Strategyzer Webinar: Mastering Value Propositions

Welcome to another Strategizer Strat chat session. This is a special one. We haven't done one of these in a while and it's Mastering Value Propositions. Today we're going to talk about how to better understand customers and design value propositions that they want. Like I said, it's a bit different today. It's just me and Alex. Generally we have other guests, but we thought we'd make this an exclusive little session for the launch and announcement of our Value Proposition Design course. So I'm Kavi Gupta, I manage content and community at Strategizer and and I'll be moderating today's session, of course, our host, Alex Osterwalder, co founder of Strategizer and co author of Business Model Generation and Value Proposition Design. At any point throughout this webinar broadcast, feel free to tweet us at Strategizer and please use the hashtag Strachat if you want to comment, add your feedback or screenshot what you're seeing during the presentation. You can also visit blog.stragizer.com for more in depth content about the topic that we're going to be talking about today. So we are here because of a kind of special announcement. We have a new course that's available to small groups and individuals and it's called Mastering Value Propositions. The online course is meant to teach you how to better understand customers and to create value propositions that sell. Here's kind of what you get. If you've read the book Value Proposition Design, it's a great start. But the course goes further and is structured around action and applying this in your business in a step by step fashion. You're going to get more case studies, more concise and clear examples, and more actionable exercises and templates to execute in your business. Most importantly, there's that certificate of completion. You can differentiate yourself and stand out as a top performer, and you can easily share your accomplishments with downloadable and verifiable certificates. I'm going to replay these offers towards the end of the session, but if you're just joining us, I'm going to mark out the kind of exclusive offers that we've provided for you here today. If you purchase the Value Proposition Canvas course by tomorrow, because you're a live attendee, you'll immediately get 15% off. Just use the code JUNEVPCWEBINARLIVE. I'll actually paste it into the chat box and I'll also send you a link to where you can purchase the course. For those of you that will catch the replay. If you manage to purchase the course in a week, you can get 10% off. There's the coupon code again. I'll also pass that through in the follow up email that comes out with the recording. And if you may not know, we actually have two courses now. We have the original Mastering Business Models course where you learn how to map, design, assess and test business models, which is now bundled with our Mastering Value Propositions course. You can use the discount on both courses or even take the Master's bundle. We also have a 60 day money back guarantee. At the end of the day, if you're not satisfied, we'll give you your money back. That's it. We believe 60 days is enough time for you to try out the course and see that the meat of the material that could be helpful to your company or your team. Any of the tools that Alex mentions during the presentation today are also available in our resource library and they're available for free. I'll also pass a link for that through in the chat box. You simply have to create an account if you haven't already, and access up to 30 plus templates, resources and other types of tools from our library. Alex, I'm going to pass the reins over to you now. Why don't you maybe start off by just telling us quickly why you chose to do this session today and why it's been a while since it's just been you at the helm.

Okay, Kavi, let me focus on getting my screen on first. So I think it's important that we rediscuss this topic of value propositions. It's been a while ago that we designed the tool and launched the book, but now we finally have an online course which first was only available to enterprises and now we're making it available to entrepreneurs and innovators around the world in particular when they want to benefit from this individually so you can go online and get this discount. We had a lot of guests so far, but this is a topic that is really dear to our Heart Strategizer. So and I'm going to take over and talk about the value proposition canvas and I'm going to give you some of the material that you'll find in the course. We'll look at one example that you can review from a slightly different angle in the online course and in the online course we'll go a lot deeper. So I'm just going to give you some background and some goodies that you won't actually find in the online course. A little Bit behind the scenes of how we even came up with the value proposition canvas. Okay, so we're going to focus on material from the second book, value proposition Design. But that doesn't mean you shouldn't have a business model, which was the topic of the first book, Business Model Generation. So I'm going to show you that it's both together that will really help you create breakthrough innovations. Okay, now you see, I can't advance anymore. Yes. Hmm. Kavi, I don't know what's going on, but gotomeeting is failing me.

You might want to click your presentations. Your presentations instead of the gotowebinar. There you go.

You've switched. Can we see it again? Okay.

Yeah.

