How to create products and services customers want. Get started with... Value Proposition Design strategyzer.com/vpd written by Alex Osterwalder Yves Pigneur Greg Bernarda ‘Alan Smith Designed by Trish Papadakos WILEY1. Canvas 2. Design 1.1 customer Profile 10 2.1 Prototyping Possibilities 74 12Value Map 26 2.2 Starting Points 86 13 Fitao 223 understanding Customers 104 24 Making Choices 120 2.8 Finding the Right Business Model 142 2.6 Designing in Established Organizations 1583. Test 4. Evolve 3:1 What to Test 188 3.2 Testing Step-by-Step 195 3.3 Experiment Library 214 3.8 Bringing It All Together 238 create Alignment 260 Measure & Monitor 262 Improve Relentlessly 264 Reinvent Yourself Constantly 256 ‘Taobao: Reinventing (E-)Commerce 268 Glossary 276 core Team 279 Prereaders 279 Bios 280 Index 282Intro < You'll love Value Proposition Design if you’ve been... 0942164 Overwhelmed by the task of true value creation Sometimes you feo ke... + Tere shouldbe beter tools valableto help you create valve for your customers and your business + You might be pursuing the wrong tasks and you fee insecure ‘about the nat steps + test to learn what customers really want + Theinformation andl data you get rom {potenti custorersis overwhelming and you don tknow now to best organize + Its challonging to go beyond products ane features toward ‘deep understanding of customer value creation. + You lack the bg picture oF how al the puzzle pieces ft together Frustrated by unproductive meetings and misaligned teams ‘You have experienced teams that. + Locked a shared language end a shored understanding of + Got Boge! down by unpreductive meetings with tons unstructured “blah elah Bich” conversations jorked without clear processes and too + Were focused mainly on teemnologies, procuct, and feetures rather than customers. + Conducted meetings that drained energy and ended without a + vere misaligned' San ge Involved in bold shiny projects that blew up ‘You have seen projects that. + Were big bold bets that filed anc wasted alot money, + Putenergy inte palsing anc refing business plan unt it perpetuated teillusion that it could actualy work. + Spenta lot of tie building detalled spreadsheets that were coreletly made up ond tured out tobe wrong, * Spent more time developing and debating ideas rather thon testng them with customers cn stakenolders, + Lotepinions dominate ove facts rom the fl + ached cioar processes and toa ta minimize risk + Used processes suited for rnning @ busines rather than anes for developing new ideas a) von Disappointed by the failure of a good idea. © cer From Faure o Success: posterValue Proposition Design will help you successfully... irre = Leverage the experience and skills of your team quip your team with a shared onguage to overcome “blah bah Understand the patterns bch? conduct more strateiecomesators, un create ete of value creation cies and get algned he wl lead to mre enable meetings that oe fl of energy and produce actontle outcomes beyond Corgan information about hat cisomers wart inasirole focus on technlopy prods and echres towerdereatng way tht makes the pattems ot vale crecton easy vise. As value or your customers an your sines. Crest, ou ll mare efectively design value propestions and proftabletusness models that ects target your customers’ Get your team aligned. ‘most pressing and important jobs, pains, and gains. Gain clarity.Avoid wasting time with ideas that won't work Aelentlesly test the most important yptheses underung our businesses in oer to reduce the risk of fale. This wil allow you to pursue big bold ideas without having to break the bank Your processes to shape new ideas il be fi or the task and complement your existing processes that hele you run our business Minimize the risk of a flop. Design, test, and deliver what customers want. © cor'From Foire to Success” posterOur Value Proposition to You The links you see on the side of every page point to resources in the online Wino = companion. eee Watch for the vPD online Companion @Strategyzer logo [HHT HS and follow the link to = oo online exercises, kx. Wtools/templates, | 4 “ re © posters, and more. Web App + Online Courses Go further with pro tools and coursesHelps shape ideas Software supported methedetoas| Helps create a a we — — susie 2 pels Oo : ly eset Med cemen seta 1 i wre Succeed! Proven ond effective ute of business tools ‘Access to advanced ‘material and knowledge ‘multimedia content s Practical, visual, + Rea ce Shered language ta communicate and-allaborate Share with and learn from peers ‘Enables practice + skills Bro, clear, (sath assessment ‘and applicable Instructions mmewe ome | earn‘The heart of Value Proposition Design is about applying Tools to the messy Search for value propositions that customers want and then keeping them aligned with what customers want in Post search. Value Proposition Design shows you how to use the Value Proposition Canvas to Design and Test great value propo- sitions in an iterative search for what customers want. Value propesition design is a never-ending process in which you eed to Evolve your value proposition(s) constantly to keep it relevant to customers, Tro. Progress Manage the messy and nonlinear process of value proposition design and reduce risk by systematically applying adequate tools and pracesses. Evolve Post search eng Sual cae Dann Newman cetAn Integrated Suite of Tools The Value Proposition Canvas is the tool at the center of this book. It maces value propositions visible and tangible ‘and thus easier to discuss and manage. It perfectly integrates with the Business Model Canvas and the Environment Map, two tools that are discussed in detail in Business Model Generation, the sister book to this one. Together they shape the foundation of a suite of business tools. The Value Proposition Canvas zooms into the details of two of the building blocks of the Business Model Canvas. Zoom out Zoom inThe Business Model Canvas helps you : create value for your business. The Value Proposition Canvas helps you create value for your customer.Refresher: The Business Model Canvas 2 embed your value proposition ina ‘customer Segments seoment. tis how an organization = Viable business model to capture value are the groups of people andjor orga captures value with aprice that for your organization. To do 50, you izations a company ororgenization customers are wing to pau, can use the Business Model Canvas, a ims toreach and create vale for tool to describe how your organization witradscicates value propostion Key Resources creates, delivers, and captures value. are the mast important assets ‘The Business Model Canvas and Value Value Propositions required 0 afer cn debvershe previ Proposition Canvas perfectly integrate, arebased ona bundle of products _eusy describe elements with the latter being lke a plug-in to ard services tna create va fr the former that allows you to zoom customer segment Key Activities into the details of how you are creating ‘are the most important ctv an value for customers. chanel