You have an idea for a product, and you would like to launch it. Great!
Do you also have the confidence that customers will buy your product, and that product will succeed on the market?
The first thing I learned about product development is that any product worth building must solve real user problems and has to do that better than the competition. To achieve that, we must implement the Product Discovery, an iterative process which involves identifying and validating new business ideas, developing a deep understanding of customers and finding out how to create solutions which will bring value to users.
A crucial step in developing a product is value proposition design. You need to be able to design a unique value proposition so that customers will be willing to pay for what you create and switch to you from competitors. Therefore, an important part of this process is understanding how your value proposition performs in comparison to competitors. Namely, customers always evaluate products on the market in relation to other solutions that are already available to them. So competitors and existing solutions significantly affect how users will perceive the value a product promises to deliver.
A tool that can help companies address competitors in the industry and discover new opportunities to design a unique value proposition is Strategy Canvas. Strategy canvas was introduced in a Blue Ocean Strategy book by W. Chan Kim and Renée Mauborgne and has been used mostly in corporate strategy. According to the Blue Ocean strategy, all high-performing companies have one common denominator. They shift away from the "beat the competition" mindset and look for alternative ways to create higher value in uncontested markets instead. In that sense, strategy canvas is also a beneficial tool for startups looking to find unique ways to create value and differentiate themselves from others on the market.
This graph shows a strategy canvas for Southwest airlines, a famous example from the Blue Ocean Strategy book. The lines we see on this graph are value curves which represent the strategy of each competitor. Southwest Airlines have a different value curve in comparison to their competitors, which signifies that their strategy differs from strategies of their rivals within the industry. The company decided to distinguish themselves by offering increased value in areas where their competitor's investments, and therefore offerings were average or low. At the same time, they decreased investment in factors where many other competitors' efforts were high. For instance, Southwest Airlines reduced price, as well as meal-offering, lounges, seating choices and hub connections. As a result, they were able to invest and offer more in friendly service, speed and frequent departures.
In the same way, startups can use a strategy canvas tool when designing a value proposition. With value curves visually presenting strategies of competitors, it is easier to examine what is already present on the market and what could be a novelty. They can analyse what customers might be missing within a specific industry. With such insights, startup teams can strategically decide where they want to increase or reduce efforts to bring higher value to buyers.
Recently, we helped our client to design a value proposition for their business and to discover how they should differentiate their product from others on the market. We listed key factors of competition - factors that matter the most to customers, on a horizontal axis and marked to what degree competitors invest in each of these factors on a vertical axis. Then, we draw a value curve which connected offering levels for each of the competitors. These value curves revealed to what degree each of them invests in a particular competitive factor. With value curves of crucial competitors displayed in one graph, we were better able to assess possible threats on the market and evaluate space for new opportunities within that industry. The team was able to refine their business idea accordingly, in a way to create a unique value proposition.
Analysing competitors that way, it was also easier to see whether their offerings are similar or unique from a customer's perspective. That is because the competitive analysis done with a strategy canvas tool concentrates on the key industry factors, which are things that customers value the most. Competitors who have a look-alike value curve most likely provide similar value customers. The risk of customers choosing a rival's product, in that case, is higher than it would be if a company had a distinguished strategic focus and hence offered unique value.
It is important to note that the basis for an effective strategy canvas exercise is preliminary research. We must know the market and target customers to discover what matters the most to customers and decide which key factors of competition we will compare on the canvas. That is why we at d.labs combine market research with user research, to find out what matters to customers, what are their underserved needs, their pains and gains and what are their jobs-to-be-done. After doing research, we are better able to determine factors in which companies within the industry invest in and which matter the most from the customer's point of view.
That is how we empower founders with whom we work. We help them to make informed decisions about the product, the strategy, and to plan where to focus their efforts so they will create higher value for customers. Evaluating opportunities in that manner helps to keep user-centric focus and at the same time allows to plan effectively. Strategy Canvas can also be an insightful, easy to grasp presentation for potential investors and other stakeholders. It helps everyone to understand the strategic profile of the industry and how you are coming into play. If you need help with finding unique paths to solving real customer problems, don't hesitate to reach out to us. We have the tools and techniques that will help you to find the answer quickly and effectively. To develop great products, you don't need to be extraordinary. All you need is to use the right tools at the right time. And that's why we are here for you.
Want to chat more about your tech venture and how we can help? Get in touch at email@example.com.