So I want to start with two data points just to show us why it's so important to dig into this topic and why it's not obvious and why you maybe want to benefit from the online course that we offer you. 72% of all new product introductions, product innovations, and service innovations. Value propositions, in our terminology. They flop. They don't deliver on expectations. This is a study that was done by Simon Kutcher, the biggest pricing firm in the world, and that is a terrible number. So the question might be, why do we actually have this? Well, it's not because people are not smart. It's because the processes and the tools we use are maybe not appropriate enough. And this actually is shown by Another study by McKinsey, where they show that only 6% of executives are actually happy with their innovation performance in their companies. That is a very, very low number. It's a relatively recent study, and I think it's changing quite a bit. But we'll also see some of the challenges throughout this presentation. So these are the data points. Now let me give you two illustrations, and I'll take the usual suspects to a certain extent. Think of BlackBerry, who have you once in their career and their lives. Ever had a BlackBerry? If you ask a room full of business people, a lot of them will hold up their hand. If you ask how many people have a BlackBerry today, you will only get one or two of the eccentrics in a crowd of 100, 200, even 1,000 people. So BlackBerry really kind of disappears a company that's still alive among the living dead, if you want. They're trying to change their business model, but they did it way too late, and they kind of missed the boat because their business model and their value propositions expired, on the other hand. So this is something that I like to say quite a bit, that business models and value propositions expire then my co author Eve often reminds me, Alex, that is true, but at least with yogurts we know when it expires. With value propositions and business models, we don't. That's why we need to put in place the right processes and tools to be proactive and come up with new value propositions and business models before it's too late. So on the other hand, you have examples and here I'll take, you know, really the usual suspect, but I think it's quite an impressive one in terms of profits. Look at Apple in 2015 when their dominance probably peaked with only 14.5% market share in the smartphone industry. This is a little study or a little graph that was shown by Apple insider. They took 94% of the entire profits of the entire market in that segment, meaning all smartphone manufacturers together. That is impressive. And that's because Apple, among several things, really masters value proposition design and in addition, business model innovation. So the question is, how can we find ourselves more on the right hand side and less on the left hand side? By figuring out the right processes and the right tools and applying them and putting them in place in our organizations. That's how we can do it. And if we're a startup, we obviously want to find ourselves on the right hand side and not end up without even having that beginning of the curve for BlackBerry and going bankrupt. So we're going to look at a series of topics just to understand how can we be a little bit more like Apple and less like BlackBerry in its recent phase. First thing is that you need to iterate your ideas until you get it right. And I won't even use the word pivot here because you probably won't get the idea right at the beginning. The challenge is to turn an idea into a value proposition that customers want. And very often we don't even need a substantial pivot, but we definitely need to iterate, which is smaller iterations. The second important point, and that's where the value proposition comes in. So we're going to spend most time on that. Second point is how do we make customer value explicit? Many, many startups, and even experienced business people, they like to focus on the solution. They like to focus on the performance of their products and services. But what they forget is that performance doesn't matter if it doesn't connect with a customer. Job pain and gain. Value propositions are what makes customer value explicit. And that's what we do with the value proposition canvas. We're going to look at that the second point and the third one, I just want to remind you that it's about getting the business model and the value proposition right. There are numerous examples of companies that had products and services that sold well but because they didn't get the business model right, they went out of business. Kodak is the usual suspect there. They were actually at the beginning of digital cameras and they sold a lot of digital cameras. However, they were not able to bring their business model of analog film into the 21st century. So these are the three core topics we're going to talk about and it gives you a little bit of a teaser, a taster of what you could find in our online course and find yourself more on the right hand side, be more Apple like and less BlackBerry like in its recent phase. So let's start with number one, iterating your ideas until you get it right. So back to this statistics here. 72% of all new product innovations flop. Again, it's not because people are not smart, it's because we have the wrong processes. Now you might tell me, well that's one of these studies, what about others? I'll give you two more studies a little bit older or again you see, you know, the top 10 business mistakes. The first one is people focus on building something nobody wants and that's why they fail with their ideas. Now again, are these people not smart? Why would anybody do that? It's because we don't use the right tools and processes. Probably more tools and processes geared towards executing a known business model and known and proven value proposition rather than searching for a new one. I'll get to that. And here the last study, just to bring it home completely. Again, the number one reason why companies fail in this case we're talking about startups, why they went out of business is because they address a problem where there is no market need. They're building something nobody wants. This is inacceptable today because I do think the whole community around the lean startup and business models and value propositions really has figured out how to do it right. So we're going to help you minimize the risk of failure. We can't guarantee with these tools. Let's be realistic here. We can't guarantee a billion dollar business with a billion dollar value propositions but we can guarantee some level of success and definitely guarantee that you don't go out of business because you won't waste your time focusing on something nobody wants. So how can we avoid this? Well, the first thing you need to admit to a certain extent is when we Go from idea to business. And that could be small business, it could be lifestyle business all the way to billion dollar opportunities. We need to accept that it's not about writing business plans. It is about managing this kind of chaotic journey of going from idea to business. So let's burn this business plan over there. Because business plans are actually the best way to, to maximize the risk of failure. Why is that? Because we refine an idea that isn't proven. We fall in love with our idea. We explain at length, maybe over 10 to 50 pages over a beautiful and long slide deck, how we're going to execute a fantasy that is a waste of time. Now, the principle or the intent behind the business plan, we should keep some of that. And basically the intent behind it is to describe.

