by Stephan Liozu
Are you able to clearly articulate the value proposition for your innovation, your business model, or your startup? Can you recite in one quick minute this value proposition and two to three value drivers that illustrate its power and monetized differential value? If you are a business leaders in the trenches, a multi-tasking entrepreneur or a busy innovator, chances are that you have not gone through the exercise and are not ready for it.
I was recently participating in a top management conversation at a fairly large high tech start up and I asked leaders around the room if they were able to articulate the business model value proposition and their critical value drivers. The question took them by surprise and generated some interesting internal discussions. I was invited to speak with them about their potential pricing problems but we quickly realized that the problem resided in the business model fundamentals and the overall value proposition. The conversation uncovered internal disagreements, some frustration among the various executives, and a real need to take a step back and reflect.
Case closed! How can one have a creative and constructive discussion on pricing models without have a clear idea of what your innovative business model is all about and what types of differentiating features you bring to your customers? This is fundamental exercise that every marketing manager, business manager, innovator, and entrepreneur should go through to create a crisp value story that will create excitement and interest for customer, investors and partners.
There are three critical elements to work as shown in the figure below.
The overall value proposition needs to reflect the main differentiating dimensions of your new business model or your innovation. It needs to short and crisp and resonate with customers by using the vocabulary they are using. Then based on this crisp statement, you can extract a maximum of three value drivers for your value offering. Focus on value drivers that are tangible and measurable but also that are the most relevant for your customers. In other words, focus on the bang for the buck. Finally, for these three value drivers, you need to calculate and extract the monetized value i.e. the financial benefits you will bring to your customers). These are typically cost savings or incremental revenues.