MGMT 261 Exam #1

The 4 stages of the Customer Development Process.

1: Customer Discovery 2: Customer Validation 3: Customer Creation 4: Company-Building

The 4 separate pathways for growth.

1: Existing Customers 2: Exploring new customers and new markets 3: New competencies 4: New go-to-market strategies

The three essential elements of a pitch.

1: Theorem or Central Premise 2: Evidence (both rational and emotional) 3: A rousing summation

An energetic member of your team has put together a long list of potential targets for the company to pursue. Which one of these would not be a good number of targeted prospects?

50 In the early days of bringing a product to market, the instinct is often to approach and attempt to sell to as many prospective customers as is possible. In driving growth, the priority should never be on volume but rather on the quality of the people you are pursuing. This is what is called a "closable prospect." A closable prospect is one that, by virtue of the careful definition of who they are, already has a propensity to find you and your product of interest. Be sure you define your prospects not just in functional terms i.e. demographics, but also in emotional, cultural and personality terms as they are an important criteria for compatibility with you, so when you do pursue them, the likelihood of this of them saying yes is much more assured.

The conceptual target audience does not:

??? level 2 definition bonus

need to have. It must always be remembered that for whatever you are creating, your customer lives in a broader world and a whole series of environmental factors that shape their decisions influence how they think and feel. Always remember to take environmental factors into account in the creative process.

A bright intern on your team is presenting information on things like societal trends, economic forecasts and census data. Your team doubts its importance. Contextual data is a:

A successful elevator pitch will include:

A central idea - your inspiration Evidence that combines both emotional and rational elements A strong conclusion that will appeal to audience's emotions and reason

A sound business plan will include:

A clear trajectory and timeline for your business Flexibility depending on market forces

Agree. A common characteristic of any product category is how competitors converge around similar marketing practices, language and even imagery. This is called the Category Idiom. The successful entrepreneur recognizes this convergence and seeks to step outside of it as a way of breaking with category and establishing entirely new ground in how it seeks to serve customers.

A key member of your team is concerned that the prototype you're developing is to radically different from what the marketplace is accustomed to. Your early prototypes should be a radical departure from the competition.

Branding is best understood as:

A relationship between a company and an individual A reflection of your company's belief system

Pivoting

Adapting to markets and feedback Taking advice Admitting setback

Rethink your original strategy and plot a new course. One of the greatest pitfalls of any entrepreneurial endeavor it is not being able to adapt sound feedback and to listen to what the marketplace is telling you. Creators are often very protective of their concepts, and while this is an important quality to ensure the early idea is not compromised, failing to Pivot, or adapt to the practical realities of the marketplace and revise concepts and plan accordingly, can result in even more failures down the road.

After a second round of research from additional focus groups, you received additional serious feedback on your core idea. With this news, do you:

Disagree. The "elevator pitch" comes from the old days in moviemaking where the most junior person in the organization had but a minute or two to pitch their idea to a movie mogul in a fast-moving elevator. It has to balance brevity with comprehensiveness. One sentence is simply not enough, a page too much and a crisp, compelling paragraph right on the money. The best method: think like a lawyer! The Advocates Approach combines three essential elements used by litigators: the theorem or central premise; evidence, both rational and emotional, in support of the theorem; and a rousing summation combining the central premise along with all the evidence in one short, compelling, and most of all memorable argument for the products potential viability.

An elevator pitch is a statement of the company's intent in one sentence.

personality characteristics

Any selling effort, particularly one that is directed in a one-on-one setting, must take personality characteristics of the potential buyer into account. Personality characteristics drive the way buyers process information and ultimately make decisions. Typically, there are four different buyer types: Process, Outcomes, People and Idea oriented. Each of these types will vary in the manner by which they make decisions and the information you need to provide to reach them effectively.

being authentic

Being a strong leader means:

The Category Idiom is best defined as:

Common marketing strategies or imagery

Your advisor puts forward the growth strategy which is exclusively about new customer acquisition. There are three additional elements to a growth strategy. Which of these is not one of them? Existing customers New Customers New Competencies Cost Containment

Cost Containment Growth comes from multiple sources, and every entrepreneurial endeavor must have a growth strategy. A double-digit growth company is one where there are separate and parallel activities driving growth in four separate pathways: 1) Existing - identifying sources of growth amongst your existing client base. 2) New - exploring new customers and what market segments they will be derived from. 3) New competencies - creating new applications from your existing product that may not have been thought of before. 4) New go-to-market strategies - developing new market approaches (i.e. vertical specialization) to tap new sources of revenue.

