References to StratML: First Reference, Second Reference, Third Reference, Fourth Reference
Capstone Project Action Plan & Analysis Summary:
New Venture for
Development Project Clearinghouse With
Final Draft of MBA Program Project—Course-by-Course Analyses Appendix
MMBA 6780 Business Strategy
February 20, 2014
Capstone Project Recommendations & Analysis Summary
New Venture Context Information This new venture action and implementation plan provides detailed analysis and information evaluating the potential launch of the new venture, the Development Project Clearinghouse (DPC). The analysis is based solely on personal/individual and secondary data analysis of materials and assignments completed during the Walden MBA program. The proposed new venture action and implementation plan represents the personal assessment of Larry Bradshaw, acting within the capacity of a student in the MBA program, and is not intended for direct professional application or hire. A one page summary presentation is offered on p. 85.
New Venture Financial Need/Ask and Estimated Returns
In order to successfully launch the Development Project Clearinghouse, I anticipate that the company/organization will require $5,000 of capital during the first few months of operations (Financial Strategy p. 14, Financial Risk Management, p.15, 12 Month Pro-Forma Income Statement p. 33, Key Assumptions Used in Forecasting Results p. 45.) The initial $5,000 will fund establishment of the non-profit as a corporation, with a reserve sufficient to pay for two annual renewals. The DPC financial strategy is to be self-sufficient, to operate at low or zero cost, leveraging free technology to deliver basic services until donations are sufficient to fund expansion costs such as labor required to deliver non-technology based results. This venture will utilize free Google services, operate out of the founder’s basement or garage, and restricting travel to local Washington DC metro area events. (Sources and Application of Funds, p. 51)
A further $50,000 and $100,000 in grants are possible once field results can be shown which is expected to be about after four to six months of operation. Such grants may constitute as much as 30% of DPC funding in the first two years of operations; the bulk of DPC funding is expected to come from donations and contributions. The need for grants will be evident two to three months prior to the first grant and as much as a year prior to the second grant. Funding in these amounts has historically been available from USAID, the U.S. Department of State, the United Nations, the World Bank, and the International Monetary Fund. For example, this venture may significantly enhance the effectiveness of programs funded from an existing trust fund, such as the United States President’s Emergency Plan for AIDS Relief (PEPFAR, http://www.pepfar.gov/). As a pilot enhancement effort able to deliver immediate or near-term results, DPC may quickly and easily qualify for a small grant. Alternatively, the firm may operate indefinitely without grants, utilizing donations to cover operating costs on a pay-forward basis (Projected Profit and Loss, p.82; Projected Cash Flow, p. 83.) This means that expansions such as leasing office space or hiring Directors and staff will only be done when donations received and banked exceed the estimated costs. (Break Even Analysis p. 81)
Based on the analysis and argument presented in the five sections below, it is expected that investors could have their principle investment returned by the end of the start-up year of operations or June 2015 and that they could receive an estimated 100% return on their investment. The founder views the startup funding as a donation to the non-profit.
Customer Value Proposition: What Specific Needs the New Venture can Meet or Exceed and for Whom, How, When, and Where
The customer value proposition offered by this firm is exemplified in the various humanitarian projects which funded hundreds of millions of dollars to Haiti after the 2010 earthquake there, only to have a hundred thousand people in hospital two years later due to unclean drinking water (http://www.oxfam.org/en/haitiquake; United Nations HDR, 2011.) For this sum one might reasonably expect not only clean drinking water but full sanitary facilities for the entire population of eight or nine million people, new housing, schools, and roads. The coordination of funding, measurement of results, and alignment of efforts which are this firm’s core value proposition could have saved thousands of lives in Haiti, and will save thousands in the future. Lacking coordination prior to initiating work on the ground, such efforts frequently experience less success than a coordinated, combined, integrated effort could reasonably expect to enjoy (p.11). The core DPC value proposition is to enable the coordination and integration of such efforts by offering products and services for free to all customers (Value Proposition, p. 5; Sourcing, p. 61). The perspective of development as a specialized kind of business is an innovation inherent in this value proposition. (Rationale for the Organization, p. 3)
The ability to consistently measure and report results is essential to effective decision-making in this space (http://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Letters-List). Value proposition details are available on page 5. The value of alignment of results measurements across borders, across departments, and over time is substantial and probably essential to the success of humanitarian efforts (Patel & Fiet, 2006.)
