Product Model Concepts (LEGO dub)
Value Exchange
last modified: April 26, 2024
Value exchange is the foundation of the product model.
Customer Value
Customers have needs, pain points, and desires (together, "opportunities"). They are willing to pay for access to products that alleviate their pain points or satisfy their needs and desires; opportunity solutions that make their lives or work easier, more efficient, or more pleasurable.
Business Value
For-profit businesses exist to sustain themselves and grow. To do so, they produce products that solve customer opportunities and offer access to the benefits of these opportunity solutions in exchange for value.
The company uses the value captured from customers to sustain itself.
To grow, the company must develop its products to efficiently provide more value for customers. This is done in some combination of the following ways:
- By increasing value offered to existing customers by (a) solving more of their opportunities or (b) improving existing opportunity solutions ("Deepening PMF").
- By expanding the surface area of the value proposition by solving opportunities for customers with related problems in adjacent markets ("Broadening PMF").
Ideally, each version of the product released to customers Deepens and/or Broadens PMF.
The Product Model
The product team's role is to develop their product to maximize the value the business can capture while minimizing the costs required to deliver the product.
To consistently and efficiently deliver value to customers, product teams must work to understand their customers' opportunities and then build and deliver products to solve those opportunities in ways that are valuable to customers and profitable to the business. The product model is a framework of concepts that has been proven to reliably produce value propositions with high product-market fit.
Below is an overview of the product model concepts and how they fit together to build impactful products.