Strategyzer Webinar – Mastering Value Propositions

Welcome to another strategize or stretch hat session this is a special one we haven’t done one of these in a while and it’s mastering value propositions today we’re going to talk about how to better understand customers and design value purposes that they want like I said it’s a bit different today it’s just me and Alex generally we have other guests but we thought we’d make this an exclusive tool session for the launch and announcement of our value proposition design course so I’m Kathy Gupta I manage content and community at strategize er and I’ll be moderating today’s session of course our host Alex alder co-founder of strategize err and co-author of business model generation and value proposition design at any point throughout this webinar broadcast feel free to tweet us at strategize err and please use the hashtag scratch chat if you want to comment as your feedback or screenshot what you’re seeing during the presentation you can also visit blog strategize or comm for more in-depth content about the topic that we’re going to be talking about today so we are here because of a kind of special announcement we have a new course that’s available to small groups and individuals and it’s called mastering value propositions the online course is meant to teach you how to better understand customers and to create value propositions that seller here’s kind of what you get if you read the book value proposition design it’s a great start but the core the course goes further and is structured around action and applying this in your business in a step-by-step fashion you’re going to get more case studies more concise and clear examples and more actionable exercises and templates to execute in your business most importantly there’s that certificate of completion you can differentiate yourself and stand out as a top performer and you can easily share your accomplishments with downloadable and verifiable certificates I’m going to replay these offers towards the end of the sessions but if you’re just joining us I’m going to mark out the kind of exclusive offers that we’ve provided for you here today if you purchase the value proposition canvas course by tomorrow because you’re a live attendee you’ll immediately get 15% off just use the code June DPC webinars live I’ll actually paste it into the chat box and I’ll also send you a link to where you can purchase the course for those of you that will catch the replay if you manage to purchase the course in a week you can get 10% off there’s the coupon code again I’ll also pass that through in the follow-up email that comes out with the recording and if you may not know we actually have two courses now with the original master in business models course where you learn how to map design assess and test business models which is now bundled with our mastery and value propositions course you can use the discount on both courses or even take the Masters bundle we also have a 60-day money-back guarantee at the end of the day if you’re not satisfied we’ll give you your money back that’s it we believe 60 days in less is enough time for you to try out the course and see the the meat of the material that could be helpful to your company or your team any of the tools that Alex mentions during the presentation today are also available in our resource library and they’re available for free I’ll also pass a link for that through in the chat box you simply have to create an account you haven’t already and access up to 30 plus templates resources and other types of tools from our libraries Alex I’m going to pass the reins over to you now why don’t you maybe start off by just telling us quickly you know why you chose to do this session today and why it’s been a while since you know it’s just been you at the helm okay Kathy let me focus on getting my green on first so I think it’s important that you know we rediscover prepositions it’s been a while ago that we designed the tool and launched the book but now we finally have a online course which first was only available to enterprises and now we’re making it available to entrepreneurs and innovators around the world in particular when they want to benefit from this individually so I’m you can go online and get this discount we had a lot of guests so far but this is a topic that is really dear to our hearts and strategize err so I’m going to take over and talk about the value proposition canvas and I’m going to give you some of the material that you’ll find in the course we’ll look at one example that you can review from a slightly different angle in the online course and in the online course we’ll go a lot deeper so I’m just going to give you some background and some goodies that you won’t actually find in the online course a little bit behind the scenes of how we even came up with the value proposition canvas okay so we’re going to focus on material from the second book value proposition design but that doesn’t mean you shouldn’t have a business model which was the topic of the first book there’s a small generation so I’m going to show you that it’s both together that will really help you create breakthrough innovations okay well you see I can’t advanced anymore hmm cavy I don’t know what’s going on but GoToMeeting is failing me you might want to click your presentations in your presentation instead of the GoToWebinar could there you go you see can you see it again okay yeah so I want to start with that two data point just to show us why it’s so important to dig into this topic and why it’s not obvious and why you maybe want to you know benefit from the online course that we offer you seventy-two percent of all new product introductions product innovations and services innovations value propositions in our terminology they flop they don’t deliver on expectation this is a study that was done by Simon Kuchar the biggest pricing firm in the world and that is a terrible number the question might be why do we actually have this well it’s not because people are not smart it’s because the processes and the tools you use are maybe not appropriate enough and this actually is shown by another study by McKinsey where they show that only 6% of executives are actually happy with their innovation