The Value Proposition Canvas fosters continuous improvement and innovation across any organization.
Digital transformation isn’t like flipping a switch. It’s a slow and often messy process, but for those that pull it off, it can make your business more efficient, more productive and more profitable.
I’m here to help. As the author and instructor of the Watspeed Digital Transformation Certificate Program at the University of Waterloo, I’ve studied organizations big and small to learn what makes for a successful transformation—and how to avoid problems that lead to a digital dead end.
Every month, I’ll share a new lesson on how to steer your organization through the rough waters of digital transformation. Yes, there will be homework. But if you pay attention and put in the effort, it won’t be long before you start seeing real results.
Active participation in continuous improvement and innovation is critical for successful digital transformation. Employees across all levels in an organization must be involved in, and committed to, technological change. This will make it easier to solve problems when they arise, identify new opportunities and foster organizational agility and innovation.
To that end, it’s important to effectively communicate and analyze ideas for change—and one of the best methods to do so is a tool called the Value Proposition Canvas. Originally developed to guide tech startups, the Value Proposition Canvas has proven to be an important tool to overcome the challenges of change that plague most organizations.
Why innovation is so hard—and why it requires teamwork
Many organizations have sought to encourage continuous improvement and innovation, but most are unsatisfied with the results. According to McKinsey & Co, 86% of CEOs believe innovation is critical to growth but only 6% are satisfied with their innovation performance.
Continuous improvement is a collective process. Anyone who has an idea should be able to easily share it with others, gain their input and have it considered for implementation. Decision makers should be able to easily understand which ideas have value and are worthy of further consideration. The Value Proposition Canvas in a collaboration tool that enables this to happen.
The Value Proposition Canvas
The Value Proposition Canvas was originally conceived by Alex Osterwalder as part of the Lean startup methodology, a widely used framework to guide the development of tech startups. That methodology was pioneered by Steve Blank to develop business and product ideas, identifying those that have a reasonable possibility of success and implementing them.
Many companies now recognize that the Lean startup methodology is not just for tech startups, but can also be used to support innovation and continuous improvement in established organizations large and small. We do this in our Digital Transformation program at the University of Waterloo.
The Value Proposition Canvas allows an idea for a new product, service or process to be expressed and communicated on a single page. It summarizes an idea and its value with a simple format that can be understood by all it. The Value Proposition Canvas has two main elements: the Customer Segment and the Value Proposition.
How to use the Value Proposition Canvas for digital transformation
The Customer Segment describes the problem or opportunity that an idea is intended to address. When applied to digital transformation, it can be used to describe the focus of the improvement being proposed. For example, the introduction of augmented reality headsets to support maintenance activity in a manufacturing facility.
Each of the main elements has three parts. In the Customer Segment these are:
- Jobs: The objectives of the customer or users of the technology being suggested. In the example these would include monitoring, maintaining and repairing factory equipment.
- Pains: The challenges that are faced in getting the Jobs done. In the example these might include keeping equipment knowledge up to date for all maintenance employees, retirement of boomer employees and consistency of the quality of maintenance work.
- Gains: The benefits that are desired or achieved by doing the Jobs well. Perhaps: reliable equipment, good production quality and lower equipment downtime.
The Value Proposition side of the canvas describes what the innovation or improvement is and how it will benefit the Customer Segment. It has the following elements:
- Products and Services: The main elements of the idea. For example: A comfortable headset which is suitable for an industrial environment, providing hands-free access to digital equipment maintenance data and the ability to capture images and video of equipment to share with colleagues.
- Pain Relievers: How the idea addresses the Pains in the Customer Segment. Perhaps: Providing access to online, up to date equipment knowledge in real time at the work site and accelerating new employee training.
- Gain Creators: How the idea contributes to the Gains. For example: Improvement in the quality and productivity of maintenance work resulting in reduced downtime.
The completed VPC might look like this:
Collaborate for continuous improvement
Creating the Value Proposition Canvas should be a collaborative process. A group can create it and all stakeholders can be asked to contribute their ideas. This enables ideas to be refined and the fit between the idea and the Customer, User or Process to be improved. It can be the basis of discussions with decision makers to obtain approval and resources for implementing the idea.
Establishing innovation and continuous improvement is essential for successful digital transformation activity. You need everyone to actively participate in effective technology-based change. If someone is not participating in change, it is much more likely they will be resisting it.
The Value Proposition Canvas tool is used to enable participation, but it isn’t enough on its own. It should be accompanied by efforts to develop an appropriate digital culture and mindset and clear processes and practices that empower employees to suggest and implement ideas.
Digital transformation homework
Your homework this month is intended to give you some confidence in using the Value Proposition Canvas. First, consider an improvement that you know about in your workplace. Create a Value Proposition Canvas for that idea. Take some time to consider your work—how good was the fit between your Customer Segment and Value Proposition?
Next, select an idea you have for a technology-based innovation in your workplace. Assemble a small group of your colleagues and complete a VPC on your idea. Pro Tip: You can use post it notes to complete the canvas elements, enabling everyone to add their own ideas.
Ready for the next lesson? Read Six Characteristics of a Successful Digital Mindset.
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Peter Carr is the author and instructor of the University of Waterloo Watspeed Digital Transformation Certificate Program, available globally online, and focused on overcoming the challenges of successful technological change. The program is jointly offered with the Ontario Society of Professional Engineers.