raenisation nonde to porform wall, sescrive how a value propostion is The refresher of the Business Model communicstedanddsiverestoe Key Partnerships Canvas.on this spread is sufficient to cstomersegment through cammu~ shows the network o suppers work through this book andi create cation, distribution, ard sles ‘nd partners that bring in external {great value propositions. Go to the channels. resources and actwties ‘online resources if you are interested In more or get Business Mocet ‘Customer Relationships cost structure Generation, the sister publication to outline what pect relations describes cl costs incurred to oper this book estoblenes andmaitsined with ata business model teach customer segment, and ey explain now customers re acquired Profit ‘ona eetained ‘calculated by subteacting the total of al costs a the cost structure Revenue Streams from he total ofa revenue streams. result om a velue proposition successfully offered to acustomerThe Business Model Canvas — — - wee oy Pars P| eyrcraies @| sareronentans | cstonernesionnes | catunerseonens stra © cownioad detaied Business Model Canvas Explanation and the Business Model Canvas patnro. Value Proposition Design works for. ‘Are you creating something fram scratch on your own or ‘are you part of an existing organization? Some things will be easier and some harder depending on your strategic, playground, | start-up entrepreneur deals with different constraints than @ project leader for anew venture within en existing organization The tools presented inthis bock apply to bath contexts. Depending on your starting pont you wil, ‘execute them in a ciflerent way to leverage ailerent strengths and overcame diferent obstacios Main challenges + Produce prcf that your ideas con vworcon a tinted budget + Manage inoivement of avestors (you seate your ideas. + Riskrunring out of money before New Ventures Iniuals or teams setting out to create a great value proposition ‘nal business model rom seratch ‘Main opportunities + Use speedy decision mating and cniity to your advantage, + Leverage the motuation a owner: ship as adrverfor success. Wy, MU, \' Petal nk “1Established OrganizationsUse Value Proposition Design to... Invent and improve value propositions. The tools we wil study work for managing and renewing value propositions. xx (and business models) just as much as for creating new ‘ones. Put the value proposition and business model to work ‘to create a shared language of value creation in your orga- nization. Use them to continuously invent and improve value propositions that meet customer profiles, which is an under ‘taking that never ends. intro Invent new value propositions that people want sth business models thet woreAssess Your Value Proposition Design Skills Complete our online test and assess whether you have the attitude and skills required to systematically be (4 successful at value proposition design, Take the test before and after working through Value Proposition Design to > measure your progress. © reke your skits test oniine Entrepreneurial Knowledge ‘You en tung aut new things. You dont se the sk of fling as 2 threat but an opportunity to learn and progres, Yousasiy navigate between the strategic ane the cacteat Tool Skills You systematically use the Value Proposition CCarwas, Business Model Canvas, and ether tools ‘ane! processesin your search for creat value prep: ostione cna business modese e — & i | | Design Thinking Customer Experimentation Skills Empathy Skills ‘You reletlesiy take a customer perspective andSell Your Colleagues on Value Proposition Design ‘wore that we fous toe much en products ard ectures instead of creating valu for custornrs really dlsoppointed by how much we tolled ‘about value propostions ‘and businass models at ‘ur last meeting without really geting tangle results concemed tha ou product evelopment process doesnt se amore customer focused methodoiogy, cstonched at how poorly igre procuct devolopment, soles, end marketing ore when comes to develorina new value propositions own avey byhow unclear that ast prosentationon that new vai propos sion ana business model we surprised that we invest s0 muchinreseare an sevelaoment (RAO), but fat ‘toimvest in developing the right value propositions ond businass model. concemed that we dent have ‘2methodology to tre:k ur progress onthe devebpment cofthatrew value prepesion cond bine model surprised at howotten we make stuff nobody wants, despite our goed ideas ard ‘9004 intentions amazed by how many resources we wested when ‘that orect ean sha ast business plan turned outto bea fp because we dant not sure if everybedyin ‘ourteam has hare Lnderstanding of whet @ good ‘value propostion actualy iSo, what if we tried out the Value Proposition Canvas (and Business Model Canvas) in our next project? © cera side deck with 10 arguments to use with the Value Proposition and Business Model CanvasesThe Value Proposition Canvas has two sides. With the Customer Profile ° 1° you clarify your customer understanding. With the Value Map °:76 you describe how you intend to create value for that customer. You achieve Fit °° between the two when one meets the other.‘CANVAS Create Value The set of value proposition benefits that you design to attract customers. DEF-ANLTION VALUE PROPOSITION Describes the benefits customers can ‘expect from your products and services.canvas/1.0. Ta) Observe Customers ‘The set of customer characteristics that you assume, observe, and verify in the market.f2ain Creators escribe hows our products and services ‘create customer gains. Value Map ‘The Value (Proposition) Map describes the features of a specific value proposition os In your business model in a more structured CANVAS 11.0 ‘and detailed way. it breaks your value ‘proposition down into products and services, pain relievers, and gain creators. This st ofa she value propositions bl round, Pain Relievers describe how our praducts and services‘ins describe the outcomes ‘customers want to achive or theconcrete benefits they are seeking Customer Profile ‘The Customer (Segment) Profile describes «a specific customer segment In your business model in a more structured ‘and detailed way. t breaks the customer ‘down into its jobs, pains, and gains. canvas 1.0 ‘customer Jobs descrbe what customers are tying to get done in theie wore ane in thai ves, as expensed in their Onn wore Pains descrive bad outcomes risks, and abstoces related to customer jobs, You achiove Fit when your value map meets your ‘customer profie—when your products and services produce pain relievers and gain creators that match ‘one or mare of thejabs, pains and gins that are emportant to your customer.Customer Profilecanvas / 1.1 Customer Jobs Jobs describe the things your customers are ‘ruing to get done In thalr work or in thei fe _Acustemar jb could be the tasks thoy ore ting ‘to parform and complete, te problems they ‘re trang to solve, o the needs they are tung to sorsty. Make sure you take the customer's perspective when investigating jobs. what you