| aoe) Se ea stomers Want AOR ee VD SRI International, the innovators behind the computer mouse, HDTV, TO Cn ACLU eyA charter 5 -———— It’s as srmpLe as NaBC: How LIz got HeR BIg JOB Ip You CAN'T STATE YOUR VALUE PROPOSITION, ‘YoU DON'T UNDERSTAND YOUR JOB. ‘An Opportunity Liz was the editor of nonfiction books at a top publishing house when the job of editorial director opened up. She saw it as @ great opportu ‘but she was worried, Liz is smare, savvy, and energetic, but not- rally the job would go to someone in his or her thircies or for ten or more years of experience. Liz was twenty-seven and looked six igence and skills to do the jon could look beyond her do, Art asked her for her value proposi explained chat every business eransaction hi i case, one would be from the anager atthe orga to the job candidates, explaining why they should take the job. Another would be from her to the company, explaining why she ‘was the best person for che job. Each side needs to persuade the other. Remarkably, many people go ing of how they can add value. Some sit chere expecting to be “sol least ewo value propo- sitions. woven 85 -3}hdescribe why could distinguish herself by using her knowledge and packaging it into value proposition: her vision of how the department she developed and improved her value joven times. She talked to many others, highest quality, too high to leave any profit. So it needed to maintain and quality, expand its customer base, change its book porefolio ‘0 be more profitable, and somehow pay less in royalties. at was high-quality and would appeal to broader readership, She suggested ways of mote emerging authors in addition to the es rteby lowering royalties. She also described new w: combine prvianypabished ail iceoew bode * Bent: por Cuts for the Publisher: Liz produced a spreadsheet of the current revenue and earnings, year revenue growth and 15 percene profit based on her sugies- tions. She also showed how the publisher's brand would be en. 6 curtis a. caRlsow ano william w, wilmot hanced, causing a “virtuous cycle,” attracting more authors and ‘therefore more books and mote profi as well. Her approach would, rot cost more than the publisher's current approach. ages of the changes she Liz was unanimously chosen shing house. When we talked juld have won this job without ing « value proposition. The was perfect, You cs, and they agree with you where you If you ate like Liz, or most of us, when you stare « new project it seems impos scary. We are often asked, “How do you take a vague, incoherent iden and eum into one hat cree compelling new ‘The process Liz used provides the answer. tested, distilled, and refin origin of hundreds of eof youu may say that you already do ly do some of them. Because of the effec any other creative professions, such as music ‘and public relations use variations‘whether in dance, business, of restaurant cuisine—is the esule of prepa tution, effort, end proven practices, all disciplines that can be learned. She emphasizes clotely observing the world and starting by getting your ideas down on paper. As you read this chapter, you will think of your ‘own examples about how these ideas apply co other activities. Even though these ideas are not complicated, very few people and ‘even fewer enterprises systematically apply them. After learning about ‘and meeting, with senior managers from hundreds of organizations, we hhave found only a handful that do. These few companies tend to be lead- crs in theie fields, like GE, P&G, Baldor, Toyota, 3M, and W. L. Gore Value Propositions: NABC [Every important innovation opportunity requires a value proposition. ‘When ics missing, the result is confusion, poor communication be- loyees and managemenc, a lack of focus on the customers’ actual needs, and wasted organizational resources. ‘The goal of every innovation is to create and deliver customer value that is clearly greater than the competition’. The difference has to be ‘compelling ro the customer, which is expressed as: "Our New Customer Value is much greater than the Competitions Value.” Bu how do you, like Liz, start to develop new value for the cus- tomer? Begin with yout value proposition. It nucleus for value creation, because it addresses the four fundamental questions that must «always be answered when you start to ceeate new customer value. These ‘questions are: ‘What is che imporcane customer and market Nest? ‘What is che unique Approach for addressing this need? ‘What are the specific Benefits per cots that resul from How alternative? ese benefis per costs superior to the Compe 18 CURLIS B CARLSON aNb wiLiam w. wilmot In an essential way, these ideas are not unt matter of course in everyday life. For example, if you ight be, ave ime for lunch, atypical conversa “June, T understand you are as hungry as] am [Need] lunch at the