VALUE PROPOSITION DESIGN PDF
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or. a result, you will more effectively design value propositions and . Download detailed Business Model Canvas Explanation and the Business Model Canvas pdf. Mastering Value Propositions New. An online course that will teach you how to better understand customers, and create value propositions that sell. Learn more .
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Value Proposition Design simplifies complex ideas into quickly readable illustrations with only the most practical, important details. The result? You'll learn more. Value Proposition Design wildlifeprotection.info Written by Alex Osterwalder Yves Download the Value Proposition Canvas pdf 3 Business Model Fit 48 Three. How to create products and services customers want. Get started with Value Proposition Design wildlifeprotection.info Written by Alex Osterwalder Yves.
What is preventing him or her from getting the job done?
Gains What would make your customer happy? What outcomes does he or she expect and what would exceed their expectations? Think of the social benefits, functional, and financial gains. Pain Relievers How can you help your customer relieve his pains? Be explicit about how they can help. Gain Creators What can you offer your customers to help them fulfill the gains?
Be concrete in quantity and quality! Products and Services What are the products and services you can offer your customer so he can get his job done? How is it not a silver bullet? Step by Step Guide 1 Before you start Arrange for a comfortable environment.
Definitely not a meeting room. Set up the space to support creation, to explore alternatives sequentially.
At the later collaboration, and productivity. Keep working groups in the same room rather than a break-out room to retain high energy levels throughout the workshop.
Everyone can meet here for movable or part of the build- Favor inspiring venues over plenary presentations and ing. Make sure you can stick boring hotel meeting rooms. It can be set up large posters, sticky notes, with or without tables. Compose Your Workshop A great workshop produces tangible and actionable outcomes.
Use a timer visible 2 PM 2 PM to all participants. Learn what they are trying to embedded in the right business model, Keep your early models rough enough get done in their work and in their lives. Unearth which models. Even the best value proposi- outcomes they are looking for. The right business model can be the diference between success and failure.
Then, get started with Testing Step-by-Step p. Then increase spending on experiments, proto- types, and pilots with growing certainty. Test all aspects of your Value Proposition and Business Model Canvases, all the way from customers to partners e.
You need a business plan. We now know better.
Business a far better approach than writing a plan. One to experiment, learn, and adapt to manage this plans are great execution documents in a known might even argue that plans maximize risk. Yet ideas will explore on the following pages, is known as uncertainty. Therefore, systematically testing dramatically change from inception to market customer development and lean start-up. It also will enable you to adapt and change your value propositions and business models and systematically reduce risk and uncertainty.
Balance learnings trumps opinion. Whatever you, your boss, embracing failure. Yet failing cheaply describing your ideas in They are a great indicator, on your vision. Understand Make it measurable. Good tests lead to measur- facts are equal. Test customer jobs, pains, able learning that gives you Interviewees might tell you Make sure that decisions that those that could blow up and gains before testing actionable insights. Consider the reliability of are particularly well informed.
The basic premise is that there are no facts in the building, so you need to test your ideas with cus- tomers and stakeholders e. In this book we use the customer development process to test the assumptions underlying Value Proposition and Business Model Canvases.
Your canvases will radically change and constantly evolve during this phase while you test every critical hypoth- esis. Only when you have validated your ideas do you get into the execu- tion mode and scale. At the early stages of the process, your canvases change rapidly; they will stabilize with increasing knowledge from your experiments.
Drive Transition from a temporary orga- Capture every hypothesis, every- customers to your sales channels and nization designed to search and thing you tested, and everything you begin scaling the business. Use the Value Proposition executing a validated model. Keeping track of your progress and evidence produced along the way allows you to refer back to it if necessary.
Here we apply the three steps in com- bination with the canvases and customer development to test ideas, assumptions, and so-called minimum viable product MVPs. This could be a conceptual prototype, an experiment, or simply a basic prototype MVP of the products and services you intend to ofer. Generate a hypothesis. Analyze the performance of the arti- Measure the performance of the fact, compare to your initial hypothe- artifact you designed or built. Ask what you thought would happen.
Describe what actually happened. Then outline what you will change and how you will do so.
