What is the Value Proposition for?

3 minute read

The Strategyzer Value Proposition Canvas is the first tool that we use with our startups. The intended function of this tool is to determine Product/Solution fit. Although we use it for it’s intended outcome our primary reasons for using this tool are described below.

Understand what the startups are trying to do

The Value Propsition Session is mandatory for Programme members. Startups sometimes object to this on the basis that they have already created a Value Proposition Canvas. However, we still need to understand their business if we are to offer appropriate help and the Value Proposition is the best way we have found of doing this.

Creating a Value Proposition Canvas by and for yourself is a tricky business. The temptation to ignore difficulties is very high, as is the propensity to overlook implicit assumptions. If you’ve done it before the worst outcome is that doing it again will be faster. The best outcome is that, by being independent and ignorant of your thought processes, we can strengthen your proposition and add detail that would otherwise be missing.

Establish that there is a problem to be solved

The majority of startups we see are solution-led, rather than problem-led.

There are many reasons why people leave their jobs to start their own business. High among this list of possible reasons is that they want to solve a problem that they themselves have encountered. This is a very good reason for considering starting a business, but only if you’re sure that:

  1. There are enough (or, indeed, any) other people/businesses in the world that have encountered the same problem.
  2. This problem is causing these other people/businesses sufficient pain that they will pay to resolve it.
  3. No-one else is already solving the problem, or if they are then your proposed solution is at least 10 times better than the solutions currently being offered.

We often find that the entrepreneur believes (s)he has identified an opportunity and leapt immediately to a solution without asking these questions.

In order to stand a chance of getting on to the Geovation Programme you have at least to have some idea of the answer to question 3. We often find, however, that startups have little or no answer to questions 1 & 2. In part this is because these questions can be difficult to answer (although it is usually the case that the entrepreneur simply doesn’t have any techniques for finding the answer and we can help them with this). There are at least two other common reasons that explain why no answers have been sought.

The first is that the entrepreneur just wants to do a thing. They’ve wanted to do the thing for some time and have finally found an opportunity to do it. They know how to do the thing, they’re good at it and they want to do it some more. In an ideal world they’d sit in a darkened room and just do the thing, present it to the world and find they have a business.

We call this Comfort Driven Development because feels good. It’s familiar. All the other things that should be done are hard and unknown and scary. Unfortunately, it is usually these hard, unknown, scary things that they should actualy be doing. This is primarily what an accelerator is for - to help entrepreneurs do the things they don’t want to do!

The second reason is that they know how their problem affects them and they assume that it affects everyone else the same way. In consequence, they throw themselves into providing a solution without fully exploring the problem. Even if there are other people who share the same problem it is important to remember that you are not your user. Just because you like your proposed solution that doesn’t mean anyone else will. Also, it is important to understand what parts of a potential problem you are not solving. This helps manage users’ expectations (and ensure that they are not disapppointed in your product/service) and also identifies potential areas for future business development.

The ideal result of the Value Proposition is clarity of purpose and intent, which are the pre-requisites for efficient execution.

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