Today we’re going to look at capturing your value proposition on the business model canvas. So far we’re showing the problems that we want to solve and the people who have them. Today we’re starting to move on to solutions – otherwise known as value propositions.
This is always a challenge in real life.
‘What problem are you solving ‘ I ask
‘We make widgets that enable you to go faster than light’
‘But why? What’s the problem?
‘What do you mean?’
If there’s not a problem-solution fit, it is SO difficult to grow a business. Trust me I’ve tried multiple times over the years.
Adding your value proposition to the business model canvas
I’m going to dive right in and put ‘Design business models’ down on the example business model canvas for the value proposition.
Is this right? Well, not exactly. It’s not that simple, but there’s a reason why we have about 10% of the business model canvas to write our solution on. Most people will take pages and pages, and write down too much.
Here we are focusing on the big picture. Capture in a few words how you solve the problem. A useful way of looking at it is to think of the problem as the why.
Why are we here? To solve the problem of businesses dying because they don’t have the right business model.
What are we going to do? Help them to design better business models.
How are we going to do it? Writing a daily blog post on how to do it and posting it on LinkedIn. That’s too much detail.
You can break it down a little bit more. Here’s an example.
Add more detail to the value proposition business model canvas
I mentor leaders, I advise companies on how to design disruptive business models, and I educate as many people as I can through blogging, videos and public speaking.
On the canvas, these value propositions appear as Mentor, advise and educate.
When I’ve worked with companies figuring this out I’ve found that if there is a lot to write here and it all seems important, there’s usually more depth that you haven’t uncovered. If you can’t take the value proposition to the customer and have them understand almost instantly it’s an early signal that you haven’t got a problem-solution fit.
If the value proposition (or group of value propositions) are so complex that it takes time to explain then you aren’t working at the right level of detail.
Testing the value proposition again customers and the problem
There are two tests to run at this stage.
Is the value proposition clear to the customer at a high level? We want them to ask ‘Do I need this?’ not ‘What is sie talking about?’
Does the value proposition solve a problem for the customer? Does it solve THE problem that we’ve already written down?
Let’s try this now.
I design business models for companies.
That’s pretty clear. The listener may not know what a business model is but the grammar is in a clear form so even if they need more, they can get 90% of the way themselves.
At the next level down, Denis designs business models for companies by advising, mentoring and educating them. Again it’s pretty robust.
Now for the second test.
Does this value proposition solve the problems that we care about?
If a company needs a business model because its old one isn’t working, will designing a new business model solve the problem.
A qualified yes. A new design is useful, perhaps critical, but they have to do something to change the company from how it is now, to where needs to be. The same logic applies to the other segment.
Iterate the problem, customer and VP until you get a fit
What do we do here? There’s a choice. You can tweak your value proposition so that you solve the problem in full. We could change my value proposition to ‘Transform business models’ or ‘Design and build business models. The value proposition is then promising to solve the whole problem.
Alternatively, we revise the problem or the customer segment to improve the fit.
Let’s try changing the problem. Companies that need to change their business models but have no skill/experience in designing new ones. That would work. We need to go back and validate this narrower problem definition
Alternatively, we narrow the customer segment and target companies who have failing business models but are competent in organisation change and transformation. That way if our value proposition is to design new business models they can then implement them.
As you can see this is a highly iterative process. As we add more pieces in we keep having to make small changes and adjustments.
[note: it’s always worth using the value proposition canvas to do a deep dive into the design of the value proposition]
I have never done a business model where we sketched it out and got it right the first time. By continually backchecking how the pieces fit together, like a jigsaw we’re asking lots of how what and why questions that increase our knowledge and understanding very quickly.
Going further when you have gaps between the value proposition and the problem you are solving, or what the customer wants, can seem attractive. You don’t have to do lots of rework. There’s always a big cost later as your marketing and sales don’t deliver the numbers you expect.
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