think of as important from your perspective might rnotbe ajob customers are actually trying to get sone: Distinguish besween three main types of ‘eustomer jobs to be done and supporting fobs: Functional jobs ‘when your customers ty to pater or complete {or example, mothe lawn, ea heathy as ‘consumer wite areport or helo clients 08 ‘a peotesional Social jobs ‘hven our eustorners want look gacd or gain power or status. These jobs describe how custom: ‘ars want tobe perceived by others, fr example, look trendy as a consumer a be perceived at ‘competent a5 professional Personal/emotional jobs ‘when your customers seek a specif emotional state, such es Teving goed or secure for examale, seeking peace of mind regarding one invest: rants as @ consumer or achieving the feling of Jb security at one's worplace, ‘Supporting jobs Customers ale perform sugperting ts inthe context of purchasing ana consuming value ether 1s consumers or as protesionas. These jas aise from toe ferent roles + BUYER OF VALUE: jobs related to buying value, such as comparing cers, dicing which product t aug, sani in. checkout tne, completing a purchase, or taking delivery of + COCREATOR OF VALUE: jobs related to cvereating valve with your organization, such ‘2 posting product reviews are feedback of + TRANSFERRER OF VALUE: jobs related tothe end ofa value propostions fe cycle. such as canceling « subscrition, disposing of «produ transfering tto others, orrasaing it owt and Pfr ae tran eb! rs "araspunses2y cng cteen na neon omJob context Customer jobs often dependon the specie context invhich they ae performed. The context ‘may lmposeesrtain constraints cr timitations. = Foresamsia calingsomebocyontnetis = dierent wen you aro oveing naan tan ston you er orideg acarUkewse, gongiotne trodes vith yurkideiseterent then aomawith veursernee Job importance Teisinparattoacknawiedse thatnot esos have the sare Important a {wil result na desired or unwaatea cutcome. Insigninicant © dowricnd wigger questions to help find customer jobs‘CANVAS 1.1 Customer Pains Pains deserbe anything that annoys your custom: ersbetore, during, and ater ring te get job done orsimely prevents them tom geting ajob dove. Pains also deze rks, thats, potenti bad outcomes, elated to getting «ob done hacky oenotatall ‘Seek to identity three types of custemer pains and how sever customers i them Undesired outcomes, problems, and characteristics Pins are functional ga selution doesn't work ‘doesnt work wel or has negative ste efects, social look bot dong tis), eetional 1 ee Ing t0 goto the store for this? Tis may aa Involve urdested characteristics customers dont Ike (9, "Running atte ayenis bong” oe "This design awa) obstactes ‘Tese ore things that prevent customers farm even gating started with job or tat si them oun fos," lackthe time to ost hisjob done lccuretelyy or "lean eord any ofthe axing solutions", Risks (undesired potential outcomes) ‘what could 90 wrong and have impertant ne: ‘ative conseauences (eg, "might lose ereibilty ‘when using tis tp of solution’ or secuty breach woul be dsastous for Us. Pain severity Acustomer paincan teextremeor ae ‘mederat, simi to ow jobs con extreme ‘be portant or insgifeant othe 1 ‘Tip: Make pains concrete. ‘Toclealy aerentioe jobs, pains. nd goins, ‘escrbe them as concretely as posse For example, hen a customer soys waiting in ne was a waste of time’ ask ater how many minute ingin ine* when you understand how exact better pan relievers in your value proposition,‘The following lst of trigger questions ‘can help you think of different potential customer pains: Hew do wour customers deine to cost? “Takes lat of tine costs toa much money, or requires substantial efforts? What mokes your customers fet iad? What ‘ore thee rustrations, annoyances, or things that give them a heaciache? + How are curent walue propasiions underper: forming fr your customers? Which features fore they missing? Are there performance issues that annoy them or malfunctions they ce? What are the main dtfeues and chatenges our customers encounter? Do thay undersans aw things werk have dffeuties aetna ceriain things done, or resist parteular jobs for specie What negative social consequences de your {1058 of face, power, rust, or status? + Wratrisks do your customers fear? Are thay ‘aid of financial, soil of techni risks oF are ‘hey asking themseles what could go wrang? las keeping your customers anche at night? What ae theirbig issues, concerns, onc worries? + What common mistakes de your customers ‘make? Ae they using a solution the wrong wc? + What berirs are keepina your customers trom adopting a value propestion? Are there upton investment costs a steep learning curve, or other obstacies preventing adoption? © Downtoad trigger questions =S2 canvas / 1.1 Customer Gains Gains descrite the outcomes and benefits yaur customers want Some gains are require, expected, or desired by customers, and some ‘Would surprige them. Gains incluse functional uly, social gain, postive emotions, and cost sovings. ‘Seek to identi tour types of customer gains in ‘ers of eutcomes and baneft: Required gains These are gains without which a solution woulnt work For example, the most basic expectation that we have tom a smartphone i that we can mae acall wit Expected gains These ar relatively base gains that we expect from azolution, evenif could werk without them, For example, since Azpleleuneheetthe Phone, we ‘expect shones tobe well-dsigned and look good. Desired gains ‘hace are gins that go beyond what we expect ‘roma solution but would ove to have we cou “hase are usually gains that customers woul come up with if wou asked them. Fr example, we desire smartphones a be seamiessyintearates with our other devices Unexpected gains ‘Thoco are gains that go beyond customer expec- tations and desies. They would’ even come up wit hem t you asked them. Before Apole brouaht touch screens and the App Store tothe ‘mainstream, nobody realy thought of them as partofaphane Gain relevance ‘customer gain con feelessentia! a ornice to have, jst ike pains con pasentiat {eel extreme or moderate fo them. | ‘Tip: Make gains concrete. ‘swith pans, t's bottr to ceszrbe gains as ‘concretely as possibie to clear ciferentate, 00s, pars, and gains trom one anther, Ask how jd axpect or dream of when e customer indicates "beter performance” os a desiree oan | “Tot way yau can note “would ove an increased ‘etformance of more than "Wha you unde. stond how exarly customers measure gos (e cutzomes ane benefits, you can sign better ‘gain crentrs in your value propesiton‘The following list of trigger questions can help you think of different potential customer gains: Wien saving would make your customers hapeu? Wrich savingsin toms of time, money ‘ne efter would they value? nat quality evel 9 thay expect ard what would they wih for more orless oP How do current value propositions deight your customers? Which specie features do they enjoy? What performance ard quality co they expect? + What would make your customers obs or ves easier? Could