Hi everyone, looks like we have a short technical glitch there with Alex. Just hold on one second.

That you're actually on the right path, then you can move towards execution and there will be a lot less iterations of your idea. So the challenge going from idea to profit is not to find the right idea. There's this myth of finding the perfect idea for a product or a service and a business model that's a complete myth. The real challenge is to turn an idea into a value proposition that customers want and a scalable and profitable business model. And for that you need to design and test continuously until you have enough evidence that you're going to succeed. So the tools we use here are the Value Proposition Canvas and the Business Model canvas. And in this session we'll focus on the Value Proposition canvas. So it's all about making customer value explicit. How are we creating value for the customer? So in our first book, Business Model Generation, and that's the first online course we actually created, we talked about the story of how a business intends to, or if it exists, how it creates, delivers and captures value. Okay, that's what the business model canvas was for. That was the sole intent. And the idea was that people and when we started out, when I started out with my PhD, it was all about helping startups and then became more and more a tool for large organizations as well. The idea was that startups could map out their business model and then more and more large companies did that as well. However, what we realized was over time is that the business model thinking is actually not so developed. Most people are still stuck in a product focused world. So the business model canvases they made were really full in the middle because people try to describe their products and services and basically their value proposition with the Business Model Canvas. But that was never the intent. The intent of the Business Model Canvas was, was always to tell the story of how you create value for your organization. So you look at the big picture. So what we thought is, okay, well, we probably need another tool. So we listen to customers, the users of the Business Model Canvas, we learned from them and we said we're going to design a tool that helps us to focus on customers and make explicit how our products and services create value for those customers. So we started first with a tool we tested and iterated until we got it right. I'll show you that in a bit. And then we wrote the book Value Proposition Design. So Kavi just told me it froze a little bit. I hope we were back and can see the images. So you're back now. What we're going to do now is we're going to, we're going to zoom into these two boxes and we're going to look at the detail of our customers. And for that we'll use the customer profile and the details of how our products and services, the value proposition, create value for the customer. That's what we call the value map. Okay. And if you have a value proposition that actually creates value, that's when you get towards fit. In the startup world, there are worlds like product market, fit, problem solution, fit to indicate the different stages of how much you figured out this equation of getting it right, finding the story of how you're going to create value for your customer. So see, we have two tools now. One that allows us to explain how we create value for our business or how we intend to create value for our business. And we have one tool that allows us now to make explicit the story of how we create value for customers. And at the end of the day, you need to get both right. And we'll see that in the third part of this presentation. So that led us to this tool, the Value Proposition Canvas. Now let me show you a little bit of the behind the scenes. So this is not something you'll find in the online course, but it's something they'll give you as a goodie to show you a little bit how much it took us to get to a good business tool. And when I say business tool, I mean a tool that helps business people, managers, entrepreneurs, innovators to solve a particular job to be done. And I think together with Yves Pigneur and Alan Smith, my co founder, that the best tools are those that are conceptually sound, but also insanely simple, practical, visual, which means that they have a Great user interface, just like a website and they provide a great user experience. Ux just like we do for websites, the best tools are stress tested thousands of times until they're so simple and so practical that they can really help business people do a better job. So I'll show you a couple of images. I hope the connection follows to show you how this whole thing started out. So the tool looked like this first on a whiteboard. And that's actually the tool I presented when I was giving a talk in the Stanford Entrepreneurial series. And that is what some people, you know, took away and started using. So it already worked, but we weren't extremely satisfied. Some people told us, oh, this is an evolution of the Business Small canvas. And our goal was to create an additional tool that plugs into the Business Small canvas, not a replacement. So when I presented at Stanford, this is how the tool looked like. But we was within, you know, at the moment where we were still iterating and we realized, well, this wasn't it because the feedback we were getting was not satisfying. So we continue to play around with the user interface. We knew that we had the concepts down because there weren't too many questions around the concepts anymore. But what we didn't figure out until then was the UI and the ux, the user interface of our tool to map out value propositions and the user experience. And all of a sudden what popped out, I was working with Alan Smith and Eve Pigner on the visual shape of it. All of a sudden this circle and square popped out and we've felt like we were onto something and that's kind of the tool we stuck with. And we tested that and we realized, hey, this is it. And the reason we thought that this was really it is because we had a couple of design constraints that allowed us to show that this was not an evolution of the Business Model canvas, but it was a plugin. It