Browsed by
Category: New Product Development

What is a Value Proposition?

What is a Value Proposition?


If there’s any common ground among all strategy, innovation, marketing, and new product development practitioners, it’s that we need to have a compelling and differentiated value proposition. But if we’re all aligned as to the importance of a value prop – are we similarly aligned as to what one is? (No, we are not!) So, just what is a value proposition?

Before we can even get started with this discussion, let’s define a “product” broadly to mean more than just a tangible product, but to also mean a product attribute (aka a feature), a service, a business model, etc. A “product” is any solution that helps a customer to get a job done. It’s unwieldy and bothersome to continually say “product, service, or business model”. So, let’s not do that.

According to the primary reference of our age, Wikipedia, the term “value proposition” is a recent one – originating with a McKinsey publication from 1988 in which a value proposition was defined as a “clear, simple statement of the benefits, both tangible and intangible, that the company will provide.”

In the original definition, the value prop is a description of customer benefits. A good start but not quite good enough. We need the Who, the What, the How, and the How it does it. To remember these elements, remember these initials: WWHH.

Let’s look at an example. You work for the Acme Pillow Company – and your focus is healthcare. Here’s the value proposition for your new product, the Acme Super Pillow 2000:

The Acme Super Pillow 2000 (the “how” – the product) helps patients recovering from neck surgery (the “who” – the job executor) to obtain a restful night’s sleep (the “what”- the job) by providing sufficient vertical support to minimize stress on the neck (The “How it does it” – the PI).

The PI is a mini-VP itself. It lists a product attribute and the job that it addresses.

But what if the great and powerful Acme Super Pillow does more than just minimize stress on the neck to help patients obtain a restful night’s sleep? In other words, can you have multiple PIs? Yes, you can:

The Acme Super Pillow 2000 helps patients recovering from neck surgery to obtain a restful night’s sleep by 1) providing sufficient vertical support to minimize stress on the neck, by 2) emitting healing vibrations that increase blood flow to the neck and 3) playing nature sounds to minimize mid-sleep wake-ups.

The key thing is that all the PIs must support the primary customer job, which is this case is to “obtain a restful night’s sleep.”

Let’s try another example for the “obtain a restful night’s sleep” job. Imagine that we make nutritional supplements. Here’s our value proposition for an alternate audience:

The Acme Sublingual Magnesium Tablets help business travelers to obtain a restful night’s sleep by minimizing the number of times per night that they wake up.

Here’s the value proposition template used for each statement above:

The product (How) helps customers (Who) to better accomplish a job (What) by achieving a performance improvement (How it does it).

Of course, the template is just the beginning. We have a lot of work to do to create a winning value prop. We need customer insights to understand which jobs that customers want to do better. We need to determine what area in which to improve performance. And of course, you must have the technical and creative chops to develop new products to address those needs.

Let’s review the required WWHH elements for a Value Prop:

  • The “who” – the job executor, the customer to create value for
  • The “what” – the JTBD
  • The “how” – the product
  • The “how it does it” – the performance improvement

If we have done a good job in selecting a market, if we’ve done sufficient research to understand what to be improved, and if we’ve also done a great job generating a winning concept – then we can take our value prop to the next level: the DVP – the differentiated value proposition.

For the DVP, we add a description of how our VP compares to other alternatives, that is, to the competition. For the DVP, we must add one required element. And if we choose, we have an optional element that we can add as well.

The required element is the reference competitor group (RCG). After all, if our Acme Super Pillow helps patients recovering from neck surgery to obtain a better night’s sleep. The obvious question is, “Better than what?” A regular pillow? A competitor’s pillow? Better than nothing?

Here’s the template for our original value proposition (VP): The product helps customers to better accomplish a job by achieving a performance improvement.

And here’s the updated template that includes the reference competitor group, making it our differentiated value proposition (DVP):

The product helps customers to better accomplish a job by achieving a performance improvement as compared to the chosen reference competitor group.

(Doesn’t that just roll of the tongue? Aren’t templates a joy to read!)

Let’s build a DVP off our earlier example:

The Acme Sublingual Magnesium Tablets helps business travelers to obtain a restful night’s sleep by minimizing the number of times per night that they wake up as compared to a typical multivitamin.

The typical multivitamin is our competition (our RCG) as we have defined it. Alternatively, we could have defined it more broadly as “nutritional supplements” or more narrowly as “magnesium tablets.” We make this selection based upon our chosen positioning.

