ǃɲ It is challenging to go beyond products and features to a deep understanding of customer value creation. Organize information about what customers want in a simple way that makes the patterns of value creation easily visible.
Avoid wasting time with ideas that won’t work
Value Proposition
Our Value Proposition to You
Web App + Online Courses
VPD Book +
VPD Online Companion
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Canvas Design / Test
SearchTools
The Tools and Process of Value Proposition Design
Post search
Evolve
Progress
An Integrated Suite of Tools
Zoom out
Zoom in
The business model canvas and the value proposition canvas integrate seamlessly, with the latter as a supplement to the former that allows you to zoom in on the details of how you're creating value for customers. The Business Model Canvas refresher in this spread is enough to work through this book and create great value propositions.
Refresher: The Business Model Canvas
To do so, you can use the Business Model Canvas, a tool to describe how your organization creates, delivers and captures value. Go to the online resources if you are interested in more or get the Business Model.
The Business Model Canvas
ɲ Risk running out of money before the right value proposition and business model are shipped.
New Ventures
Established Organizations
The tools we are going to study work as much for managing and renewing value propositions (and business models) as for creating new ones. Use them to continuously invent and improve value propositions that meet customer profiles, which is a never-ending enterprise.
Assess
Your Value Proposition
Sell Your Colleagues on Value Proposition Design
So what if we tried the Value Proposition Canvas (and Business . Model Canvas) in our next project. Get a slideshow of 10 arguments to use with Value Propositions and Business Model Canvases XXV.
Create Value
VALUE PROPOSITION
Observe Customers
A value (proposition) map describes the characteristics of a particular value proposition in your business model in a more structured and detailed way. Break down your value proposition into products and services, pain relievers, and acquire creators.
Value Map
A customer (segment) profile describes a specific customer segment in your business model in a more structured and detailed way. You achieve fit when your value map matches your customer profile—when your products and services produce pain relievers and acquire creators that match one or more jobs, problems, and acquisitions that matter to your customer.
Customer Profile
Customer Jobs
For example, calling someone on a flight is different when you're traveling on a train than when you're driving a car. Likewise, going to the movies with the kids is different from going with your partner.
Customer Pains
Are they afraid of financial, social or technical risks or wondering what could go wrong. These are gains that go beyond what we expect from a solution, but we'd love to have them if we could.
Customer Gains
These are relatively basic gains that we expect from the solution, even if it would work without them. ǃɲWhat quality levels do they expect and what would they like more or less of.
Profi le of a
Business Book Reader”
Make sure you don't just keep in mind the jobs, problems, and profits associated with the value proposition or product. Identify these (e.g., “Business books are too long”) and other extreme problems (e.g., “Lack of time” or “get the boss's attention”).
Ranking Jobs, Pains, and Gains
Step into Your
Customers’ Shoes Instructions
Best Practices for Mapping Jobs, Pains, and Gains
Another problem when you start working with the customer profile is that you can settle for a superficial understanding of your customer's tasks. Don't settle until you really understand the underlying tasks that need to be accomplished that really drive customers.
Products
Pain Relievers
Gain Creators
Mapping the
Value Proposition of Value
Formal overview of how we believe the products and services in this book create value for customers.
The Value MapMap How
Your Products and Services
It's okay if one of them deals with both pain and gain at the same time. Offer pain relievers and win creatives that have nothing to do with the pains and gains in the customer profile.
Best Practices for
Mapping Value Creation
You achieve relevancy when customers get excited about your value proposition, which happens when you handle important work, alleviate extreme pain, and create core benefits that customers care about. Consumers expect and want a lot from products and services, but they also know they can't have it all.
Fit?
Check Your Fit
The first happens when you identify relevant jobs, problems and customer acquisitions that you believe you can address with your value proposition. The second happens when customers respond positively to your value proposition and it becomes popular in the market.
Three Kinds of Fit
Problem-Solution Fit
At this stage, you don't yet have proof that customers actually care about your value proposition. Your next steps are to provide evidence that customers care about your value proposition or start from scratch by designing a new one.
Product-Market Fit
This is when you try to identify the jobs, pains and benefits that are most important to customers and design value propositions accordingly. You prototype multiple propositions with alternative values to come up with the ones that produce the best fit.
Business Model Fit
Customer
Profi les in B2B
People and groups that can hinder or disrupt the process of researching, evaluating and purchasing a product or service. Customer value propositions can also involve several stakeholders in researching, evaluating, purchasing, and using a product or service.
Multiple Fits
Platforms only work when two or more actors interact and extract value within the same interdependent business model. In such a case, the business model must hold two value propositions, one for local residents (called hosts) and one for travelers.
Stay Rent
Platforms are called double-sided if there are two such actors and multi-sided if there are more than two. It's a website that connects locals with extra space to rent and travelers looking for alternatives to hotels as places to stay.
Going to the Movies
Same Customer, Diff erent Contexts
Same Customer, Diff erent Solutions
Apply it as a "scoreboard" to track whether the supposed customer pains, pains, and benefits exist when you talk to real customers. Problem Solving Adaptation: Evidence that customers care about the jobs, pains, and benefits you intend to address with your value proposition.