performance in their companies that is a very very low number it’s a relatively recent study and I think it’s chain quite a bit but we’ll also see some of the challenges and throughout this presentation so these are the data points now let me give you two illustrations and I’ll take the usual suspects a certain extent extent think of a blackberry who of you once in their career in their lives ever had a blackberry if you ask a roomful of business people you know a lot of them will hold up their hand if you ask how many people have a blackberry today you will only get a one or two of the eccentrics on you know in a crowd of one hundred two hundred even a thousand people so blackberry really kind of disappears a company that’s still alive among the living get dead if you want they’re trying to change their business small but they did it way too late and they kind of missed the boat because their business model and their value propositions expired on the other hand so this is something that I like to say quite a bit that business small the value propositions expired then my co-author Eve of often reminds me Alex that is true but at least with yogurts we know when it expires with value propositions and business smalls we don’t that’s why we need to put in place the right processes and tools to be proactive and come up with new value propositions and business models before it’s too late so on the other hand you have examples in here I’ll take you know really the usual suspect but I think it’s quite an impressive one in terms of profits look at Apple in 2015 when it their dominance probably peaked with only percent market share in the smartphone industry this is a little study or little graph that was shown by an Apple Insider they they took ninety four percent of the entire profits of the entire market in that segment meaning all smartphone manufacturers together that is impressive and that’s because Apple among several things really masters value proposition design and in addition business model innovation so the question is how can we find ourselves more on the right-hand side and less on the left-hand side by figuring out the right processes and the right tools and applying them and putting them in place in our organizations that’s how we can do it and if we’re a start-up we obviously want to find ourselves on the right hand side and not end up without even having you know that beginning of the curve for blackberry okay and going bankrupt so we’re going to look at a series of topics just to understand how can we be a little bit more like Apple and less like a blackberry in its recent phase first thing is that you need to iterate your ideas until you get it right now I won’t even use the word pivot here because you probably won’t get the idea right at the beginning the challenge is to turn an idea into a value proposition that customers want and very often we don’t even need a substantial pivot but we definitely need to iterate which is smaller iteration the second important point and that’s where the value proposition comes in so we’re going to spend most time on that second point is how do we make customer value explicit many many startups and even experienced business people they like to focus on the solution they like to focus on the performance of their products and services but what they forget is that performance doesn’t matter if it doesn’t connect with a customer job pain in game value propositions are what makes customer value explicit and that’s what we do is the value proposition canvas we’re going to look at that the second point and the third one I just want to remind you that it’s about getting the business model and of value proposition right there are numerous examples of companies that had products and services that sold well but because they didn’t get the business model right they went out of business and Kodak isn’t the usual suspect there they were actually at the beginning of digital cameras and they sold a lot of digital cameras however they were not able to bring their business model of analog film into the 21st century so these are the three core topics we’re going to talk about and gives you a little bit of a teaser a taster of what you could find in our online course and find yourself more on the right-hand side be more apple-like and less and black very like in its recent phase so let’s start with number one iterating your ideas until you get it right so back to this statistics here seventy-two percent of all new product innovation clump again it’s not because people are not smart it’s because we have the wrong processes now you might tell me well that’s one of these studies what about others I’ll give you two more studies a little bit older or again you see you know the top ten business mistakes the first one is people focus on building something nobody wants and that’s why they fail with their idea again are these people not smart why would anybody do that it’s because we don’t use the right tools and processes probably more tools and processes geared towards executing a known business model and known improve and value proposition rather than searching for a new one I’ll get to that and near the last study just to bring it home completely again the number one reason why companies fail in this case we’re talking about startups why they went out of business is because they address a problem where there is no market need they’re building something nobody wants this is been acceptable today because I do think the whole community around the Lean Startup and business model and value propositions really has figured out how to do it right so we’re going to help you minimize the risk of failure we can’t guarantee with these tools let’s let’s be realistic here we can’t guarantee a billion-dollar business with a billion dollar value proposition but we can guarantee some level of success and definitely guarantee that you don’t go out of business because you won’t waste your time focusing on something nobody wants so how can we avoid it well the first thing you need to admit to a certain extent is when we go from idea to business and that could be small business it could be lifestyle business all the way to a billion dollar opportunities we need to accept that it’s not about