Developing a Value Proposition - Entrepreneurship 101 2010/11

good evening everyone welcome to entrepreneurship 101 tonight's lecture is on building an effective value proposition and will be given by Joe Wilson who is a colleague of ours here at Mars and Tony as usual we'll be introducing him I just wanted to start with a couple of announcements so as you may have noticed coming in we have some brochures from clients Park the little light bulb brochures as well as a bigger one this is an interesting initiative that we wanted to bring to your attention we know some of you might be involved in the clean tech space or with or just be interested in environmental technologies they have a website where business ideas have I think there's 20 on there now that have been they have a pitch and you can vote and comment on the ideas the it's an open innovation approach to finding great business ideas that can also reduce greenhouse gas emissions so you can join the climate spark CA community and weigh in with a thumbs up or are down on fascinating business proposals there's weekly prizes for participation as as well as a $10,000 prize at the end for the winner and the top five ideas right now where are LED lighting smart energy controls a renewable energy franchising concept and electric car that can power your house and a novel kitchen composting solution called the UFO so check that out it looks really looks really interesting and before we start today I wanted to draw your attention to another program we have at Mars for anybody who wasn't here last week and who's interested in the upstart competition we did announce it last week if you watch the first 5 minutes of the video online you can get sort of my explanation about that or we also have some sheets at the at the registration desk about the competition every year it gets better in bed and it's a really great experience so we encourage you if you have an idea and you really want to go through the process of learning how to pitch your idea to to apply for the competition the deadline to come to apply is February 4th but so something we're doing a little bit different this year to prepare people for the competition to have them sort of start on fairground with other people who might be a bit farther along is what we have is called entrepreneurship 201 so this is actually mm-hmm a three workshop series that we offer to Mars clients it's it's a five hundred and fifty dollar value that is offered free of charge to Mars clients and this year we're going to with first-time offer it to entrepreneurship 101 clients but it's a much smaller program than this program it's only has takes twenty four people so if you saw on the registration desk we have a little red sheet and I'll just go through a little bit about the program so it's to help you prepare for the upstart competition and there are three workshops and they're very hands-on experiential based programs and actually our speaker tonight Joe Wilson is one of the facilitators so you'll see his style he's a great speaker and you these workshops have you in small groups working through the topics of value proposition building a business model and building your pitch so this is the first one it's January 19 8:30 to 1:00 p.m. here in the auditorium and the focus of that workshop is to design a value proposition sort of what you'll be talking about tonight but actually working with other people on yours the second workshop is designing a business model this uses the Alexander Osterwalder business model canvas if you know the canvas very well you know that the the value proposition is actually the center part of the canvas so this is sort of the thread that goes through the workshops is that they're all very much connected the third workshop of the series is called perfecting your pitch it's February 2nd so that's two days before the up start competition deadline and that's on purpose we wanted everybody to have a chance to do these three workshops so the pitch obviously is about taking your value proposition that you have from the first workshop and your business model that you worked on and putting them together a great 10/10 slide pitch presentation okay and how to apply for so we do have a limited amount of people it is only 24 so there is an application process which involves the Mars discovery document which is a regular form that Mars people wanting to be Mars clients fill out don't be intimidated by this document it's it's online it's a form if you can't answer everything that's fine just leave it blank put put what you can in because people come to Mars at different stages so the deadline to fill to apply for entrepreneurship 201 is Friday January 7th you apply online in the field that says description you put entrepreneurship 201 that's our flag that you're interested in this program we'll pick 24 from the applicants and let you know the following week and because there are limited spots we do ask that you pay $100 deposit just to ensure that you're sort of you're committed to coming to the program because we don't want people to get in and then not show up when other people would have really appreciated this opportunity so and then if you attend all three workshops you get your hundred dollars back it's just sort of a sign of your commitment any questions please email entrepreneurship 201 at Mars DD comm and again the fliers are here or come talk to me or Joe if you're interested in the program and now we'll welcome Tony Redpath up okay good evening ladies and gentlemen I will echo Carrie's sentiments that I think the those three that that concentrated of course I think will be good particularly for those who are really serious about the upstart we've introduced this and if you call it negative pay getting you getting people to pay and then refunding money I think I've mentioned this before we've had bad experiences in the past with limited seating events being sold out and then having a 20% no-show rate which is you know I find discourteous and all sorts of other things and so this is just a way of ensuring if you really want to come with money down and in a guarantee we're good for it we'll get it back to you so that's what our CFO and if Charles