A Multisided Value Proposition Canvas for Online Platforms

A Multisided Value Proposition Canvas for Online Platforms

Paul Belleflamme (Université catholique de Louvain, Belgium) and Nicolas Neysen (University of Liège, Belgium)
Copyright: © 2021 |Pages: 14
DOI: 10.4018/JBE.2021010101
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Abstract

Operators of digital platforms have to convince potential users that their intermediation and matchmaking services bring additional value in the market. To do so, they need to formulate a strong value proposition, which convinces users that joining the platform brings them larger value than staying out. In recent years, a number of frameworks have been developed to help entrepreneurs reflect on which elements should be included (or not) in their value proposition. In this paper, the authors argue that such tools do not necessarily offer a satisfactory answer, as they miss the specificities of platform-based business models. Hence, they propose an alternative tool that overcomes the limitations they identified and is more appropriate for nascent multisided platforms. They argue that it is crucial to identify the complementarities and potential conflicts between the wants, needs, and fears of the different groups of users that the platform connects, so as to formulate a set of interlocked value propositions.
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Introduction

When pitching their idea, many entrepreneurs naturally describe what their product or service is about and why it is expected to deliver value to the customer. In short, they share their value proposition (VP), a convincing expression of the appeal of a product or service to customers, usually integrated to the sales force and the advertising message. Some research efforts have been undertaken to refine the concept of VP, to help entrepreneurs reflect on which elements to include, or to identify what makes a strong VP. For instance, after having analyzed data related to multiple innovations launched by the firm Amazon.com, Lindič and Marques da Silva (2011) suggest decomposing the VP into five elements, namely performance, ease of use, reliability, flexibility and affectivity. Indeed, when it comes to online platforms, entrepreneurs need to provide strong arguments in order to demonstrate how easy it is to register on the platform, how user-friendly the interface is, how much valuable information users will access, how fast users will get a successful match, and so on.

Besides theoretical contributions, some efforts have also been made to offer more actionable tools to practitioners, using frameworks and visual representations to depict the VP in a compelling way. One of the most famous tools is certainly the so-called ‘Value Proposition canvas’ (Osterwalder et al., 2014). This tool intends to show how the VP should fit the customer profile through a description of the market segment(s) that the product or service targets. More specifically, the goal is here to defend the idea that the offering delivers positive features (called “gain creators”) and reduces negative aspects (called “pain relievers”) from the perspective of a customer experience.

In this paper, we argue that existing frameworks that facilitate conceptual VP modeling (like the VP canvas for instance) do not necessarily offer a satisfactory answer, as they miss the specificities of platform-based business models. The latter rely on a particular mode of value creation–focused on matchmaking in a multi-sided environment–which highly differs from the traditional vertically integrated models (or ‘value chains’) for which the existing tools have been designed.

The primary goal of this paper is to offer an analysis and a communication tool that are truly adapted to the reality of platforms. In our opinion, such a tool must meet a number of criteria: it must be simple to use (complicated models tend to be scarcely used in the field, although they are probably closer to reality). As a learning tool, it must also be self-explanatory, making users understand easily the specificities of platform businesses by forcing them to ask the right questions. Finally, the tool should take as much account as possible of previous work on the subject. The aim is not to start from a blank page, but to suggest adaptations that will allow the fundamentals of previous tools to be preserved while bringing new and relevant elements.

Our paper is organized as follows. First, we set the scene of this study by describing the main features of platforms and VPs. Second, we explain how we went from the existing frameworks to the proposal of a more adapted model. Then, we explain why we believe that the VP canvas, in its current state, fails in assisting platform entrepreneurs with the definition of their VP. We then suggest a new version of the VP canvas that, in our opinion, offers a better starting point for thinking about how platforms generate value for their multiple stakeholders; we highlight our contribution by comparing our tool to alternative approaches recently proposed in the literature. We end the paper with some concluding remarks about our contribution and its limitations.

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