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Biz-Speak Basics for Engineers

Biz-Speak Basics for Engineers
Jim Jindrick ... Mentor-in-Residence
University of Arizona – Eller College of Management – McGuire Center for Entrepreneurship
Jindrick@IEEE.org ... VentureNotebook.com


Collaboration between engineers and entrepreneurs has resulted in countless innovative products, services, processes, and methods that have truly made the world a better place.

An innovative engineer creates something new and better, an enterprising entrepreneur puts that something new and better to work. The result are satisfied customers and equitable financial returns that allow a business venture to survive and thrive. That "something new and better" is typically a product, service, process, method, a niche market positioning, or a combination that serves a customer segment better than other alternatives.

Effective communications between technology-focused scientists and engineers and business-focused entrepreneurs is essential to develop and maintain an efficient path to commercialization. Following are a set of core business principles and lingo that engineers can use to help understand the business perspective and focus their activities on developing innovations that will optimize customer value in continually-changing competitive technology and market environments.


The Best Value Wins ...

Economist Peter F Drucker observed that a "business enterprise has two–and only two–basic functions: marketing and innovation." Innovators create value, entrepreneurs market that value to customers. Value is delivered through a combination of products, services, processes, and methods of doing business. In the long run, customers determine the better value between competing alternatives.


Venture Value Proposition 0.06.png


As Ohm's Law is to electricity (I = V / R where I is current, V is voltage, and R is resistance), so the Value Law is to business (V = B / P where V is value, B are benefits receive by the customer, and P is the price paid by the customer). It is a good analogy. With Ohm's Law the more voltage, the greater the current; with the Value Law, the more benefits received by the customer the more value. Similarly, with Ohm's Law the lower the resistance the greater the current; with the Value Law the lower the price, the greater the value.

Every Business Looks Like This ...

Business ventures share a similar structure. Successful business ventures adequately, efficiently, and effectively address each of these elements. While it is not uncommon to give these activities more fashionable titles, the basic functions are the same.


Venture Map E5.png


The #1 Critical Success Factor for Every Business Venture ...

There is a critical success factor every successful business venture must accomplish. It is not a formula for business success where the result is the same every time. Rather, it is a recipe where the end-result will depend on the quality of the ingredients and the skills of the cook. Further, it is not a goal that once achieved can be set aside. Rather, this critical success factor must become a continuing venture mission to survive and thrive in a complex, changing, competitive business environment.

The Critical Success Factor for Every Business Venture ...

Earn a Profit Solving Customer Problems Better than the Competition!

There are seven key elements in this recipe ...

  • Earn ... A business employs a team of people working together to continually and profitably solve customer problems better than competing alternatives. Healthy, growing ventures follow a clear business model. An educated, experienced, collaborative, communicative team with key core competencies is paramount to success.

  • Profit ... The monetary value captured by a business is appropriately called earnings. After all expenses are accounted, the earnings become profit. Profit is a reward for doing a good job solving customer problems. A key source of growth funding for a business venture is earned profit. While the profit reward is "financial", the reward can and should have other elements, too. In a healthy venture culture it can actually be "fun" going to work and being part of the team, and their may well be some "fame" that results from delivering valued solutions to customers.

  • Solving ... Solutions to customer problems are typically combinations of products, services, process, and methods. However, the world keeps changing as do customers and competitors. Solving customer problems, new and old, is a continuing process for sustaining a healthy venture.

  • Customer ... Customers are the primary source of revenue for a business venture. Some business ventures may have only a few key customers, others may have many. A group of customers that share similar traits comprise a market segment. Many business ventures may serve multiple and varied market segments.

  • Problems ... Customer needs, wants, desires, and situations that can be adequately addressed and resolved in a reasonable time and expense are good opportunities for a business venture.

  • Better ... Continually improving value is critical to sustaining a competitive advantage. Scientists and engineers often think about innovative solutions in terms of the fit, form, function, features, and performance. The entrepreneur thinks in terms of the benefits customers will receive. Value is measured by comparing the benefits to the price. Value can be increased by delivering better benefits to customers, by lowering the price, or both. Customers decide what offers the better value. In the long run, the products, services, processes, and methods that deliver a better value win the business. In short: Value = Benefits / Price

  • Competition ... Some competing solutions and ventures are directly comparable. Other competition may be indirect alternatives, substitutes, and replacements that could serve customer requirements. There is always competition. However, competition is not always a bad thing ... competitors can help validate and build new markets, and sometimes competitors can become collaborative partners.

Basic Financial Statements ...

There are a variety of tools used for pro forma financial objectives planning and post-facto reporting.

  • Assumptions: a thing that is accepted as likely to happen ... the probability of a particular customer placing an order in the next 6 weeks, for example

  • Budget: an estimate of income and expenditure for a set period of time

  • Income Statement: provides performance information about a time period. It begins with sales and works down to net income and earnings per share (EPS)

  • Cash Flow Statement: the total amount of money being transferred into and out of a business; a positive cash flow is good.

  • Balance Sheet: a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time.


Basic Financial Statements 160923a.jpg



Some Key Business Terms ...