are still standing there ya see it Charles and assures me not not to worry you're not floating our operation for two extra days with the money you're depositing so tonight happy to our delight it's a welcome a relatively new Martian Joe Wilson Joe is working with us as an education adviser and I was just Joe just kind of appeared at Mars all of a sudden and said hey but he's really good he's really helpful so I haven't had a chance to to get some info on his background so I was just kidding it now turns out he did a Bachelor of Science in astronomy and anthropology just saying how can you do astrology and anthropology well it turns out is not the apologist he was studying scientists now I'm worried he works on the fourth floor where Kari and I are and I'm wondering what studies are actually taking place right now big yeah there's a big experiment going on there so I hadn't realized this he after that and that was at U of T he went on did a master's in education looking at specializing in social justice and global education he then took on a very dangerous mission he spent five years teaching grade 12 at East York collegiate for which he did gets a nomination for a premiers teaching award and since I have a son in grade 12 for which I think he should have had danger pay he has now come to the relative safety of Mars where he's working with us on programs like this he is also working with our social innovation group in his spare time he he writes on issues of Technology and culture for Now magazine for the globe mail spacing and for Yonge Street and he's the executive director of the tree house group which fosters innovation by hosting cross-disciplinary events and when he's not doing that he's a jazz and rock drummer so without further ado and and and Joe's talking tonight on value propositions go over to you okay good evening you can everybody hear me okay yes it's good to see so many people here this is this is fantastic numbers we're pleased how this program has grown over the last over the last couple years Green okay so as you can see we got a pretty straightforward agenda we're gonna talk a little bit about what a value proposition is what does it mean what are the dimensions of value and then we're gonna just do a ton of examples that's the only way to get it this lecture didn't exist last year in the in the e 101 curriculum it didn't exist in any of the previous years we found that it was getting missed some of this stuff was in the marketing lecture some of it was in the business modeling lecture so what we decided to do was create its own lecture because when we talk to people in the Mars community we found over and over again people we're talking about how important the value proposition is and how it often gets missed so one of the things I do here at Mars is we travel around Ontario to a lot of the other innovation centers where entrepreneurs are working and we deliver workshops much like the Entrepreneurship 201 workshops on value proposition business modeling pitching we've just got some marketing communications workshops coming up and when we talk to the entrepreneurs in residence they're the adviser set that are that are at these locations we talk to the advisors here at Mars we talk to investors venture capitalists angel investors and we talk to investor relations professionals like the guys at equi comm which is the investor relations firm owned by the Toronto Stock Exchange they say the same thing that the main problem that entrepreneurs have even if they show that they're really passionate about their ideas is that they can't articulate their value proposition now the value proposition is a very specific thing we're going to kind of go through the formula so that you can practice doing it in essence though you can start thinking of it as an answer to this question what do you do you get asked this all the time and it's surprising how difficult it is to answer that question without you know giving your whole life story or explaining how cool it is what you're doing in the lab you need to practice it you need to practice it as if you're talking to somebody who has no clue you know what the science is behind what you're doing and you need to practice it to different target audiences a more brutal way of saying that is who cares who cares that you've spent you know five years working in a lab perfecting some sort of electrical engineering algorithm right what what good does it do for people in short what value does it have what value does it have for investors what value does it have for target customer what value does it have for the public in general so here are some tips from the entrepreneurs in residence and for the here at Mars these are things that we hear when you're asked to explain what do you do explain the value of your company or the value of your idea not the technology behind it the second point is sometimes called the grandmother test right when you're talking to somebody cold and you don't know their background you've got to explain what you do and the value of what you do as if you're talking to your grandmother I didn't want that to sound like I was insulting anybody's grandmother they might be very smart person but you need to assume that there don't share your background your technical background right another thing we hear from venture capitalists is will I want to tell somebody at the next party I'm at is your message gonna stick you know oh I just met this guy and he's actually he's got a business that solves this problem doesn't that sound cool it's not gonna stick in there if all you've done is explain the technical side of what you're doing so I put together a little video that was inspired by a conversation I had about six months ago with an entrepreneur smart guy I'm embellishing a little bit but this is the tone of the of the of the conversation hey I've got a great idea for a business that's exciting that's really about it I've developed a chemical isomer that links to volatile organic compounds causing carbon bonds to rupture and ramps them in a nanotubes coating huh that's a little confusing can you dumb it down for me sure what I do is I take a proprietary isomer that I developed with a picric acid