a deeper understanding of the users' pulse: 2. Define: State Users' Needs and Problems
1. Empathy interviews - to find out as much The first step towards defining a problem is to
insight as possible using an open conversation. find who the user is, what is his needs and then
develop insights from the answers.
2. Immersion and Observation - users should be
observed in their natural environment or The purpose of this problem statement is to
immersed in a certain situation while they are in establish the core problems and generate tangible
action. and actionable ideas to solve the problems.
3. Extreme Users - the needs of extreme users
are usually intensified that could help solve the
problem.
3. Ideate: Challenge Assumptions and e. Put to another use - This is making the idea or
Construct Ideas concept works into a different use compared to
what is originally planned.
Here entrepreneurs may now look for alternate
ways to view the problem and pinpoint innovative f. Eliminate - In the same process like the Lean
solutions to the problem statement created. Six Sigma, this concerns eliminating waste due to
inefficient processes. Removing ineffective
Ideation Techniques
procedures could reform them.
1. Brainstorm - This is a more relaxed and
g. Rearrange/Reverse -This is doing things that
informal way of solving a problem using
are completely against the original purpose in
imaginative thinking.
order to see something from a different angle.
2. Brainwrite - This is a serial process of asking
4. Prototype: Start to Form Solutions
participants to write down their ideas about a
specific question or problem on sheets of paper. A prototype is a low-cost, scaled-down quick
Each participant passes his ideas on to someone working sample of entrepreneurial ideas for new
else, who reads the ideas and adds new ideas. products or particular features found in these
products.
The process repeats that would last from 10 to 15
minutes. Once the sheets are collected, they are Benefits about prototyping:
posted for discussion.
1. Timely feedback
3. Worst Possible Idea - This is a technique 2. Prompt changes save time and cost
where members of the team look for the worst 3. Validation prior to development
solutions in ideation periods.
4. User research and user testing- User testing
4. SCAMPER- The SCAMPER method is a concept shall reveal how the product would become
that aims to look for solutions to problems. functional and valued by the final user.
The SCAMPER technique is more engrossed on Essentially, a prototype is the foundation for what
the process of discovering unfamiliar and will become the minimum viable product (MVP).
innovative solutions to problems. The goal of also An MVP is a minimum viable product that was
a improving a product or service: born out of the lean mentality pioneered by Eric
Ries from his book "The Lean Startup".
a. substitute - A designer may look for
something to replace that will result in 5. Test: Try Solutions Out
improvements of concept, product, service or
The complete product is tested in real life
process.
environment using the best solutions in the
b. Combine- An idea might not work alone, but a previous step.
combination of some ideas, processes or products
The Power of Storytelling
could work best.
Stories are about specific events of real people
c. Adapt - Often, there is already the right solution
and their respective lives that can inspire
to a problem, but still unknown yet. Sometimes,
opportunities, ideas and solutions.
an idea could solve one or more problems.
These stories offer actual details to be used in
d. Modify - At times, exaggerating a situation or
picturing solutions to certain problems.
problem could offer a new insight or added value.
Storytelling is the core of the structure and
functions of every human being to connect events
as a complete experience through time.
Usually, every story has the following elements: Double Diamond Design Thinking Process
1. Domain/What 1. Understand -The first diamond helps people
define what the problem is and involves talking to
This is the definition of the topic that is the
and spending time with people who are part of
concern of the story.
the issues.
In the design process, it can be the problem of a
2. Define -The understanding from the discovery
consumer that should be resolved.
phase can help describe the challenge in a
2. Players/Who different manner.

These are the people involved in a story. 3. Develop -The second diamond inspires people
to offer multiple answers to the well-defined
In the design process, the main player is the
problem, trying to find motivation from
persona who represents the demographic
elsewhere and co-designing with a variety of
information of the consumer who faces the
diverse people.
experiences.
4. Deliver - Delivery includes experimenting
There could be other players involve in the story
different solutions in a limited way, discarding
such as those who are part of the support groups
those that are not feasible and refining the ones
or those employees that directly communicate
that will work.
with the customers.
Double Diamond
3. Story flow/How - There are three main
chapters for each story namely the beginning, 1. Discover (divergent thinking) - Exploring
middle, and end. the problem space broadly and deeply.