would allow you to zoom into the business model canvas. And, and that's when we started drawing, or when we saw people actually starting drawing the circle inside the Business Small canvas to show a customer segment and the square inside of the value proposition box of the Business Small canvas because they wanted to show the value proposition for that segment. So that's when we knew that we figured out the right user interface and user experience. So that's just a little bit about the story behind the tool. And for us, what was really important is to show that going from idea to business, from idea to profit, is not a simple one. You actually have to iterate between the Value proposition Canvas and the business model canvas, because you need to get both right. You need to create a value proposition that creates value for your customers and a business model that allows you to scale and become profitable. And you won't immediately find both. So you have to kind of navigate between the two, which is a bit of a back and forth. And there's no one that comes first because at the end you need both. There's a real back and forth until you figure it out. So I think the best innovators, the best entrepreneurs will be really good at using a series of tools that are integrated in the software world. We like to call this API the Application Programming Interface. To a certain extent, between the tools. It's not about one tool that does everything. There is no such thing as a Swiss army knife to do heart surgery. It's the same in innovation and entrepreneurship. It's about a series of tools that do one job well. The business model canvas for business models, the Value Proposition canvas for value propositions. So let's zoom into the value proposition canvas and you'll learn a lot more when you go into the online course in terms of details. So we're just going to go through this quickly. The first element of the Value proposition canvas, on the right hand side in the customer profile are the jobs that your customers are trying to get done. These are tasks that they're trying to achieve. They're things that they want to get done in their private lives. There's things that they want to get done in their business lives. They can be functional, social, emotional. It's what our customers are trying to achieve and that's independently of solutions. Right. They have certain things they want to get done related to those jobs to be done. And there's a whole theory around it by Tony Ulwich and Clayton Christensen to start with. Those are the two people who really made it popular in the course. You can find a little bit more around that, around that whole jobs to be done theory. But related to these jobs, customers have certain pains, certainly things that prevent them from performing a job well, things that they don't like from the existing solutions. And at the end of the day, it's how they measure failure of a job not done well. On the other hand, it's not just about problems, it's not just about pains, it's also about objectives. And here I think sometimes we get it wrong because we always focus on, oh, what's the problem you're solving? Well, maybe your customers also just look for certain gains, certain objectives. It's how they measure success. If I'm, you know, if I have a value proposition to a salesperson, well, of course they have certain pains, but they also have certain gains. They have objectives in terms of sales quota and they have objectives in terms of bonuses. What does the game look like? How do they actually measure success? So when you're able to describe jobs, pains and gains of your customers, you have a good understanding. Some of you might ask, okay, how does this relate to Personas? Personas is a slightly different aspect of your customer. You're going to describe maybe the type of customer, how old they are, where they live, etc. That's interesting, but not very actionable in terms of how am I creating value for my customers. When you understand the jobs, pains and gains, it becomes pretty easy to figure out if you're creating value for customers or not. Brings us to the left hand side of the value proposition canvas. We need to ask ourselves not just what are our products and services and how do they perform, but why does this matter to customers? So we're going to connect like a bridge, the left hand side to the right hand side. So here's where you have the pain relievers, the headache pills. So these are indeed the problem solvers. How do your products and service minimize or even eliminate the pains of your customers? So you're going to make that explicit. So the performance per se of your products and services only matter if they relate to certain pains. If we're focusing on the pain relievers or on gains gain creators, if we're focusing on the positive outcomes that our customers are trying to achieve, great value propositions, they focus on few pains and few gains and they do that extremely well. So on the right hand side, you'll have a lot of jobs, pains and gains for every customer. But on the left hand side, where we design how we create value, we'll focus on few things. Okay, so that is the value proposition canvas. Now let me go into one of the examples of the numerous examples you'll find in the online course to better understand the value proposition canvas. You'll also understand some best practices of how to use the value proposition canvas and how to map out jobs, pains and gains. We're going to look at Hilti. So surprisingly, a lot of people know Hilti, even though Hilti, you know, sells originally sold to builders and then to building companies. So what does Hilti do? Hilti traditionally was a manufacturer and seller of light machine tools to builders. Now over time, they evolved because they had to ask themselves, how could they Kick start growth. Again, better tools wouldn't really do it because their tools were already pretty good. And to a certain extent that was the problem of lacking growth because their tools were so good that, that you bought a tool once, you didn't have to buy another one for a long time. So Kavi is telling me that there's a bit of a lag. Is it okay now? Is it okay to follow the slides?