  • Accounting: the action or process of keeping financial records relating to a particular period or purpose

  • Advertising: describe or draw attention to a product, service, or event in a public medium in order to promote sales or attendance

  • Assignments: a task given to someone as part of a job

  • Benefit: an advantage or profit gained from something

  • Better: a more excellent or effective type or quality

  • Brand: a type of product manufactured by a particular company under a particular name; an identifying name and/or mark

  • Budget: an estimate of income and expenditure for a set period of time

  • Build-Measure-Learn: the process of creating a new product, service, process, or method through continual incremental change and improvement

  • Business: an organization focused on the work that has to be done to profitably solve customer problems

  • Business Model: a design for the successful operation of a business, identifying revenue sources, customer base, products and services, operational processes, and details of financing

  • Business Model Canvas: a popular visual tool for developing new or documenting existing business models

  • Business Plan: a formal statement of a set of business goals, the reasons they are believed attainable, the plan for reaching those goals, and information about the organization or team attempting to reach those goals

  • Cash Flow: the total amount of money being transferred into and out of a business, especially as affecting liquidity

  • Change: become or make different

  • Copyright: the exclusive legal right, given to an originator or an assignee to print, publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same

  • Core Competency: a defining capability or advantage that distinguishes a venture from its competitors

  • Cost: an amount that has to be paid or spent to buy or obtain something

  • Critical Success Factor (CSF): an element that is necessary for a venture to achieve its mission

  • Desire: strong feeling of wanting to have something that is not absolutely needed

  • Earn: obtain money or other value in return for products or services

  • Elevator Pitch: a short verbal summary used to quickly and simply define a venture, product, service, organization, or event, and its value proposition

  • Enterprise: a project or venture, typically one that is difficult or requires effort, initiative, and resourcefulness.

  • Entrepreneur: a person who organizes and operates a venture

  • Entrepreneurial Mindset: the ability to recognize opportunities for innovation and enterprise

  • Entrepreneurship: the process of starting a business venture or other organization

  • Environment: the setting or conditions in which a particular activity is carried on

  • EPSCPBC: an acronym for "Earn a Profit Solving Customer Problems Better than the Competition" ... a critical success factor for every business venture

  • Executive Summary: a short document or section of a document that summarizes a longer report or proposal or a group of related reports in such a way that readers can rapidly become acquainted with a large body of material without having to read it all

  • Exit Plan: a means of leaving a current situation after a predetermined objective has been achieved

  • Exploration: traveling in or through an unfamiliar area in order to learn about it and uncover new opportunities

  • Forecast: a prediction or estimate of future events

  • Goal: a long-term aim or desired result

  • Ideation: the process of forming ideas or concepts

  • Income Statement: a financial document that gives operating results for a specific period; it typically includes sales revenue, cost of sales, gross income, operating expenses, and earnings

  • Innovation: make something new and better or improvements in something by introducing new methods, ideas, products, services, processes, market positions, paradigms, or combinations thereof

  • Input: a contribution of work, information, money, or material

  • Intellectual Property: a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.

  • I-T-O: abbreviation for Inputs-Transformation-Outputs, the core function of a venture ... Transformation consists of processes and resources

  • Judgment: the ability to make considered decisions or come to sensible conclusions often with limited information

  • Lean: creating or developing something (a business venture, for example) with a limited set of resources

  • Low-hanging Fruit: a thing or person that can be won, obtained, or persuaded with little effort

  • Management: responsibility for applying resources to achieve particular objectives

  • Margin: an amount of something included so as to be sure of success or safety

  • Market: a demand for a particular commodity or service, and the customers that create that demand

  • Marketing: the action or business of identifying, promoting and selling products or services to selected markets

  • Method: a particular form of procedure for accomplishing or approaching something

  • Maximum Value Product: a product, service, process, or method that provides a high level of value to the customer

  • Minimum Viable Product: a product, service, process, or method with just enough features to gather validated learning about the product and its continued development

  • Mission Statement: a statement of the purpose of a venture or organization, and its reason for existing; the mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making

  • Need: something that is a necessity as opposed to a preferred want or desire

  • Operations: the harvesting of value from assets owned by a business; manufacturing, production, and delivery of goods and services

  • Organization: the structure of related or connected people, places, and things to achieve specified objectives

  • Output: the amount of something produced by a venture

  • Pain: suffering or discomfort that may be an opportunity for a venture to solve

  • Patent: a government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention

  • Plan: a detailed proposal for doing or achieving something

  • Pleasure: satisfaction and enjoyment benefits delivered to customers

  • Price: the amount of money expected in payment for something

  • Problem: a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome

  • Process: a series of actions or steps taken in order to achieve a particular end

  • Product: an article or substance that is manufactured or refined for sale and can typically be defined as having a certain fit, form, function, features, and performance

  • Profit: a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something

  • Pro Forma: a standard document, form or financial statement

  • Research & Development: work directed toward the creation, innovation, improvement, and introduction of products and processes

  • Resources: a stock or supply of money, materials, facilities, staff, time, and other assets that can be drawn on by an organization in order to function effectively

  • Reward: something received as a result of achievement

  • Risk: the possibility that something unpleasant or unwelcome will happen

  • Sales: the exchange of a product or service for money; the action of selling something; the organization within a venture responsible for the selling activities

  • Service: helping or doing work for someone

  • Social Responsibility: an obligation to act in ways that benefit society at large

  • Something: a product, service, process, position, or paradigm

  • Solution: products, services, or processes designed to meet particular need, wants, and desires

  • Strategic Position: the orientation of a venture in relation to the environment, in particular, the competition

  • Tasks: a piece of work to be done

  • Team: two or more people working together

  • Technology: the application of scientific knowledge for practical purposes

  • Time: the indefinite continued progress of existence and events in the past, present, and future regarded as a whole

  • Timing: the choice, judgment, or control of when something should be done

  • Trademark: a symbol, word, or words legally registered or established by use as representing a company or product

  • Trade Secret: a secret device or technique used by a company in manufacturing its products

  • Transformation: a qualitative change from one set of elements into another by a predetermined process utilizing a set of resources

  • Value: the importance, worth, or usefulness of something

  • Value Equation: Value equals Benefits divided by Price (V = B/P) where there are objective and subjective benefits, and a direct and indirect price

  • Value Proposition: a promise of value to be delivered and a belief from the customer that value will be experienced

  • Venture: a business enterprise involving risk but with a significant reward for success

  • Vision: the ability to think about or plan the future with imagination or wisdom

  • Want: a strong wish for something

  • Work: activity involving mental or physical effort done in order to achieve a purpose or result

[Jim Jindrick is a Mentor-in-Residence for the McGuire Entrepreneurship Center at the University of Arizona Eller College of Management. Jim has 30+ years experience in high-tech research and development, product engineering, operations and manufacturing, international marketing, and new business development. He has created internal corporate ventures, spin-off companies, and independent start-ups. Products and ventures Jim developed have generated over one billion dollars in lifetime revenue. Jim is an IEEE Life Member.]

