The Value Proposition Canvas and Customer-centric Innovation
Have you ever experienced products and services that just don’t hit the mark? The Value Proposition Canvas is one of the most useful tools for customer-centric innovation. This article describes what the Value Proposition Canvas is, how to use it and where it fits into the overall business model.
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What is the Value Proposition Canvas?
The Value Proposition Canvas is a tool to describe and visualise how a business creates value for customers in the form of pain relievers and gain creators from the products and services that are provided. Alex Osterwalder invented the Value Proposition Canvas to use in tandem with the Business Model Canvas to innovate and design businesses.
Why Does a Business Need a Strong Value Proposition?
Designing a Value Proposition is about reducing risk and uncertainty. The two main risks are, 1) The backstage risk of ‘can we do it?’. This would include, technology, infrastructure and cost structure. 2) The front stage market risk of ‘should we do it’. That is are we in the right market? Do our customers really care enough about our products and services? And, will they pay us enough?
According to CBInsights, 42% of startups fails because there is no market need. Meaning that the value proposition has not been validated. The lessons here apply to existing businesses too — think Nokia and Kodak.
The Six Parts of the Value Proposition Canvas?
On the right-hand side (the circle) is the Customer Profile. The Customer Profile consists of three sections, 1) Jobs to be Done (JTBD), 2) Customer Pains, 3) Customer Gains.
On the right-hand side (the square) is the Value Proposition. The Value Proposition consists of three sections, 1) the Products and Services that you offer, 2) descriptions of how the products and services relieve annoyances (pains), 3) descriptions of how the products and services create benefits/outcomes (gains).
When there is a clear ‘fit’ between the left and the right sides this is known as product-market fit because the product or service is starting to get traction in the market.
Read this article for more about the 3 levels of business ‘fit’.
The Customer Profile
The Customer Profile is the starting point and it is where you are capturing the insights and needs from your customer research. I recommend that different profiles (and Value Propositions) are created for distinct customer types to get really clear on the products and services that provide value.
Jobs to be Done
Within the Customer Profile begin with understanding what jobs the customer is trying to get done within their lives. There are three main types of jobs to identify:
- Functional Jobs — these are often the actual tasks they are trying to complete or the specific actions (eg. read a book, buy some milk)
- Social Jobs. — these are how someone wants to be perceived within society (eg. be perceived as environmentally conscious)
- Emotional Jobs — are emotional states that are sought (eg. peace of mind)
There is actually a fourth job type — Supporting. Focusing on the main three will uncover core insights. However, an example of a supporting job is ‘reserve accommodation’, think of these jobs as actions when consuming value.
Customer Jobs often remain stable over time and it is the products or services that evolve to meet the needs in a particular circumstance. Once you’ve captured all the jobs then rank them in the level of importance to the customer.
Find more about JTBD and the best insight generating tools here.
Customer Pains
Customer pains are any problem, dislike, obstacle, risk, a negative experience or undesirable outcome prior, during and after trying to get a job done. An example, as in the case of a business traveller might be the check-in process at a hotel.
Try using trigger questions to uncover the pains, such as — ‘What are the main difficulties customers are having?’, ‘Are customers creating workarounds?’, ‘What mistakes are frequently occurring?’
After capturing all the customer pains then order them in terms of severity.
Customer Gains
It’s important to remember that customer gains are not simply the opposite of pains, they are the required, expected, desired or unexpected outcomes, or in other words — what success looks like.
An example of a customer gain in the case of a business traveller might be that they expect free wifi now, but require a good nights sleep.
Questions that may help uncover gains might be — ‘What could make their life easier?’, or, ‘What does success look like?’, or, How might we help them increase their perceived status?’
Once you have all the pains identified that you can, then rank them in order of what is most essential, to things that would be less important.
Customer Profile Tips
- Explore all types of Customer Jobs, not only the functional ones
- Leave your solution to one side, this is about empathy so understand their world deeply
- At this stage try to capture as many as possible, the more the better, then they can be prioritised later.
- Get specific, clarity is required here.
- High-value jobs are ones that are really important, they are tangible, the customer is unsatisfied and there may be a lucrative opportunity
The Value Proposition
Once you have really profiled the customer types, proceed to the Value Proposition for each. This is the side of the canvas where we work out how to address the pains and increase gains.
Products and Services
The products and services section links directly with the customer jobs, pains and gains. Here we what products and services your customers will hire to get certain jobs done and in the process address (create value) for some (often not all) pains and gains.
The products and services don’t have to work in isolation, these can be new bundles of existing offerings.
Pain Relievers
Pain Relievers are descriptions of how the products and services that you offer reduce the customer pains that are in the way of getting the jobs done satisfactorily.
Consider how might your products and services reduce fear, eliminate mistakes, stop frustrations or eliminate barriers or concerns. as in the case of the business traveller might be that there is no need to wait and check in.
Again, once you have identified the pain relievers, prioritise in terms of essential to those that are less important.
Gain Creators
Gain Creators are the descriptions of which benefits and outcomes you intend to focus on that customers expect or wish for.
An example of a gain creator for a business traveller might be, that the rooms are very well designed for the needs of short stays as opposed to the needs of families.
Consider how you might compete against existing value propositions, or outperform customer expectations, or surprise them with better quality.
Ten rank the gain creators from most impactful to less impactful.
Value Proposition Tips
- Focus on addressing as many pains and gains as possible; However, you will not be able to address all, so work on what is most important
- It is critical that you can clearly articulate how the Value Proposition links with the Customer Profile in terms of addressing the pains and gains
- Remember that this Value Proposition canvas is only for each customer type, so capture only the products and services that apply and not everything that your company offers
What is a Good Value Proposition?
The signs of a good Value Proposition could include:
- There is strong alignment with customers success measurement
- You have differentiated enough that you have achieved a competitive advantage
- You have created a Value proposition that is hard to emulate
- It is clearly a foundation of your business model
- It addresses the jobs, pains and gains
What Next?
Often it can be good practice to start with an ‘as is’ canvas and then iterate (try different options) within a ‘to be’ canvas. Explore different ideas that might increase gains or decrease pains. Are there things that you can simply amplify that were out of sight from customers or do you need to radically innovate to meet customer needs?
The Value Proposition becomes a living artefact that is continually refined in conjunction with the Business Model Canvas and should be a visual tool for collaboration and ongoing innovation. Download a copy of the Value Proposition canvas here.
So, grab yourself plenty of post-it notes, a few sharpies and the Value Proposition and get designing a more customer-centric proposition.
If you liked this article, you might also enjoy learning about Design Thinking.
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Vaughan Broderick is a service designer, entrepreneur and writer. He helps businesses to design better, human-centred, products & services at vaughanbroderick.com, facilitates strategy and design sprint workshops, created the Service Design Journal and Innovation Today publications.
