All successful businesses have one thing in common; they have a clearly defined value proposition. But what constitute a good value proposition? Do you think that Google would have been so successful had its value proposition been “Google uses a patented page-ranking algorithm to make money through ad placement” instead of its current “The world’s largest search engine that allows internet users to find relevant information quickly and easily” (Source: Google)?
So how can you as an entrepreneur create your perfect value proposition? Well, here are some tips and resources to help.
Components of a value proposition: there are 3 key parts of a value proposition:
a. Target Customer
b. Customer Problem
c. Product or Solution
A well written value proposition connects all these 3 together in one or two simple sentences. Here are some resources to help you identify these three key parts.
1) A-Day-in-the-life Scenario: This technique helps you identify your target customer and the customer problem. Imagine that you are the ideal customer for your product – what would your regular day be like, what problems or stresses are you under and what are its economic consequences. Then you overlay the enabling factors of your product and see if they can solve the problems and lead to economic benefit.
2) Strategy Canvas: This is a powerful exercise to help you identify your competitors to see how you can differentiate yourself (see example for Southwest Airline in Fig 1). Think of all the factors that consumers consider when buying a product or service in your market. Plot these factors along the horizontal axis of your strategy canvas and then rank yourself high, medium or low compared to your competitors for that factor. This exercise shows you in a very visual way where you differ from your competition and these unique factors that your customers are looking for are what you should be including in your value proposition.
3) Buyer Utility Grid: This is a useful exercise in trying to determine at what point in your product’s life cycle you can add value. The columns on the grid represent the different phases of your product’s life cycle and rows represent common value-add factors that consumers are looking for. If you are struggling to find ways to differentiate yourself from your competitors, I would encourage you to go through this exercise to see how your ‘whole product’ (core product + services and ancillary products) can give you new competitor advantages.
All these exercises were included as part of working group activities by entrepreneurs in a workshop organized by RIC Centre in partnership with the Business Mentorship and Entrepreneurship Program based at the MaRS Discovery District. This workshop, facilitated by Joseph Wilson and Jon Worren from MaRS, was highly engaging and all the invited entrepreneurs who attended this session were able to write and share a concise value proposition for their company by its conclusion.
Sheldon Joseph from Rejuven8 said that he found the interactive nature of this workshop very useful and added that “I’m writing an executive summary [of my business] as we speak”. The next workshops will cover business models.
All information for this blog was taken from content discussed at the “RIC workshop series: Designing a Value Proposition”, courtesy of Jon Worren and Joseph Wilson. The models and activities can be found in the ‘Entrepreneurs Toolkit – Market Strategy Workbooks’ designed by the Business Mentorship and Entrepreneurship Program.
Shantanu Mittal is graduate student pursuing his Masters of Biotechnology from the University of Toronto Mississauga. He is currently the communications officer for the RIC Centre, a role which has helped him understand the world of entrepreneurship and business development. With his expertise in the life sciences and green technology sector, he has been able to provide valuable feedback to clients along with the entrepreneur-in-residence. Shantanu hopes to pursue a future in business development in the biotechnology or green technology industries.
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