wash that hollows out the carbon bonds and replaces them with a nanotubes wrapping okay so I guess it's pretty technical oh yeah I've been working on this isomer for nine years so what's the business idea to sell it to who everybody will want one right four so they can wrap their volatile organic compounds in carbon nanotubes hmm I think you might need a target customer I don't think I need to wrap my compounds in your nanotubes well maybe not you so for people who buy it what's the value you are providing them I've developed a chemical isomer that links to volatile organic compounds causing carbon bonds to rupture and ramps them in a nanotube coating you've said that already this is getting annoying why should anyone care about your isomer I spent nine years on this I know that okay pretend I'm an investor how can I make money off your product by selling it you're a smart guy but try not to think like a scientist think like a businessperson okay value-chain term-sheet I have to go now and answer that that's not your phone I know alright so for those of you who have been around Mars the last month everybody's obsessed with this Xtranormal thing so that's that's my contribution and full disclosure my background is in science in physics and astronomy too so I understand how hard it is in that in communication like that you know you take it as self-evident that other people think what you're doing is interesting or that it's important but you need to spell it out for people so here's the kind of textbook definition and a lot of the stuff here is taken from the entrepreneur's toolkit which lives on the Mars website all the tools we're gonna be looking at all the definitions and quotes there on there so if you want to ever reference something check it out there this also forms the basis of a large part of what we do for the Entrepreneurship 201 workshops we go through these stuff so a value proposition is a statement of the unique benefits delivered by our offerings to the target customer that sounds very simple to make it even simpler we break it down into its component parts almost like an algorithm or formula you follow to plug in the words so a value proposition needs to have four components to it it needs to explain what your product is so they should know what you do it needs to explain the target customer and then the value you bring that target customer so for whom are you providing value and then the last point there is that you need to explain or at least hint that your product is unique it's not like all the other chemical isomers that are on the market right now it's hard to get into one sentence but one sentence is ideal it could go to but we're gonna strive for one so let's just go straight into some examples so you know how this looks so what we've got up there is a good value proposition and a bad value proposition winners the department store you know everybody knows it so it's something that we can start with so on the Left winners is the only department store that offers fashion conscious consumers the latest brand names for up to 60% off well that apart in a minute line by line the bad version is winners is an off price department store owned by TJX that employs international sourcing and buying power that's the technology behind it that's the chemical isomer right there for winners it says that on their website but it's not on the main page it's buried way in the FAQ section and it answers a question like how can winners provide such such a deep discount on designer brands right so this is more an explanation of their business model than it is a statement of value so we want to keep to the left you say that first and then you follow up with that if you've got a venture capitalist who knows the market and is really interested so let's break it down based on our criteria well what is it well it's a department store that's an easy one the customer fashion-conscious consumers that's their specific target market now when winners first started out you know if these if these guys were starting out I would probably tell them that that that target market is a little too broad you need to be as specific as possible you know fashion conscious consumers between the ages of 18 to 35 all right to really narrow it down what value do they bring to them well they bring them the latest brand names which speaks to the value of status and how you're seeing in the community and 60% off which of course is monetary value they're saving money here uniqueness well they're the only department store that has this particular business model that allows them to do it let's look at this little company called Google Google is the world's largest search engine that allows Internet users to find relevant information quickly and easily that's a value proposition on the right Google uses a patented page ranking algorithm to make money through ad placement that's their business model again important to know especially if you're an investor in this company you're going to need to know how they make money and what they're doing with your money but for somebody you know the first line that comes out of your out of your mouth the second slide on your pitch deck needs to be that it needs to be something that pretty much everybody can understand what is it it's a search engine what are the customers internet users and again that is a very broad target that's not that's too broad for a startup company right Google's immense so their target market is like everybody who ever uses a computer it wasn't at the beginning though they had a much narrower target market the values they bring relevance speed and easily so it's easily used quickly accessible and relevant information those are three values and of course there can only be one world's largest and that's them so they're unique this is the value proposition that inspired that last video and I loved working with this guy because he was so passionate so passionate and he said this a thousand times and he was so excited about his isomer that he discovered discovered a chemical isomer the bonds with carbon to allow a overall reduction of EOC emissions and I'd say great so what does that mean well it turns out after this was in