here bea ter learing curve, more services, oF loner costs of oamershin? ‘Wat postive social consequences do your ‘ustanses dese? What makes them lock good? What increases ther power or their status? ‘What ere customers looking fr most? ae they ‘or mere features? ‘What do customers ream bout? What 0 ‘they aspire to achieve or what would be a big relat to ther? How do your customers measure suceass and falure® How do they gauge performance or cost? ‘What would increase your customers tkethocd ‘of adopting a value proposition? Do they desire {ower cost, ess investment, lower rs or beter quaity? © dowricad winger questions <= canvas / 1.1CANVAS / 1.1 Profile of a “Business Book Reader” We chose to use potential readers of this book to illustrate the customer profile. We deliberately went beyond jobs, pains, and gains merely related to reading books, since we intended to design an innovative and more holistic value proposition for businesspeople in general. “The customer profile sketohed au onthe rights informed by soveal intr ‘ews we conducted ans thousands of teractions we had with workshop parca, However it is not mandatory ta start with preexisting customer knontedge You may begin exploring deasby sketching out aproie based on what you believe yur patential customers ook ik, This an excelent starting point to prepare custome interdews and tests regarding your ‘assumptions about custome jobs, pains, and gas. GGaine are bones, resus an horacterstis that custom cers require or desire. They are ‘outzames of obs or wanted char loctersties ofa value preposition ‘that halp customers get aloo dane wall ‘The mere tangle and specie \yeu make pains and gains, the better For example, “examples from my industrs sme concrete than "relevant 19 my content Ask customers how they tigate how thay measure success or flue a job they want to get done Moke sure you deeply uncer sad your customer f you have only few sticky notes on your pola, that probeoly indicates & lack of customer understanding, Unearth as many obs, pains, and ‘gens as you can. Search beyondt those directly relates to your value proposition.indicators tomeasure a ee esas Indiatore Een Yeu should know your customers Ateatasita onessire | TaN pec eisandnet ie Cee EE EEE ‘ent thelr funetonal jabs, which easy to buyin from conpect with with ‘re usually easier to iaentiy, understand helpwhen leadership ! ee like-minded / colleagues, cae ‘teem “prope boss, cliente PAlesle haps ith ¥__HelPEme ‘com leads ‘ie cpiomer nme TERE | sacsoragan Maks ings be poe ‘clearly collaboration’ set + advance PEOPIe wan home run zi ae = > aa eres — FERN), Make sure uu go beyond a ropesions —Feduero) @ tiztoox Wren Meee | gaghiy “ swertetncesansna tits ee kL Why do customers want "earn jeneric) | ‘methods OSM new knowledge" might be tat generic | “mathods Sica knowledge" itmig TES Miitnotners) ee rt ttre methods ‘communicate decisions inzo tek organization Ask "why" rem | Aeimen”” | Orbelpthem ter orsanzation. ee severaltimes to gett vie mast run Important obs. sade ma Well ‘Make sure you dont jst consider cbs, pains, and gins related to ‘evae prepestionor productin ming, ientty nose fea, ness books are ta ong’ as wall ‘as other extreme pains eg, "ack lor tie® or "get boss's attention’ canvas) 1.1‘canvas /1.1 Ranking Jobs, Pains, and Gains Although individual customer preferences vary, you need t2 get a sense of customer priorities. Investigate which jobs the majority consider important or insignificant. Find out whict pains they find extreme versus merely moderate. Learn whizh gains they find essential and which are simply nice to have. ankina jobs, pais, ond gain is exsenalin oder to design value propos tions thot ecress things customers really care about OF course difiut to unearth what realy matters to customers, but your uncerstanig wil improve with every customer interaction and experiment edoesrt matter if you start ot wth a ranking that based on whet you think important to your potential custemers os long as you strive to test that rarking unfit rly reflects rors from the customers perspective.satan (2). me R) mo ani poncecrd tothe feuryanaecorc eccanaaecatas tera outemn tow eee hye powered tego + + + melee — eal » nor 5 Paes 3 SSR acacia nth coleagues, run, | boss cents tee | ove wal make dcinone roe | iste ‘or build @ | ~onnaenee’ ‘sleet | aaa Tralidecs sssetsand Soca rink woke things ‘ollaborate | Perle want chat Crheip them | eaerinee ethers about preferred fedytearn, | Prete neta r a stay uptodte Insgnitcant Moderate Nice to haveis Gere a Bec Pe rrae ct amarok ctamuneithy custorner segments to practice using the customer § ames cores eee Sa riogen | Sietnctisaciiny | becanono mrt icentocraeta he [| or How good is your understanding of your customers’ jobs, 2. Grab set of small sticky notes. pains, and gains? Map out a customer profile. 3. Map out your customer profile, Select customer Identity customerjobs. Identity customer Identify customer Priontize jobs, pains, segment. Asewhat tases your pains. gains. fend gains Selecta customer customers are tring to ‘nat pains do your What outcomes and Corder jobs, pans, rd searnentthat youwant complete. Map aut alot ‘customers have? Write benefits do your custom ‘xin ina column, sac toprefle. ther jobs'oy witing each downasrmary as you cers want to achieve? ‘wth te mast ing ‘ane on an incivuct ean come up with, inte down as many ‘nt ots, mas entre sticky note, Incuzing obstacles and ‘gain as you can come pains, andessentit sks ve wit ‘gans.on top ancl the moderate pans ord rice-tonave gainsot © do this exercise online— Customer Profile © Strategyzer © download the customer Profile pat CANVAS 11.1‘CANVAS 11.1 Best Practices for Mapping Jobs, Pains, and Gains Common Mistakes Mixing several customer segments into one proie, axing jobs one v Best Practices Make Value Prepesition Carwas for every siferent customer companies, ask yourselt \f you have aiferent types of customers swthin each compen (9, users, buyers sobs ore the tasks customers are trung to perform the problems corthe neds they ore tiv to satis, wheraas ‘gains re the concroto ‘outcomes they wart to ‘achive avoid nd rina in the case of pains. Focusing en functional jos only and forgetina social end emetional Jobs. ‘Sometimes socal or femetionaljobs are even ‘more important tran the “tacking goon in rent of others might be more lnnportant an fining | ‘reat technical solution ‘that helps complete the Job effectively, Listing jobs, pains, and {goin with your valve roposton in mind. "when you map your customer, you souls sroceed ean anthvo- elegiet ond oenat? thot you are oer, or example, a business ublsnersnauld net ‘papjobs, pins, ond soins merely related to oaks, because 4 reader has the choice between business books, consul rans, YouTube viseos, oF even completing an MBA program or traning, Go beyond the jobs, pains, fone gins you inten forhopeteadress with {our value proposition. Avoid frequently committed mistakes when profiling a customer, and instead follow these best