Company Café [Approachl, instead of McDonald's {Co petition} because, for the cost of McDonald's, it has great food, quiet, end we can continue our conversation [Benefits per costs). “Who determines the worth of this value prog 2 Do you as the host? No, ic is your visitor, June. And June might say, “Thank you, but ‘MeDonald’s today, so ‘would prefer going there. My children will be happy playing on che side, and we will be better able to continue our conversation.” ‘This simple example demonstrates several other important points. First, the order of che questions—need, approach, benefits pet and competition—does not matter. What is imporeant is ans of them. Second, there ate many different approaches for ad T promised my children that we would ‘greatly facilitates communication of your ideas. When i's appropri always create one, ‘Value propositions are difficult to develop in business, because tially you don't know enough about any of the four questions. In ad tion, chese four key questions interact with one another. One must repeatedly improve ot “iterate” value propositions by getting feedback from others to make them complete and compelling. As we discussed in Chapter 2, you must repeatedly go back and forth between the unmet needs of your customers and your sources of new ideas ro create new in- rnovations. Without a process to help, answering the four questions in a four carcets, and in the beginning they always sound like this:eee, Approach, Benefits per cost, Comp. “They reall about “approach.” For example: “What the world needs is Our approach is to build alittle red wagon. The’benefits are that we will have alittle red wagon. There is no competition, since our wagon is a nice shade of red” red wagon. Ie’ all approach, with no need, benefits per costs, or competition, ‘You might think that this example is an exaggeration, but i isn't. Peo- pile are always consumed with sber approach—after all, they thougl up. They want to cll you aboue it and they want you to appre Ifyou don‘, chey often assume ie is your problem, not theirs. ‘When you begin developing your value proposition, it should ini- tially look more like eis: Need, Approach, Benefits per costs, Competition {In this case the focus is on understanding the customers and the poten- tial competition. That is, itis all about understanding the market ecosystem—the customer and market needs and the current and po- tential future players. Over time, you can create an app: an existing one, with com, h, oF refine compared benefits per costs with those of the competi ‘most enterprises are a Tower of Babel. ly speak a different language. The about “nAbc," because they are focused on theit approach. There is no need, benefics per costs, and competition. But the decision makers will be i tition. They assume the staff can figure oue the approach and benefits pet costs once che needs and competition are understood. With no yy things like “The decision ‘makers doa'e get it” or “They don’t support us." When you talk to the decision makers they also will say things like “The staff doesn't get it of “We're unable to get the staff to do useful things.” Remarkabl both groups say the same things about the other and both feel power- less. The solution is to have a value-creation process in place where everyone speaks the language of customer value, including all elements of a value proposition, NABC. Remember Frank fom Chapter 1. When he came into the room he brought a “abc” presentation, He was frustrated because no one would ly that wasn’t the problem—no one could tunderstand him. In most orgs you are a decision maker with no value-creation process in place, you too will probably be befuddled when a Frank walks in, beca don't have the time to figure out what he is saying in order to deter- mine whether it has value for the enterprise. At that point you have two poor choices: 1) You can politely ignore him or 2) you can send him off, saying “Do more homework” in the hope that something. will hap- pen to help you make sense our of what you just heard. These choices demoralize the seaff and leave the decision maker feeling ineffective. is a common problem. If you Absent a way to engage the staff member, they may even ‘out the door. Steve Wozniak, cofounder of Apple with Steve Jot HP, a company he loved, because he couldn't get management to pay attention co the potential of personal computers. This outcome is not unique. Hundreds of talented employees, carrying billions of dollars of new value in their heads, leave companies they love each year. As @ champion, you must make sure value-creation processes are in place €0 engage your Wozniaks in order to capture thei important innovations. "The next time someone gives you a presentation, keep the four and competition—in ingredients —need, approach, benefits per cos ‘mind and see