writing business plans it is about managing this kind of chaotic journey of going from idea to business so let’s burn this business plan over there because business plans are actually the best way to maximize the risk of failure why is that because we refine an idea that isn’t proven we fall in love with our idea we explained at length maybe over 10 to 50 pages or were beautiful and long slide deck how we’re going to execute a fantasy that is a waste of time now the principle or the intent behind the business plan we should keep some of that and basically the intent behind it is to describe you hi everyone looks like we have a short technical glitch there with Alex just hold on one second that you’re actually on the right path then you can move towards execution and there will be a lot less iterations of your idea so the challenge going from idea to profit is not to find the right idea there’s this mix of finding the perfect idea for a product or service and a business model that’s a complete myth the real challenge is to turn an idea into a value proposition that customers want and a scalable and profitable business model and for that you need to design and test continuously until you have enough evidence that you’re going to succeed so the tools we use here are the value proposition in canvas and the business model canvas and in this session we’ll focus on the value proposition canvas so it’s all about making customer value explicit how are we creating value for the customer so in our first book business small generation and that’s the first online course we actually created we talked about this story of how a business intends to or if it exists how it creates delivers and captures value okay that’s what the business model canvas was for that was the sole intent and the idea was that people and when we started out when I started out with my PhD was all about helping startups and then came more and more tool for large organizations as well the idea was that startups could map out their business model and then more more large companies did that as well however what we realized over time is that the business model thinking is actually not so developed most people are still stuck in a product focused world so the business model Candice’s they made were really full in in the middle because people try to describe their products and services and basically their value proposition with the business model canvas but that was never the intent the intent of business mul canvas was always to tell the story of how you create value for your organization so you look at the big picture so what we thought is okay well we probably need another tool so we listen to customers the users of the business model canvas we learn from them and we said we’re going to design a tool that helps us to focus on customers and make explicit how our products and services create value for those customers so we started first with a tool we tested and iterated until we got it right I’ll show you that in a bit and then we wrote the book value proposition design so cabby just told me it froze a little bit I hope we were back and can see the images so you’re back what we’re going to do now is we’re going to we’re going to zoom into these two boxes and we’re going to look at the detail of our customers and for that we’ll use the customer profile and the details of our how our products and services design for position create value for the customer that’s what we call these value map okay and if you have a value proposition that actually creates value that’s when you get towards fit in the startup world the worlds like product market fit problem solution fit to indicate the different stages of how much you figure it out this equation of getting it like finding the story of how you’re going to create value for your customer so see we have two tools now one that allows us to explain how we create value for our business on how we intend to create value for our business and we have one tool that allows us now to make explicit the story of how we create value for customers and at the end of the day you need to get both right and we’ll see that in the third part of this presentation so that led us to this tool the value proposition canvas now let me show you a little bit of the behind the scene so this is not something you’ll find in the online course but it’s something they’ll give you as a goodie to show you a little bit how much it took us to get to a good business tool and when I say business tool I mean a tool that helps businesspeople managers entrepreneurs innovators to solve a particular job to be done and I think together with Eve Pina and Alan Smith my co-founder that the best tools are those that are conceptually sound but also insanely simple practical visual which means that they have a great user interface just like a website and they provide a great user experience UX just like we do for websites the best tools are stress tested and thousands of times until they’re so simple and so practical that they can really help business people do a better job so I’ll show you a couple of images I hope the connection follows to show you how this whole thing started out so the tool looked like this first on a white board and that’s actually the tool I presented when I was giving a talk and in the Stanford an entrepreneurial series and that is what some people you know took away and started using so it already worked but we weren’t extremely satisfied some people told us all this is an evolution of the business small canvas and our goal was to create an additional tool that plugs into the business small canvas not a replacement so when I presented at Stanford this is how the to look like but we know was within you know in in at the moment where we were still iterating and we realized well this wasn’t it because the feedback we were getting was not satisfying so we continued to play around with the user interface we knew that we had the concept down because there weren’t too many questions around the concepts anymore but what we didn’t figure out until then was the UI and the UX the user interface of our tool to map out value proposition and the user experience and all of a sudden what popped out I was working with them Alan Smith and he