Issue 26: Part 8 - A 5 stage process for Digital Transformation

Democratising and demystifying how to do it: Value Proposition Design

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In trying to explain Digital Transformation to organisations that are interested in it, we technical people tend to lose sight of the big picture and confuse business leaders by burying the discussion in technical jargon, this is direct feedback I’ve received recently. In order to deal with this, I thought I’d try to demystify the subject, this is my first attempt.

On to the issue.

In the previous issue, Issue 24: Part 7 …, I continued outlining the Digital Transformation methodology I use to help my clients structure their strategies for Digital Transformation. I hope this gives you insight for your own journey. Let me know if I've missed something or you would like me to discuss your own projects.

In issue 24, having exposed the staged methodology, I contextualised the segmentation and targeting process that is really about trying to understand your customers better in order to identify opportunities for Digital Transformation looking at it from their point of view. This is important in the sense that it approaches the problem from the opposite end of traditional product/service design — remember products and services can be internal projects in their scope. Too often we think of the buying customer and not the internal customer who is, in my mind, crucial to a well-functioning business — by investigating ideas for improvement that would illicit interest from them. We do this by identifying the JTBD (Jobs To Be Done) and testing where digital technologies can improve, speed up or lower the cost of “hiring” your product or service.

The issue then introduced the 5 levers of Digital Transformation and introduced the innovation process. Innovation goes hand in hand with the segmentation and targeting stage and is in fact a continuation of essentially the same process. I separated it out in its own section to emphasise the importance and outline the step-by-step process, points 1 to 11.

This is all hard work. It is slow, and it takes a lot of effort to get to the innovation stage. Don’t be discouraged though, starting the process and revisiting it after a short pause almost always produces new ideas for exploration. Take extra care in the data collection process though. I recently came across a case that I’ll write about in the future, but suffice to say that, decisions on data collection and rationalisation now can have profound impacts in how you can later exploit that data. As one of the levers is all about data, I'll go in to it in more detail at that point.

This issue continues from where I left off discussing the next lever to Digital Transformation, the Value Proposition.

Source: visionedgemarketing

Value Proposition

Hopefully you’ll note that this lever is again, a continuation of the previous one, that’s deliberate. Your value proposition is there to make your clients understand quickly and simply why they should use your products or services as opposed to your competitions’.

In dealing with companies over the last few years, a businesses or products’ value proposition is not always well defined or well-articulated. Often, the value proposition is simply a bullet list of why our product is cheaper than someone else’s. I hate to pop the balloon, but this is not a value proposition.

There are a number of things that a value proposition should be, but to get a better hone on that it’s important to understand what it is not. I’ll outline a few examples here to get a feel for where I'm headed.

The VP should not, under any circumstances, be a list of how much better than the competition you are. Sure, it’s ok to point out differences and point out that you are in fact better than the competing product. It should be done by highlighting the real advantages of your product or service, full stop. For example, don’t say that your product is cheaper or faster than a competing product, highlight where your product will enable the client to get a JTBD faster and more efficiently. Saying you’re cheaper only tells your clients you are, well, … cheap. Ugh!

Avoid listing technical jargon where it concerns your products. That’s so 1990’s (/sarcasm). It's true that to sell a PC in the 90’s, it was important to list the processor type, model number and clock speed to differentiate yourself from the competing builders. But as we saw back then, this only has limited impact, because before long, a competitor can list the same things and possibly even better specifications than you. This is a zero-sum game.

Additionally, don’t list your honesty and integrity as a selling point, no one cares when it comes to digital transactions. A slogan is a slogan, not a value proposition. And lastly, don’t write your CV. You’d be surprised!

This of course, begs the question “What is a Value Proposition?”

Putting it simply, it should intrinsically detail the value you propose to deliver to your potential clients. The value being the effect your product or service has on the clients’ ability to get his or her JTBD faster, easier, cheaper, more elegantly etc. It should additionally explain in simple terms how using your product/service it solves their specific problem. Lastly, it details how you deliver those specific benefits and it explains to your customers why they should use your services.

A good example of this is the privacy-oriented search engine DuckDuckGo. DuckDuckGo highlighted a number of years back that the incumbent search engines were using the fact that discovery is central to Digital Transformation to track your internet usage in order to either sell ads against that collected knowledge or sell that information to those that would attach ads. The result of their engineering and value proposition design, resulted in the following value proposition:

DuckDuckGo. The search engine that doesn’t track you. Switch to DuckDuckGo and take back your privacy. We don’t store personal info about you. We don’t follow you around with ads. We don’t track you. Ever.