if they are all included. Ifehey are, you are talking to a very tare and special person. But if they aren't, be tolerant—developing a ‘good value proposition is excremely difficult. That is why it must be pare of chougheful tion, not an ad hoc activity. provement process with your team and organiza , novation 91Below are some short, effective value propositions. The first one is from Paul Cook, a Silicon Valley Hall of Fame entreprenens, It is the value proposition presented to a cable company executive for a video ‘on-demand system. We have labeled che four key ingredients—need, approach, benefits per costs, and competition—so you can see how they all ft together, ———{ VIDE0-ON-DEMAND VALUE PROPOSITION J “I understand that you are looking to expand your business, T think we might be able to help. * (Need) Movie rentals represent a $5, nity that you cur that people rea a business opportu- nly parts of reatals are the obligation to return the tapes plus the late fees. Customers find tha wastes time, } We have developed a system that allows you to ideos on demand to your customers using your cable ith access to all the movies of Blockbuster. Our ap- proach makes use of one of your currently unused channel: no changes co your system. In addition, you do not need to invest any capital. Each movie costs your customers $6.99, the same cost asa rental a a video store (Benefits per costs) You is inconvenient and not have to return the movie when done, Late fes a estimate you could c of ehese features. Online rentals represent new ‘CURTIS B CARLSON aND WaLam w, Wilmot competition for both you and us, but they have a handli disadvantage of 75 cents per tape. Sending videos back is incon venient, plus they cannot provide spontaneous purchases. ‘Would you like a follow-up meeting to see how we could help you increase your revenue and profit? the begin- ning of « proposal or innovation plan for your project. The power of the ABC value proposition is that itis concise and to the point. As we Writing down your initial answers to these qh Chapter 9, we describe your Nore that situations there is direct competition, Buc in other cases there are alterna that we might for those interested in an exciting dei the comparison might be between a sports car and a mot case motorcycles are a serious alternative with sales gro first. For exam) ‘When someone comes up wi ‘a new idea, ask the these four questions: need, approach, benefits per costs tion and alternatives. Communication about an in tated through a common language, incl the value proposition is not persuasive, ables you to develop a compelling, your innovation to yous peers, supervisors, and, eventually, customers Multiple Value Propositions Are Required In every situation, af leat two value propositions are required. The frst is to your prospective customers, the people who, or service. The metrics for them are benefits pe efits per coses compare with those of the competi "The second value proposition is to the investors. I organization, chat might be the manager of the compsofficer at @ government agency. In other cases, cots, such as venture capitalists. In that case, he mettics for success include market size, profi, revenue geowth, and secuen on investment (ROD. ‘fn most situations, more than two value propositions will be required, because you may have business partners in addition to your customers and investors. In the Paul Cook video-on-demand example, the owner of investors. The value proposition tothe cable owner emphasized revenue and prot growth for his company. But you will also sce that eis brief value proposition included benefs per costs forthe cable owner’ use tomes, such as the benefie chat atthe same price, chere is no need to r= tum rented tapes. The cable owner would only be interested if he was astomers would be getting additional value to. Typical value proposiions rust be develope for suppliers, dliseibutors, taf and other partners, if they ae all co join the initiative Bel draft of a hands-free car phone value propo tion, Ie i in outline form, which is che best way to get started. Note that it includes benefits per costs to both customers and investors. ——{ HANDS-FREE CAR PHONE VALUE PROPOSITION } — NEED + Cell phones are ficult and dangerous touse when you ate driving. + There are more than $00 milion cell hones in use around the word ks, manyUS. states and other Foreign * Consumers want to continu tobe able to use their phones while driving APPROACH + Use vice-activated dialing with a headset + Provide aditonal software for existing phones, 94 CURIS. caRISoN aNo william w. wikmot + Make the software downloadable” to existing phones with 2 $10-perear suber carserice” CUSTOMER BENEFITS PER COSTS + Convenience ws increased phone usage. ‘comfortable, and easy tose: does nat require a new phone, «+ Excellent