In every story there is problem that could be 2. Define (convergent thinking) - Refining the
part of the middle stage which is the target in problem and identifying the core challenge.
the design process.
3. Develop (divergent thinking) - Generating a
Storytelling in the Design Process wide range of potential solutions.
The Double Diamond
4. Deliver (convergent thinking) - Evaluating
and refining the solution to its final form.
The Double Diamond- a process that use both
Steps in Story Telling
the divergent and convergent thinking.
1. Problem Framing
The two diamonds represent a process of
exploring an issue more widely or deeply Deals with exploring the problem to know
(divergent thinking) and then taking focused exactly the concern that needs a solution. Here
action (convergent thinking). storytelling is used to identify the problem using
qualitative data from the consumers.
Divergent thinking- solves problem by
proposing multiple possible solutions to identify 2. Solution Framing
the one that is best.
The designer needs to test and evaluate a number
Convergent thinking- concentrates on finding of possible solutions to obtain the best solution
the single best solution to a problem. based on the standpoint of the user.
In the Double Diamond many ideas are generated, Storytelling is used in this stage to confirm the
then refine and confine to the best idea. efficiency of the solution by creating a two-way
communication with the consumer. Here the
designer must know if the solution really works mopping easier. From a different angle, coming
best for the consumer. from those meaningful insights given the primary
need of avoiding messy and dirty water was
3. Solution Implementation
resolved because of Swiffer mop.
The consumer feedback about the product or the
Interview
service can be collected as basis for improvement.
Interviewing is an important tool to identify and
Storytelling can be used as an instrument to
empathize with customers’ needs, form fresh
discover how the end product is used by
ideas and find out new opportunities.
consumers in their everyday lives. From the
feedback sessions, the information gathered An expert interviewer should be open-minded, a
could become useful in enhancing a better version skilled listener, a keen observant, flexible and
of the product in the future. exhibits patience.
Example: A good example of the use of storytelling Most business owners interview their
happened with the Coca-Cola's Happiness customers right after purchase for feedback.
Machine campaign. It featured a Coca-Cola However, entrepreneurs also interview people for
vending machine converted to deliver astonishing ideas and insights in addition to the identification
"doses" of happiness to unsuspicious college of needs during the design thinking process.
students. The machine was placed in the center of
Experiments
the student cafeteria at the Queens, NY, campus of
St. John's University. The apparently typical Coke Experiment is an approach of approving or
machine, something very familiar to most people disproving the soundness of an idea or
was in complete sight of five intentionally hypothesis.
positioned unseen cameras. The candid camera
For majority of entrepreneurs, it is through
angles capture the joy and happiness of those in
experimentation that new innovations, initiatives,
the video. The video revealed unpretentious
ideas and opportunities are revealed.
surprise and delight on the students' faces when
they interacted with the Coca-Cola 'Happiness Entrepreneurs in the food venture may
Machine. experiment with recipes and flavors to come up
Observation and Insights with new menus.
Knowing what customers think or feel is the Those in the fashion industry may possibly
initial step towards making innovative products experiment with designs, fabrics and
and services that they want and need. distributions to create a stylish brand.
Example: The everyday task of floor mopping. A concept prototype may perhaps be a good
experiment for a technology company.
Procter & Gamble made observations of
people cleaning floors. From the observation, Art and Science Applied to Entrepreneurship
generated insights such as people do not like
washing floor with water using mop and water As an art, an entrepreneur must have a creative
does not help in eliminating dirt. Hence, from thinking skill to make some ingenious ideas and
these insights a new product with the brand make the entrepreneurial process a great success.
name Swiffer was born. The Swiffer brand is a Science, on the other hand, calls for combining
waterless mop that cleans surfaces easier and new information into prevailing models, or
conveniently. The researchers here were able to adding new models to a superior body of
identify the unexpected pattern the troublesome knowledge.
mopping with water and a product that makes
The scientific method was used by tech giants Traditional Types of Business Models
such as Uber or Facebook.
1. Manufacturer - A manufacturer is a person or
Facebook, for example, originally released their a registered company which makes finished
