Using Value Proposition Canvasing to Define Product-Market Fit in Health (2 of 5)
In our next installment of this five-part series on Value in Healthcare, we delve into the Value Proposition (VP) portion of the modelH Product Discovery Process. This process is instrumental in answering the crucial questions that complete the VP portion of the modelH canvas. Our aim in this series is to assist you in aligning your value proposition to meet your customers’ needs. This alignment, known as Product-Market Fit, is the cornerstone of a successful healthcare product. In this post, we will also explore Product-Market Fit and how to do it right.
“When we buy a product, we essentially ‘hire’ something to get a job done. If it does the job well, when we are confronted with the same job, we hire that same product again. — Clayton M. Christensen
If the JTBD (job to be done) building block defines what utility a User is looking for, a Value Proposition (VP) describes the shared value between the four key healthcare stakeholders. For more on these stakeholders, please refer to post 1: Understanding Value Propositions in Healthcare Business Models with modelH (1 of 5).
Our goals today are to:
- Understand Product-Market Fit.
- Define our Value Proposition for healthcare using modelH VP Canvas.
- Understand the various classifications of “Products” in healthcare.
Understanding Product-Market Fit
Most of the products (or the goods and services) that healthcare companies offer are defined by the features and benefits they possess. However, good business models must think past this inwardly facing view and instead look to the value their solutions create. For instance, a good business model in the healthcare industry could be one that focuses on preventive care, thereby reducing the burden on the healthcare system. This fact is not just important but crucial in the healthcare industry, where the value derived from a product’s benefits and features can be a matter of life and death. There is a not-too-subtle distinction I am trying to make, and it can significantly impact the lives of patients, the cost of care, and the quality of outcomes.
We have already addressed that a healthcare business model must establish a position of value with a specific Customer Segment. A position of value can otherwise be called your ‘Product,’ it can be made from the goods or services you sell to your Buyers through your Channels. In the healthcare industry, the ‘Buyer’ is often the healthcare institution or the insurance company, while the ‘User’ is the patient. Your position of value serves as a point of initial engagement with your Customer Segment. It forms the basis for all ongoing interactions (which we will discuss in Customer Relationships in a future post). In modelH, you strive to reach a point at which a clearly identified Buyer and End User are aware that your business is offering them something valuable, relevant, and complementary to their specific health Job to be done. This concept is your Value Proposition or VP.
Our goal today is to empower you, as a healthcare professional, to build a VP that gets you to Product-Market Fit (or PMF), the sweet spot where your product perfectly aligns with the needs and desires of a specific market. Your role in this process is not just crucial but integral.
You know you have a great value proposition when your Buyers understand and acknowledge the unique benefits your product offers compared to your competitors’ products. You know you have PMF when those same Buyers are willing to pay you for it.
PMF is crucial for the success of any business, especially startups, and your role in achieving this fit is significant. The key attributes you are looking to ensure are as follows.
- Relevancy: Your product effectively solves a User’s Jobs to be done.
- Alignment: Your product’s features and benefits match your Buyer’s preferences.
- Demand: You have a measurable need for your product in the market.
- Viability: Your product generates enough Revenue to sustain the business.
You can see that VP and PMF are closely related concepts but are necessarily unique. Think of it this way. Your VP is your promise to customers that they will receive value (created gains and relative pains) from your offerings. PMF is the validation that you delivered on that promise. Understanding these two concepts’ differences can better position your product for success.
To summarize, a strong Value Proposition is necessary for achieving Product-Market Fit. Product-Market Fit is not just a milestone, but a validation that the Value Proposition resonates with the market, reassuring you that your business strategies are on the right track.
So, how do we develop great Value Propositions and achieve Product-Market Fit? I suggest using the following techniques, discussed in the next three posts, to define, test, and build your Value Proposition.
Building a modelH Statement of Value
Let us start with summarizing your “value in a single statement — worthy of an elevator pitch. I suggest using the following template:
- My company, __(insert name of company)__, offers __(a defined offering)__ to help __(a defined audience)__ (solve a problem)__ with __(secret sauce)__.
You will likely iterate on this initial statement many times as you progress through these techniques. Maintaining your Value Proposition involves increasing your understanding of your Customer Segments. Understanding both the Buyer and User is critical to achieving Customer Intimacy, a value discipline characterized by occupying no more than a few high-value customer niches and being obsessive about understanding those customers in detail. Market Leaders with this focus excel at customer attention and customer service — examples include the family doctor and the personal trainer. A business model must also create the insight needed to turn a prospect into a customer willing to share personal and health information in a two-way exchange. This exchange is vital for any healthcare business model and positions the business to monetize the relationship.