Lessons Learned
Communicate the map across your organization as a one-page document that creates a shared understanding of how you intend to create value. Use it as a "scoreboard" to track whether your products actually ease pain and gain when you test them with customers.
The Value Proposition Canvas
Design, Test, Repeat
OBSER
VATION
PFROM
TESTING
STAR TING POINT S
ASSESSMENT
PRO TOTYPING
TO TESTING
FAILED
Shaping Your Ideas
Ideas, Starting Points, and Insights
Prototype Possibilities
Understand Customers
10 Characteristics of
Great Value Propositions
Focus on jobs, problems, and acquisitions that many people have or that some people will pay a lot of money for.
Prototyping Possibilities
What’s Prototyping?
Prototyping
Napkin Sketches
Ad-libs
Our ______ help(s) ______ who
Don't spend time on the details of a prototype that is likely to change radically anyway.
Value Proposition Canvases
Representation of a Value Proposition
Minimum Viable Product
10 Prototyping Principles
Use napkin sketches to quickly share and evaluate ideas during the early value proposition design process. You will kill or transform many of the sketched ideas during the prototyping and testing process.
Make Ideas Visible with Napkin Sketches
All votes can be given to one idea, or they can be divided into several napkin sketches. One team member from each separate group takes the stage and presents (large) napkin sketches.
Create Possibilities Quickly with Ad-Libs
Flesh out Ideas with Value Proposition
Starting Points
Where to Start
Could you…
Adapt your value proposition to a new or underserved segment, such as the emerging middle class in emerging markets. Design a value proposition for a new macroeconomic trend, such as rising healthcare costs in the Western Hemisphere.
Spark Ideas with Design Constraints
Servitization
Razor Blade
Trendsetter
Low-Cost
Platform
Use best-selling books and magazines to generate new ideas for new and innovative business propositions and models. Prepare a series of books and magazines that represent a trend, important topic or big idea on a large table.
Invite Big Ideas to
Technology
Solution
Value proposition
Push vs. Pull
Market
Problem (jobs, pains, gains)
Push: Technology in Search of Jobs,
Refine the value proposition by outlining how it will kill customer pains and create profits.
Pull: Identify
High-Value Jobs
When current value propositions don't alleviate the pain, don't create the desired gain in a satisfying way, or simply don't exist. When many people have the job with its associated pains and benefits, or a small number of customers are willing to pay a premium.
Pull: Job Selection
Six Ways to Innovate
Can you…
Address more jobs?
Switch to a more important job?
Go beyond functional jobs?
Get a job done
Help a customer get a job done radically better?
Help a lot more customers get a job done?
Understanding Customers
OBSER VATION
Six Techniques to
Gain Customer Insights
Google Keyword Planner Find out what is popular with potential customers by finding the top five search terms related to your idea. Government Registration Data, World Bank, IMF and more Identify the (government) data that is relevant to your idea and at your fingertips via the Internet.
The Data Detective
Never before have creatives had more access to information and data readily available inside and outside their companies before starting with value design. Third-Party Research Reports Identify three readily available research reports that can serve as a starting point for preparing your customer research and value proposition.
Get Started with
Existing Information
Describe the jobs, problems, and acquisitions that you believe are typical of the customer you are targeting. Use the Value Proposition Canvas to prepare for interviews and organize the chaotic mass of information that will come your way during the interview process.
The Journalist
Interview Your Customers
Complete the interview by following the rules described on the next page. Map the jobs, pains and gains you learned about in the interview onto a blank customer profile.
Ground Rules for Interviewing
Avoid wasting time talking about your beliefs because this is at the expense of learning about your client. ǃɲ Interviews are an excellent starting point for learning from customers, but they usually do not provide enough or reliable enough insight to make critical decisions.
The Anthropologist
Dive into Your
Customer’s World
̃ɲ Record not only what you can observe, but also what is not talked about, such as feelings or emotions. ɲDevelop customer empathy as a critical mindset to effectively conduct this type of contextual research.
A Day in the Life
Worksheet
Identify Patterns in Customer Research
Synthesis Example: Master profile of a business professional / book reader
Find Your
Earlyvangelist
Making Choices
Does it focus on the most important jobs, the most extreme pains, and the most essential gains?
10 Questions to Assess Your Value Proposition
Concentrate it on only a few painkillers and get creators, but do it very well. Focus it on jobs, pains or gains that have a large number of customers or for which a small number are willing to pay a lot of money.
Simulate the Voice of the Customer
Take the perspective of the company's management (eg CEO, Chief Financial Officer [CFO], Chief Operating Officer [COO]). Other internal stakeholders Who else does the company need to make your idea a success?
Understand the Context
There is one idea that your innovation team wants to explore further: participatory television – enabling viewers to crowdsource the plot of a TV series. Players in the gaming industry may be better equipped to succeed with a participation value.
Participatory TV
Assess how your value proposition stacks up against your competitors' by comparing them on a Strategy Canvas, a graphic tool from the Blue Ocean Strategy book. On this post, we compare the performance of Value Proposition Design with the performance of executive education and massive open online courses (so-called MOOCs).