speech recognition for voice-activated dling 99 percent ‘accuracy with untrained users. * Supports twelve different languages. + Robust performance in noisy envronments-—better than human performance. + New applications: the speech interface allows access tothe Imernot andbother services. * Cost: $10 per phone per yar. INVESTOR BENEFITS PER COSTS + New product = increased sales. + Assuime ouravallable market share is 10 percent ofthe 500 milion total market + A: $10 each, then 50 millon X $10 = $500/ lon per yeor total retum on investment of + Other sources ofrevenue are av tial discussions under woy with other service providers. * Applications include: navigation auto service, fod. * Business model TAD. + Hands fee auto use can reduce litigation, which many be another , because of the speech interface, revenue opportunity, + Today the average cell phone cor lawsuits round $50,000, + Opportunity for reduced auto insurance tothe consumer + Business model T. + Low product risk = prototype developed and demonstratedCOMPETITION ANO ALTERNATIVES phones, which must be used outside the cr. + Speech-activated phones built int the cr. * More expensive at more than $100 per car + Less convenient for the consumer who wants touse a regular cell Phone, + Possible competitors: Intel IM, and Mcrosot trated 10 percent better speech quality and car noise ‘enables this oplication, erty protection: we are protected by o family of ‘This early draft was writen after just @ few hours of thoughe. Ie left ‘many questions unanswered, and some ofthe early assumptions turned ‘oat to be incorrect, But that di er Ie wasa start, and this ini- tial drafe convinced us that che opporcunity was important enough to pursue, Therefore we began the iteration process to improve the value proposition and determine whether we could ereate a compelling busi- ness opportunity. Specific, Quantitative, and illustrative utes to present it. We hay and only a few have been passable igible. But we are sympathetic; we have never got- ten one right che firse time either. Even with the NABC template ia fakes numerous rounds of improvements to be effective. the hands-free-phone value proposition says, “Many US. states and other foreign governments are legislating ageinst the use of cell phones by drivers in moving cars.” This is not good enough. ‘We need to know the dates when che new laws will come into effect and exactly what chey will mandate. We also assume that 10 percent of Ho 96. contin centson avo wali w. witmot ‘the 500 million phones will want ous service. We need much mote spe- cific evidence about the number of potential customers and how we will engage them. Try this ‘your office and asked for the value proposition for your most important project. What would you say? Try it. sple experiment. Imagine that someone just came into Ns My customer's needs are A My approach to satisfy chat need is B: The benefits per costs of my approach are © My benefits pet costs are superior to the competition and alterna- tives because Your value pro template gives you a more powerful world- ‘view, which also appl with a colleague preparing a presentation. He is standing customer value, but he was time he practiced his p about the topics with which he fele comfortable —his approach. We all do this, bue presentations like this just exasperate your audience. We asked him co put on his “customer value hat” for each slide he showed. ‘That is, to think about what the audience needed, why the points on represented value for them, and why this value was superior 0 ives. When he gave the final presentation, he got rave re- 0 everyday business tasks. Re the alee views, and a few months later he won a huge contract. ‘where possible, you should create a detailed picture of the product of service ia us, dent. Below are some tips for creating compelling value propositions. the concept of the innovation becomes evi- + Customers ' Talk to and interoet with your prospective customers: Deeply understand your market space. + Creat a first Value Factor Analysis to make sure you re considering al elements of potential vole, from tangible features, to convenience, tothe overall experience, od to intangible issues, such as security and identity, rmoration 97 hh+ Create «prototype, if possible, rat least o picture or mockup of {your product or service + Wotch a study your prospective customers using your prototype. * Competition + Study your competition: knaw the competitors by name. altematives. anticipate new competitors and mar you ate not sure, take a SWAG (Sci Fail often to succeed eorly ‘+ Forma *Wetering Hole” (Chopter 6]. Innovation Plans Value propositions are noc complete innovation plans. But they address the fundamentals ofa plan. It doesn’t make sense to develop a more exten- sive plan until these basic questions are answered in