The Value Proposition Canvas

Hi this video is about the value proposition canvas the value proposition canvas is a tool for customer inspired innovation this is what the tool looks like but before I go into great detail of that tool I want to tell you more about where it originated from the tool was actually created by Alexander Osterwalder he together with Patrick from the Bell wrote the book business model generation in that book they introduced the business model canvas the business model canvas is a model that facilitates the designing of business models and contains building blocks that actually build the business model now in their book they facilitate you to actually create as many business models you can think of and making it really easy with they’re easy to use building blocks but nevertheless it’s a lot of work and before you go into that I would advise you to focus on the user product relationship you can imagine that if you are trying to facilitate a customer wanting to win the Tour de France you need a completely different bike than someone who wants to commute from home to the office and back the value proposition canvas is part of the business model canvas if you look closely you will see that the value proposition and the customer segment here come together in the value proposition canvas and these two models together are actually the value proposition canvas now you can either approach this from the left-hand side or the right-hand side and if you look at it from the right hand side you will try to push your product down the throat of the customer so I advise you to approach it from the right-hand side let’s look at an example of a green bike project which was approached from the right-hand side in that project a lot of intelligent guys got together that we’re really able to create the best possible bike a bike that would get you out of your cars you leave your car at home and actually go and commute from home to the office on a bike so you wouldn’t get stuck in traffic now they created this bike it looks like this this is what they come up with now you can see that it’s actually pretty hideous but that’s not the biggest issue the biggest issue is safety look at how white this bike actually is and imagine you going 40 45 kilometres an hour and having to squeeze through here that’s a serious safety issue if we look at the value proposition canvas I advise you to approach it from that side and then you’ll get to customer inspired innovation so start with the understanding of the customer need if they would have done that with the green bike then they probably would have gotten to something looking like this that’s really difficult even if they’ve gotten to something like this to predict if this will actually sell and therefore we have to do a lot of research to make sure we validate our assumptions about the customer needs let’s look at an example for instance of a croissant burger a croissant burger a French bun combined with a hamburger it’s an actual product it’s a product from lobule lunch together with Starbucks now can you predict if this will actually create waiting lines that’s the issue we can’t predict customer behavior now with this model it’s really easy to structure our assumptions about customer needs and we should therefore start on that side of the model we should look at the critical success factors and we can use the post-it notes and we can easily stick them in there take them off and really convenient so if you use that side of the model first then you would list the jobs that your customer would want to get done if we would think of the the to the France again and the racing bike then the job here would be win the Tour de France now imagine if you would want to win the Tour de France it’s not really difficult to come up with pains especially for an untrained consultant as myself now if you have the frustrations and everything negative that you might experience once you have set that goal that’s something you’ll list with the pains above here it mentions the gains so you list everything that you actually want the reason why you want to want to achieve that goal once you’ve done that you then you move to the value proposition you can if you structure that well you can really code the gain or the pain relievers with the actual pains so here you list what you will do to take away these pains now you do that for all pains and also for the gains of course because up here you could you list the gain creators the gain creators are also connected to the gains that your customers wanting now these together the gain creators and the pain relievers these are actually what is put together in products and services and those products and services is what in the end is offered to the actual customer so here eventually it would list the racing bike for instance focusing on customers wanting to win the to the Front’s as mentioned it’s really difficult to predict the actual customer needs and we need to validate our assumptions because if we would do so we might find out that some of our assumptions are wrong and we need to adjust our proposition and also we also get new insights about the actual customer needs customer needs are really difficult to predict let’s look at an example for instance the Dragons done I have an example of the dragon stand and I use that a lot in my lectures and it’s about magic white magic white is an alternative to the white board and on magic White’s you can write and you can do all sorts of things that you would normally do on a white board and this was pitched in the Dragons Den and the clue to the actual investment of the Dragons was with the number of items sold in Japan and what to me was really interesting was the fact that the reason why they sold so much in Japan was the fact that the customer was using their product in a completely different manner they were actually they were actually using it in nurseries and also as a solution to block out windows now if you would validate your assumptions you would get to the actual customer need and fit with your actual solution and that’s the way you should use this model so approach it from the customer segment side and make sure that you validate your assumptions so go out there and practice the application of this model and make sure you get to customer inspired innovation Oh you

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