Crafting your Value Proposition
There are several ways to define a business model. Most people understand that a business model describes how you make money. However, a definition that focuses strictly on revenue generation is too limited. Entrepreneurs who are in the process of designing their business model require an approach that allows them to understand if and how a value proposition can be successfully scaled up to a profitable business. “Scaling up” refers to the process of progressing from creating and selling your first unit to a situation where you are creating and selling multiple units in a financially sustainable manner. To make such an assessment, a business model must include operations, customer acquisition and retention, supply chain management, and the aforementioned cost and revenue aspects. With that in mind, 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, Volume 15)
This definition is particularly useful for entrepreneurs because it is based on a holistic perspective of the business and emphasizes the sustainability aspect of a business model.
Review the steps to the process of developing a value proposition and the business model:
1. Crafting Your Value Proposition from MaRS, Fundamentals of Entrepreneurial Management Series (2012)
2. Business Model Design from MaRS, Fundamentals of Entrepreneurial Management Series ( 2012).
Discuss the following questions:
To start the process to designing a well-crafted and effective value proposition, think about the step you should take and discuss the following
• What key activities do you need to engage in to deliver or develop your value proposition?
• Discuss what you see as important to develop your own value proposition beyond the definition and processes outlined in the MaRS articles (attached references) management series.
• How has our social media, technology, and global presence changed how we approach our value proposition and business model?