finger on the visual shape of it Oh a sudden this circle and square popped out and we felt like we were on to something and that’s kind of a tool we stuck with and we tested that and we realized hey this is it and the reason we thought that this was really it because we had a couple of design constraints that allowed us to show that this was not an evolution of the business model canvas but it was a plugin it would allow you to zoom into the business model canvas and that’s when we started drawing or when we saw people actually starting drawing the circle inside the business model canvas to show a customer segment and the square inside of the value proposition box of the business model canvas because they wanted to show the value proposition for that segment so that’s when we knew that we figured out the right new user interface and user experience so that’s just a little bit about this story behind the tool and for us what was really important is to show that going from my idea to business from idea to profit is not a simple one you actually have to iterate between the value proposition canvas in the business model canvas because you need to get both right you need to create a value proposition that creates value for your customers and a business model that allows you to scale and become profitable and you won’t immediately find both so you have to kind of navigate between the two which is a bit of a back-and-forth so there’s no one that comes first is at the end you need both there’s a real back and forth until you figured it out so I think the best innovators the best entrepreneurs will be really good at using a series of tools that are integrated in the software world we like to call this API the application programming interface to certain extent between the tools it’s not about one tool that does everything there is no such thing as a Swiss Army knife to to do heart surgery it’s the same in innovation and entrepreneurship it’s about a series of tools that do one job well the business small canvas for business models the value proposition canvas for value propositions so let’s zoom into the value proposition canvas and you’ll learn a lot more when you go into the online course in terms of details so we’re just going to go through this quickly the first element of the value proposition canvas and the right hand side in the customer profile are the jobs that your customers are trying to get done these are tasks that they’re trying to achieve the things that they want to get done in the private lives of things that they want to get done in their business lives it can be functional functional social emotional it’s what our customers are trying to achieve that’s independently of solutions right they have certain things they want to get done related to those jobs to be done and there’s a whole theory around it Byam tonio Luke and Clayton Christensen’s to start with those are the two people who may really made it popular in the course you can find a little bit more around that around that whole jobs to be done to it but related to these jobs customers have certain pains things that prevent them from performing a job well things that they don’t like from the existing solutions and at the end of the day it’s how they measure failure of a job not done well on the other hand it’s not just about problems it’s not just about pains it’s also about objectives and here I think sometimes we get it wrong because we always focus on oh what’s the problem you’re solving well maybe your customers also just look for certain games certain objectives it’s how they measure success if I’m you know if I have a value proposition to a salesperson well of course they have certain pains but they also have certain games they have objectives in terms of sales quota and they have objectives in terms of bonuses what does a game look like how do they actually measure success so when you’re able to describe jobs painting gains of your customers you have a good understanding some of you might ask okay how does this relate to personas personas is a slightly different aspect of your customer you’re going to describe you know maybe the type of customer how old they are where they live etcetera that’s interesting but not very actionable in terms of how how am i creating value for my customers when you understand the jobs pains and games it becomes pretty easy to figure out if you’re creating value customers or not bring this to the left-hand side of the value proposition canvas we need to ask ourselves not just what are our products and services and how do they perform but why does this matter to customers so we’re going to connect like a bridge the left-hand side to the right-hand side so here’s where you have the pain relievers the headache pills so these are indeed the problem solvers how do your products and services minimize or even eliminate the pains of your customers so you’re going to make that explicit so the performance per se of your products and services only matter if they relate to certain pains if we’re focusing on the pain relievers or on gains gain creators if we’re focusing on the positive outcomes that our customers are trying to achieve great value propositions they focus on few pains and few games and they do that extremely well so on the right-hand side you’ll have a lot of jobs pains and games for every customer but on the left-hand side where we design how we create value we’ll focus on a few things okay so that is the value proposition canvas now let me go into one of the examples of the numerous examples you’ll find in the online course to better understand the value proposition canvas you’ll also understand some best practices of how to use the value proposition canvas and how to map out jobs pains and gains where you look at healty so surprisingly a lot of people know healty even though he’ll be you know sells originally sell sold to builders and then to building companies so what does Hill t do Hilti traditionally was a manufacturer and seller of light machine tools to builders now over time they evolved because they had to ask themselves how could they kick-start growth again better tools wouldn’t really do it because their tools were already pretty good and to a certain extent that was the problem of