Arkaro Insights
Arkaro Insights is a podcast series produced by Arkaro, where we help B2B executives deliver better results with the latest ideas in change and innovation for your organisation.
About Arkaro
Arkaro is a B2B consultancy specialising in Strategy, Innovation Process, Product Management, Commercial Excellence & Business Development, and Integrated Business Management. With industry expertise across Agriculture, Food, and Chemicals, Arkaro's team combines practical business experience with formal consultancy training to deliver impactful solutions.
You may have the ability to lead these transformations with your team, but time constraints can often be a challenge. Arkaro takes a collaborative 'do it with you' approach, working closely with clients to leave behind sustainable, value-generating solutions—not just a slide deck.
"We don't just coach - we get on the pitch with you"
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Arkaro Insights
The Value Proposition Challenge: Why Products Don't Sell
Welcome to the Arkaro Insights podcast. This episode is based on original content developed by Arkaro. At Arkaro, we're committed to innovation in everything we do—including how we share our insights. We've utilised advanced AI technology to transform our written expertise into this conversational format, making our content more accessible and convenient for our busy B2B audience. What you'll hear is a two-person discussion generated through AI voice technology, designed to deliver our insights in a more engaging way than traditional reading. As we continue to evolve this approach, we genuinely value your feedback. Thank you for listening to Arkaro Insights, where professional expertise meets innovative delivery.
The value proposition gap stands as the single most significant factor in why new B2B products fail—and fail they do, at an alarming rate of 80% within their first year of launch.
Drawing from Mark Blackwell's incisive article, we dissect what happens when companies build offerings based on internal assumptions rather than validated customer needs. The cautionary tale of Forward Health serves as a sobering example: despite $650 million in funding, they created healthcare solutions that fundamentally misunderstood what patients truly valued—the human connection in healthcare, not just technological convenience.
We explore three critical failure modes that doom value propositions from the start. First, misunderstanding customer needs—failing to grasp what customers are truly trying to accomplish and the problems they genuinely need solved. Second, insufficient differentiation—creating "me too" products or falling prey to the "utopian illusion" where innovators become enamored with potential benefits while downplaying risks and complexities. Third, inadequate switching value—underestimating the enormous inertia and real costs customers face when changing from established solutions.
The path forward lies in five powerful practices employed by successful companies like Bosch, who systematically gather evidence before building and retire 70% of initial ideas that lack customer validation. These practices include starting with jobs-to-be-done, quantifying the complete value equation with hard numbers, validating through progressive disclosure, mapping the full adoption journey, and addressing the needs of all stakeholders in the value chain.
Your value proposition isn't just marketing language—it's the foundation upon which successful B2B products are built. When it's weak, no amount of execution excellence can compensate. How does your offering stack up? Visit arkaro.com to learn more about building value propositions that truly resonate with customers and justify their decision to change.
Welcome to the Arkaro Insights Podcast. Our mission here is simple to help B2B executives like you get better results by exploring the latest ideas in change and innovation for your organization.
Speaker 2:And today we're doing a deep dive. We've got some source material, a listener sent over and it tackles a really, really critical challenge.
Speaker 1:Yeah, the source is an article the Value Proposition Challenge why Products Don't Sell. It's by Mark Blackwell, the founder of Arkaro.
Speaker 2:And this is actually the fourth in his series looking at why product launches fail, digging into the root causes.
Speaker 1:So our goal today is to unpack what this article argues is the single biggest reason B2B products often stumble a poor value proposition.
Speaker 2:We want to look at. You know the specific ways this happens, how it breaks down and, crucially, how you can avoid these traps using the insights from Mark's article.
Speaker 1:It's definitely a conversation worth having. Yeah, because the stats, the article quotes, are well, they're pretty stark.
Speaker 2:They really are Something like 80% of new B2B products fail within their first year. 80% and the main culprit. Time and again, a weak value proposition or sometimes none at all.