© 2016 by Jim Jindrick ... all rights reserved ... 1.28



Basic Glossary for Innovators and Entrepreneurs ...

  • A
    • A/B Testing

      • See: Split Testing

    • Accounting

      • Accounting: the action or process of keeping financial accounts

    • Additional Value

      • See: Alternative Value

    • Addressable Market

      • Addressable Market: the total potential market for a product or service, measured in dollars of revenue per year

    • Adventure

      • Adventure: daring and exciting activity calling for enterprise and enthusiasm

    • Advertising

      • Advertising: describe or draw attention to a product, service, or event in a public medium in order to promote sales or attendance

    • Advisor

      • Advisor: someone who is expert in a particular field who gives guidance or recommendations

    • AIDA

      • AIDA: abbreviation for Attention, Interest, Desire, Action ... four critical elements of marketing communications

      • Also, see ...

        • Communications

    • Alpha Test

      • Alpha Test: an initial trial of machinery, software, or other products carried out by a developer

    • Alternative Value

      • Alternative Value: other possible values in a venture

    • Amortization

      • Amortization: the process by which the loan principal decreases over the life of the loan

    • Angel Investors

      • Angel Investors: an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity

    • Arizona Center for Innovation

      • Arizona Center for Innovation: based at the University of Arizona, AZCI fosters technology start-ups, emerging and mature companies develop their ideas, inventions and next evolution of product

    • Asset

      • Asset: a useful or valuable thing, person, or quality

  • B

    • B2B

      • B2B: abbreviation for a Business-to-Business relationship

    • B2C

      • B2C: abbreviation for a Business-to-Consumer relationship

    • B2G

      • B2G: abbreviation for a Business-to-Government relationship

    • Barriers

      • Barriers: an obstacle that prevents movement or access

    • Beachhead

      • Beachhead: focusing your resources on one key area, usually a smaller market segment or product category, and winning that market first, even dominating that market, before moving into larger markets

    • Benchmark

      • Benchmark: a standard or point of reference against which things may be compared or assessed

    • Benefits

      • Benefit: an advantage or profit gained from something

    • Beta Test

      • Beta Test: a trial of machinery, software, or other products, in the final stages of its development, carried out by a party unconnected with its development

    • Better

      • Better: a more excellent or effective type or quality

    • Board of Directors

      • Board of Directors: a group of persons chosen to govern the affairs of a corporation or other organization or institution

    • Bootstrap

      • Bootstrap: launch and build a startup business without using outside funding

    • Brand

      • Brand: a particular identity or image regarded as an asset

    • Bridge

      • Bridge: a type of temporary financing in which a venture investor provides a privately-held company with a specified amount of capital, the purpose of which is to serve as a "bridge" between one round of equity financing and the next.

    • Budget

      • Budget: an estimate of income and expenditure for a set period of time

    • Build-Measure-Learn Loop

      • Build-Measure-Learn Loop: emphasizes speed as a critical ingredient to product development where a prototype product is built, tested with customer interaction, and feedback recorded and used to learn new needs, wants, and desires

    • Business

      • Business: an organization focused on the work that has to be done to profitably solve customer problems

    • Business Development

      • Business Development: business function focused on strategy, creating strategic partnerships and long-term relationships with suppliers and customers

    • Business Model

      • Business Model: a design for the successful operation of a business, identifying revenue sources, customer base, products and services, operational processes, and details of financing

    • Business Model Canvas

      • Business Model Canvas: a strategic management visual chart with elements describing a firm's value proposition, infrastructure, customers, and finances for developing new business models or documenting existing ones

    • Business Plan

      • Business Plan: a formal statement of a set of business goals, the reasons they are believed attainable, the plan for reaching those goals, and information about the organization or team attempting to reach those goals

    • Business-to-Business

      • Business-to-Business: describes marketing and selling a company’s products or services to other businesses (as opposed to individual consumers)

      • Also, see ...

        • B2B

  • C

    • C Corporation

      • C Corporation: the most common legal form of organization for a company

    • CAGR

      • CAGR: abbreviation for compound annual growth rate

    • Cap Table

      • Cap Table: abbreviation for Capitalization Table, which see

    • Capital

      • Capital: money, in particular, funds contributed by investors or lenders to a company for the purpose of funding

    • Capital Structure

      • Capital Structure: how a company is financed

    • Capitalization Table

      • Capitalization Table: a chart or table that displays the specific makeup of a company’s capital structure

    • Cash Flow

      • Cash Flow: the total amount of money being transferred into and out of a business, especially as affecting liquidity

    • Change

      • Change: become or make different

    • Chasm

      • Chasm: refers to the differences between the characteristics of and the ways a business markets to initial customers versus the bulk of the business’s potential customers

    • COGS

      • COGS: abbreviation for Cost of Good Sold, the cost of the components and labor required to produce a product

    • Collaboration

      • Collaboration: the action of working with someone to produce or create something

    • Commercial

      • Commercial: making or intended to make a profit

    • Common Stock

      • Common Stock: equity or stock ownership of a company representing owners who have the lowest-priority

    • Communications

      • Communications: the imparting or exchanging of information

    • Company

      • Company: a commercial business

      • Also, see ...

