Unit 4: Customers and Meaning

Summary

This video script emphasizes the critical role of customers in entrepreneurship. It advises entrepreneurs to continuously engage with their customers and adapt to their evolving needs. The script also encourages focusing on a specific customer group to refine business ideas. It introduces concepts like market research, prototyping, and customer validation, highlighting the importance of service design in creating compelling experiences that differentiate products. The speaker uses the example of a mouse to illustrate how adding symbolic value and meaning can enhance a product's appeal, suggesting that successful entrepreneurship involves juggling ideas, customers, and the meaningful experiences they deliver.

Takeaways

• 🤔 The customer is central to successful entrepreneurship and should be a constant focus alongside the business idea.
• 🔄 Both the business idea and customer base are likely to evolve over time, requiring regular reassessment.
• 🎯 It's beneficial to start by focusing on a small, well-defined customer group with specific characteristics.
• 📊 Market research and prototyping are essential for understanding customer needs and validating business ideas.
• 🤝 Engaging with potential customers early can provide invaluable insights and help refine the business approach.
• 🛠️ Successful service design is about creating a compelling customer experience, which can be more impactful than a physical product.
• 🏆 The phases of competition typically progress from technological innovation to improvement, maturation, and commoditization.
• 💡 Introducing symbolic value and meaningful experiences can disrupt the path to commoditization and enhance product or service appeal.
• 🌟 Meaning can be a differentiator, providing a competitive edge by associating a product or service with deeper values.
• 🔍 Entrepreneurs should research their idea and the associated meaning online to understand the competitive landscape and potential for differentiation.
• 💼 The final challenge for an entrepreneur is to juggle the idea, the customer, and the meaning they aim to deliver to the customer.

Q & A

What is the importance of keeping the customer in focus during entrepreneurship?

The customer is crucial to successful entrepreneurship. Entrepreneurs need to regularly address both the idea and the customer to ensure that the idea creates value for them.

How can entrepreneurs ensure their ideas are aligned with customer needs?

Entrepreneurs should regularly ask themselves questions about their customers' problems, characteristics, and perceptions of their product or service to ensure alignment.

Why is it advisable to focus on a smaller, well-defined group of customers?

Focusing on a smaller, well-defined group of customers helps sharpen thinking and most successful businesses start by serving a narrow group before expanding.

What is the role of market research in validating customer needs?

Market research helps entrepreneurs understand customer views and validate whether their product or service will be valued by the target market.

What is prototyping and how does it relate to entrepreneurship?

Prototyping is the process of creating a model or example of a product or service to test its viability and functionality, which is crucial in entrepreneurship to refine ideas.

What is customer validation and why is it important?

Customer validation is the process of confirming that customers find value in an idea. It's important because it reduces the risk of developing products or services that don't meet market needs.

What is the significance of the 'experiment board' or 'validation board' in entrepreneurship?

The 'experiment board' or 'validation board' is a tool used to systematically validate ideas and ensure they meet customer needs, enhancing the success of entrepreneurial ventures.

How does the concept of 'meaning' relate to entrepreneurship?

In entrepreneurship, 'meaning' refers to the value or significance that a product or service provides to customers beyond its functional use, which can enhance its appeal and success.

What are the phases of competition as described in the script?

The phases of competition are technological innovation, improvement, maturation, commoditization, and potentially a symbolic value phase where differentiation is based on experiences.

Why is it beneficial to create an experience for customers?

Creating an experience for customers can lead to differentiation in the market and provide symbolic value, which can be a competitive advantage.

How does the concept of 'meaning' apply to services in entrepreneurship?

In services, 'meaning' can be delivered through compelling experiences that are intangible and ephemeral, creating a unique value proposition that can set a service apart.

Outlines

00:00

🧩 The Importance of Customer Focus in Entrepreneurship

The paragraph emphasizes the critical role of customers in successful entrepreneurship. It stresses the need for entrepreneurs to continually balance their focus between their business ideas and their customers. The speaker warns against neglecting the customer and suggests that both the entrepreneur's idea and their customers are subject to change. Entrepreneurs are encouraged to ask themselves key questions about their customers, such as identifying their problems, demographics, and perceptions of the product or service. The paragraph also advises against a broad approach, recommending instead to focus on a well-defined customer group. The importance of market research, prototyping, and customer validation is highlighted, with the mention of tools like the 'experiment board' or 'validation board'. Lastly, the speaker introduces the concept of designing services, which is relevant to a large portion of the economy, and suggests that successful service design is about creating compelling experiences.