Ries, The Lean Startup, Use these prototypes as a tangible way to clearly map, track, iterate, and share your ideas and hypotheses. Design and build experiments to Hypotheses test the hypotheses that need to be true for your idea to succeed. Start with the most critical hypotheses that could kill your idea. Build so-called MVPs to test your Products value propositions.
This will prevent you from wast- ing time with products and services them the square. Start with jobs, pains, and gains Possessing evidence about customer jobs, pains, In the design section we looked at a series of and gains before you focus on your value propo- techniques to better understand customers. In sition is very powerful. If you start by testing your this chapter we go a step further.
We aim to know with more certainty about which jobs, pains, and gains matter to which jobs, pains, and gains customers really care customers.
Square Test if and how much your customers care about how you intend to help them. The Art of Testing Value Propositions Make sure your experiments allow you to It is an art to test how much your customers care understand which aspects of your products and about your value proposition because the goal services customers appreciate, so that you can is to do so as cheaply and quickly as possible avoid ofering anything unnecessary. Testing the Rectangle Test the most critical assumptions underlying the business model your Provide evidence showing that the value proposition is embedded in.
Provide evidence showing that and capture value is likely to work. Similarly, a company customers but for your business.
Many creators are so focused activities required to create value are more costly on designing and testing products and services than the value they capture. Testing such critical customers in a way they want to be reached. Prioritize Your Hypotheses: Some can kill your business, whereas others matter only once you get the most important hypotheses right. These are the hypotheses that are critical to the survival of your idea. Rank all your hypotheses in order of how critical they are for your idea to survive and thrive: If they stock, and best seller in a format they like.
Less critical to survival What priorities matter most? Start by testing the most critical hypotheses. Describe the hypothesis work. Data Reliability: Consider We are right if we can achieve a click-through rate CTR produces results. How will I learn?
Critical to survival We be line lieve Durat that ion Start performing the experiments at To ve rify th at, w e will Critica l: Data Reliab ility: Assigned to Critical: We believe that We believe that Cop yright Busines Critical: To verify that, we will s Mod el Fou ndry board and rethink your ideas.
Test Cost: Assigned to We believe that Duration Time Required: Test Name Critical: We are right if Assigned to Deadline Duration Cards in your list irrelevant. We believe that We are right if Critical: To verify Critical: And measure Test Card Test Cost: Test Card ed: Time Required: We believe that Time Required: Test Name Deadline Critical: To verify that, To verify that, we will: Data Reliability We are righ Test Cost: We believe that Copyrigh t Business Model Foundry: We are right if And measure Time Required: To verify that, we will Test Cost: Design a series of experiments Rank Test Cards.
And measure Time Required: We are right if for the most critical hypotheses. Prioritize your Test Cards. Rank the Copyright Business Model Foundry AG The makers of Business Model Generation and Strategyzer Tip most critical hypotheses highest, but Consider testing the most critical hypoth- prioritize cheap and quick tests to be eses with several experiments.
Start with done early in the process, when uncer- cheap and quick tests. Then follow up tainty is at its maximum. Increase your with more elaborate and reliable tests if spending on experiments that produce necessary.
Thus, you may create several more reliable evidence and insights Less critical to survival Test Cards for the same hypotheses. Where can I get the most learning the fastest? Outline the outcomes step 2: A Learning 2. Card may aggregate Data Reliability: From that we learned that there is a suiciently Explain what conclu- sions and insights you strong interest for the topic.
Highlight how step 4: For example, if interviews with Design and conduct further tests potential customers show a strong when quick and early experiments interest for a service that requires based on a small amount of data heavy investments to launch, follow indicate the need for drastic actions.
Deepen your understanding. For example, if the quantitative Design and conduct further tests to data of an experiment show that understand why a trend is taking potential customers are not inter- place once you discovered that it is ested, follow up with qualitative taking place.
Validated Expand to next building block. How Quickly Are You Learning? This is called cycle time. Keep the efort FAST customers, partners, in-house so learnings remain fresh and relevant The speed at which you learn is crucial, especially and stakeholders and so you can move fast and act upon insights.
