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4.pptx6/08/2018
BUS502 Entrepreneurship
Business Model and Value Proposition Canvas – Part 2
Week 4
Learning Objectives
To introduce the business model and value proposition canvases
To understand the different components of these canvases
To explore how these canvases can help with the business model development
To explore business models and value propositions of existing organisations
To utilise the canvases for the business development as part of assignment 2
What is a Value?
Before we look at the Value Proposition Canvas, let’s talk about values:
How do you define value?
What aspects of products or services do you value and in what way?
– Examples?
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The Elements of Value Pyramid
Products and services deliver fundamental elements of value that address four kinds of needs:
Functional
Emotional
Life changing
Social impact
https://hbr.org/2016/09/the-elements-of-value
The Elements of Value Pyramid
Extends Maslow’s ‘hierarchy of needs’
Does not accept on its face a consumer’s statement that a certain product attribute is important; instead explores what underlies that statement.
Companies can improve on the elements that form their core value, which will help set them apart from the competition and meet their customers’ needs better.
https://hbr.org/2016/09/the-elements-of-value
What do customers really value?
For example, when someone says her bank is “convenient,” its value derives from some combination of the functional elements saves time, avoids hassle, simplifies, and reduces effort.
https://hbr.org/2016/09/the-elements-of-value
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What do customers really value?
And when the owner of a $10,000 Leica talks about the quality of the product and the pictures it takes, an underlying lifechanging element is self- actualization, arising from the pride of owning a camera that famous photographers have used for a century.
https://hbr.org/2016/09/the-elements-of-value
What do customers really value?
The life-changing element motivation is at the core of Fitbit’s exercise-tracking products.
https://hbr.org/2016/09/the-elements-of-value
More Examples
https://chiefexecutive.net/30-elements-can-help-ceos-attain-product-nirvana/
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Further information
Bain & Company (the creator of the elements of value) http://www.bain.com/publications/business- insights/elements-of-value.aspx
http://www.bain.com/bainweb/media/interactive/e l ements-of-value/
(interactive tool)
The B2B Elements of Value
… if you are focussing business- to-business
40 distinct elements of value
More value – greater loyalty
Interactive tool here: ht tp : // ww w .ba i n. c om / ba i n w eb / media/interactive/b2b- eov/index.html
Both Elements of Value articles are on Learnline!
https://hbr.org/2018/03/the-b2b-elements-of-value
Value Proposition Canvas
The Value Proposition Canvas zooms into the details of two of the building blocks of the Business Model Canvas.
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Value Proposition Canvas
The main aim is to create a fit between your value proposition and the customer segments you target.
The set of value proposition benefits that you design to attract customers.
The set of customer characteristics that you assume, observe, and verify in the market.
Value Proposition Canvas Explained (3:12)
https://youtu.be/ReM1uqmVfP0
Value Proposition Canvas
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Customer Profile
Customer Jobs
Describes what customers are trying to get done in their work and in their lives, as expressed in their own words.
Customer Pains
Describes bad outcomes, risks, and obstacles related to customer jobs.
Customer Gains
Describe the outcomes customers want to achieve or the concrete benefits they are seeking.
Customer Jobs
Functional jobs
Trying to perform or complete a specific task or solve a problem
E.g. mow the lawn, eat healthy, write a report, or help clients as a professional
Social jobs
Want to look good or gain power or status
E.g. look trendy as a consumer or be perceived as competent as a professional
Personal/emotional jobs
Seek a specific emotional state, such a feeling good or secure
E.g. seeking peace of mind regarding one’s investment as a consumer or achieving the feeling of job security at one’s workplace
Customer Jobs
Supporting jobs
Performed in the context of purchasing or consuming value either as consumers or a professionals
Buyer of value: e.g. comparing offers, deciding with product to buy, standing in checkout line, completing purchase, or taking delivery of product or service
Cocreator of value: e.g. posting product reviews and feedback, or even participating in the design of a product or service
Transferrer of value: e.g. related to the end of a value proposition’s life cycle, such as cancelling a subscription, disposing of a product, transferring it to others, or reselling it
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Customer Pains
Undesired outcomes, problems, and characteristics
Pains are functional (e.g., a solution doesn’t work, doesn’t work well, or has negative side effects),
social (“I look bad doing this”),
emotional (“I feel bad every time I do this”),
or ancillary (“It’s annoying to go to the store for this”).
This may also involve undesired characteristics customers don’t like (e.g., “Running at the gym is boring,” or “This design is ugly”).
Customer Pains
Obstacles
Prevent customers from even getting started with a job or that slow them down
E.g., “I lack the time to get this job done accurately,” or “I can’t afford any of the existing solutions”
Risks (undesired potential outcomes)
What could go wrong and have important negative consequences
E.g., “I might lose credibility when using this type of solution,” or “A security breach would be disastrous for us”
Customer Gains
Required gains
Gains without which a solution wouldn’t work.
