value proposition - entrepreneurship 101 (2012/2013)

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Focus is on the process of creating a crisp and concise value proposition for your start-up. Learn how to answer the essential question, “what is the value you bring to your customers?” without getting into the details of your technology. Formulating a good value proposition is an essential step for any start-up and lies at the core of many of the other tools entrepreneurs need to develop, such as market analysis, business modeling, finding funding and delivering an investor or customer pitch. The resources below offer a foundation upon which you can build your knowledge and skills in these areas.

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Page 1: Value Proposition - Entrepreneurship 101 (2012/2013)
Page 2: Value Proposition - Entrepreneurship 101 (2012/2013)

Joseph Wilson [email protected] ��

Page 3: Value Proposition - Entrepreneurship 101 (2012/2013)

Agenda

What is a value proposition?

Examples Dimensions of value Customer interviews The value proposition generator

Page 4: Value Proposition - Entrepreneurship 101 (2012/2013)

marsdd.com/toolkit

Page 5: Value Proposition - Entrepreneurship 101 (2012/2013)

How to (not) articulate value:

Page 6: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 7: Value Proposition - Entrepreneurship 101 (2012/2013)

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.

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Value Proposition is Not:

An elevator pitch: a 30 second conversation starter

“I buy dead magazines…”

“We un-think marketing…”

Page 9: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition is Not:

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

“What Happens Here, Stays Here”

“The City That Never Sleeps”

“Built for the road ahead”

Page 10: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition is Not:

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”

Page 11: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 12: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Page 13: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Page 14: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Page 15: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Page 16: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Page 17: Value Proposition - Entrepreneurship 101 (2012/2013)

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?

Are Internet Users really Google’s customers?

Page 18: Value Proposition - Entrepreneurship 101 (2012/2013)

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.”

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

What is it?

For whom?

Values?

Page 19: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 20: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 21: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 22: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 23: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 24: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 25: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 26: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 27: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

Page 28: Value Proposition - Entrepreneurship 101 (2012/2013)

Saving/making money

Saving time

Lower risk

Enabling function

Convenience

Quality

Customizable

Selling to Business

- Overt values

- Rational decision making

B2B Sales:

Page 29: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 30: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 31: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 32: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 33: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 34: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 35: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 36: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 37: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 38: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

Page 39: Value Proposition - Entrepreneurship 101 (2012/2013)

Usability

Social Inclusion

Self-Actualization

Health

Aesthetics

Status

Newness

Environmental

Ethical

Selling to Customer

- Latent values

- Emotional decision making

B2C Sales:

Page 40: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 41: Value Proposition - Entrepreneurship 101 (2012/2013)

Process: Draft a value proposition

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

Page 42: Value Proposition - Entrepreneurship 101 (2012/2013)

Process: Test your value proposition

Blank, Steve Four Steps to Epiphany

State your hypothesis

Test problem

hypothesis

Test product concept

Verify

Page 43: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 44: Value Proposition - Entrepreneurship 101 (2012/2013)

Get out of your office!

Page 45: Value Proposition - Entrepreneurship 101 (2012/2013)

Interviews Focus group Surveys Participant observation Observation

Page 46: Value Proposition - Entrepreneurship 101 (2012/2013)

1. The Problem interview

Purpose: To determine that the problem you are solving is a large pain point for the target customer

2. The Solution interview

Purpose: To determine that the solution you have proposed is of value to the target customer and they are willing to pay to solve the problem sin that way.

Page 47: Value Proposition - Entrepreneurship 101 (2012/2013)
Page 48: Value Proposition - Entrepreneurship 101 (2012/2013)
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30-60 interviews are considered statistically significant.

Consider infographics:

0 5

10 15 20 25 30 35 40 45

Sharing takes time

External demand

No free time

Identifying customer problems n = 59

Quantitative Analysis

Page 50: Value Proposition - Entrepreneurship 101 (2012/2013)

Quantitative Analysis

Page 51: Value Proposition - Entrepreneurship 101 (2012/2013)

Qualitative Analysis

High-value testimonials:

“There is nothing more important to me than sharing memories with my family.”

“I can’t tell you how frustrating it is to post photos and videos to, like, three different platforms every week cause my uncle doesn’t understand how to use Dropbox.”

Page 52: Value Proposition - Entrepreneurship 101 (2012/2013)

Qualitative:"

Body language, intonation:"

Page 53: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 54: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 55: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 56: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 57: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 58: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 59: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 60: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 61: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 62: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 63: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

Page 64: Value Proposition - Entrepreneurship 101 (2012/2013)

Value Proposition Designer

http://www.businessmodelgeneration.com/downloads/value_proposition_designer_draft.pdf

Page 65: Value Proposition - Entrepreneurship 101 (2012/2013)

Process: Test Your MVP

State your hypothesis

Test problem

hypothesis

Test product concept

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!

Page 66: Value Proposition - Entrepreneurship 101 (2012/2013)

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.

Page 67: Value Proposition - Entrepreneurship 101 (2012/2013)

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.

Page 68: Value Proposition - Entrepreneurship 101 (2012/2013)

Iterations in the Market

TIME"

VALUE"

Minimum Viable Product"

Whole Product"

Progress is iterative"

Page 69: Value Proposition - Entrepreneurship 101 (2012/2013)

Iterations in the Market State your hypothesis

Test problem

hypothesis

Test product concept

Verify

Page 70: Value Proposition - Entrepreneurship 101 (2012/2013)

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

Page 71: Value Proposition - Entrepreneurship 101 (2012/2013)

Joseph Wilson [email protected] ��