Building out the modelH Value Proposition Placemat
You can now refine this statement further using the pre-determined questions from the Value Proposition block on the modelH business model canvas.
We begin, as we should, with Osterwalder’s model that asks these three key questions:
- What value do we deliver to the customer?
- Which one of our customer’s problems are we helping to solve?
- What bundles of products and services are we offering to each Customer Segment?
I then added these additional questions for modelH that are focused on healthcare.
- What compels a purchase decision by the Buyer?
- What aspects of the User’s life do you deliver value?
- Which jobs, pains, and gains must be addressed in the Value Proposition?
- How much time does it take for the Value Proposition to be delivered?
- What social value(s) is met (if any) while delivering the Value Proposition?
- What bundles of products and services are offered in the Value Proposition?
- How can the Value Proposition be personalized based on the Customer Segment need(s)?
- What Intermediaries derive value from our Value Proposition?
- How does the business model gain insights from Customer Segment interactions?
- What Key Behaviors are required for the Buyer & User to realize the Value Proposition?
- What Experiences are required for the Buyer & User to realize the Value Proposition?
- What Key Influencers are necessary for the Buyer & User to realize the Value Proposition?
Building a Value Proposition Canvas?
Finally, we can now expound on our initial statement of value by using the answers from above to complete a modelH Value Proposition Canvas — a visual framework designed to help you reach Product-Market Fit by ensuring your products (goods and services) effectively address consumers’ problems and fulfill their aspirations. The modelH process, which involves in-depth research, customer interviews, and market analysis, is specifically designed to involve you in understanding how consumers make healthcare-related purchases and usage decisions in the channels you control.
A Value Proposition Canvas is a complementary tool to the Business Model Canvas, designed to provide a deeper understanding of value propositions and their alignment with customer segments. It enables a detailed exploration of the value you intend to deliver to your customer’s expectations. This tool can be used at various stages of product development, from initial concept to post-launch analysis. Using it beforehand lets you identify knowledge gaps about customers and prioritize areas for value proposition testing. After the product launch, the canvas helps assess the fit between your offering and customer needs. Whether developing a new product or refining an existing one, the Value Proposition Canvas provides a framework for structured thinking and tangible idea generation.
A Value Proposition Canvas is meant to answer the following questions:
- What would create value for customers in performing their job to be done?
- What are their current approaches, and what are the pain points?
- What performance criteria do they use in evaluating the solution?
- What benchmarks exist across the full range of competition?
- What prevents new solutions from being adopted?
The modelH framework, an expansion on Alex Osterwalder’s original Value Proposition Canvas, offers many benefits. This short video, Alexander Osterwalder: Mapping Customer Pains to Value Proposition, provides a primer on Osterwalder’s fantastic concept.
The modelH Value Proposition framework is divided into two halves — the Customer Segment side on the right and the Value Proposition side on the left. This two-pronged evaluation will help us be customer-centric and prioritize customer needs over product features while ensuring we chase Product-Market Fit and offer what customers truly value. Creating a strong alignment between these two sides can increase the chances of building a successful product or service.
Customer Segment Canvas (Right Side)
Customer Segment: This side focuses on understanding your customers.
- Customer Jobs: What are customers trying to accomplish? “I want to…” action words + object of action + context.
- Pains: What frustrations or risks does the customer expect to avoid?
- Gains: What desired outcomes does the customer expect to achieve?
- Approach: How does the customer solve their JTBD now?
- Value: What creates value for the customer when solving their JTBD?
- Benchmark: To what does the customer compare their current approach?
- Criteria: What does the customer use to judge their effort & experience?
- Barriers: What prevents the customer from trying a different approach?
Value Proposition Canvas (Left Side)
Value Proposition: This side focuses on your product or service.
- Products & Services: What bundles or products and services are offering in your value proposition?
- Value Proposal: What value does your offering create? Can you tie it back to the JTBD of specific Customer Segments?
- Gain Creators: How do your offerings create customer gains, expected or otherwise?
- Pain Relievers: How do your offerings alleviate customer pains, expected or otherwise?
Start with Customer Jobs (the work we did here) for your defined Customer Segments (the work we did here). Then add your customer’s Pains that they do or could experience before, during, and after getting the job done. For the Gains box, enumerate every benefit your customer expects, desires, or would be surprised by.
In modelH, we do not stop at just the Pains and Gains. We dive deeper into a comprehensive evaluation of how your customers solve the jobs to be done today or what we call their Approach. Next, use the Value box to define what creates value for the customer in solving their JTBD using their current Approach. Remember to mention any Key Behaviors (the work we did here) needed to receive value or any Key Influencers (the work we did here) required to assist them along the way. It is worth documenting what the customer compares their current Approach to in the Benchmark box and how they judge their effort and experience in the Criteria box. Finish with the Barriers box to list what prevents the customer from trying a different approach. Be sure to speak to any Intermediaries (the work we did here) about the business model.
