Nailing Your Startup's Value Proposition

What are the pains and aspirations of your customer? Does your product truly solve your customers problems? And fulfill its promise of doing something in a better way?

Most startups wrestle with these questions at their outset, when they are in the customer discovery and customer validation phases of the lean startup cycle. But all startups should reevaluate these questions periodically. After all, a company’s customers evolve with time and so do their jobs. The product-market fit assumptions that held true six months or year ago or three years ago may no longer be valid.

It can be challenging to succinctly communicate a startup’s value proposition even to people who are intimately familiar with a company or sector. In this sequel to Business Model Generation called Value Proposition Design, Alex Osterwalder and his team have published a value proposition diagram that solves the problem of articulating the match between customers needs and a startups product.

The diagram, reproduced above, identifies the three key parts of serving the customer well: the details of the customer’s current task, the pains of accomplishing this duty, and the aspirations of the customer of what could be done better. These three areas form the basis of customer discovery.

For a startup to attain product-market-fit, the startup’s value proposition should neatly map to these needs. First, the product must accomplish the majority of the customer’s job. Second, the product should eliminate the customer’s pain. Last, the product has to enable the customer to do more than they could they could before.

It might sound basic, but these core ideas can get lost in the fray of rapid iteration of a product, particularly during the early phases of lean startup development, when a team generates a huge number of ideas. Or the neat product-market-fit may erode over time as the customer and the ecosystem mature.

Whatever stage a company may be in, the business needs a mechanism to communicate how the product solves the needs of the customer to each team: product, marketing, engineering, and sales. This ensures that sales pitches, product development and positioning all point in the same direction: the right one to solve the customer’s problems and build a successful company.

Published 2014-12-01 in Product 


Tomasz Tunguz is partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.


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