the third workshop this is what it means it means that they've developed a cheap and easily applied additive that allows paint manufacturing companies to reduce the environmental impact of their products you just add a few drops of this into paint before it ships out and it reduces the environmental impact we were like that's a great idea why didn't you say that in the first workshop and you'd say I did say that in the first workshop I keep telling you I developed a chemical isomer that reduces vo sea emissions he didn't realize that the messaging was lost it was self-evident to him but we tried to tell him you need to hold people's hands and tell them exactly what the value is what is it it's an additive what are the target customers paint manufacturing companies nice and specific for a first sale the value it reduces the environmental impact of the products and the uniqueness for him is that it's cheap and easily applied because in the industry you know you don't apply those things after they're part of the manufacturing process usually so those are some examples kind of using the four criteria that I've given to you there are other ways of doing this there are lots of other templates and websites that you can go to and kind of fill in the blanks and put together a value proposition this is one from a company called sustain and they've got kind of different adjective boxes and different descriptor boxes adjectives describing your products superiority the generic name for the product more phrases describe in comparative benefit so that's kind of your uniqueness there and then a comparison of the price higher or lower same as competition and so on the only thing I think they're missing there is a target market and you need to put that right in your value proposition so it's obvious for whom you're delivering value but these if you want to check out these references later and go and play around with them feel free here's another one which looks kind of confusing it's from the balanced scorecard and they're looking at value as certain attributes products and service attributes the image you want to portray and the relationships you have with your customers those are the value you see your brewing and those are the values you articulate when you're talking to people so I thought I'd start with some examples so you know where we're trying to go where we're trying to lead you at the end of all this but all this talk about value begs the question what is value and what words are we using to describe it it's not entirely clear in workshops we often do brainstorming around this idea of value and what does it mean in business what does it means to you personally how do we use that word in everyday life and there are certain patterns that come up if we ask people to put them on their business goggles their business lens two things always come up time and money that's what people value right especially if you are running a business and you're doing I deal with their business you value cost savings and time savings or the ability to make money or the ability to save time but if we push past this there's dozens and dozens of value attributes that we can use benefits that we can speak to when we're talking about our product we can talk about an enabling function if I owned a grocery store and the truck driver brings me my vegetables every morning he's in enabling me he's allowing me to run my business and make a profit so the value he brings to me is that he enables a smooth functioning of my grocery store convenience quality the ability to customize something right it could cost more than the competition but if it's customizable then that's a value people are willing to pay for usability is it easy to use or is it difficult lower risk this is a huge one the more and more we kind of talk about this aspect at these workshops and with entrepreneurs lowering the risk to entry is a big big part of being an entrepreneur it's a value that you should consider having in your in your value proposition because if things are going fairly smoothly for a company they have to be convinced they have a pretty serious problem to disrupt the flow and to go with whatever it is you're offering you know people are very risk-averse they don't like change health it I mean that's what everybody cheers to on Christmas Day right good health you know it's it's like the most fundamental value of all and it can be used to sell stuff lots of stuff all right I'm thinking that's just today I was thinking about the baby and the Michelin tire right I mean they're talking about the health of your kids there's nothing more fundamental than that all right aesthetics beauty people value their status their social status they value things that are new right early adopters we'd call them they value things just because they're new they might not be any good but they got to be the first ones that the Apple store getting them right environmental values right you could sell a lot of stuff if you put that as a value of your product just put the word green in it somewhere and you'll sell more of them you'll probably be able to double the price too right I'm being too cynical you know 20 years ago that would never even have come up 30 years ago it would have no it would have what probably wouldn't have come up as a value now it's what everybody wants to talk about I'll make it green you know you can sell more and kind of a wider lens of that ethics your ethical values right people buy things you know there's the no sweatshop label movement people will pay more if that product or service aligns with their internal values social inclusion so kind of building community as a value and self-actualization which is a fancy word I'll explain in a moment so as we map these out and as we did this over the last few months at some of these workshops we realized there was patterns forming so I've drawn a dotted line here the valley is on the right-hand side here our generally values that you talk about when you're selling to businesses so a b2b sale saving time and saving money are what they're mainly interested in but they want quality convenience customizable they want it easy they want it low risk on the Left these