        • Business

        • Venture

    • Comparable

      • Comparable: a company in the same or a similar industry, and/or at the same or similar stage of development, to which a startup can compare itself regarding various key operating ratios and valuation metrics

    • Competition

      • Competition: a business relation in which two parties compete to gain customers

    • Competitive Advantage

      • Competitive Advantage: a condition or circumstance that puts a company in a favorable or superior business position

    • Compensation

      • Compensation: the pay and other incentives an organization provides to an employee in exchange for his/her services

    • Compound Annual Growth Rate

      • Compound Annual Growth Rate: the annual growth in revenues of a company, a market niche or an industry, factoring in annual compounding

    • Contingency Plan

      • Contingency Plan: a proposal designed to take a possible future event or circumstance into account

    • Continuous Innovation

      • Continuous Innovation: modest, gradational, ongoing upgrades or enhancements of existing technologies or products

    • Copyright

      • Copyright: the legal protection of the works of authors or artists which gives the originators the exclusive right to publish or benefit from their works

      • Also, see ...

        • Intellectual Property

    • Core Competency

      • Core Competency: a defining capability or advantage that distinguishes a venture from its competitors

    • Corporation

      • Corporation: a legal form of business organization that shields its individual principals (shareholders) from personal liability

    • Corporate Entrepreneurship

      • Corporate Entrepreneurship: the act of initiating new ventures or creating value with an already established organization or social entity

    • Cost

      • Cost: an amount that has to be paid or spent to buy or obtain something

    • Cost of Goods Sold

      • Cost of Good Sold: the cost of the components and labor required to produce a product

    • Cost of Sales

      • Cost of Sales: the carrying value of goods sold during a particular period

    • Critical Path

      • Critical Path: the sequence of stages determining the minimum time needed for an operation

    • Critical Success Factors

      • Critical Success Factor (CSF): an element that is necessary for a venture to achieve its mission

      • CSF Example: Earn Rewards Solving Customer Problems Better than Competition.

    • Customer

      • Customer: a person or organization that pays for goods or services

      • Also, see ...

        • Markets

        • User

        • Buyer

        • Influencer

        • Decision Maker

    • Customer Funding

      • Customer Funding: a business arrangement between a venture and its customer wherein the customer agrees to provide the venture with some level of up-front funding in advance of delivery of the product or service

  • D

    • Debt

      • Debt: borrowed funds; money, goods or services owed by one person or organization to another

    • Decision

      • Decision: the action or process of deciding something or of resolving a question

    • Define

      • Define: mark out boundaries or limits

    • Depreciation

      • Depreciation: a reduction in the value of an asset with the passage of time

    • Design

      • Design: plan something with a specific purpose in mind

    • Develop

      • Develop: cause to become more mature, advanced, or elaborate

    • Deploy

      • Deploy: bring into effective action

    • Desire

      • Desire: strong feeling of wanting to have something that is not absolutely needed

    • Dilute

      • Dilute: finance/accounting term ... to reduce a person's or entity’s proportional (i.e., percentage) equity ownership, typically by issuing and selling new equity (stock) to other shareholders

    • Discover

      • Discover: become aware of a fact or situation

    • Distribution

      • Distribution: the act of distributing, or moving goods (products) to market for ultimate sale to end-user customers

    • Distribution Channel

      • Distribution Channel: the mechanism or method by which a business brings its products to market, or distributes its products to its target customers and generates sales

    • Domain Knowledge

      • Domain Knowledge: knowledge about a specific industry, technology and/or market, typically based on extensive experience in that industry or technology arena

    • Due Diligence

      • Due Diligence: the process employed by potential investors or their agents of investigating a business deal or the target of an investment or acquisition

    • DXpedition

      • DXpedition: five venture adventure phases ... Discover, Define, Design, Develop, Deploy

  • E

    • Earnings

      • Earnings: the excess of revenues over outlays in a given period of time

    • Early Adopter

      • Early Adopter: individuals or organizations that enthusiastically embrace (try and buy) new technologies or tech-based products before the vast majority of potential buyers consider it

    • EBITDA

      • EBITDA: abbreviation for Earnings Before Interest, Taxes, Depreciation, and Amortization

    • Elevator Pitch

      • Elevator Pitch: a short summary used to quickly and simply define a venture, product, service, organization, or event, and its value proposition

    • Early-Stage

      • Early-Stage: a new venture, typically one that is not yet financially stable and self-supporting, generally less than 5 years old

    • End User

      • End User: the ultimate customer

    • Engineer

      • Engineer: a skillful creator of something

    • Engineering

    • Enterprise

      • Enterprise: a project or venture, typically one that is difficult or requires effort, initiative, and resourcefulness.

    • Entrepreneur

      • Entrepreneur: a person who organizes and operates a venture

      • An entrepreneur puts something new and better to work!

    • Entrepreneurial Mindset

      • Entrepreneurial Mindset: the ability to recognize opportunities for innovation and enterprise

    • Entrepreneurship

      • Entrepreneurship: the process of starting a business venture or other organization

    • Environment

      • Environment: the setting or conditions in which a particular activity is carried on

    • Equity

      • Equity: common and preferred stocks, which represent a share in the ownership of a company

    • ERSCPBC

      • ERSCPBC: an acronym for "Earn Rewards Solving Customer Problems Better than Competition" ... something every business venture must do to survive and thrive

    • Executive Summary

      • Executive Summary: a short document or section of a document that summarizes a longer report or proposal or a group of related reports in such a way that readers can rapidly become acquainted with a large body of material without having to read it all

      • Also, see ...