05:01

🛒 Phases of Competition and the Evolution of Products

This paragraph delves into the concept of the phases of competition for products or services, starting with technological innovation and moving through improvement, maturation, and commoditization. The speaker uses the example of computer mice to illustrate how a new technology is developed, improved, and eventually becomes standardized. The discussion then shifts to the symbolic value phase, where differentiation is based on the experience a product can provide. The speaker shares a personal anecdote about purchasing a mouse, highlighting how the choice of a mouse with a unique design provided a moment of introspection and personal meaning, thus demonstrating the power of experience in product differentiation.

10:02

🎨 The Power of Design in Creating Meaningful Experiences

The speaker explores the idea of designing experiences that can provide symbolic value and meaning to customers. They recount their experience at Target, where the choice between a basic mouse and a more expensive, aesthetically pleasing one led to a moment of personal reflection and satisfaction. This narrative illustrates how products can transcend their functional purpose to offer a deeper, more meaningful experience. The paragraph also references Pine and Gilmour's concept of the experience economy, which outlines a progression from commodities to services to experiences, suggesting that the ultimate goal is to create poetic, memorable interactions for consumers.

15:03

🔍 Juggling the Three Pillars of Entrepreneurship

In this concluding paragraph, the focus is on the three key elements an entrepreneur must juggle: the business idea, the customer, and the meaning that the product or service delivers. The speaker advises entrepreneurs to research their ideas and the associated meanings to understand the competitive landscape. They emphasize the importance of differentiating one's offering by providing a unique meaning that sets it apart from competitors. The paragraph reinforces the idea that incorporating meaning into a product or service can significantly improve its success in the market.

Keywords

💡Entrepreneurship

Entrepreneurship refers to the process of designing, launching, and running a new business, which typically starts as a small business, such as a startup company, offering a product, process, or service for sale or hire. In the video, entrepreneurship is discussed as a journey that requires balancing multiple components, such as ideas and customers, to create value.

💡Customer

A customer is an individual or entity that purchases goods or services from a business. The video emphasizes the importance of keeping the customer at the center of entrepreneurial efforts, as they are crucial for validating ideas and ensuring the creation of valuable products or services.

💡Market Research

Market research is the process of gathering, analyzing, and interpreting information about a market. In the context of the video, market research is highlighted as a vital tool for entrepreneurs to understand customer needs, preferences, and behaviors, which can inform the development of products or services.

💡Prototyping

Prototyping refers to the creation of a preliminary model or original form of something. The video mentions prototyping as a method for entrepreneurs to test and refine their ideas through the development of early versions of their product or service to gather feedback and make improvements.

💡Customer Validation

Customer validation is the process of confirming that customers will indeed find value in a product or service. The video discusses the importance of customer validation as a means to ensure that an entrepreneurial venture is aligned with real customer needs and is likely to succeed in the market.

💡Experiment Board

An experiment board, or validation board, is a tool used to systematically approach customer validation. The video suggests using such a tool to ensure that the entrepreneurial idea is indeed valuable to the target customers, providing a structured way to gather and analyze feedback.

💡Service Design

Service design is a process that involves planning and organizing people, infrastructure, communication, and material components of a service in order to improve its quality and the interaction between service provider and customers. The video touches on service design as a critical aspect of entrepreneurship, especially in economies where services dominate.

💡Experience

In the video, 'experience' refers to the events a person encounters or lives through. It is discussed in the context of creating a compelling and memorable interaction between the customer and the product or service, which can be a key differentiator in a competitive market.

💡Symbolic Value

Symbolic value is the intangible, non-functional worth that a product or service holds for consumers, often related to personal identity, social status, or emotional connection. The video uses the example of a mouse with a unique design to illustrate how symbolic value can drive consumer choice beyond mere functionality.