practices, ldentfuing 20 few labs, Baing too vague in pains, and gains. ‘descriations of pains ‘ond gains. ‘Agood custerner prafle Moke pains and gains istulfstickyrotes, tenelble ard concrete, ‘because most customers. Rather than just iting me nintetpainsand “sala increase" in expect ordesirea stot gains specfy ow | ‘cain Wap outil your much of onincwasea (eotertiad customers’ customers seeking imoertantjoos, extreme Rather than writing pains.andessential “takes toolong in ‘ins pains dicate now tong "to ang? actualy ‘This wil aw you to Lnderstord how exactly customers measure suszess one aleoe ee va pains vs. Gains ‘nen you get started with the customer prot, purmight simply put the same ideas in pains cn ns 65 appostas af each other For exam, tone ofthe customers jods to be cones “earn more money you rah start by acing “salary incense" to gains and“solery decrease” pains pores abetter way to doit: + Finout precisely how much more maney the customer expects to ear sot ease a gan and investigate what decrease would fee ke + Inthe pons, ace the barriers thet prevent plethe pain might be ‘my emelouer doesnt ‘ve raises" + Inthe pins acd the risks related ta not geting ‘he Joo done. n our exampte the pain cous be “might not be able to atford my enies future colege tution? .— 7= 3s [Ask “why” several times until you really understand your customers’ jobs to be done. “Another issue when you get started withthe customer profleis that you ight setie with ‘a superfelal understanding of your customer's Jobs. To avoid this. you need ta ask voureel hy ‘a customer wants 9 perform e certain job to ag deeper tower the eal motivations For excmple, why might customer want 0 lear foreign language? Maybe because the “reat custorer job tobe done sto improve his CCV. why does ne want to improve his CV? Maybe because he warts to earn move mone, Dorr sete unt you realy unaerstanc me Underlying jonsto be done that realy rive canvas | 1.1Value MapProducts and Services This is simply a list of what you offer. ‘Think of it as all the items your cus- tomers can see in your shop window metaphorically speaking. t's an ‘enumeration of all the products and services your value proposition builds ‘on. This bundle of products and services helps your customers complete either functional, social, or emotional jobs or helps them satisfy basic needs. tis crucial to acknowledge that products and services don't create value alone— oniy in relationship to a specific cus- tomer segment aind their jahs, pins, and gains. ‘Your list of products and services may also include supporting ones that help your customers perform the roles ‘of buyer (those that help customers, compare offers, decide, and buy), co-creator (those that help custom- ‘ers co-design value propositions), and ‘transferrer (those that help customers dispose of a product). ‘Your value proposition is Uke to be comosed cof various types of products and services: Physical/tangible (Goods, sueh as menufactured products Intangible Pracucts such as copyrights or services such os fter- sales assistance Digitat Products such as music downloads or services such as online recormendatons. Finaneat Prochicts uch as investment funds and Ineurances oF services such as the Francing ofa purchase Relevance ‘eis essential! to ccknowiedge nar otal products and services have Essent the same relevance to your custom er. Some procucts ana services are essential to your value Broposton: ee. nave some are merely rice to have = canvas 11.2Pain Relievers Pain relievers describe how exactly tour products and services alleviate specifi customer pains. They explicitly outline how you intend to eliminate or reduce some of the things that annoy your customers before, during, or after they are trying to complete a job or that prevent them from doing so. Great value propositions focus on pains that matter to customers, in particular extreme pains. You don’t need to come up with a pain reliever for every pain {you've identified in the customer profile—no value proposition can do this. Great value propositions often focus only on few pains that they alleviate extremely well The following tis:of trigger questions can help ou ‘ink of eeren waus your predicts and services may help your austomers oleate pains, ‘sic yoursel: Cold your preducts and series. + produce savirgs? In terms of tine, money, or fons, + rake your customers fol better? By lig tus trations, annoyances, are other things that ave customers ahsadaehe + So underperforming solutions? By introducing ew features, batter performance, or enhanced @uat, + put on end to ificuties ard enaienges your ‘customers encounter? By making things easier oF + wipe out negave social consequences your customers encounter fear? In trms of loss of face ost pover, ust or satus + eliminate rsksyour customers fear? interns ot ‘nancial socetechnical sks, or things that could potertialy 9 wrone, + help your customers beter sleep at right? Buy adressingsgnieantiesves, driishia concerns, or elminating worres + limit or eracicote common mistakes customers ‘ake? By hela them use a slution the right wou. + eliminate bares that are keeping your customer {rom adopting valve propositions? inreduing lower or no upfont investment costs, fatter leaming curve or eliminating ether ebstaciae preventing adostion, a ‘Apatnrefevercan bemare or less fe ‘cenowmremeneriteare matin cee macs Sone fear ee ioc Nice to have © donnicaa tigger questions canvas 11.2Gain Creators Goin creators describe how your prod- ucts and services create customer gains. They explicitly outline how {you intend to produce outcomes and benefits that your customer expects, desires, or would be surprised by, including functional utility, social gains, positive emotions, and cost savings. As with pain relievers, gain creators don't need to address every gain identified in the customer profile. Focus on those that are relevant to customers and where your products ‘and services can make a difference. ‘The flloving ist of tigger questions can helo {ou thnk of aferent waus your products ana services may help your customers obtain required, expected, dese, or unexpected outcomes and benefits ‘Ask yourself Could your products ond serves. + create savings that please your customers? Interms oftime, money.ané effort + produce outcomes your customers expect or that exceed ther xmectatons? By ofering quality levels, more of something, or ess of something + eutnerorm currant value propositions and {eatures, performance, or avait + make your customers work orf easier? Via better usability, accessiilt, more series, or lower eostf ownership, + create postive social consequences? By ‘making them look good or producing an Ineroase in poner or status + do something spect that customers are looking for? interns of good design, quaran- tees, oF specie or more features + fle desire customers ream about? By helping them achieve ther aspirations or getting rele rome hareshin? + produce postive outcomes matching your customers success and fale criteria? In terms of better