TEI 123: A product management view of Value Proposition Design – with Alex Osterwalder

Summary: <br>  <br> This interview is rather meta. It’s a discussion about a book; not about the book itself, but about the product management decisions for creating the book. This is the story of recognizing a problem a target market has and addressing it with a product.<br> You likely already know my guest, Alex Osterwalder, as the inventor of the Business Model Canvas — a one-page business model — and author of the related book Business Model Generation. He is also the 2015 winner of the prestigious Thinkers50 Strategy Award and is ranked as the #15 most influential business thinker by Thinkers 50. Further, in 2013 he won the inaugural Innovation Luminary Award by the European Union. He more recently co-authored the book Value Proposition Design, which in a way, is the topic of our discussion.<br> However, I didn’t want to ask him the same questions he has been asked a hundred times that you can find in other interviews. Instead, I asked him to discuss the book from the perspective of a product manager — identifying the need for the book, its target market, the value it creates for customers and for his organization, as well as how the name was chosen. So, you not only get some insights into what Value Proposition Design is, you also get to see the book as a product and the product management thinking that went into its creation.<br> If you are new to Value Proposition Design, think of it as the third leg of a stool consisting of Lean Startup and Design Thinking as the other legs — all three are similar in intent and each provides valuable tools, arguably with Alex’s tools being most valuable to product managers who think like product leaders — or in my words, product masters.<br>  <br> Practices and Ideas for Product Managers and Innovators<br> Summary of some questions discussed:<br> <br> * Why was this product needed – the Value Proposition Design book? There were two triggers. The first one was that the Business Model Generation book was pretty successful and a lot of people started using the business model canvas. What we didn’t realize is that some people were repurposing the business model canvas to sketch out their value proposition. The business model canvas was never designed to help with that particular job. The only job to be done was how to sketch a business model. So we tried to figure out what would another tool be to satisfy the need. So that was the origin of the tool – addressing an unmet need of our existing customers. The second tool customers needed was the value proposition canvas. It’s like zooming in. The business model is the big picture perspective and you zoom into the value proposition. The other trigger was that we learned so much over the year since we launched Business Model Generation that we had a huge need to share that learning. We built upon what was working, integrating customer development and lean startup approaches into the new book with what we were learning as well.  Also, we had just launched the Strategyzer brand and the book was an opportunity to promote the brand with “Strategyzer” on the cover.<br> <br>  <br> <br> * What opportunities would the book create for your company? The original vision for Strategyzer was to be the SAP of strategy, or the strategic operating system. We wanted to build the enterprise software that would help senior leaders manage strategy, manage innovation, and create new growth engines. It’s like strategy support tools, computer-aided design for strategy. So that was the original vision. Ultimately what we learned over time was we need three pillars to realize the vision. One is the tools and the concepts and the content. How do we help business people better solve these jobs to be done? How do they create business models, value propositions, etc.? You do that with the right tools and right processes. We teach it to them with content. The second pillar is the platform.