The document discusses the evolution of value propositions in the context of technology commercialization, highlighting the transition from goods-dominant logic (GDL) to service-dominant logic (SDL) in value creation. Through case studies of four firms, it demonstrates how value propositions are iterated based on dialogue with customers to address unique situational needs. The findings suggest that both GDL and SDL approaches have their place depending on market conditions, and emphasizes the importance of co-creating solutions with customers.

1. Understanding the value
proposition as a
cocreated claim
Noelle London, Greg Pogue, Clay Spinuzzi

2. The value proposition is a claim
about the value of an innovation...
“This technology is a brake pad spring that
reduces friction, improves corrosion resistance,
and reduces high frequency vibrations & noise.
Invented for the purpose of reducing noise and
friction in automotive brake systems, the
innovation is based on a combination of coatings
which provide dampening and reduced friction in
a targeted manner while also improving
corrosion resistance.” (2008)

3. … but value emerges through
dialogue.
◻ No traction: the brake spring coating solved
a problem that wasn’t really a problem.
◻ Then: Toyota recall meant that automotive
companies became focused on safety
features (2009)
◻ New value proposition: by reducing friction,
the coating could lengthen the life of the
brake spring and therefore improve safety.
◻ Value propositions must be iterated.

4. Value propositions...
◻ Often begin as descriptive arguments:
Value is seen as being a property of the
innovation.
◻ But they work best as proposal arguments:
Value is seen as emerging from the
application of the innovation to the unique
situational needs of the receiver.

5. The case
◻ A technology commercialization program,
structured as a pitch competition.
◻ Innovators learn to be entrepreneurs;
innovations are transformed into
commercialized technologies.
◻ Firms must make several interrelated claims;
the central claim is the value proposition.
◻ We examine how four firms iterated their
value propositions.

6. The framework: SDL (Lusch &
Vargo)
◻ Goods-Dominant Logic (GDL): Value is
understood as embedded in goods and
offered to consumers; focus is on exchange-
value (good’s characteristics).
◻ Service-Dominant Logic (SDL): Value is
cocreated by producer and consumer and
realized in use; focus is on use-value (service’
s benefits).
◻ Both claims can be made throughout the
customer development process.

7. The study
◻ We interviewed mentors of 5 Korean entrepreneurs
in the Gyeonggi-UT Innovation Program (GIP).
Firms A-D iterated their value proposition, Firm E
did not.
◻ Firm A: Coated brake spring
◻ Firm B: Process to produce aluminum in a
rounded shape in a single process
◻ Firm C: Reliability and durability testing systems
and services
◻ Firm D: Noise cancellation software
◻ Firm E: Machine to heat baby formula

8. Evolving value propositions
Firm Technology
description
Initial Value Proposition Final Value Proposition
Firm A Coated brake spring Reduces noise and friction in
automotive brake systems
Greater brake safety through
corrosion- resistant brake springs
Firm B Process to produce
aluminum in a
rounded shape in a
single process
Improves productivity 80%, lowers
selling price 30%
A seamless, one piece muffler that
does not crack along weld joints,
leading to significant cost savings
Firm C Reliability and
durability testing
systems and services
Manufactures testing equipment at a
lower cost than its main competitors,
offers strong technical services
abilities and after-sale support
Provides test bench facilities and
services for a partner (and former
competitor) in the US
Firm D Noise cancellation
software
Reduces ambient noise in cell
phones, improves battery life
Reduces ambient noise in drive-
through PA system for an
international fast food chain
Firm E Machine to heat baby
formula
Automatically mix formula with
heated water to the perfect
temperature in 90 seconds
(Same)

9. Key insights
◻ Value propositions initially focused on describing
features.
◻ For Firms A-D, value propositions were iterated
during the execution phase. (Later than we would
expect, based on Lean methodology.)
◻ Iterating value propositions involved transitioning
from GDL to SDL arguments. (From feature
descriptions to proposal arguments.)
◻ SDL arguments involved co-identifying a problem
and co-creating a solution with customers.

10. Example: Noise reduction
software
◻ Initial value proposition to phone manufacturers:
Reduces ambient noise in cell phones, improves
battery life.
◻ Problem: Benefits were only incremental; they were
outweighed by the redesign costs for handset
manufacturers.
◻ Response: Find other cases that require noise
reduction.
◻ New value proposition to fast food chains: Reduces
ambient noise in drive-through PA system. Game
changer: Long-term cumulative savings in company
and consumer time, better experience.

11. Example: New manufacturing
process
◻ Initial value proposition to manufacturers: Improves
productivity 80%, lowers selling price 30%. (Descriptive;
focuses on incremental changes in cost, quality, speed)
◻ Through dialogue with representatives of target markets,
assumptions about value changed.
◻ New value proposition to muffler manufacturers: A
seamless, one piece muffler that does not crack along
weld joints, leading to significant cost savings. (Proposal:
focuses on unique challenges for that type of product.)
◻ The GDL-based value propositions were communicated
to the customer; the SDL-based value propositions were
co-created with the customer.

12. Conclusion
◻ GDL- and SDL-based value propositions both have
their place. GDL focuses on products and is appropriate
for “red ocean” markets; SDL focuses on new uses and is
appropriate for “blue ocean” markets.
◻ Pivoting can involve moving from one type of value
proposition to another.
◻ The seizing of opportunity that defines entrepreneurship
is thoroughly rhetorical.

13. Calls for papers
◻ Special Issue of IEEE Transactions on
Professional Communication on
Entrepreneurship Communication (December
2016)
◻ Special Issue of the Journal of Business and
Technical Communication on the Rhetoric of
Entrepreneurship: Theories, Methodologies,
and Practices (July 2017)
http://spinuzzi.blogspot.com/2015/04/two-calls-for-proposals-on.html