💡Commoditization

Commoditization is the process by which goods or services become similar or indistinguishable from one another. In the video, commoditization is presented as a phase in the life cycle of a product or service where differentiation is minimal, and competition is primarily based on price.

💡Meaning

Meaning, in the context of the video, refers to the significance, purpose, or value that a product or service holds for customers. The video argues that imbuing a product or service with meaning can enhance its appeal and competitive edge by connecting with customers on a deeper level.

Highlights

The importance of keeping both the entrepreneurial idea and the customer in focus at all times.

The necessity to regularly address the idea and the customer to ensure the idea creates value for the customer.

The evolution of ideas and customer segments as entrepreneurship progresses.

The recommendation to focus on a smaller, well-defined group of customers with specific characteristics.

The advice to conduct market research and prototyping to understand customer needs and validate ideas.

The significance of customer validation in confirming the value of an entrepreneurial idea.

The introduction of the concept of the 'experiment board' or 'validation board' as a tool for systematic validation.

The discussion on the design of services, which constitute a significant portion of the economy.

The proposition that successful service design creates a compelling experience for customers.

The explanation of the phases of competition, starting from technological innovation to commoditization.

The concept of a 'symbolic value phase' as a potential speed bump to commoditization, based on experiences.

The story of choosing a mouse based on color and pattern, illustrating the power of experience in decision-making.

The idea that the creation of experience is ephemeral and may not always happen, but is worth considering.

The mention of Pine and Gilmore's 'experience economy' model, which includes the staging of experiences as the highest level.

The argument that including meaning in a product or service can increase the odds of entrepreneurial success.

The suggestion to Google ideas and their meanings to assess competition and find a unique competitive advantage.

Transcripts

[Music]

