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Developing business ideas for drone technologies
Developing business ideas for drone technologies

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2 The value proposition canvas

In Week 4, you looked at the three building blocks of the value proposition area. This week you will look at what makes a good value proposition.

Osterwalder et al. (2010, pp. 23–25) discuss what creates value to customers. There is not a definitive answer to this question, but they propose several aspects which can contribute.

  • Newness: some value propositions meet new needs that people didn’t even know they had because there was no similar product or service before, or the offer was quite limited. This is often related to technology, but not always. For example, the creation of live streaming platforms like Twitch introduced a whole new way for people to interact. Similarly, ride-sharing apps like Uber changed the way we think about travel by making it easy to book transport. However, newness isn't always about technology; think about fair-trade products, which cater to a growing demand for ethically produced goods without relying on new tech.
  • Performance: making a product or service better is a common way to create value. For example, video game consoles like the PlayStation and Xbox get more powerful with each new version, offering better graphics and faster performance. However, there are limits to this strategy. Recently, even though smartphones have become faster and more advanced, these improvements haven't always led to increased sales, as people may not see enough benefit in the small upgrades each year.
  • Customisation: creating value by making products and services that fit individual needs has become very popular. The idea of mass customisation lets businesses offer personalised products while still making them efficiently. For example, Vans allows customers to design their own sneakers, combining personalisation with large-scale production. Similarly, websites like Canva let users create custom designs for everything from posters to social media posts, tailoring the experience to each user's needs.
  • Getting the job done: value can be added by simply helping people accomplish specific tasks. For example, Spotify helps users by curating playlists and recommending new music, making it easy to discover and enjoy songs without spending hours searching. Another example is food delivery services like DoorDash, which connect people with restaurants, allowing them to order food without leaving their home.
  • Design: design is a crucial yet challenging aspect to measure in creating value. A product with superior design can stand out significantly. In technology, products like the Nintendo Switch are known for their innovative and user-friendly design, making them popular among gamers.
  • Brand/status: customers often find value in the status associated with a particular brand. For example, wearing designer clothing signifies a connection to fashion and celebrity culture. On the other hand, wearing a Patagonia jacket might show a commitment to environmental sustainability.
  • Price: offering similar value at a lower price is a common way to attract budget-conscious customers. Fast fashion retailers such as Zara, Boohoo and Misguided provide stylish clothes at affordable prices, although there are serious concerns about the sustainability of their business model in terms of use of resources and labour conditions (IESE Insight, 2015). Xiaomi is another example: their smartphones offer good quality at a lower price than most, making them accessible to more people. Increasingly, free offerings are also popular, with services like free apps and games supported by ads or in-app purchases.
  • Cost reduction: helping customers save money is a significant way to create value. For example, Google Docs is free and allows users to create, share and edit documents online, saving them the cost of purchasing expensive software.
  • Risk reduction: reducing the risks people face when buying products or services is highly valued. For instance, a student might appreciate a laptop warranty, which lessens the risk of paying for repairs if it breaks. In online shopping, companies like Amazon offer easy returns, providing assurance to buyers that they can return products if they're not satisfied.
  • Accessibility: creating value by making products and services available to those who previously couldn't access them is another strategy. For example, Kindle Unlimited offers a vast library of books for a monthly fee, making it easier for avid readers to access a wide range of books. Online learning platforms like OpenLearn provide access to courses from The Open University, allowing people from around the world to learn new skills and build knowledge.
  • Convenience/usability: enhancing convenience or ease of use can create significant value. For example, using Google Maps makes it easy to find directions and explore new places without getting lost. Netflix and Spotify let users stream their favourite shows, movies or music on demand, making it incredibly convenient to access them.

Activity 4

Timing: Allow approximately 15 minutes.

Task A

Note down in the text box below a value proposition for the Drone Spraying Use Case. To do so, you may also want to revisit Week 4.

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Discussion

Spraying drones help farmers who want to reduce the use of agrochemicals by spreading them more precisely, enhancing yields, and reducing their cost of the treatment.

Task B

A drone spraying service for farmers would give several benefits. You can explore them in the second part of this activity. Match the value proposition element in the list below with the correct aspect.

Using the following two lists, match each numbered item with the correct letter.

  1. Getting the job done

  2. Risk reduction

  3. Newness

  4. Cost reduction

  5. Convenience/usability

  6. Accessibility

  7. Performance

  8. Performance

  • a.Reduce the use of agrochemicals

  • b.Data-driven insights: enable informed farming decisions: mapping of the field created before the spraying

  • c.Precision agriculture: enhance crop yield and reduce chemical usage by ~10%

  • d.Collect accurate data

  • e.Reduce the risk of workers spreading pesticides

  • f.Control the treatment remotely

  • g.Environmental sustainability: lower the ecological impact of farming

  • h.Cost efficiency: reduce overall operational costs for farmers

The correct answers are:
  • 1 = a
  • 2 = e
  • 3 = b
  • 4 = h
  • 5 = f
  • 6 = d
  • 7 = c
  • 8 = g

As you can see, not all aspects suggested by Osterwalder et al. (2010) are relevant to a value proposition of a new service.