performance or tower cost + help make adestion easier? Through ower cst, fener investments lower risk, better quality, Improve performance, or bear desien atevence Acvineretr cin radia MEER i EE eaten Jprtecontona ut tke we ave ser a ere i overnite between eset fend nics te have gain cractore, Nee to have © donno tigger questions ‘canvas /12canvas /12 Mapping the Value Proposition Remarkable value propositions focus Con jobs, pains, and gains that mat- ter to customers and achieve those exceedingly well. Again, you should not try to address all customer pains and gains. Focus on those that will make a difference for your customer, “keds ofthe precuts and serices that your value proposition bids onto target a specie customer segment. Pain ralevers ouine how exactly your products and services kill customer pans. Each pain oliver actresses ot {east one or more pains or aains, Cont ec procucts or services heret ah creators highlight how exact yar products and services help fosomers achive oains Each gain ‘estor addresses ct east one or na pains organs. Dana prod canvas 12 formal Map ofhow we believe the products and services around this book create value fr customersa canvas 12. & Create Value owecrive ourcome Deseribeexplictty | 1 page map of value how sour preauets | creation value Instructions Shaten eu the value map of ane of your oxsting value propostions For example, use one that ar er segment you prefled in the have one yet sketch out ow you intnc to create value with a new idea We wil cover ‘he croation of new value proneatians more spec later an in For now 1. Geab the customer profile uou previously completed 2 Download the value map. 2 Grob setof smal sticky notes. 4 Mp out how you erate value fer your customers © donniocd the Value Map pa The Value Map © Strategyzercows2 3 bs SES _ _ _ ea a 3 oles —— — 1 2 3 4 = | er? Lt products and services. Outine pein relievers uttine gain creators. Rank by order of importance. Lital the products ond services of Outline how your pracuets and Explainhow your products and Rank preducts and semiees, pain sr elting valve prapostion services curently help customers all> services currently create expected elves, and gain creators accord ete painsby eliminating undesited or desred outcomes and benefits for ing te how essential they are to ‘utcomes,chstacles, or sks Use one customers Use ane sticky nate per customers. Sticky noteper pain reliever, ‘in creator, © 00 tnis exercise ontine‘CANVAS 11.2 le & Pain relievers vs. Gain creators Pein relievers and gain creators both create value forthe customer in diferent weus. The dference le that the former spectieally addresses pins inthe customer profs, white the latter spect cally adresses gains tis okay f ether of tram edoresees pans and gar at the some tie, ‘The main goal ofthese two areas is to make the customer value creation of your products and services expt ? ‘What Is the difference with the pains. ‘and gains in the customer profile? Pain retevers and gain creators are disney diferent from pains and gains. You have contol cover the former whereas you don'thave contol ver the latter. You deed Ge, design) how you Intend 9 create vlue ay edaressng specific obs pains ane! gains. You dant decide over which {obs pains, and gins te customer has. And no ‘value propasition addresses all acustomer’s jobs, pains. and gains. The best ones ascress those that matier most to customers anc do soBest Practices for Mapping Value Creation xX Common Mistakes stll your products ond services Add products and services to the pin rather than just those targeted ata relever and goin creator feds specif segment. ¥ Best Practices roducts and services create value Pain eeleverecnd gain crectors are Jato segment Lst ony the make the value eration of your tundlof products and servers that products and services expt Exam Jon formavelve prepestton fora ales include helps save time” ane saci customer segment well-designed” canvas 12 § Cfferpaln reevors and gain creators Make the unreal attempt to ‘thathave nothing todo with the pains aekdessallcustamer pains anc ‘and gains inthe customer profil, gains. Remember that procucts end services Realize that great value propositions ‘ont create value in obsotute tars. are about making cholees vega Isatways rectve to customers jobs, ing which obs, pans, ond gain to pains, and gains aderess and which to forgo No value ropositin acirasses ol of them. your value map incites so, ts probably because youre not honest ‘outa the jobs, pans, and gains that shouldbe in yur customer profileANAS |1.3 Fit You achieve fit when customers get excited about your value proposition, which happens when you address important jobs, alleviate extreme pains, and create essential gains that customers care about. As we will explain throughout this book, fit is. hard to find and maintain. Striving for fit is the essence of value proposition design. ‘Customers expact and desire a lot from products: ‘and eervices, yt they so know they cant have ‘tall Focus on those gains that matter most to customers and make a ference, {customers have alt of pains. No organization can reasonably aderess olf ther Focus on thase eadcehes tat matter mest and ae insufclenty‘Your customers are the judge, Jury, and executioner of your value proposition. They will be merciless if you don't find fit! cawvas /13)CANVAS /12 Fit? When we designed the value proposition for this book, we strived to address some of the most important jobs, pains, and. gains that potential customers have and that are insufficiently addressed by current business book formats. ‘check marks signify that prod- ucts and services relieve pains or create gains and directly ‘address one of the customers’ Jobs, pains, or gains.wd wn OGD = G iyquick Cay au ear Gr EOE. nO / connect wi ‘with Co sas Dh re Uike-minded / colleagues, 2 Or Selene = G ht 2 % See ie teas oh” on 3 a ideas better improve: a 3 0 O Fisangy etollaboration’# «advance PeoPlewant home creer in BE eee Nona a OE E risk) biz book ‘epply | orbuild Preferred eaer | methods‘ abusiness Method! cone) < lon pollaborat Pishothers Communicate decisions ideas pe oO \ | a og uptodate Xs show which jobs, pains, ‘and gains the value proposition ‘does not address.ourcome. Connection between > | your products and terstocustomers | services and customer jobs, pains, and gains © do this execise online i Instructions [see ee) Bring inthe Valse Proposition Map and Customer ‘Segment Pofie you completed earler. Go trough ain reeves end gcin creators ene oy one, anc canvas ita &2 ‘outcome IFerpainrelever or gan creator doesnt anuthing, may not be creating customer value Dore worryifyouhavent checked al pains) ‘ains—you car satisy them al. Ask yours, your customer? © dowrioac tne value Propostion Carvas paf 2 ‘cANvAS 13Gia uscr Quickly with Ad-Libs dtibs are a great way to quickly shape alternative tions for your value proposition. They force you to pi opiectivE ourcome how exactly you are going to create value. Prot three to five different directions by filling