Strategy Canvas
Compare Your
Value Proposition with Competitors
Don't just compare value propositions based on products and services that are similar to yours. One of the most important aspects of presenting value propositions is conveying messages with customers' jobs, pains and benefits in mind.
Use low-fi delity prototypes to
Presenting your ideas and paintings in a clear and tangible way is critical throughout the design process. Never just display features; instead, think about how your value proposition helps get important jobs done, kills extreme pain, and creates core benefits.
Always refer back to customer jobs,
Present your value proposition to others to gather feedback, get buy-in, and complement the more "analytical assessment" we looked at up to this point and the experiments we'll study in the testing chapter. Make sure you get the most out of presenting your ideas by explaining them with disarming simplicity and coherence.
Avoid Cognitive Murder to Get Better Feedback
Learn from the design professions, where people are trained to present ideas early and feedback providers are trained to provide effective design critique. Prototypes can change radically, especially based on market facts that matter more than the opinion of feedback providers.
In a great feedback
This applies both to feedback receivers who present ideas, as well as to feedback providers who provide input to ideas. Teach feedback receivers that feedback providers are not as important as customers, however powerful they may be.
Master the Art of Critique
This is in contrast to business feedback providers, who are often leaders on governing boards or advisory committees. Leaders and decision makers are trained to provide feedback on early ideas to help them evolve.
Collect Effi cient Feedback with de Bono’s Thinking Hats
The presenting team develops their idea equipped with the white, black, yellow and green hat feedback. ǃɲ Make sure that whether people hate or love an idea, everyone wears all hats, white, black, yellow and green.
Vote Visually
Multicriteria
Defi ne Criteria and Select Prototypes
Develop your prototype (eg based on the scores it got) and test it in the market to find out if it really has potential.
Finding the Right Business Model
Create Value for Your Customer
Zoom-Zoom
In 2012, Eight19 launched Azuri to commercialize the technology and bring electricity to off-grid customers in rural emerging markets.
Azuri (Eight19)
Turning a Solar Technology into a Viable Business
FRE E
Idea for
Combine mobile phone and solar technology with scratch cards to access electricity for a period of time.
Idea for the Azuri
Buy scratch cards, use SMS from a mobile phone, enter the resulting password into the Indigo device and use the installation for a period of time (typically a week).
From Value Proposition to
Stress Testing with Numbers
A MedTech Illustration
23MProfit
Recurring Revenues from Consumable Testing Strips
Other Who does the WorkHow much does your business model get customers or third parties to create value for you for free?6. My cost structure is at least 30 percent lower than my competitors. All the value created in my business model is created for free by external parties. My business model has virtually no limits on growth. My business model presents significant grooves that are difficult to overcome.
Seven Questions to Assess Your Business
- Switching Costs
- Recurring Revenues
- Game-changing Cost Structure
- Others Who Do the Work
- Scalability
- Protection from Competition
To what extent does your business model allow customers or third parties to create free value for you? All value created in my business model is created for free by external parties.
Designing in Established
Adopt the Right Attitude to Invent
ObjectiveDesign new value propositions regardless of any limitations imposed by existing value propositions and business models (although management may specify other limitations). Enhance your existing value propositions without radically changing or affecting your core business models. Helps toǃɲProactively bet on the futureǃɲEmbrace a crisisǃɲEmergence of game-changing technology, regulations, etc.ǃɲRespond to a competitor’s disruptive business value propositionǃɲRenew outdated products and services.ǃɲEnsure or maintain fit.ǃɲImprove profit potential or cost structure.ǃɲSustain growth.ǃɲResolve customer complaints.Financial goals At least 50% annual revenue growth (caution: specific to company c) 0 to 15% annual revenue increase or more (caution: specific to company c) Risk and uncertainty High Low Customer knowledge Low, potentially non-existent High Business model Requires radical adaptation or changes Small changes Attitude to failure Part of a learning and iteration process Not an option Mindset Open to exploring new possibilities Focused on improving one or more aspects Design approach Radical/disruptive change to value proposition (and business model) Incremental changes and corrections to existing value proposition Main activities Search , testing and evaluation Improvement, design and implementation Examples Amazon Web Services Designing a new IT infrastructure value proposition aimed at a new customer segment.
In between: Extend
It builds on existing core resources and activities, but requires a significant expansion of Amazon.com's business model.Amazon Prime Introduce a membership with special benefits aimed at frequent Amazon.com users.
The Business Book of the Future
Improvements add to the value proposition and require only minor changes to the business model. The value proposition of this book combined with the exercises and online materials at Strategyzer.com is our attempt to more closely address the jobs we believe matter to our readers.
Reinvent by Shifting from Products…
The Perfect
Workshop Setting
Room Control This space should be set aside for the facilitator and team to have access to a computer, sound system, Wi-Fi and possibly a printer. Work in Progress Gallery/Inspiration Wall Create an area where you can display paintings and other works in progress.
Compose
Your Workshop
Find out what they are trying to get done in their work and in their lives. Look for the right value proposition embedded in the right business model, because every product, service and technology can have many different models.
