If you have ever googled "business model", "value proposition" or similar terms, you will have come across Strategyzer. Strategyzer is a strategy and operations consulting firm, which aims to make practical tools available to all business strategy professionals, and their website puts it like this: "We love to build products and create experiences that benefit people, organizations and society". Its co-founder is Alexander Osterwalder, known for creating tools used worldwide, such as: Business Model Canvas, Value Proposition Canvas and Business Portfolio Map.
- What is Value Proposition Canvas?
- When to use it?
- What makes it up?
- Functions and advantages.
What is Value Proposition Canvas?
The Value Proposition Canvas is a tool that facilitates the in-depth analysis of two of the blocks of the Business Model Canvas: Market Segments and Value Proposition. This canvas allows the value proposition to become visible and tangible, therefore easier to create and manage. Moreover, it matches the needs of the potential market.
Before I go further into the explanation, I would like to refresh you on what the two BMC blocks mentioned above consist of.
- Market segments: these are the people or organizations that are potential customers, those that your business wants to reach to offer them a value proposition.
- Value proposition: the products or services you offer to the market segments, which add value to the customer.
While the Business Model Canvas helps you create value for your business, the Value Proposition Canvas helps you create value specifically for your customers. To learn more about the Business Model I invite you to the following blog: Business Model: what is it and why is it important?
When to use it?
As I mentioned in another blog, if you have a business idea in mind and you are planning to launch it, you must have a guide that captures the necessary elements for its operation, otherwise, it would be like starting the construction of a house without having the plans ready. By placing your idea under the microscope of the Value Proposition Canvas, you will be able to visualize more clearly who your customers are, what their habits are and what problems they have that your business can solve. But this tool is not only useful for an idea in process, but also applies to existing organizations.
If you are starting from scratch, you will first have to design your business model, which will be made easier by using the Business Model Canvas, as you will define the 9 building blocks that will make your business work. Then, you will have to zoom into that model and define more specifically the value you will bring to customers. If your company is already up and running, but you don't have a defined business model, you can perfectly apply the same strategy as above.
Designing the canvas is the first step, then you will need to validate what you have put on paper with your customers, test your value proposition and analyze the market response. This test will help you to fine-tune your proposition and improve it more and more.
If you want to learn more about business model patterns, I invite you to read the following blog: 14 successful business model patterns.
What makes it up?
Value Proposition Canvas
The Value Proposition Canvas consists of two parts: Value Map (left) and Customer Profile (right).
- Value Map
Describe the characteristics of your value proposition in detail, specifying the products and services offered, how you alleviate pains or frustrations and how you create benefits for the customer.
- The list of products and services that make up the value proposition.
- Description of how your products and services generate benefits for your customers.
- Description of how your products and services alleviate the pains and frustrations of your customers.
- Customer profile
Describes a market segment in a specific and structured way, detailing the client's work, frustrations, and joys.
- Description of the client's tasks or objectives in their work and daily life, which may be functional, social, or emotional.
- Description of the benefits or solutions the client expects to receive.
- Description of frustrations and obstacles related to doing the client's work.
The objective is that both the customer profile and the value map fit perfectly and work in harmony, and this synchronization is achieved when the products and services that make up the value proposition respond to the frustrations and solutions expected by the customers. It should also be clarified that this analysis should be developed for each market segment as they will have different pains and motivations.
Functions and benefits
Value Proposition Canvas is used to:
- Correctly define the customer profile by identifying their "Jobs to be done", their frustrations and joys. If you want more information about this theory Know your customers' Jobs to be done Harvard Business Review.
- Visualize the value proposition as you define the main components.
- Achieve synchronization between the market and your proposition, as you match your value proposition to the customer profile.
The advantages of using the canvas are:
- It helps to form ideas.
- It facilitates the creation, improvement, and management of the value proposition of your business.
- It allows you to "speak the same language" within the organization, with respect to the value you are creating for the customer.
- It allows you to organize information about the characteristics of your customers, their desires, and pains, in a simple and clear way, facilitating the visualization of patterns.
- It integrates seamlessly with the business model.
- It helps to create products or services that the market really wants.
- With testing, you can minimize risk by testing whether the idea works or not.
- Practical format.