out thé the ad-tib below. © @ downloaa the template Our Lal help(s) & who ———- Sooo ynlike your own verb (eg, increasing, enabtina)Our Ee help(s) am who ant to a by Pa and - 2.Push vs. Pull ‘The push versus pull debate is a. common one, Push indi cates that you're starting the design of your value proposi- tion from a technology or innovation you possess, whereas pull means you're beginning with a manifest customer job, pain, or gain, These are two common starting points, many Of which we outlined previously © p. 88. Consider both as Viable options depending on your preferences and context. DESIGN 2, Technology Push start from en invetion.navation, or technological resaure for which wou Sovelop a wolue proposition that acdrasses c customer jot, pain.]ne gin Inslmgte terms, this sa solution in search ofa peabler. i | a ‘Explore valve proposition prototypes that are based an your invention, innovation, or technological resource with patently interested customer cepnunte Design a dedicated value mar foreach secment until you nd problem-alution fit Read nore about the bu, measure, laa cycle oF Bp. 185 Technology 1.solution| (invention, innovation, technology) a6 FINDA PROBLEM, a.customer jobs pains gains © 2. Value insights proposition prototypelr Market 1. Problem (dobs, pains, gains) learn ait 98 FIND A § SOLUTION 3 SAdiust og 2.value t technology th proposition - (and resource) prototype needs || Market Pull Start froma manest custome job, pain or gain for which you desion a ‘value proposition, n simple terms, his sa prem in search of a solution Lean what technologies and ater resources ere requires fer each value propestion prototype designed to aldrass manfest customer jobs, pains, ‘and gains. Redesign your value map and cast resources until you fd | ible solution to adress custome obs, pans, end gains. Mere about the bull, measure ecm cycle on & p96,Ee evanirelcel: Pains, and Gains se oBsEcTIVE ourcone wy practice the improved skits 3 ecmoiogy % _eporoac wth na ek ‘This push exercise starts withthe sotstion mS 1 Design. Design a value proposition based on ‘the technology outlined in the press excerpt fram the Swiss Federal Institute of Technology in Lausanne (EPFL) by targeting a customer Se9- ‘ment that might be interested in ‘adopting this technology, solar and aeotian sources are great candi dates forthe electity generation ofthe ture. However solar anal wind sources! peak evaltabilty takes place at ties that do rot usualy correspond fo peak demand Nous TTerefore, « way must be devise 9 store ac later reuse the eneray generated. in Search of Jobs deat. ome up wth an ea for velue proposition using the compressed cr eneray sto “The Business Model Canvas 3 Segment. Selecta customer segment ‘would be ready te pa fori Tourevarine @ | wmrceones mB] comes | come canon a ay La EpPL nas worked for over fan years on an ois Jal storage syste: comaressed ai: Te use ofa hydraulic plston delivers the best systers performance. Te obtained nigh pressure tir can be safely stored in bots without (856 tint tts necessary to generate new electcty by expanding the gas inthe cyte. One of he ‘advantages of our systems nat dees not require rare materials. ostrat ‘Asplzoff has been created to devon th principte ond create ‘turkey’ electrical Storage and retriavat uns. n 2074, a 25 wit be instae ato phocovattale parc in te fture, there wil be 250 Ki esl fest and 2500 kW ones afterwards"ee Tips + Ad design constraints to tect ny push exereses. Your organi zation might not wart to edorese certain customer segments (eg, specie regions, te}.Or youmiant fer certain strategic rections, 97 forexampie,leersing rater than, bulaingsousions. 5 + Follow upon your customer = assumptons by researching a cumomen phan poduc ingens @p, aor yee sekcted a pote merested 6 aren Aseees, faves bebe trecitome poe crete store van proponton a ‘The Value Proposition canvas 4 prota | Sheehan caterer, Mntecsurpinn | ctoutebeio bene, Sketch pesierae Fete the val prop- | putin bu sate cothow wi customer pains ond create gainsesion/22 Pull: Identify High-Value Jobs Dee Great value proposition creators master the art of focusing on the jobs, pains, ‘and gains that matter. How will you know which of these jobs, pains, and gains to focus on? Identity high-value Jobs by asking if they are important, ‘tangible, unsatisfied, and lucrative, High-value jobs are characterized by pains ‘and gains that are. Important When te customer's successor fare to et the jb cone leads to essential gains or extreme pains, respectvea + 02s ain the ob leas to extreme eas? + Do2s fang the ab ead to missing out on ‘essential gains? Tangible \Wihen the pains o- gains related to ajob can fest or experienced immediately or often not ays or weaks later + can you fee! the paleo + Can you sea the gain?a2 o®@ nsatisfied Lucrative High-value jobs eicurrent value propositions dot help relieve When many pedole have the job with related sor create desred gains in a satisying way oly dont ax Focus on the highest vale jobs ‘pains and gains ar @ small number ef customers and elated pains and gains ‘re wt to pay @ premium, + Are there mang with this}eb, pain or acin? + Are there few witing to pay alot? sethere unrealized gains?omecrive entity high-value customer jobs that {you could foeus on & Imagine your customers are chief information officers (CIOs) and you have to understand which jobs matter most to them. Do this exercise to prioritize their jobs or apply it to ene ‘of your own customer profiles. ‘customer Profile ‘synthesized customer profile of @ C10 ourcome RRonking of eustomer js from your perspective This put. the customer. Tips + Tis exercise helps you prlrtize obs om the customer’ perspective. doesnt mean you have to mandatory across temost importa cones in your volue propose: those might be ‘outside your scope However, ake sure your ‘yalue proposition does adress jobs that an hil ealevont to customers Great value proposition creators often focus conan few jbs, pains ond gains, but do that ‘extremely nal ‘Complement this exerese with geting customer insights from the feta @ p. 106 and experiments that produce evidence @ p 216 © Strategyzer corporation seeuriey+ Dees fing theo lead to extreme pains? + Doasfaling the jen leceto missing out on ‘essential gains? Important @°65 + can you feo the pain? + Can you ee the gain? ‘Tangible + Are thereunresoived pans? + Ave there unrealized Unsatisfeg + Are thore manyvith Focus ante highest ‘hisjob, pain or gain? value jobs ant reed are there few viling pains and gains. topay alot? igh-vatue jobs sale: + fow) to Sande iat wa byenary. ai,six Ways to Innovate from the Customer Profile ‘You've mapped your customer profile, What to do from here? Teectare six ways to trigger your next value proposition move: Can you... Vv Address more jobs? switch to a more important job? velp customersdo 0 that ferent fom vyrot oat wae propesons ceri foo" “Address a more compete set of obs, eluding feloted ond ancitory jabs rfitnatenanes aepinent create Hi ie ruthlne soot mete 