Okay, this is the next lesson on the business model canvas. And in this lesson, we started to look at the value proposition. and the value proposition is a big fancy name for what we're offering to our customers, what are we promising to deliver to our customers that is going to change their lives and implicitly make it better in some way, shape or form? So there are four questions. What value do we create? Now a product or service that doesn't create any value isn't great or a customer?

So you need to be really clear about what is the value that is created. So in some ways, you can say that what is the benefit or what are the benefits to the customer. But I think in many ways value is larger than that. Because quite often, when we talk about features and benefits, we are talking very specifically about the product or service that you're selling. Whereas for the customer, there is a need, there is a problem that they require solving unmet needs that differ from you. And that is quite often larger than the simple product or feature.

So, for example, if you're looking at education and children's schooling, yeah, what you may set up as a school or a teacher, our maths lessons. Yeah. The value that you're providing, though, is something more akin to hope or opportunity. Big case a maths lesson has no real value in itself. It's what it enables what it allows the child to then go on and do. So this is what we're really talking about when we look at value.

The value proposition also ask the question, What problems are we solving? Now, it's amazing. There are a huge number of startups and entrepreneurs and that, who have an idea that they want to do something, but they aren't then clear on the problem. They need to actually so it's, quite often they will have an idea I want to make this and then they go out and do. The classic example of this is Kevin Costner and then in the field of dreams, he has his vision that He's got to go out. And he's got to build a baseball field in the middle of nowhere.

And he does it. And then it's like, well, who's going to play there? Who's going to come and watch that? How are you going to make money. And so when you manage to tie the value proposition down to a real specific problem that customers have, and that they need, so that they're prepared to pay money to have solved, then you your business model is in a lot stronger. All right.

The next question we ask is, what needs are we satisfied now needs a in the broad hierarchy, they're a little bit further down than they are the problem. And you know, you're looking at what is somebody need to have in one good way of looking at this is to look at Maslow's hierarchy of needs, where you start at the bottom of a pyramid and the bottom you've got food and shelter and then you work Cut through successive levels. If you're right at the top, you've got self actualized. sation and being clear about the need that you're trying to fulfill, then makes your value proposition a lot stronger. So if you're trying to fulfill a need yourself, the customer's gotta need self actualization. And you're trying to sell the rice and water which are meet very, very different needs, your value proposition is not very strong.

If you're selling them a whole series of yoga videos, with worksheets and dynamic phrases, of course, then you're able to meet that that need for self actualization or not better. So being very clear about the needs of the customers and how your value proposition solves them is absolutely critical. And then The important thing for all this is your value proposition is fundamentally a bundle of products and services that you put together. Yeah, you want just enough in them to meet the customer's requirements, because then they're happy, but you want no no extra because otherwise you're wasting resources either in time or money inputting them into the, into the value proposition. A good good example of this bundling is somebody like Rolls Royce, they're a maker of airplane engines. And the product that they sell to to the airlines is the engine that goes on the on the on the plane wave.

The service that they sell is looking off the engine to the whole of its working life, and promising that it's only gonna fail for one minute out of every thousand hours of flying time. Something Like like that, and the whole, and that is the whole value proposition, you can't buy the service package by itself, you can't buy the engine that by itself, the whole thing comes together. And that is a very, very clear value proposition. And it means that the airlines get reliable flights, which they're able to outsource almost totally, because they don't have to worry about the engines or any of the maintenance, and that cuts their capital costs. And that's a very, very powerful that proposition to the airlines. So the the value proposition is important, because it's blue explosion test is the reason why people will choose to buy from you or they choose to buy from somebody else.

The value that you provide to your customer, is the reason why you will stay in business. And that that needs to be a little bit more nuanced. Because sometimes it is purely the value that you're providing. Other times it is the perception of the value. And that is the difference between taking a product, here's a product, this is great. Drink it and it will keep you awake and allow you to do more work.

That's that's quite a quite a good value proposition. Or here we can get it here is a credit card code points your your days better, it keeps you going. It means you have more friends, and there's a whole branding, marketing value perception, a relationship with the kind of cup so you need to be clear about the value that you're providing and how customers perceive that that value both both both are important. So to sum up the value proposition so A problem or a need for the customer, it does a good job. The VP is a bundle of products and services that you form you like you put together a little bit like an alchemist or witch doctor, getting little bits from here that we put it together in a recipe that makes a difference to the customer. The trick is getting the right mix and being able to assemble the mix at the right cost of the for entrepreneurs, we're looking to find a value proposition that is disruptive.

And sometimes it may be the bundle of products and services that is disruptive. So for example, a Tesla car the electricity the electric motor is disruptive because it changes a lot of the dynamic Mix economics of car ownership. Or it can be the business model that is disruptive, with much more like Uber where the cars remain petrol driven. But the the ownership is actually very different. You don't enjoy the car, somebody else owns the car and does your driving for you. And presumably in the longer term with ride sharing, companies, etc, the the driver will go, and you'll have an AI, artificial intelligence driving a cup, which is then another disruptive shift.

So in thinking about where do you find the disruption in your business model? And then the most important thing of all is, can your value proposition meet market expectations and there's a very extensive literature on on this over the years. What does the market demand from a product? I mean, if you look at, say, cars back in the 1970s, the market demanded a car that didn't break down, then you've got electric windows, then you got car heaters in the winter, then you've got stereos and CD players, then you've got inbuilt GPS systems then, and slowly the the bar of what the market demands is slowly rising for your product. And so your product or your service, you're finding proposition needs to meet those market expectations. So, I hope I've given you a lot to think about it in this little session.

The value proposition design is the subject all of itself and we'll be doing a course on that in due course, for the most important thing to think about is how can it be I build something that my customers are going to love. That is going to be remarkable. So how do you do it? Very much you put down all your ideas for the value proposition. Often this can be 10 2030 ideas. Yeah.

I then print those out what are the three most important things that you've you've identified as being part of your value proposition and perfect putting values in, you need to make sure that your your value proposition matches up to your your customer segments. So if we look at site, Google, when we were if we were doing a value proposition to Google, we be saying okay, what is the value proposition that the search customers need? And they need fast, fast answers to their questions. They always So need accurate answers to the questions. And they also need reliable authority sites that you're directing them to is probably those three things are at the core of the Google value proposition for search customers. For advertising customers, the important things are okay, am I getting good people coming through to my website when they click on my adverts?

Yeah, is the quality of the customer good. Secondly, am I getting a good return on investment from those customers? And three, is there a reliable clear why of repeating or scaling this process? So I know that I get to be able to continually generate customers in this way. So making sure that we are matching Update the value proposition to each of the customer segments is important like all the all the other boxes is it is rooted, your first attempt will be okay. You go out you test it you try it out you come back you see what people say you iterate again.

But it gives you a strong firm foundation for where you where you go next. So to reiterate, what the value proposition does is it identifies the value that you provide your customers and it tells the world how he solves your how you solve your customers problems. Got any comments or questions, please please ask them in the in the comment box below. And do send us copies of your business model canvas and we can see how you how you getting on. So good. Good luck with the exercise today and beat us