Value proposition design

Source: Value Props: Create a Product People Will Actually Buy, Harvard Innovation Labs, 1:27:29, uploaded 2023-04-01.

A value proposition starts before the pitch. It starts with a specific user, a painful enough problem, and a reason the customer would change behaviour now. Michael Skok’s workshop is structured as three passes—define, build, and evaluate—and repeatedly returns student ventures to the customer’s account of the problem.

Get rid of the idea of ideas

Skok opens by calling ideas free-floating and cheap. They gain meaning only when attached to a problem or opportunity. The workshop’s promised “answer” is consequently a framework rather than a business idea:

For a specific person dissatisfied with a current condition because of an unmet need, this product supplies a defined benefit compelling enough to cause adoption.

The sentence is the final compression. Most of the workshop is devoted to earning each part of it.

Define exactly who

Connected, a nonprofit bridging Kazakhstan’s digital divide, supplies the first correction. “Children” is narrowed to children in marginalised rural communities who lack equipment and basic digital literacy. This specificity determines whom to interview, what language to use, and which route to market can be tested. “Everybody” makes even the largest organisation boil the ocean.

User and customer may differ. A child uses the equipment while a government, donor, or organisation pays. That creates two value propositions. User benefit produces pull; payer benefit releases the budget. Starting with the payer while the user receives no value creates a funded product nobody adopts.

The minimum viable segment is the market equivalent of an MVP. Find the smallest group whose members share enough of the same need that the same first product can be sold repeatedly. Targeting the whole market pulls a young product in incompatible directions.

The test is free and uncomfortable: speak to the people without pitching. Ask until someone recognises both the problem and pain large enough to engage. If they say “that isn’t me,” the segment or problem is still wrong.

State the problem before assigning engineers

“A problem well stated is half solved” becomes an organisational rule. Five engineers cannot align on a product if the team cannot agree which pain and person it serves. The workshop uses the four U’s to determine whether a stated problem has weight.

Unworkable

An unworkable condition creates consequences severe enough that somebody could be fired, become ill, lose access, or face institutional failure. Early iPhone buyers could not activate devices or restore contacts and calendars. The workflow failure was worth tens of millions of dollars to solve for carriers because it made the celebrated device unusable.

The category also includes social failure. Digital exclusion in Kazakhstan contributes to educational and economic inequality; lower graduation rates for Black students perpetuate inequality. The point is not to dramatise every inconvenience. Ask what happens if the problem remains and follow the chain to measurable consequence.

A student’s oral-cancer example makes the diagnostic risk explicit: low diagnosis might come from poor awareness or poor access to care. Calling the wrong cause unworkable directs the entire venture at a symptom. Users have to reveal the root.

Unavoidable

Taxes and death are the memorable anchors. Aging, education, health, compliance, and infrastructure create needs that people or institutions cannot simply abandon. COVID-19 produced chains of unavoidable demand extending from vaccination and testing to masks and their supply systems.

Unavoidability can sit at different levels. Children need education to become self-sufficient; governments need an educated population to remain economically viable. The buyer’s reason may differ from the user’s.

Urgent

Urgency is relative to a segment and its competing priorities. Space medicine is remote for most people and immediate for a commercial space operator responsible for passengers. A useful product can remain unfunded because the buyer must first fix a security breach, feed a family, or solve another higher-ranked problem.

The interview should therefore ask: what is your number-one priority tomorrow, and when will you reach number two? Market shifts can also create urgency. Mobile phones forced banks to move services from branches to apps. AI creates a similar scramble across processes now.

Underserved

An underserved segment cannot obtain an adequate answer at an acceptable price, quality, location, or fit. Taste of Kenya describes low-income Kenyan consumers unable to afford locally grown coffee and falling back to imported instant coffee. Menopause care combines unavoidable symptoms with very low research attention and insufficient practical guidance.

The four U’s can also reveal that a startup is the wrong vehicle. One team concluded that its issue first required policy. Skok treats abandoning an unsuitable startup as a successful result: recognising the actual intervention saves years.

Consumer needs can begin latent

Facebook does not solve a problem that ordinarily gets an executive fired. It addresses connection, a deep human need whose product expression was latent before social networks made it obvious. Skok uses Maslow’s hierarchy and the Harvard longitudinal study of happiness to connect social tools to belonging rather than to the mechanics of posting.