The value proposition is targeted (segmentation) at an audience sensitive to the fact that they were being tracked and targeted by ads based on what they’d searched for. Their promise, no ads, no tracking and good search results. That’s it, simple, concise, and accurate. This VP is simply a statement of what, how and what value the offering is, behind it a team of designers and engineers built a product that respected these values to the letter. That’s the lesson from developing your own VP. Design it to address the needs identified — A problem looking for a solution if you will, rather than a solution looking for a problem!

Developing your own VP is, like the other steps, a continuation of all the work you’ve done up until now. You’ve understood your potential customers through the empathy map, you’ve selected a segment that aligns with them and you’ve extracted the JTBD and classified them according to importance. The value proposition design is largely a brainstorming exercise in ideating what products and services could fulfil the requirements of the JTBD to provide value to them.

After proceeding through the earlier stages in the Digital Transformation methodology, you should have identified a number of areas in which either your current products and services can be bettered digitally or identified entirely new opportunities for business. Once you have this classified (by importance) list of products or services ideas that address the JTBD model, you then need to test them. I briefly talked about prototyping in issue 24, but here it is more critical in determining the next steps.

The first step is selecting one of either the pain points or the gain creators identified and prototyping that solution with your intended target. A very rough cut which addresses that need is all that is required. This will not be the complete value proposition, as it only addresses one of the areas in which your new offering can help. This process is repeated over and over to build up a more complete solution with each iteration being tested.

Testing can take multiple forms and it doesn’t have to be an actual development of an application or the build of a basic prototype, you can rely on today’s digital services that are both easy and relatively cheap to use. For an application, several app building websites exist that throw up a convincing mock-up very quickly allowing you to get it into the hands of your target audience for direct feedback. As mentioned previously, access to 3D printers has been completely democratised, again, allowing you to build a rough model to touch and feel, inciting physical feedback responses from your testers. It doesn’t stop there either. Recent advances in Augmented Reality provide an excellent platform for designing and building test model and placing them in the “real world” for manipulation.

This feedback should be noted, analysed and assessed. It is important data that will need to be revisited both immediately, and in the future, when you go through this cycle again — historical data generated helps understand current trends and helps avoid old mistakes.

At this stage you have enough data and feedback to make a decision on what to keep, what to put aside (perhaps because its needs maturing) and what you should outright reject. Which leads us to the last step which is to write down in unambiguous terms — like we’ve seen in the DuckDuckGo example — an expression of your value proposition. It is really important to keep in mind that we develop this from first principles looking at the Jobs To Be Done from the clients’ perspective and not your own, and we gradually build up one, two, then more “solutions” to these identified pains and gains your potential clients a looking to alleviate and benefit from.

You can either use a value proposition template, you’ll find thousands of them online, or simply get right to the point like DuckDuckGo. Here’s a couple of other examples.

Evernote (Note taking applications and cloud services)

Remember Everything. Capture Anything. Access Anywhere. Find Things Fast.

Square (Online payments)

Start accepting Credit Cards today. Sign up and we’ll mail you a free card reader.

One last point before I leave you, your Value Proposition will ultimately become old and stale as both your product or service matures and changes and when your competition evolves possibly catching up or surpassing your offering, so Value Proposition Design is an ongoing process that needs to be done regularly, from a fresh perspective each time. Remember, nothing exists in a vacuum.

Get in touch. I can help you through this process painlessly and enjoyably.

I hope this puts in to perspective and helps you start your own process. If you have any questions or want to discuss your own projects, please let me know, I’d be only too happy to see how I can help out.

Reading List

Photo by Jonas Jacobsson on Unsplash

The Radical Transformation of the Textbook

FOR SEVERAL DECADES, textbook publishers followed the same basic model: Pitch a hefty tome of knowledge to faculty for inclusion in lesson plans; charge students an equally hefty sum; revise and update its content as needed every few years. Repeat. But the last several years have seen a shift at colleges and universities—one that has more recently turned tectonic.

Nice article from Wired about the Digital Transformation of textbooks and the opportunities and downsides.

Microsoft catches Russian state hackers using IoT devices to breach networks

Microsoft researchers discovered the attacks in April, when a voice-over-IP phone, an office printer, and a video decoder in multiple customer locations were communicating with servers belonging to “Strontium,” a Russian government hacking group better known as Fancy Bear or APT28.

I’ve not yet discussed IoT (Internet of Things) and the role of the technology in Digital Transformation, but its on my list. This is a sobering example of the dangers, however. Enjoy.

We've had Generations X, Y and Z: Meet Generation Alpha

I love this article and articles like these. Whilst not strictly Digital Transformation, they are very informative of the next wave to come and should provide insight when you are doing what I’ve discussed in this issue and the previous ones in the series.

The Future is Digital Newsletter is intended for anyone interesting in learning about Digital Transformation and how it affects their business. I strongly encourage you to forward it to people you feel may be interested.

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