Value canvas

Revision as of 18:56, 9 May 2023

Developed by Ali Abdul-Ghani - s184640

Abstract

The following article will introduce the "Value proposition canvas" and its context as an analytical tool in project assessment. The "Value Proposition Canvas" is a business model tool developed by Alex Osterwalder. The model was developed in addition to the existing "Business Model Canvas (BMC)." By outlining the tasks, the businesses use the canvas to visualize, design and test how to create value for customers by describing the jobs they want to accomplish, the gains they desire, and the pains they wish to avoid. ^[1] The Values Proposition Canvas is a pivotal element of the business model canvas (BMC) and focuses on two building blocks from the BMC. The Canvas comprises the "Customer Profile" and the "Value map." ^[2] The customer profile is divided into three parts describing the jobs the customers are trying to complete and the pains and gains. The value map lists the products and services the value proposition builds on by describing the way the products, services, and features are pain relievers and how they eliminate, reduce, and minimize customers' concerns, and outline which way these are gain creators, by how they produce, increase, or maximize outcome and benefits, that the customers desire. A "Fit" can be achieved when a clear connection between what matters to customers and how products, services, and features ease pain and create gains. The customer profile might contain numerous jobs, gains, and pain. However, the value map highlights the most important ones ^[3] Different businesses can utilize Value Proposition Canvas in all development stages for project managers to better understand their customer's needs and develop a better value proposition. Additionally, this tool can help enhance better stakeholder communication for progressive success.

Big Idea

Value Proposition Canvas and purpose

The Value Propositions Canvas is a great tool to help businesses to develop and clarify a good value proposition. The purpose of the canvas is to identify and understand the customers' needs and how to acquire these values to meet those needs. Consisting of two parts, the value proposition and value map, the model provides a visual framework for the users to present the information simply and effectively. For a more comprehensive understanding of the customer segment in the Business model Canvas, the Value Proposition Canvas was developed to illuminate the essential building blocks of which the Business model consists. The Value Proposition Canvas seeks to understand the customer by identifying the jobs the customer is trying to accomplish and the pains/gains experienced in the process.^[1] The value proposition describes the products or services the business provides to address the customer's needs in contrast to the traditional value proposition, which focuses on developing features and quality of the service or product. The Value Proposition canvas focuses more on the needs of the customers. By doing so, the users can make a fit between the features and quality of the product/service they develop and customer's actual needs, thereby avoiding possible unexpected deficiencies in the project.

Simplicity, flexibility, and efficiency

There are various benefits that a company or person can achieve by using the Value Proposition Canvas. The main idea is to create a value proposition that complies with the customers' needs and provides the desired value. By doing that, the product or service will stand out and attract customers. The model is constructed to be very simple, so it is straightforward to use and does not require training or specific knowledge to figure out its purpose. The model's simplicity makes it very useful for individuals or companies to identify the searched core values. ^[4]

Using the Value Proposition Canvas, businesses can stand out from their competitors. The value proposition identified for the customers will contribute to improved product/service features and eventually create a better connection between them and the market. The aspect of flexibility of the Value Proposition Canvas makes it usable tool by various individuals and businesses. Since the tool is not designed to be specific, it is flexible to use in different industries. Moreover, the ability to use the canvas in different stages of the process makes it a likable model. It showcases excellent flexibility to maintain the same approach and work unhindered without changing to adapt to new circumstances. This creates a better workflow in the solving approach. By effectively clarifying customer segments' needs, businesses and individuals can reduce time and cost expenditures expected in projects by focusing on their needs instead of developing ideas that do not fit the customers' expectations. The expected outcome is more cost/time-effective project management. ^[3]

How the constant evolution of customer segments can create a dynamic solution.

In a dynamic market with many changes, using the Value Proposition Canvas can be beneficial. The Canvas is designed to adapt according to an evolving world. Since the Value proposition canvas is designated to be dynamic, the developers can use it, especially for product or service providers where the market is in constant change. This could be social media, app developers, platforms, etc., where customers' needs change according to the fast-growing technology. ^[5] Therefore, the constant evolvement of customer segments can create a dynamic solution space when using the canvas. Through feedback from the customer, a new and improved value proposition can be created to fit the needs.

How it can be utilized by developers, project managers, etc. to align with a good project, program, and portfolio management

The Value Proposition Canvas can be utilized by developers, project managers, etc., to create solutions based on issues that they meet in daily work. In project program/ or portfolio management, ensuring that the delivered product/service satisfies the customers is necessary. Using the Value proposition Canvas, the project manager can develop a product or service that aligns their project program and portfolio management with the customers' needs in a constant and evolving need habit, where the model can adapt in these circumstances. Therefore, the Value Proposition Canvas is a complementary tool to these management methods, as it facilitates the process of project, program, and portfolio management.

Application

Figure 1. Value Proposition Canvas

- Business Model Canvas(BMC) and relations to Value Proposition Canvas and its applications.