site only with Harvard students. Later it was products from raw materials in an effort to make
opened for students from all universities. After a profit.
two years, Facebook was available to everyone
Examples of manufacturers in the Philippines
else.
: Ajinomoto Philippines, Alaska Milk and Century
Likewise, Uber did the same thing. The service Pacific Foods, among others.
was tested initially with the founders' friends.
2. Distributor-an entity or a company that
After a few months, the app was launched in San
purchases noncompeting products or product
Francisco then later to other large cities in the
lines, stores them in warehouses, and resells them
United States. After three years, the startup raised
to retailers or directly to the customers.
enough money to grow
Auto dealers are examples of distributors.
globally. Today it is present in more than 600
cities in 80 countries. Unilever spends its major part of revenue in
maintaining a proper distribution.
Chapter 4
3. Retailer - a person or business that purchases
Building Business Model
goods from the wholesaler or directly from the
“The more you drive positive change, the more manufacturer.
enhanced your business model."-Anand Mahindra
They purchase goods to sell those goods in small
Introduction quantities to end consumers. Online retailer
giants include Best Buy, Wal-Mart and Target.
A business model makes the difference between
success in the laboratory and success in the 4. Franchise - A franchisor provides access to his
marketplace. business' proprietary knowledge, processes,
business system and a brand's trademark or trade
The business model involves the product or
name in order to let the franchisee to sell a
service offering, the targeted customers, and the
product or provide a service under his business's
economic engine that will enable a business to
name.
meet its profitability and growth objectives.
A franchisee pays a royalty and often an initial fee
What is a Business Model?
for the right to do business under the franchisor's
According to management guru Peter name and system.
Drucker: "a business model is supposed to answer
In the Philippines, Jollibee ,McDonald's and Pizza
who your customer is, what value you can create
Hut are some examples of retailing businesses.
/add for the customer and how you can do that at
McDonalds's though is the best example which
reasonable costs".
has 93% of its franchised restaurants worldwide.
Simply, a business model defines the
foundation of its company's core value
proposition, targeting customers, key resources,
and assumed revenue streams and overcoming
challenges.
5. Brick-and-mortar - It is a model that refers to Some Basic Types of Modern Business Models
the old-fashioned street-side business that sells
1. Nickel-and-dime - This model makes use of
products and services to its customers face-to-
the lowest price strategy in selling basic product
face in an office or store that the business owns or
or service to the customers.
rents.
Here in the country, Cebu Pacific is the low-cost
Grocery stores, dentists, gas stations, local
carrier which offers the lowest possible price
grocery and walk-in banks are examples of brick-
for the flight tickets and charges fee. However,
and-mortar businesses.
it charges fees over extra services such as
6. Bricks-and-clicks - It is a model where a meal/snack, beverage and other services.
company combines its online and a physical
2. Freemium - This model is a combination of free
presence. Customers may place their orders
and paid services normally used by tech
online and then pick up the products from the
companies in the Software as a Service (SaaS) or
physical stores.
apps business model.
These day, most businesses selling apparel and
Usually the basic services are free but for a limited
shoes items in Divisoria use this model.
time or with limited features.
7. Direct Sales - In this model, products are
Zoom, Spotify and Dropbox are examples of this
directly sold to the customers.
model.
Selling could be in the form of a face-to-face
3. E-Commerce - This model is an upgradation of
conversation or small gathering. The former
the old-style brick-and-mortar business model.
Tupperware used to have house parties to sell its
products. The salesperson gets a commission of It focuses on buying and selling of goods or
every sale. services creating a web-store using the internet.
Avon, Boardwalk, Dakki, Fern and Forever Living. Online stores like Amazon, Flipkart, Shopify,
These companies choose to always be in personal Myntra, Ebay, Quikr, Olx and Alibaba are examples
touch with its customers. of E-commerce businesses.
8. High Touch - This model uses a lot of human 4. Subscription - This model offers a long-term
interaction and involvement contract to customers by paying a fixed amount
every month or year.
Hair salons and auto dealers make use of this
model. Netflix, LinkedIn, Amazon Prime, Dollar Shave
Club, are few of its examples.
9. Family-owned - This is a family that is owned
and operated by a family. 5. Aggregator - This is a network model, the
company acts as a middleman between two