Now let’s add our optional element. It answers the question “How much?” We call this the Precise Performance Improvement (PPI). Unsurprisingly, this describes in precise terms the degree of improvement:

The Acme Sublingual Magnesium Tablets help business travelers to obtain a restful night’s sleep by minimizing the number of times per night that they wake up by 50% as compared to a typical multivitamin.

And there we have it. By adding the PPI, we provide the degree of performance improvement that our customers will enjoy.

Before putting a bow on this topic, let’s take care of a little business that will help us to better understand the role of VPs and DVPs in use.

First, the DVP is very close to a positioning statement, but there are a few differences to consider before we just copy and paste the DVP into our positioning document. The positioning statement considers broader issues such as:

  • What has our brand/product identity been? What do we want it to be?
  • What trends are going on with our competitors?
  • Strategically, how does this fit into the grand plan?
  • How credible is this statement in the mind of our customer? How much distance do we have to make up for them to believe?
  • Can we own this position in the minds of our customer?
  • Have we left room for growth?
  • How memorable would this position be in the minds of our customer?

The positioning statement must consider more than just a particular innovation or new product effort, it must also take into account the broader strategic scenario. However, with this as a caveat, the DVP can often be used as a positioning statement for the product it represents.

For either a DVP or a positioning statement, we must remember that we are crafting these for clarity, not for customer consumption. DVPs and positioning statements provide what we want to communicate but not how that message should be communicated. The process of creating a DVP or a positioning statement is a strategic one – usually executed by product managers and their leadership. The process of communicating the DVP or positioning statement is a tactical one – usually executed by the creative staff, marketing agencies, PR agencies, and business development pros. Once the DVP or positioning statement is delivered to the tactical marketing function, they are charged with determining how this message should be delivered. They have all media at their disposal. Print ads, white papers, videos, and whatnot. Tactical marketing will likely use elements of the DVP or positioning statement, but there is no expectation that they must use the specific language. They are responsible for communicating that message with whatever words and media work best.

Strategic marketing must trust the creative abilities of tactical marketing while holding them accountable for delivery of the correct message. This dance is never perfect but when each partner embraces their role, it’s more graceful. If tactical marketing tries to “lead” by changing the core message, toes are stepped on. Likewise, when strategic marketing tries to provide too much advice about creative decisions – like fonts, colors, chosen music, etc., conflict ensues with suboptimal results. In practice, the best outcomes are obtained when the strategic and tactical folks have worked with each other for a time and can trust each other’s abilities.

Nobody would disagree that the Value Proposition is critical to business growth and success. And yet, we have very little dialogue about what a value proposition is or how to create one. This reading is admittedly not the most interesting as we’re basically describing a template. But it provides something important – key questions to answer:

  • Who are our customers?
  • What is our product?
  • What job do we want to help our customers accomplish?
  • How does our product help them?
  • How much does it help them?
  • What is our competition?

It’s in answering these questions that the fun begins. Probably the best book on this topic is Value Proposition Design by Osterwalder and Pigneur. If you’re past that one already, note the books within the Strategic Marketing section of this reading list.

Nunc coepi.



Go Slow to Go Fast: How to Speed up New Product Development

Go Slow to Go Fast: How to Speed up New Product Development


Taking time to understand customer needs reduces product development time.

Ever heard the joke about the optimistic pilot? Before the days of computers, when pilots had to use more elementary tools, a particularly optimistic pilot was flying from New York to Bermuda. To his horror, he noticed that the compass needle seemed to be stuck. Being conscientious, he felt that he should alert his passengers.

“Good afternoon. I’m afraid I must inform you that we’re having some instrument problems and we’ve been flying in the wrong direction for a bit. We’re not sure for how long and so – we are not sure where we are. But the good news is that I’ve had the throttle down the whole trip, and so we’re making great time.”

Doing our VoC work is the equivalent of checking our maps, our compass, and the GPS to know where we are, to plot our destination, and to make sure that our team is aligned. It would be a poor decision for a pilot to ignore his instruments, and it would be a poor decision to just begin NPD without preparing first.

The reason that executives insist that “they don’t have time to do market research” prior to development is that they want their new products to launch faster. But this is short sighted. If they will take the time to execute VoC properly, they will in fact be able to launch their products faster than otherwise.

Why do we think we don’t have the time?

Because we mistake action for progress. When project teams are building prototypes, this feels like “real work.” It feels like action. But doing research doesn’t feel like real work. It feels like waiting for the real work. This is of course, incorrect.

Executives are familiar with taking action that involves outputs, like business results. They don’t think of the relationship between the inputs and the outputs. Also, market research sounds theoretical, not practical…because executives don’t often have this background.

