Entrepreneurship Chapter 07 Homework Build Your Learning Into The Next Iteration

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

Lecture Notes

Chapter 7: Testing and Experimenting in Markets

Learning Objectives

• Define experiments and describe the steps of experimentation.

• Identify and describe the six steps of scientific experimentation.

• Demonstrate how to test hypotheses and identify customers.

Notable Quote

• “Experiments are key to innovation because they rarely turn out as you expect, and you

Experimentation Defined

• Experimentation is a method used to prove or disprove the validity of an idea or

Experimentation Includes:

• Taking action

• Trying something new

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

• Validating assumptions

The Six Steps of Scientific Experimentation

• Asking lots of questions

• Carrying out background research

Critical Thinking Question

• Suppose you started a business and your original assumptions about your target

Hypothesis and Customer Identification

• In 2008, Subway hypothesized that selling select foot long sandwiches for $5 would

increase overall sales.

• See photo 7.3: a Subway foot-long sandwich as offered for the $5 special price]]

Notes:

In 2008, as the U.S. and other countries were hit with a recession, some marketers at Subway

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

expensive items? What could Subway do to attract them to the other items on the menu, while

offering the promotion? The Subway experiment turned out to be a useful way for them to

Six Types of Customers

• End users—customer who actually buys and uses the product

• Influencers—celebrities or other trend setters

Six Types of Customers

• Economic buyers—customers who approve large purchases such as retail store buyers,

office managers, etc

Critical Thinking Question

• Choose a particular kind of business that you imagine you are starting. How would you

Rights of Research Participants

• Ethical concerns

• Legal requirements

• Regulations on use of animals in testing

Notes:

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

status; the right to privacy and confidentiality; and the right not to be deceived or harmed as a

consequence of research participation. In addition, there are legal requirements for testing of

Rights of Research Participants

• The right to informed consent

Rules of Experimentation

• Focus on all stakeholders

• Ask lots of questions

• Think like a scientist, but do not act like a scientist

Notes:

1. Focus on all stakeholders. Entrepreneurs need to focus on all the stakeholders potentially

2. Ask lots of questions. Remember, every question you have about your idea is fertile ground

3. Think like a scientist but don’t act like a scientist. In other words, it’s important to think

4. Build your learning into the next iteration. Don’t ignore negative information just as you

6. Keep your experiments low cost and quick; and use them to shape and improve ideas.

8. Don’t ignore data just because you don’t like what it’s telling you.

Critical Thinking Questions

• How would you go about finding out what kinds of testing are required for an

entrepreneurial product or service?

Three Types of Experiments

• Trying out new experiences

• Taking apart products, processes, and ideas

• Testing ideas through pilots and prototypes

• See Figure 7.3: Three Types of Experiments

Notes:

Try Out New Experiences

• Examples

• Live in a different country

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

Take Apart Products, Processes, and Ideas

• Examples

• Disassemble a product

Test Ideas Through Pilots and Prototypes

• Examples

• Build a prototype

• Pilot a new process

The Power of Storyboarding

• Storyboarding is an early form of prototyping that provides a high-level view of thoughts

Storyboard

Notes:

Source: http://www.fastcodesign.com/1672917/the-8-steps-to-creating-a-great-storyboard

Walt Disney animator Webb Smith has been credited with the developing the idea of

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

Reasons for Storyboarding

• Engaging

• Simple

• Effective in communicating position

Basic Storyboarding

• What is the problem your customer is experiencing?

• What are you offering as a solution to the problem?

• How will your customer benefit from your product/service offering?

Notes:

The problem: Many women (even those in well-paid jobs) cannot afford designer dresses to

wear to special occasions. “I want to wear a designer dress, but they are very expensive and I

Storyboard to Boost Student Engagement

Notes:

Instructor Resource

Neck, Entrepreneurship

SAGE Publishing, 2018

This storyboard shows a before-and-after scenario. The upper left quadrant shows a traditional

classroom setting, with a professor standing at the top of the class, lecturing students on the

theory of entrepreneurship. One student is sleeping; another student is hoping a friend will text

The second part of the story board (the upper right quadrant) suggests a solution to boost

student engagement by separating them into teams, and loaning each team $3000 (funded by

the college) as startup money for the new ventures.

In the third (lower left) quadrant, the students armed with the money organize their businesses

Critical Thinking Question

• Do you think people with artistic training or talent have an advantage in storyboarding?

Why or why not?