The decision making are controlled by family
individual parties.
members.
The company sells its own brand by creating value
Some examples of this type of model are the
for both demand and supply side.
National Bookstore, ShoeMart, Jollibee, and
Robinsons. It makes profit by through commissions.
Airbnb, Zillow and Oyo for Hotels; Uber for taxi
service; and Yodlee for financial service are the
right examples for this model.
 In return, the affiliate gains a commission for
every sales opportunity it referred to their vendor
6. Online Marketplace - In the online
companies.
marketplace, there is a collection of different
sellers into one platform. The affiliate website oftentimes provides product
review. NerdWallet, Capterra, MoneySaving
The online marketplace earns commission on
Expert.com and and the Wirecutter are examples
every sale carried on its platform.
of businesses that are into affiliate marketing.
Examples of well-known companies using this
11. Dropshipping - the owner has no ownership
model are Amazon and Alibaba.
of the product or hold any inventory, but he has an
7. Hidden Revenue - the company offers its E-store.
services for free. The company earns revenue
He has many different suppliers/ wholesalers to
streams from advertisements which are paid for
sell their product on the website. When an order
by identified sponsors when information is
is placed on a business owner's website, the
shared.
partner sellers then deliver the products directly
Users of Google, Facebook, Instagram and Twitter to the customer.
don't pay for the search engine, but these
Few examples of this nature include Doba, Oberlo,
companies earn from advertising money spent by
Dropship Direct, and Wholesale 2B.
businesses.
12. Network Marketing - Often called multi-level
8. Data Licensing / Data Selling - The Internet
marketing, this model works on direct marketing
has given rise to the importance of data.
and direct selling philosophy.
Data is the major element in the web technology
There are no retail shops here but the offerings
where companies need vital information to
are sold to the target market directly by the
perform its operations and gain profit.
participants.
Twitter sells real-time data to third party users
The more people that become part of the pyramid
for analysis, advertising, customer insight and
structure, more money are gained by selling more
other uses.
goods and getting more people on board.
9. Agency-Based - This is a partner company that
This is a commission-based model where
has specialization in doing non-core business
participants earn income through selling and
activities such as advertising, digital marketing,
recruitment of members.
PR, even janitorial and security.
Avon and Mary Kay are good examples of network
Usually, businesses that have no internal know-
marketing.
how hire agencies to acquire a customizable
solution for their needs. 13. Crowdsourcing - This is a model that solicits
intellectual information of users on what value-
Leo Burnett Company is an agency that services
added concepts be inputted in the product and or
United Airlines, McDonald's, Kellogg's and some
service offering.
of their notable clients.
14. Blockchain - This is a digital ledger that is
10. Affiliate Marketing - This is a commission-
irreversible and decentralized. No one owns and
based model where companies make profit by
monitors this digital database but anyone can
promoting a partner's product and convince its
contribute to it.
followers and users to buy the same.
This model works on peer-to-peer interactions
and document all on a digital decentralized ledger.
Many crypto-currencies such as Bitcoin, The profit though is intended to be used for
Ethereum, and Litecoin use Blockchain humanitarian works to improve human living
technology-based business model in their conditions.
operations.
Some of the social enterprises in the Philippines
15. Low Touch - there is minimum human are Bayani Brew, Coffee for Peace, First Harvest
assistance or intervention in selling a product or and Liter of Light.
service.
The Business Model Canvas
There is no need to keep a big salesforce although
Sample business canvas model for a small bakery
companies may focus on improving technology to
that intends to sell organically baked breads:
further lessen human involvement and make the
customer experience better. Key Partners
Ikea and SurveyMonkey are good examples. 1. vendors of organic raw materials
16. Razor and Blade - one item is sold at a low 2. packaging suppliers
price or even given for free in order to intensify
3. retail partners
the sales of a complementary good, such as
consumable supplies. Key Activities
A good example is the Razor that is sold at a low 1. introduce organically produced bread
price and its partner, the blade is sold at a
premium price. The same situation holds in a 2. marketing and sales
printer and cartridge. 3. branding
This model is advisable if the business has a loyal 4. consumer education
customer base and has the ability to create some
sort of lock-in situation with customers. Key Resources