a cleat, concise, and ‘compelling way. We use che term fanawation plan rather than business plan, because this phrase emphasizes the urgent, dynamic imperatives lan, whether itis @ government proposal ot « In Chapter 9 we will show how value propositions naru- and tips for success will be described. All Activities Need a Value Proposition ‘A value proposition should be developed fr all your organization's innova tion activities, whether incremental or transformational. That 98 CURLS R caRlson ax william W. wilmot formation of new products and businesses, product improvements, man- icies, education reforms, saterptise-wide programs from the finance ‘an invaluable tool for your 3 uses all the time, He to ees were in the NABC formar, since it helped him focus on what his audience needed. He even does performance reviews using NABCs. He izives his value proposition co each employee, and the employee gives ‘one to him, He said it was a remarkably efficient way to develop goals and achieve organizational alignment. Innovations can be incremental (the development of a new website) or eransformational (the creacion of a new drug to control diabetes). In most organizations, the value creation process is a series of ad hoc, inefficient steps. But inovations never occur out of whole cloth. Inno- ‘vations must be developed in a value-cteation process. The value propo- Icallows you and the ions for each of ideas, described in Chaprer 2, Discover the power that Liz used to win her new job. The next time you give a presentation, p the NABC format. Make it as spe- cific and quantitative as you can. Add a picture or sketch of your ap- roach, if appropriate, ‘Then find a partner, and others, and ask them ro bet that sur colleagues will notice a positive he starting point. Eventually, it ‘will become che core of your Elevator Pitch and your complete innova- tion plan. ‘These ideas have been used at SRI International for all organiza- ‘ional activities, including presentations to customers, formation of critique your contenc and presentation multiple times, when you give your presentation, difference. Your value propo renovation 99new companies, requests for capital equipment, and changes in human. resources policies. Since every activity within an organization has a cus- tomer and a need for resources, every new activity requires a value proposition to demonstrate why it is ee best use of the organization's time and money. oo. cutis R. caRLSON aNb william w. wilmot ———— charter 6 -— wateRINg HoLes for cRreatiNG vaLue: tHe Day tHe BBC waLkeD IN ‘Tu opyecriva is To uD NEw cusromER \VALUE AT RAPID, EXPONENTIAL RATES, ‘AWake-Up Call ‘One Monday at 7:30 A.M. not too long ago, senior mat ssh Broadcasting Corporation (the BBC) came to pat Discipline of Innovation workshop. They are an outgoing, a and witty group. The team members were full of energy but they hed "The BBC was formed in 1922 and idea what was in store for th red to be the most re- world. Its roots go It broadcasts not only in but in forty-ewo other languages in Asia, Euro East, the Americas, and fot only does the BBC ps national news coverage, it has also been a pioneer of top- tainmene programs, such as Masterpiece Theatre, as have been adapted for comme nin America, include Wo Wants to Be a Millionaire?, The Weakest Link, and Whose Line Is It Anyway? ‘While the BBC is often seen by outsiders as a superbly creat enterprise, its management did not think it was keeping up wi“is imlghe work” ll experience the curve of exponential improvement, uncover ‘more customer value, and increase the likelihood of a successful inno- vation, just as Linux did. cutis 8 canlsow ax william W. wilmot + charter 8 -}——_ your eLevator PItCH: How uptv Began “Ip TAM TO SPEAK TEN MINUTES, I NEED A WEEK FOR Getting to Yes Could it be done? For two decades Japan led the development of HDTV, Every HDTV “fist” was owned by NHK, the national broad- sb ac- at used a great deal of bandwidth. The ques taying to answer was needed to have full HDTV resolution, good mot ‘gether atthe right time. Ifyou are too early you can waste hundreds of lar rillions of dollars; if you are too late you can miss a multibillion opportunity. (Our team had worked on HDTV for yeas, first as part of RCA Labo- ratories and then as part of Sarnoff, SRI’s subsidiary. We had been devel- ‘oping persuasive arguments for why digital HDTV was now possible, innovation 127) ait -RCA from GE, We had a chance to make our case view at Thomson's digital video laboratory in Germany with the senior VP for research, ric Geiger. We were given only afew mit - Geiger is a remarkably perceptive and courageous manager, but many of the people atthe meeting were unreceprive tothe idea of a US. dig- ital standard. Consequently we wanted to avoid getting into a pro- tracted debete about the minutiae of