are more emotional values and these are values that are often used to sell consumer products and consumer goods so they're not as rational and they're not as well thought out now that doesn't mean they're and mutually exclusive at all right I've drawn a oh you can tell my background is science I was gonna say I drew a semi permeable membrane there but I mean I drew a dotted line to show that it's it's not a it's not a wall right it's like a fence things can still get in and out but in general they kind of cluster on two sides like that so let me just give you some more examples and I'll show you what I mean so if we look at the values on the right there the b2b values I just want to go through some examples lowering risk a warranty right this is at consumer level as well but you know if you provide a warranty or some sort of guarantee with your product and say look try it for six months no risk you can return it I just want you to try it get them in there because they've got to take a risk to try a new product saving time right that's the Ford assembly line 1913 the Ford assembly line took the time of making one car from 12 hours to 12 minutes which of course allowed him to make a I think about 15 million of these things in about 10 years saving our making money astral is of course an ad company that Doritos pays an astral allows Doritos to make a lot of money because more people see the Doritos brand enabling function rolls-royce famous for making cars but they also make boats they make planes best R&D labs in the world to emphasize the fact that the rolls-royce expertise enables Boeing to fly their jets for every hour that a jet from Boeing is in the air working functioning rolls-royce gets paid so it's an interesting business model they don't only get paid when it breaks they get paid when it actually works right as an acknowledgement that okay your good work is allowing me Boeing to make more money convenience FreshBooks right is a great platform it gets all your invoicing and billing in one it's amazing quality IBM don't even really make personal computers anymore right this is where they focus on big scale solutions for companies and people pay a lot more for that IBM name because perceived or real the IBM logo comes with an assumption of quality customizable this is salesforce comm which is an online kind of cloud computing platform that people can use to track their and it's wonderfully customizable that the forms the reports you get back you can pretty much customize them to however you know you run your business and that's the power of this so again these are values I mean consider using these words in your value proposition you know XYZ industries enables you to save time and save money by employing our quality cloud completing platform or something like that I just you know fill in the blanks these are rat people can talk about these values they're overt they're rational if you ask them what do you need they can talk about this the ones on the left are more irrational right and that stuff people want and they might not even know they wanted usability use it you know stuff that's easy to use is definitely a value I originally had an iPod up here but then I began thinking I mean an iPod is kind of famous for being so usable but it's only usable in comparison to all the other electronic gizmos you know what's really usable is a book you're only one step away from interacting with the content this is such a successful technology that of course it's six hundred years later and we're still buying books right so if you're thinking about how usable your product is give it the book test is it as usable as a book if it comes with a instruction manual then you're going to need to hold people's hand through that health right that's an easy one aesthetics venetian blown glass right there's no other reason to buy this except that if you think it looks good status is that anybody recognize that that bag what what is it yeah it's a Louis Vuitton bag the logo is nowhere on it you just know right so if you have that bag you're saying something you're delivering a message it's that you value status and you value your status in this community newness the iPad which is actually in a Louis Vuitton iPad holder but of course the iPad even before it was shown whether it was good or not people wanted to have it those early adopters wanted to have it because they value newness self-actualization so this is a fancy word to basically talk about your inner your inner drive and this is this I stole this example from Dan Pink's book Drive we saw him speak a few months ago at Rotman here and he talks about staying at home on a Friday night playing the oboe why would people do such a thing if you're a rational economic person it doesn't make any economic sense to stay at home on a Friday night and playing oboe in fact it probably costs a lot of money that's probably an expensive oboe people do it of course because they have inner drives and inner values and inner motivation that this speaks to if if any of you have a background of the humanities you might recognize this as the very peak of Maslow's hierarchy right this is the this is the the pinnacle of kind of human experience as satisfying those inner values environmental right the Prius that's a value they're using to sell their stuff ethical something like 10,000 villages right which can charge more for their products I mean they're intertwined you could say well the stuffs beautiful right you could say maybe it's new you get their new shipment but the main idea there is that you know that the dollar you spend is going back to helping people who are at need there's an ethical dimension to your purchase and they use that value that's in their value proposition is that we provide ethical sourcing and ethical consumerism social inclusion Facebook right I can't tell you how many people say I wish I wasn't on Facebook but I just don't want to miss all the good parties you know that's why they're on Facebook again those b2c values are a little harder for people to talk about right if you ask a good guy well why do you why do you play oboe he's not gonna say it's a process of self actualization he's gonna say that he just