lack you know lacking growth because their tools were so good that that that that that you bought a tool once you didn’t have to and buy another one for a long time okay so caveum is telling me that there’s a bit of bit of a lag is it okay now is it okay to follow this line yes okay great just a little check customer discovery so what you’ll see did is they try to better understand their customers and since they were selling directly to them what they understood is that the customers biggest job to get done the job to be done it was not to buy another tool or even to find a better tool or not even to drill a hole the really big problem that construction companies had small and medium-sized construction companies all the way to the bigger ones was to manage maintain and replace the tools in other words having the right tool at the right place at the right time that was the biggest challenge because if the tools weren’t there a construction site might you know stop just because of one simple tool because maybe the drill wasn’t working the battery was missing and that was result in penalties for the construction company so they came up with a value proposition that we’re going to you know look at in a bit called Hilty fleet management that was not a better drill not better tools it was the whole service with monthly subscription for the construction companies and healty would make sure they would have the right tools at the right place at the right time all that based on a monthly invoice so let’s zoom into this to better understand and we’ll focus first on the jobs to be done of our CEOs of the construction companies so basically it will keep it very high-level when you do this for your customers your customer profiles are going to be a lot more detailed what are the jobs basic jobs to be done of our CEOs of the small and medium sizes construction companies well it’s finding the contracts executing contracts and managing the fleet schedule then we can ask ourselves well what are some of the aims related to that particular job well one is that they’re not particularly interested in investing in new tools so they want new tools but they don’t want to have that capital expenditure and then even more important you know they don’t want broken tools they don’t want stolen tools as I mentioned before because that leads to penalty costs and that is not a good thing and it leads to additional stress so that’s the problem side but we also need to understand the game how do these construction company CEOs measure success well of course they want profitable contracts here are interestingly they want access to the newest tools of course though they are not willing to invest upfront so we can already see that there’s a tension between what they want and what they don’t want so how can we solve that as a service provider and then of course they want 100% uptime of the tools they want the right tool at the right place at the right time because they want predictable costs in particular in an industry that has very low margins and is very sensitive to cost so healty had to figure out okay first what are the most important jobs pains names and again here we’re just focusing on high-level for the purposes of illustration in your case you would have a lot more detail they focused on they need to figure out what’s important to their customers and what isn’t and based on that they would have to come up with a new value proposition so what did they come up with they came up with this online fleet management system which I already mentioned but now let’s zoom into this online fleet management system and map it out a little bit and again I’ll keep it pretty straightforward at high level for the purposes of illustration and you’ll find a lot more cases in the online course first element here is that the construction companies would not have to pay for repair and replacement that’s a big challenge for them right it’s a cost that is not instable so they would want to avoid that on the other hand we heard before that they don’t want to invest into these tools so what about a subscription law pretty interesting right okay and then let’s look at the positive side of measuring success well what do these construction companies want well they do want access to the newest tools so hey what if they could lease this fleet this modern fleet and what if we offered them to immediately replace tools that weren’t working and all of that would have the great benefit of providing sound cost management to our CEOs of the construction company so we have a wonderful fit between the left hand side and the right hand side in our value proposition canvas and I talked to the CEO of Hilty just last year and he was telling me that this was so successful that they extended their value proposition which you can’t see on this line and they said well we’re going to offer these customers not only the management of Hilty tools but we’ll take over the management of their entire tool fleet all of the tools the construction companies would be managed by healty now isn’t that a pretty interesting thing when you’re a company like guilty you would want to have such a powerful value proposition that locks in your customers okay so that’s an example you might come up with in the meeting room you know have this brilliant idea and you think you got it right but as I’ve shown you the statistics prove that 72 percent of all products actually suck that people don’t want them so what if we immediately got out of the building to use Steve blanks world words that our friend who invented the Lean Startup movement and then Eric Ries made it popular with the Lean Startup book what if we said well we know that on this journey from idea to profit we’re going to get it wrong for a very long time need to get out of the building take our designs and immediately success test them so we’re going to do that with what we’ll call customer discovery so doing this is just talking interviewing potential customers as an innovator as an entrepreneur very very easy to do and in the course you’ll also see that maybe not so easy that you can make mistakes I won’t go into that I’ll go into another aspect because we now have a tool that allows us actually to track how accurate our customer