Yes.

Okay, great. Just a little check. Customer discovery. So what Hilti did is they tried to better understand their customers. And since they were selling directly to them, what they understood is that the customer's biggest job to get done, the job to be done, was not to buy another tool or even to find a better tool, or not even to drill a hole. The really big problem that construction companies had, small and medium sized construction companies, all the way to the bigger ones, was to manage, maintain and replace the tools. In other words, having the right tool at the right place and at the right time, that was the biggest challenge. Because if the tools weren't there, a construction site might stop just because of one simple tool, because maybe the drill wasn't working, the battery was missing and that would result in penalties for the construction company. So they came up with a value proposition that we're going to look at in a bit called Hilti Fleet Management. That was not a better drill, not better tools. It was a whole service with monthly subscriptions for the construction companies. And Hilti would make sure they would have the right tools at the right place at the right time. All that based on a monthly invoice. So let's zoom into this to better understand and we'll focus first on the jobs to be done of our CEOs of the construction companies. So basically we'll keep it very high level. When you do this for your customers, your customer profiles are going to be a lot more detailed. What are the jobs, the basic jobs to be done of our CEOs of the small and medium sized construction companies? Well, it's finding the contracts, executing the contracts and managing the fleet schedule. Then we can ask ourselves, well, what are some of the pains gains related to that particular job? Well, one is that they're not particularly interested in investing in new tools though. They want new tools, but they don't want to have that capital expenditure. And then even more important, you know, they don't want broken tools, they don't want stolen tools, as I mentioned before, because that leads to penalty costs and that is not a good thing. And it leads to additional stress. So that's the problem side. But we also need to understand the gains. How do these construction company CEOs measure success? Well, of course, they want profitable contracts. And here, interestingly, they want access to the newest tools. Of course, though, they are not willing to invest up front. So we can already see that there's a tension between what they want and what they don't want. So how can we solve that as a service provider? And then of course, they want 100% uptime of the tools. They want the right tools at the right place at the right time, because they want predictable costs, in particular in an industry that has very low margins and is very sensitive to costs. So Hilti had to figure out, okay, first, what are the most important jobs, pains and gains? And again, here we're just focusing on high level for the purposes of illustration. In your case, you would have a lot more detail. They focused on they needed to figure out what's important to their customers and what isn't. And based on that, they would have to come up with a new value proposition. So what did they come up with? They came up with this online fleet management system, which I already mentioned. But now let's zoom into this online fleet management system and map it out a little bit. And again, I'll keep it pretty straightforward and high level for the purposes of illustration. And you'll find a lot more cases in the online course. First element here is that the construction companies would not have to pay for repair and replacement. That's a big challenge for them, right? It's a cost that is not predictable, so they would want to avoid that. On the other hand, we heard before that they don't want to invest into these tools. So what about a subscription model? Pretty interesting, right? And then let's look at the positive side of measuring success. Well, what do these construction companies want? Well, they do want access to the newest tools. So, hey, what if they could lease this fleet, this modern fleet? And what if we offered them to immediately replace tools that weren't working? And all of that would have the great benefit of providing sound cost management to our CEOs of the construction companies. So we have a wonderful fit between the left hand side and the right hand side in our value proposition canvas. And I talked to the CEO of Hilti just last year and he was telling me that this was so successful that they extended their value proposition, which you can't see on this slide, and they said, well, we're going to offer these customers not only the management of Hilti Tools, but we'll take over the management of their entire tool fleet. All of the tools, the construction companies would be managed by Hilti. Now, isn't that a pretty interesting thing? When you're a company like Hilti, you would want to have such a powerful value proposition that locks in your customers. Okay, so that's an example you might come up with in the meeting room. You have this brilliant idea and you think you got it right. But as I've shown you, the statistics prove that 72% of all products actually suck, that people don't want them. So what if we immediately got out of the building, to use Steve Blank's words, our friend who invented the Lean Startup movement, and then Eric Ries made it popular with the Lean Startup book. What if we said, well, we know that on this journey from idea to profit, we're going to get it wrong for a very long time. We need to get out of the building, take our designs and immediately stress test them. So we're going to do