We will continue discussing the USP Experience Framework by defining the components of the model more fully.  If you didn’t read the previous post, you may read it here to find out more on the framework. The key components are Teams, Impact Accelerators, Core Processes, and the value proposition itself.

Teams – This is the most self-explanatory component, which describes the human involvement with the value proposition.  The idea of having powerful teams behind a value proposition is old news however it is critical to understand how these teams and the interaction with the customer affects the experience.  This includes details such as how a receptionist greets someone or a store clerk asks you if you need help.  The teams must fully buy in to their position and designated responsibilities, especially if they interact directly with a client.  Getting the right people in the right places can completely shift the dynamic of the experience.

Impact Accelerators – This is a unique concept that simply describes anything requiring no regular, continuous human input that accelerates and enhances the impact of the experience.  Branding and design of the value proposition, websites and landing pages, even down to the smell, look, and feel of the store or office are included here.  These obviously take human labor to design and setup and even some level of maintenance but should not require regular attendance by a person.

Core Processes – These are essentially the systems and processes used to influence the experience and the other components.  The process a client goes through for a service or the system of production and delivery for a product are core processes.  Systemization of experience will ensure consistency while improving efficiency.  Without these, the experience will deteriorate and ultimately fail either due to confusion over consistency or out-of-control costs.

Value proposition – This is the centerpiece of the model and the area where most focus in product development.  It is the obvious component to the unique selling proposition. This is the answer or solution to the customer dilemma, your core product or service.  As a piece of the model, in this context it is viewed with the experience stripped away, in its simplest form.  Although ultimately you are selling the USP as a whole, experience included, in order to understand and define the USP, the value proposition must be stripped to down to the essential aspects that will affect the experience.  It is the end-result quality of the service or product.  In food, it comes down to the actual taste, simply the food itself.  After you’ve stripped away the presentation, the ambiance, the waiter and restaurant staff, what is left is the simplified value proposition, that which satisfies hunger.  In financial services, this would be the financial product or instrument, minus any brochures, smiling sales staff, or cordial planner in a fancy office with free coffee.

Next, we will explore the relationships among the components and how they influence the experience and, ultimately, the USP as a whole.  Let me know any questions you may have regarding the components! Also, begin defining these components for your business as they currently exist.  What is your offer? Processes? How are teams structured around your offer? What else may influence the experience such as your office, billboards, brochures, websites, phone systems, etc.

Designing your unique selling proposition(USP) can amount to be one of the most challenging tasks a business may undertake.  On the surface, it can seem simple and is typically the starting point of any business development, however, the fact remains that shortfalls in the USP design are a leading cause of ultimate business failure.  Typical approaches focus on the product values directly or the ability to provide the intended solution but often do not take into account the factors defining the experience surrounding the value proposition.  With a central focus on the long-term experience of USPs and the solutions they offer, many opportunities are revealed and proper strategy unveiled.  The realities of the marketplace response are revealed when this focus is understood.  People buy on much more than raw utility or even marketing hype.  The proper combination of these among other factors helps develop the USP more fully.  In many companies, the concepts around experience development are disconnected at best, and completely misunderstood or unknown at worst.  The USP Experience Framework has been developed to help us understand the relationship between the factors defining the experience.  By utilizing the framework in strategic analysis and development, in complement with other tools, the USP can be more fully defined and without too much “hit-and-miss” testing.

The USP Experience Framework

The framework is designed to focus on the value proposition(VP) and the experience that accompanies it.  The experience is intentionally designated within the empty, unenclosed space of the model. Ultimately, it is out of our control as a specific criteria, tool, tactic, or otherwise and is composed of the derivatives of the other components.  Depending on the VP, these other components will contribute in different ways to the experience, including the VP itself.  If the actual value proposition is shoddy, the long-term result of the experience will reflect that fact, although it may maintain during the early, short-term stages.

The initial step in understanding and utilizing the framework is to define the addressed problem, the VP, and the desired experience.  The experience must be understood from the eyes of the end-user or buyer.  For that reason, it is important to know to whom the experience appeals OR to whom we want the experience to appeal.  This may reveal the starting place.  You may start with an understanding of the experience and design the outward marketing for those this most appeals or you may start with a desired customer and begin to define the experience around the understanding of the ideal customer.  Ultimately, the VP, experience, and customer must all be clearly understood.  That knowledge allows for the other components to be designed to be congruent with the strategy.

We will explore this framework more fully in future posts, including what “Impact Accelerators” are exactly. This is part 1 in a multi-part series.  Let me know what you think of the concept!

This video from bNet describes some key advantages of moving with a freemium model.  Keep this in mind when developing your business model as this has completely made some businesses and allowed access to markets otherwise impossible to enter.

It is also important to understand the “seedy underbelly” of freemium. With the open, free model, you will also see an increase in abuse of your service. Check out this video on abuse of freemium:

The value proposition lies at the center of your business model.  Even with all the variations of what academia calls a “business model” it typically is the center piece and rightly so.  The value proposition ties all the components of the model together.  What is a value proposition? It is what your business offers that creates value for your customer by fulfilling some need or desire, whether initially recognized or not.   This offering is the means by which your customers achieve their goal.  It is rarely the value in and of itself but is the tool to achievement (e.g. Advertising is not value but the customers obtain, brand recognition, etc. are the value while ads were the tool).

