The Lean LaunchPad

Value Proposition, Customer Segments & MVPs

Steve Blank

Value Proposition/Customer Segments

Product/Market Fit

Business model & value proposition

Source: Alexander Osterwalder

Source: Alexander Osterwalder

Product / Market Fit

customer jobs

what customers are trying to get done in their work and in their lives

task to perform, problem to solve, needs to satisfy

Source: Alexander Osterwalder

customer pains

describe bad outcomes, risks, and obstacles related to customer jobs

Source: Alexander Osterwalder

customer gains

describe the benefits customers are seeking

Source: Alexander Osterwalder

describes the benefits customers can expect from a your products & services

A VALUE PROPOSITION …

Source: Alexander Osterwalder

products & services

A list of all the products and

services a value proposition is built

around

Source: Alexander Osterwalder

pain relievershow your products and

services alleviate customer pains – by

reducing or eliminating: wasted time, costs,

negative emotions, risks - during and after getting

the job done

Pain Reliever– Problem or Need?• Are you solving a Problem?

– It gets a job done:• accounting software, elevators, air-conditioning, electricity, tablet

computers, electric toothbrushes, airplanes, email software, etc.

• Are you fulfilling a Need?– It fulfills a fundamental human social need:

• friendship, dating, sex, entertainment, art, communication, confession, gambling, religion, etc.

• For whom?

• How do you know?

Pain Reliever Ranking

• Rank each pain your products and services kill according to their intensity for the customer• Is it nice to have or got to have?

• For each pain indicate the frequency at which it occurs• Is it intense and frequent enough to be a business?

gain creators

describe how your products/services create

customer gains. the customer expects, desires

or is surprised by, functional utility, social

gains, positive emotions, and cost savings?

Gain Creator- Ranking

• Rank each gain your products and services create according to its relevance to the customer.

• Is it substantial or insignificant?• For each gain indicate the frequency at which it occurs.

Discussion

• Are we a “pain” or “gain” and does the level of pain/gain get customers VERY excited?

• REMEMBER: you’re focusing on “problem!!!”• Are we proving our current Value Proposition? • Need to make it stronger, more unique? How?• Any feedback telling us it’s not so exciting?• Ideas on how to make the Value Prop stronger?• What else do we need to do to be sure?

Goal of the Value Proposition = MVP

Value Proposition – Common Mistakes

• It’s too big or amorphous• Value Proposition includes competitive set• “It’s just a feature” of someone else’s product• It’s a “nice to have” instead of a “got to have”• Not enough customers care• The best piece of advice Airbnb founder Brian Chesky

ever got was to build something that 100 people love rather than 1 million people kind of like (from Paul Graham)

Key Questions for Value Propositions

1. Problem Statement: What is the problem?

2. Target customers: For whom is this relevant?

3. Competition: What do customers do today?

4. Technology / Market Insight: Why is the problem so hard to solve?

5. Timing: Why now?

6. Market Size: How big is this problem?

7. Product: How do you do it?

EXAMPLE: Key Value Prop Questions

1. Problem Statement: Network security without a CTO

2. Target customers: Small banks

3. Competition: Expensive, Custom or DIY

4. Technology / Market Insight: Small Companies without Big Resources…Fines getting bigger

5. Timing: FDIC pressure

6. Market Size: 9,000 little banks, 5,000 + more

7. Product: perimeterusa.net

MVPs and Experiments

Steve Blankwww.steveblank.com

What

map hypotheses Business Model Canvas

How

What

map mission hypotheses Mission Model Canvas

How

Customer Development & Agile EngineeringValidate hypotheses

What

map mission hypotheses Mission Model Canvas

How

Validate hypotheses Customer Development & Agile Engineering

map value proposition Value Proposition Canvas

What

map mission hypotheses Mission Model Canvas

How

Validate hypotheses Customer Development & Agile Engineering

map value proposition Value Proposition Canvas

test ideas Experiments with MVPs

Discovery Experiments

Validation Experiments

MVP Plan

• Go from Low Fidelity to High Fidelity– cheap and fast early on– Increase the strength of evidence with multiple

experiments for the same hypothesis• Pick the experiment that produces the strongest

evidence given your constraints • Reduce uncertainty as much as you can before

you build anything

Steps to Properly Using MVPs

1. Identify what you want to learn

2. Decide what visual aids will help you learn it

3. Design an experiment

1. Identify what you want to learn

Always test one aspect of BMC- Are busy moms my customer?- Is advertising my best channel?- Should I generate revenue

using a freemium model?- Do businesses care about my

value prop to save time?

1. Identify what you want to learn

Always test one aspect of BMC- Are busy moms my customer?- Is advertising my best channel?- Should I generate revenue

using a freemium model?- Do businesses care about my

value prop to save time?

These might be hard to learn through

interviews (words), but much easier to

learn through actions.

2. Decide what visual aids will help you learn

Physical (paper, plastic, hardware)

Digital (landing page, mockup, ad)

Intention to purchase

Ability to use

Customer satisfaction+

Pick a medium that helps you see specific behaviors

3. Design an experiment• What hypotheses do we want to prove / disprove?

• For each hypothesis, what quantifiable result indicates success? i.e. your pass/fail metrics

• Who are the target participants of this experiment?• How many participants do we need?

• How are we going to get them?

• How do we run the experiment?• How long does the experiment run for?

• Are there other qualitative things to learn during this experiment?

Source: Testing With Humans, pages 39-45

4. Go Broad, Then Go Deep

• Test lots of markets/segments first (90 day plan)

• Then go deep into one market (next 90 plan)

• Then if that market isn’t right pop back up and pick

another deep search

10 Examples of MVP Types

1. Landing Pages

Createasimplewebpageorwebsitethatexpressesyourvaluepropositionandgivesthevisitortheabilitytoexpresstheirinterestwith

somesortofcalltoaction.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

2. Advertising

Advertiseyourvaluepropositiontoarelevantaudiencetoseewhetherpeoplerespond.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

3. Promotional Material

Produceonlineorofflinepromotionalmaterialtotestreactionsorgeneratedemand;avariationof

anadvertisingtest.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

4. Pre-Selling

Bookorders,andpossiblycollectcashpayment,beforeyouhavebuilttheproduct.Includescrowd-

funding

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

5. Paper Testing

Mockupanexampleofanapplicationuserinterfaceorreportandputitinfrontofapotentialcustomer.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

6. Product Prototype

Aworkingversionofyourproductorexperiencethatisbuiltforlearningandfastiteration,rather

thanforrobustnessorscale.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

7. Wizard of Oz

Providetheserviceinamanualway,hiddenbehindthescenes(hencethename),wherethecustomerthinkstheyareinterfacingwithareal

product(orfeature).

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

8. Concierge

Manually,andovertly,actastheproductyoueventuallywanttobuild(unlikeaWizardofOz

wherepeoplearebehindthescenes).

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

9. Pilot

Putanearlyversionofyourproductinthehandsofyourcustomers,butyouscaledownthesizeoftheimplementationandputafinitetimeperiodon

theproject.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

10. Usability

Checktoseeifsomeonecaneffectivelyuseaproductwithoutgettingstuckorblocked.

Types of MVPs

Source:TestingWithHumans,pages35-36and78-90

Extra Credit – Read Testing Business IdeasBy Alexander Osterwalder