that with what we'll call customer discovery. So doing this is just talking, interviewing potential customers as an innovator, as an entrepreneur, very, very easy to do. And in the course you'll also see that maybe not so easy that you can make mistakes. I won't go into that. I'll go into another aspect because we now have a tool that allows us actually to track how accurate our customer understanding was or is. So whatever we come up in the meeting room, what we come up with in the meeting room is just a guess, right? We don't know if our customers actually have those jobs pains and gains. So when we start talking to customers, we can invalidate some of those jobs pains and gains that we thought they would have. We can start invalidating some of the ways of how we thought we would relieve pains or create gains. On the other hand, we're probably going to get some things right, maybe at the beginning a bit less, but the more you talk to customers, the more you're going to understand. And at the same time, we're also going to learn a lot of new things. So the Value Proposition Canvas becomes a wonderful tool, a wonderful map to track on the one hand side, your customer understanding. And on the other hand side, are you really creating value for your customers? So this is just the first phase talking about customer discovery. And that's the part we outline quite a bit in the online course. When it comes to testing, we give you a little bit of an introduction, but that probably merits a course on its own, which, who knows, in the future we might be able to do. Now let me give you another example, because once you have your customer profile mapped out, that's not sufficient. You want to understand the priorities of your customers around jobs, pains and gains. What are the most important jobs? What are the biggest pains? What are the biggest gains? Because you definitely don't want to focus on things that are insignificant to your customers. So the example I'm going to use here is a company I like a lot, full disclosure, I'm a small investor in this company called shapescale. These are two entrepreneurs living in the Bay Area that I really love because they apply the Value Proposition Canvas, the business Model Canvas and Lean Startup to try to avoid any kind of waste on their journey from idea to profit. So you can go to their website if you want to learn more and watch some videos around their scale. But the idea here is that they're building a scale that will make a 3D image of your body and represent it in an online in an app on your phone. So there's a lot of things you could do in this case, a lot of features you could put into shapescale and in the application. But the question is, what should they do? So what are the customers most important? Jobs, pains and gains? We'll focus on the jobs first. So here's a way to simply work with your customers and figure out what really matters to them. When you do your customer discovery interview, you won't just ask them a question. You will take your understanding that you had so far in the customer profile. You will take the jobs, pains and gains, or maybe just the jobs, maybe just the pains, maybe just the gains and you'll turn. Here's what Shapescale did. They said, well, we're starting to have an understanding of our customers different jobs and they mix this a little bit also with the solutions. For example, tracking fat tracking muscle tracking measurements, maybe predicting how they're going to look like in the future if they continue eating like that. Pretty terrifying, right? Or just a review of their preview of their body, if they work out well and they have a good diet. So there's no way to understand what's the most important thing in the meeting room. But by giving your customers these cards or in this case shape scale, working to a certain extent face to face, doing a lot of this also online, they could start to identify the top jobs and the flop jobs. Those things that they thought would be important to customers but actually weren't so important to customers. These are the kinds of exercises you want to do very quickly based on your customer profile, and then also based on your value proposition canvas, on the entire value proposition, how you hope or believe you will create value to customers. But it does require that you admit that you actually don't know. Now, let me finish before we take a couple of questions. We might have time for one or two questions that Kavi will bring up from the webinar participants. Let me focus on this last part, which is also in the online course. We won't go deep on business models. That's part of the first online course. But we need to look at the relationship between, between the value propositions and the business model. So let me repeat what I said at the beginning. Can't say it enough, because we need to have both a story, an explicit story, and a proven story with evidence of how we're creating value for our customer. And for that, we'll use the value proposition canvas. But in order to succeed, we should never forget that we also need another story. What is the business model that will allow us to create, deliver, and capture value in a profitable and scalable way? So we need to get both parts of the equation, right? So if you map it, it's very simple. You have your value proposition or value propositions if you're a platform or if you use intermediaries to get to the market. But now you have to ask yourself, what are the different elements in the business model that we need to put in place to succeed? Which activities do you have to be excellent at to create this value proposition? Which resources do you need to create and deliver this value proposition? Which partners could you