17. Consulting - The consulting business is 1. team cooperation

composed of experienced and qualified 2. raw materials
professionals that offers services based on their
line of expertise. 3. social media

Most consulting firms charge their clients by the 4. retail network

number of hours they have rendered service or a Key Propositions
percentage of share once a project is completed.
1. freshly baked breads
Mostly accountants, lawyers, educators and
businessmen form their own consulting 2. specialized in organic bread
companies. 3. breads of constant quality
The most popular consulting firms are Mckinsey, 4. breads are served quickly
Deloitte and Boston Consulting Group, software
or website development firms 5. competitive priced breads

18. Social Enterprise - aims to put up a business 6. Halal certified

more for creating a positive change but with 7. The "Finsbury bread" of Manila
profit.
Customer Relationships Types of Partnerships
1. Hotline number 1. Strategic alliances - This partnership is an
arrangement between non-competitors to help
2. E-mail for questions
each other do an equally advantageous task but
3. Facebook page retaining their independence.

4. Loyalty discounts For instance, a new cafeteria business could

partner with several suppliers of coffee beans.
Channels
2. Coopetition - This partnership is an agreement
1. social media
between competitors to help share the risk that
2. rider delivery these companies may take.

3. on call delivery Companies could be partners in forming

awareness for their shared industry, to gain new
4. direct selling using own website users.
5. physical store 3. Joint-ventures - This is when two businesses
6. events planner because of their mutual interest agreed to for a
completely different company.
Customer Segments
A new market or a new geographic area could be
1. neighborhood communities the reasons for combining their resources in a
2. healthy life stylist joint venture. For example, a cheese company may
opt to form a joint venture with a milk
3. neighborhood supermarkets manufacturer for a cheese manufacturing in
4. neighborhood bakeries another place.

Cost Structure 4. Buyer-supplier relationships - These are the

most usual type of partnerships in businesses.
1. equipment and facilities Such relationships make certain that there will be
2. staff salaries a dependable spring of supplies coming in.