This venture can meet project funding, coordination, reporting, execution, tracking, and collaboration needs for humanitarian assistance projects globally by providing simple templates that are consistently applied by supporters and customers in their projects. In this way each customer can tailor the value proposition to their specific needs within the general scope of our services. Each customer may enjoy their own level of detail, scope, area of execution, and practices within the general templates. When submitted to DPC the templates become permanent records against which simple searches, matches, and reporting will be executed automatically. As DPC grows, human intervention will add to the value provided automatically.
The DPC web site will provide data entry portals where funding seekers and funding providers may enter their specific information. In addition, a search portal will offer match results nearly instantly which will also be available by email. Where funding sources are at present unable to locate projects seeking funding without holding international conferences or engaging in expensive and time-consuming travel to each local area, DPC will enable identification of projects within seconds of the request. DPC will facilitate evaluation of funding requests without providing judgments; final valuation of the merit of the project is the responsibility of the funding provider. This is an open-to-all-comers value proposition for projects in both developed and underdeveloped countries. In cases where the funding requestor and the funding provider are the same entity, such as governments or large non-profits, DPC will provide the value stated above as if the requestor and provider were different entities. (Value Proposition, p. 5)
Evidence of Customer Preference Relative to Competitor Positioning
The overall marketing strategy can be expressed simply by the statement: “DPC can help your development and disaster recovery projects succeed, for free, in ways no one else will: here’s how.” The DPC value proposition is framed from the customer’s perspective (Hlava & Camlek, 2010) and designed to be communicate to customers by customers over social networks, email, and other referrals. DPC is initially positioned as a virtual firm offering free services and products over the internet. The primary evidence of customer preference relative to competitors is that a) competitors do not offer these services or products at any price, b) competitors will have difficulty imitating these services and products, c) free is a compelling price, d) DPC is has no vertical or horizontal market limitations unlike all potential competitors, e) customers who do not prefer us based on price or product may prefer us because we will help save more lives.
The strategy (Sales & Marketing, p. 12) is to deliver value first -- leaving financials and charges to be resolved later. Basic services will be developed and delivered prior to presentation of the firm to the marketplace include a) record keeping, and b) matching of funding requests with funding providers. These functional capabilities will be delivered over the internet globally, in a standardized, consistent, and coherent manner. Over time additional capabilities may be included, such as include project planning, project execution, project reporting, financial management, financial reporting, performance metrics, business analytics, and an expanded repository of records when receipts allow expansion. Prior to such expansion the primary technology engine will operate and deliver basic services at little or no cost to the firm. (Products and Services, p. 9, Analysis of Mission Statement, p. 66) These services are unique and highly valuable in this space and will be difficult to fully imitate for free. The market need for the products is high (p. 11), the products are information based and easily deliverable over the internet, the cycle times can be in the seconds or minutes, and the value-return ratio is very high for the customer effort invested. Other strengths are offered in the Business Strategy Conclusion (p. 19), the Global Opportunities for Growth (p. 62), and the Analysis of Vision Statement (p. 63.)
Over time, projects in dire straits will find we are available to provide management services on an emergency basis, as a partner and a friend, depending on staff availability. Our simple and comprehensive approach to financial information is based on our specific knowledge, which means that we can provide solutions that many firms will desire as they are costly to produce in-house and we can provide these for free. We provide free services but retain ownership rights of any data provided to us, augment its value as an asset by correlation with other data in our possession, and that we will leverage that data over time, while also respectfully requesting a small donation.