Speaker 1:That number should really make you pause. I mean think of the effort, the resources, the sheer hope that goes into those launches.
Speaker 2:Right, and the article's core argument is that the problem often starts right at the beginning. Your value proposition needs to nail that fundamental question for your customer why should I buy this from you?
Speaker 1:If you can't answer that clearly.
Speaker 2:You're already in trouble. The article talks about this value proposition disconnect. It's this common scenario where companies well, they build things based on their own internal ideas.
Speaker 1:Like assumptions about what customers need, or maybe just focusing on the tech they can build.
Speaker 2:Exactly, instead of starting with validated real world customer needs.
Speaker 1:And when you have that disconnect, the article says your product basically lacks something crucial. Maybe the benefits aren't strong enough or customers don't actually want them.
Speaker 2:Or maybe they are desirable, but they're just not clear. Customers don't understand how it's better than what they already use.
Speaker 1:The article uses Forward Health as a pretty sobering example.
Speaker 2:Oh yeah, that one really stands out. They burned through what was it?
Speaker 1:$650 million $650 million, yeah, on initiatives that basically went nowhere. The article literally says they built something nobody wants.
Speaker 2:How does that even happen with that level of funding?
Speaker 1:Well, according to the article, it was a fundamental misjudgment of what patients actually needed or valued. They went all in on tech clinics with no doctors or nurses physically present these care pods in malls, assuming convenience and tech were the answer. Right. But they missed the human element people actually wanted in health care. You know, talking to a trusted professional, that sense of personal connection.
Speaker 2:So it's a really powerful illustration of building what you think is cool versus what the customer actually needs. That disconnect in action.
Speaker 1:Okay, so that's the core problem the disconnect building on assumptions. The article then breaks down how this failure happens into three main categories, three failure modes for the value proposition.
Speaker 2:Yeah, thinking about it in these categories can really help you diagnose potential weaknesses in your own approach.
Speaker 1:Okay, let's take the first one. Failure mode one misunderstanding customer needs. This feels like, well, the absolute foundation.
Speaker 2:It really is Get this wrong and nothing else you do downstream is likely to fix it. It's about failing to truly grasp what the customer is trying to accomplish their job to be done.
Speaker 1:Their real pains, what they hope to gain, the challenges they face day to day.
Speaker 2:Exactly, and the article points out a couple of ways this manifests First, simply not doing the research, failing to investigate thoroughly, misjudging needs.
Speaker 1:Like forward health again, assuming tech was the primary driver, without validating if that's what patients truly sought in their healthcare experience.
Speaker 2:They built based on an internal vision, not really on external evidence.
Speaker 1:What about the positive example? The article mentioned Bosch.
Speaker 2:Yes, Bosch is the counterpoint. They apparently have this really rigorous, systematic way of doing things. It starts with gathering evidence, proof that the customer jobs, pains and gains actually exist.
Speaker 1:Evidence, not assumptions.
Speaker 2:Right and the discipline this created is key. The article states they actually retired over 70% of their initial ideas because they couldn't find enough customer evidence to support them 70%.
Speaker 1:That sounds incredibly efficient, though Stopping bad ideas early.
Speaker 2:It absolutely is. It saves enormous amounts of wasted resources down the line. It shows the goal isn't just having ideas, it's validating them against reality before you pour money into them. That's crucial for a strong VP.
Speaker 1:And the other part of misunderstanding needs, overestimating demand or poor segmentation.
Speaker 2:Yeah, this is when you don't quite grasp which specific customer groups really feel the pain your product solves, or you think everyone needs it when it's actually more noosh.
Speaker 1:So you end up spraying your sales and marketing efforts too broadly.
Speaker 2:Exactly, you overinvest trying to reach everyone, but the message doesn't land because it's not targeted. The article gives examples like bioplastics for all packaging.
Speaker 1:Or additives for every kind of concrete.
Speaker 2:Right. In reality, for many segments in those broad categories the existing solution might be perfectly fine, maybe even better on cost or performance. Your new thing might only be truly valuable for a small slice, but you're marketing it like it's for everybody. Building a rifle but using it like a shotgun as the article puts it OK.