There is another important aspect to the offering.  It must also be the tool by which the business’ need is fulfilled.  In this instance, the need of the organization ought to be defined in its core purpose, i.e. the mission, vision, and values.  This is best served beyond simple monetary compensation.  One “hot” area in business today that demonstrates this openly is the socially-conscious enterprise. For example, an organization trumpeting solar energy may have a goal to minimize pollution, save the planet, etc.  So, in this case, the offer must be the tool by which the planet is saved through them.  If it is not, it will not last within the model.  A proposition that offers money alone is unsustainable.  For long term business success, the business must define its core purpose and do so with some social goal in mind, something greater than themselves and their financial success.

The indirect benefits of doing so are substantial as well.  These include customer loyalty and buy-in, powerful brand development, and product/service differentiation.  Your cause or goal can become part of the value proposition.  Again with our example, customers may buy not simply because your product solves their initial need for power or even sustainable power but they buy for your core purpose of saving the planet as well.

Start by identifying your business core purpose, then work with the possible offerings and customer needs to find those that best align.  Which offers the most upside potential, scalability, etc. while meeting our standards within our purpose? Define the customer needs you are striving to fulfill.  Now identify the characteristics of your offer that meets the criteria.  This is the beginning of your business model.

Many entrepreneurs I run into on a regular basis are extemely “fly by the seat of their pants” type business owners.  They are “movers and shakers” and go from “zero to hero” rather quickly.  These types tend to grow faster than most and also run into substantial problems faster than most.  Growth is a “double-edge sword” if you are not ready for it… (wow, enough buzz phrases yet?).  I work closely with one that has built up and nearly lost it all several times!  Granted, the economy played some tricks on this person but how necessary was it? During the hot times, enough money was flying out of the business on hair-brained ideas to have likely floated the business through some rough waters if a more strategic approach had been taken.  The challenge faced by most of the “entrepreneurial faith” is when to say no to an opportunity or the next “shiny object” that will apparently make business double in no time. I’ve taken this bait enough times to be bigger than Deloitte if it were true. We tend to spread ourselves, our organizations, and our budgets too thin.

So what is the secret?

Well, it is important to first setup your business’ set of core values, mission, and vision. These are meant to be guiding lights within the organization and decision making processes.  Without real parameters, it is difficult to know when to say no.  But these alone can be difficult to judge by as each scenario is different.  Well, if they are built into a model-of-sorts that can almost decide for you, life gets much easier.

Enter the Business Model…

I would venture to guess that more than 9 out of 10 businesses have not put together a business model.  Now, naturally you have one (however poor it may be) just by doing business.  The fact remains that most entrepreneurs think through aspects of their business model but in a compartmentalized fashion, never putting all the pieces together in a more holistic approach. This model is meant to take most key aspects of your business and put them together to make sure they play well. It is also key to keep it relatively simple otherwise it becomes nothing but a fun, theoretical exercise in your final year of graduate school (fun being loosely defined).  The process of thinking through it will definitely bring a certain level of clarity but having a model you can use will transform the way you do business and make decisions.  It has also been said that a great entrepreneur with a mediocre model will fail while a mediocre entrepreneur with a great model will gain phenomenal success.

So what is a Business Model?

Well, it is define as follows by Alexander Osterwalder, in his book “Business Model Generation“:

A business model describes the rationale of how an organization creates, delivers, and captures value.

Their are a few key elements to consider when putting together your model.  I will list these here as they are the next step in your own design. Define these elements for your business.

• Value Proposition – what you offer to your customer, your product or service that creates value.
• Customer Profiles – ideal customer
• A revenue model – how you make money
• Distribution Methods – from value proposition to customer directly
• Fulfillment Process – from your business to value proposition
• Cost Structure
• Competition, competitive strategy
• Resource Management
• Value Network position – recognition of position in overall value network, i.e. from raw materials provider to partners to end users.
• Key Partnerships
• Core Purpose defined – mission, vision, and core values or principles.

I will elaborate on these points in future posts and unveil the construction of the model itself.  For now, begin working through the above mentioned points, defining them for your own idea or business. Once you have a workable model, you will be able to forge ahead with more confidence and surety that you are making wise business decisions.

The major key to sustained success is connected innovation.  That is, continual innovations and improvements to products and practices based on research, feedback, and general connectedness with the serviced demographic.  Innovation is a key characteristic of the entrepreneur.  Every day, entrepreneurs start businesses, have success, and fail.  One of the main factors in this lack of sustainability is not their entrepreneurial spirit but their inability to translate that into an organization.  They either are completely unable to transition from small startup to larger organization or in that transition, lose what made them successful in the first place and allow inefficient, ineffective bureaucracy to infiltrate based on old assumptions of “the way to do it”.  The transition to growth is crucial for sustained success just as the connected innovation that generated the business idea in the first place.

So how do you maintain that power within an organization of 10, 50, 100, 1000, or even 10,000?  An effective organization will be made up of two types of people: Entrepreneurs and Intrapreneurs.  You’re likely familiar with entrepreneurs but what is an intrapreneur? The popular Wikipedia includes this entry:

Intrapreneurship is the act of behaving like an entrepreneur, except within a larger organization… In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”. Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques that are more traditionally thought of as being the province of entrepreneurship.

Entrepreneurs will be found at the head of the organization as owners, key executives, and department heads. Intrapreneurs will essentially make up the rest of the organization.  The key to success, therefore, is instilling the responsibility, trust, respect, and expectations of entrepreneurship throughout the organization and within each position.