Value Innovation & Value Proposition: The Business Model Canvas


More and more people start using the Business Model Canvas as a network innovation tool. According to definition, “the Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model.” In my opinion, it is a really useful tool and well integrated with the philosophy of value innovation, which is simply an approach to business growth concentrating on new markets.

Below is a picture of framework of the Business Model Canvas:

When we take a close look at this picture, you can easily see that the central of this picture is Value Proposition. The right half of the picture shows all the relations and interactions between this value proposition and the target customer group. In the left half part, all the key resources, main activities and partners that needed to complete this value proposition are listed.

Recently, a popular view claims that the first goal of a new business is to find Product-Market-Fit. However, what is fit means? In my opinion, if it is fit mainly depends on the level of acceptance among target group of the value proposition that the product provide. Only if the value proposition has been accepted by enough amounts of customers, economic scale can be truly formed. Thus, the income from selling the product and service could exceed the cost of providing them, and the company can profit from the business. Then we say it is a feasible business model.

However, the more important question is: how to find this Product-Market-Fit? Or should we look for the potential market for the existing product or the other way around, trying to creating the product for the existing market? From the Business Model Canvas’s perspective, it is better for entrepreneurs to think from the right half to the left half or from left to right?

The traditional industry of technology innovation normally follows the path of Technology -> Design/Build -> Sale, but the new way of innovation, like what Apple, Facebook and Amazon followed is User Behavior -> Solution -> Technology. In this new path, company should observe the change of consumer behavior first, and then design the most valuable solution for the specific problem. After that, start to think if there is appropriate technology to support this solution. If not, then the innovation should be in abeyance until the right technology comes out.

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