How does one develop a quantified value proposition?
You do all the steps earlier in this.
You get your persona.
You make sure you understand what
is it that is their number one priority.
And you make sure that that is true.
You use different techniques like, here's 100 points.
How would you allocate that?
And they might say, oh it's 30, 30, 30.
And that means all three things are equal.
But somehow you may have to find out
which is the one where they're going
to put the most points on it.
That say, this is the thing that's
the most important to me.
And that's how you get started.
So once you have that most important,
then you just go out and spend time with the customers.
You iterate with them and use their words.
You say, here's how you are working today
to reduce your mean time to failure.
And you show them what the number is,
and you get each one of those steps.
Just good customer interviewing.
Then you take your product and work
with your team and the customers and the experts you have.
And you figure out, how will we increase revenue?
Or how will we decrease mean failure rates?
That's essentially how you do it within that structure.
And once you know that structure,
it's just work to get it done.
And we can all do that as entrepreneurs.
I would love to hear a description of how
to do value proposition in the context of one
of your companies.
I'm sure you've done it many, many times.
The one that's the clearest-- and I
think the team did a really great job-- was at SensAble.
Our persona was Ed Champ.
He was at Hasbro.
He was a toy designer in Pawtucket, Rhode Island.
And there were a lot of things he
was interested in like design intent,
and interfacing, different things.
But it all came down to the thing
that kept them awake at night was time to market.
Because if they didn't get it to market quickly,
they would miss revenue opportunities.
And most often, it was a toy that
was popular for a certain period of time.
And so what happened was, if it took too long
then they made too many of them or too little them.
They rarely made the right number.
Whereas if they could shrink time to market,
they could get more information about it
and make the right number.
This could mean millions of dollars to them.
So at SensAble what we did is, we knew that was a dimension.
We went out and we interviewed the customer
and laid out specifically what were the different stages
in which it took to get time to market.
The ideation stage looks like, works
like, all the way through.
We used their exact language in it.
We then asked them what was the average time
and got examples of that.
And we laid out that it was 16 weeks time
to market for the average product.
We validated that with them and checked it off with them,
and they signed off.
So that was actually quite easy.
Now they're on board with that.
The harder part now is, what's the possible state
with our new product?
And we took those exact same stages,
and we showed if you had a digital asset as opposed
to a physical asset, how you could go from 16 weeks
to eight weeks.
In fact, we knew that we could do it in six weeks,
but it's much better, especially as a start-up,
to under-promise and over-deliver.
Now Bill, I can see really well how this methodology applies
in business to business settings.
What about B to C, business to consumer?
This really was constructed in the B2B environment,
you're absolutely correct.
But through hundreds of examples now, I've
seen it apply to the B to C, to the consumer marketplace.
And it's an excellent framework there.
It's harder to get a quantifiable benefit.
But there was one company called InTouch.
And they were providing an ability for first-time mothers
to connect with their babies.
And he laid out on the top the current state,
and it wasn't a pretty thing.
And you're seeing that you had to go to the hospital.
And you had to get on Google.
And you had to get these other monitors.
Nothing really worked particularly well.
And it wasn't very fulfilling.
And then you have on the bottom, you had his solution
where it worked well.
And the mother got what they really
wanted, which was intimacy with their baby.
To understand it was healthy and kind of how it was doing.
And just by laying those two next to each other,
while it was not technically quantified by numbers,
comparing the as-is state versus the current state
was very powerful.
So you can also include intangible benefits
that are very important to people.
Absolutely.
If that's the thing they're most concerned about,
that's what you have to do.
And then you just have to show as-is state
versus possible state.
And it has to be such a big leap that they're going to buy in.
The internet today makes it easier
for entrepreneurs to go direct to consumer.
You can create a website and sell your product right
from the website.
But oftentimes, you have to go through a third party.
You have to go through a retailer, for example.
When you do that, do you also develop a value proposition
for the retailer that is going to be selling your product,
or not?
You do have to do that.
But I would warn you that the retailer is not
the end customer.
At the end of the day, the only reason
why Walmart will pick you up is because one of their customers
wants to buy it.
So you can't get confused that Walmart's the actual customer.
The real customer is out here.
Man, the amount of knowledge that you
generate in this process-- incredible.
And really will be at the foundation
of your competitive advantage.
I think that's incredibly important.
I mean, what we're doing here is we're
interfacing with the customer.
And each time, we're reaching into that mine
and we're getting more gold.
And we're building up a nice chest of gold here.
And that gold is knowledge about the customer
and how to interact with them.
Some people say, well, I'm going to outsource that.
I'm going to get someone else to do it.
That's crazy.
I mean, would you download your eyes and ears to somebody else?
Not when that is going to produce this gold.
And that's what an entrepreneur has.
They have the ability to move.
They're very committed, they're very smart,
there's lots of upside for them, they're uninhibited.
But they can have very rapid customer iterations.
That's the key here.
You can't do that if you're a big company.
That's what entrepreneurs have to focus on.
And they have to do that real well.
And in the value proposition, that's
what the customer cares about most.
And we must deliver on that for them.
And we will.