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What is a Value Proposition

Your VALUE PROPOSITION is the foundation for the success of your business as it defines the essence of what connects your market offerings to your customers and makes you stand out among competitors.  It is not simply the product(s) or service(s) you deliver -- it is the ingredient of your business that solves a problem competitors can't. It is your unique identifier and without it, people don't have a reason to choose you over somebody else.

Your Value Proposition is more than just a positioning statement. It drives everything you do in business and marketing.


Picture2 Your Value Proposition:
  • Identifies your target customer.
  • Defines the customer need/problem that your product/service addresses.
  • Expresses the key features of your offering(s).
  • Addresses how these features connect to needs and deliver benefits. 
  • Describes why these benefits are valuable to the customer.  
  • Specifies what differentiates you as the preferred provider of this value.

The Importance of Value Proposition Quality

Since the Value Proposition drives all downstream business and marketing activities, a sub-optimal Value Proposition can impact the effectiveness of all of your downstream and outboaund marketing efforts.

rip The quality of your value proposition can be the difference between a business that thrives, and one that struggles to survive. The US Department of Commerce reports that 2 out of 3 business will fail in less than 10 years. The #1 reason businesses fail is the inability to deliver real value to customers.
  • They offer something nobody wants
  • Features don’t align with customer needs and wants
  • Fix a non-existent problem
  • Target the wrong customer
explosionFailure of a firm to continually revise and evolve their Value Proposition to maintain alignment with current market conditions can result in a "blow-up" of the business. In a market survey of businesses regarding value propostions:
  • 69% have value propositions,
  • 54% had done nothing to optimize their value proposition
  • less than 5% were found to have high-quality value propositions.
This survey suggests a vast majority of firms could increase their revenue and growth by simply working to optimize their Value Proposition.

What is Value Proposition Design

stockicebergOften expressed as a condensed statement representing the "elevator pitch" for your company, your value proposition statement is just the visible tip of the iceberg.

Your Value Proposition is much more than a marketing or positioning statement for promotional purposes. Expressing the very foundation of your business, it emerges from a rigorous and comprehensive analysis of several factors. Design starts with a solid understanding of your target customer, their needs, goals, and motivations. Then, the individual components of your market offering(s) must be connected to specific customer needs. In situations where you might be simultaneously serving multiple customers, a multi-dimensional Value Proposition may be needed to be effective.
The way your offering(s) connect with your customers' needs must also take into consideration what your competitors are doing.  Creativity and innovation are needed to develop elements that are not only compelling to the customer, but also provides distinctive differentiation from your competition. Potential areas of innovation include finding new ways to meet specific needs, adding features to address unmet customer goals, or reaching beyond just functional needs.  Any identified potential enhancement must then be validated with customers to assure the Value Proposition is truly delivering what matters to them.  This is often done in a cyclic pattern of customer feedback and value proposition changes to arrive at a final compelling and competitively superior result. feedback
 
The resulting design activity is a messy, non-linear, iterative process involving a continuous back and forth between designing prototypes and testing them to evolve a high quality, compelling, and competitive superior Value Proposition.  If you haven't been through such a process, then you are likely not to be among the 5% of business that have a high quality value proposition, and likely to be in the 2/3 of companies that will fail to survive 10 years.  messy process
 

What Can Value Proposition Design do for Me

Value Proposition Design helps you tackle the core challenge of every business ― creating compelling products and services customers want to buy.
person

Gain clarity in what creates value for your customers.

Value Proposition Design provides a structured approach for understanding the more subtle patterns of what creates value for your market segments.  This knowledge and insight will allow you to be more effective in innovating competitively superior products and services that directly target your customers’ most pressing and important needs, points of pain, and desired gains.
team

Leverage the skills and experience of an aligned team focused on the customer.

Equip your team with the shared language needed to conduct more strategic and meaningful conversations, get aligned, and focus their different perspectives on the customer. This will produce actionable outcomes beyond just technology, products, and features, with a focus on creating real value for your customers and unique differentiation for your business.
team

Minimize the risk of market failure and avoid wasting time on ideas that don’t deliver value.