Business Model Canvas is a strategic management tool to design, test, build, and manage business models. The model includes nine building block that forms the business model. In general, the model provides information about what the company delivers and to whom, how it has done, the system design for that, and which cash flow it triggers in revenues and costs. The model has not had a defined order. However, the creator recommends following the order: customer segment, value proposition, channels to customers, customer relations, revenue stream, key resources, key activities, key partners, and cost structure. The Business Model Canvas is a helpful tool for understanding the totality of the company strategy and marketing and how customers are included. Integrating and merging with Value Proposition Canvas provides a detailed customer and value map exploration to detail these essential building blocks to get a more comprehensive view of the tool. ^[6]

- Value Proposition Canvas

Value Proposition Canvas is a strategic model developed for companies to visualize, design and test a value proposition for the customers. The model was developed in connection to Business Model Canvas by Alexander Osterwalder. The Value Proposition Canvas zoom in on two of the main components of the Business model, the customer segment and value map. The idea of the model is to clarify the relations between the customer's conscious and unconscious needs and the actual value. Whereby the purpose of the Business Model Canvas is to create value for the company, the Value Proposition Canvas goal is to create value for the customers. The Value Proposition Canvas is divided into two parts, each consisting of three subparts. Combining these parts provides an overall view of the customer segment and value proposition. The better the value creation or 'fit' between the two segments, the higher the likelihood of success for the product and project.^[6]

Customer profile:

The customer profile constitutes the right-hand side of the Value Proposition Canvas. The customer profile visualizes the customer/stakeholder segment intended to create value, which is done by describing the pains and gains.

- Customer jobs

Describe the tasks that the customer wants to get done. This could be both in the workplace and their personal life, as expressed in their own words. Jobs could be functional, social, or personal/emotional.

- Pains

Bad outcomes, risks, and obstacles that customers want to avoid since it prevents them from getting a job done (well). Pains can be specific barriers, frustrations, or negative situations that one hopes to avoid or ease/minimize.

- Gains

Outcomes and benefits customers must have, expect, desire, or hope to achieve. Gains can be essential, expectations, wishes, unexpected or unexpected benefits.^[1]

Figure 2. Value Proposition design stages

Value map:

- Products and Services

The value proposition is based on the items that the customers can see. Products and services can be tangible, intangible, digital, and financial in nature.

- Gain creators

By getting a job done (well), products and services create gains for customers and help customers achieve the outcomes and benefits they expect, require, desire, or hope for. Gain Creators can both lead to benefits of a functional, economic, social, and emotional nature.

- Pain relievers

By getting a job done (well), products and services alleviate customer pains by eliminating or reducing risks, obstacles, and bad outcomes. Pain Relievers can be savings (time and money), eliminating risks, or breaking down barriers preventing happiness and well-being. ^[1]

- The practice- Value proposition design

Value proposition design indicates how to use the value proposition canvas to design and test great value propositions. A constantly evolving value proposition is needed through an iterative search of customers' needs for the process to be up to date and keep relevant for the customers.

Canvas: The initial step in the design process is creating a value canvas consisting of the value proposition and map. The canvas visually represents the intention to create value for the customer. A 'fit' is achieved when one meets the other.

Design: The following step is to design a prototype that can be tested with customers. This involves creating a prototype that presents the key features of the product or service. This can be done by using quick and cheap prototypes that can be used to explore the possibilities and lead to testing with customers.

Test: To reduce the risk and uncertainty of the ideas in the project, it is necessary to conduct a test by deciding what to test, followed by the test and drawing from the experiment library, bringing it all together, and measuring the progress.

Evolve: The final step in the process is constantly evolving based on feedback from the customers. This includes changes in the product based on their needs and requirement. The product or service is repeatedly evolved to seek the best value proposition through an iterative process. ^[1]

Through these processes, businesses can create the best value proposition that meets the customer's needs and is constantly evolving to fit the market.

Limitations

- Using Value Proposition Canvas for best benefits in combination with other tools and not as a singular tool

The Value proposition canvas appears simple when isolated. Without research, data collection, testing, and validation, it only suggests the value proposition that may be relevant for a company to focus on. The model's simplicity makes it appear superficial without real value as a strategic management tool. However, this is also clarified by Alexander Osterwalder, that the Value Proposition Canvas only has value when the tool is integrated with thorough research and repeated use of hypothesis-based testing and validation of data. The Value Proposition Canvas is only a practical tool that partly provides a summary overview of the intermediate calculations and results of the analysis and partly provides a framework and guidance in the company's work to invent or reinvent itself. ^[6]

In this regard, ' Value Proposition Canvas can be used with other tools to develop a successful business idea/product. Depending on the goal and scope of a project, a better understanding to choose the appropriate tools to best fit with the business model. Several tools can be used and integrated with 'Value Proposition Canvas' such as:

SWOT analysis: Allows the product managers a better idea of the strengths, weaknesses, opportunities, and threats of the company to give the manager insight to identify parts of the project that need correction or improvements in the Value Proposition Canvas.