A successful entrepreneur will:

Create an environment where risks are taken

You have an opportunity to bring a client on board that is very different than you and your organization. You should be prepared to accept a variety of different client types irrespective of cultural compatibility.

DISAGREE Cultural compatibility is as essential externally as it is internally. The objective of any company is to nurture and grow loyal customers whose value systems are compatible with yours. An outlier, while contributing income, costs time, profitability and can also negatively affect staff morale. Nothing can affect the entirety of your organization more significantly than an incompatible client making inappropriate demands on the organization.

Your key advisor is advising you and your partner to increase your presence at this advanced stage of your company's relevant. Your partner argues that it's better to have others step forward rather than the partners to show levels of your company's maturity. Founders need to play a supporting role and allow the company members to be the public face and operations so as to demonstrate the viability the company.

DISAGREE In the early days of bringing a product to market it must always be remembered that early customers and other influencers who will make a difference for your company will first and foremost be buying you, as you are the validator and the person who brings a credibility and something to believe in, as well as the product innovation you have created. So don't underestimate the power of your presence and personal engagement. Now is not the time to take a backseat—step out and be present in the marketplace in support of your product.

Your company is going through a period of unusual quiet. Some members believe it may well be a time to pivot. A period of quiet time is a prime indicator of a need to pivot.

DISAGREE Inevitably in the life of an entrepreneur will come those times when it seemed like virtually nothing is happening. A pivot is indicated when enough concrete marketplace data has reached you from which to change direction. Otherwise, there are natural ebbs and flows. Entrepreneurship is a persistence game, requiring stamina and an unwavering belief in yourself, your people and your product. Take these five steps during these times: 1) Stay focused on the customer; 2) Take care of your people; 3) Get out there and see new people and get new ideas; 4) Learn, by conducting new forms of research; 5) Brainstorm strategies for new opportunities

False. There are many who might assert that it is data that drives decisions. In fact, it's the other way around. An entrepreneur, in creating something that didn't exist before, is driven by the power of the idea and searches for the data to assist in its creation. It is no substitute for good instinct, vision and a judgment about a better way and a better idea that ultimately benefits in a happier and more satisfied customer.

Data tells you how to make decisions.

A routine practice

Delegating tasks are:

Growth will come disproportionally from new customers:

Dependent of the stage of development

remember this:

Do not underestimate the power of your presence and personal engagement. 2. Entrepreneurship is a persistence game, requiring stamina and an unwavering belief in yourself, your people and your product. 3. Partners must share a unity of purpose, a fundamental belief in one another and the belief systems shared by all. 4. Cultural compatibility is as essential externally as it is internally. 5. A way to break the deadlock in a negotiation is to move away from negotiating about position (the details in dispute) but rather to move the negotiation to objectives—a higher ground. 6. The most successful presentations are those based upon this solid logical foundation, but are those that are crafted and rehearsed with painstaking discipline.

Role clarity is essential in an organization because it:

Ensures employees stay on task Provides the structures within which experimentation can flourish Reduces conflict between team members

Question the existing team on the issues. Empathy is the ability to place oneself in the shoes of others and to develop an appreciation for their lives, perspectives and most of all basic wants and needs. This is especially true of your ultimate consumer, or target for your product, as well as the people around you who will make your concept happen. Remember that people make decisions with their hearts and not their heads. An entrepreneur must listen for emotional motivation of their audiences.

Faced with a delay in software development, you need to take action. Do you:

A physical location guarantees a reliable structure for your employees and will be sure to appear legitimate to investors.

False

Always recommended - the more feedback the better

Feedback from end-users at an early stage in your product development is:

Your team will be responsive to your leadership when:

Feel emotionally supported

It is the primary purchase motivator

Gauging the emotional response to your product is important because:

One of your employees believes in company values, but putting them in words makes them inauthentic. What would be a good way to instill values:

Get your core team to a meeting to develop and sign If the Real Ambition is the higher order emotional goal that galvanizes you and your people, then the Credo is the rocket fuel for this ambition. People are mobilized both by ambitious, emotive goals but they are also connected by a common value system. It's vital that the entrepreneur articulates and shares, a written set of common values, your belief system and communicates them clearly and frequently.

Finding customers for your new product means:

Identifying prospects that are predisposed to be interested Having an emotional, as well as demographic, profile of customers

Diversity of experience in a start-up is:

Important for creating an interdependent team Role clarity is a vital characteristic of high-performing companies. It should encompass both the specific functional tasks you expect, but add in broader things you wish them to contribute to, giving them cultural permission to experiment and contribute. The benefit: role clarity greatly reduces conflict, misunderstanding and organizational politics, while giving each employee the freedom to create, experiment and innovate.