Speaker 1:so that's failure mode one fundamentally not getting the customer's world. What's failure mode two?
Speaker 2:Failure mode two is insufficient differentiation. So this is where, okay, maybe your product does address a real need.
Speaker 1:But it just doesn't stand out. It's not clearly better than the alternative.
Speaker 2:Precisely. It fails if it doesn't offer benefits that are obviously superior or more relevant compared to what the customer is already using.
Speaker 1:This is where those Me Too products fit in.
Speaker 2:Exactly Just copying what's out there, without adding any real meaningful advantage. In a crowded B2B market, just being another option usually isn't compelling enough.
Speaker 1:The article had that slightly odd example from the Seysaul food show Mega Chips.
Speaker 2:Ah yes, the ones with the novel shape. Pitched as fun for aperitif, but they were made from rehydrated potato flakes.
Speaker 1:So different shape.
Speaker 2:But the core product, the actual chip experience wasn't really better than traditional potato chips. The novelty wasn't enough to overcome the lack of a core advantage.
Speaker 1:Differentiation has to be about real value, not just surface level stuff, which ties into the next point. Under this mode, peripheral innovation without core product value.
Speaker 2:Right, this is innovating around the edges. Packaging presentation maybe one specific feature, but the core product itself isn't strong enough.
Speaker 1:Like that other sale example, the fried vegetable snack, Cool process but tasteless.
Speaker 2:Exactly. No matter how innovative the manufacturing or how nice the bag looks, if a food product doesn't taste good, people won't buy it again. Simple as that.
Speaker 1:Or the coffee and brewable sachets. Interesting format, but the taste wasn't great and it was more hassle.
Speaker 2:The peripheral novelty didn't make up for a weaker core or make it easier to use.
Speaker 1:That makes total sense. Innovation needs to enhance the core or create new value, not just add complexity to something weak.
Speaker 2:And this leads into something the article calls the utopian illusion and risk disequilibrium.
Speaker 1:The utopian illusion sounds like getting a bit too excited about your own tech.
Speaker 2:That's the idea. Innovators fall in love with the potential benefits of their new material or technology. They see the amazing possibilities.
Speaker 1:And they kind of gloss over the downsides, the risks, the complexities.
Speaker 2:Exactly. They focus on the potential utopia but fail to properly weigh the risks versus the benefits from the customer's perspective.
Speaker 1:The article used the early history of HDPE high-density polyethylene as an example.
Speaker 2:Yeah, a great historical case. Promoted for bottles no rust, easy to mold but they initially downplayed big problems. Molding was actually tricky and it was prone to stress fractures.
Speaker 1:So the theoretical benefits didn't match the practical reality for early adopters.
Speaker 2:Right. The perceived risk and the actual pain of using it outweighed the hype. It led to a mass customer exodus, apparently until they spent two more years fixing the material.
Speaker 1:And we see that today too, right Like with lightweight materials in cars.
Speaker 2:Definitely Great fuel efficiency benefits, sure, but the risk of failure, huge warranty claims, safety issues means extremely long and tough testing cycles. The perceived risk often outweighs the benefit initially. Or carbon fiber in airplanes and tough testing cycles. The perceived risk often outweighs the benefit initially.
Speaker 1:Or carbon fiber in airplanes, developed way back in the 60s but took decades for primary structures.
Speaker 2:Because the consequences of failure are just so incredibly high. The article really stresses that in B2B the customer's calculation of risk is massive and innovators often underestimate how heavily customers weigh risk mitigation against potential gains.
Speaker 1:Okay, so failure mode two not different enough, focusing on peripherals or being blinded by the tech's potential and ignoring the customer's risk. What's failure mode three?
Speaker 2:Failure mode three is inadequate switching value.
Speaker 1:This seems especially relevant for B2B. Customers aren't starting fresh. They have suppliers, systems, ways of working already in place.
