Value Props: Create a Product People Will Actually Buy
Harvard Innovation Labs・84 minutes read
A compelling value proposition is essential for a company's success, targeting a specific audience with clear needs and addressing critical problems through innovation. Understanding and evaluating the gain pain ratio is crucial to overcome customer resistance and inertia, tailoring the value proposition to offer significant gains over existing solutions for successful adoption.
Insights
- Identifying and solving valuable problems through a compelling value proposition is crucial for a company's success.
- Understanding the difference between users and customers, pinpointing critical problems using frameworks like the "Four U's," and addressing socio-economic challenges are vital steps in creating a strong value proposition.
- To succeed, startups must focus on developing truly disruptive, defensible, and innovative solutions, understanding the gain pain ratio, and tailoring value propositions to address critical, blatant needs of customers while transitioning from nice-to-have to must-have products.
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Recent questions
How important is a value proposition for a company?
A: A value proposition is crucial for a company's success as it focuses on solving valuable problems, guiding in defining, evaluating, and creating value propositions. It helps in addressing a problem or opportunity, targeting a specific audience with clear needs, and differentiating between users and customers. By evaluating and building a compelling value proposition, businesses can ensure they are addressing critical issues and providing significant gains over existing solutions to motivate customer adoption.
What are the key elements of a value proposition?
A: The key elements of a value proposition include defining the problem to be solved using frameworks like unworkable, unavoidable, urgent, and underserved. It is essential to identify a minimum viable segment to target the right audience and evaluate the value proposition through the eyes of the customer. By understanding the difference between users and customers, businesses can create a value proposition that addresses critical and blatant needs, offering an order of magnitude breakthrough to stand out in the market.
How can startups identify critical problems to solve?
A: Startups can identify critical problems to solve by using frameworks like the "Four U's" - unworkable, unavoidable, urgent, and underserved. By asking users to pinpoint the root cause of a problem, businesses can ensure they are addressing issues that are significant and valuable. Understanding that not all problems are technology-related and focusing on social challenges like lack of education and resources can help startups pinpoint critical problems that need solutions.
Why is it important to understand the gain pain ratio?
A: Understanding the gain pain ratio is crucial for measuring the gain delivered to customers versus the pain of adopting a product. This framework helps in assessing the level of gain offered compared to the pain of change, with a 10:1 ratio often necessary to overcome customer inertia. By tailoring the gain pain ratio to specific user classes and industries, businesses can ensure they are offering significant gains over existing solutions to motivate customer adoption.
How can startups achieve success in a competitive market?
A: Startups can achieve success in a competitive market by focusing on founder market fit, delivering a unique solution based on personal knowledge, and aligning with a disruptive business model. By developing a compelling value proposition that addresses critical and blatant needs of customers, startups can differentiate themselves and offer an order of magnitude breakthrough. Overcoming customer inertia and risk aversion, tailoring the gain pain ratio, and ensuring a clear before and after scenario in the value proposition are key steps towards success.
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Summary
00:00
Creating Compelling Value Propositions for Success
- Value proposition is crucial for company success, focusing on solving valuable problems.
- The workshop aims to guide in defining, evaluating, and creating value propositions.
- A framework is provided to assist in this process.
- Ideas need to address a problem or opportunity to have value.
- Evaluating and building a compelling value proposition is essential for success.
- The value proposition should target a specific audience with clear needs.
- Understanding the difference between users and customers is vital.
- Identifying a minimum viable segment helps in targeting the right audience.
- Evaluating the value proposition through the eyes of the customer is key.
- Defining the problem to be solved is crucial, using frameworks like unworkable, unavoidable, urgent, and underserved.
14:17
Solving Social Problems for Business Success
- Unworkable problems can lead to severe consequences, such as job loss, health issues, and educational barriers.
- Addressing social problems like educational inequality is crucial to closing socio-economic gaps.
- Failure to solve socio-economic issues can lead to unrest and protests in nations.
- Not all problems are technology-related; social challenges like lack of education and resources are significant.
- Improving graduation rates for black students is vital, as failure to do so can result in 20% of students not graduating high school.
- Lack of access to care can be a root cause of problems, emphasizing the importance of identifying the true issue.
- Asking users to pinpoint the root cause of a problem is crucial for startups to succeed.
- Taxes, death, and education are unavoidable aspects of life that lead to various industries and opportunities.
- Urgency in business is relative and depends on the priorities of the target audience.
- Market shifts, like the rise of mobile phones and AI, create urgency for businesses to adapt and innovate.
