One of the most important elements of the business model is the value proposition. But while we intuitively all know what it means, writing it down for a concrete case can be a challenging and confusing exercise.
So I decided to do some research to get some advice and ideas on this. Surprisingly, while value propositions are widely discussed, I found it hard to find literature discussing more in depth what a value proposition actually is. Most interestingly, the most prominent hit is Kaplan and Norton from the Balanced Scorecard. Kaplan and Norton argue that a value proposition is critical for linking the internal organization to improved customer outcomes.
They differentiate between three types of differentiators based on the value disciplines of Treacy and Wiersema : operational excellence, customer intimacy, and product leadership. This will also enable companies to make smarter choices about where to allocate their scarce resources in developing new offerings.
Anderson et al. In the third approach the company shows a full understanding of the critical issues of their customers who are often managers with ever-increasing levels of responsibility and pressured for time. The company makes their offering superior on a few elements that matter most to target customers and convey this in a communicative and evidence-based way. Anderson, J. Customer value proposition in business markets. Harvard Business Review, 84 3 , Kaplan, R.
Having Trouble with Your Strategy? Then Map It. Harvard Business Review, 78 5 , Treacy, M. Customer Intimacy and Other Value Disciplines. Harvard Business Review, 71 1. Posted by Erwin Fielt at Labels: business model , customer value. Dear Erwin, yep the value proposition is the most difficult part of the business model since it is less clear than products. I define the value proposition as the answer to the question: Which value do you create for whom?
