1.4 Value proposition
You first met the term ‘value proposition’ in Week 4, and last week you came across it again in the Business Model Canvas that you’re using to develop your smart cities project. Value proposition is a promise of value to be delivered. It’s the reason why people will use your smart city product or service.
Value proposition identifies specific benefits and explains how a product or service solves customers’ problems or improves their situation.
Who will benefit from the product or service? Clearly there’ll be the user, but are there other beneficiaries? A smart water meter might benefit citizens by saving them money, but it will also benefit the water company by providing better data on water use, as well as benefiting the city government by reducing the city’s water consumption.
With smart cities both short- and long-term value must be thought about. Understanding and communicating a clear value proposition is vital to funding a smart city project idea. As you saw in Week 4, if there is no clear value proposition such as efficiency or cost savings then investors and city governments will not buy the smart product or service. It’s also crucial to getting acceptance and uptake by citizens. So taking a living lab approach where you co-create the solutions with users and producers helps to develop a clear value proposition and user acceptance.