We’ve got our business idea(s).

Now we need to start refining. We’ll now work out what the actual value of the business is.

This is an exercise far too many businesses forget!

Let’s get started:

Businesses create value. Full stop. That's the beating heart of every successful enterprise out there.

I love Josh Kaufman's definition from The Personal MBA: a business is a repeatable process that creates and delivers something of value to customers.

As an aside that book rocks for basic business education. And I say this as someone with an MBA…

Now, you'd think this would be Business 101, right? Create value. Easy.

Yet I can't tell you how many times I've sat across from founders who stumble when asked, "What does your business do?" It's not just a pitch problem - it's a fundamental issue that can cripple growth.

Knowing what value you create is the lodestar you’ll orientate all your decisions around. Not knowing it means you’ll go in all sorts of directions - and rarely the right one.

It's Not Just About Making Something Good

Now, you might be thinking, "Alright, Kyle, I get it. I'll just make something awesome and the customers will come flocking!"

I wish.

The thing is you cannot define what’s value.

ONLY your customer can.

Let that sink in for a moment. You can't create value in a vacuum! Value isn't defined by you, or by the "experts", or by your mum who thinks everything you do is amazing (thanks, Mum!).

Value is defined solely by your customers.

Remember the old adage "the customer is always right"? Well, when it comes to defining value, this is true. Your job isn't to convince them that your idea is valuable. Your job is to create something they already value.

Think about the Segway.

Back in 2001, the Segway was unveiled with more hype than a superhero movie franchise. It was supposed to revolutionise personal transportation. We were all going to be segging (??) around on those things.

Let's break it down:

• Technically excellent product? Check.

• Built by a large team of experts? Check.

• Backed by a huge war-chest of cash? Check.

• Actually solved a problem customers cared about? ...lol, crickets.

The Segway flopped hard.

Why? Because no actual customer wanted it.

The product had low value because the customers didn't value it.

The Segway isn't alone in the hall of "great ideas nobody wanted". Remember these?

• Google Glass: High-tech and futuristic, but it turned users into "Glassholes".

• Juicero: A $400 juicer that basically just squeezed bags. Turns out, people can squeeze their own bags for free.

• Bic for Her: Because apparently, regular pens were too masculine? This one got roasted so hard it practically turned into a marketing case study on what not to do.

And more recently in the AI space? Rabbit and the Humane pin? People don’t learn do they?

Let’s use a prompt to work out i) our potential customers and ii) the value proposition for these customers. It’s another mega-prompt:

You are an AI assistant specialising in business analysis and value proposition definition. Your task is to help the user define the value proposition for their business idea across different potential markets. Follow these steps:

1. Ask the user to input their business idea generated from the previous Ikigai-based prompt.
[Wait for response before next question]

2. Explain that to define a clear value proposition, we first need to identify potential target markets. Ask the following questions one at a time, waiting for the user's response before moving to the next question:

   a. Who might benefit most from your product or service?
   [Wait for response]

   b. What industries or sectors could your idea serve?
   [Wait for response]

   c. Are there any specific demographic groups (age, location, income level, etc.) that your idea caters to?
   [Wait for response]

   d. What problems does your business idea solve, and who experiences these problems most acutely?
   [Wait for response]

   e. Can you think of any unexpected or non-obvious groups that might find value in your offering?
   [Wait for response]

3. Based on the user's responses, identify three distinct potential markets for their business idea. Present these to the user and ask for confirmation or adjustments.

4. For each of the three potential markets, conduct the following analysis, presenting your findings one step at a time and waiting for the user's acknowledgment before moving to the next step:

   a. Give the market a clear, descriptive name.

   b. List 3-5 example companies that currently serve this market.

   c. Create a customer avatar (a fictional person representing a typical customer in this market). Include details such as:
      - Name
      - Age
      - Occupation
      - Key challenges or pain points
      - Goals and aspirations

   d. Define a specific value proposition for this market in one clear, focused sentence.

   e. Identify the type of business this is (ie. product, service, rental, expertise, capital etc.)


5. After completing the analysis for all three markets, present your findings in a table format with the following columns:
   | Market Name | Example Companies | Customer Avatar | Value Proposition | Type of Value |

6. Provide a brief summary of your findings, highlighting any key differences in how the business idea creates value across the different markets.

7. Ask the user if they would like any clarification or have any questions about the analysis.

Remember to be thorough in your questioning, creative in identifying potential markets, and clear in articulating value propositions. Your goal is to help the user understand how their business idea might create value for different types of customers.

I’ll run this prompt with this ikigai idea from the last Part:

AI expert consultancy group. A community for AI experts who provide consultation, advisory and implementation services to businesses globally.

I’ll then run through the process as I’m asked questions.

After this, ChatGPT specifically highlighted these three potential markets for me:

• Independent AI Consultants

• AI Consulting Firms

• Corporate AI Departments

And for each markets runs an analysis.

Here’s the output for the independent AI consultants market specifically:

One market and value proposition may jump straight out at you. If so: fantastic.

In the next Part we’ll validate these markets and value propositions and start to hone on on which we should pursue. We’re moving from idea > market > validation.