2 understo0e mobte phone but enabled us to store and tGy Imusic ona browse she web on ore device. tat construction managers needed 0 Keep ienedtlos to avein penatties, not only lt Holes ‘Ther fleet management solution adlaressedt he Jorma in aston tothe ater © dourioac tigger avestions % Go beyond functional jo! Look beyond functional jos and create ie! ‘elue b fulling important socal and erat jobs. Mos Cooper erent! ear that became as mach a means of transport as a statement Identity,jelp a lot more customers ‘a job done? pare peop doa job that was otherwise t00 lox ort expensive Nene web data storage and eomoutng reused tobe reserved to big companies with I budgets. Amazon.com made i avai J companies of ary size and buadget with Web Services Get a job done incrementally better? Help customers better do aj by making @ res of micrimprovernents to an existing value propesition German engineering and electronics mat: ‘ational Bosch improved ana wide range of ‘features of ts crculr saw that realy mattered ‘customers and outperformed competition. Help a customer get a Job done radically better? This the stu of new market cretion, when ‘new value popostion dramatically outper. forms elder ways of helsing a customer gat a Jb one The rst spreadsheet called VisiCalc not only Introcucer a new market for such tools but ‘160 ushered « whole new realm of possibl- ties coross industries powered by ensy, visual ateulations, ioe 3DESIGN /22 Six Techniques to Gain Customer Insights Understanding the custamer's perspective is crucial to designing great value propositions. Here are six techniques that will get you started. Make sure you use & good mix of these techniques to understand your customers deeply. ‘The Data Detective ule en evstng work wth (esi research. Sec ‘ondary resea‘ch reports ond customer data you tight ciready have provide a great foundaton ‘or getting strted, Look also at dota outside your industry ane study analogs, appasites, or sgacences. ascuty level * serangth: great foundation for further research Weakness. sttic dat from a diferent context {© p, 108 for more ‘The Journalist ‘The Anthropologist Takin tpotentad custamersascn easy tay ta Observe (tential customers inthe rea cn customer insights i's awellestabished to get good insgh’s into how they relly sermtce However customers might tet youone Nave, tidy whicyabs they focus on and ‘hag inoninteriow but behave liferertiyinthe _theyeget them dove Note which pans Ue real wore them ane! ch gains they ime achiew afeuty lve ificuty (vel Suength-quckand cheap to getstared with frst Strength’ data provide unbiased ew an leamings and insights discovering rel-worcoshavior res customers dontelways row whet Weakness: ificut to gain customer ni teu wantand actual behavior difersfrominte-_relatedto new dens ‘ew onswers| © p.r1atermore © p 110 for more‘The Impersonator ‘ne your customer” and actively use praducts and vices Spend a day or morein your customer's shoes. Draw from your experience oan uneatis: fe customer. Difeutytevet: Strength: firsthand experience f bs, pains, anc gains Weakness: not alwaus representative of your real tustomer or possible t apa s ‘The cocreator Integrate customer nto the process ot volue ‘reation to lear with hom, Work witheustomers tw explore ana develop new ideas, Difcuty level ae Strengt: the proximity with customers can help ou gain deep insights Weakness: may nat be generalized to al custom ersandseements esion/2a ‘The Selentist Get customers to parietate knowingly or Lnrowingly) in an expenmers, Learn fom the ifcuty level tee Strengtn: proves fact-based insights on Feal-novld enavior works pareve wel for ee ideas Weakness: can bs hars to epplsin esting || ‘organizations because of sit ustomer) el ‘les ane auidetines © p.216 tr moreDesion 12.9 Loe rears a Interview Your Customers opsecrive ourcome Gina better customer Fics ghty vaideted customer understanding prottets ‘Talk to customers to gain insights relevant to your context. Use the Value Proposition Canvas to prepare interviews and ‘organize the chaotic mass of information that will be coming {at you during the interview process. 1 crestea curtomer prof. Seton out ela, fein ond gas you Tnratiaceren theca youre tarting anjob, pains, ond gains in ‘order of impartence, 2 create an Jaterview outline. Asse yoursal whit ou want to lear Derive te interview ‘questions from your customer pote Asc about the mast Imgortan bs, pains, andigains. 5 Review the interview. Assess you need to revlew the ntaniow {questions based on what you teamed,tp Copture your biggest Insights trom alte Baie 7 conduct the intr Make a separate view by following the sunthesized customer intewew ground rules prof ter every 3 uted onthe next customer segment a that emerges from ‘all your interviews. rte down yeurmast Important insights en pave, o998e'g GOR | 3®' core neneroeam comer" manta Grout Semen among interviewees? pains, ond gains?a esicn/23, Ground Rules for Interviewing tis an art to conduct good interviews: that provide relevant insights for value proposition design. Make sure you focus on unearthing what matters to {potential) customers rather than try- ing to pitch them solutions. Follow the rules on this spread to conduct great interviews. (© cer “Ground Rules for interviewing poster Rule 1 Adopt a beginner's mind. Listen with afresh pair of aos" ad avoid inter pretation. Explore urexoected bs, pains an ‘gains portelor Rule 2 Listen more than you talk, ‘your goals tosten calor, nat tinker, Irnpres,or convince your oustomer of anthing ‘avo wasting time talking about your ow bel ‘because fs ct the expense of learning about Rule 3 ‘Get facts, not opinions. Dont ask “would you.” ‘sehen is the last time you have? Rule 4 ‘ask “why” te get rect motivations. ‘ask ny do youneed 9 d.-7" Ask "Why is__importat to you? ‘Ask “hy s_—_suchapaire®Rule 5 ‘The goal of customer insight interviews Is not selting (even if @ sale is involved); iv’ about learning, Don'ts "Wut you buy our solution” Ask ‘what are your decision criteria when you make & purchase of. Rule 6 ‘ont mention salutinns (Le. you value proposition) too early. Dont explain, "Our solution does.” sk “What are the mast important things You are svoging with" Rule 7 Follow up. Get permission to keep your interviowse's contact information a come back for more questi ard ansners or testing prototunes, Rule 8 Always open doors at the end. 954 "Who alse should Irak tom Tips + Intervions are an excellant strting point to learn trom custamers, but ypically they dont provide enous able insights focmaking rite decisions. Complement your Interviews wth other research, us ike a good Journalist does further research to td thereat ‘story berind wht pane tel Adc eal wot ‘bservations of customers ana experiments ‘educe hare data to your research mx + Conduct interviews in tzams of twa peoate ‘Desde in advance who willees the interview ‘and who wiltoke notes. Use a recording device. (phot, video, or other if possible, but be awa hat way witha recering Gevice onthe table, cmeiisia