ECE 306: TECHNOPRENEURSHIP

04: Value Proposition

 Customer Discovery
(Validating Your Hypothesis)

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Steve Blank, Stanford
Image from: http://www.spikelab.org/blog/the-4-elements-of-lean-startup.html
Reading:
The Four Steps to the
Epiphany
By Steve Blank

Download the reading

Customer Discovery

Purpose: Information Gathering

Discovery

Who is youí taíget customeí? What can you leaín about them?

Validation

Do they íeally expeíience the píoblem(s) you assume?

Does youí solution solve the píoblem (píovide value)?

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ECE 307: TECHNOPRENEURSHIP
 Customer Discovery
The Process is the Interview

● Introduction and Building Rapport (Fact Gathering)

○ Where do you work, what did you study at university? Where? Do you like
being a teacher?
○ What do you do in your free time?

● What does their typical day look like?

○ Let them talk

● What sort of challenges do you face in your classroom?

● How do you solve those today? (tees up your solution proposal)

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ECE 307: TECHNOPRENEURSHIP
Best Practices
● When possible work in pairs
Don’t interview friends and family
c t a n d
●
● Ask for 20 mins and take more
Re f l e
● Build a list of prioritized questions in advance
e a t ! ! !
●
●
Keep conversations as casual as possible
Record with permission Re p
● Keep data organized and look for trends

● Ask if they have any colleagues or contacts they would

recommend you interview

● Get contact information so you can follow up

○ This is important for validating your solution
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ECE 307: TECHNOPRENEURSHIP
Copyrighted © 2017 Property of TrendMobility LLC.
ECE 307: TECHNOPRENEURSHIP
Copyrighted © 2017 Property of TrendMobility LLC.
ECE 307: TECHNOPRENEURSHIP
03 Value Proposition

Today’s 1 Lean Startup Methodology

Agenda
2 The Art of Validation

3 Value Proposition Canvas

4 Lean Canvas

4 Testing Hypothesis

ECE 307: TECHNOPRENEURSHIP

Lean Startup

a method used to found a

new company or introduce
a new product on behalf of
an existing company.

Copyrighted © 2017 Property of TrendMobility LLC.

Lean Startup Methodology

Learn Faster Build Faster

Customer Development Continuous Deployment
Five Whys Small Batches
Minimum Viable Product

Measure Faster
Split Testing
Actionable Metrics
Net Promoter Score

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ECE 307: TECHNOPRENEURSHIP
Lean Startup

Establish the baseline

● Measure how customers behave right now

Tune the engine

● Experiment to see if we can improve success metrics from
the baseline towards the ideal

Pivot or persevere
● When experiments reach diminishing returns, it’s time to pivot.

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How to design new ventures for rapid growth,
lower risk and global impact

BY MARCELO BRAVO

A great idea is an idea that is

VALIDATED by your CUSTOMER
Developing & Validating the Value Proposition
Leaders in Innovation Fellowship
March 10, 2020 – London, UK
Lean Startup

Pivot: Changing direction based on what you’ve

learned from customers (the market).

All startups will pivot

If you can reduce the time between pivots, you can increase your
odds of success….before you run out of money!

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Lean Startup

Myth: Lean means cheap.

Truth: Lean is not about cost, it is about speed.

Myth: Lean Startup is only for software companies.

Truth: Elements of Lean Startup apply to all companies that

face uncertainty about what customers will want.

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VALUE PROPOSITION CANVAS

ECE 307: TECHNOPRENEURSHIP

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 The Value Proposition Canvas
Watch video here

copyright: Strategyzer AG
The makers of Business Model Generation and Strategyzer strategyzer.com
 The Value Proposition Canvas

copyright: Strategyzer AG
The makers of Business Model Generation and Strategyzer strategyzer.com
1.1 The
Custom
er
Profile

copyright: Strategyzer AG
The makers of Business Model Generation and Strategyzer strategyzer.com
Customer
Jobs *

Jobs describe the things your customers are trying to get done in their work or in their
life. A customer job could be the tasks they are trying to perform and complete, the
problems they are trying to solve, or the needs they are trying to satisfy.