loves it and it just makes him feel good so this begs the question how do you know which values to use to sell your product how do you know what values your target customers have that's the easiest way is you must get out of your office and you must go talk to people ten faces of innovation is a great book by Tom Kelley from ideal in San Francisco and he talks about putting on the face of an anthropologist not like sneaking around with lino watts and spying on scientists but you know you need to you need to go and visit your target customers and talk to them and figure out where they work and how they work what the dynamic is like and to ask them what do you need but you need to also watch because if you just ask people what they need sometimes they can't explain it I showed you Ford's assembly line there earlier and there's a famous quote from Henry Ford that says he said if I had asked people what they wanted they would have said a faster horse right not a car nobody would say oh you know what I really need is a motorized it needs four wheels motorized you know four people can sit in it it just didn't exist yet another technique you can use is what we call a day in the life scenario so once you have an idea of who your target customer is what industry they work in what their values are you can map out a day in the life so you pick a guy you pick your kind of prototypical archetypical cost give him a name Ernie this guy fixes airplanes and what we're gonna do with Ernie is we're gonna take him through like a before and after scenario kind of like a reality TV show before and after this is before and after your product came along so what you need to do for Ernie is we need to map out his current situation and what he wants to have happen so Ernie fixes airplanes and he basically wants those planes fixed quickly and accurately so that the planes can leave and make the company some money but he encounters a problem something he's never seen before in the in the depths of the engine of the airplane any consequences of that or of course that the airline company loses money so after Ernie has been enabled by your product which is an e-book reader and this allows him to search the database of all the of all the instruction manuals that the airline company has and quickly diagnose the problem and the economic rewards are that the plane takes off pretty quickly saving the the company some money okay so before and after scenario this is another way you can kind of dig into what your customers need this is another great tool that comes from Kerry met Kerry I mentioned for the for the business model workshop we use this book the Alexander Osterwalder book business model generation and in it he's got the customer empathy map which I really like it sounds nice and basically what it is it's is it's really trying to get into the head of your target customer and you ask yourself these questions what does my target customers think and feel when they're at work what are they what are they trying to do what are they trying to accomplish and what do they see when they do that what do they hear from their colleagues what do they hear from their boss what is their boss yelling at them and say you need to do better at blank that's the problem you're solving for them because then you know when when they're saying such things you can say I can solve that problem my company does blank and then you reel off your value proposition at the bottom pain and gain what current obstacles are they facing and how can you help them over that obstacle all this work on on target market brings up a really important question of course we can't visit our entire target market we can only talk to individuals we can only make approximations at some point you need to validate your assumptions about your target market this is something that Mars can help you do if you're registered as a Mars client you have access to the Mars market intelligence database and they cluster around the three kind of groups which is reds ICT Green is clean tech and blue is life sciences and social innovation is actually I think that's June in in life sciences that does that you can get data on size of market and all that market research you need to boost up your pitch okay so you need data to back up your assumptions at some point once you've got an idea of your target market or your target markets plural you need to prioritize them who has the most compelling problem who has the biggest financial problem which market is the easiest to access what values do you bring to those target customers and then you need to pick one to start right you can't launch your product at ten target markets at once it just doesn't work that way you can once you've got your value proposition for one target market I remind you again that here we're talking about paint manufacturing companies it's pretty easy to deliver the same value to another target market plastic chair manufacturers or solar panel manufacturers write his was a platform technology that can be used in many many different areas but we needed to prove that it worked in one factory with one product first and then you can move your way out from there there are some products that have what we call multiple stakeholders education is a lot of the work I do here at Mars with education clients education entrepreneurs health care is another one you've got so many stakeholders involved kind of trying to change the system is really really hard so in education we often talk about having a value proposition for your target customer but sometimes it's hard to figure out who you're actually selling to if all these people need to sign off on it to get it into a classroom say you've got some educational software or a book or an after-school program you need to convince all these people that what you do has value it's a lot of work but you need to come up with a separate value proposition for every one of these people because they value different things a teacher the teachers value saving time in the classroom they're overworked and they're exhausted that's the first question you'll get is do I have to do anything and that's the first thing that we get time is it aligned with the curriculum