3 types of Business value fit
3 types of Business value fit
Searching for Fit is the process of designing value propositions around products and services that meet jobs, pains, and gains that customers really care about. Fit between what a company offers and what customers want is the number one requirement of a successful value proposition. Fit happens in three stages. The first occurs when you identify relevant customer jobs, pains, and gains you believe you can address with your value proposition. The second occurs when customers positively react to your value proposition and it gets traction in the market. The start-up movement calls these problem solution fit and product-market fit, respectively. The third occurs when you find a business model that is scalable and profitable.
Fit 1: On paper
1. Problem-Solution Fit
Problem-solution fit takes place when you:
Have evidence that customers care about certain jobs, pains, and gains.
Designed a value proposition that addresses those jobs, pains, and gains.
At this stage you don’t yet have evidence that customers actually care about your value proposition. This is when you strive to identify the jobs, pains, and gains that are most relevant to customers and design value propositions accordingly. You prototype multiple alternative value propositions to come up with the ones that produce the best fit. The fit you achieve is not yet proven and exists mainly on paper. Your next steps are to provide evidence that customers care about your value proposition or start over with designing a new one.
Fit 2: In the market
2. Product-Market Fit
Product-market fit takes place when you:
Have evidence that your products and services, pain relievers, and gain creators are actually creating customer value and getting traction in the market.
During this second phase, you strive to validate or invalidate the assumptions underlying your value proposition. You will inevitably learn that many of your early ideas simply don’t create customer value (i.e., customers don’t care) and will have to design new value propositions. Finding this second type of fit is a long and iterative process; it doesn’t happen overnight.
Fit 3: In the bank
3. Business Model Fit
Business model fit takes place when you:
Have evidence that your value proposition can be embedded in a profitable and scalable business model.
A great value proposition without a great business model may mean suboptimal financial success or even lead to failure. No value proposition—however great—can survive without a sound business model. The search for business model fit entails a laborious back and forth between designing a value proposition that creates value for customers and a business model that creates value for your organization. You don’t have business model fit until you can generate more revenues with your value proposition than you incur costs to create and deliver it (or “them” in the case of platform models with more than one interdependent value propositions).
AHD Consulting Solution is here to help you with tools and insights to not just deal with these challenges but turn them into opportunities for innovation success. Accessible to corporations of any size, our sprints and programs include interactive workflows, videos, pre-structured workspaces, and much more. If you want to discuss a potential project, you can email on services@ahdconsultingsolution.com or get in touch with us here. Alternatively, you can book in a free 15-minute consultation call here.