Delegate the task to a specialist. You cannot make a success of an entrepreneurial venture alone. It requires a mix of skills personalities and temperaments. Building a team requires you to play to your strengths but be ready to accept your weakness and staff accordingly. A key reason for failure is an inability to avoid the temptation to "do it all" under the guise, as the originator, of "knowing best".

In a mission-critical situation do you:

Seek out as much input as possible

In general, it is a good rule to:

When is the best time to plan an exit strategy?

In the early planning stage. It is a certainty that the one thing that any entrepreneur can count on is change and unpredictability. But that should not drive the management of the process of developing the idea nor the business surrounding it. Any entrepreneur must have a clear sense of what the end state is and where they expect their idea and their company to be over time. This clearly articulated end state provides a solid context within which to make sound decisions in ever-changing circumstances.

Which of the following is true of an ambition statement?

It uses emotive and optimistic language

False.

It's counter-productive to terminate a beloved employee:

False. Creating your following comes from connecting with people and the only way you can do this is to be your true, authentic self. Your core is your true self; it is your strength, what you are great at, and what your focus should be. It is also the confidence to bear your weaknesses, for these are the areas where your following will offer help.

It's important that you adapt your persona and presence to different situations.

what is leading?

Leading people it is not simply the act of telling people what to do. It is creating a connection with your people and inviting them to support you in the creation of something special. This is emotionally intelligent leadership. As a leader, your people will make you buoyant when you connect with them on an emotional level, demonstrating that you understand them and value the contributions they will make in helping you and your idea succeed.

Selling off shares in your company early is:

Limits your control

hold off on new investments

Members of your team have presented a parallel investment idea that could prove promising. At this early stage in the development do you:

Your team is prepared to make the final and very exciting presentation to Gotham Bank. Your team is debating upon on whether rehearsal helps or hurts the final outcome. It's Monday morning, and you have a presentation to Gotham bank Friday at 9.00 AM. Which is the worst approach?

Once each day Monday through Thursday" The most successful presentations are those based upon this solid logical foundation, but are those that are crafted and rehearsed with painstaking discipline. There are two kinds of rehearsals: a "blocker", where you bring all the elements of the presentation together to evaluate the quality of each section and how they all fit; and a "dress" rehearsal once this hard work is done to refine, edit and streamline the content. Here is where you and your participants, with a stopwatch, present your case in a practiced session. It's very simple: the more you rehearsed you are, the better, more natural, more relaxed and more effective you will be.

An understanding of your audience's personality profile is important because it:

Orients toward an individual's information-processing style

You are thinking of bringing a new partner to the company. The individual has unparalleled qualifications and banking connections. In the interviewing process, the candidate indicated they do not agree with several of the elements of your credo. Do you:

PASS Somewhere in the life of every company, some thought will be given to the potential of adding partners. This is an area of rich promise but also fraught with many potential difficulties and business destroying conflict. It's vitally important to have a partner with different skills and perspectives—but-- what can never be in question is a shared value system and cultural compatibility. Both partners must share a unity of purpose, a fundamental belief in one another in the belief systems shared by all.

ambition statement

President John F. Kennedy once said, "We choose to go to the moon in this decade not because it's easy but because it's hard." This higher order ambition motivated thousands to apply their energies and skills to sending a person to the moon, an endeavor that had never been attempted before. An entrepreneur must set a highly charged, emotionally charged goal for their team. The financials of metrics are a measure of that bigger goal. A Real Ambition is a higher order goal, one that defines an achievement in emotive terms that galvanize the emotions of your team. It begins with the words, "We will..." and is a single sentence that galvanizes the very essence of what you believe you are creating.

legacy

Primary motivation for an entrepreneur is shown to be:

Which of these are all elements of Trout and Ries's Positioning Statement:

Reason Why, Frame of Reference, Point of Difference, Target Audience

A new outside investor offers a significant increase in available funds in return for a minimal stake in the company, provided you move immediately. Do you:

Reject the investment. Every entrepreneurial effort requires initial capital, but perhaps more importantly, working capital or cash, to keep it functioning. Every entrepreneur has a vital decision to make: whether to trade off ownership of the company in return for equity stake by investors. The rule is a simple one: the earlier in the process the entrepreneur accepts capital the less control that they will have over time.

In spite of the potential for expenditures to exceed first year income, your team urges you to invest in development of three parallel concepts. Do you approve or reject their recommendation?