        • Hypothesis

    • Exit Plan

      • Exit Plan: a means of leaving a current situation after a predetermined objective has been achieved

      • Also, see ...

        • Funding Proposal

        • Term Sheet

    • Experience

      • Experience: the knowledge or skill acquired over a period of time, especially that gained in a particular profession by someone at work

    • Experiment

      • Experiment: a procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact

    • Expertise

      • Expertise: expert skill or knowledge in a particular field

  • F

    • Feasibility Analysis

      • Feasibility Analysis: an evaluation and analysis of the potential of the proposed project which is based on extensive investigation and research to support the process of decision making

    • Finance

      • Finance: monetary support for an enterprise

    • Financial Objectives

      • Financial Objectives: monetary goals for a venture

    • Forecast

      • Forecast: a prediction or estimate of future events

      • Also, see ...

        • Objectives

    • Friends, Family, and Fanatics Funding

      • Friends, Family, and Fanatics Funding: a form of startup funding in which the entrepreneur asks friends, family members, and people that are fanatical about the new venture products and services for investments in an early-stage business venture

    • FUD Factor

      • FUD Factor: abbreviation for Fear, Uncertainty, and Doubt, a method by which one vendor raises concerns in the mind of a prospective customer regarding certain qualities or capabilities of the vendor’s competitors

    • Funding

      • Funding: the action or practice of providing money for a particular purpose

    • Funding Proposal

      • Funding Proposal: a plan or suggestion for providing money for a particular purpose, especially a formal or written one, put forward for consideration or discussion by others

      • Also, see ...

        • Term Sheet

    • Fuzzy Front-End

      • Fuzzy Front-End: the period between when an opportunity for a new product is first considered, and when the product idea is judged ready to enter formal development

  • G

    • GAAP

      • GAAP: abbreviation for Generally Accepted Accounting Principles

    • GizmoGadget

      • GizmoGadget: a small device or tool, especially an ingenious or novel one

    • Goals

      • Goal: a long-term aim or desired result

      • Also, see ...

        • Objectives

    • Grant

      • Grant: a type of funding typically provided by government agencies or non-profit foundations

    • Gross Margin

      • Gross Margin: a ratio, usually expressed as a percentage, equal to the selling price minus the cost of goods sold (COGS)

    • Growth

      • Growth: the process of increasing in size

  • H

    • Hats

      • Hats: used to refer to a particular role or occupation of someone who has more than one

    • Hypothesis

      • Hypothesis: a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation

  • I

    • Ideation

      • Ideation: the formation of ideas or concepts

    • Income

      • Income: Revenue minus expenses

    • Income Statement

      • Income Statement: a financial document that gives operating results for a specific period; it typically includes sales revenue, cost of sales, gross income, operating expenses, and earnings

    • Incorporate

      • Incorporate: to create a new corporation by making a legal filing with the Secretary of State of a given state

    • Industry

      • Industry: a particular form or branch of economic or commercial activity

    • Industry Map

      • Industry Map: a visual and/or written representation of all players in an industry

    • Initial Public Offering

      • Initial Public Offering: a corporation's first offer to sell stock to the public

    • Innovate

      • Innovate: make something new and better or improvements in something by introducing new methods, ideas, products, services, processes, market positions, or paradigms

    • Innovation

      • Innovation: something new and better

      • Also, see ...

        • Something

        • New

        • Better

    • Innovator

      • Innovator: someone who creates something new and better

      • Also, see ...

        • Something

        • New

        • Better

    • Intellectual Property

      • Intellectual Property: intangible property that is the result of creativity such as patents, trademarks, copyrights, or trade secrets

    • Interest

      • Interest: money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt

    • Invention

      • Invention: something created that is new and useful

      • Also, see ...

        • Intellectual Property

        • Patent

    • Investor

      • Investor: an individual or organization that commits capital in order to gain financial returns

    • IPO

      • IPO: abbreviation for Initial Public Offering, which see

    • Iteration

      • Iteration: a new version with carefully implemented improvements from a previous version

    • ITO

      • I-T-O: abbreviation for Inputs-Transformation-Outputs

      • Input

        • Input: a contribution of work, information, money, or material

      • Output

        • Output: something produced by a venture

      • Transformation

        • Transformation: a qualitative change from one set of elements into another by a predetermined process utilizing a set of resources

      • Process

        • Process: a series of actions or steps taken in order to achieve a particular end

      • Resources

    • Investability

      • Investability: a venture that is able to attract funding from investors that have the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property

  • J

    • Journalism

      • Journalism: gathering, processing, evaluation, and dissemination of information

    • Judgment

      • Judgment: the ability to make considered decisions or come to sensible conclusions

  • K

    • KISS

      • KISS: acronym for Keep It Simple, Stupid; a guiding philosophy widely used in organizations that aims to focus management attention on the core attributes of a product, service or task

  • L

    • Laggard

      • Laggard: the last group of potential customers to adopt a new technology or innovation in the technology adoption life cycle

    • Launch

      • Launch: introduce a new venture or product to the public for the first time

    • Lean

      • Lean: efficient and with no waste, offering little reward or substance

    • Lean Canvas

      • Lean Canvas: a version of the Business Model Canvas that focuses on addressing broad customer problems and solutions and delivering them to customer segments through a unique value proposition

    • Lean Start-up

      • Lean Start-up: a new venture formed with limited resources

    • Legal Issues

      • Legal Issues: questions concerning the protections that laws or regulations should provide