Barriers to this venture’s entry into new markets will be reduced by these tactics, while barriers to competitor entry into the same markets will be maintained or raised. This is a significant difference in Product, Pricing, Place/Distribution, and Promotion/Communication strategies from those found in other organizations. Donations are to be requested but not required from inception. Marketing requires constant management efforts and this firm’s management will combine inputs such as the global context, customer context, and collaborator or partner participation to enable this venture to excel compared to competitors. This dynamic and robust approach is supported by the structure of the Board of Directors and venture leadership. This and other tactics will ensure differentiation of our products and services from others. Competitors may include other NGO’s, foreign aid efforts from nations, and international organizations. Part of the marketing strategy of this venture is to co-opt potential competitors into partners, offering the uniquely valuable services we specialize in while maintaining a fully transparent organizational culture. Free services support this strategy. (Product/Service Innovation Value Proposition (Benefits) p. 10; Value Chain, p. 70) Other strengths are offered in the Business Strategy Conclusion (p. 19), the Global Opportunities for Growth (p. 62), and the Analysis of Vision Statement (p. 63.)
The final element to the DPC competitive edge is the servant-leadership management approach with a focus on the values, vision, and beliefs of the founder, in combination with an embrace and expectation of future change as innovations are developed and deployed in a continuous cycle of growth, creation, and more growth (Wheatley, 2007.)
New Venture Key Success Factors and KSF Evaluation The most important keys to the success of DPC are:
Inspired, experienced leadership, primarily in the servant-leader style, combined with situational leadership.
An organization structure that facilitates engagement of volunteers and offers opportunities to dedicated individuals passionate about helping others.
Creation of a website using Google technologies to capture, store, and match records on funding providers and funding seekers.
Utilization of the web site in pilot cases whose outcomes showcase the value potential of the clearinghouse.
Presentation of the clearinghouse in a way that showcases the outcomes of the pilot cases to potential funding providers and funding seekers.
Establishment of strategic partnerships with potential stakeholders such as the United Nations, the U.S. Department of State, USAID, the World Bank, the International Monetary Fund, established global non-government non-profit entities such as the Carter Foundation, the Clinton Foundation, the Gates Foundation, and others.
Receipt of sufficient funding in donations to cover operating costs and growth costs.
Engagement of Directors who believe in the DPC core values, mission, vision, and who are dedicated to the success of the venture.
Innovative use of technology to advance the state of the art in practice.
The most important key to the success of DPC is inspired, effective, experienced leadership. The founder’s strengths include being an experienced professional with more than twenty years of business experience, a successful small business owner, a certified PMI PMP and six sigma black belt, a Walden MBA graduate student, a member of various boards of directors for small non-profits (<$5 million/yr.), active in various charities and non-profits, experienced project manager and financial manager, formerly a contractor to USAID, currently a contractor to U.S. Department of State, and a volunteer in humanitarian projects since early years. This venture will start as a one-person effort although several other people have expressed interest in leadership roles. Prior to moving forward with engagement of other leadership a decision must be made as to whether to integrate this proposition with an established NGO like the Clinton Foundation or proceed as a standalone entity.
The founder fits this venture and this market space (Patel & Fiet, 2006.) The founder’s primary weakness is that he is just one person and may be working as a full time employee while also advancing the DPC organization. Areas of professional development or support that will be needed include: legal advice specific to non-profit incorporation and legal document filings, accounting advance specific to grant and non-profit funding actions such as handling promised donations and recurring donations via credit cards or pay-pal, and human resources advice (Staffing Plan and Human Resources, p. 68) from non-profit associations or support firms to ensure excellent staffing and hiring decisions are made. The most important leadership factor is the inspired vision, the dedication and commitment, the clarity of perception of the desired outcomes, and the competence to lead efforts toward those goals. (Leadership, p. 7) Leadership may occur at any level of the organization.
The organization chart (p. 17) makes sense for this kind of business because it allows each Director a wide swath of autonomy and flexibility while ensuring alignment with strategic goals and effective execution of tactics. Each Director may employ any legitimate and cost effective means at their disposal to achieve the agreed upon goals. It is expected that each region or area of specialization will have unique characteristics, cultures, laws, and behavioral norms. Each Director will adjust their operations to optimize performance in their area. In addition, this structure enables DPC to embrace any inspired, dedicated, visionary individual as a Director and to enable their performance in the area to which they are dedicated. As a non-profit organization, the most empowering thing we can do is to fully support the area of greatest interest to our staff. The more senior the staff, the greater the scope of support we can offer if we use this organizational structure.