work with to leverage your business model? Then ask yourself, okay, how much does that actually cost us? Okay, so it's an equation. The decisions you make on the top have a financial impact. So changing one of the building blocks kills the equation of, in this case, how it makes money, and then on the other side, cost, and on the other side, how it makes money? Now you ask yourself, well, how am I bringing that value proposition to the market? Which channels am I going to use to sell my value proposition? And what relationship am I going to establish with my customers over time, and how am I going to acquire and keep them? And that allows me to define how I'm going to create revenues, how I'm going to earn money. So with the value proposition canvas, you made explicit how you're creating value for your customer. But now with a business model canvas, you decide which elements you're putting in place to create a profitable equation. More revenues than costs. You change one of the Building blocks. You just broke the equation and you can't figure out both things. How am I making value? How am I creating value for my customers? How am I creating value for my business model? So the equation in business is very simple, obviously a bit more complicated when you do that. Anybody who tells you this is simple has either never done it or is lying to you. You need a great value proposition that customers want. And sometimes they're not value propositions that delight customers. Take EasyJet and Ryanair in Europe. That's not a delightful experience, but it is something that creates value. These low cost airlines create value for customers because here we have a price sensitive segment. Then you need a business model that can be profitable and that can scale. And last piece, what we're not going to focus on in this or these online courses is executing the model well, once you've proven that it can work. That's the success equation in business. Let's go back to Hilti just to look at this connection. And again, you can watch this one. It's just a small part of the online course. We'll make the connection between this value proposition, Hilti fleet management system and the business model. It's this back and forth between the two tools that we've seen here, the two elements of success, the business model and the value proposition. And we'll navigate between the two. So let's keep it simple and look at the business model. High end machine tools for our builders. In this case switching the customer segment to the CEOs. How are they? Afterwards we'll see that with the innovation. How are they? Did they initially reach their builders with a salesforce in some stores in a direct one to one personal relationship with the builder. So we're focusing on the old business model here. Before the introduction of the new value proposition. How did they earn money through transactional sales? Then we look at the backstage. What did they need to do this? They needed factories, patents to protect their intellectual property and the brand name. Which activities did they need to be good at in the old business model? Manufacturing and selling, working with some partners which would give them the initial cost structure. That was the old model before they came up with their new value proposition. So what we've seen before was this question, how could they regain competitiveness? So let's take this old model and put like an architect tracing paper, a tracing paper on top of that model and ask yourselves, how does the business model evolve with this new value proposition? We said an online fleet management system. We also said that it's not for Builders anymore It's for, for CEOs. How are they reaching them? Well, still Swiss salesforce, but they had to re educate their salespeople because it's a different conversation selling to builders or selling to CEOs. A new channel comes up which is the web because now we're talking about an online fleet management system. Customer relationship still remains direct and now very interesting. Here we have a complete change of the revenue stream. Now it's long, it's a long term subscription with monthly payments. So Hilti was able to lock in customers a lot more. In particular now that they're also moving towards managing their customers entire tool fleet. Then a new value proposition obviously in this case also has a huge impact on key resources, key activities, key partners and costs in this case key activities. Now they need to be able to manage a service fleet. They're becoming a service model. Last piece here in terms of key resources. Now the tools are not something they sell anymore. It's in their books. They have the inventory. It even changes their accounting system. And to a certain extent, sometimes people say we can't do this business model because it changes our accounting system. So a new value proposition maybe changes also the business model in a way that you almost can't do it. I remember customers telling me, alex, we can't create this business model in our company because our SAP system won't allow us to. So then the last piece here that we want to understand is that this has implications on costs. So an innocent change of the value proposition obviously has an important consequence for the business model. So here you can see this relationship between business model and value proposition. I'll hand it over back to Kavi in case there are any questions and he will conclude otherwise with the promotion code. So you can benefit from our second online course, a new one around value proposition design, which is an extension of the value proposition design book. And if you're interested, you can buy both courses in case you don't have them yet. Kavi, over to you.