3. product ingredients On the part of the supplier this means a stable

established customer for their product.
Revenue Streams
Key Activities
1. volume sales from supermarkets
Key activities are the most essential activities in
2. sales to consumers achieving a company's value proposition and to
3. sales to events such as weddings, birthdays, operate successfully.
anniversaries, etc. Categories of Key Activities:
Key Partners 1. Marketing - Adding value by promoting
Key partners are the network of suppliers and products and/or services such as advertising a
partners that may provide the business model product to create awareness and hence demand
more effective. 2. Sales - This concerns selling a product and/or
The entrepreneur could partner with other service.
business, governmental, or non-consumer
entities that can help the business model works.
For instance, personal selling includes creating Customer lists, customer knowledge, and even the
customer relationships, discovering solutions to company's own people, are also form of
the customer's problem and closing sales. intellectual resources.
3. Design - This is about forming designs of 3. Human - Employees are the biggest and most
various items. vital resources of any company but are often
overlooked.
For example, an apparel company creates design
of its lines of clothing for presentation to the In service-oriented companies which require
outsourced manufacturers. great deal of creativity and extensive knowledge,
human resource is very vital.
4. Development - This is adding value through
developing products and services. Customer service representatives, software
engineers or scientists are good examples.
In the case of software company, it develops a
software product which could probably be 4. Financial - Cash, lines of credit and the ability
customized based on the need of the customer. to have stock option plans for employees are some
examples of financial resources.
5. Operations - The manufacturing of products
and delivery of services. Customer Value Proposition
Designing, manufacturing, and delivering a Customer value proposition (CVP) is a
product in big quantities and certainly of highest business's way of generating value in their
quality are some of the activities under this. product or service when targeting potential
customers.
6. Distribution - This is about reaching out to the
customers to sell to them and delivering the items A value proposition is a statement consisting of
to them. the reason/s someone should do business with
the company.
7. Customer experience - Customer service,
consulting and customer support are some of the This is computed through adding all the benefits
activities involve here. that the product could provide to the customers.
Key Resources Factors considered in the development of the
customer value proposition
Key resources describes the most important
assets required to make a business model work. 1. Functional value - The product and or service
offers the solution to a particular problem.
1. Physical - These are physical assets which are
considered tangible resources that a company Said solution is convenient, better version, easier
make use of to form its value proposition. to use and more complete compared to others.
These could include equipment, machines, Examples of functional benefits consist of the
inventory, buildings, vehicles, manufacturing phone competence offered by an iPhone, the
plants and distribution networks that allow the thirst-quenching benefit by a bottle of water and
business to function. the warmness given by a wool sweater.
2. Intellectual - These are non-physical, 2. Emotional value - The product and or service
intangible resources such as brand, patents, is pleasant to look at or attractive.
proprietary knowledge, copyrights, and even
Here the customer is fond of this offering because
partnerships.
of sentimental reasons, based from tradition or
the advice of people attached to the customer.
Nowadays, purchasing locally produced or Some types of customer relationships
organic brands carries emotional benefits
1. Personal assistance - Founded on human
especially for those enthusiasts.
collaboration, the customer can communicate
3. Economic value - The product and or service with a real salesperson to provide help during and
offers a financial advantage, promotes energy after the sales process.
conservation, saves time or is innovative.
Ways of communication may include onsite at the
4. Symbolic value - For the customer the product point of sale, using call centers and even emails,
and or service is valuable because of a certain among others.
type of status given to the customer. This status
2. Dedicated personal assistance - This is the
can be a social responsibility orientation or based
deepest and most intimate type of relationship
from the brand.
that involves assigning a salesperson to an
It may include the sophistication and the feeling individual customer.
of being casual coming from Apple products, the
3. Self-service - Basically there is no direct
manliness projected by the Italian Ducati
relationship that exists here, although all the
motorcycle brand or the extravagance exhibited
essential things to assist customers help
when carrying a cup of Starbucks coffee.
themselves are given.
Different Types of CVPs
4. Automated services - This is a combination of
1. All Benefits - The company in this type of CVP customer self-service and automated processes.
just list all the benefits or solutions that a product
For instance, automated services are able to
and/or service offering can deliver and serve to
identify individual customers and their
target customers.
characteristics, hence they can be given
2. Favorable Points of Difference - The company information about their orders.
using this CVP tries to differentiate their solution
5. Communities - User communities can be used
by conveying its point of difference compared to
by companies to be more close and connected
the customer's next-best alternative.
with their current and potential customers.
Here, there must be a complete understanding of
Tsikot.com is the leading automotive website and
customer's requirements and preferences, and
community in the Philippines. It offers auto
what it is worth to fulfill them.
classifieds, forums, reviews, galleries and a lot
3. Resonating Focus - The company making use more. It has a user-friendly interface, location
of this CVP identifies the one or two points of based search with map and mobile
difference between its solution and its responsiveness. Tsikot is the most popular car
competitors that provide the best value to the users community in the country.
target customers.
6. Co-creation - Here customers have the chance
Companies that use resonating focus value to co-create value with the company such as in
