Monday, October 20, 2003

The Value Proposition

by Asim Jalis

1. The value proposition guides the development of a product or a software venture. For example, if I know why someone will buy a product, what the product's killer value proposition is, then that will guide me in deciding which features to put in and which to not put in. It will give my program a unified interface. Otherwise the program will be schizopherenic. 2. So the question becomes: Do you build the product first and then hope to find a value proposition for it? Or do you find the value proposition first and then build the product? Or do you find the value proposition for things you already have and then use the value proposition to guide further development? 3. I think it's a combination of all three. 4. You need to have something at the beginning. The reason is that otherwise the customers don't know what you are offering. The initial product is a communication device of what is possible. I suppose it could be a simple demo. Also a product establishes credibility. Otherwise the customer does not know if you can really deliver. 5. But the product should not be sophisticated and perfect. It should be embryonic, functional but embryonic. 6. Next take this product to customers, to different segments in the market, and try to sell it. See if anyone buys. See why they buy, or why they don't buy. Focus groups are pointless because unless the people vote with their wallets you don't know if they mean it. 7. Once you discover the value proposition then you can evolve the product to suit the market. 8. Based on all this here is a product idea: a developer management framework, that generates reports on the code base. How many classes, how many functions, how many lines of code, how many files were updated today, how many unit tests pass, which lines of code are never called, how many lines of code are commented, and so on. The framework could scan the file system and build reports. It could log these reports every day and build charts over time. The unit testing framework could also generate a log every time it is run and this could accumulate over time. 9. The idea: the logging unit testing framework. The framework is free but the log parsers are not. 10. To know the value proposition you need the customer in mind. You need to know who you are targeting, and you need to know what your product is. 11. The basic duality in the market place: producers and middlemen. The hybrid model in between: value added reseller. This is a middleman but he/she also transmutes the underlying product enough so that it loses most of its brand identity and acquires the brand identity of the reseller. 12. In production you are focused on finding customers. In middleman plays you are focused both on finding the best suppliers and the best buyers. By "best" I mean people who will create the biggest margins.