A starter web site using free Google technologies has already been created. The next steps are identified in the action plan / milestone goals in detail. The strategy is to first develop technologies sufficient to deliver minimal results, work with partners and stakeholders to deliver initial results, refine the technologies, and then showcase the capabilities to the widest possible audience. The proposed products and services are very doable, sustainable, profitable to both the customers and to DPC, and addresses immediate customer needs (Hlava & Camlek, 2010.)
These success factors will be addressed in the first year by the founder and in subsequent years by the Board of Directors and Executive Committee (Strategic Growth Phase Table, p. 64.) In the start-up year the founder will create the website, perform the software development and testing, identify and engage pilot case projects with potential to showcase the clearinghouse capabilities. With tangible results available about three-quarters of the way through the first year, the founder will solicit strategic partnerships by offering solutions to intractable problems in the form of clearinghouse capabilities. These servant-leadership efforts will emphasize partnership and collaboration on results above and beyond the expected product and services in this plan.
Donations are the majority funding source for this venture. Securing donations requires performance, delivery of services and products, and successful partnerships. The first efforts of this firm will be to develop and deliver the core products and services. These efforts will continue in order to add products and services over time. As soon as products and services are available, these will be exhibited to potential stakeholders and partners, and also provided to interested parties willing to work with the firm as first customers. (Finance Plan, p. 14, Key Financial Indicators p. 80)
This venture envisions innovative use of technology as a cost-saving and productivity-multiplier tool. For example, a technology exists by which strategic plans and progress may be reported and aggregated in a single file format called StratML. If adapted to the development and humanitarian assistance field, this format may be applicable to all projects. In this way a single XML file may suffice as a financial report, a project results report, a project status report, and a funding activity and dependencies report. (Other Considerations, Risks, and Opportunities for Innovation and Use of Technology, p. 32) If files are aggregated into a single file for a region, the correlation of information in plain text (XML) may be a very potent tool.
Consistent use of measures and metrics that are reported and tracked monthly is a competitive advantage for this venture. Projects seldom use comparable measures of success at present, and correlating data by subject area or geographical area is difficult or impossible. As this venture coordinates project efforts and captures project results in standard, relevant, usable metrics that are consistently recorded the customer preference for services provided by this venture will grow.
Specific Action Plan/Milestone Goals to Implement New Venture
Tactics or Milestone Goals to implement new venture as diagrammed in the pdf embedded on p. 85 as Waterfall Chart & Milestones for Startup Year:
Create non-profit corporation in U.S.
Draft website user interface, document primary features and functions.
Document high level web site requirements.
Research Google technologies, capabilities, and compatible open source software such as database software.
Cross reference Google and compatible technologies with high level web site requirements to develop an initial technological solution set.
Perform proof of concept development work to confirm the validity of the initial technological solution set; draft straw-man web site with placeholders for future development work.
Evaluate open source or crowd source development approach that involves the general public in the form of the source forge technology community.
Clarify strategic trade-offs inherent in technology selection.
On the other hand, Google may be interested in supporting this project directly and may contribute one or more Director level staff members.
Proceed with implementation of functional capabilities and features as documented.
Complete version 0.01 (gamma) web site with core record acquisition, storage, and match functionality.
Engage with potential stakeholders to gather funding source and funding request records.
Facilitate the development of metrics and measures for reporting of project progress.
Provide match results while tuning web site to ensure correct and proper functionality.
Solicit permission to showcase results for specific success cases.
Refine marketing strategy as proposed in the business case into actionable plan.
Develop screen-capture videos with narratives of three minutes or less in length. Follow marketing plan, utilize marketing strategy tactics.
Open the website to general public use.
Create Facebook, Twitter, Google Talk, and other social media presence and post videos and still images or artifacts that are consistent across projects, featuring the DPC web site link.
Develop roadshow package with executive summary, presentation, and video compilation.
