Sep 6, 2012

Test Your Value Proposition: Supercharge Lean Startup andCustDev PrinciplesAlexander Osterwalder

In my last post I described a new business tool, the Value Proposition DesignerCanvas. In this post I outline how you can use the tool to not only design ValuePropositions, but also to test them. You’ll learn how you can supercharge the alreadypowerful Lean Startup and Customer Development principles to design, test, andbuild stuff that customers really want.

The Value Proposition Designer Canvas (VP Designer Canvas) allows you to zoom into the detailsof your Value Proposition and the Customer Segments you target. You can use it as a poster (cfimage below) to design better Value Propositions with sticky notes. However, to make sure yourcustomers really want what you design, you’ll need to test all the assumptions you make with theVP Designer Canvas.

We already now know how to do this kind of designing and testing for business models: bycombining the Business Model Canvas with the Customer Development process. Steve Blank hasimpressively demonstrated this in his work.

We can achieve the same for Value Propositions by combining the VP Designer Canvas with theLean Startup process. This will help us more systematically work towards achieving what thestartup movement calls a product-market fit or problem solution fit. In other words,building/offering stuff that customers really want.

1 of 7

In a nutshell, the Lean Startup process essentially consists of iterating through the “building” of,“measuring” of, and “learning” from product (and service) prototypes. The Lean Startupmovement calls these prototypes Minimum Viable Products (MVP).

Supercharge the Lean Startup Process

The VP Designer Canvas can add two crucial things to this process that are currently missing.Adding them to the mix will bring us to a whole new level.

Firstly, the VP Designer Canvas gives you a simple and practical way to rapidly sketch out WHATyou are building and how you believe this will create customer value/benefits, as well as WHYyour are building it: which customer jobs, pains, and gains you intend to address.

Doing this BEFORE building an MVP, will help you better track and manage the testing,measuring, and learning process.

2 of 7

Secondly, the VP Designer Canvas helps you distinguish between Product/VP and Customerassumptions. If you “just” build an MVP to measure and learn, you won’t know if a negativeoutcome of your experiment is related to your MVP or to a lack of customer interest.

In science such a significant bias would invalidate your results all together. Hence, you need toseparate the testing of your product/VP assumptions (i.e. WHAT) and your customer assumptions(i.e. WHY) whenever possible. The latter is something you can observe and investigate evenbefore designing an MVP.

Using the Value Proposition Designer Canvas – Step by Step

Let me walk you through a rough step by step process of how to use the VP Designer Canvas fortesting. In reality, of course, these steps will be less sequential and much more messy. You’ll alsowant to adapt this process to your needs and circumstances.

1. Fill Out Your VP Designer Canvas.

Describe the JOBS your customer is trying to get done and outline their PAINS and GAINS. Listthe PRODUCTS and SERVICES you intend to offer and describe how you believe they willALLEVIATE your customer’s PAINS and CREATE GAINS. You can use the trigger questions inthe poster and in my last blogpost if you need help.

3 of 7

Voilà, you now have a great list of Produc/VP and Customer assumptions. You described who youthink customers are and what you think would create value for them. It’s your best guess – but stilljust your (smart) opinion.

2. Test your Customer Assumptions

Now it’s time to “get out of the building” – to use Steve Blank’s terms – in order to verify yourcustomer assumptions. Talk to as many (potential) customers as possible to verify if they really aretrying to get those JOBS done that you described in the VP Designer Canvas. Find out if thoseJOBS are crucial to them or unimportant? Find out if the really have those PAINS you believedthey have. Are those PAINS severe or minor? Verify if they really value the GAINS you believedthey value.

It’s even better if you can test your customer assumptions more rigorously. What I mean with thatis going beyond simply talking to customers, but not yet building an MVP. The design professionshave several techniques to achieve that.

4 of 7

3. Adjust your Customer Assumptions Based on Insights

Now that you better know who your customers are you should revisit the Customer Profile in yourVP Designer Canvas. Ideally you now understand the significance of your customers’ JOBS, theseverity of their PAINS and the intensity of their desired GAINS.

4. Redesign your Value Proposition Based on Insights

Adjust which pains and gains you want to focus on, based on your customer insights. Thenredesign your Value Proposition accordingly. Don’t forget that great Value Propositions rarelyaddress all customer PAINS and GAINS. They address a few really well!

This will give you a readjusted VP Designer Canvas.

5 of 7

5. Start Testing your Value Proposition

Now it’s time to build your MVP and continuously test and adjust your Value Proposition based onwhat you learn.

The VP Designer Canvas will serve as your map to permanently track assumptions and tests, whileyou’re pivoting through the Lean Startup process. The moment this circle ends is when you’veachieved a fit between your Value Proposition and what your Customers expect. This is what thestartup movement calls product-market fit or problem-solution fit. It’s when you build stuff thatcustomers really want!

6 of 7

Don’t hesitate to give me your feedback, since this process is just a first suggestion of how to usethe Value Proposition Designer Canvas.

7 of 7