3 main types of customer jobs and supporting jobs:

Functional Jobs
Social Jobs
Personal/emotional Jobs
Supporting Jobs
Buyer of Value
Cocreator of Value
Transferrer of Value

Job importance
It is important to acknowledge that not all job s have the same importance to
your customer. Some matter more in a customer’s work or life because failing to
get them done could have serious ramifications. Some are insignificant because
the customer cares about other things more. Sometimes a customer will deem
a job crucial because it occurs frequently or because it will result in a desired or
unwanted outcome.
Customer
J
Tro
igb
gesr Questions
Use the following trigger questions to help you think of different potential customer jobs:

1. What is the one thing that your customer 6. What emotional needs are your customers
couldn’t live without accomplishing? What are trying to satisfy? What jobs, if completed,
the stepping stones that could help your would give the user a sense of self-
customer achieve this key job? satisfaction?
2.What are the different contexts that your 7. How does your customer want to be
customers might be in? How do their perceived by others? What can your
activities and goals change depending on customer do to help themselves be perceived
these different contexts? this way?
3.What does your customer need to 8. How does your customer want to feel? What
accomplish that involves interaction with does your customer need to do to feel this
others? way?
4.What tasks are your customers trying to
perform in their work or personal life? What 9. Track your customer’s interaction with a
functional problems are your customers trying product or service throughout its lifespan.
to solve? What supporting jobs surface throughout this
life cycle? Does the user switch roles
5. Are there problems that you think customers throughout this process?
have that they may not even be aware of?
Customer
Pains *

Pains describe anything that annoys your customers before, during, and after trying to
get a job done or simply prevents them from getting a job done. Pains also describe
risks, that is, potential bad outcomes, related to getting a job done badly or not at all.

3 types of customer pains:

Undesired outcomes, problems and characteristics
Obstacles
Risks (undesired potential outcomes)

Pain severity
A customer pain can be extreme or moderate, similar to how jobs can be
important or insignificant to the customer.
Tip: Make pains concrete.
To clearly differentiate jobs, pains, and gains, describe them as concretely as
possible. For example, when a customer says “waiting in line was a waste of
time,” ask after how many minutes exactly it began to feel like wasted time. That
way you can note “wasting more than x minutes standing in line.” When you
understand how exactly customers measure pain severity, you can design better
pain relievers in your value proposition.
Customer
TPraigignersQuestions
Use the following trigger questions to help you think of different potential customer pains:

1. How do your customers define too costly? 5. What negative social consequences do your
Takes a lot of time, costs too much money, or customers encounter or fear? Are they afraid
requires substantial efforts? of a loss of face, power, trust, or status?
2.What makes your customers feel bad? 6. What risks do your customers fear? Are
What are their frustrations, annoyances, or they
things that give them a headache? afraid of financial, social, or technical risks, or
3.How are current value propositions under are they asking themselves what could go
performing for your customers? Which wrong?
features are they missing? Are there 7. What’s keeping your customers awake at
performance issues that annoy them or night? What are their big issues, concerns,
malfunctions they cite? and worries?
4.What are the main difficulties and challenges 8. What common mistakes do your customers
your customers encounter? Do they make? Are they using a solution the wrong
understand how things work, have difficulties way?
getting certain things done, or resist particular 9. What barriers are keeping your customers
jobs for specific reasons? from adopting a value proposition? Are there
upfront investment costs, a steep learning
curve, or other obstacles preventing
adoption?
Customer Gains
Gains describe the outcomes and benefits your customers want. Some gains are
required, expected, or desired by customers, and some would surprise them. Gains
include functional utility, social gains, positive emotions, and cost savings.

Gain relevance
A customer gain can feel essential or nice to have, just like pains
can feel extreme or moderate to them.
Tip: Make gains concrete.
As with pains, it’s better to describe gains as concretely as
possible to clearly differentiate jobs, pains, and gains from one
another. Ask how much they’d expect or dream of when a
customer indicates “better performance” as a desired gain. That
way you can note “would love an increased performance of
more than x.” When you understand how exactly customers
measure gains (i.e., outcomes and benefits), you can design
better gain creators in your value proposition.
Customer
TGriagginersQuestions
Use the following trigger questions to help you think of different potential customer gains:

1. Which savings would make your customers

6. What are customers looking for most? Are
they searching for good design, guarantees,
happy? Which savings in terms of time, specific or more features?
money, and effort would they value? 7. What do customers dream about? What do
2. What quality levels do they expect, and what they aspire to achieve, or what would be a big
would they wish for more or less of? relief to them?
3. How do current value propositions delight 8. How do your customers measure success
your customers? Which specific features do and failure? How do they gauge performance
they enjoy? What performance and quality do or cost?
they expect? 9. What would increase your customers’
4. What would make your customers’ jobs or likelihood of adopting a value proposition? Do
lives easier? Could there be a flatter learning they desire lower cost, less investment, lower
curve, more services, or lower costs of risk, or better quality?
ownership?
5. What positive social consequences do your
customers desire? What makes them look
good? What increases their power or their
status?
Ranking Jobs,
Pains, and Gains
Best Practices for Mapping Jobs,
Pains, and Gains
 1.2
The
Valu
e
Map

copyright: Strategyzer AG
The makers of Business Model Generation and Strategyzer strategyzer.com
Map How Your Products and Services
Create Value
Products
and
Services
This is simply a list of what you offer. This bundle of products and services helps your customers
complete either functional, social, or emotional jobs or helps them satisfy basic needs.
Your list of products and services may also include supporting ones that help your customers
perform the roles of buyer (those that help customers compare offers, decide, and buy), co-
creator (those that help customers co-design value propositions), and transferrer (those that help
customers dispose of a product).

Your value proposition is likely to be composed of various types of products

and services:
Physical/tangible
Intangible
Digital
Financial

Relevance
It is essential to acknowledge that not all products and services have
the same relevance to your customers. Some products and services are
essential to your value proposition, some are merely nice to have.
Pain
Relievers
Pain relievers describe how exactly your products and services alleviate specific
customer pains. They explicitly outline how you intend to eliminate or reduce some of
the things that annoy your customers before, during, or after they are trying to complete
a job or that prevent them from doing so.

Great value propositions focus on pains that matter to customers, in particular extreme
pains. You don’t need to come up with a pain reliever for every pain you’ve identified in the
customer profile — no value proposition can do this. Great value propositions often focus
only on few pains that they alleviate extremely well.

Relevance
A pain reliever can be more or less valuable to the customer. Make
sure you differentiate between essential pain relievers and ones that are
nice to have. The former relieve extreme issues, often in a radical way,
and create a lot of value. The latter merely relieve moderate pains.
Pain Relievers
Trigger Questions
Use the following trigger questions to ask yourself:
Could your products and services…
1. ... produce savings? In terms of time, money, 6.... eliminate risks your customers fear? In
or efforts. terms of financial, social, technical risks, or
2. ... make your customers feel better? By killing things that could potentially go wrong.
frustrations, annoyances, and other things 7. ... help your customers better sleep at night?
that give customers a headache. By addressing significant issues, diminishing
3. ...fix under-performing solutions? By concerns, or eliminating worries.
introducing new features, better performance, 8. ... limit or eradicate common mistakes
or enhanced quality. customers make? By helping them use a
solution the right way.
4.... put an end to difficulties and challenges
your customers encounter? By making things 9. ... eliminate barriers that are keeping your
easier or eliminating obstacles. customer from adopting value propositions?
Introducing lower or no upfront investment
5. ... wipe out negative social consequences costs, a flatter learning curve, or eliminating
your customers encounter or fear? In terms of other obstacles preventing adoption.
loss of face or lost power, trust, or status.
Gain
Creators
Gain Creators describe how your products and services create customer gains. They
explicitly outline how you intend to produce outcomes and benefits that your customer
expects, desires, or would be surprised by, including functional utility, social gains,
positive emotions, and cost savings.

As with pain relievers, gain creators don’t need to address every gain identified in the customer
profile. Focus on those that are relevant to customers and where your products and services can
make a difference.

Relevance
A gain creator can produce more or less relevant outcomes and benefits for the
customer just like we have seen for pain relievers. Make sure you differentiate
between essential and nice to have gain creators.
Gain Creators
Trigger Questions
Use the following trigger questions to ask yourself:
Could your products and services…
1. ... create savings that please your 6....do something specific that customers are
customers? In terms of time, money, and looking for? In terms of good design,
effort. guarantees, or specific or more features.
2. ... produce outcomes your customers expect
or that exceed their expectations? By offering 7. ... fulfill a desire customers dream about? By
quality levels, more of something, or less of helping them achieve their aspirations or
something. getting relief from a hardship?

3. ... outperform current value propositions and 8. ... produce positive outcomes matching your
delight your customers? Regarding specific customers’ success and failure criteria? In
features, performance, or quality. terms of better performance or lower cost.

