Wrapping up Value Propositions (the What of your Business Model) (5 of 5)

Today, we are wrapping up our 2nd miniseries of posts on model business model canvasing for healthcare and life sciences. We have two objectives today:?

• A reminder of what the modelH process is and why it helps define healthcare and life science business models.?
• A quick run-through of the modelH Value Proposition process - the “WHAT” part of the business model.?

What is modelH again?

At the risk of repeating myself, I will direct you to this previous post summarizing modelH, what we were trying to accomplish, and why we are doing a refresh.?

• Is Your Healthcare Company Run by a Business Model or a “Busyness” Model?
• Wrapping up Customer Segments (the Who of your Healthcare Business Model)

The image below shows that these 17 blocks can be divided into four main functional areas. As I stated, in this miniseries, we looked at Value Propositions, the basis of a business model’s WHAT, which is highlighted in orange.

As a refresher, Value Propositions in healthcare business models are the unique benefits a healthcare organization offers its customers (be they patients, members, citizens, or others). They are the core reasons customers (Buyers|Users) choose one company over another. These propositions can be based on cost, quality, accessibility, experience, and more. For example, a healthcare business might offer lower-cost services, faster appointment times, or a more personalized approach to care. By articulating their value propositions, healthcare organizations can differentiate themselves in the competitive market and attract and retain patients.

Let's review what we learned in each of the four posts.?

1. Understanding Value Propositions in Healthcare Business Models with modelH
2. Using Value Proposition Canvasing to Define Product-Market Fit in Health
3. Understanding Minimum Viable Product (MVP) in Health?
4. Understanding How to (and Why) to Pivot a Healthcare Business Model

In summary, here are the four key messages.

1st – Establish a Position of Value with Someone Specific

First, your business model must establish a position of value with a specific Customer Segment. This statement means reaching a point where a clearly identified Buyer|User knows your business offers something valuable, relevant, and complementary to their specific health JTBD (jobs-to-be-done). This position of value serves as a point of initial engagement with your Customer Segment and forms the basis for all ongoing interactions. The aim of understanding your Customer Segment is to focus on what matters most to them while making healthcare-related purchase decisions. These “key matters” are called Value Drivers. Remember that Value Drivers are both known and unknown to the healthcare consumer. Simply put, healthcare consumers seek solutions that meet their JTBD based on alignment with their Value Drivers. So, to build a good product or service, ensure your product’s Value Proposition meets your ideal customer’s Value Drivers.

2nd – Increase Your Understanding of that Value Position

Second, commit to “ever-increasing” your understanding of the Customer Segment(s) you engage. This understanding of both Buyer and User is critical to the discipline of Customer Intimacy, characterized by occupying no more than a few high-value customer niches and being obsessive about understanding those customers in detail. Market Leaders with this focus excel at customer attention and customer service – examples include the family doctor and the personal trainer. A business model must also create the insight needed to turn a prospect into a customer willing to share personal and health information in a two-way exchange. This exchange is vital for any healthcare business model and positions the business to monetize the relationship.

3rd – Develop Your Product Market Fit Iteratively

Third, based on your Customer Segment understanding, identify the Value Propositions (products and services) with the greatest potential for alignment with the JTBD of your Buyers and Users. This concept is what Marc Andreessen calls Product Market Fit. This third step implies continually shaping your business model’s solutions to fit an increasingly refined definition of your Customer Segment. This step requires marketing solutions consistent with each customer’s stated preferences and capturing important health and behavior data in a two-way exchange. To do this, define your Value Proposition using a Minimum Viable Product (MVP) approach. It is also important to note that your Value Proposition must extend past your Customer Segments and apply to your Intermediaries and Key Partners.

4th – Pivot When You Need To

Fourth and finally, pivot your business model's Value Proposition when you need to. A strong value proposition is essential for a successful business model in healthcare. However, even a well-designed model may require adjustments due to competition or changing market conditions. Use competitive analysis frameworks (like Porter's Generic Strategies or Blue Ocean Strategy) to keep on top of who you want to be and how your customers see you. When ready to make a change, adjust the "blocks" of your business model to improve performance. Use levers (minor adjustments) to fine-tune a business model and pivots (significant changes) to re-align a business model for new opportunities.

What is Next?

Looking ahead, to finish the rest of the "WHAT" section of our modelH business model canvas, we will be addressing these additional business blocks: Experience, Channels, and Customer Relationships.?

We will do this by:?

1. Relating Value Propositions to a customer or partner’s Experience.
2. Using Journey Mapping techniques for defining great experiences.
3. Relating Value Propositions to sales Channels.
4. Using Channel Threading techniques for building great distrbution.
5. Relating Value Propositions to Customer Relationships.
6. Understanding the Dimesnions of healthcare Customer Relationships.

When all is said and done, our modelH sub-canvases will fit together nicely to form a clever picture of how to develop, market, sell, and support it. I am looking forward to the following posts.?

Here is some great additional reading if you are so inclined.

1. What Is Value in Health Care? by Michael E. Porter, Ph.D.
2. The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema Customer Intimacy
3. The PMARCA Guide To Startups ebook by Marc Andreessen
4. The Lean Startup Methodology by Eric Reis
5. The Value Proposition Designer Canvas by Alex Osterwalder
6. modelH Business Model Canvases for Healthcare by Kevin Riley

Interested in what I am doing and want to learn more? You can read all about modelH business model innovation for healthcare on Medium.?

to your health,

- Kevin