Business model canvas: Although Value Proposition Canvas is a great tool to understand and visualize the customer and value segment, to analyze and understand their needs, the model needs to provide a view on the business aspect herby the economic and technical perspective. The limited focus on the customer segment can explain this. To get a better understanding of the larger perspective, the user needs to use another model, such as Business Model Canvas, in combination with it to build on the overall understanding of the analytical output. The remaining building block will provide support for the overall comprehension. To help users create value for businesses, the Business Model Canvas completes the critical strategic factors for business management.

Environment Map: The environment map is a strategic foresight tool to map the context in which you design and manage value propositions and business models. It helps the user to understand the context it creates. ^[1]

Unite Value Proposition Canvas: The model consists of three main parts, customer profile, value map, and substitute. The new substitute section adds the value of gathering information about what people do instead and what habits stand in the way of people adopting the product. ^[7]

Market research /analysis: Market research and analysis done by conducting interviews and surveys can help the product developer or manager better understand the customers' needs, which can help clarify the customer segment in the Value Proposition Canvas. Moreover, by analyzing the market, the manager can identify opportunities and competition in the field.

- Limited options

When creating a Value Proposition Canvas, the inability to deal with multiple customers will appear when trying to include them in the project. Moreover, when narrowing the customer, other factors such as age, social status, interest, etc., will create the need to engage them in a separate template for each category. A big mistake is combining them into a single chart, as it will not represent the specific customer. If doing so, it will be more difficult to identify the highest priority jobs, gains, and pains. As a result, the value map will be misfocused, and the value proposition will go down. ^[8]

- Limited guidelines

The Value proposition canvas consists of two similar parts that can easily be misinterpreted. The important point is to notice that the Value map and customer profile are two separate building blocks. A big error is not considering this and merging them into one canvas. The customer segment is beyond the control, while the value map is within the ability to design and improve. That being stated, misunderstanding the order to design a value proposition canvas can be misinterpreted. A lack of clarity and knowledge on using the canvas can result in ineffective usage. By working from right to left, the user establishes the qualities the product must possess to be in demand. Working the other way will probably result in misunderstanding what the customer needs. ^[8]

Annotated bibliography

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design. Wiley.

The book introduces the Value proposition design on creating products and Services the customers want. An illustrative work through the Value proposition canvas herby the the two building blocks value map and customer segment, showcase how to create value for the customer segment and how the user can design, test and evolve the Value proposition to maintain and create best value for their customers. The book is a good tool to create customer value and a follow up business model.

How to Complete a Value Proposition Canvas - EB Pearls. (n.d.). EB Pearls. https://ebpearls.com.au/learn/how-to-complete-a-value-proposition-canvas/

'Marketingsmodeller' is a short and precise book describing 45 of the most important marketing models, what they can be used for and where their weaknesses are located. A team writes Marketing Models of experts with years of experience in marketing and particular experience with the models they have written about.

References

1. ↑ ^{1.0 1.1 1.2 1.3 1.4 1.5} Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design. Wiley.
2. ↑ Kyhnau, J., & Nielsen, C. (2015). Value Proposition Design: How to create products and services customers want. Journal of Business Models, 3(1), 81–89. https://doi.org/10.5278/ojs.jbm.v3i1.1105.
3. ↑ ^{3.0 3.1} Strategyzer. (2016, November 22). The Value Proposition Canvas - 9 Steps to Creating Products Customers Love. YouTube. https://www.youtube.com/watch?v=ReM1uqmVfP0.
4. ↑ Team, O. (2020, July 7). Use the Value Proposition Canvas to Position Your Business for Success | Ownr. Ownr Blog. https://ownrblog.com/how-to-use-value-proposition-canvas/
5. ↑ How to Complete a Value Proposition Canvas - EB Pearls. (n.d.). EB Pearls. https://ebpearls.com.au/learn/how-to-complete-a-value-proposition-canvas/
6. ↑ ^{6.0 6.1 6.2} Kyhnau, J. G. (2017). Value Proposition Canvas. In K. Buch-Madsen (Ed.), Marketingmodeller (1 ed., pp. 74-79). Samfundslitteratur.
7. ↑ VValue Proposition Canvas Template (PDF + PPT) – Full Guide. (n.d.). Digital Leadership. https://digitalleadership.com/unite-articles/value-proposition-canvas/
8. ↑ ^{8.0 8.1} Value Proposition Canvas – a Tool to Understand Your Product’s Value from the Customer’s Perspective | Railsware Blog. (2023, April 19). Blog by Railsware | Blog on Engineering, Product Management, Transparency, Culture and Many More. . . https://railsware.com/blog/value-proposition-canvas/