Value Proposition - Entrepreneurship 101

Joseph Wilson [email protected] ��

Agenda

What is a value proposition?

Examples Dimensions of value Testing your hypothesis The strategy canvas

How to (not) articulate value:

A value proposition is a statement of the unique benefits delivered by your offering to the target customer

A value proposition is a hypothesis that your offering will bring certain values to a target customer. * * Like any hypothesis, it needs to be rigorously tested in the lab (read: marketplace) before money is put into scaling.

Value Proposition is Not:

An elevator pitch: a 30 second conversation starter

“I buy dead magazines…”

“We un-think marketing…”


A tag-line: an ad compliment “We know money”

“What Happens Here, Stays Here”

“The City That Never Sleeps”

“Built for the road ahead”


A mission statement: a statement of the purpose of your business. “The University of Toronto is committed to being an

internationally significant research university, with undergraduate, graduate and professional programs of excellent quality.”

“Google's mission is to organize the world's information and make it universally accessible and useful”

The value proposition statement should consist of these components: 1. What your product/service is

2. The target customer

3. The value you provide them

Emergent property: why your product is unique

Examples:

Good: “Winners is a department store that offers fashion conscious consumers the latest brand names for up to 60 per cent off.” (Winners)

Bad: “Winners is an off-price department store owned by TJX that employs international sourcing and buying power.”

What is it?

For whom?

Values?

Examples:

Good: “A1 Industries has developed an economical and easy-to-use chemical additive that allows paint manufacturing companies to reduce the environmental impact of their products

Bad: “A1 Industries has discovered a chemical isomer additive that allows for a reduction of VOC emissions.”

What is it?

For whom?

Values?

Examples:

Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”

Bad: “Google uses a patented page-ranking algorithm to make money through ad placement.”

What is it?

For whom?

Values?

Examples:

Good: “Google is the world’s largest search engine that allows internet users to find relevant information quickly and easily.”


What is it?

For whom?

Values?

Are Internet Users really Google’s customers?

Examples:

Good: “Google is the world’s largest search engine that automatically provides advertisers with potential customers tailored to the ad content, increasing click-through rates and conversion rates.”


What is it?

For whom?

Values?

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Usability

Social Inclusion

Health

Aesthetics

Status

Newness

Environmental

Self-Actualization

Ethical

Selling to Business

Selling to Customer

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

- Overt values

- Rational decision making

B2B Sales:

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

- Latent values

- Emotional decision making

B2C Sales:

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Usability

Social Inclusion

Health

Aesthetics

Status

Newness

Environmental

Self-Actualization

Ethical

Selling to Business

Selling to Customer

Process: Draft a value proposition

Version 1.0: I think A1 Industries’ product/service will…

The Customer Development Triangle

Product

Target Customer

✗


Product = solution

Target Customer

Problem

Process: Test your value proposition

Version 2.0: A1 Industries provides…

Blank, Steve Four Steps to Epiphany

State your hypothesis

Test problem

hypothesis

Test product concept

Verify

Get out of your office!

Understanding Customer Problems:

Empathy with Target Customers!

Osterwalder, Alexander, Business Model Generation, 2009

Day in the Life Scenario

Ernie: fixes airplanes

Current situation & desired outcome

Problem encountered & economic consequences

Enabling factors of your product

New outcomes and economic rewards

Before

After

Understanding customer problems:

¢ Market research methods for entrepreneurs

Pretend to be the customer

Customer Interview Program

Lead user

QFD - Quality Function Deployment

Customer archetype

¢ Methods that require professionals

Concept testing

Cojoint analysis

Empathic deisgn

Prototype/Beta testing

Primary Market Research

Industry specific

vendors

IDC Forrester Gartner

Lux Research Cleantech Group LLC

Thomson Pharma MedTrack

Business Insights IMS

Multiple Industry coverage vendors

Frost & Sullivan BCC Research Total Patents

Delphion/Thomson Innovation

Datamonitor Venture Source

Chemical Abstracts

Aggregator of other vendor

resources

Dialog Pro Market Research

Factiva Meltwater News

1. Access to reports/data from 20 databases

2. Access to industry analysts through inquiry

time

Key: Red – ICT Green – Cleantech & Nanotech Blue – Life Sciences

U of T- $ 50 M collection

Secondary Market Research

Process: Test your value proposition

Blank, Steve Four Steps to Epiphany


Test problem

hypothesis


Verify

The Three Outcomes:

Verify

Validate: Confirmed

value proposition

Iterate: change value

proposition

Exit: Don’t spend any

more money!


Pg 52

Product = solution

Target Customer

Problem

Whole Product

A whole product is the combination of all the things that give your customers a compelling reason to buy. This includes not only your core product, but also any services and ancillary products that augment it.

Minimum Viable Product

A minimum viable product is a product launched to early adopters that has only the minimum set of features required to get feedback from potential customers.

Iterations in the Market

TIME!

VALUE!

Minimum Viable Product!

Whole Product!

Progress is iterative!

Iterations in the Market State your hypothesis

Test problem

hypothesis


Verify

Process: Decide what features to include

Which features do my target customers value most? Which are they willing to pay for? Which are easy to roll out and which require more R&D

Product differentiation

Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

What is the criteria people use when solving their problem?

How does your business rate on that criteria?

High

Medium

Low

Product differentiation

The goal is not to be the highest in each category, but to have a unique profile that highlights where your value lies.

Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

Process: Testing your MVP

Consider Eliminating the features that don’t add value.

Consider Reducing the features you must have but isn’t that valuable.

Consider Raising the features that differentiate you from your competition.

Look to Create new value factors your customers have never seen before.

Process: Test Your MVP


Test problem

hypothesis


Verify

Blank, Steve Four Steps to Epiphany!

Verify

Validate: Confirmed

value of MVP

Iterate: change your

product features

Exit: Don’t spend any

more money!

The value proposition statement should consist of these components: 1. What your product/service is

2. The target customer

3. The value you provide them

Write – Test – Iterate Prototype – Test - Iterate

Joseph Wilson [email protected] ��

Value Proposition - Entrepreneurship 101

Business

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