now that we've thought about ideas for

entrepreneurship and reflected them

against current trends it's time to

bring in another key component of

entrepreneurship namely the customer the

customer is absolutely crucial to

successful entrepreneurship but

unfortunately some entrepreneurs make

the mistake of taking their eye off the

customer remember our juggling metaphor

we need to keep both the idea and the

customer up in the air at all time and

address each one regularly so that we

can make sure that the idea actually

creates something of value for the

customer keep in mind also that both the

idea and the customer can and will

change your idea will evolve as you

refine your thinking in the process of

entrepreneurship and although you may

have started out with one customer

segment in mind you may change that and

don't forget your customers may also

change with new norms and trends so

let's think about your customers what is

the customers problem that you're trying

to solve who exactly are your customers

what do they look like what do they

think where are your customers how many

are there how do they view your product

or service and how do they believe your

product or service is different from

what's already out there there are a lot

of questions you should be asking

yourself at this point and it may be

tempting to take too broad a view when

answering these questions and assuming

that everyone or at least a whole lot of

people will want to buy your product or

service but it's usually a better idea

to focus on a smaller well-defined group

of customers with very specific

characteristics because thinking about

these characteristics will help to

sharpen your thinking most successful

businesses start out serving a narrow

group of customers and gradually grows

that they can serve several larger

groups

it's going to be absolutely impossible

for you to answer all these questions

once and for all before you develop and

launch your new product or service

that's why it might be a good idea to

get out there and talk with some

perspective customers and get their view

on things this is what we call market

research or get out there and conduct

some experiments to find out what

actually works

this is what we call prototyping and

we'll be talking about that later in the

course leading on from the idea of

market research with customers and

experimentation Lisa's natural to

thinking about customer validation it's

very important to get validation that

your customers are actually going to

find value in your idea there are some

very good tools out there to approach

this in a systematic fashion one such

tool is the experiment board or

validation board I'm now going to ask

you to watch a presentation I made a few

years ago to a conference of designers

in this presentation I talked about the

phases of competition and the importance

of creating an experience for customers

this leads us to the next important

component of entrepreneurship which is

meaning oK we've been talking about

design here today and I want to try to

stretch your thinking a little bit to

what some people have alluded to but not

really discussed in a great length and

that is what do you design when there is

nothing no thing to design so namely the

design of services we've already heard

today that services are 70 80 % of the

jobs in Europe the economy I've been

doing research on Icelandic

technology-based firms 95% of them

gained at least half of their income

from services so this is very relevant

for Iceland and so the question I want

to try to talk about for a few minutes

is what do you design if there is no

thing to design

my proposition is that successful

service design yields a compelling

experience and an experience I mean

that's even worse than designed there's

no definition it's very ephemeral it it

could happen it may not happen I mean

you're all sitting here but that doesn't

necessarily mean you're listening to me

it's that kind of thing it's it's

something that you really don't have

control over so starting off with some

of the background for this if we think

about the phases of competition of

course I'm talking about this as a

person from business not a designer so

I'll take you through a little bit of

business speak for a moment the phases

of competition for products or services

starts in the upper left hand corner

where we have the technological

innovation phase this is where a new

technology is created or developed and

adopted by the market let's think about

computer mice I'm sure you've all I'm

sure you all own a mouse who doesn't own

a mouse everybody has a mouse back in

the day when this was the new technology

this was in the early 80s I guess first

of all there was the development of

course of the mechanical object itself

which used to have a ball inside that if

it accumulated late you had to take it

out and clean it otherwise nothing

worked but the most important technology

that was kind of the cornerstone or the

reason why we have mice is the the

ability to move a cursor on a screen and

the fact that you can actually move a

cursor on the screen and the stuff

underneath doesn't disappear that took a

lot of technology so anyway everybody

started buying mice mice were expensive

at the time they were not organ Amish

they were ugly they had first just one

button but people became enamored of the

idea of being able to move cursors on

screens it just gave a new level of

control to the computer then we moved to

what's called the improvement phase this

is where things start to become more

reliable and more consistent

like I said the first mice or the first

my mouse I had which was on an Apple 2e

I believe it was rather than a Macintosh

it had one button then there was the 2

button Mouse 3 button mouse there was

buttons with scroll bars we've gone

through a lot of it's basically

experimentation with what's the best way

to design a mouse but nowadays pretty

much you buy a mouse and you know what

the what the left buttons going to do

for you what the right buttons going to

do and that's because that we have

created norms for what the mouse should

do so it's consistency there they became

more reliable the linked problem for

instance was gradually fixed by going to

new technologies next is the maturation

phase this is where differentiation is

based on convenience this is where we

get the first we get carpal tunnel

syndrome and then we get organic mice so

we got larger mice that are specially

shaped to fit the human hand and as that

those became more and more popular and

more accepted basically now all mice are

to some extent ergonomically formed so

what happens in the lower right hand

corner is you know right there the

category with death and taxes is the

commoditized phase it's where

differentiation quite frankly is based

on price only so you you will need a

mouse and the only issue you know is

what what does it cost because you can

expect a mouse to do certain things in

certain ways and provide a certain level

of ergonomic excellence so based on some

research that I did along with my my

colleague who talked about the

assignments on we we develop this

concept of a possible speed bump on this

way to death taxes and commoditization