How does development without VoC slow down development?

Without VoC, every decision is difficult. It is difficult because there is no agreement on anything. Feature choices, performance levels, material options? All difficult. So many decisions to make. Should we use aluminum or titanium? Should we use polyester or cuben fiber? Should we make this app work on all iPad models? Are we building a product to hit the general market needs or just a niche? Without customer insights, there is no market strategy. No product strategy. No roadmap. Not one worth much anyway. For if we create a strategy in a vacuum, it will likely be inaccurate and even worse, our team (and company) will not be aligned around it. Development slows down due to a lack of confidence with many things: what needs should be addressed, what performance level should be delivered, etc.

Even when decisions are made, without customer insights, they will be revisited. Maybe many times. Perhaps changed or even remade. With low certainty, the team flounders. It takes time to gather data and remake a decision. It takes even more time to unmake a decision and change course.

Without good customer insights, engineers will also feel more empowered to assert their own vision of what the product should be. When the subcomponents are brought together, it’s a Rube Goldberg device that no customer would touch.  Time keeps slipping into the future with each event. And it all could have been addressed with an upfront understanding of customer needs.

How does a lack of VoC affect team productivity?

Without data-driven customer insights, team members will argue much more – again – due to the uncertainty. They take turns with statements may sound like, “If I was a user, I would want…” And it becomes a contest of the wills. One person’s opinion versus another where the most dominant personality wins. Not only does this damage team morale, but the clock is ticking while these conversations persist.

And it’s not just development productivity. With a good set of customer needs, our marketing communications and tactical marketing folks will also be faster in their work. They will have direction for their activities. They’ll know everything from which benefits to tout all the way down to the details of what demos to create.

Time? We should acknowledge the opportunity cost of building the wrong product

This will be the biggest time loss of all. We spend months, perhaps years, developing a new product. We spend time in meetings. Time with suppliers. We solve problems. We make our launch preparations and see them through – from photoshoots to website updates.

Then, the product? Uh oh. It’s a loser.

All that time is gone. Time is one thing that once lost, it’s gone forever. All we can do is try better the next time.

Do the VoC – and while we might appear to be slow now, but we’ll ultimately be more accurate and faster as well.

From the classic work by Bob King, Better Designs in Half the Time: “A relatively short time is spent defining the product. A relatively long time is spent designing the product and a surprisingly long time is often spent redesigning the product.”

Adding a bit of time for customer insights will help us arrive at destination faster. And even better, we’ll get there with a product that customers will love.

What’s the difference between positioning and branding?

What’s the difference between positioning and branding?


Positioning is the process of associating a something (product, brand, company) with a desired concept. In other words, the strategy.  It’s deliberate. A process of choosing the association that you want. Volvo = safety. Harley-Davidson = the loudest, most American motorcycle. Walmart = low prices. The brand is the “thing” that you want to position.  That’s why it makes sense to say that you position the brand, but it does not make sense to say that you brand the position.

If positioning is about strategy, then branding is about execution. It is the act of communication. And what are you communicating? The desired position!

Ah, but alas. These are words. Words! Unfortunately, some people will occasionally use the words positioning and branding interchangeably.  I don’t know that I would get into any bar fights to defend my “position” (sorry, couldn’t help it!) but as a bigger issue, we want to be clear on whether we are selecting and defining a position, that is, positioning, or if we’re are communicating, i.e. branding.

Thinking about the bigger picture of product development is helpful to keep the distinction. The positioning process actually begins when we do our initial market research, prior to even designing a product. Our discoveries will guide us to determine the place we want to occupy in a customer’s mind by the benefits that we want our product to deliver. We then develop that product to deliver those benefits. It’s no accident that the template for a value proposition statement and a positioning statement are the same. (Ever noticed that?)

From there, the branding process begins. Our tasks are no longer to select a position – but to communicate it to the target market. If the positioning has been done well, and therefore the value proposition is clear; this is simple. During the branding process, we develop the vehicles for communication …. The normal collateral and artifacts that we think of. These will be visuals for sure, but also the means, the message, and the delivery.

Here’s my favorite way of keeping this straight: Positioning is about what should be communicated while branding is about how it should be communicated. Positioning is executed by strategists, branding by creatives.

Wade into your Customer’s World

Wade into your Customer’s World


“The one who knows the water best is the one who has waded through it.” – Danish Proverb


I was once in a product development meeting where product managers and engineers were arguing about the merits of one feature versus another. In order to protect the guilty, let’s pretend that one group was promoting the blue feature, and the other was promoting the red feature. The rhetoric sounded something like this:

“If I was a customer, I would want the red feature.”