understanding was or is so whatever we come up in the meeting room what we come up with in the meeting room is just a guess right we don’t know if our customers actually have those jobs painting games so we when we start talking to customers we can invalidate some of those jobs pains and games that we thought they would have we can start invalidating some of the ways of how we thought we would relieve paint or create games on the other hand we’re probably going to get some things right maybe at the beginning a bit less but the more you talk to customers the more you’re going to understand and at the same time we’re also going to learn a lot of new things so the value proposition canvas becomes a wonderful tool a wonderful map to track on the one hand side your customer understanding and on the other hand side you know are you really creating value for your customers so this is just the first phase talking about customer discovery and that’s the part we outline quite a bit in the online course when it comes to testing we give you a little bit of an introduction but that probably merits a course on its own which who knows in the future we might be able to do now let me give you another example because once you have your customer profile mapped out that’s not sufficient you under want to understand the priorities of your customers around jobs pains and games what are the most important jobs what are the biggest pains what are the biggest gains because you definitely don’t want to focus on things that are insignificant to your customers so the example I’m going to use here is a company I liked a lot full disclosure I’m a small investor in this company called shape scale there are two entrepreneurs and living in the Bay Area that I really love because they apply the value proposition canvas the business model canvas and leaning startup to try to avoid any kind of waste on their journey from idea to profit so you can go to their website if you want to learn more and watch some videos around their scale but the idea here is that they’re building a scale that will make a 3d image of your body and represent it in an online in an app on your phone so there’s a lot of things you could do in this case a lot of features you could put into shape scale and in the application but the question is what should they do so what are the customers most important jobs painting games will focus on the jobs first so here’s a way to simply work with your customers and figure out what really matters to them when you do your customer discovery interview you won’t just ask them a question you will take your understanding that you had so far in the customer profile you will take the jobs pains and gains or maybe just the jobs maybe just the pain later just again and you’ll turn you here’s what shape’s kale did they said well we’re starting to have an understanding of our customers different jobs they mix just a little bit also with the solutions for example tracking fat tracking muscle tracking measurements maybe predicting how they’re going to look like if in the future they continue eating like that pretty terrifying right or just a review of their a preview of their body if they work out well and they have a good diet so there’s no way to understand what’s the most important thing in the meeting room but by giving your customers these cards or in this case shape scale working to a certain extent face to face but we’ll doing a lot of this also online he could start to identify the top jobs and the flop jobs those things that they thought would be important to customers but it actually weren’t so important to customers these are the kinds of exercises you want to do very quickly based on your customer profile and then also based on your value proposition canvas on the entire value proposition how you hope or believe you will create value to customers but it does require that you admit that you actually don’t know now let me finish before we take a couple of questions we might have time for one or two questions that Kavi will bring up from the webinar participants let me focus on this last part which is also in the online course we won’t go deep on business small that’s part of the first online course but we need to look at the relationship between the value for positions and business model so let me repeat what I said at the beginning can’t say it enough because we need to have both a story an explicit story and a proven story with evidence of how we’re creating value for our customer and for that we’ll use the value proposition 10 but in order to succeed we should never forget that we also need another story what is the business model that will allow us to create deliver and capture value in a profitable and scalable way so we need to get both parts of the equation right so if you map it it’s very simple you have our value proposition or value propositions extra platform or if you are used in term eateries to get to the market but now you have to ask you some what are the different elements in the business model that we need to put in place to succeed which activities do you have to be excellent at to create this value proposition which resources do you need to create and deliver this value proposition which partners could you work with to leverage your business model and then ask yourself okay how much does that actually cost us okay so it’s an equation the decisions you make on the top have a financial impact so changing one of the building blocks kills the equation of in this case how it makes money and then on the other side and cost and on the other side how it makes money now you ask yourself well how am i bringing that value proposition to the market what channels am I going to use to sell my value proposition and what relationship am I going to establish with my customers over time and how am I going to acquire and keep them and that allows me to define how I’m going to create revenues how I’m going to earn money so with the value proposition canvas you made explicit how you’re creating value for your customer but now with a business model canvas you decide which elements you’re putting in place to create a profitable equation more revenues than costs you change one of the building blocks you just broke the equation