Reject. A cornerstone of a successful startup is not the identification of a brilliant idea alone, but laying out a foundation for solid financial discipline. Startups have the ability to consume any amount of capital the entrepreneur is willing to spend. It's vitally important not to spend ahead of income and to instill a discipline that, after the appropriation of initial investment funds, the business must generate revenues to pay for itself and justify further investments in its growth.

Eliminates creativity Misses market opportunity Negates the role of instinct

Relying purely on data to make decisions about product development:

Negotiations are now underway and have reached a deadlock. Neither side wants to budge on the fee levels. Do you confidently maintain your position or shift the debate to respective objectives?

SHIFT Negotiation is about individuals from completely different perspectives trying to find common ground. It is decidedly a human game. A way to break the deadlock in a negotiation is to move away from negotiating about position or the details in dispute, but rather to move the negotiation to objectives—a higher ground. This involves drawing out not just what your opponent's position is but what the objectives are. Objectives are more emotive and are far more consequential than the details being discussed and it is there that common ground can be found.

impact

Studies show the primary motivation of entrepreneurship is:

A set of common values, codified in the credo, will:

The means by which your team members connect

disagree. The singular motivation for any entrepreneur is not the product that they are creating per se, but a deep understanding of the audience for who they are creating their product or service. But it must be remembered that people do not make decisions with their heads, they make them with their hearts. Therefore, an emotional definition of your audience --the Conceptual Target-- is required to understand what is it that burns in their hearts and how you can connect yourself and your product with it.

The target audience definition is a complete articulation of the audience.

Successful Entrepreneurs value this more than an idea

What is an opportunity?

Legitimacy. As their business grows, entrepreneurs often look to established business norms for the creation of their business model. In fact, it's often the last place any entrepreneur should look. Brick-and-mortar offices, desks and telephones does not make an organization, nor is it the model upon which the development and delivery of the product or service should rest. Instead, it's about talent. The entrepreneur's single focus is to develop the right array of skills and abilities to develop the innovation to its greatest potential. The business model should support the talent, not the other way around.

What is the weakest reason to move from virtual to a physical location?

it doesn't matter. A common characteristic and critique of entrepreneurs is their sense that they can do everything on their own, or at least better than anyone around them. Even if that's true, it's a physical impossibility and a poor idea. One of the most important steps an entrepreneur needs to take (and as early as possible) is to surround themselves with competent, senior people who can offer vitally needed advice and counsel on a wide range of issues. Numbers don't matter; it's the quality of advice that does.

What's the optimal number of advisors an entrepreneur should have?

Decide how to modify. In reviewing feedback, you must separate the commentary you are receiving to understand the fundamental soundness of your basic idea along with feedback on how your idea is being executed—the various elements of how you are bringing your idea to life. So, start with execution and work your way in reverse. Be sure when you're listening for this feedback that you don't mix up the two and, as they say, throw the baby out with the bathwater.

When acting on critical feed-back, the best first step is to:

Do not exist in a vacuum

When developing new products, it is important to remember that your users:

Separate out criticism of your execution from that of your initial idea Look at your execution and make minor changes

When receiving and revising a product based on feedback, you should first:

The manager. One of the most challenging things an entrepreneur will face is the process of letting go and allowing people to experiment and make mistakes, all while taking personal responsibility for the entirety of your team's efforts. No matter what the team does, for good or for bad, you are the person who bears ultimate responsibility. Remember, as it is once said, "the buck stops" with you.

Where does the primary accountability lie for under-performing employees?

False. Feedback from your end user group and influencers is absolutely vital to any new undertaking. Entrepreneurs often don't want to hear the bad news about their creations, but to succeed, is to listen carefully to feedback. In fact, negative feedback at the early stages, as hard as it is to hear, is essential for making fundamental improvement to your concept. Of course, you must apply good judgement to sift out the insights from random opinions and other research dynamics, but an entrepreneur ignores feedback at their peril.

Your Chief Strategy Officer is proposing focus group research with your target audience. This kind of research is a risk at this early stage of idea development.

Products have two vitally important dimensions. The first is the functional utility that the product or service provides. But this is not the only reason that a product is embraced; it provides an emotional benefit to the customer as well. The entrepreneur will always ensure that a deep understanding of both the functional and emotional benefits are well understood in the product development process.

Your business consultant presents a list of purchase considerations that she argues are core to what drives the purchase. In certain categories, the rational considerations drive the purchase over emotional considerations.

