A value proposition is a

s t a t e m e n t of t h e unique
benefits delivered by your
offering to t h e target
customer
 A value proposition is a
hypothesis t h a t your offering
will bring certain values to a
target customer. *

* Like a n y hypothesis, it needs to be

rigorously t es t ed in t h e lab before
mo n ey is p u t into scaling.
Value Proposition is Not:

An elevator pitch: a 3 0 second

conversation s t a r t e r
“I buy dead magazines…”
“We un-think marketing…”
 Value Proposition is
Not:
A tag-line: a n a d compliment
“We know m o n e y ”
“What Happ ens Here, S t ay s Here”
“The City That Never Sleeps”
“Built for t h e r o a d a h e a d ”
 Value Proposition is
Not:
A mission s t a t e me n t : a s t a t e m e n t
of t h e purpos e of y o u r business.
“The University of Toronto is committed to being a n
internationally significant r e s e a r c h university, with
u n d e rgr ad u a te , g r a d u a t e a n d professional p r o g r a ms of
excellent quality.”
“Google's mission is to organize t h e world's information a n d
m a k e it universally accessible a n d useful”
 The value proposition s t a t e m e n t
should consist of t h e s e
components:
1. What y o u r product/service is

2. The ta rg e t c u s t o m e r

3. The value you provide t h e m

Emergent property: w hy y o u r
product is unique
 What is i t ?

Example: For w h o m?
Values?

Good: “Google is t h e Bad: “Google uses a

worldʼs largest s e a r c h
engine t h a t allows
i n t e r n e t u s e r s to find
r e l e v a n t information
quickly a n d easily.”
p a t e n t e d page-
r a n k i n g algorithm to
m a k e money t h r o u g h
a d placement.”
 What is i t ?

Examples: For w h o m?
Values?

Good: “Google is t h e Bad: “Google uses a

worldʼs largest s e a r c h
engine t h a t allows
i n t e r n e t u s e r s to find
r e l e v a n t information
quickly a n d easily.”
p a t e n t e d page-
r a n k i n g algorithm to
m a k e money t h r o u g h
a d placement.”

Are I n t e r n e t Users really Googleʼs c u s t o m e r s ?

 What is i t ?

Examples: For w h o m?
Values?

Good: “Google is t h e Bad: “Google uses a

worldʼs largest s e a r c h p a t e n t e d page-
engine t h a t r a n k i n g algorithm to
automatically provides m a k e money t h r o u g h
a d v e r t i s e r s with a d placement.”
potential c u s t o me r s
tailored to t h e a d
content, increasing
click-through r a t e s a n d
conversion rates.”
 Selling to Selling to
Customer Business
Usability
Health Lower r isk
Aesthetics
Saving time
Status
Saving/making mo n ey
Newness
Enabling function
Self-Actualization
Convenience
En v ironmen tal
Quality
Ethical Social
Inclusion Customizable
 Selling to
Business
Lower risk

Saving time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Sav ing time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Saving time

Sav ing/making money

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Saving time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Saving time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Saving time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
Lower r isk

Saving time

Saving/making mo n ey

Enabling function

Convenience

Quality

Customizable
 Selling to
Business
• B2B Sales: • Lower r is k

• Saving time

• Saving/making mo n e y
- Rational • Enabling function
decision making
Convenience

• Quality

- Overt values Customizable

 Selling to Selling to
Customer Business
Usability
Health Lower r isk
Aesthetics
Saving time
Status
Saving/making mo n e y
Newness
Enabling function
Self-Actualization
Convenience
E n v ironmen tal
Quality
Ethical Social
Inclusion Customizable
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health

Aesthetics
St a t u s

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health

Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

Env ironmental

Ethical

Social
Inclusion
 Selling to
Customer Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to Customer
Usability

Health
Aesthetics

Status

Newness

Self-Actualization

E n v ironmen tal

Ethical

Social
Inclusion
 Selling to
Customer
Usability

Health B2C Sales:

Aesthetics

Status

Newness
- Emotional
decision making
Self-Actualization

E n v ironmen tal

Ethical - Latent values

Social
Inclusion
 Selling to Selling to
Customer Business
Usability
Health Lower r isk
Aesthetics
Saving time
Status
Saving/making mo n ey
Newness
Enabling function
Self-Actualization
Convenience
En v ironmen tal
Quality
Ethical Social
Inclusion Customizable
Process: Draft a value proposition

Version 1.0: I think A1

Industries ʼ product/service will…
The Customer Development
Triangle
Target Customer