HDTV, which could have derailed our proposal ‘We decided to keep our presentation extremely short, and to present i as an Elevator Pitch composed of six que dress ditectly to Geiger. Ifhe said ns, which we would ad~ result would be the lenn Reiemeies, we was to make it easy for Geiger to say yes. Here is a truncated version of ‘our elevator pitch to him with the six ingrediencs in bold: that consumer electronics will be revolu technology over the next ten years?” Geiger said, APPROACH: "We believe by 2003 that we can pri {and transmit at consumer prices 2 1.2-billon-bts-per-second high- ion signal over today’s United States 4.2 Miz analog channels, which can be C. Our approach would use an imulations show can provide ight path?” Geiger s BENEFITS PER COSTS: "Establishing the U.S, HDTV standard current 25 percent market share represents @ five-bi {year new business for your company floras conti cantson ano etiam w.ynimot ‘of today's products. it wll provide the foundation for multiple waves of new products and services, such as camcorders, CDs, and consumer games, each of which will result in several billion dollars in new reve rue, Do ave this CCOMPETITION/ALTERNATIVE capabilities that distinguish our system from the competition, includ: ing 20 percent or better image quality and new digital services such as interactive advertising, We could start this program in Europe, but ‘that approach would not have credibility with the FCC, which must ap prove the system. The United States is the beachhead market that ‘must be won first. Reasonable?” Geiger said, “Yes” THE CLOSE: Then do you agree that we should immediately start a US-based HDTV program?” Geiger said, “Yes” 'We have demonstrated a number of ‘We asked our qh sand to al ger said, “Yes.” Then we sat down before everyone in the room fully realized what had just hap- ‘pened, Clearly, we left the technical details out of the above summary, and you might feel thae the justification for HDTV is obvious now, but i wasn't at the time, The hard part of this presentation was figuting ‘our how to get back to yes if he said no. Foreunat done our homework, that was not necessary. Getting Noticed {deas have always been a dime a dozen, but never more so than today in the exponential economy. We are all bombarded. e new new ing.” Getting the attention needed for success requires that you di singuish your ideas by their l if you are the champion cf a new innovation, one of your jobs isto raise the financial and human resources needed co get your project completed. This always means that you must convince someone—a company president, a board of di- rectors, a venture capitalist ‘you have a good idea. ects far outsteips fa government program manager—that uations, the number of possible proj- inancial resources. SRI board memberHenry Kressel, who is a managing partner at Warburg Pincus, the Distinguish yourself by giving nonprofit agency, if you can succinctly state the great social value of the business world, if you story in a few minutes, you have a much beteer chance of ceinct presentations. In @ being funded The Elevator Pitch ‘An Elevator Pitch is @ pithy summaty of your value proposition that can be told in one to two minutes. I grabs the attention of a potential customer, partner, employee, or supervisor who can't forget it and wants 0 learn more. (One of the hardest things to eeach people—especi ing the core message and presenting the best possible value ‘We want to determine “What must our audience remem- ber about our message?” Keep your message as short as possible. Remember Strunk and White's succinct admonition from The Element of Style: “Omit needless to Mozart, "Your » because Mozart's Ifyou take one out—even one—you feel the loss. Think of Mozart as your role model. Take out all those extra “notes” until you can give an Ele- ‘vator Pitch that would male Mozart proud, If your audience doesn’t understand, ies your fa "They should understand,” or “I need more time co ex wffe- 150. cunts x cantson ano waltiam w. witmot ‘These are all cop-outs. As a champion who accepts responsibility for the success of your program, you must be willing to iterate and develop compelling to all on your team. In the ya until yu cannot communicate with 2ip and force, there won't be anyone listening. Sequoia Capital—a leading Silicon Valley venture-capital company that helped form Apple, Google, and Oracle—says, “One test we often apply to 2 new business is the ease ‘with which it can be explained. If someone is able to summarize his, jan on the back of a business card, i¢ usually means thac he I be able to describe is purpose to employees, customers, and share- ests they truly understand their business +a hardworking secretary in the is planning to steal another of her ideas and pre- sent it to Mr. Trask of Trask Industries, Katherine's