    • Letter of Intent

      • Letter of Intent: a brief, temporary, pre-contract document between two or more entities that outlines the parties’ intention regarding a future contractual or business arrangement

    • Limited Liability Company

      • Limited Liability Company: abbreviated LLC; a legal form of company that has many of the tax advantages of partnerships, notably the characteristic of being a pass-through entity for tax purposes

    • LLC

      • LLC: abbreviation for Limited Liability Company, which see

  • M

    • Maker

      • Maker: a person or thing that makes or produces something

    • Management

      • Management: the process of dealing with or controlling things or people

    • Margin

      • Margin: an amount of something included so as to be sure of success or safety

    • Market

      • Market: a demand for a particular commodity or service, and the customers that create that demand

    • Market Research

      • Market Research: the action or activity of gathering information about current and prospective customer needs and preferences

    • Market Segmentation

      • Market Segmentation: the process of subdividing a market into distinct groups of customers with similar needs, such that a subset of the market

    • Marketing

      • Marketing: the action or business of identifying, promoting and selling products or services to selected markets

    • Maximum Value Product

      • Maximum Value Product: a product designed and developed to deliver a high level of benefits, features, and functionality to customers

    • McGuire Center for Entrepreneurship

      • McGuire Center for Entrepreneurship: educational center within the Eller College of Management at the University of Arizona focused on developing and delivering high-quality innovation and entrepreneurship educational programs

    • Method

      • Method: a particular form of procedure for accomplishing or approaching something, especially a systematic or established one

    • Mindmap

      • Mindmap: a diagram used to visually outline information

    • Minimal Viable Product

      • Minimal Viable Product: version of a new product which allows a team to collect validated learning about customers with the relatively low effort

    • Mission

      • Also, see: Mission Statement, Vision

    • Mission Statement

      • Mission Statement: an expression of the purpose of a venture or organization, and its reason for existing; the mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making

    • MVP

      • MVP: abbreviation for Maximum Value Product, which see

    • mvp

      • mvp: abbreviation for Minimal Viable Product, which see

  • N

    • Nascent Market

      • Nascent Market: a very new, formative market in which vendors sell their products or services to innovator and early adopter customers

    • Need

      • Also, see: Desires, Wants

      • Need: something that is a necessity

      • Needs, Wants, Desires

    • Newco

      • Newco: a placeholder name for a new venture

  • O

    • Objective

      • Objective: a thing aimed at or sought

    • Operations

      • Operations: the harvesting of value from assets owned by a business venture; manufacturing, production, and delivery of goods and services

    • Opportunity

      • Opportunity: a set of circumstances that makes it possible to do something

      • Also, see ...

        • Problem

        • Pain

        • Pleasure

        • Preferences

    • Organization

      • Organization: the structure of related or connected people, places, and things to achieve specified objectives

      • Also, see: Organizational Structure

  • P

    • Pain

      • Pain: suffering or discomfort

      • Also, see ...

        • Pleasure

        • Preferences

        • Problem

    • Patent

      • Patent: a grant by the United States federal government or a foreign government to an entity (individual inventor, company or organization) giving the entity the exclusive right to produce and sell an invention for a given period of time

    • Passion

      • Passion: an intense desire or enthusiasm for something

    • Phase

      • Phase: a distinct period or stage in a process of change or forming part of something's development

      • Venture Development Phases: Discover, Define, Design, Develop, Deploy

    • Pivot

      • Pivot: structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth

      • Also, see ...

        • Iteration

    • Place

      • Place: the regular or proper position of something

      • Also, see ...

        • Position

    • Plan

      • Plan: a detailed proposal for doing or achieving something

    • Pleasure

      • Pleasure: a feeling of happy satisfaction and enjoyment

      • Also, see ...

        • Pain

        • Preferences

        • Problem

    • Position

      • Position: the state of being placed where one has an advantage over one's rivals in a competitive situation

    • Positioning

      • Positioning: strategies for marketing a product, service, or business within a particular sector of a market to fulfill that sector's specific requirements

    • Post-Money Valuation

      • Post-Money Valuation: the value or nominal worth of an entire company immediately after a financing round

    • PR

      • PR: abbreviation for Public Relations, which see

    • Preferences

      • Preferences: a greater liking for one alternative over another or others

      • Also, see ...

        • Pain

        • Pleasure

        • Problem

    • Pre-Money Valuation

      • Pre-Money Valuation: the financial value or worth established for a company immediately prior to a financing round

    • Price

      • Price: the amount of money expected in payment for something

    • Primary Research

      • Primary Research: a collection of original primary data, often undertaken after the researcher has gained some insight into the issue by reviewing secondary research or by analyzing previously collected primary data

      • Also, see ...

        • Secondary Research

    • Problem

      • Problem: a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome

    • Process

      • Process: a series of actions or steps taken in order to achieve a particular end

    • Product

      • Product: an article or substance that is manufactured or refined for sale

    • Product Launch

      • Product Launch: the orchestrated introduction of a new product (or version of a product) to the market

    • Profit

      • Profit: a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something

    • Profit and Loss

      • Profit and Loss: often referred to by its acronym, P&L ... shorthand for a profit and loss statement, an alternative name for an income statement

    • Pro Forma

      • Pro Forma: financial/accounting term; forward-looking, or predicting future financial performance

    • Projections

      • Projections: an estimate or forecast of a future situation or trend based on a study of present ones

      • Also, see ...

