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Stage 3: Craft Business to Know Viability ◾ 97

5.3.5 Value Capture

What experience has shown is that value creation and delivery isn’t as dif-
ficult for start-ups as capturing the value for your business. As you think
about capturing value, think about the following aspects.

◾◾ Can you quantify the value of the problem you are solving for the cus-
tomer with your solution?

◾◾ Does the customer realize and agree with your estimate of the problem
scale?

◾◾ Can you quantify the benefit of your solution in solving the identified
problem?

◾◾ Does the customer realize and agree with your estimate of the solution
value?

◾◾ Does the customer trust you as a partner?
◾◾ What does the customer feel about the problem you are solving? Is

there an emotional reason that the customer would be more or less
inclined toward solving this problem? For example, if your solution
brings efficiency advantage to a client’s IT organization that eliminates
the need to keep a significant portion of their team on staff, this will
create significant emotional distress for the decision maker, not because
he/she doesn’t want the efficiency gains but because he/she is worried
about the well-being of the people who will no longer be needed. In
addition, with a smaller team, the CIO’s realm of influence in the orga-
nization will also shrink – no leader wants to have a smaller team to
manage.
◾◾ The customer is already continuing his/her business without your solu-
tion. How much does it cost currently to operate?
◾◾ What are the competitive alternatives a customer has at his/her dis-
posal? How much do the competitive alternatives cost to solve the same
problem?
◾◾ Does your pricing structure require up-front expenditure for the cus-
tomer, regular recurring expense (subscription) or a pay-per-use model
(utility model)? This makes a huge difference for enterprises, as it
translates between a Capital Expenditure (CAPEX) versus Operating
Expenditure (OPEX). CAPEX requires additional approvals for enter-
prises and delays the procurement cycle. For consumers as well, a
larger up-front cost acts as a barrier to adoption.