A Compelling Value Proposition: The Missing Tool in Your Lean Startup Kit

By: Laszlo Gyorffy

Eric Reis first introduced the concept of Lean Startup in 2008. Today Lean Startup is deployed far beyond entrepreneurial circles and is taking root in large, complex organizations looking to improve their new product success rates – and in the process build lean cultures. This is very good news. Too often the processes corporations use in pursuit of innovation can actually erode their capability to innovate. Still, when applying the principles of “Build – Measure – Learn” to initiating Lean practices in corporations, there is room for improvement…and possibly even for a pivot.

CVP before MVP

Corporations do not operate with the freedom of a startup, and navigating the internal learning and approval cycles can be even more challenging than effectively engaging customers. Before an intrapreneur starts coding, fabricating, etc. to test his/her new concept as a Minimum Viable Product (MVP) in the market, approvals and sponsorship from management is required. So rather than building an MVP, I recommend that these intrapreneurs start with a CVP (Compelling Value Proposition). Innovators need a way to not only get smart fast about what their target customers want, but also about what management wants and will support. An effective bridge for crossing the internal chasm between a potentially brilliant idea and the approval to build a minimum viable product is essential.

Our analysis of the most effective value propositions practiced in Silicon Valley, revealed six basic yet essential questions that can quickly turn an inexact concept into a well-honed and compelling value proposition.

C – Who are the intended Customers and what are their important unmet needs?
O – What is the full potential of the Opportunity?
S – What is the proposed Solution for capturing the opportunity and satisfying
the intended customer?
T – Who needs to be on the Team to ensure the solution’s success?
A – What is the competitive Advantage of the idea over the alternatives?
R – What Results will be achieved from the proposed solution?

From a Lean Startup perspective, the “CO” helps answer the question “should this product be built?” And the “STAR” addresses “can we build a sustainable business around this product?” CO-STAR provides a vehicle that intrapreneurs can use to gather intelligence by pitching and iterating their innovative idea until their value proposition is as strong as it can be. It also offers a nuanced method for reducing uncertainty about the real value of an idea in areas beyond customer benefit. For example, you can test hypotheses related to feasibility with the “Solution,” competitive superiority with the “Advantage,” and profitability with the “Results.”

Getting smart fast

Typically intrapreneurs go through a number of cycles of enrolling others when championing a bold new product or service idea. Even with CO-STAR they experience many of the typical obstacles a champion faces when sharing his/her idea with others in hopes of receiving useful support, e.g. getting false positives, not getting valid feedback, or simply having trouble getting people to respond. Here are some tips for increasing the productivity of these important exchanges:

1. Start the process by sharing your initial thoughts with a few trusted colleagues. Listen and learn from their reactions and feedback. Encourage them to tell you what they like about your idea and what could make it stronger. Ask them to comment separately on each element of your CO-STAR.
2. Once you’ve considered the comments of these initial exchanges carefully, and you find the idea still has significant value, widen your circle of support by talking to experts and key stakeholders. Build a mock-up. It makes abstract ideas tangible and facilitates further exploration of your proposed solution. It is enormously valuable to be able to see, touch, and experience something concrete about the end state of an idea, even if it is still in relatively crude form. Integrate the feedback you receive again and continue to answer the CO-STAR questions more thoroughly and with greater quantification.
3. Take your idea to a more objective audience (e.g., end users, functional experts, potential buyers) to test its real-world viability and potential. If the internal information is gold, this feedback is platinum. Depending on your situation you can try out an early prototype with real customers and find out how they respond. At this point you are ready to join your organization’s official innovation pipeline, take full advantage of your Lean Startup toolkit, and begin building Minimum Viable Products and contemplating split tests and iterative product release strategies.

Perfect pitch

Presented poorly, a great idea no longer appears to be great. It is not easy to share a new idea quickly, concisely, and confidently. The CO-STAR template captures the techniques perfected in Silicon Valley, and is structured to cover the basic dimensions required for a good value proposition. It enables intrapreneurs to easily create a winning pitch that allows them to communicate effectively with their investors, collaborators, and target customers.

Working with a value proposition is much more useful than trying to write the perfect business plan very early on in the development of an innovative idea. A good pitch that can be iterated and continually improved to substantiate the value of an idea is much more practical than spending many hours preparing a business plan that is rarely updated and almost never read by anyone other than its author.

Scale and Sustainability

In today’s connected mobile world, large organizations looking to embed a lean mindset and methods into the fabric of their corporate culture can speed up adoption by deploying an online innovation management systems and/or apps. These systems not only crowdsource ideas and manage the overall innovation pipeline, they also promote personal initiative, customer focus, and collaboration. Lean techniques can be easily highlighted and success stories shared with the entire workforce. CO-STAR enabled platforms like Q+, Ideascale, and One Hour Innovator can be easily deployed to spread common language, concepts, and practices that are crucial for advancing an enterprise-wide discipline of innovation.

Leaning forward

The success of corporate innovation efforts in today’s complicated and fast-moving world depends on practices that support continuous learning and adaptation — collecting, sifting, testing, discarding, quantifying, building and pivoting. Implementing a disciplined value proposition method such as CO-STAR as part of Lean Startup efforts helps guide and accelerate people’s discovery efforts, enriches the quality of their thinking, and helps them prepare a practical pitch they can share to continuously improve their innovative ideas.

Innovators are now using CO-STAR in over 40 countries. In the spirit of Lean, I would love to hear about your CO-STAR experiences and welcome your feedback. If you are using CO-STAR, please share your story here or with me personally.

By Laszlo Gyorffy