When you start out, uncertainty is at its Library of Use the whole range of experiments from the maximum. Start with quick about the jobs, pains, and gains you intend to ones when uncertainty is high. Write one only when you writing a business plan or conducting a large third- have clear evidence and are approaching the party market study is the wrong thing to start with, execution phase.
They make most sense in the context of incremental changes to a value proposition. Six rapid iteration cycles based on quick experiments produce more learning than three long iteration cycles based on slower experiments. The faster approach will produce knowl- edge more quickly and thus reduce risk and uncertainty more substantially than the latter.
Value Proposition Design Summary
Not seeing things that are there. Also, you might True was designed to unearth. Accurate tested customer interest with Google Measurements AdWords. Accurate Measurements Risk: Seeing things that are not there. When your testing data mislead you to conclude, for example, that your customer has a pain when in False fact it is not true. Overlooking limitations e. When you think an opportunity is larger than it is in reality. Searching in the wrong place.
When you abandon an opportunity because you are looking at the wrong data. For example, you might drop an idea because the customers you are testing with are not interested Risk: Missing out on the real potential. When you conduct experiments that opti- Focus on learning rather than optimizing. For example, positive testing natives if the testing data are positive but the Go back to designing other alternatives before feedback might result in you sticking with a much numbers feel like they should be better e.
Some are quick and cheap but produce less reliable evidence. Some produce more reliable evidence but require more time and money to execute. As a rule of thumb, start to invent new experiments. Keep two things in cheap when uncertainty is high and increase your spending mind when you compose your mix: Experiment Use experiments that provide verbal evidence A procedure to validate or from customers as a starting point.
Get customers invalidate a value proposition to perform actions and engage them e. Customers behave diferently when you are there or when you are not. During direct personal contact with customers, you can learn why they do or say something and get their input on how to improve your value prop- osition. You can collect numerical data and track how many customers performed an action you induced.
Tip Use these techniques to verify whether customers really mean what they say. Produce evidence that the jobs, pains, and gains they mention are real and that they are seriously interested in your products and services. The more a customer test subject has to invest to perform a CTA, the stronger the evidence that he or she is really interested. Clicking a button, answering a survey, providing a personal e-mail, or making a prepurchase are diferent levels of investments.
Select your experiments accordingly. CTAs with a low level of investment are appropriate at the beginning of value proposition design. Those requiring a high level of investment make more sense later in the process. Show that your ideas are relevant enough to them to get them to perform actions that go beyond lip service e.
Provide evidence that indicates which features of your value proposition they prefer. Deliver facts that show they will put their money where their mouth is. Ad tracking is an established technique used by advertisers to measure the efectiveness of ad spending.
Google You can use the same technique to explore customer interest even before a value proposition exists. Select search terms. Select search terms that best represent what you want to test e.
Design your test ad with a headline, link to a landing page, and blurb. Make sure it represents what you want to test. Launch your campaign. Pay only for clicks on your ad, which represent interest. Test interest early in the process 4. Measure clicks. Unique Link Where to apply? Pitch and track. Make a unique and trackable link to more detailed Explain your idea to a potential customer or part- information about your ideas e.
During or after the meeting via e-mail , give landing page with a service such as goo. Track if the customer used the link or not. MVPs are and test reactions to a representation of mainly used to explore potential customer a video before you and partner interest.
Data Sheet Brochure Storyboard Specs of your imagined Mocked-up brochure Illustration of a customer value proposition of your imagined value scenario showcasing your Requirements: Prototype packaging Product development of your imagined value proposition Requirements: Packaging designer and prototype implementation Wizard of Oz Video Set up a front that looks Video showcasing your like a real working value imagined value proposition proposition and manually or explaining how it works carry out the tasks of a Requirements: These types of Illustrations are quick and cheap to produce and make even the most complex value 1 propositions tangible.
Prototype alternative value propositions. Come up with several alternative prototypes for Tips the same customer segment. Go for diversity i. Create compelling visuals. Process adapted from Christian Doll, bicdo.
Which value propositions really create value for you? Which ones should we keep and move forward with, and which ones should we abandon? Get customers to rank value propositions from most valuable to least helpful. Use the insights from your meetings with custom- ers. Life-Size Experiments Get your customers to interact with life-size prototypes and real-world replicas of service experiences.