is this going to engage my students is it simple to set up and deliver do I need to spend an hour you know setting it up whereas if you jump down to a superintendent or the principal they're concerned with will this raise a standardized test scores will this address the board priorities of say bullying or literacy initiatives that the board is put in this year I mean they're concerned about the kids at the teacher level too but their immediate everyday concerns have different words to describe them they have different values that they need to that you need to speak to so this brings me to you know one of my last points which is that you know we talked about the Google's value proposition and identified Internet users as their customer this isn't entirely fair the Internet user is actually what we would call the end user who are the customers for Google yeah the advertisers exactly so if I'm in a pitch meeting there's no point pitching to an internet user because they get it for free right what we need to do is we need to pitch to the advertisers which is an entirely different value proposition so Google is the world's largest search engine that gives advertisers access to millions of potential customers by personalizing ads based on searched content so that describes the value for the advertiser who actually pays your bills above here that describes the value for the user the end user which is important for people to understand how it works basically the advice here is know who's in the room when you go give a pitch call beforehand say who's going to be there are these people who understand you know high-tech business models are these people who understand what a chemical isomer is this was an example that we got when we saw Alexander Osterwalder speak a few months ago and he introduced us to this lovely technology called the people bag now the people bag is as the name implies a bag that you go to the bathroom in and it biodegrades not so that it's environmentally neutral but it's actually an environmental benefit the bag actually has fertilizer in it so you can use it to fertilize farm fields so the people bag is what we will call double sided business model it requires two interdependent target customers so they need to value propositions the first one might look something like this the people bag is a cheap disposable outlet for human waste providing a hygienic option for Refugees and camps across East Africa I picked a very specific target market there I want to get this started in East African refugee camps there's the other side to this which is that the people bag is a cheap disposable outlet for human waste that turns into high quality fertilizer perfect for low income East African farmers to increase yield and avoid using expensive fossil fuel based fertilisers so those are like two sides of the same coin and again you need to know who you're talking to which side of the coin are you pitching at any given time the last thing I want to talk about is to speak to that I this idea of uniqueness and how you differentiate your product so this is a tool that comes from like a library up here blue ocean strategy right which is kind of a hot book these days lots of people use it it's nice because there's a few tools in there that you can do on your own there's a few tools that you can do with you with your colleagues and your companies and one of them that I really like is called the strategy canvas it looks like a graph but it's not a graph my background again in physics I was confused by this because I was trying to see it like a graph it's not a graph let me show you why on the bottom on the x-axis there is criteria people use when they're buying a product when you're going out to buy a new phone what do people think about and on the y-axis there you rate yourself how high or low do you rate along that criteria compared to your competitors this is the strategy canvas for Southwest Airlines taken straight from the book now it looks like a mess but it's not so bad Southwest Airlines is in green where's my laser pointer is in green here the average airlines they're comparing themselves is in purple and red is car transportation those are their competitors you know you might think well they're not really competing with a car they're a nail airline but the criteria is you know a person needs to get from point A to point B what do they think about well they think about speed no does this work they think about speed they think about how fast is it gonna take they think about the service hub connectivity seating choices lounges meals price is a big one how much is it gonna cost frequent point-to-point departures so I can I leave when I want now Southwest Airlines here the green has decided to be way lower than their competition they're not even gonna bother having meals on their flights you don't get to choose what sea you sit in they're getting getting rid of all those perks but friendly service and speed are there two differentiators the point here is not to be highest in every category or lowest in every category but to have a unique profile it's like a map of your business that shape and you need to focus on those data points where you're far away from your competitors because that's where you're different there's no point talking about something you know where you're you share data points because it's a non-starter you both have that there's another point here in the same book called the buyer utility grid when people ask you about the value of your product or how people use your product people always start here they think about it being used they think about it in use but that's not the only place that you can add value to your offering you can add value at the front end because people need to perform research on what on what they buy so where do they do that do they go to consumer reports that they ask their friends you could think of a strategic way of inserting your brand into that process how do you deliver people this stuff do they download it did you put it in a box and come to their front door is that a pleasant experience for them how about support and maintenance over time all right do you just give them give them their widget and