Detail your Value Proposition using the modelH statement and block questions from above. Then, describe all the Products & Services your value proposition is built around. Next, define how you intend to create value by eliminating a problem through a Pain Reliever or making the customer happy through a Gain Creator.
Take the time to incorporate these approaches into the Value Proposition block in your business model canvas. Whether your business model is aimed at Patients, Providers, Payers, or Purveyors, creating a Value Proposition based on a shared sense of value will go a long way toward ensuring your business idea’s sustainability.
A Close Look at Products & Services
I wanted to spend more time slicing up how “Products & Services” in our Value Proposition Canvas can be subcategorized. Healthcare is a large market space that can manifest in your Value Proposition in many different ways.
Products can be “Typed” as either goods, services, or promotions. Products can be “Categorized” as tangible, digital, intangible, and financial. Products can be divided into three “Relevance” classifications: Health Direct, Health Related, and Health Relevant. Within these classifications, the Products you offer can also be “Contextualized” as In-context or Opportunistic. The diagram below helps you understand what I am trying to address with these classifications. Let us take a deep dive into each.
Product Type
Product Category slices your healthcare Value Proposition across goods, services, and promotions.
Goods
Goods are the physical items marketed to consumers based on their jobs to be done. Goods include medications, medical devices, yoga mats, running shoes, exercise equipment, workout apparel, nutritional supplements, vitamins, medical devices and monitors, and eyeglasses.
Services
Services are products that are not physical items and are provided by an expert in that particular field. Services include doctor visits, immunizations, flu shots, remote health monitoring, fitness coaching, dieting advice, a mental wellness app, and laser teeth whitening.
Promotions
Promotions are communications to advance awareness of a good or service and incentivize customers to purchase it. Promotions are best when they are relevant to the consumer’s jobs to be done. An example of a promotion is a $2 off a “Heart Healthy” lunch at Chili’s or a $0.50 coupon for Quaker Oatmeal to support a lower cholesterol diet for someone with hypertension.
Product Category
Product Category slices your healthcare Value Proposition across tangible, digital, intangible, and financial offerings.
Tangible
Tangible products in healthcare are physical items used to prevent, diagnose, or treat medical conditions. Some examples are as follows.
Medical Devices and Equipment
- Diagnostic tools: X-ray machines, MRI scanners, ultrasound machines
- Surgical instruments: Scalpels, forceps, retractors
- Implantable devices: Pacemakers, artificial joints, cochlear implants
- Monitoring devices: BPe monitors, glucose meters, thermometers
- Therapeutic devices: Nebulizers, inhalers, crutches, wheelchairs
Pharmaceuticals
- Prescription drugs: Antibiotics, pain relievers, antidepressants
- Over-the-counter drugs: Pain relievers, allergy meds, cold remedies
- Vaccines: Flu shots, measles vaccines, COVID-19 vaccines
- Medical supplies: Bandages, gauze, syringes, catheters
Consumable Products
- Medical dressings: Wound care products, bandages
- Personal care items: Contact lenses, hearing aids, orthotics
- Medical supplies: Gloves, masks, gowns
- Dietary supplements: Vitamins, minerals, protein powders
Digital
The digital health landscape is vast and rapidly evolving. Digital health products leverage computing platforms, connectivity, software, and sensors to improve health and healthcare delivery. Here are some examples of digital products transforming healthcare.
Patient-Centric Products
- Wearable devices: Fitness trackers, smartwatches, and continuous glucose monitors provide real-time health data.
- Mobile health apps: Apps for medication reminders, symptom tracking, mental health support, and chronic disease management.
- Telehealth platforms: Enable remote consultations, virtual appointments, and remote patient monitoring.
- Health information portals: Patient access to medical records, test results, and appointment scheduling.
- Digital therapeutics: Software-based interventions for conditions like anxiety, depression, and chronic pain.
Provider-Centric Products
- Electronic health records (EHRs): Digital storage and management of patient information.
- Clinical decision support systems: Provides evidence-based recommendations for diagnosis and treatment.
- Remote patient monitoring software: Allows continuous tracking of patients’ vital signs and conditions.
- Practice management software: Streamlines administrative tasks for healthcare providers.
- Health information exchanges: Facilitates secure sharing of patient data between healthcare organizations.
Administrative and Operational Tools
- Health insurance claims processing systems: Automate and streamline insurance claims.
- Healthcare analytics platforms: Provide data-driven insights for improving operations and patient care.
- Supply chain management software: Optimize the procurement and distribution of medical supplies.