Stick to the principles of rapid, quick, and low-cost prototyping to gather customer insights despite the more sophisticated set-up. Add a CTA to validate interest. Their purpose is get reactions from customers rather than to go into mass production directly.
Lit Motors used lean start-up principles to prototype and test a fully electric, gyroscopi- cally stabilized two-wheel drive with custom- ers. Because this type of vehicle represents a completely new concept, it was essential for Lit Motors to understand customer perception and acceptance from the very beginning. In addition, Lit Motors added a CTA to validate customer interest beyond initial interactions with the prototype. Deposits go into a holding account until vehicles are ready, with higher deposits moving customers to the front of the waiting list.
Include industry experts to help build and test new concepts and ideas. Guests and experts are invited to create the hotel experience of the future by cocreating hotel rooms and other spaces. Custom- ers will always be tempted to create the perfect experience in a prototype setting, whereas they might not be willing to pay for it in real life. Stick to the principles of rapid, quick, and low-cost prototyping as much as possible, while ofering a close-to-life experience to test subjects.
Landing Page The typical landing page MVP is a single web page or simple website that describes a value proposition or some aspects of it. We believe that by-product of the Critical: Call to Action Get website visitors to perform an experiment. And measure prepurchase. Limit your CTAs to Test early to learn if the jobs, pains, and gains optimize learning.
Learn about their jobs, pains, erences or alternatives that work better than generation, and CTA based on your and gains. Of course, this requires others. Measure click activity with so-called heat learning goals. Your insights from performed action a CTA closer to reality e. Consider are willing to to you? Call to Action The most common form of split test is to test Here are some elements that you can easily test How many of the test subjects perform the CTA?
Split testing the title of this book For this book we performed several split tests.
We tested the titles with more than , people over a period of 5 weeks. As a small reward we showed people a video explaining the Value Proposition Canvas. So go ahead, start a The games can be played online or in person. We present three of them.
Prioritize which Task: Understand your Task: Hohmann, Innovation Games, Speed Boat 1 Set-up. This is a simple but powerful game to help you verify your Prepare a large poster with a speed- understanding of customer pains. Identify pains. Each issue should go on a large sticky note. Ask them to place each sticky as anchors to the boat—the lower the anchor, the more extreme the pain. Compare the outcomes of this exercise with your previous understanding of what is holding customers back from performing their jobs to be done.
The box box to you. Identify their jobs, pains, and gains. Customers get a limited budget of play money to buy their preferred features, which you price based on real-world factors.
Have the participants buy. Analyze outcomes. Select the features for which you Participants buy features as a group, Invite participants to allocate their Analyze which features get most want to test customer preferences.
Instruct them to collaborate ones are not. Make sure the personal with others to get more features. Mock Sales A great way to test sincere customer interest is to set up a mock sale before your value proposition even exists.
The goal is make your customers believe they are completing a real purchase. This is easily done in an online context but can also be done in a physical one. This is the strongest evidence of customer demand see tips to manage customer perception, p.
Presales The main objective of this type of presales is to explore customer interest; it is not to sell. Customers make a purchase commitment and are aware of the fact that your value propo- Tips sition does not yet fully exist. Manage customer perception well, and mock sales can be turned into an advantage. Build on these best practices: Online Attention Physical World Remember that successful presales Platforms such as Kickstarter made preselling are only an indicator.
Ouya, an popular. They allow you to advertise a project, Pledges, letters of intent, and signatures, even if Android-based video game console, and if customers like it, they can pledge money. If you are up for building also easier to apply in a B2B context. This foundation allows you to easily make the hypotheses explicit that need to be true for your idea to work. Start by testing the most important ones with a series of experiments.
With the testing card, you describe how exactly How to Test you will verify your most important hypotheses and what you will measure. After one or more completed experiments, you use the learning card to capture your insights and indicate whether you need to learn more, iterate, pivot, or move on to test the next important hypothesis.
I test already? What am Track the tests you are planning, building, measur- ing, and digesting to learn and make your insights I testing, and follow-up actions explicit.
Keep score of how much progress you are making. How much progress did I make?
Learning Learning To verify that, we will Test Cost: To verify that, we will advance to next step: Owlet was the winner of the International Business Model Competition.