propositions are able to create tailored-fit value designing and innovating products.
propositions for different customer segments.
Writing reviews and soliciting ideas from
Customer Relationships customers are examples of engaging customers to
become co-creators.
Customer relationships are the types of
relationship a company forms with its particular A good example is IKEA, a Swedish furniture and
customer segments. home goods retailer. In 2018, it launched "Co-
Create IKEA", a digital platform that promotes the
participation of customers and fans to design new 3. Segmented - There are businesses that select
products. There are even cash rewards whose to offer products and/or services to customer
ideas are chosen. IKEA also opted to provide test segments that have very small differences in their
labs and prototype shops so that customers may need requirements.
hone their suggestions.
In this segment, the company forms various
Customer Segments customer value propositions based on these small
differences in the customer segments.
Shared needs, behaviors and other traits can be
the bases for customer segmentation. In retail banking for instance, the distinction lies
on the net worth of customers, which is small yet
A customer segment refers to demographics such
substantial.
as age, ethnicity, profession and/or gender; or
psychographic factors which include spending 4. Diversified - Some companies often select
behavior, interests, and motivations. differentiated customer segments.
Various Types of Customer Segments Basically, these customer segments have very
diverse needs and wants. One of the diversified
1. Mass - This is basically an unsegmented
companies in the Philippines is San Miguel
market in which products with mass appeal
Corporation.
products such as aspirin, orange juice, soft drinks,
paperback romances, and the like are offered to 5. Multi-sided platforms - This type of customer
every customer. segment is used when customer segments are
reliant with each other, which makes it a necessity
The customer value proposition for this segment
to serve both sides of the balance.
must be for a big number of people who has
similar problem or need requirements. This is true with credit cards. It is vital for
customers to use their credit cards. At the same
Refrigerator manufacturers should target the
time, it is also important that stores accept these
mass market because there is little differentiation
credit cards of customers for transaction.
needed by customers who are interested to buy a
refrigerator. Channels
2. Niche - This market speaks of a customer Channels are the touch points through which a
segment with very distinct characteristics and company communicates with its target
extremely specific needs. customers.
This segment necessitates a highly customized 1. Awareness - This is the marketing and
product, custom made to fit their needs. Hence, advertising phase.
the customer value proposition for this segment
Said phase entails educating the target customers
should be strictly defined based on the
about the features of the products and/or services
preferences of this specific customer segment.
and how these offerings shall be of value to them.
This type of market is common amongst
Google and other search engines plus YouTube,
automobile parts suppliers who are really reliant
Instagram, Facebook are good examples.
on automobile manufacturers for sale of their
products. 2. Evaluation - In this phase, the customer
evaluates, reads about or uses the product or
avails of the service in order to formulate an
honest opinion about it.
 Value Proposition Canvas
3. Purchase - This phase is the actual sales It was Alexander Osterwalder who developed this
process. value proposition canvas.
Here the customers buy their chosen product Simply, the value proposition canvas makes
and/or service. certain that a product and/or service takes into
consideration the values and needs of the
The sales process represents the exchange of a
customers.
particular product and/or service for money.
Stripe and Paypal can be used for purchase. The canvas appears to be a detailed relationship
of the customer segments and value propositions.
4. Delivery - Also known as the fulfillment stage
of the process; this is the phase when the The value proposition canvas consists of two
promised value proposition has reached the building blocks namely the customer's profile and
customers. a company's value proposition.
Simply, the way the offerings shall reach the Customer Profile
customers to solve their problems.
The customer profile points to the customer
Postage/ Mail such as UPS, FedEx and USPS are segment that the company shall serve its product
good examples. and/or service offering.
5. After Sales - This phase centers in giving A customer profile should be created for each
customer care and support after purchase. customer segment, as each segment has distinct
gains, pains and jobs.
It offers the customers to call when they have a
problem or make queries about the product. Customer Gains
Email service providers and Chat platforms like Customer gains include all the expectations and
Facebook messenger can be utilized. needs of customers, things that may delight them
and other stuffs that may intensify the possibility
Types of Channel
of these customers embracing a value
1. Direct channels - those that the entrepreneur proposition.
owns or has control over.
Types Customer Gains
This could be his physical store, website, or
1. Required gains - When buying a product or
salesforce.
being provided by a service, these are the very
2. Indirect channels - Also known as partner basic expectations by the customers.
channels, the company makes use of intermediary
An individual buying a Smartphone has the least
and places its products or makes the service
expectation that his new bought phone can allow
obtainable at the partner store.
him to make and receive phone calls.
Wholesalers are considered partner channels.
2. Expected gains - These gains are beyond the
Winegrowers partner with wholesalers in basic ones, but even these are not present in the
various countries to sell their wines. product and/or service, said offering can still
provide its basic purpose.
Hence, for a Smartphone, it is expected that it
should be visually attractive and fashionable.
3. Desired gains - These gains are the customer's 3. Financial pains - These are pains that involve
preference when it comes to product and/or money in particular that often a customer spends
service. too much for a product and/or service when his
intention really is to spend less.
These are the most sought-after and cherished
gains by the customer. 4. Process pains - These pains are those that
create friction to buyers because of the