4.... make your customers’ work or life easier? 9. ... help make adoption easier? Through lower
Via better usability, accessibility, more cost, fewer investments, lower risk, better
services, or lower cost of ownership. quality, improved performance, or better
design.
5.... create positive social consequences? By
making them look good or producing an
increase in power or status.
Mapping the Value Proposition of
Value Proposition Design
Best Practices for Mapping Value
Creation
 1.3
Fit
Fit
DEFINITION
VALUE PROPOSITION
Describes the benefits customers can
expect from your products and services.

Create Value Observe Customers

The set of value proposition benefits that you design to attract customers. The set of customer characteristics that you assume, observe, and verify in the market.
The 3 Types of Fit 1 On Paper
Problem-Solution Fit
Problem-solution fit takes place when you
•Have evidence that customers care about certain jobs,
pains, and gains.
•Designed a value proposition that addresses those
jobs, pains and gains.

2
3
In the Market
Product-Market Fit
Product-market fit takes place when you
•Have evidence that your products and services, pain
relievers, and gain creators are actually creating
customer value and getting traction in the market.

2
3 In the Bank
Business Model Fit
Business model fit takes place when you
•Have evidence that your value proposition can be
embedded in a profitable and scalable business model.
1
10
Characteristics
of Great Value Are embedded in great
business models
Go beyond functional jobs
and address emotional and
social jobs

Propositions
Stop for an instant and reflect on the
characteristics of great value
propositions before reading about how
to design them. Don’t hesitate to add
your own. Great Value Propositions…
Focus on unsatisfied jobs, Target few jobs, pains, and Focus on the jobs, pains, and
unresolved pains, and gains, but do so extremely well gains that matter most to
unrealized gains customers

SCORE

Align with how customers Focus on jobs, pains, and gains Differentiate from
competition on jobs, pains, Outperform competition Are difficult to copy
measure success that a lot of people have or that substantially on at least one
some will pay a lot of money for and gains that customers
dimension
care about
Ad-Lib Value
TPermopplatoesition
Ad-libs are a great way to quickly shape alternative directions for objective
your value proposition. They force you to pinpoint how exactly Quickly shape potential value proposition directions
you are going to creating value. Prototype three to five different outcome
directions by filling out the blanks in the ad-lib below. Alternative prototypes in the form of “pitchable”
sentences

Our _ help(s) _
Products and Services Customer Segment

who want to
jobs to be done

by and _.
verb (e.g., reducing, avoiding) and a customer pain verb (e.g., increasing, enabling) and a customer gain

(unlike )
competing value proposition

www.strategyzer.com/vpd
From Value Proposition to Viable Business Model
Leaders in Innovation Fellowship
March 10, 2020 – London, UK
LEAN CANVAS

ECE 307: TECHNOPRENEURSHIP

 LEAN CANVAS

PROBLEM SOLUTION UNIQUE VALUE PROPOSITION (UVP) UNFAIR ADVANTAGE CUSTOMER SEGMENTS
List your top 3 customer problems • Outline a possible solution for each (capture customer’s attention) (deter competition) List your target customers and
• Must be focused on your customer’s problem you have identified Single clear compelling message that Something that cannot be easily copied segments
perspective • Is your solution faster, cheaper, states why you are different and worth • Might be unknown or under • Who will pay for your product?
• Have you spoken to them to validate more versatile, multifunctional, paying attention to development • Do you have a clear view of the
your product? easier to adopt, etc. ? • Compellingmessage stating why • Allows you to hedge against copy users, beneficiaries, influencers and
• Limit yourself to their most pressing • Do you need to work with others to you’re different cats and competitors buyers in your target market?
issues bring this solution to life? • The UVP is a marketing tool that • Are you collecting a unique dataset • Are you developinga social
articulates the customer’s Problem that may be monetized? enterprise?
and your Solution • What are the different customer
personas/groups you can target
(individuals, B2B, etc.)?
• If the user/beneficiary is not the
buyer, what must you do to validate
demand for your product?
KEY METRICS CHANNELS
What are the key numbers that tell List your path to customers
you how you are doing? • How do you reach customers? How
• How do you quantitatively measure HIGH LEVEL CONCEPT do they know you exist?
how you’re doing? List your X for Y analogy (Youtube = Flikr • Which channels are the most cost
• What metric allows you to measure for videos..) efficient?
EXISTING ALTERNATIVES success or failure? • May not be possible for your product • How do they buy your product? EARLY ADOPTERS
• How are these problems currently • What else can you count? Number if it is disruptive List the characteristics of your ideal
solved? of users, impact? • Allows you to articulate your product customers
• What makes your solution better than quickly and in simple terms • Who must you target to ensure early
existing alternatives? • Forces you to be clear and concise adoption of your product?
• Have you considered these
‘competitors’ as potential customers?
COST STRUCTURE REVENUE STREAMS
List your fixed and variable costs List your sources of revenue
• what are your fixed and variable costs • Are there difference ways to make money? (Licensingmodels, subscriptions etc.)
• How much will it cost to develop(or continue developing)your product/service? • How can you get repeat business? (rerunning course for other employees, part of a regular
• What services do you need to pay for e.g. software development, field trials, etc. professional developmentcurriculum,etc. )
LeanCanvas– Problems,alternative and proposedsolutions