boss. This idea ‘would open up a new market in radio, allowing Trask ro improve their market position without competition, A few days later Tess, Katherine, ‘and Me, Trask are all in che lobby of the office b frontation with Katherine, Mr. Trask steps into an elevator, and just as the elevator door closes and Me. ‘Task disappears from sight, Tess says, 1g. Tess has a con: “The hole?” Mr, Trask is hooked. He opens the elevator door and steps out, Mr. Trask arid Tess go into an empty elevator and Tess is told, “You're on.” ‘Mr. Trask on her idea during their elevator ride. Sh ‘Trask some of her research and how “the hole” could be closed to Trask’s advantage. When they get off the elevator and Katherine rejoins them, Mr. ‘Trask asks Katherine where she got “her idea” and she can't answer. She is fred and ‘Tess wins the day on the strength of her Elevator Pisch. Hollywood understands the importance of a good Elevator Pitch. ‘Your crisp elevator pitch must exude value. What do we mean by that? The goal should always be to present oppor ‘whose value is 0 obvious that the audience mast take advantage of them. WI She has just over a mi1g presentation, you prove thac you are focused on the fundamental issue of creating value in the marketplace. You also prove that you will be able to communicate that vision, not only co iavestors, but also to customers and employees. If employees do not clearly under- stand the vision of the company and the value being created, then the chances for success ate limited. ‘What does an Elevator Pitch look like? Fred Frica was president of disposable hearing aid company called Songbird Medical Systems.” Here is Fred's Elevator Pitch to 2 prospective user: Are you having trouble heating? You're nat alone, ‘Tens of millions of people sufer from hearing loss and find the has: sle of getting an expensive hea For the frst time, disposable he We offer a disposable hearing aid that costs one the best every month | sound and, because you throw the uni your drugstore, By comparison, high-quality hearing aids cost several thousand dollars today, and they have to be fitted by @ doctor. Because they cost so much, they have to be made out of hard, durable materials ly or tightly in the ear, which also makes the sound quality suffer. Would you lke to see one of our disposable hearing aids? Keep it brief. Every team should be required to prepare an Elevator The Elevator Pitch Template ‘The template for an Elevator Pitch has three parts: hook, a core, and close. It has a hook co ger interes, a core composed of your quantita ‘CURIS R CARLSON ano WiLLIam W. Wilmot tive value proposition to tell your story, and a close to ask for action #0 move to the next step. An elevator pitch looks like: ‘# Hook: co get their interest ‘+ Core: your NABC value proposition * Close: action to get to che next step ‘Your Elevator Piech must be repeatable by ott leaders in government an¢ ted argue you and state simply and ‘must move ahead with your et lost in the morass of not- ist firms, for exampl ure capi be expected to remember long, walk out of the room after meeting wi clearly why their company or orgs ppoject, you have filed. Your pro mal business. Good venture-cepi etal chousand ideas a year and invest in about a dozen. Stand above che look at sev- rest; stare with compelling, value-laden Elevator Pitch. And make it brief. ‘We all know when someone is not compelling —the vision does not , and you are not con- vvinced by the value proposition. Here are some ways to develop and. resonate, you cannot see your role in the activi improve your Elevator Pitch Have a Hook 1g people kno something thet Advert ects your idea “hook” hat con- sehen you say, + “Are you having erouble hearing? You're not alone.” ‘+ "Bach year, one hundred chousand people die because of adverse drug effects."* + "More than two thousand ideas have been patented for ‘new mousetraps and only two are really used."?10 stories, metaphors, and humor. Te in their minds, When we talk about how Douglas Engel team created the foundations of the modern PC user including the computer mouse, people remember. His story ‘eams making an impact, and maybe, icably link the listener with the value proposition and activate their interest or curiosity. Provide the audience with a hook. The Core—NABC In Chapter 5, “It’s As Simple As NABC: How Liz Got Her Big Job,” ‘we gave you the essentials of the cote of your Elevator The NABC value proposition focuses you on the audience need—not your own need—and on the approach you propose, the benefits per costs you «an provide to your audience, and an examination of the competition ‘The NABC is your quanticative value proposition eucked in the middle of your Elevator Pitch, Be Quantit One of the most difficul with an audience, ings to do, but ove of the most persuasive co be