and you can’t figure out both things how am I making value how am i creating value for my customers how am i creating value for my business model so the equation in business is very simple obviously a bit more complicated when you do that anybody who tells you this as simple has even either never done it or is lying to you you need a great value proposition that customers want and sometimes they’re not value propositions that delight customers take easyJet and Ryanair in Europe that’s not a delightful experience but it is something that creates value these low-cost airlines create value for customers because here we have a price sensitive segment then you need a business model that can be profitable and that can scale and last pin swim or nog and I focus on in this or these online courses is executing the model well once you’ve proven that it can work that’s the success equation in business let’s go back to Hilty just to look at this connection and again you can watch this one it’s just a small part of the online course will will will make the connection between this value proposition guilty from the management system and the business model it’s this back and forth between the two tools that we’ve seen here the two elements of success the business model and the value proposition and we’ll navigate between the two so let’s keep it simple and look at the business model high end machine tools for our builders in this case switching the customer segments to the seals how are they afterwards we’ll see that with the innovation how are they did they initially reach their builders with a sales force in some stores in a direct one-to-one personal relationship with the builders so we’re focusing on the old business model here before the introduction of the new value proposition how did they earn money through transactional sales then we look at the backstage what did they need to do this they needed factories patents to protect their intellectual property in the brand name which activities did they need to be good at in the old business model manufacturing selling working with some partners which would give them the initial cost structure that was the old model before they came up with their new value proposition so what we’ve seen before with this question how could they regain competitiveness so let’s take this old model and put like an architect tracing paper a tracing paper on top of that model and ask yourself how does the business model evolve with this new value proposition I always said an online fleet management system we also said that it’s not for builders anymore it’s for CEOs how are they reaching them while still through a sales force but they had to re-educate their salespeople because it’s a different conversation selling to builders or selling to seals a new channel comes up which is the web because now we’re talking about an online fleet management system customer relationship still say it remains direct and now very interesting here we have a complete change of the revenue stream now it’s long it’s a long term and subscription with monthly payments so healty was able to lock in customers a lot more in particular now that they’re also moving towards managing their customers into power tools we then a new value proposition obviously in this case also has a huge impact on the resources kicked give these key partners and costs in this case key activities now they need to be able to manage a service sleep there become a service model last piece here and in terms of key resources now the tools are not something they sell anymore it’s in their books they have the inventory it even changes their accounting system to a certain extent sometimes people say that we can’t do this business small because it changes their accounting system so a new value proposition maybe changes also and the business model in a way that you almost can’t do it I remember customers telling me Alex we can’t create this business model in our company because our si P system won’t allow us to so then the last piece here that we want to understand is that this has implications on costs so an instant change of the value proposition obviously has an important consequence for the business model so here you can see this relationship between business model and value proposition I’ll hand it over back to Kavi in case there are any questions and you will include food otherwise with the promotion code so you can benefit from our second online course the new one around value proposition design which is an extension of the value proposition design book and if you’re interested you can buy both courses in case you don’t have them yet copy over to you awesome thanks Alex we’ll take one question unfortunately because time is running tight and I’ll just put the offer up for everyone to see it’s one that we’ve heard about a lot I think internally in our anecdotes and maybe you know you could shed light on this what’s the best way for our audience just go to find clients to interview whether they’re online or offline to get started in that journey or value proposition well it’s not that complicated these days to get access to to customers all depends obviously in what area you’re in business the business or business to consumer but it’s easier than ever before I mean one of the interesting experiments that we the startups or even corporate innovators do now is just using Google Ads or even Facebook Ads they put a small budget on advertising and if nobody clicks on on the ads well already it probably indicates that nobody’s has these jobs pains and gains you’re addressing or they’re not interested in your value propositions for doing that so that is a way of getting access in case you don’t have an interesting kind of you know angle on this sometimes people say yeah you know we might just have this one shot with the decision maker and you know in business the business and we would prefer selling to them than testing well before you take an important meeting to learn from these decision makers you might be wanting to sell too you might want to start at the bottom of the hierarchy so the questions you ask them are not completely off so decision makers have staff decision makers have collaborators that might be easier to access you can