The habits of individuals and business practices are being disrupted by the pandemic. In many cases, a return to normalcy is still not being achieved. For many organizations, it is crucial to adapt value propositions and business models.
The need for adaptation and transformation is paramount. Not only to remain relevant to customers but also to maintain a differentiation from competitors.
Three business analysis tools facilitate the exploration of value proposition alternatives. These tools provide a solid basis for the reflection leading to what many have described as the pivot of the business model.
They are known approaches used to differentiate business offerings. The steps that each one proposes, facilitate the identification of choices necessary for the development of a winning strategy.
These three tools focus on understanding customer issues and needs (jobs-to-be-done). They enable the alignment of the value proposition while paying attention to the necessary differentiation.
Ultimately, the process facilitates choices and ensures that resources are allocated where it is possible to create that differentiation.
- The Value Proposition Canvas;
- The Strategy Canvas (or the mapping of purchasing attributes);
- The Buyer Utility Map.
The Value Proposition Canvas
Presented in the books of A.Osterwalder and Y.Pigneur, the Value Proposition Canvas focuses on understanding the customer’s jobs-to-be-done and mapping them using the canvas.
The elements of the Value Proposition Canvas are part of the nine blocks that make up the business model represented via the well known Business Model Canvas.
The use of the Value Proposition Canvas helps identify and document the needs, gains, and challenges of the target segment. A value proposition is defined to meet these needs and is integrated into a specific business model, ideally allowing for the deployment of competitive advantages and differentiation.
In the current context of uncertainty, it is possible to explore and identify which elements are affected and which are modified from the customer (segment) point of view. Depending on the level of changes and their permanence, it is possible to re-evaluate the impacts on the value proposition and its supporting business model.
The main actions are:
- Document the current value proposition and business model on their respective canvas;
- Identify the impacts of the pandemic on customers’ needs and habits (jobs-to-be-done);
- Develop options and scenarios to adapt to these challenges. Do not forget to take into account scenarios affecting the duration of the changes;
- Test unknown elements to increase understanding of the different variables influencing the preferred strategy;
- Make choices. Modify your offer, adapt the business model, monitor the results.
The Strategy Canvas (or mapping of purchasing attributes)
Put forward by the authors of the Blue Ocean Strategy and Blue Ocean Shift, C.Kim and R.Mauborgne, the Strategy Canvas is a valuable tool for mapping the factors valued by customers. It put in perspective how the organization and its main competitors are positioned to respond to them.
In the current situation, it is possible to represent on the canvas the modifications in customer requirements. It is also possible to identify how competitors are responding by highlighting the changes to their value proposition.
The interest is then to seek to increase the gaps. In other words, to focus on the factors that make the value proposition unique and to eliminate or significantly reduce the factors on which the organization has little chance of differentiating itself.
The use of the Strategy Canvas is similar to what A.Francis and A.Frei proposed in their excellent book Uncommon Service.
The element to remember is the following: In light of this strategic mapping, how is it possible to still create value, stand out, and excel? The answer may lead to an overhaul of the value proposition and the business model supporting it.
The proposed key steps are:
- Clarify customer segments;
- Document and map the original competitive factors and perceived customer value (from your perspective);
- Position your original value proposition and the positioning of the competition;
- Document the evolution of the competitive factors (based on external documentation and customer feedback);
- Analyze the gaps between your perception and the documented reality (customers and competition);
- Identify the required changes and the impacts on the business model;
- Adapt the business model, allocate resources on the important factors;
The approach also goes further, because any changes to the business model also affect management systems and culture. However, just like the design of the value proposition, it is important to document first and foremost how customer needs evolve and how they affect the business model.
The Buyer Utility Map
It is also possible to explore how the value proposition can be reviewed through the Buyer Utility Map. By looking at the customer experience as a whole (the customer journey) and assessing the needs in light of 6 different utility factors, it is possible to identify new sources of value.
By highlighting these needs in addition to the strengths of your value proposition, and those of the competitors over the complete journey, it is easier to evaluate how to maximize the value for your customers. Of course, with today’s changing behaviors, the exercise is more than relevant and should be executed in parallel with the tools previously discussed.
Summary and Benefits
In these uncertain times, it is essential to measure your customers’ value drivers and see how they have changed. It is also essential to determine how your value proposition and the corresponding business model can be adapted. Not only to ensure that your business remains relevant to your customers, but also to ensure that you maintain a differentiation from your competitors.
Ask yourself the following questions:
- How have your customers’ job-to-be-done evolved?
- What do your customers need most to succeed?
- How do you need to modify your value proposition?
- How do you need to adapt your business model?
- How can you reallocate resources?
- What is the impact on your balance sheet?