Value Proposition Design provides a structured approach for relentlessly testing the assumptions and hypotheses underlying your ideas in order to reduce the risk of failure. This will allow you innovate and test bold ideas and shape them to customer needs, and assure their customer value before investing the considerable effort needed to implement your plans and ideas.  You only invest in the ideas with the highest probability of success.
winning product

Grow your business by delivering what customers want

Value Proposition Design help you innovate and deliver compelling, competitive superior value propositions that delight and attract customers, and stand out from the crowd. The result provides the foundation for driving business growth.
 

Who Can Benefit from a Design Effort

You can benefit from Value Proposition Design whether you are creating something from scratch on your own or you are part of an existing organization.  A start-up entrepreneur will deal with different constraints than a product manager within an existing organization.  However, the techniques of Value Proposition Design apply to both contexts.  Depending on your starting point they are executed in different way to leverage different strengths and overcome different obstacles.

NEW VENTURES - Individuals or teams setting out to create a great value proposition and business model from scratch.

new venture Main Challenges
  • Produce proof that your ideas can work on a limited budget.
  • Manage involvement of investors (if you scale your ideas).
  • Risk running out of money before finding the right value proposition and business. model
Main Opportunities
  • Use speedy decision making and agility to your advantage.
  • Leverage the motivation of ownership as a driver for success.

ESTABLISHED ORGANIZATIONS - Teams within existing companies setting out to improve or invent value propositions and business models.

Office Building Main Challenges
  • Get buy-in from top management.
  • Get access to existing resources.
  • Manage cannibalization.
  • Overcome risk aversion.
  • Overcome rigid and slow processes.
  • Produce big wins to move the needle.
Main Opportunities
  • Build on existing value propositions and business models.
  • Leverage existing assets (sales, channels, brand, etc.).
  • Build portfolios of business models and value propositions.

The Value Proposition Canvas

canvasThe Value Proposition Canvas provides an easy to understand visual tool that can help ensure a product or service is positioned for success. The framework provides for a detailed examination of the realtionship between two building blocks, the customer profile, and the product value map. The technique delivers a repeatable and structured approach for designing, testing, creating, and managing products and services customers actually want.  It can be used when there is need to refine an existing product or service offering, or where a new offering is being developed from scratch.

Using the tool involves completeing the customer profile side for each each segment served, as each segment has distinct gains, pains and jobs.  The value map then lists the specific attributes of the offered product or service.  Each point identified can be ranked from nice to have to essential in terms of value to the customer. A fit is achieved when the products and services offered as part of the value proposition address the most significant pains and gains from the customer profile.  The resulting value proposition, is then validated with customers.

Simply using the tool with a team of diverse perspectives often leads to new and useful insights.

value canvas

History of the Value Proposition and Business Model Canvas

The Value Proposition Canvas and Business Model Canvas were initially developed by Dr. Alexander Osterwalder and published in his books Value Proposition Design (2014) and Business Model Generation (2010).   The initial work on the business models was grounded in the lean start-up movement and subject of his first publication Business Model Generation (2010).  Value Proposition Design (2014) was then written as a companion to Business Model Generation.  These books have now sold over a million copies and have been published in 37 languages. USA Today named Business Model Generation among the 12 best business books of all time, and the German edition was named Management Book of the Year 2011. The Value Proposition and Business Model Canvas are currently being used by over 5 million business practitioners around the globe and are now taught in hundreds of business school programs (globally, and growing). They are rapidly becoming mainstream best practices in the corporate innovation space. 
 
business model bookvalue prop book
 
The value of these frameworks is their ability to consolidate a significant amount of leading-edge business theories into pragmatic, easy to understand tools, that can be immediately applied to produce results and improve business success rates. The rapid adoption rate of these tools within global corporations is a testament to their value and usefulness.

In 2015 Alexander Osterwalder won the strategy award by Thinkers 50, called the “Oscars of Management Thinking”, and ranks #15 among the leading business thinkers of the world. In 2013 he won the inaugural Innovation Luminary Award by the European Union.  He is a frequent keynote speaker at Fortune 500 companies and has held guest lectures in top universities around the world, including Wharton, Stanford, Berkeley, IESE, MIT, KAUST and IMD.

In 2018, our principle consultant, Dr. Daniel Lewis, traveled to Baden, Switzerland to receive 50 hours of intensive personal training from Dr. Osterwalder on how to train practitioners in the use and application of these tools, and is focused on bringing this knowledge to the smaller sized business.
 
More than 322 schools across the United States, plus countless more worldwide now these techniques, which we apply in advisory services and cover in our seminars and workshops.
 