quantitative. Rather than saying, “ improve your workshop offering to the organiza- tion?” you say, “Would you be interested in 220 percent increase in en- rollment over the next six months?” Because being qu rate, it helps you to stand out from the crowd. Fusthe, would you like ‘CURES R. CARLSON ano watLram ws, wilmot than what? And are the amounts what? How much cheaper? Bet signifi but does it matter? For example, 0.1 water chip chat is faster than another, matter; it might take 100 percent ‘demonstrate that your improvement. the customer. Imagine a college basketball scout giving a repore to his coach. He says, "Thave found a terrific new center, named Kareem, for our team. and he’s a nice guy.” Compare that with found a new center named Kareem for our team. He is |, he has scored 43 points per game, he has a 3.7 grade poine average, and he is president of his clas.” Specificity is powerful ‘When talking about market size, give numbers. When talking a product specifications, list them. When talking about profitabiliy, say how much, People like numbers. Think of baseball and footbsll you don’t yet know the specifics, tell your audience you don't know and take a SWAG."0 Pur down your best estimate. Say, "We are Il working co get the data, but we expect to be 20 co 50 percent less expensive.” Over time, you can improve your estimate, But you must at least give ballpark estimates so your audience will have some idea of, what you are talking about. Don’t compound ignorance with ambiguity. People in human resources and in nonprofit work find this even ‘more challenging chan others. Something feels “wrong” about provid- i Yer when you do, you are forced co be ab- ick beete in the quantitative det lutely clear about what you are offering, an¢ listener's mind, Close: What Are You Asking For? ‘All too often, the close for beginning presenters i co lower the voice, break eye contact with the and then awkwardly sit inking away is not an effective relieved co be done. ‘good close must accomplish something. After all, why are you talking co them? What are you asking for? oration assaf* another meeting * funding ‘Ask yourself before you begin, “What do I real to survive the one-minute pitch or to accomplish something? If you don’t want a specific ‘wane here?” Isic just come, don't waste anyone's time. Practice and Make It Contagious Both the message and the delivery must be practiced and improved by suggestions from others. You don't wane to give a canned sal Refine, recast, redo—icerae, ireat icerare. When you communicate and it doesn’t resonate with the ccam members, or outsiders, refine your pitch, Talk to others about how to cast the message the next None of us 0 expect to change and refine as you 0. Here ‘end, who doesn'e understand your busi- ness of job, understand what you are saying? n sells, Former secretary of state General Col plies.” Winning present a visible sign of your commi ble proof that you are a champion: someone who can be believed and followed. We do not mean that you must be flamboyant. On the con- sentations can be understated and said softly. But others can ‘you are committed and enthusiastic about spreading the gor- pel of your project. And passion is contagious—when you make the ideas important and celevant, they almost spread by themselves. Others think, “Gee, is so important to them, maybe I could be part of this t00, ‘The nice thing about contagion is thet it cycles back co you. The you know, one of yous 4 passionate plea for you «. The contagion reverberate cout the team and the orgenization. 6 CURLS R. caRlSON awn william w. ¥ f the necessary components. Fi blanks and begin the iteration process economy moves fast. Iris based on a flood of infor- ish your project, develop a tion. Your Elevator Pitch is your NABC value proposition with an ‘opening hook and action steps in closing. The Blevator Pitch works best ng hook, so others can connect with it. Through CLOSE, What cequee? srsouation 57-9i cuarter 9 -—— YOUR INNOVatION PLAN: from tue ski sLope to tue fireHouse “MAKE SURE YOUR INNOVATION 18 A PABN KILLER AND NOT JUST A VITAMIN.” David Ladd, venture partner at Mayfield Fund ALifesaver Hees. concen caton nowt wine ‘ment of the opportunity, the initial PacketFHop team. step: specifying the first market. The langer marke phone company ‘We had to start to “cross the chasm” from enrly adopters to mainstream “Michael Howse was hired as an entrepreneur ses fo ‘one where che technology could be used successfully aged to open up other rger markets. For each poss he appr game together on campus at idges and highways that communicate highway condit point, ski slopes we fieule it is co find varying speeds. cell service was fast expanding to more sl decreasing the need for PackeeHop, ‘What kind of need would qualify as a painkiller? After lots of invoration 159-9}