Value Proposition: what problem do you solve?
The Value Proposition is the heart of the Business Model Canvas. It describes what makes your offering valuable to a specific customer segment and why customers choose you over the alternative.
Value Proposition: what problem do you solve?
The Value Proposition is the reason customers choose you. It is the bundle of products and services that creates value for a specific Customer Segment by solving a problem or satisfying a need.
It sits at the centre of the Business Model Canvas because everything else exists to create and deliver this proposition. Channels, relationships, activities, revenue. All of it points back here.
What creates value?
Osterwalder identifies several value-creating elements:
Newness. Satisfying a need customers did not know they had. First smartphones. Streaming music.
Performance. Improving what a product or service does. A faster laptop. A more accurate diagnostic tool.
Customisation. Tailoring products to individual customers. Mass customisation. Personal training programmes.
Getting the job done. Helping customers complete a specific task they struggle with. Accountancy software. Canvas tools.
Design. Matters enormously in fashion, consumer electronics and luxury goods.
Brand and status. The value of wearing a Rolex or driving a certain car.
Price. Offering similar value at a lower price. Budget airlines. Supermarket own brands.
Cost reduction. Helping customers spend less. CRM software that eliminates manual admin.
Risk reduction. Reducing the risk customers face. A warranty. A consultant who guarantees results.
Accessibility. Making something available that was previously out of reach. Online banking. Telemedicine.
Convenience and usability. Making things easier. One-click checkout. Cloud storage.
Value Proposition vs. product description
A product description says what it is. A value proposition says why it matters.
"Cloud-based canvas builder" is a product description. "Build your first Business Model Canvas in 30 minutes, share it with a client link and never lose work again" is a value proposition.
We see this confusion constantly. Teams spend weeks perfecting their product description and never articulate the actual value. Start with the customer's problem and work backwards.
Matching proposition to segment
Every value proposition belongs to a specific Customer Segment. A business can have multiple propositions for different segments. A consultancy might offer "rapid strategy alignment" for SME founders and "team workshop facilitation" for corporate innovation leads.
These are genuinely different propositions for genuinely different people. Treating them as one blurs everything.
Questions to explore with clients
- What problem do you solve for your customer, and how painful is that problem?
- Why do customers choose you instead of doing nothing or using a competitor?
- Which element of value is most important to your customer: price, speed or quality?
- Do different customer segments value different things about your offering?
- What do customers complain about most, and does your proposition address that?
- If you had to describe your value in one sentence, what would it be?