Problem - Must be focused on your customer’s perspective

• Have you spoken to them to validate your product?
• Limit yourself to their most pressing issues
Existing alternatives – enables you to put your solution into context (what your
target customers actually use today, to solve their problems)

• What makes your solution better than existing alternatives?

• Have you considered these ‘competitors’ as potential customers?

Solution - How do you solve your customer’s problems

• Is your solution faster, cheaper, more versatile, multifunctional, easier to
adopt, etc. ?

• Do you need to work with others to bring this solution to life?

Oxentia 2020
Lean Canvas – Key metrics and cost structure

Key Metrics – how do you quantitatively measure how you’re doing?

• What metric allows you to measure success or failure?

• What else can you count? Number of users, number of XX
analysed/converted/bought, etc.

Cost Structure – what are your fixed and variable costs

• What is your technology readiness level?

• How much will it cost to develop your product/service to a minimum
viable product?
• What services do you need to pay for e.g. software development,
prototyping, field trials, etc.

Oxentia 2020
LeanCanvas– unfair advantage, customersegments,early adopters
Unfair Advantage – what have you developed that is difficult to copy
• Might be unknown or under development

• Allows you to hedge against copy cats and competitors

• Are you collecting a unique dataset that may be monetized?

Customer Segments – who will pay for your product?

• Do you have a clear view of the users, beneficiaries, influencers and buyers in
your target market? Are you developing a social enterprise?

• What are the different customer personas/groups you can target?

(individuals, B2B)
• If the user/beneficiary is not the buyer, what must you do to validate demand
for your product?
Early Adopters – who is your ideal customer?

• Who must you target to ensure early adoption of your product?

Oxentia 2020
Lean Canvas – Channelsand revenue streams
Channels – how do you interact with customers?

• How do you reach customers? How do they know you exist?

• Which channels are the most cost efficient?

• How do they buy your product?

Revenue Streams – how do you make money?

• Are there difference ways to make money? Licensing models, unit
sales, subscriptions etc.
• How do you engage potential customers? (freemiums (angry birds),
bait and hook (Gillette), etc.)?

Oxentia 2020
LeanCanvas– uniquevalue proposition and high level concept

Unique Value Proposition (UVP) – compelling message stating why you’re different

• The UVP is a marketing tool that articulates the customer’s Problem and your
Solution

• The UVP captures the customer’s attention while the Unfair Advantage deters
competition

High Level concept – your X for y

• May not be possible for your product if it is disruptive

• Allows you to articulate your product quickly and in simple terms

• Forces you to be clear and concise

Oxentia 2020
Adapting to your customer’s need
Watch video here

Design experiment

Hypothesis Test hypothesis

Adapt/improve/iterate Collect insights Oxentia 2020

 Adapting to your customer’s need

Hypothesis Design experiment Test hypothesis Collect insights Adapt/improve/iterate

• I can sell my new • Do A and B need my • Find as many As and Examples: Examples:
product to product? Bs I can and interview • A doesn’t need my • Stop selling to A
customers A and B • What do they them to determine product. • Develop
• I can reach them currently buy? their needs • B buys it for their own understanding of B’s
by direct • What are their unmet • Have samples of my customers customers’ needs
engagement, needs? product tested with • Alternative products • Compare functionality
online and • Who else should I potential customers in market don’t last and durability of my
through my consider as a • Review the very long product with
networks customer? competitive landscape • There is a customer C alternatives
• I can sell my • Do I have the right to determine my but their buying • Understand the
products via resources to address unfair advantage decisions are heavily relevant State
subscriptions and this market? influenced by State regulation to target C
unit sales regulations

Oxentia 2020
Oxentia 2020