Problem Produc t =solution

The Customer Development
Triangle
Target Customer

Problem Produc t =solution

 Process: Test your value
proposition
State your
hypothesis

Test
Verify problem
hypothesis

Test
product Blank, Steve Four Steps to Epiphany
concept

Version 2.0: A1 I n d u s tries provides…

Get out of your
office!
 Understanding Customer
Problems:

Empathy with Target Customers

Osterwalder, Alexander, Business Model Generation, 2009

 Day in t h e Life
Scenario
Before

Current Problem
situation encount er ed &
& desired economic
outcome consequences

Aft e r

Ernie: Enabling New

fixes factors of outcomes a n d
airplanes your economic
pr oduct rewards
 Understanding customer
problems:
¢ Market r e s e a r c h me t h o d s for e n t r e p r e n eu r s
Pretend to be the customer
Customer Interview Program
Lead user

QFD - Quality Function Deployment

Primary
Customer archetype
Market
¢ Methods t h a t require professionals
Re s e a r ch
Concept testing
Cojoint analysis
Empathic deisgn
Prototype/Beta testing
 Se c on d ary
M a r ke t
Res e a rc h 1. Access to reports/data
from 20 databases
2.Access to industry
analysts through inquiry
Industry specific time Multiple Industry
vendors coverage vendors

IDC Frost & Sullivan

Forrester BCC Research
Gartner Total Patents
Lux Research Delphion/Thomson
Cleantech Group LLC Aggregator of Innovation
Thomson Pharma other vendor Datamonitor
MedTrack resources Venture Source
Business Insights Chemical Abstracts
IMS Dialog Pro
Market Research
Factiva
Meltwater News
U of T- $ 50 M Key:
Red – ICT
collection Green – Cleantech &
Nanotech
Blue – Life Sciences
Process: Test y o u r value proposition
State your
hypothesis

Test
Verify problem
hypothesis

Test
product
concept
Blank, Steve Four Steps to Epiphany
The Three
Outcomes:

Validate:
Confirmed
value
proposition

Iterate: change
Verify value
proposition

Exit: Don’t
spend any
more money!
The Customer Development
Triangle
Target Customer

Problem Produc t =solution

Pg 5 2
 Whole
Product

• A whole product is t h e c o m b i n a t i o n of all

t h e t h i n g s t h a t give y o u r c u s t o m e r s a
compelling r e a s o n t o bu y. This i n c l u d e s n o t o n l y
y o u r c o r e p r o d u c t , b u t also a n y s e r v i c e s a n d
a n c i l l a r y p r o d u c t s t h a t a u g m e n t it.
 Minimum Viable
Product

• A minimum viable product is a product

launched to early a d o p t e r s t h a t h a s only t h e
m i n i m u m s e t of f e a t u r e s r e q u i r e d t o g e t
feedback from potential customers.
 Iterations in t h e
M arket

Whole Product

VALUE
Progress is iterative

Minimum
Viable Product
TIME
Iterations in t h e M a r k e t

State your
hypothesis

Test
Verify problem
hypothesis

Test
product
concept
 Process: Decide w h a t feature s to
include

Which features do m y ta rg e t
c u s t o m e r s value m o s t ?

Which a r e t h e y willing to pay for?

Which a r e e a s y to roll out a n d which

require m o r e R&D
 Product
differentiation
High
How does y o u r
business r a t e on t h a t
cr ite r ia?
Medium

What is t h e criteria
people u s e w h e n
Low solving t h e i r
problem?

Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

 Product
differentiation

The goal is not to be t h e

highest in each category,
b u t to have a unique profile
t h a t highlights w h e r e your
value lies.

Blue Ocean Strategy, Kim & Mauborgne, Harvard 2005

Process: Testing y o u r MVP

Consider Eliminating t h e features t h a t donʼt

a d d value.

Consider Reducing t h e features you m u s t

have b u t isnʼt t h a t valuable.

Consider Raising t h e features t h a t

differentiate you from y o u r competition.

Look to Create new value factors y o u r

c u s t o m e r s have n e v e r s een before.
 Process: Test Your
Validate:
MVP Confirmed
value of MVP

State your
hypothesis

Iterate:
change your
product
Test features
Verify problem
hypothesis
Verify

Test
product
concept
Exit: Don’t
spend any
more money!

Blank, Steve Four Steps to Epiphany

 The value proposition s t a t e m e n t
should consist of t h e s e
components:
1. What y o u r product/service is

2. The ta rg e t c u s t o m e r

3. The value you provide t h e m

Write – Test – I t e r a t e
Prototype – Test - I t e r a t e