• Missouri University Of Sci & Tech • Butler University • University Of St Thomas St Paul • University Of Chicago • Ivy Tech Cc Indianapolis • University Of Calif Santa Cruz • Asbury Theological Sem • Calif St University Northridge • Biola Univ • Pittsburg State Univ • Georgetown Univ • Arkansas State University Jonesboro • Mira Costa College • Dartmouth College • Imperial Valley College • Auburn University Auburn • Peru State College • Niagara University • Arizona St University Tempe • University Of Delaware • Metropolitian Community Coll • University Of Hawaii Manoa • Central Michigan Univ • Calvin College • University Of Incarnate Word • North Lake College • Pratt Institute • University Of Central Florida • Emery Weiner School • University Of Tenn Knoxville • Seminole State Coll Seminole • University Of Washington • Skyline College • Saddleback College • University Of Conn Hartford • Purdue University Main Campus • Los Angeles Sw College • Calif St Poly University Pomona • University Of Miami • University Of Virginiasch Medicine Health System • University Of South Florida Tampa • Brooklyn Law School • Expression Coll Of Digital Art • Smith College • Miami Dade College • Itt Tech Inst Duluth • Hagerstown Comm College • Mississippi College • Art Inst Of Houston • University Of Mass Bostonharbor Campus • Miami University Oxford • North Lake College • University Of Conn Storrs • Siena Heights University • Texas Christian Univ • University Of Iowa • University Of St Thomas St Paul • Skyline College • Salem State University • Colorado School Of Mines • John Carroll University • Grace College Seminary • Depaul University • University Of Maryland Coll Pk • School Of Visual Arts • Calif St University Northridge • Everest University Orange Park • Concordia University River Forest • Florida A & M Univ • University Of Tenn Knoxville • Los Angeles Sw College • Glendale Comm Coll (Az) • Itt Tech Inst Orland Park • Cuny Brooklyn College • Paradise Valley Comm Coll • Mira Costa College • Capella University Minneapolis • University Of Louisville • Ivy Tech Cc Indianapolis • Wayne State Univ • Biola Univ • Westminster Coll Slc • New School University New York • University Of Central Florida • Trident Technical Coll • Art Inst Of Las Vegas • Texas A & M University Coll Sta • North Shore Comm College • Western Mich Univ • Wichita State University • College Of Lake County • Tulsa Community College

Value Proposition Design Process

A Value Proposition Design effort is a structured process consisting of several steps.  The first step is to map out your current or intended value proposition using the Value Proposition Canvas to create a baseline perspective. This baseline is then used to drive innovation and identification of potential changes that can be made to improve your offerings in both terms of competitive differentiation as well as fit to customer needs. Candidates for change must then be validated with customers, and the feedback provided used to drive additional adjustments. This cycle of idea generation and validation continues until the concepts converge on an updated, improved, and customer validated value proposition.

cust profile
Step 1 - Map your Customer Profile - Using the Value Proposition Canvas, map the profile of one of your currently existing customer segments. If you are working on a new idea, sketch out the customer segment you intend to create value for.
  • Select a customer segment that you want to profile.
  • Identify customer jobs by asking what tasks your customers are trying to complete. Map out all of their jobs.
  • Identify the pains your customers have in trying to complete the identified tasks.  Write down as many as you can come up with including obstacles and risks.
  • Identify what outcomes and benefits your customers want to achieve with the identified tasks. Write down as many gains as you can come up with.
  • Order jobs, pains and  gains in a column each with the most important jobs, most extreme pains and essential gains on top and the moderate pains and nice to have gains at the bottom.
Step 2 - Complete the Value Map - Sketch out the value map of your existing value proposition that  targets the profiled customer segment  If you don’t  have one yet, sketch out how you intend to create value with your new idea.
  • List all the features, products, and services of your existing market offering.
  • Outline how your products and services currently help customers alleviate pains by eliminating undesired  outcomes, obstacles, or risks.
  • Explain how your products and services currently create expected or desired outcomes and benefits for customers.
  • Rank products and services, pain relievers, and gain creators according to how essential they are to customers.
valuemap
fit
Step 3 - Check your Fit by verifying you are addressing what matters to customers. Go through Pain Relievers and Gain Creators one by one, and check to see whether they fit a customer job, pain, or gain. Put a check mark on each one that does. If a Pain Reliever or Gain Creator doesn’t Fit anything, it may not be creating customer value. Fit actually occurs on three levels.
  • The first is the Fit of our solution with the customer problem and with what customers really care about.
  • The second is the Fit to market, and is driven by positive customer reaction to your value proposition which results in market traction.
  • The third level is the Fit to your business model in a scalable and profitable way.
Ask yourself,  how well does your Value Proposition really fit your customer, market, and business model?


