Bad Value Proposition Design

I had the opportunity to interview Alex Osterwalder about his new book Value Proposition Design. This is the first part of the two part interview. For fun I thought I would break the interview into two parts so we could take a look at his thoughts on both bad value propositions and good value propositions in turn. Below you will find my questions in bold and Alex’s answers immediately following the questions.

1. When creating value propositions and bringing them to market, where do companies unnecessarily burn the most cash?

They write business plans to launch new value propositions. That’s simply a waste of time. Product managers, corporate venture teams, and entrepreneurs should test and iterate their ideas with customers immediately rather than refining untested ideas in a made-up business plan. When you test ideas early you minimize the risk of wasting money and time. When you refine ideas early and have to change later on in the process you maximize the risk of wasting money and time. That seems obvious, but is yet to be incorporated in most corporate processes.

2. How can organizations possibly screw up communications when it comes to Value Proposition Design?

Product management, marketing, and sales all speak a different language. That’s one of the reasons why we invented the Value Proposition Canvas. To give people a shared language across functions and disciplines in (large) corporations. That saves a lot of time and energy, and allows a very focused messaging.

3. In the area of Value Proposition design, what is the biggest waste of time?

Falling in love with product ideas too early on in the process and having to change them later on in the process when it gets expensive. You want to prototype and test alternatives early on to deeply understand your customers’ jobs, pains, and gains. Only when you nailed that you should go on to develop products and services. That seems like a lot more work, but ultimately it will save you a lot of time and money.

4. More than anything else, what leads to companies building stuff nobody wants?

When companies fall in love with their products and services and the features they offer. Customers don’t care about products, services, and features. They care about getting a job done. They care about avoiding the pains of a job badly done. They care about the gains obtained from a job well done. Provide evidence that you understand your customers’ jobs, pains, and gains and then provide evidence that your products and services actually address those jobs, pains, and gains. If you can do that you’ll find it difficult to build stuff that nobody wants.

Thank you Alex for taking the time to answer the questions and to allow us to share your answers with the Innovation Excellence audience!

P.S. You can find the second part of this interview here – Good Value Proposition Design

Image credits: Rugusavay, Strategyzer

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Braden Kelley is a popular innovation speaker, builds sustainable innovation cultures, and tools for creating successful change. He is the author of the five-star book Stoking Your Innovation Bonfire and the creator of a revolutionary new change planning toolkit coming soon. Follow him on Twitter (@innovate) and Linkedin.