which is the what we call a symbolic

value phase where differentiation is

based on experiences and I'm going to

continue with my mouse and I realize

this is not a service example but it's I

believe it's a very tangible example

that will help you understand what I

mean I was in the US last year for a

conference and I was you know ever at

the last minute ever Icelandic working

on my presentation late

the night before I was going to present

8 o'clock in the morning and I have a

mouse crisis my mouse literally dies

there was nothing I could do for it

I had the computer I usually travel with

which has a really really bad thumb pad

I just can't can't deal with it and I

was setting up a diagram something like

this one and I needed a mouse so I jump

in my rental car and I go out to the

local target for those of you who

haven't been in a target it's huge

store American store that sells

everything from aspirins to tires for

your cars I go into the target I know

they have mice I have seen mice in

target after getting lost a few times

and asking around you know finally I'm

in aisle you know 39f the mouse aisle

and at this point you know it's it's

late and evening I have a presentation

to prepare my sole purpose with my trip

to target was I need to get a mouse fast

my mouse is a mouse I don't care I just

need a mouse so I go and this is you

know last year so the Icelandic króna as

we've all talked about today is it's not

the best thing to have in your pocket so

I also had the the objective of buying

something for not a lot of money so I

there's i/o 39f the mice I've quickly

zero in on the laptop mice the the

smaller mice and I quickly scan the

prices

there's $19.99 there's $29.99 okay

$19.99 that's me

and look at the mice okay what do I want

here I want cordless what's cordless all

of a sudden my eyes strays like it never

should to the $29.99 area what what are

they offering and you know the sudden

all of a sudden the the urgency slows

down a bit I wonder what you get for an

extra 10 bucks in a mouse and I look at

this display of mice from Logitech and I

see the brand is completely by by the

way here and they had a lot of mice like

this one this is this is the mouse I

bought and they were in different colors

which is you know they were all

available in colors but they not only

had different colors but they also had

different patterns

front now this is interesting color and

pattern so all of a sudden I shift from

my target oriented get it for a little

as little money as possible and do it

quickly mode into quiet introspection

and I start thinking about now if I were

picking one of I have it selling it made

the commitment to spend the extra ten

bucks plus tax but I think if I were

picking one of these mice which one of

them would would I pick you know which

which one of them says marina and and

all of a sudden your complete mind shift

complete I start thinking about well you

know what what would I like my life to

be well who would I like to think people

to think I am and I have these wonderful

five minutes there on Io 39f and target

picking out you know a my mouse in my

favorite color and that has a pattern

which for those of you who can see it

probably not nobody it's kind of like

the pattern of a pebble falling in a

calm pool of water so kind of Zen kind

of peaceful kind of a life where I don't

have to rush out to Target to get a

mouse almost in the middle of the night

so I walked out of there with $29.99

plus tax

instead of $19.99 plus tax and it was

money well spent because I got that

little bit of time of introspection now

think about it

the people at Logitech who designed

these mice were they thinking about this

were they thinking about this

possibility there's 39f fild possibility

I don't know I hope they were but think

about all the other people who also went

to Target and did not get the ten-minute

bonus so like I say the whole creation

of experience is very very ephemeral it

may not happen but you can still think

about it no discussion of experience is

legal unless pine and Gilmour are

mentioned and they came up with the idea

of the experience economy and they're

basically their model looks like this in

the lower left hand corner you had

corner you had the extraction of

commodities this is like

pumping oil from the ground there is a

market price we all know about the

market price of oil we here in Iceland

at least we know whether it's going up

or down and we look at the gas stations

to see if it's being reflected there's

really no differentiation I'm not a

petroleum engineer so I'm not sure

there's really a difference between what

you pump out of the ground in Texas or

what you pump out of the ground in Egypt

I just don't know but the

differentiation is not huge then we got

to manufacturing products this is where

you create you know fuel for cars and

you create these super H fuel and you

brand it shale or something I don't know

anything about you get a little more

opportunity for premium pricing you get

a little more opportunity for

differentiation then you go up to

delivering services this is the gas

station ranging all the way from the

self-service gas station where it's just

between you and the pump and the your

credit card to the full-service gas

station where you know you can also buy

something to eat and there's a human

being who you can talk to if the pump or

the credit card doesn't work but

basically they're all delivering the

same service at different prices they

differentiate depending on how much the

service they're delivering and I think

they can do various things to make I

mean you gas stations are different yeah

they're that depends on who's running

them and where and so on and then at the

top is staging experiences and this is

where be buying gasoline from your car

becomes poetic okay I don't know what

that looks like it's a thought exercise

you can take home what would it take to

make buying gas poetry I still have that

mouse by the way in the presentation I

talked about symbolic value and

experience a term we can use to cover

both of those is meaning a product can

have symbolic value which gives it

meaning if you include an experience in

your service it also delivers meaning

now I realize that you could create

product or service without giving it any

particular meaning and in some cases

that may make

but I would argue that in most cases

your odds of success are better if you

include meaning think of it as wrapping

your product or service in meaning so

now you have three things to juggle as

an entrepreneur your idea your customer

and crucially the meaning that you will

deliver to your customer at this point

in the entrepreneurship process it might

be a good idea to spend some time online

Google your idea or words that describe

it does it look like somebody else is

providing a similar product or service

next Google words that describe your

meaning

does it look like somebody else is

already providing this meaning if you

realize that you have some competitors

and you probably will you need to give

some serious thought to how your product

or service can be significantly

different from what's already out there

what is your competitive advantage

[Music]