3 Simple Steps to Help Identify Your Value Proposition

Every business with a success story has one thing in common: Uber, Apple, Google, and Slack, all clearly defined their value proposition.

Let’s take a look at Google. They reached such a high level of success that we find ourselves using it as a verb repeatedly. Had their value proposition been “Google uses a patented page-ranking algorithm to make money through ad placement”, rather than “The world’s largest search engine that allows internet users to find relevant information quickly and easily” it wouldn’t have stuck with us. So why is that?

They were able to answer the question: ‘What do you do?’ with precision and purpose.

Social innovator Al Etmanski writes about strategically expanding by framing your purpose (value proposition) in a defined container. In his book ‘Six Patterns to Achieve Impact’ Etmanski says that having a message is just as important as how you phrase it.

Critical Components of a UVP

So how can we as entrepreneurs create a unique value proposition (UVP)?

For starters, understanding why it’s critical to your business helps. Also, knowing the critical components can help make sure you’re creating an effective value proposition.

  • Target customers
  • Customer problem
  • Product or solution

A properly defined value proposition connects all these components together in a few simple (but impactful) sentences. To help you get to that, we’ve identified three activities that can help you understand your first customer:

A-Day-in-the-life Scenario

This technique helps us identify our target customer and define the problem. Imagine that you are the ideal customer of your product – what would your regular day be like?

  • What problems or stresses are you under?
  • What are the economic consequences of those stresses?
  • Imagine the customer using your product. What are your product’s qualities or capabilities?
  • In what way do those capabilities affect the customer’s ability to achieve those objectives?
  • What is the measurable benefit of achieving those objectives?

The objective here is to be able to analyse and synthesize the target customers problem, and match your products’ enabling factors to activate change. You need to know how your product changes the situation for the customer and what the impact is of that change.

Create Your Own Business Model

how to identify your value prop

There are different ways to define your business model. Most people understand that a business model describes how you make money but that definition can be too limiting.

When you’re in the process of designing your business model, you need an approach that allows you to understand if and how your value prop can be successfully scaled up to a profitable business. For this reason, we prefer the following definition:

“A business model describes the value an organization offers its customers and illustrates the capabilities and resources required to create, market and deliver this value and to generate profitable, sustainable revenue streams.” (Osterwalder, A., Pigneur, Y., & Tucci, C. (May 2005). Clarifying Business Models: Origins, Present and Future of the Concept. Communications of the Association for Information Systems.)

Based on the above definition, it’s clear that many factors must be considered when creating your business model. The Business Model Canvas (a visual tool created by Alexander Osterwalder) can be used to facilitate the design process. The visual component of the tool simplifies the design process by making it easier to understand how the various components of a business affect each other. It also enables you to involve the rest of your team and advisors in the process.

Buyer Utility Map

With this exercise, you’re trying to determine at what point in your product’s lifecycle you can add value. The columns on the grid represent the different phases of your products life cycle and the row represent common value and factors that consumers are looking for.

This exercise helps If you are struggling to find ways to differentiate yourself from your competitors. This expands on how your ‘whole product’ (core product + services and ancillary products) can give you new competitive advantages.


how to identify your value prop

Work On It

Your value proposition needs to reflect your company’s most fundamental decisions, including target customer, problem to be solved and which product solution to offer.

Creating a clear and succinct value proposition that is meaningful to all of your stakeholders (staff, investors and of course, your customers) is one of the first challenges any entrepreneur faces.

The exercises we covered in this post were done by tech entrepreneurs as part of a workshop organized by RIC in partnership with MarS.

If your learning style is experiential and hands-on, then be sure to enroll in our next half-day workshop to do these exercises with other entrepreneurs and a RIC business advisor.

Editor’s Note: this post was originally published in Oct 2010 and has been updated for accuracy and comprehensiveness by Ward Surour. The models and activities referenced can be found in the ‘Entrepreneurs Toolkit – Value Proposition Workbooks’ designed by MaRS.

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