For example, the most basic expectation that we have from a smartphone is that we can make a call with it.
Expected gains
Relatively basic gains that we expect from a solution, even if it could work without them.
For example, since Apple launched the iPhone, we expect phones to be well-designed and look good.
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Customer Gains
Desired gains
Gains that go beyond what we expect from a solution but would love to have if we could. These are usually gains that customers would come up with if you asked them.
For example, we desire smartphones to be seamlessly integrated with our other devices.
Unexpected gains
Gains that go beyond customer expectations and desires. They wouldn’t even come up with them if you asked them.
Before Apple brought touch screens and the App Store to the mainstream, nobody really thought of them as part of a phone.
Example: “Business Book Reader”
Ranking Jobs, Pains, and Gains
Although individual customer preferences vary, you need to get a sense of customer priorities.
Investigate which jobs the majority consider important or insignificant.
Find out which pains they find extreme versus merely moderate.
Learn which gains they find essential and which are simply nice to have.
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Ranking Jobs, Pains, and Gains
Value Map
Products and services
A value proposition is built around these
Pain relievers
How do the products and services alleviate customer pain?
Gain creators
How do the products and services create customer gains?
Products and Services
A list of what you offer (what do your customers ‘see’?), incl. supporting products and services
Physical/tangible
Goods, such as manufactured products.
Intangible
Products such as copyrights or services such as after-sales assistance.
Digital
Products such as music downloads or services such as online recommendations.
Financial
Products such as investment funds and insurances or services such as the financing of a purchase.
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Pain Relievers
Ask yourself: Could your products and services…
produce savings?
In terms of time, money, or efforts.
make your customers feel better?
By killing frustrations, annoyances, and other things that give customers a headache.
fix underperforming solutions?
By introducing new features, better performance, or enhanced quality.
put an end to difficulties and challenges your customers encounter?
By making things easier or eliminating obstacles.
wipe out negative social consequences your customers encounter or fear?
In terms of loss of face or lost power, trust, or status.
Pain Relievers (cont’d)
Ask yourself: Could your products and services…
eliminate risks your customers fear?
In terms of financial, social, technical risks, or things that could potentially go wrong.
help your customers better sleep at night?
By addressing significant issues, diminishing concerns, or eliminating worries.
limit or eradicate common mistakes customers make?
By helping them use a solution the right way.
eliminate barriers that are keeping your customer from adopting value propositions?
Introducing lower or no upfront investment costs, a flatter learning curve, or eliminating other obstacles preventing adoption.
Gain Creators
Ask yourself: Could your products and services…
create savings that please your customers?
In terms of time, money, and effort.
produce outcomes your customers expect or that exceed their expectations?
By offering quality levels, more of something, or less of something.
outperform current value propositions and delight your customers?
Regarding specific features, performance, or quality.
make your customers’ work or life easier?
Via better usability, accessibility, more services, or lower cost of ownership.
create positive social consequences?
By making them look good or producing an increase in power or status.
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Gain Creators
Ask yourself: Could your products and services…
do something specific that customers are looking for?
In terms of good design, guarantees, or specific or more features.
fulfil a desire customers dream about?
By helping them achieve their aspirations or getting relief from a hardship?
produce positive outcomes matching your customers’ success and failure criteria?
In terms of better performance or lower cost.
help make adoption easier?
Through lower cost, fewer investments, lower risk, better quality, improved performance, or better design.
Example: “Business Book Reader”
Check for Fit
Are you addressing essential customer gains?
Fit?
Are you addressing extreme customer pains?
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10 Characteristics of Great Value Propositions
Are embedded in great business models
Focus on few pain relievers and gain creators, but do those extremely well
success
Focus on the most significant jobs, most severe pains, and most relevant gains
Differentiate from competition in a meaningful way
Address functional, emotional and social jobs all together
Outperform competition
Focus on jobs, pains, or gains that a substantially on at least one large number of customers have or dimension
for which a small number is willing Are difficult to copy to pay a lot of money
Align with how customers measure Focus on unsatisfied jobs, pains,
and gains
Tutorial?
We will be developing a value proposition canvas.
If needed, we will also continue developing business ideas or you will have the opportunity to discuss some ideas that you have for your assignment.
Preparation for next week
In week 5, we will focus on some strategic aspects and legal issues (see text book).
Most importantly:
You should have a clear idea about what your business idea is – if not, get in contact with your lecturer or the unit coordinator!
Start drafting your business model and value proposition
Research evidence to support your opportunity development
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Thank you for your attention
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