Your team is working on the development of your brand and logo. You need to provide them with your views on branding to give them some clarity. To give your people direction, what would you tell them a Brand is?

an idea You may be creating an innovation but remember always, you're also creating a brand. A brand is transcendent—it's an idea, a concept shared by your customers and yourselves. It is reflective of your belief system as you are creating with your innovation. It is the brand that ultimately outlasts any subsequent innovation you will create and will be the continuing reason why your customers believe in and stay loyal to you.

Your consultant recommends to your partner that junior members of the team be given freedom to experiment and develop independent thinking. Your partner is concerned that this may create chaos. Experimentation is better employed in which stages of the start-up's development:

beginning There are two important skills of any entrepreneur possesses. The obvious is the ability to create and have a vision for a powerful idea. The other and perhaps even more important, is the ability to create a culture and an environment for your people to experiment and create in a risk-free environment at all stages in its development. No achievement ever comes when people fear making a mistake. Trial and error is what great achievements are made from.

Your team is debating the allocation of your advertising budget. One argues a concentration in one area while your other colleague is a proponent of using multiple communications avenues. Even with adequate budgets, it is better to concentrate your communications firepower with one dominant medium.

disagree A marketer should start not with a discussion of different media types with "either, or" but should be speaking more about the role of each of these communications disciplines in supporting the selling effort. No matter what medium is used, a customer must travel through four important phases before they purchase: 1) Awareness, the state of prospect having knowledge of the presence of your product; 2) Understanding, a state where the prospect is clear on what the product is, what it does and how it differentiates; 3) Acceptance, the degree to which the prospect embraces and believes in what the product is and is capable of; and 4) Commitment, the degree to which the prospect has made the decision to embrace the product. Different forms of medium work better in each of these phases. Your task is to decide what forms of media do the best job in driving each of these four phases.

You are experiencing resistance to the direction of your concept. For the benefit of the organization it's best that the resistant employee it is removed.

disagree People resist most often because they are scared. When you are innovating and changing an existing order, people will react to change in entirely different ways. These individuals can be described as catalysts, followers, observers and resistors. To create a following for your innovation is to recruit catalysts, people who are forward leaning and positive as well as those whose inclination is to oppose, otherwise known as resistors. Addressing both of these individuals simultaneously will both recruit the catalyst but also allay the concerns of resistors to make them productive and supportive members of your organization.

Entrepreneurs must be more liberal than established companies with how they apportion funds and incur debts and losses:

false

purchasing motivation

fear It must always be remembered that buyers are human and therefore subject to the role of emotion in their decision-making. In fact, people make decisions with their hearts and not their heads, and a fundamental objective of any entrepreneur is to fully understand the emotional motivation that drives the potential purchase of their product. This emotional driver should be at the core of any marketing or selling effort.

Two of your team members discuss the need for better strategic direction for communication development. One believes the direction should be very tight while the other believes in very loose direction to foster "creativity". A tightly defined strategy ___________ creativity.

fosters There is an old adage in the advertising business "Give me the freedom of a tightly defined strategy." It may seem oxymoronic, but greater strategic precision gives creators confidence to explore, but with clarity of purpose. A time-tested tool is the Positioning Statement, made famous by Trout and Ries; it has four parts: Target audience - a robust definition of your target, both rational and emotional Frame of Reference - a way to think about or classify the product Point of Difference - how the product is differentiated from competition Reason Why - specific proof of differentiation

Question #5 "The Hire" There is a move to add a person with much needed skills but no experience in game development. At this critical stage in coding development, is this a:

good idea. It might be thought that a developing startup needs similar kinds talent with skills aligned to the innovation. However, the danger is that a lack of a mix of talent and personalities will prevent the early organization from developing freshness and perspective. It has been proven that diverse organizations, by virtue of their varied people (and at times conflicting perspectives), are high-performing organizations. This unique blend of talent forms an interdependence where individual strengths are celebrated and linked together, where the whole is greater than the sum of its parts.

Optimal communications strategies:

integrate

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new initiatives should not always be:

product, price, place, promotion. What is missing from the 4 P's?

people. Studies show that when a plan is carefully detailed and written down in a complete form, it stands a greater likelihood of being successfully implemented. A classic structure for marketing plan development has been the 4P's: Product, Price, Promotion and Place. Contemporizing this notion yields the 5 P's: People, the citizenship of your brand; Product, the reason for being and its practical and emotional benefits; Price, a justification of your pricing strategy; Presence, how your product will be known, its reputation, promotion and advertising; and Place, a description of your distribution strategy.

The definition for Customer Discovery.

the method founders use to find customers and a market for their vision

Both resistors and catalysts are essential members of your team.

true