Step 4 - Compare your Fit to that of your competitors. Select the most important jobs to be done, points of pain, and desired gains.  Create a competitive map that shows how you rate against competitors with a focus on the most important items.  Look for gaps and unserved needs.
fit


idea lab
Step 5 - Seek out ideas for ways you can improve your Fit and competitive difference.  Areas to consider include:
  • address more jobs
  • focus on more important jobs
  • go beyond functional jobs
  • help more customers get the job done
  • get a job done incrementally better
  • help get a job done radically better
Step 6 - Validate your ideas with customers.
  • identify your hidden assumptions about customers and ideas
  • prioritize your assumptions
  • define ways to test your assumptions
  • prioritize your tests
  • execute tests and collect learnings
fit
Step 7 - repeat steps 1-6 until a validated competitive  value proposition emerges. The search for value propositions that meet customer jobs, pains, and  gains is a continuous back and forth between designing prototypes and  testing them. The process is iterative  rather than sequential. The goal of  Value Proposition Design is to test  ideas as quickly as possible in order to  learn, create better designs, and test again. Use the activity of making quick and rough study models of your idea to explore alternatives, shape your value proposition, and find the best opportunities. Prototyping is common in the design professions for physical artifacts. We apply it to the concept of value propositions to rapidly explore possibilities before testing and building real products and services.

Value Proposition Design - Training & Advisory Services

We provide training and consulting on the use and application of The Value Proposition Canvas to help clients design new value propositions or improve existing ones.

training web
Learn how to:
  • Design, test, and build high-quality compelling customer value propositions in a structured and repeatable way.
  • Clarify your customer needs and how you create value for them on more than just a functional level.
  • Capture the gains the customer is trying to achieve.
  • Identify the barriers your customers encounter.
  • Connect specific elements of your offering to customer needs, delivery of desired gains, and elimination of barriers.
  • Improve the fit between customer and market opportunities and business capabilities.
  • Identify opportunities for improving your competitive advantage.
  • Compare the quality of your offering against your competitors to identify opportunities for improvement or competitive advantage.
  • Examine fit to customer, market, technology, and business
 
target audience
Target Audience:
  • New start-up businesses who are seeking to define their market offerings.
  • Established businesses seeking to improve their market traction and competitive advantage of current offerings.
  • Established businesses seeking to add new products and services.

We offer three (3) tiers of Value Proposition training services:
FOUNDATIONS SEMINAR:

bootstrap This seminar provides an introduction to the concepts and components of the Value Proposition Canvas, equipping attendees with the foundation knowledge needed to pursue additional training and use of the tools, either on their own, or through additional structured training and consulting.

The Bootstrap Seminar is periodically offered in a public (open registration) venue at various locations, and is also available on-line at the Innovation Oxygen Academy.   Please contact us for more information on our public seminars.

MASTER CLASS WORKSHOP
workshop This is an intensive workshop providing in-depth, hands-on training in the use and application of the Value Proposition Canvas.  Attendees learn how to apply the model along with approaches to drive innovation and specific techniques to validate ideas and assumptions with customers (see detailed syllabus). 

The Master Class Workshop is offered in multiple formats:
  • Public (open registration) venue, which are offered periodically at various locations.  Please see our seminar schedule for the next seminar near you. 

  • Private - restricted to your company or team, and provided on demand at your location. (Contact us to schedule a private in-house seminar for your team(s)
  • On-line - self paced training.
 Contact us for more information on our Master Class Workshops
 
GUIDED IMPLEMENTATION AND ADVISORY SERVICES
advisory serviceEnlist us for a comprehensive engagement that includes coaching and advice as you work through the process of defining and validating a value proposition. This begins with customized in-house training that can span over an extended period of time, with advice and guidance as you work through a Value Proposition definition project.  Contact us for more information on our guided implementations.

Contact us contactustoday (281.858.3271) for a free no obligation discussion of your current needs and situation.

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