Consumer products often travel from latent and aspirational to blatant and critical. A smartphone began as an optional object and became infrastructure for work, banking, navigation, and contact. The business must explain how a desired novelty becomes a must-have, rather than pretending it already is one.

The product is only one dependency

A smartphone without a carrier network and useful apps is a brick. Apple Pay needs merchants, banks, devices, and trust. A Tesla’s value depends partly on charging availability. The “whole product” is the complete experience required for the customer to receive the promise; most startups control only part of it.

Mapping dependencies exposes external failure points, partners, sequencing, and cold starts before the team markets an incomplete solution as though the missing pieces will appear.

Replace faster, better, cheaper with the three D’s

Every startup claims to be faster, better, or cheaper. An incumbent with more resources can often copy those properties, so the workshop asks whether the value is:

• Disruptive: a technology or business model changes access, cost, or use. Airbnb connects unused homes and travellers without owning hotels; Google’s ad-supported software challenged paid suites.
• Discontinuous: the product makes previously impossible behaviour practical. Multitouch replaced fixed controls with an interface that can change by context; AWS exposed Amazon’s compute and storage infrastructure as a service on which others could build.
• Defensible: IP, contracts, data, network effects, switching costs, workflow integration, or operational knowledge make copying insufficient. A better empty social network loses to the network where one’s contacts already are.

Amazon illustrates a sequence across the terms. Its original bookstore used the internet’s long tail to offer selection unavailable in physical shops, then combined low prices and fast delivery through scale. AWS turned infrastructure built for that scale into a discontinuous platform.

Defensibility can emerge from use. A pharmaceutical analysis tool embedded in interpretation and internal communication becomes costly to replace. A face-response dataset improves as more marketers contribute. A bike seat that changes shape from live pressure data may combine patents, proprietary data, and contracts with bike-share operators.

Evaluate the before and after

Write the painful before state and the materially different after state. For menopause care, the before includes symptoms severe enough to impair work, family life, and health; the after is restored function and quality of life. For Kenyan coffee, the before can end in farmers removing coffee trees and local consumers losing access to their own product.

The exercise should push beyond “nice vitamin” toward necessity without inventing catastrophe. Customer interviews supply the real extremes.

The gain–pain ratio

Adoption depends on the promised gain relative to every cost of change. Venmo eventually made person-to-person payment easier than writing a cheque, but early users faced another app, bank connection, security doubt, and a network too small to be useful.

Asking only what customers like conceals this denominator. Ask repeatedly: why would you not buy? Answers include insufficient need, price, training, procurement, supply-chain disruption, integration, startup survival risk, search, trial, purchase, switching, and ownership.

There is no universal ratio. A pharmaceutical company replacing a validated workflow may require an order-of-magnitude improvement; a consumer may switch for a smaller saving when trial is nearly free. Low trial pain also makes deletion easy, so durable value must continue after installation.

The best evidence is pull: customers insist on the problem, accept the transition cost, and help explain why the new state matters. Until then, a crisp sentence is still only a hypothesis.

Assemble the proposition around founder fit

The final statement now has earned components: a minimum viable segment with a blatant or emerging critical need; dissatisfaction expressed through the four U’s; a whole solution with dependencies; a disruptive, discontinuous, or defensible benefit; and a gain large enough to overcome adoption pain.

Skok closes by adding founder and business-model fit. If the team has no distinctive understanding of the problem or ability to deliver the answer, better-informed competitors have the advantage. Customer value must join a sustainable model and a reason this team can build it.

Takeaways

• Define the customer before defining the product.
• Use customer interviews to surface pain, not to sell the idea.
• Test the problem with the four U’s.
• Map the whole solution, including dependencies outside the product.
• Make the before-and-after state concrete.
• Treat adoption pain as part of the value proposition.

Caveat

The frameworks are diagnostic prompts, not proof. Terms such as “10x,” “critical,” and “disruptive” invite inflation unless customers, observed behaviour, and economics supply the comparison.

Related: startup timing, startup funding, marketing as context, blitzscaling.