        • Objectives

    • Prospect

      • Prospect: short for Prospective Customer

    • Prototype

      • Prototype: a first, typical or preliminary model of something, especially a machine, from which other forms are developed or copied

    • Public Relations

      • Public Relations: the professional maintenance of a favorable public image by a company or other organization or a famous person

  • Q

    • Quality

      • Quality: the degree of excellence of something

  • R

    • Research

      • Research: the systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions

    • Research & Development

      • Research & Development: work directed toward the creation, innovation, improvement, and introduction of products and processes

    • Rapid Prototyping

      • Rapid Prototyping: a group of techniques used to quickly fabricate a scale model of a component or assembly

    • Rapid Prototype Venture

      • Rapid Prototype Venture: a process used to create a new venture to launch a new product or service concept in a short period of time

    • Resources

      • Resources: a stock or supply of money, materials, staff, and other assets that can be drawn on by an organization in order to function effectively

      • Resources: People, Places, Things, Time, Money

    • Reward

      • Reward: something received as a result of achievement

    • Risk

      • Risk: the possibility that something unpleasant or unwelcome will happen

  • S

    • Sarbanes-Oxley Act

      • Sarbanes-Oxley Act: a US business reform act signed to law on July 30, 2002 that mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud

    • Sales

      • Sales: the exchange of a product or service for money; the action of selling something; the organization within a venture responsible for the selling activities

    • SAM

      • SAM: abbreviation for Served Addressable Market, which see

    • Scale

      • Scale: the relative size or extent of something

      • Also, see: Scope

    • Science

      • Science: the intellectual and practical activity encompassing the systematic study of the structure and behavior of the physical and natural world through observation and experiment

      • Also, see ...

        • Technology

    • Scientific Method

      • Scientific Method: a method of procedure consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses

    • Scope

      • Scope: the extent of the area that a venture deals with or to which it is relevant

      • Also, see: Scale

    • Search Engine Optimization

      • Search Engine Optimization: often referred to by the acronym SEO, the act of making changes or adjustments to a website with the intent of improving its search engine rankings

    • Secondary Research

      • Secondary Research: the summary, collation and/or synthesis of existing research, data, and information

      • Also, see ...

        • Primary Research

    • Seed Financing

      • Seed Financing: financing to fund an early-stage company

    • SEO

      • SEO: abbreviation for Search Engine Optimization, which see

    • Served Available Market

      • Served Available Market: the part of the total addressable market (TAM) that can actually be reached

    • Service

      • Service: the action of helping or doing work for someone

    • Skill

      • Skill: the ability to do something well; expertise

    • Social Responsibility

      • Social Responsibility: an obligation to act in ways that benefit society at large

    • Something

      • Something: a product, service, process, position, or paradigm

    • Solution

      • Solution: products, services, or processes designed to meet particular need, wants, and desires

    • Split Testing

      • Split Testing: different versions of a product are offered to customers at the same time

    • SPLUCK

      • SPLUCK: Abbreviation for Skills, Passion, Luck

    • Stable Venture

      • Stable Venture: an organization that has become financially self-sustaining and no longer requiring survival investment

    • Stakeholder

      • Stakeholder: a person with an interest or concern in something, especially a business

    • Start-up

      • Start-up: the action or process of setting something in motion

      • Also, see ...

        • Early-stage

    • Start-up Company

      • Start-up Company: a new business venture that is about to launch, or has recently launched but has not yet achieved sustainable sales revenue

      • Note: The term "startup" is loosely applied to many relatively young companies, even though it may be years after the company formally launch

    • Strategy

      • Strategy: a plan of action or policy designed to achieve a major or overall aim

    • Strategic Position

      • Strategic Position: the orientation of a venture in relation to the environment, in particular, the competition

    • Sustainable

      • Sustainable: able to be maintained at a certain rate or level

    • SWOTT

      • SWOTT: abbreviation for Strengths, Weaknesses, Opportunities, Threats, and Trends

  • T

    • Taxes

      • Taxes: a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions

    • TAM

      • TAM: abbreviation for Total Available Market, which see

    • Team

      • Team: two or more people working together

    • Tech Launch Arizona

      • Tech Launch Arizona: University of Arizona organization charged with ensuring that technologies and innovations originating with UA researchers find meaningful application

    • Technology

      • Technology: the application of scientific knowledge for practical purposes

      • Also, see ...

        • Science

    • Technology Transfer

      • Technology Transfer: the transfer of new technology from the originator to a secondary user

    • Term Sheet

      • Term Sheet: a bullet-point document outlining the material terms and conditions of a business agreement ... after a term sheet has been "executed", it guides legal counsel in the preparation of a proposed "final agreement"

    • Time

      • Time: the indefinite continued progress of existence and events in the past, present, and future regarded as a whole

      • Also, see: Timeline, Timing

    • Timeline

      • Timeline: a graphic representation of the passage of time as a line

    • Timing

      • Timing: the choice, judgment, or control of when something should be done

    • TLA

      • TLA: abbreviation for Tech Launch Arizona, which see

    • Total Available Market

      • Total Available Market (or Total Addressable Market): the total revenue opportunity available for a product or service

    • Trademark

      • Trademark: identifying name or graphical mark that is uniquely identified with a specific product, service or company

    • Triple Helix

      • Triple Helix: thesis that the potential for innovation and economic development in a Knowledge Society lies in a more prominent role for the university and in the hybridisation of elements from university, industry and government to generate new institutional and social formats for the production, transfer and application of knowledge

  • U

    • Unicorn

      • Unicorn: an early-stage company that has grown significantly in perceived market value, generally over $1 billion

  • V

    • Validation

      • Validation: demonstrate or support the truth or value of something

    • Valuation

      • Valuation: the monetary worth of something, especially as estimated by an appraiser and industry experts

