Value proposition canvas

Revision as of 02:34, 26 February 2018

In order to provide customers with good service and valuable products, an organization should define their value propositions for their projects. In order to create successful projects a project manager must use his skills and knowledge to plan projects and create project plans to meet the project and product requirements by the customers ^[1]. The value propositions set by the organization for their specific products can guide the project managers to develop project plans that satisfy their customers and provide them with valuable products. The Value proposition canvas is a tool that can be used in order to solve the problems of specific customer segments and fulfill their needs by providing products and services that creates value for the customer. The organization should design value proposition with benefits in order to attract customers and make them choose one company rather than its competitors ^[2]. The project manager has to make sure that the value proposition and customer profile complement each other so that the customer segment is provided with the right products/service and that the customer’s pains are met with the right pain relievers ^[3].

This article will describe the value proposition canvas and the importance of choosing the right value proposition. The relation between project management and the canvas will be described along with how the canvas can be used to satisfy customers and stakeholders.

Description

Project management is using tools, skills and knowledge in order to meet project requirements and can be done through project management processes ^[4]. In project management a project manager must use his skills and tools in order to meet project requirements as well as the wants of customers/stakeholders. Project management can be categorized into five process groups: Initiating, Planning, Executing, Controlling and Closing. In the initiating process group the scope of a project and stakeholders/customers are identified. The needs and expectations of the stakeholders are identified. A project manager must communicate with stakeholders in order to analyze their needs and concerns ^[1].. The project manager can use the Value Proposition Canvas as a tool to understand and analyze the stakeholders.

Identifying and choosing the value propositions are an important part of creating value for the customers and stakeholders. However, it is not enough to only design the value propositions, it is also important to integrate a business model in order to create value for the organization. The Business Model Canvas can be used for this purpose. ^[2].

Business Model Canvas

A business model is game plan for implementing strategies through organizational processes and systems. The Business Model Canvas consists of 9 building blocks and can be used as a tool to describe how an organization creates and delivers value. To quickly sum up the Business Model Canvas:

• Customer Segments: Group or people that the organization wants to create value for with value propositions

• Value Propositions: Products or services that creates value for a particular customer segment

• Channels: How value propositions are delivered to a customer segment

• Customer Relationships: Establishment of relationship with particular customer segments

• Revenue Streams: Result from successfully delivered value propositions to customer segments

• Key Resources: Required assets to provide the elements described above.

• Key Activities: Important activities that the company must execute well.

• Key Partnerships: External suppliers and partners

• Cost Structure: Cost to meet a business model

The left side of the Business Model Canvas concerns the organization (internal), while the right side concerns the customers (external). In the Value Proposition Canvas Customer Segments and Value Propositions play important roles ^[2].

^[5]The image illustrates the 9 building blocks in the Business Model Canvas.

Value Proposition Canvas

Alexander Osterwalder describes the Value Proposition Canvas as a 'Plug-in' to the Business Model Canvas in order to elaborate the value proposition ^[3].

^[6]The image illustrates the Value Proposition Canvas. The model is split into two parts: The value map (left) and the customer profile (right).

Application

Application

Common Mistakes

Example: Tesla

Further Reading

Alexander Osterwalder & Yves Pigneur: Business Model Generation, 2010

• Learn about the Business Model Canvas to learn about creating value and improving organizations. The book describes how to use business model in order to position an organization in a competitive advantage and re-designing an organization's business models.

Alexander Osterwalder et al.: Value Proposition Design, 2010

• Learn about creating desirable products for customers and the processes and tools in order to create and sell the products.

Office Of Government Commerce: A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 2013

• Learn about fundamental practices that drives businesses and that reflects the current industry knowledge and practises.

References

1. ↑ ^{1.0 1.1} Office Of Government Commerce, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 5th Edition, 2013
2. ↑ ^{2.0 2.1 2.2} Osterwalder, Alexander and Pigneur, Yves, Business Model Generation, 2010.
3. ↑ ^{3.0 3.1} https://lederindsigt.dk/vaerktoejer-skabeloner/strategi-og-forretningsudvikling/value-proposition-canvas/
4. ↑ https://sd-ds-dk.proxy.findit.dtu.dk/Viewer/Standard?ProjectNr=M268368&Status=90.20&VariantID=46&Page=0
5. ↑ https://www.creatlr.com/template/UOLHsfqGrLzugzVVttoi1e/business-model-canvas/
6. ↑ https://strategyzer.com/canvas/value-proposition-canvas/