I’m an engineer by heart, basically I like writing code and solving problems. As my career has evolved, I’ve come to realize that’s not enough.
When working at a startup, I focused on writing the perfect code (seriously it was awesome!). Unfortunately, in retrospect we failed because we focused too much on the code being clean, and not enough on the business around the code.
At an enterprise corporation, I focused on doing what I was told. If a sales person told me to implement feature X because a big customer was going to pay top dollar, then I did. The company made money, but the product often sat on the shelf or failed to live up to the promise. Enterprise software sells the dream, not the product.
I’m now in a leadership role, and I now understand there are three attributes for software to be successful. Firstly, it’ll need to be desirable. Someone needs to want it! Secondly, it needs to be profitable with a sustainable business model behind it. Finally, it needs to be feasible — we can build it.
Last week, I attended a two-day workshop on Value Proposition by the fine folks at Business Models Inc.
The process follows a double-diamond pattern. Firstly, focus on understanding and defining the problem. Only then focus on exploring and creating solutions.
Note that I’m presenting what I learnt as a linear walk through, but it’s not! Each stage of the journey results in learning which can feed both backward and forward leading to adjustments.
To understand and design the solution, you (unsuprisingly) need to understand the current condition. You might do this with a PEST analysis or Porter’s Five Forces, or a context map canvas. Your goal here is to understand the bigger picture to reveal potential business drivers or customer behaviours. For example, the emergence of GDPR compliance is a political change that opens up big opportunities.
From the context you are operating in, you generate enough insight to come up with a cover story (a vision). The purpose here is to create something the team can get behind, understand the questions that will be asked and the skepticism that might emerge.
It’s time now to understand who you are targeting. What is the persona? There might be many different personas involved. For example, is the user the same as the buyer? Are there different types of user? For each type of user, you’ll need to understand them in detail. What are their needs? What are their headaches? Fears? Hopes? Opportunities? Deeply understanding these needs is the only way to produce solutions that they’ll engage with.
One point Business Models made repeatedly is that people lie! If you ask people something, they’ll tell you what you want to hear, not the truth. This isn’t because they are horrible, it’s because they are nice.
After you’ve got the understanding of the problem, a potential solution and the people who will use that solution you can begin to understand the value proposition.
The value proposition is your way of communicating to the outside world the value in your product. As an example Uber’s value proposition is simple “Tap the App — Get a ride”. Stripe is an accessible, convienent and flat-priced payment provider. MailChimp allows you to “send better email”. These examples might sound like glib statements, but they help the company distinguish itself from peers and focus the business strategy.
The business model Value Proposition Canvas helps you construct a value proposition from the point of view of the customer.
The right hand side reflects the view of the customer. What is the job they are trying to do? What are their pains? What are their gains? Clearly articulating (and understanding!) these problems is vital.
The left hand side focuses on your solution. How are you going to relieve pain from this customer? What gains are you going to create? And finally (and only once you’ve understood the environment!) what products and services are you going to use to solve these problems?
I’d seen these tools being used around Redgate, but this training course gave me a much better understanding of the big picture. Of course, having the canvasas and using them are too different things and Business Models Inc. gave us great feedback about using them effectively.