“In my last company, all our products had blue features.”

“Sure, but nobody bought your products, remember?”

The debate became intense. Emotions smoldered. Nobody was about to lose face or admit weakness. Many things went unsaid as well – such as the secret development work behind the scenes to support the red feature. Finally, the boss posed this simple question, “Who here has spoken with an actual customer this year?” And of course – silence followed.

I submit that your product development teams should do their own Voice-of-the-Customer (VoC) projects to complement the bigger market research effort. As a result, you will have more fun, argue less, and actually build stuff that people want.

Of course, you might have formal market research available. Perhaps a conjoint study, customer satisfaction reports, concept tests, need assessments, etc. But no matter how much you have, your intuition for new product development decisions will always be limited if you have not spent time with customers yourself. There can never be enough research to answer every question that comes up during development. You need intuition – based on actual experience with customers.

At its core, innovation and new product development are problem solving processes. The first step to solving a problem is to diagnose it. To diagnose it, you must experience it. See it, hear it, feel it, smell it if possible. A doctor would never rely on tests alone. Are the eyes watery? Are there marks on the skin? Do the joints move easily? How does the breathing sound? The pulse? The senses are engaged.

You should also use all your senses to diagnose customer problems. Visit them, see them, talk to them, interview them. Gather their needs. Probe for understanding. Perhaps you don’t need to smell them – I’ll give you that. Take good notes and combine this new knowledge with the rest of your market research. I imagine that your company has many product experts. But do they have market experts?

But, alas, you are skeptical!  Perhaps you will insist that you already know what customers want.

I say – maybe. Maybe you do. Maybe there are customer needs that are well understood. If you are a product manager for Weight Watchers, you already know that customers want to lose weight. Fine. But…how well do you understand what is difficult about losing weight? Is losing weight easier or more difficult at home as opposed to vacation? With all the knowledge about nutrition, what challenges do customers really have losing weight? And how do you explain the success of all the “medically-assisted rapid weight loss centers?”  Regardless of your market, there is always more to learn about customer needs. And quite frankly, if you’re not doing VoC work yourself, then how can you be so sure that your knowledge is complete?

Ah, but you persist. You tell me that “Our sales staff knows what customers want. They talk with customers every day.” And so, with their kind counsel, you say that you do – in fact – understand your customers’ needs.

Do you have some information? Sure. But let’s think about this. Ask a sports fan what happened in a game where their team lost. Did they give you all the information? Are you ready to write an objective article from this fan’s perspective? I doubt you would feel very confident that you have the whole truth. Now, imagine that you asked a parent for an assessment of their child’s piano recital. Do you get some information? Sure. Did you get all the information? No way. It’s a horrible idea to use biased data as your only source of truth. Even a GPS system needs multiple satellites to know where you are.

Perhaps I have won you over on that point. But then you tell me that, “We do not have the time to execute our own VoC – so we have to do our best without it.” To this, I will quote the great John Wooden, perhaps the best basketball coach of all time, “If you don’t have the time to do it right, when will you have the time to do it over?” Without enough VoC, your product development team will move very slowly as they argue over whether it should be the red or the blue feature. Or even worse, they will build science projects that do not solve any meaningful customer problems. If you have waded into the customer’s pool yourself, you have a better chance to lead the team away from those hazards.

I think I have now convinced you, but alas, you still do not give in so easily. You tell me that, “We do not have the knowledge, expertise, or experience to do our own VoC projects.” Perhaps you have market researchers within your company – and they have told you that you should not do your own VoC because you don’t have the expertise. They are like grammar teachers – scolding students for beginning sentences with conjunctions or ending them with prepositions. (Personally, I think that a preposition is a great thing to end a sentence with. But, I digress.) VoC skills are like all skills in that practice leads to proficiency. Training and coaching programs can accelerate your progress.  I assure you, with a moderate bit of education and experience, a product manager or engineer can become an effective VoC researcher.

I want to leave you with a final thought: VoC projects are fun! Learning from your customers is a blast. Beyond that – your new knowledge will clear away the confusion from product development. Over time, you will be a market expert as well as a VoC expert. Skills such as interviewing, capturing customer needs, ranking requirements, etc. will enhance your career. Give yourself time to get there and enjoy the journey “wading through the water.”  As the great Zig Ziglar said, “Anything worth doing  – is worth doing poorly –  until you can learn to do it well.”