    • Value

      • Value: the importance, worth, or usefulness of something

      • Value Equation

        • Value Equation: Value equals Benefits divided by Price (V = B/P)

    • Value Proposition

      • Value Proposition: a promise of value to be delivered and a belief from the customer that value will be experienced

    • Venture

      • Venture: an enterprise involving risk but with a significant reward for success; a venture could be a business, a company, an organization, a not-for-profit venture

    • Venture Capital

      • Venture Capital: capital invested in a project in which there is a substantial element of risk, typically a new or expanding business

    • Venture Capitalist

      • Venture Capitalist: an organization or speculator who makes money available for innovative projects (especially in high technology)

    • Venture Plan

      • Venture Plan: a detailed proposal for a venture

    • Vision

      • Also, see: Mission

      • Vision: the ability to think about or plan the future with imagination or wisdom

  • W

    • WAG

      • WAG: abbreviation for Wild Ass Guess

    • Want

      • Want: a strong wish for something

      • Also, see ...

        • Need

        • Desire

    • Who, What, Where, When, Why, How?

      • Who, What, Where, When, Why, How?: the six most powerful questions

      • Also, see ...

        • Journalism

    • Work

      • Work: activity involving mental or physical effort done in order to achieve a purpose or result

  • X Y Z


Lean Startup Terminology

Minimum viable product
A minimum viable product (mvp) is the "version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort" (similar to a pilot experiment). The goal of an MVP is to test fundamental business hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the learning process as quickly as possible. As an example, Ries notes that Zappos founder Nick Swinmurn wanted to test the hypothesis that customers were ready and willing to buy shoes online. Instead of building a website and a large database of footwear, Swinmurn approached local shoe stores, took pictures of their inventory, posted the pictures online, bought the shoes from the stores at full price, and sold them directly to customers if they purchased the shoe through his website.Swinmurn deduced that customer demand was present, and Zappos would eventually grow into a billion dollar business based on the model of selling shoes online.

Continuous deployment (only for software development)
Continuous deployment, similar to continuous delivery, is a process "whereby all code that is written for an application is immediately deployed into production," which results in a reduction of cycle times. Ries states that some of the companies he's worked with deploy new code into production as often as 50 times a day. The phrase was coined by Timothy Fitz, one of Ries's colleagues and an early engineer at IMVU.

Split testing
A split or A/B test is an experiment in which "different versions of a product are offered to customers at the same time." The goal of a split test is to observe differences in behavior between the two groups and to measure the impact of each version on an actionable metric.

A/B testing can also be performed in serial fashion where a group of users one week may see one version of the product while the next week users see another. This can be criticized in circumstances where external events may influence user behavior one time period but not the other. For example a split test of two ice cream flavors performed in serial during the summer and winter would see a marked decrease in demand during the winter where that decrease is mostly related to the weather and not to the flavor offer.

Actionable metrics
Actionable metrics can lead to informed business decisions and subsequent action.[1][24] These are in contrast to vanity metrics—measurements that give "the rosiest picture possible" but do not accurately reflect the key drivers of a business.

Vanity metrics for one company may be actionable metrics for another. For example, a company specializing in creating web based dashboards for financial markets might view the number of web page views[20] per person as a vanity metric as their revenue is not based on number of page views. However, an online magazine with advertising would view web page views as a key metric as page views are directly correlated to revenue.

A typical example of a vanity metric is 'the number of new users gained per day'. While a high number of users gained per day seems beneficial to any company, if the cost of acquiring each user through expensive advertising campaigns is significantly higher than the revenue gained per user, then gaining more users could quickly lead to bankruptcy.

Pivot
A pivot is a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth."[1] A notable example of a company employing the pivot is Groupon; when the company first started, it was an online activism platform called The Point.[3] After receiving almost no traction, the founders opened a WordPress blog and launched their first coupon promotion for a pizzeria located in their building lobby.[3] Although they only received 20 redemptions, the founders realized that their idea was significant, and had successfully empowered people to coordinate group action.[3] Three years later, Groupon would grow into a billion dollar business.

Steve Blank defines a pivot as "changing (or even firing) the plan instead of the executive (the sales exec, marketing or even the CEO)."

Innovation accounting
This topic focuses on how entrepreneurs can maintain accountability and maximize outcomes by measuring progress, planning milestones, and prioritizing.

Build–Measure–Learn
The Build–Measure–Learn loop emphasizes speed as a critical ingredient to product development. A team or company's effectiveness is determined by its ability to ideate, quickly build a minimum viable product of that idea, measure its effectiveness in the market, and learn from that experiment. In other words, it's a learning cycle of turning ideas into products, measuring customers' reactions and behaviors against built products, and then deciding whether to persevere or pivot the idea; this process repeats as many times as necessary. The phases of the loop are: Ideas –> Build –> Product –> Measure –> Data –> Learn.

This rapid iteration allows teams to discover a feasible path towards product/market fit, and to continue optimizing and refining the business model after reaching product/market fit.

Definitions popularized after The Lean Startup

Business Model Canvas
The Business Model Canvas is a strategic management template invented by Alexander Osterwalder and Yves Pigneur for developing new business models or documenting existing ones. It is a visual chart with elements describing a firm's value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.[30]

Lean Canvas
The Lean Canvas is a version of the Business Model Canvas adapted by Ash Maurya specifically for startups.[28] The Lean Canvas focuses on addressing broad customer problems and solutions and delivering them to customer segments through a unique value proposition.

[Attribution: Wikipedia] 2.09

Jim Jindrick

You can send Jim Jindrick a message here: TextJim.VentureNotebook.com Jim's books are available here: Amazon.com/author/JimJindrick

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