Introduction
Accenture’s market experts argued that in their most recent survey for a Life Centricity Playbook research, 95% of 1700 global B2C and B2B C-suite executives interviewed declared they believe their customers are changing faster than they can change their businesses (Shah, El-Warraky, Miranda, & Bellin, 2023). Despite that many of them turned to technology and digital adaptation to reshape operations; the steps taken merely have allowed them to keep pace but not to achieve further growth (Shah, et al., 2023). C-suite executives agree that it has never been more challenging to achieve meaningful growth. The features of a volatile, uncertain, complex, and ambiguous (VUCA) environment with its economic, social, environmental and political forces are pushing consumers to continuously reassess their values and decisions (Shah, et al., 2023). The latter signals a consumer movement toward an experiential approach of choice for products and services consumption based on a validated value proposition.
The Lean Startup Value Proposition
Introduces a social technology framing social entrepreneurs’ solutions for delivering value to potential consumers. The lean startup (LS) first proposed by practitioners (Ries, 2011) has also been recognized by scholars as a method that can guide entrepreneurs in developing a validated (by customers) business model (Harms and Schwery, 2020). Customers Profile Information is crucial to the LS approach, and its principles may be used in product and market development. Entrepreneurs conduct business experiments to understand customer needs and test a value proposition and other key business-model elements from the early stages of startup development. Entrepreneurs tend to leverage an experiment-based approach, such as the LS social technology (Ghezzi & Cavallo, 2019; Ghezzi, (2018); Harms & Schwery, 2020). The LS system is a movement dedicated to understanding and supporting innovative businesses that operate in high-risk environments (Harms and Schwery, 2020) with VUCA features. The LS practice advocates testing entrepreneurial assumptions through business experiments as well as building LS capability, which contributes to early entrepreneurial exploration (Harms and Schwery, 2020). The LS system is a methodology entrepreneurs use to help them innovate by continuously testing their products and getting feedback from customers in real time.
A Value Proposition Development
A value proposition is a statement that clearly identifies the benefits a company’s products and services will deliver to its customers. A well-crafted value proposition will differentiate the company and/or its specific product or service in the marketplace and among a target market or target audience (OpenStax, 2020). New businesses need time to develop their identities, engage their target market, create and develop the right products, and sharpen their strategies. Startups do not have fully developed and proven business models like established companies do. Hence, an imperfect product is rolled out to be shared with early adopters in its beginning stages of development to gain immediate feedback (OpenStax, 2020). This trial for adoption ensures that people actually like a product and are willing to buy it. In a rapidly changing technological environment working on a product without measuring its acceptance is highly risky (OpenStax, 2020). Under this principle the product idea is tested to receive customer feedback without losing time or money on products that would not work. If any changes are needed, there is a timely flexibility to make them because it is just an early prototype and no great investment had been made yet at this development stage (OpenStax, 2020). At this juncture, the starting focus or product idea may evolve into something else because the initial feedback from the prototype points in a different direction. When such a shift occurs is an indication the original assumption was not validated and the product was never needed in the target market (Pahwa, 2019). Now, before starting to convert a conceived business model to actual business, make sure your value proposition canvas is filled to ensure you have a problem-solution fit (PSF). This is when marketers have discovered a deep customer problem in an underserved market. This stage is generally very early and often in the seed or pre-seed stage. This step will add confidence the product planned for roll out is actually required in the market (Wang, 2022). To ensure market validation a beta version or minimum viable product (MVP) release should be the first consideration (Pahwa, 2019).
Value Proposition Canvas
A Value Proposition Canvas (VPC) is a business model tool originally developed by Dr. Alexander Osterwalder, Yves Pigneur, and Alan Smith, that helps to align the value proposition of the offering with what a customer values and needs to make the offering a better fit for the target market (Osterwalder, Pigneur, Bernarda, & Smith (2014). As a tool the VPC can be used both for refining an existing offering or launching an entirely new product in the market to help visualize, design, and test how value for customers can be created (Osterwalder et al., 2014).
Source
Business Model Canvas
The VPC is an extension of the business model canvas an important business development and strategy tool that helps you validate your business idea before spending too much time and effort on it. The VPC is a major component (or section) of the business model canvas (BMC) with a focus on customer profile and value map. Each section helps answer questions on what, how, and who of your business operations (Osterwalder et al., 2014). The VPC requires you to observe what the customer actually wants and then design a value proposition which will sell. It includes two elements a customer profile to observe the target market, and a value map to design the value proposition of the offering (Osterwalder et al., 2014).