Obtaining these gains can result to the complete
substandard processes of the business.
satisfaction of the customers.
Customer Jobs/Jobs-to-be-done
In the case of Smartphone, having no trouble in
the synching the phone with other gadgets is a Customer jobs describe the functional, social and
desired gain of any user. emotional tasks customers are trying to do,
challenges they are attempting to resolve and
4. Unexpected gains - These gains are the
needs they desire to satisfy in their personal and
potential benefits of the product and/or service
professional lives.
for which the customer is unaware until these are
introduced to him. Types of Jobs
Although these ideas and innovations are not 1. Functional jobs -These are the regular and
articulated by the customer, they are able to particular jobs that a customer is trying to do and
transform the customer's experience with a is working towards.
product and/or service.
These are easy and simple things like cooking a
A touch screen capability of a Smartphone is a menu, finishing an essay for the English
type of an unexpected gain for customers. assignment, eating balance diet and other similar
ones.
Customer Pains
2. Social jobs - These consist of the manners a
Customer pains are situations which either avoid
customer desires to reflect his image in a social
the customer from getting a job done or the
environment.
negative experiences, emotions and risks that the
customer experiences before, during or after a Some examples include fitting in with a group of
job. friends or praising a co-employee in his sales
presentation.
Said pains include the following:
3. Personal emotional jobs - These include how
1. Productivity pains - These pains include the
a customer works towards feeling a certain way.
inefficiency of the businesses that a customer
Some people feel they can rush from a tough task
experiences.
and then do another task after like having a gym
Majority of customers practice time management practice before dinner time.
that they felt annoyed when additional steps
4. Supporting jobs - Often customers also
would occur in the buying process.
purchase value, hence doing a supporting task.
2. Support pains - These are pains felt by a Here are the three roles of customers that may
customer when he is not assisted during the assist in supporting jobs:
buying process.
a. Buyer of value - This task is any purchase of Products and Services
value that may cover from evaluating choices at
These are the products and/or services which
hand up to paying for the product that had been
create gain and relieve pain and build around the
chosen.
value proposition.
b. Co-creator of value - These are jobs for which
These offerings may help customers obtain a
a customer has a direct hand in the manufacture
functional, social, or emotional job done or just
of the product with the company.
satisfy the basic needs.
Such jobs include providing ideas for product
In addition, these products and/or services could
design, product testing and giving product and/or
be in the form of tangible, digital/virtual,
service reviews online.
intangible or financial which are essential to the
c. Transferor of value - These are jobs at the end customers.
of the product use such as disposal of product
The Lean Canvas: A Business Model Canvas
trash or giving the ownership of the product to
Alternative
another person because it has no value anymore
to the original owner. The Lean Canvas as proposed by Ash Maurya is a
developed version of the Business Model
Value Proposition
Generation. It outlines a more problem-focused
After really understand the customers, including approach and appropriate to use by small
their gains, pains and jobs, then it is time to reflect entrepreneurs especially those creating startup
on the gain creators, pain relievers and the businesses.
products and/or services to offer them.
The focus is more on customers' needs, on
Gain Creators actionable metrics and offer a fast idea-to-
product transformation.
Gain creators explicitly outline how the products
and services may create customer gains and offer The Lean Canvas is also primarily meant for
customer added value. entrepreneurs and not the customers,
consultants, investors or advisors.
An entrepreneur may form benefits that a
customer supposes, desires, or may came as a Elements of the Lean Canvas Model
surprise.
1. Problem - In this box, the entrepreneur shall
Gain creators may include functional utility, list the three high priority problems that the
social gains, positive emotions, and cost savings. customer segment is experiencing.
Pain Relievers 2. Solution - Once a problem has been identified,
the next step to look for the effective solution.
Pain relievers explicitly outline how the products
and/or services lighten, avoid or solve the According to Steve Blanks, the Godfather of Lean
particular customer pains. Startup, the entrepreneur needs to "get out of the
building". The phrase was coined by Blanks to
An entrepreneur must provide details on how his
mean going out in the streets and interview the
offering of product and/or service could lessen or
customer segment. The customer should be asked
completely eradicate the annoyance of his
questions in order to learn from them regarding
customers before, while, and after they are trying
their problems.
to get a job done.
3. Value Proposition - This block contains a
marketable promise to the target user that the
business will solve their problem.
4. Unfair Advantage - A startup should recognize
if it has the competitive advantage that cannot be
copied and cannot be bought or it has an unfair
advantage over others.
The entrepreneur needs to think about what the
business has that no one else can buy such as
dream team, expert endorsements and existing
customers.
5. Customer segments - The problem and the
customer segments must be connected.
6. Channels- These are the ways to reach the
customer segments.
They can be email, social,, blogs, articles, trade
shows, radio and TV plus webinars which are also
the same with the business model canvas.
7. Revenue streams - This is the money matter of
the business just like in business model canvas.
Getting people to sign up for something for free is
not the same than asking them to pay as they are
more interested in free products.
8. Cost structure - These are the operational
costs that the business needs to pay in bringing
the product to the market such as salaries, cost of
the materials, cost of maintenance.
The complete variable costs and fixed costs are to
be listed here.
9. Key Metrics - The metrics consist of the
assortment of products and/or services the
business wants to deliver.
For a startup business though, one metric is good
enough and then just build on it.
It is important that the correct metric is
recognized.