Ensuring true customer centricity - by activating the Business Model Canvas
Whether pandemic related, black swan events or geo-political instabilities, most companies have had to review strategic intents and ways of working to ensure future and sustained profitability. For established corporate businesses this has meant reviewing their entire set-up from product / service provision, organisational structure and ways of working. Start-ups are obviously not fixed in these aspects, but equally do not have a history of successful business ventures to review and reflect upon so need to ensure that their propositions are based on robust testing and market pull.
Wherever your business is on the continuum, using the Business Model Canvas can support you in both documenting and analysing your current and potential future business models. The core principle being to clearly describe the rationale of how your organisation creates, delivers and captures value.
However, as we all know, the key to capturing value is to ensure you have propositions which customers actually want. Sounds insanely obvious doesn’t it, but let’s reflect for a moment on a couple of substantial market launches which failed due entirely to this lack of consumer demand. Two often quoted examples in this context are Qualcomm and Quibi. Qualcomm launched its FLO TV service to much fanfare, with ‘live on the go’ mobile TV services being the value proposition. In addition to limited availability on mobile devices and not being able to achieve full national (US) coverage the consumers were simply not interested in paying for such content on the go, with the exception of live sports. Instead consumers were more interested in the developments within video-on-demand streaming and the ability to pick and choose content. Losses were estimated at over $800M dollars.
The other example, Quibi, launched a ‘Netflix style’ of video for mobiles. Having raised $1.75B to build the application, the team unfortunately focused on developing the application as proposed, rather than step back and ensure a valid value proposition. With the Quibi App falling out of the list of the 50 most downloaded free iPhone apps in the US only one week after it was released, the service announced closure just six months after launching. So two very costly lessons on the validation of and ensuring market pull!
Moving back to the Business Canvas Model, we look at ensuring customer desirability by deep diving into the two segments of Value Proposition and Customer Segments. Put very simply, you are looking to ensure a problem - solution fit. The focus should always be on what jobs customers are trying to get done. This analysis creates what is known as the Value Proposition Canvas.
The analysis starts by reviewing the customer ‘jobs to be done’ (JTBD). A term coined by Tony Ulwick and later popularised by Clayton Christensen, JTBD theory is based on the economic principle that people buy products and services to get jobs done. These are not always functional jobs, instead they may be social or emotional. Unsurprisingly, the more Gain creators that you can address for your customer, in conjunction with providing pain relievers, the more desirable your value proposition will be.
I’ve watched teams complete this type of analysis only to turn to each other and ask ‘do you actually know what pains our customers have’? A fantastic moment to witness as the realisation dawns that they have assumed customer jobs. As Steve Blank states “There are no facts inside your building, so get outside”. You can only truly understand customer needs and market pull by diving into the customer jobs to be done and analysing each in turn. I’ve seen many teams use customer personas to identify such, and whilst some of them can direct your review, do not rely on them. I’m laughingly reminded of an example of why personas should not be used when someone drafted the personas for: male, born in 1948, raised in the UK, married twice, lives in a castle and is wealthy & famous. Anyone spring to mind? Well both King Charles and Ozzy Osbourne fit the persona perfectly - enough said, so take that as a cue to get out of the building and really understand your customers.
In my next blog, I’m going to use some great case study materials to walk you through the Business Canvas Model and use the different levers of Desirability, Feasibility and Viability to review the art of the possible. See you then!