28:54
"Identifying Urgent Problems for Innovative Solutions"
- The world was moving towards the 4th Industrial Revolution around 2010-2015, with Africa lagging behind, prompting urgency for change.
- Schools began seeking resources to adapt to the changing landscape, highlighting the importance of identifying problems before users realize they exist.
- Creating a curriculum with the government helped address the urgency in preparing for the industrial shift.
- The challenge arose in capturing value from the identified problems and solutions.
- In b2c marketplaces, identifying underserved needs, like affordability in the Kenyan coffee market, can lead to innovative solutions.
- The concept of the "Four U's" - unworkable, unavoidable, urgent, and underserved - was introduced to help startups pinpoint critical problems.
- Celine Health aimed to provide personalized menopausal management, addressing unavoidable symptoms and an underserved population.
- Terraflow's software targeted pharmaceutical companies, aiding in proving the worth of expensive clinical trials and preventing potential losses.
- Facebook's success was attributed to addressing the critical need for connection, highlighting the significance of fulfilling fundamental human needs.
- Rent the Runway exemplified a solution catering to unworkable, urgent, and underserved needs, bridging the gap between b2b and b2c markets.
43:20
"iPad's Evolution: From Nice to Critical"
- The speaker discusses their experience with using an iPad, initially not critical but later becoming essential for certain activities like Harvard classes.
- iPads were initially met with skepticism but gained importance as applications were developed for various critical uses like navigation for pilots and medical functions.
- The speaker emphasizes the importance of understanding whether a product is nice to have or critical for users, highlighting the significance of identifying the use case.
- Steve Jobs' approach to creating the iPad involved envisioning a platform for developers to build applications, leading to its success through a wide range of user-created apps.
- The speaker compares the success of the iPad to the Pebble smartwatch, noting the importance of a development platform and a large user base for creating critical applications.
- The speaker discusses the concept of products not being standalone solutions, emphasizing the need for dependencies like networks or apps to make a product fully functional.
- Dependencies are crucial for a product's success, as seen in examples like Apple Pay and Tesla's reliance on charging stations for electric vehicles.
- The speaker advises startups to focus on cutting through the noise by offering something truly disruptive, defensible, and innovative beyond just being faster, better, or cheaper.
- Disruption can come from innovative business models like Airbnb's sharing economy approach or technological advancements like multi-touch interfaces.
- The speaker encourages startups to aim for 3D breakthroughs, which are disruptive, defensible, and truly innovative solutions that can compete with larger competitors.
57:38
"Amazon's Success: Marketing, Innovation, Customer Focus"
- Tesco was the first in the UK to introduce e-commerce.
- Amazon's success is attributed to marketing, user-friendliness, and customer focus.
- Amazon's breakthrough was offering both low prices and fast delivery.
- Amazon initially succeeded as a bookstore due to its vast selection.
- Amazon's cloud computing service, AWS, stemmed from their operational scale.
- AWS allowed others to rent Amazon's computing resources.
- Defensibility in business can come from IP, breakthrough innovations, and switching costs.
- Networks and data can create strong competitive advantages.
- Evaluating a business involves assessing the before and after impact on customers.
- Defining a value proposition with a clear before and after scenario is crucial for success.
01:12:14
Measuring Gain Pain Ratio for Successful Adoption
- The Gain Pain Ratio framework is crucial for measuring the gain delivered to customers versus the pain of adopting a product.
- Venmo's example illustrates the initial challenges of adoption, such as being a new app, security concerns, and lack of a user network.
- When engaging with customers, focus on understanding their pain points by asking why they wouldn't buy your product.
- Common reasons for resistance include not needing the product, cost concerns, training requirements, and disrupting existing processes.
- Overcoming customer inertia and risk aversion is vital for successful adoption, especially for startups.
- The ideal gain pain ratio varies based on the level of gain offered compared to the pain of change, with a 10:1 ratio often necessary to overcome inertia.
- Tailoring the gain pain ratio to specific user classes and industries is essential, as different thresholds for change exist.
- The value proposition should offer significant gains over existing solutions to motivate customers to adopt it.
- The value proposition should address critical and blatant needs of customers, not just aspirational ones, and provide an order of magnitude breakthrough.
- Understanding the transition from nice-to-have to must-have products is key in developing a compelling value proposition.
01:26:33
"Founder market fit key to competitive success"
- Founder market fit is crucial for success in a competitive market, focusing on delivering a unique solution based on personal knowledge, built around oneself, and aligned with a disruptive business model for sustainability.
