4: Evolve

Use the Value Proposition and Business Model Canvas as a shared language to Create Alignment throughout every part of your organization while it continuously evolves. Make sure you constantly Measure and Monitor your value propositions and business models in order to Improve Relentlessly and Reinvent Yourself Constantly.

Create Alignment

The Value Proposition Canvas is an excellent alignment tool. It helps you communicate to different stakeholders which customer jobs, pains, and gains you are focusing on and explains how exactly your products and services relieve pains and create gains.

Craft aligned messages.
	Advertising
	Slide Decks
	Explainer Videos
	Packaging
	Sales Scripts

Align internal and external stakeholders.
	(Channel) Partners Bring (channel) partners on board, and explain your value proposition. Help them understand why customers will love your products and services by highlighting pain relievers and gain creators.
	Marketing Craft marketing messages based on the jobs, pains, and gains your products and services are helping with. Align customer-facing messaging all the way from advertising to package design. Point out which pain relievers and gain creators to focus on.
	Employees Help all employees understand which customers you are targeting and which jobs, pains, and gains you are addressing, and outline how exactly your products and services will create value for customers. Explain how the value proposition fits into the business model.
	Sales Help sales understand which segments to target and what customers’ jobs, pains, and gains are. Highlight which attributes of your value proposition are most likely to sell by relieving pains and creating gains. Align sales scripts and pitch decks.
	Shareholders Explain to your shareholders how exactly you intend to create value for your customers. Clarify how the (new or improved) value proposition will bolster your business model and create a competitive advantage.

Measure and Monitor

Use the Value Proposition and Business Model Canvases to create and monitorspan performance indicators once your value proposition is operational in the market. Track the performance of your business model, your value proposition, and your customers’ satisfaction.

Business Model Performance

Value Proposition Performance (Quantitative Facts)

Customer Satisfaction 262 (Perception)

Target	50%	25%	****	80% satisfied with balance
Indicator	# workshop guide downloads by readers who signed up online	conversion rate from book to online sign-up	rating on Amazon.com	# of readers who feel theory/practice is good
Building Block

Improve Relentlessly

Use the same tools and processes from testing and monitoring to improve your value proposition once it’s in the market. Continuously test “what if” improvement scenarios, and measure their impact on customer satisfaction.

Reinvent Yourself Constantly

Successful companies create value propositions that sell embedded in business models that work. Outstanding companies do so continuously. They create new value propositions and business models while they are successful.

Today’s enterprise must be agile and develop what Columbia Business School Professor Rita McGrath calls transient advantages in her book The End of Competitive Advantage. She argues that companies must develop the ability to rapidly and continuously address new opportunities, rather than search for increasingly unsustainable long-term competitive advantages.

Use the tools and processes of Value Proposition Design to continuously reinvent yourself and create new value propositions embedded in great business models.

Five things to remember when you build transient advantages:

• Take the exploration of new value propositions and business models just as seriously as the execution of existing ones.
• Invest in continuously experimenting with new value propositions and business models rather than making big bold uncertain bets.
• Reinvent yourself while you are successful; don’t wait for a crisis to force you to.
• See new ideas and opportunities as a means to energize and mobilize employees and customers rather than a risky endeavor.
• Use customer experiments as a yardstick to judge new ideas and opportunities rather than the opinions of managers, strategists, or experts.

Continuously ask yourself…

What elements in your environment are changing? What do market, technology, regulatory, macroeconomic, or competitive changes mean for your value propositions and business models? Do those changes offer an opportunity to explore new possibilities or could they be a threat that might disrupt you?

Is your business model expiring? Do you need to add new resources or activities? Do the existing ones offer an opportunity to expand your business model? Could you bolster your existing business model or should you build completely new ones? Is your business model portfolio fit for the future?

Is your value proposition still compelling to your customers? How are your customer’s jobs, pains, and gains evolving? Can you build on your existing value proposition or do you need to revisit it entirely? Is there a new potential customer or a new segmentation emerging? What is happening in your business that creates the basis for new value propositions to existing or new customers?

Taobao: Reinventing (E-)Commerce

Taobao is the Chinese e-commerce phenomenon, part of the Alibaba Group. It is credited with ushering in a new wave of commerce in China by using the Internet to create an ecosystem where trusted commercial exchanges could take place. In 10 years it evolved its business models three times. It proactively embraced the changes taking place on its platform and in the wider Chinese economy and turned them into an opportunity.

2003
A new Consumer-to-Consumer (C2C) Platform

1
Obstacles to commerce in the Chinese economy

Lack of infrastructure to do business

Consumers discouraged by high prices, low quality, and lack of trust.

2
Creation of a trusted platform

Launch of a payment and logistics infrastructure with partners to facilitate commercial transactions and shipment of goods.

Creation of a new value proposition for buyers and sellers

Introduction of a review system creates trust among buyers and sellers that did not exist in the physical economy

2006
Taobao — Small Business-to-Consumer (B2C)

1
Birth of microentrepreneurs

The Taobao platform becomes so popular that millions of sellers see an opportunity to become micro-entrepreneurs

Creation of the “Taobao University” to help entrepreneurs navigate the platform and learn about business

2
Pivot toward microentrepreneurs

Taobao shifts focus and builds on this trend by catering to micro-entrepreneurs

Inclusion of third-party service providers to strengthen the value proposition

2008
Taobao — Big Business-to-Consumer (B2C)

1
A new asset is revealed

Taobao realizes that its business model possesses an incredible asset: hundreds of millions of Chinese consumers.

2
Launch of a new business

The “new” asset becomes the basis of a new value proposition

…for a new customer (big brands)…

…helping them reach Chinese consumers much faster than through the opening of physical stores.

2013
Taobao — ?

Taobao went from a simple e-commerce platform to complex ecosystem in 10 years. It achieved this by improving and reinventing its value propositions and business models on the way. With new developments in mobile, gaming, messaging, and more, however, the company can’t rest on its laurels. Taobao is constantly challenged to continue its evolution.

Lessons Learned

Create Alignment

The Value Proposition and Business Model Canvases are excellent alignment tools. Use them as a shared language to create better collaboration across the different parts of your organization. Help every stakeholder understand how exactly you intend to create value for your customers and your business.

Measure, Monitor, Improve

Track the performance of your value propositions over time to make sure you continue to create customer value while market conditions change. Use the same tools and processes to improve your value propositions, which you used to design them.

Reinvent While Successful

Don’t wait with reinventing your value propositions and business models. Do so before before market conditions force you to, because it might be too late. Create organizational structures that allow you to improve existing value propositions and business models and invent new ones at the same time.