- Revenue cycle management systems: Manage patient billing and collections.
Other Notable Examples
- Health-focused social networks: Connect patients, caregivers, and healthcare providers.
- AI-powered diagnostic tools: Assist in detecting diseases through image analysis and data interpretation.
- Virtual reality (VR) and augmented reality (AR) applications: Used for medical training, patient education, and pain management.
Intangible
Intangible products in healthcare primarily consist of services and information. They lack a physical form but provide significant value to patients and the healthcare system. Here are some examples:
Services
- Medical consultations: Doctor-patient interactions, telemedicine consultations.
- Nursing care: In-hospital, home healthcare, and specialized nursing services.
- Therapy sessions: Physical, occupational, speech, and mental health therapies.
- Diagnostic services: X-rays, MRIs, blood tests, and other medical examinations.
- Surgical procedures: Any surgical intervention performed by medical professionals.
Information
- Health records: Electronic health records (EHRs), patient data, and medical history.
- Medical research and data: Findings from clinical trials, epidemiological studies.
- Health education: Patient education materials, wellness programs, and prevention advice.
- Telehealth platforms: Virtual consultations, remote patient monitoring, and digital health tools.
- Health insurance plans: Coverage for medical expenses and services.
It’s important to note that while many healthcare products involve a combination of tangible and intangible elements (e.g., prescription drugs and medical devices), the core value often lies in the intangible services or information provided.
Financial
Financial products play a crucial role in the healthcare industry, addressing the complex needs of both patients and healthcare providers. Here are some key examples:
For Patients
- Healthcare Loans: These loans help patients finance medical treatments, procedures, or equipment not covered by insurance.
- Health Savings Accounts (HSAs): Tax-advantaged savings accounts for medical expenses.
- Flexible Spending Accounts (FSAs): Employer-sponsored accounts for unreimbursed medical expenses.
- Health Insurance Plans: Benefit plans that offer different levels of coverage for medical services.
- Patient Financing Plans: Offered by healthcare providers to spread out the cost of treatments.
For Healthcare Providers
- Medical Revenue Cycle Management: Services that optimize the claims and payment process.
- Healthcare Financing: Loans or lines of credit for equipment, facility upgrades, or expansion.
- Insurance Reimbursement: Contracts with insurance companies for patient care services.
- Government Grants and Programs: Funding opportunities for research, public health initiatives, and facility improvements.
- Investment Opportunities: For healthcare organizations to generate additional revenue.
Other Financial Products
- Medical Crowdfunding: Platforms for individuals to raise funds for medical expenses.
- Health Insurance Exchanges: Marketplaces for individuals to compare and purchase health insurance plans.
- Medicare and Medicaid: Government-funded health insurance programs for specific populations.
Product Relevance
Product Relevance slices your healthcare Value Proposition across health direct, related, and relevant.
Health Direct
Health Direct products and services directly affecting a person’s health can be considered Health Direct. Simple examples include vaccinations. Complex examples are items a doctor prescribes to solve the JTBD of a particular health issue, such as medications, therapies, and durable medical equipment.
Health Related
Health Related products and services are used to maintain or improve overall health but do not necessarily address a particular medical JTBD (condition) that can be considered Health-Related. Some examples include “wellness” products like screenings, massages, personal training, and supplements.
Health Relevant
Health Relevant products and services are not primarily used for healthcare reasons but can be after the fact. An example is a pair of running shoes bought for their aesthetic value but that can also be used for fitness activities.
Product Context
Product Context slices your healthcare Value Proposition across in-context and opportunistic.
In Context
Products and services recommended as part of a specific JTBD are considered “in context” with that JTBD. For example, a pair of running shoes is in context with the JTBD of getting regular exercise as part of a Doctor-prescribed Key Behavior for a User with high cholesterol.
Opportunistic
Products and services that are not part of a specific JTBD (Health Direct, Related, or Relevant) but are still valuable to a User’s total health can be considered Opportunistic. For example, a User with a JTBD of financial security would be interested in the In-context product of ID Theft Protection. It would be reasonable and relevant to approach this same User with the Opportunistic service of Social Media Reputation Management via the underlying connection between financial security and personal information security.
Hopefully, this classification exercise will help you as you develop the “Products & Services” portion of your modelH Value Proposition Canvas.
What is Next?
Next, I will examine applying a Minimum Viable Product approach to building out your Value Proposition. This important set of techniques targets avoiding building products customers do not want and seeks to maximize the information learned about the customer per dollar spent using Problem-Solution Fit.
Interested in what I am doing and want to learn more? You can read all about modelH business model innovation for healthcare on Medium.
to your health,
- Kevin Riley
