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.