“1,000 songs fit right in my pocket” is how Steve Jobs introduced the iPod in 2003. A simple but powerful Value Proposition statement articulating the iPod’s value to customers. In seven words we understood we no longer had to carry a CD case, worry about creating “mixed tapes,” or buy whole albums for only one hit song. It promised that we could have all our favorite songs in our pockets, anywhere, at any time, and our fingertips.

Understanding the importance of value proposition is even more critical in this current age of exponential emergent technologies. AI will solve many problems, as will blockchain, and 3D printing. Still, product teams must be weary of “slapping” AI or Blockchain to an existing product, without fully understanding the customer problem the technology will solve and how the business model will need to change. In many cases, these emergent technologies will solve latent problems, that is problems that have become such a part of life, that the customer doesn’t even realize they have them. Back to the iPod example, most music consumers in the late 1990s carried CD cases, or mixed CDs to listen to their favorite playlists. That was life. The problem of having to carry a CD case or of wasting time creating a mixed CD was not obvious until MP3s and the iPod came along. The iPod also changed the music business model by changing music distribution and pricing, through the iTunes music store. Now consumers did not need to spend the $10.00 on an album instead they could buy and instantly download individual songs. The business model had to change for the iPod to be a success, otherwise music lovers would only be using their iPods to store songs they uploaded from their CDs.

A Value Proposition is akin to a mathematical equation: VP = f(CP1 ) + f(CP2 ) + f(CP3). VP is the Value Proposition and CP is the customer problem. If there is certainty about who is the customer and what is the problem the customer needs to solve, then the value proposition is easily articulated. If the value proposition is effectively articulated, then the problems it aims to solve are obvious.

Unfortunately, the Value Proposition is at worst neglected and at best given lip service by product teams. Sometimes either product or marketing will hastily put together a value proposition to better market the product and push adoption. A value position should 100% be used to market and create awareness; the problem arises when the value proposition is created after the product is built. Flashy words replace the proper articulation of the customer problem the product promises to solve. All hope is placed on marketing and sales to push adoption. Often that emphasis on marketing and sales is a clear signal that the product team does not fully understand the customer problem and likely built a product based on a “good idea” rather than a set of validated customer problems.

The product or service does not need to exist to create a Value Proposition. Per our mathematical equation, the product team needs to know who the customer is and what the customer problem that needs solving is. It’s best to articulate the value proposition before the product is fully conceived. I strongly advocate getting fidelity on the customer’s most pressing problems. I’d even go a step further and advocate understanding the job the customer is trying to accomplish when they face the problem the product team aims to solve.

Understanding the job-to-be-done makes it easy to articulate the customer problem in the form of what I call a “needs statement,” also known as a “job story” (like an Agile user-story but focused on the problem to solve). The “needs statement” should include the customer, their need or desire, the context the customer must achieve it in, and the outcome the customer wants to achieve. It then becomes clear that anything that gets in the way of meeting the need or getting the job done is a problem. A clear set of needs statements practically writes the value proposition. With validated needs statements and a well-articulated Value Proposition, the product team can begin to experiment with the best solutions and technologies that will address the need and deliver on the value proposition. The value proposition becomes their promise to the customer that their solution is better at solving the customer’s problem than any other alternative in the market. The product team now has the freedom to iterate on the solution until the customer signals that they have met their promise.

Sometimes value propositions articulate more than one customer need. This is where a product team is best guided by a customer needs-roadmap, instead of a product features roadmap. The product team might not be able to solve all the needs right away, but the needs-roadmap clarifies the path to fully deliver on its promise in the value proposition. They iteratively experiment their way to meeting each need, having the freedom to quickly fail all solutions that do not fully address the customer’s need. The product team is only done with each need when the customer with their buying behavior tells them “Yes, this product solves my problem better than anything out in the market. This company understands me better than any other.” The team is not completely done until the full set of need statements are met. And then only when the customer demonstrates by asking for the product because it met the promise in the value proposition.

Once a product is launched, and has left the growth stage and entered the mature stage, the value proposition and the needs roadmap become the benchmark for sustaining competitiveness. The product team should be continuously probing to determine if the original needs statement is still valid for the customer. Have their context or behaviors changed? Did they encounter a new problem that prevents them from completing the job-to-be-done in the needs statements? Does the Value Proposition need to change because the product team needs to solve a new set of needs?

A Value Proposition that properly articulates real customer problems will create pull and will be obvious to the customer in their first encounter with the product. It will make the job of sales and marketing very easy as the customers will immediately see themselves in the product. “1,000 songs fit right in my pocket” did not need explaining. It did not boast a set of features, but rather it simply told the customers the problems they would no longer contend with if they purchased an iPod. How successful was it? Well, you know the history.

Up-next sustaining and driving growth by managing your Value Propositions.

For more in-depth reading on value propositions:

· Value Proposition Design: How to Create Products and Services Customers Want by Alex Osterwirlder, Yves Pigneur, Gregory Bernarda.

· Product Roadmaps Relaunched by C. Todd Lombardo, Bruce McCarthy, Evan Ryan, Michael Connors

· Jobs to Be Done: A Roadmap for Customer-Centered Innovation: Stephen Wunker, Jessica Wattman, David Farber