then they never hear from you again or can you add value by providing a 24 hour a day help line and finally how do they get rid of it once they're done using it the disposal is there anything there you can add value we can use online banking as an example here when you're using online banking it's easy to be productive because you can pay lots of bills at the same time it's very convenient cuz all you got to do is sit down at a computer you don't have to actually go to the bank maintenance overtime you know it you know your your your browser remembers your password it remembers things for you you can pick up right where you left off and then of course it's environmentally friendly because at the end you're there's no piece of paper right when you want to check your balance if I was hired by the banks of Canada and asked to add value I would focus on this support column here if something goes wrong who do you call right you get stuck on a line for five hours with them telling you that you're very important and you get frustrated you know I think there's space in the industry here for somebody to basically advertise their support line as being simple convenient as having a friendly image right I mean you know the image is of these support lines are pretty a grim but you know that's that's an opportunity to add value so if you do these tools at home you can map out your own product and you can map out where you stand and where you wish to stand in terms of the values you're trying to bring your specific target customer these are the four things you need to think about so now I would suggest that you try and go home and write one thank you very much okay so we have time for time for questions nobody that's right you can send it to your adviser and I'll see what's the semi permeable membrane yeah the elevator picture my our value proposition so basically ours is that the problem is that conferences are boring so the treehouse group makes conferences that are not boring basically it I mean there's I mean there's I can go on but yeah yeah so here's a question when you're developing value propositions I can see two fundamental ways of classifying them one would be solving a problem for your client and the other one is is creating an incremental benefit that doesn't necessarily solve a problem that makes their life better in general what would you say would be the split are most value propositions solving problems or most value propositions increasing the goodness of potential customers lives that's a great question I would say in general it splits into b2b sales are more like you have a problem you need to solve this quickly so that your business can make more money the kind of incremental benefits the incremental value add is more directly to consumer that's the way I would kind of categorize it so it really depends in in industry you know today we were doing work with with clean tech companies and a lot of them are in manufacturing and material science and they're really problem-based find a problem in the factory and fix it you know and in charge people to fix it the kind of intrument incremental values that you're talking about they come up often in more consumer goods yeah yeah how is the value proposition different from the elevator pitch that's a good question so the value proposition is specifically for target customer I would say and the elevator pitch is just a general introduction on what it is you do the elevator pitch is could be used on anybody right that's kind of a grandmother test one the elevator pitch should be used on anybody so you assume they know nothing and you give them your your to sentence your to sentence beginning and again that's something that you I would write it down before you're stuck in an elevator with a VC and they ask oh what do you do and you go well we've got this chemical isomer that you know bonds the vo C emissions and you know so so write it out beforehand yeah I talked to a guy and he and he had his his elevator pitch down if somebody would said oh what do you do he had his sentence and he were he would rehearse that sentence right his wife was sick of it his family was sick of hearing it he'd say it in the mirror but it worked because people were like wow that sounds cool and of course the purpose of an elevator pitch is to get another meeting right it's not to fully explain what you do it's just to get the hook in so that the next time you see the guy you say remember me I'm the you know I'm the guy with this stuff in the paint or whatever and then and then you have a that that three minute conversation turns into a 10 minute conversation which ideally turns into an hour-long pitch to his team which turns into negotiations so it's kind of a stepping stone anybody else yeah right I mean the easiest question to ask yourself versus who pays my bills who writes me a check okay so then yeah then you need to separate value propositions I mean and unless they're so close in there in the industry that the same value proposition works but essentially you need to find out what's of most value to customer X what's a voz that most value to customer Y and kind of switch back and forth depending on who you're talking to you know yeah hi how do you communicate say a value that's very vague like self-actualization for something like that I don't think you can verbally you'd have to show somebody and take them through an experience so they feel so they feel the value you can't talk very rationally about values like that even about status and newness and social inclusion those are values that are that are latent values right they don't that they don't lend themselves well to talking about them so you basically need to show somebody and the experience if you want to be if you want to show them the value like Cirque du Soleil you couldn't pitch Cirque du Soleil on paper you got to go see it and then you get it that make sense yeah anybody else look at that 6:30 right on okay thanks very much

Channel: MaRS Startup Toolkit

Views: 7,508

Rating: 4.7058825 out of 5

Keywords: ent101, events, entrepreneurship, marketing, value, proposition, joe, wilson

Id: djSsG8Ldu20

Length: 58min 28sec (3508 seconds)

Published: Tue Dec 14 2010