Awesome. Thanks, Alex. We'll take one question unfortunately, because time is running tight and I'll just put the offer up for everyone to see. It's one that we've heard about a lot, I think internally in our anecdotes and maybe you could shed light on this. What's the best way for our audience to just go and find clients to interview, whether they're online or offline to get started in that journey of value proposition design?

Well, it's not that complicated these days to get access to customers. Well, Depends, obviously, in what area you're in. Business to business or business to consumer. But it's easier than ever before. I mean, one of the interesting experiments that we see startups or even corporate innovators do now is just using Google Ads or even Facebook ads. They put a small budget on advertising, and if nobody clicks on the ads, well, already it probably indicates that nobody has these jobs pains and gains you're addressing or they're not interested in your value proposition if you're doing that. So that is a way of getting access in case you don't have an interesting kind of angle on this is sometimes people say, yeah, we might just have this one shot with a decision maker, business to business, and we would prefer selling to them than testing. Well, before you take an important meeting to learn from these decision makers you might be wanting to sell to, you might want to start at the bottom of the hierarchy. So the questions you ask them are not completely off. So decision makers have staff, decision makers have collaborators that might be easier to access. You can learn from them. And you might also figure out how actually to then get access to the decision maker. So you have to work yourself up the kind of the hierarchy of an organization. If you're in business to business, if you're in business to consumer, it's never been easier to get access to customers. And sometimes when I hear people say entrepreneurs or corporate innovators. Oh, but it's so difficult to get access to potential customers. Well, nobody's ever said this, this was easy. And you know, since I've worked with pharmaceutical companies, I believe it's possible anywhere. Because if you are a pharmaceutical company we work with, with some of the big ones in the world, Strategizer, you know, you might be selling to one customer per country, which is the government, you don't have a lot of shots of actually getting it right or wrong. So the people we were working with, I remember, were very afraid of talking to those government officials and decision makers. They said, well, we can't show that we don't know. But it turns out that it was a hypothesis on its own that these decision makers would experience them as not knowing what they want. Because once they started talking to these government officials, they said, well, finally you're talking to us to figure out what we really want. So sometimes it's a hypothesis on its own that you can't get access to customers or that customers don't want to talk to you. One thing is very clear, that to do this, well, it's a long journey and you will talk to a lot of customers and you will work yourself towards the right customer with a lot of pain. Your job is to get evidence, and that's never easy and it can take a long time. But nobody said that entrepreneurship in innovation was easy. And if somebody says that again, they're either lying to you or they've never done it.

Let's just touch on that quickly because we've got time for one more question that kind of extends on that. Alex, how can people avoid getting lost in the details of their value propositions? Right. You are saying it's a painful journey, it is a long journey, but can be very rewarding. But it can be very easy to get lost in the details.

That's an excellent question. And it's actually something we see a lot from both inexperienced first time entrepreneurs, but also very senior business people. Senior entrepreneurs, seasoned entrepreneurs usually do this a little bit less. But getting lost in the details, trying to figure out the right solution up front, because you believe it's just about getting the idea right is a big mistake. What you really want to do is keep it very rough at the beginning, start testing learning with very light customer discovery interviews and then only adding details when you have more evidence that you're on the right path. One thing that it requires is actually that you don't just focus on the experiments themselves. So, you know, in the lean startup movement, there are a lot of people now that follow this build, measure, learn cycle that Eric Greece introduced. And it's great. However, sometimes people, you know, take this too literally and they build immediately and they get so excited about their experiment that they forget actually to learn and they forget what they, you know, what the prize was? The, the prize is not to make experiments and prototypes and to learn. The prize, as Steve Blank often likes to say, is turning an idea into a business, turning an idea into profit, which requires that every week. You are extremely rigid in terms of asking yourself, okay, where did we start at? What was our business model in our value proposition that we thought might work? What were our hypothesis? What did we believe had to be true for this to work? How did we test that and what did we learn? And here comes the most important part. What are we going to do based on those learnings? There are 3 things you can do. Either you're saying it's not clear yet, we need to test more, or you say, okay, we got this one right, we figured out our customer has this job or they have a budget for this value proposition. You move on to the next experiment or you Say, well, we got it completely wrong. We need to change our value propositions, our business models and our hypothesis. But you need to really explicitly link back every experiment and what you learn from it, every interview and what you learn from it back to your initial map that you had the business model canvas and the value proposition canvas. And again, to not get lost in the details, you start out with a very rough value proposition canvas and business model canvas, because inevitably you're going to get it wrong, in particular when you're doing something substantially new. And the more you learn, the more evidence you have that you're on the right path. And that won't be at the very beginning. The more you learn, the more you can focus on detail. But don't try to get it right at the beginning, because you won't. That's called a business plan syndrome. You think you have the right idea, you write a business plan and you think it's an execution problem. Entrepreneurship and innovation at the beginning is not an execution problem. It's a search problem. Once you have enough evidence that you're on the right path, once you start having some indicators, like you made your first sales, figured out the right channels, you know, people really do want your value proposition. That's when you work towards scaling. That's when it becomes an execution problem. So execution is a challenge for innovators and entrepreneurs, but not at the beginning. At the beginning, it's a search problem. So detail doesn't actually matter at the beginning.

Thanks so much, Alex, to everybody who was able to attend the session. Thank you for joining us today. I'm just going to quickly mention that we do have a 15% off discount exclusive to the attendees. The code is there on the screen. We'll also follow up with an email about an hour after the session, so you can get the direct link as well. We'll also have a recording available to you of today's broadcast. Also, Alex, thank you for the session. Thank you everyone for attending. We'll be signing off now. I hope all of you have a good day. Thanks for joining us, Sam.