Percentage of positive feedback TEST: Interview nurses pulse DATA: Of 58 nurses interviewed, 93 percent prefer oximetry monitoring monitor patients the wireless monitoring. Wireless pulse oximetry is more convenient. Percentage of positive feedback materials pulse TEST: Interview hospital administrators oximetry DATA: Test Card Test 2: Parents are ready to adopt and buy a wireless baby alarm.
Percentage of adopting parents TEST: I want to buy now! A smart bootie is convenient and sudden easy to use for monitoring. Number of positive comments baby alarm syndrome TEST: Percentage for a sale price TEST: Less worried parents are ready to adopt and buy a wireless baby health tracker, mobile app convenience without alarm.
Percentage of parents adopting the oximetry taking care no-alarm tracker monitor of babies TEST: Interview at retail locations, having to choose between the Owlet tracker and other a slight similar systems video, sound, and movement baby alarm anxiety for baby sleep DATA: Of 81 people interviewed, 20 percent adopted the Owlet tracker.
Professions excluding non-responses: Testing ideas without so get outside of the building and test Go beyond talking to customers and launching is just a pastime. Launching your ideas with the customer develop- conduct a series of experiments. Get tested ideas can change your life as ment and lean start-up process. Make them to perform actions that provide an entrepreneur. Measure your progress sure you start with quick and cheap evidence of their interest, their prefer- from idea to real business step by step.
Make sure you constantly Measure and Monitor p.
How to really understand your customer with the Value Proposition Canvas
Align customer-facing messaging all the way and external from advertising to package design. Point out which pain relievers and gain creators to focus on. Channel Partners Employees Bring channel partners on board, and explain Help all employees understand which custom- your value proposition.
Here you get the cold, hard facts that reveal whether your value proposition is profitable and scalable. The goal is for your value proposition to lead you to a profitable business.
Generally speaking, this happens when the revenue you generate exceeds the costs of your business. Value Proposition Design Key Idea 4: You can understand your customers by studying data, observing their habits and meeting their employees. It might not be obvious, but an ornithologist and an entrepreneur have a lot in common. Only, instead of studying birds to understand avian habits, entrepreneurs study customers to understand consumer habits. One inexpensive and easy way to start gaining insight is to analyze customer data.
Once you have a website, you can use the tracking and analysis services provided by Google Analytics. You can also make a list of the top ten most visited pages on your site and the top ten least visited pages.
This allows you insight into those day-to-day jobs, such as making breakfast for hungry kids, and what pains and potential gains are connected with them. This is the kind of first-hand observation that can lead to ideas about how to improve, for instance, a slow toaster. Another, less direct approach is to observe your potential customers by visiting the stores they go to. Over the course of a full day, you should be able to see patterns in their shopping habits.
For business-to-business or B2B endeavors — where one business sells products to another business — you can use a similar strategy. Spend a day or more at the headquarters of a potential customer and set up some workshops with their employees to find out about the pains and gains of their jobs. Value Proposition Design Key Idea 5: To come up with valuable ideas, try making napkin sketches and filling out ad-libs.
The goal is to put the central idea of a value proposition onto a piece of paper no bigger than a napkin — and then share it. This way you can quickly visualize and share an idea with coworkers, or even customers. Ikea has a clear and good central idea. Ad-libs are another helpful tool to spark a valuable idea.
Value Proposition Design Key Idea 6: Prototypes and pre-sales are two great ways to gather early data on customer interest and reactions. There are always high levels of uncertainty when designing a value proposition. So gathering as much evidence as you can to validate your idea is key to moving forward.All rights reserved. Manage customer perception well, and mock sales can be turned into an advantage.
These types of Illustrations are quick and cheap to produce and make even the most complex value 1 propositions tangible. Are there performance issues that annoy them or malfunctions they cite? For general information about our other products and services, please contact our Customer Care Department within the United States at , outside the United States at or fax Strategic foresight tool to map the context in which you design and manage value propositions Customer Development and business models.
Thus, you may create several more reliable evidence and insights Less critical to survival Test Cards for the same hypotheses. What performance and quality do they Seek to identify four types of customer gains in expect?
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