Value Proposition vs. Unique Selling Proposition
To clarify between a Unique Selling Proposition and a Value Proposition let us recognize differences. A Value Proposition is the number one reason your target audience tries or buys your offering (Pahwa, 2023). It is the chief trigger for the prospects to think of your offering when they talk or hear about the product/service category. The Value Proposition is a clear statement of tangible results a customer gets from consuming or experiencing your offering.
Whereas, a Unique Selling Proposition (USP) makes you stand out because of your unique product feature or marketing strategy (Pahwa, 2023). The Value Proposition focuses on the product benefits rather than the features or ingredients.
Customer Profile
The value proposition canvas includes two elements a customer profile to observe the target market, and value map to design the value proposition of the offering. The customer profile section includes important details about the needs, wants, pains, and gains of the target market broken in three parts: Customer jobs, Pains and Gains.
Customer Jobs. Jobs describes the important issues your customers are trying to solve in their functional, social and emotional activities. These could be usual tasks they are trying to complete, problems they are trying to solve, or needs they are trying to satisfy.
Pains. Pains severe or light are internal and external factors which pose difficulties in the path of customers getting the job done. Pains include barriers as well as negative outcomes which the customers hope to avoid like risks, obstacles, and dissatisfaction from the outcome.
Gains. Gains include the benefits and gains in the form of positive outcomes and satisfaction which the customers require, expect, desire, or will be surprised by, and which will increase the likelihood of adopting a value proposition.
Value Map
Product and Services. These include the list of products and services you offer to the customers to help them get their functional, social, or emotional job done. It forms the base to addressing their pains and gains.
Pain Relievers. These answer the question of how your products and services will alleviate the customer’s pains before, during, and/or after the job is done. Pain relievers are specific to the pains mentioned in the customer profiles and usually, different pain relievers are assigned to address different pains.
Gain Creators. These explicitly specify how your product or services create customer gains. They show which of the mentioned customer gains does your value proposition addresses.
Filling the VPC.
Suggested Guide. Count yourself as your own customer to make the filling process easier. You might need to step out of your comfort zone into the actual market and ask many questions from as many customers belonging to your target market as you can. Once done, be ready with markers and sticky notes and include all the team members who you think should be part of this process
The Jobs Side. Start with the customer jobs and mention all the functional, emotional, and social jobs your customers do on a daily basis. Also include how they do that job, how they feel, and what social qualities come into play rating them according to their importance. In case you serve different customer segments, a rule of thumb would be to use your research and build a customer persona of your perfect customer who has characteristics representative of most of your segments. Ask a lot of whys, what’s, and how’s. They’ll lead you to uncover all the pains and gains behind the jobs.
The Value Map Side. Next, move to the left side now that a customer profile has already provided you with many problems to solve, and all you need to do is to rate the problems according to the severity and find exact solutions for all or most of them.
The Offering. Start with defining your product offer and go on to answer all the what’s, why’s, and how’s, here.
Focus On The Problem-Solution Fit. A problem-solution fit is achieved when the value proposition map matches perfectly with the characteristics of the customer segment profile.
A problem-solution fit is achieved when the value proposition map matches perfectly with the characteristics of the customer segment profile.
Aim for the Product-Market Fit. Once you reach the problem-solution fit, you can release an MVP or beta version of your product to let the market validate it.
When the market validates the MVP, the characteristics of the customer segment profile are perfectly addressed by the value proposition map, the offering is said to have achieved a product-market fit.
Managerial Implications
Mindset. The term startup come from the verbal phrase circa 1550s “upstart” found in circa 1200 in the sense of “rise up” and by 1590s as “come suddenly into being”. Nowadays, the startup mindset is one where you’re not so concerned about procedures and established roles, you’re going to do whatever it takes to get things done. The startup mindset means that you’re creative, you ask for forgiveness not permission, and you’re on a mission not simply trying to make a buck (Kawasaki, 2020).
Structure Life Cycle. In the early stages, most startups will adopt a flat or matrix organizational structure. Such structure helps create faster expansion and decision-making because it is less structured than those of competitors, which may have complex management hierarchies (Kawasaki, 2020). The life cycle of an LS entrepreneurial approach are early-stage, venture-funded (growth) stage, and late stage. Once management have solved market research, development, and identified a repeatable, scalable business model,
LS organizations move up on the ladder to the scaleup phase (Babu, 2023).
Forecasting for the maturity cycle is the most challenging stage. Bear in mind, that a startup is an innovative and collaborative organization not older than 3-5 years; normally using an innovative/disruptive business model or technology. The failure rate for new startups is currently 90%. Ten percent of new businesses do not survive the first year (Babu, 2023). Recent research indicates that first-time startup founders have a success rate of 18% (Babu, 2023).