Reach out to large potential stakeholders and partners with roadshow materials, leverage existing contacts in organizations such as the United Nations, the U.S. Department of State, USAID, the World Bank, the International Monetary Fund, established global non-government non-profit entities such as the Carter Foundation, the Clinton Foundation, the Gates Foundation, Google, and others.
Establish strategic partnerships with stakeholders interested in participating.
Perform financial management analysis of operational results and revenues to date, refine projections of future funding needs. Repeat every three months for first two years.
Decide if Grant applications are needed or if the firm can operate without grant funding.
Begin recruiting Directors.
On-board Directors and encourage them to begin recruiting staff.
Feasibility Analysis: Primary Anticipated Risks and Key Assumptions
Offering free services and products may not seem feasible. The free services and products offered in this plan are produced by use of free technology requiring little or no day to day operational investment by the firm. The data captured by this use of technology becomes the property of the firm, an asset obtained at no cost to the firm, provided by customers giving the information to the firm in digital form. This asset is leveraged by the firm in the future to the advantage of the firm in the form of more advanced products and services. This is an innovative approach as it differs from the norm which is that most firms must expend funds to own assets.
This plan is feasible because it utilizes existing technologies, known capabilities, specific knowledge, proven methods, free Google services, and solves intractable problems at extremely low costs thereby delivering very high value to participants. (Background, p.1; Rationale for the Organization, p. 3) Low costs enable the firm to provide free services and products globally. The entire venture is simple and direct with only two moderate areas of complexity. The matching algorithms to pair up funding requestor profiles with funding provider profiles are moderately complex however are also very well understood as they are simpler than and use the same principles as internet dating site algorithms. If these prove too challenging, initial matching may be obtained by manual searches by customers rather than being automated. The financial reporting capabilities sound very complicated yet are dramatically simplified by IFRS and SEC standards recently adopted. (Introduction, p.2) The key to success will be to maintain a flow of new funding and new project information through the website over time. Getting the message out about early successes will help develop new interest. A few quick wins in the very short term is important to create a track record of success. (Impact of the Global Economy on the Business, p. 59)
The key risk is that organizations choose not to participate, which in its worst form is an organized choice to avoid using the offered services and products on a global basis. This risk is mitigated by engaging in partnership efforts with global leaders in this space such as the United Nations, the World Bank, the International Monetary Fund, the U.S. Department of State, USAID, the Carter Foundation, the Clinton Foundation, the Gates foundation, and many others. The development and delivery of services strategy discussed in the Marketing Strategy (p. 12), Business Strategy (p.16), Risk Management (p. 15) and Blue Ocean Strategy (p. 72) has a single core concept of developing and delivering real-world high-value capabilities prior to marketing or publicizing the innovations. The intent is to identify, define, and capture a blue-ocean market in one action which leaves existing barriers to entry in place and raises them.
The primary assumption is that these innovations can be developed and delivered legally by a U.S. based non-profit corporation. Analysis up to this point indicates that this can be done. Certainly, similar activities have been engaged in previously by the U.S. Military in Operation Unified Assistance (Background, p. 1) and in disjointed and uncoordinated pieces and parts by the U.S. Department of State and USAID. Validation of this assumption is most likely to be satisfactorily obtained in a working partnership with USAID and U.S. Department of State. Exigencies driven by arcane legal subtleties may be best handled in practice rather than in theory, in execution with highly desired results directly observable by U.S. Congressmen and women. These lawmakers can make it possible for this firm to enable whatever they wish.
The willingness to partner with others to deliver high-value results is a key element to the success of this venture. A partnership perspective is emphasized internally and externally and is viewed as critical to the firm. Partnerships often bring unexpected risks. Risks and assumptions are discussed in detail in Key Assumptions Used in Forecasting Results (p. 45), Other Considerations, Risks, and Opportunities for Innovation and Use of Technology (p. 32), Marketing Mix (p. 52), Risk Management (p. 15), and Financial Risk Management (p. 14.)
Appendix Complete MBA Program Project Detailed Analysis—All Core Courses