learn from them and you might also figure out how actually to then get access to the decision makers so you have to work yourself yourself up be kind of the hierarchy of an organization if you’re in business the business if you’re in business to consumer means never been easier to get access to customers and you know sometimes when I hear people say you know entrepreneurs or corporate innovators oh but it’s so difficult to get access to potential customers well never nobody has ever said this this was easy and you know since I’ve worked with the pharmaceutical companies I believe it’s possible anywhere because if you are a pharmaceutical company we work with with some of the big ones in the world strategize er you know you might be selling to one customer per country which is the government you don’t have a lot of shots of actually a getting it right or wrong so the people we were working with I remember were very afraid of talking to those government officials and decision makers they said well we can’t show that we don’t know but it turns out that it was a hypothesis on its own that these decision makers would you know and experience them as as not knowing what they want because once they started talking to these government officials they said well finally you’re talking to us to figure out what we really want so sometimes that it’s a hypothesis on its own that you know you can get access to customers or that customers don’t want to talk to you one thing is very clear that to do this well it’s a long journey and you will talk to a lot of customers and you will work yourself towards the right customers with a lot of pain your job is to to get evidence and that’s never easy it can take a long time but nobody said that entrepreneurship and innovation was easy and if somebody says that again they’re either lying to you or they’ve never done it let’s just touch on that quickly because we’ve got time for one more question that kind of extent extends on that Alex how can people avoid getting lost in the details of their value propositions right you are saying it’s a painful journey it is a long journey but can be very rewarding but it can get very easy to get lost in in the details that’s an excellent question and it’s actually something we see a lot from both you know inexperienced first-time entrepreneurs but also very senior businesspeople senior entrepreneurs as seasoned entrepreneurs usually do this a little bit less but getting lost in the details you know trying to figure out the right solution upfront because you believe it’s just about getting the idea right is a big mistake what you really want to do is keep it very rough at the beginning start testing learning with very light customer discovery interviews and then only adding details when you have more evidence that you’re on the right path one thing that it requires is actually that you don’t just focus on the experiments themselves so you know in the Lean Startup movement there are a lot of people now that follow this build measure learn cycle that Eric Ries introduced and it’s great however sometimes people you know take this too literally and they build immediately yeah and they get so excited about their experiment that they forget actually to learn they forget what they you know what the price was the price is not to make experiments and prototypes and and to learn the the prize as SD blank often likes to say is you know then turning an idea into a business the turning an idea into profit which requires that every week you are extremely rigid in terms of asking yourself okay what where did we start up what was our business model in our value proposition that we thought could might work what were our hypothesis what did we believe had to be true for this to work how did we test that and what did we learn and here comes the most important part what are we going to do based on those learnings there are three things you can do either you’re saying it’s not clear yet we need to test more or you say okay we got this one right we figured out our customer has this job or they have a budget for this value proposition you move on to the next experiment or you say well we got it completely wrong we need to change our value propositions or business more than our hypothesis but you need to real explicitly linked back every experiment in what you learn from it every interview and what you learn from it back to your initial map that you had the business model canvas and the value proposition canvas and again to not get lost in the details you start out with a very rough value proposition canvas and business model canvas because inevitably you’re going to get it wrong in particular when you’re doing something substantially new and the more you learn the more evidence you have that you’re on the right path and that won’t be at the very beginning the more you learn the more you can focus on detail but don’t try to get it right at the beginning because you won’t that’s called a business plan syndrome you think you have the right idea you write a business plan and you think it’s an execution problem entrepreneurship and innovation at the beginning is not an execution problem it’s a search problem once you have enough evidence that you’re on the right path once you start having some indicators like you made your first sales figure out the right channels you know people really do want your value proposition that’s when you work towards scaling that’s when it becomes an execution problem so execution is a challenge for innovators and entrepreneurs but not at the beginning at the beginning it’s a search problem so detail doesn’t actually matter at the beginning thanks so much Alex to everybody who was able to attend the session thank you for joining us today I’m just going to quickly mention that we do have a 15% off discount exclusive to the attendees the code is there on the screen we’ll also follow up with an email about an hour after the session so you can get the direct link as well and we’ll also have a reporting available to you of today’s broadcast also Alex thank you for the session thank you everyone for attending we’ll be signing off now I hope all of you have a good day thanks for joining us

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