Concluding Comments
The research question by C-Suite executives in a recent survey published by Accenture was:
Why are we not able to achieve further growth after turning to technology and digital adaptation to reshape marketing operations, which merely have allowed us to keep pace with the market (Shah, El-Warraky, Miranda, & Bellin, 2023). Findings led C-suite executives to agree that it has never been more challenging to achieve meaningful growth (Shah, et al., 2023). The features of a volatile, uncertain, complex, and ambiguous (VUCA) environment with its economic, social, environmental and political forces are pushing consumers to continuously reassess their values and decisions (Shah, et al., 2023). The latter signaled a consumer movement toward an experiential approach of choice for products and services consumption based on a validated value proposition.
To address the issue we introduced a model for The Lean Startup Value Proposition. A social technology framing social entrepreneurs’ solutions for delivering value to potential consumers with a method that can guide entrepreneurs in developing a validated (by customers) business model (Harms and Schwery, 2020). The LS system is a movement dedicated to understanding and supporting innovative businesses that operate in high-risk environments (Harms and Schwery, 2020) with VUCA features.
The LS practice advocates testing entrepreneurial assumptions through business experiments in a VUCA environment as well as building LS capability combining experimentation and consumer profile information in a product benefit co-development construct. A complementary relationship to produce a value proposition (VPC) as a statement that clearly identifies the benefits a company’s products and services will need to offer and deliver to its customers. A problem solution fit (PSF) is drawn from filling a value proposition canvas (VPC). To ensure market validation a beta version or minimum viable product (MVP) release should be the first consideration in this process (Pahwa, 2019). We covered in detail two elements a customer profile to observe the target market, and a value map to design the value proposition of the offering (Osterwalder et al., 2014).
To conclude, we believe that research that reflects on the performance implications of popular management tools is particularly relevant for practice. The research and practitioner community will welcome future efforts to broaden and deepen the scope of this documented effort.
Please, share your views on this subject for the benefits of readers and follow up. Your comments are welcome and greatly appreciated!
For any inquiries or comments visit https://www.amasfl.org/ and reach Dr. Luis at education@amasfl.org or to DrLuisDeLaCruz@Inbox.com
References
Babu, S. (2023, July 21). Startup statistics 2023: The numbers you need to know. https://smallbiztrends.com/2023/07/startup-statistics.html
Ghezzi, A. (2019). Digital startups and the adoption and implementation of Lean Startup approaches: effectuation, bricolage and opportunity creation in practice. Technological Forecasting & Social Change, 146, 945–960. doi:10.1016/j.techfore.2018.09.017
Ghezzi, A., & Cavallo, A. (2018). Agile business model innovation in digital entrepreneurship: Lean Startup approaches. Journal of Business Research. doi:10.1016/j.
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Harms, R., & Schewery, M. (2020, January). Lean Startup: Operationalizing Lean Startup Capability and testing its performance implications. Journal of Small Business Management 58(1), 200-223. doi:10.1080/00472778.2019.1659677
Kawasaki, G. (2020, May 19). Embracing the startup mindset.
https://medium.com/canva/embracing-the-startup-mindsetedd3638e9bc2#:~:text=The%20startup%20mindset%20is%20one,takes%20to%20get%20things %20done
OpenStax. (2020, January16). Launching the imperfect business: Lean Startup. https://openstax.org/books/entrepreneurship/pages/10-1-launching-the-imperfect-business-lean startup
Osterwalder, A., Pigneur, Y., Bernarda, G., Smith, A. (2014). Value proposition design: How to create products and services customers want. John Wiley & Sons.
https://www.b2binternational.com/research/methods/faq/what-is-the-value-proposition-canvas/
Pahwa, A. (2019, September 27). Value proposition canvas: How to fill it? https://www.feedough.com/value-proposition-canvas
Pahwa, A. (2023, August 11). What is a value proposition? Examples & templates. https://www.feedough.com/what-is-a-value-proposition-definition-examples-templates/
Ries, E. (2011). The lean startup. New York, NY: Crown Publishing.
Shah, B., El-Warraky, N., Miranda, M., & Bellin, J. (2023). The life-centricity playbook. https://www.accenture.com/us-en/insights/song/life-centricity-playbook?c=acn_glb_thelifecentricigoogle_13632211&n=psgs_0523&gclid=EAIaIQobChMI18 L3_cvhgAMVSJKGCh1V7wUMEAMYASiu SAAEgIUQ_D_BwE&gclsrc=aw.ds
Wang, D. (2022, December 11). How to find problem solution fit for your first product. https://www.antler.co/academy/problem-solution-fit