Why We Created Value Proposition Design

Added on by Alexander Osterwalder.

Finally! On October 20th we are launching Value Proposition Design (#VPDesign). This second book in the Strategyzer series explains how to create products and services customers want. It complements the first book, Business Model Generation, which focuses on how to create great business models. In this post I explain why we created this new book.

The 2nd book in the Strategyzer Series: Value Proposition Design (#VPDesign)

The 2nd book in the Strategyzer Series: Value Proposition Design (#VPDesign)

We are extremely excited to launch Value Proposition Design on October 20th, 2014.  It is a direct answer to satisfy three strong customer demands that we've seen over the last couple of years since we launched Business Model Generation. Many practitioners were asking us for:

  • A tool dedicated to describing how an organization creates value for its customers with its products and services.
  • Stronger guidance on how to integrate our tools with testing methodologies such as Customer Development and Lean Startup.
  • More hand-holding on how to integrate our tools into people's daily work practice. 

Let me go through these three requests and outline how the new book addresses each of them (after you have a look at the awesome table of contents below).

#VPDesign: Table of Contents

A Dedicated Tool for Customer Value Creation

A while ago we noticed that some practitioners were using the Business Model Canvas, the  main tool at the center of Business Model Generation, for something it wasn't designed to do. They tried to use the Canvas to describe customer value creation in detail. At the same time we saw adaptations of the Business Model Canvas pop up to accommodate this new objective. That would have been OK if it had led to an improvement. Unfortunately, it led to the contrary. The adaptations made it impossible to accurately describe the essential elements of a business model and they didn't do the mapping of customer value creation well either.

Our answer was the Value Proposition Canvas, an additional tool that is dedicated to explaining how you intend to create customer value with your products and services. It perfectly complements and integrates with the Business Model Canvas, a tool designed to make explicit how you create, deliver, and capture value for your organization. In fact, the Value Proposition Canvas is like a zoom in to two blocks of the Business Model Canvas.

The new book focuses on how to design great value propositions. However, it reminds us that we need to get both right, the value proposition AND the business model, to succeed in business. The spread below (p.144/145) shows how it's a continuous back and forth between the two until you've figured it out.

#VPDesign: Sustainable companies create value for their customers AND for their business

But Value Proposition Design isn't just a dry utilitarian business tool book. It features a large amount of detailed and playful images that help you better apply the content. We worked with 4 illustrators from Pilot Interactive in Toronto to create illustrations for almost every page. Each illustration went through 4 to 15 iterations, because they play an important role in transmitting and/or reinforcing the content.

#VPDesign: An entire chapter of Value Proposition Design is dedicated to the customer centric design process

Integration with Customer Development and Lean Startup

Business Model Generation was published before we learned about the Customer Development Process by Steve Blank and the Lean Startup by Eric Ries. That is the only reason why they are not featured in the first book. Since we discovered them, we have been rigorously applying these methods in all our work in addition to the Design Thinking approach we've been practicing for over a decade.

Our new book was the opportunity to conceptualize, synthesize, and visualize the intersection between Design Thinking, Business Model Generation, Customer Development, and Lean Startup in a way that is simple to understand and apply. 

In Value Proposition Design we dedicate an entire chapter to the testing of business models and value propositions and outline several new practical tools and processes that make testing an even more systematic, practical endeavor. These additions build on the existing body of work by Steve Blank and Eric Ries and extend it, rather than reinvent the wheel.

For example, the Test Card helps you design (Lean Startup) experiments to validate or invalidate the assumptions underlying your business model or value proposition. The Learning Card helps you capture your insights from these experiments. To make it actionable we also added an Experiment Library that offers you some ideas on how to test your assumptions. The spread below (p.198/199) is one of my favorite and gives a simple overview of the testing process.

#VPDesign: The new book is perfectly integrated with the established testing methodologies

And finally, the piece I'm most excited about in the Test chapter: we designed a Progress Board to help you bring it all together and track your customer development progress all the way from idea to validated business. Have a look at the spread below.

#VPDesign: The Progress Board brings it all together

Applying the Tools Step-by-Step

After publishing Business Model Generation a lot of practitioners asked us for more help in applying the tools described in the book. They wanted a bit more hand-holding on how to apply the ideas in the book. Though Business Model Generation was already pretty practical we didn't really follow a step-by-step approach, which is typically something you would get in a training workshop or from a consultant.

However, since Strategyzer isn't a consulting business and wants to get as many practitioners as possible self-started, we decided to add a lot of exercises and workshop ideas with step-by-step instructions to Value Proposition Design. Each exercise or workshop idea is beautifully illustrated to make it as understandable and applicable as possible. The spread below (p.22/23) shows an exercise in the first chapter of the book.

#VPDesign: Step-by-step instructions help you easily apply the content in your work

But we didn't stop there (crazy as we are). Because we noticed that people often feel insecure about applying the tools correctly, we decided to add a free online companion to the book where you can complete the exercises and get feedback on how you are doing. All you need is a book to get access. This will also allow you to connect with an entire community of practitioners on our platform.

Get a 100 Page Preview and Join the Book Launch (Week of Oct 20th)

Value Proposition Design will be available in bookstores during the week of October 20th. Of course you can pre-order it on Amazon, Barnes & Noble, or 800CEOread. A pre-order will give you access to a unique and exclusive launch week webinar with the authors.

Teams and companies that pre-order the book can get special goodies from Strategyzer (e.g. Strategyzer credits and pdf goodie pack) or even get the authors to join them via webinar during the launch week. Get more info on the Value Proposition Design webpage.

We are also organizing a whole series of launch events in cities around the world. Sign-up to this blog for more info in upcoming posts.

Last but not least you can preview AND download 100 pages of Value Proposition Design for free on Strategyzer to learn more about the methodology and discover the book before purchasing it.