Value Props: Create a Product People Will Actually Buy
- Value propositions are critical because they address valuable problems that make a product worth investing in.
- The workshop aims to help viewers define, evaluate, and create value propositions using a framework approach.
Define (00:01:56) and Who (00:04:18)
- A structured approach is proposed for defining value propositions: identifying the target audience, their dissatisfaction, unmet needs, and how the product addresses these to offer compelling benefits.
- Identifying "who" the product or service is for is crucial to avoid targeting too broad an audience.
- Examples are given of how to narrow down the target market to specific groups, such as children in Kazakhstan lacking digital literacy.
User vs Customer (00:04:54) and Segment (00:07:35)
- Distinguishing between the user (the one benefiting from a product) and the customer (the one paying) is fundamental; both their needs must be met by the value proposition.
- The concept of minimum viable segment (MVS) is introduced to focus efforts on a specific group with uniform needs, complementing the product development strategy of creating a minimum viable product (MVP).
- It's critical to evaluate the product value proposition through the customer's perspective, engaging directly with potential users and interpreting their feedback regarding whether they feel the product addresses their problems effectively.
A famous statement (00:10:22) and For use (00:11:13)
- A well-articulated problem is deemed half-solved, highlighting the importance of clear identification of pain points or opportunities.
- The FOR USE framework is presented to categorize problems as Unworkable, Unavoidable, Urgent, and Underserved, providing a structure for identifying the types of issues a product should address.
- Unworkable problems can have severe consequences, like job loss.
- The iPhone's initial activation issue is cited as an example of an unworkable problem.
- These problems can also be social, affecting education and resources, illustrating a larger social divide.
Taxes and Death (00:19:57)
- Taxes and death (aging) are unavoidable aspects of life that create massive industries.
- The accounting industry, in particular, thrives due to the necessity of managing taxes.
- There are less obvious unavoidable things that become apparent upon reflection, such as the necessity of education for self-sufficiency.
- The COVID-19 pandemic gave rise to new businesses and industries in health, such as mask production and testing services.
- Urgency differs by perspective; what's urgent to one group may not be to another.
- The example of space health services is important for particular customers, like space tourists, illustrating the necessity of targeting the right segment for whom the issue is urgent.
- Urgency in product relevance is relative; not all products are important to everyone.
- In business, competition for time, money, and resources is inevitable—products must be high priority to gain attention.
- Sales should focus on the customer's immediate needs and priorities, not just nice-to-haves.
- Asking customers about their top priorities can reveal pain points a product may address.
- Market shifts can create urgency, such as the rise of mobile phones and AI, shaping industries and consumer behavior.
- Startups can identify and respond to emergent needs, sometimes helping to shape policy or market demand.
- Limited resources mean that products must be compelling enough to be prioritized by customers.
- In B2C markets, understanding and catering to underserved needs can create strong value propositions.
- Example given on Kenyan coffee: addressing both the lack of local supply and the high cost of local products.
Unavoidable Urgent (00:31:30)
- Products that solve critical, unavoidable, and immediate problems are more compelling.
- The example given of a company catering to menopausal women, addressing an unavoidable condition with insufficient support and resources.
- It's vital for startups to find or identify a problem that is of the highest importance over other resource allocations.
- Recognizing that not all socially-focused problems are best solved by a startup; some may require governmental policy changes.
- Reframing a product’s purpose to emphasize how it addresses an urgent and costly problem can enhance its perceived value.
Maslow's Hierarchy (00:37:23)
- Facebook addresses basic human needs of connection, which alleviate loneliness and promote happiness.
- Social connections are fundamental to well-being, as evidenced by a long-term Harvard happiness study.
- Social networks serve the important function of connecting people with similar interests.
- Bumble and other dating services meet the significant need for romantic connections.
- Services like WhatsApp fulfill the need for inexpensive communication, especially for those in foreign countries staying in touch with family.
- Financial services are being revolutionized by social networks like Weibo and Tencent in China, making payments more accessible.
- Rent the Runway is an example of meeting urgent, unavoidable, and underserved needs for affordable fashion for important events.
- Solely having a great value proposition is not enough for business sustainability; economic viability is critical as well.
Latent Needs (00:42:12)
- Latent needs, such as the aspiration to look good, can evolve into critical needs.
- iPads were not initially seen as critical but became so through various applications like navigation for pilots and tools for medical professionals.
- Businesses should aim to transition their products from 'nice to have' to 'must have'.
- Understanding user needs can transform a product's perceived criticality, as seen with the iPad's evolution.
- Steve Jobs's vision with the iPad led to the creation of a platform that spurred vast application development.
- Success can come from making a platform flexible for user-driven problem-solving.
- Examples like open source platforms exemplify the potential to extend products, creating entire industries.
- Pebble and Apple Watch are contrasted, showing the importance of an open platform and a robust developer community.
In summary, understanding human needs and creating products that serve them, from basic social connections to professional utility, is essential. Products like Facebook, Bumble, WhatsApp, and Rent the Runway exemplify this practice. Additionally, the transformation from latent to critical needs can be seen in technology like the iPad, which gains essential status through varied applications. Platform flexibility and community development are pivotal aspects for product evolution and success, as demonstrated in the case of the Apple Watch's rise in contrast to Pebble's struggles.