Speaker 2:Absolutely. Your new product has to offer significant extra value to make it worth the customer's. While to change it's not just about being slightly better. It has to overcome the inertia and the very real costs of switching.
Speaker 1:And innovators often underestimate these costs.
Speaker 2:Massively. They're focused on their product's benefits. They don't always see the customer side. The time, the effort, the learning curve. Maybe new equipment needed, getting rid of old stock, the risk, if the new thing doesn't work out, even damaging existing supplier relationships.
Speaker 1:It's a whole bundle of costs and risks.
Speaker 2:And the article's point is your new product's added value has to clearly exceed the sum total of all those switching barriers combined.
Speaker 1:There was that study mentioned about the US soybean seed industry.
Speaker 2:Yeah, really interesting case from 1996 to 2016. Genetically engineered seeds offered potential benefits like higher yields or less pesticide use Seems like a clear win. You'd think so, but adoption was slower than expected because of switching costs for farmers, Things like needing new sprayers. The money already sunk into old equipment, learning new farming practices, new chemicals.
Speaker 1:And even relationship costs. Yeah, changing suppliers they trusted.
Speaker 2:Exactly so. Even with a potentially better product on paper, many farmers just stuck with what they knew because the hassle and cost and uncertainty of changing felt too high.
Speaker 1:It's inertia, but it's rooted in real costs.
Speaker 2:And habit. The article also mentions the food industry, 80% of innovations failing partly because breaking consumer habits is so hard. People buy the same things almost automatically. That habit is a psychological switching cost.
Speaker 1:And the resistance isn't always from the end user, is it? The article talks about ignoring value chain dynamics?
Speaker 2:Yes, super important point. Resistance can come from distributors, installers, partners, anyone in the value chain whose business might be disrupted by your innovation.
Speaker 1:Like the PVC pipe example in US housing, took 15 years.
Speaker 2:Because, as the article puts it, it created two losers plumbers and pipe distributors. Plumbers and pipe distributors their traditional way of working, their profitability, felt threatened by this cheaper, different material, so they resisted slowing things way down.
Speaker 1:Your value trove has to work for the whole ecosystem, not just the final customer.
Speaker 2:Or at least not actively antagonize key players. And this whole difficulty ties into what the article calls the myth of the drop-in replacement.
Speaker 1:Ah, the idea that your new thing will just slide perfectly into the old thing's place. No change is needed.
Speaker 2:Which, especially in complex B2B systems, is almost never true. Think about plastics replacing metals in car parts. They ran into issues with heat chemicals in the painting process, unexpected stress cracks. It wasn't just a simple swap. The integration was complex.
Speaker 1:Okay, so the three big failure modes Misunderstanding needs not being different enough, or managing risk and not offering enough value to overcome switching costs. That paints a pretty clear picture of the pitfalls.
Speaker 2:It does, but thankfully the article doesn't just stop there, it moves on to solutions five key practices for actually building stronger value propositions, based on what successful companies do.
Speaker 1:Good, let's pivot to the positive Practice number one Start with customer jobs to be done.
Speaker 2:This means digging deeper than just features. What is the customer really trying to achieve? What's the underlying job functional, emotional, social they're hiring your product for? Understand their frustrations, their desired outcomes. You have to really get inside their world. Understand the why behind the need. Okay, Practice two quantify the complete value equation. This is absolutely critical in B2B. Forget vague claims like it's better. You need hard numbers. What are the customer's current costs, Performance limits, Risks. Then, how specifically does your solution improve their economics?
Speaker 1:And you have to include the switching costs in that equation.
Speaker 2:Yes, show the ROI, the improved total cost of ownership, the risk reduction, all in concrete terms. You essentially need to build the business case for them.
Speaker 1:Makes sense. Practice three validate with progressive disclosure.
Speaker 2:Don't just build the whole thing and hope for the best. Test your value proposition step by step. Test the basic concept first. Does the need even exist? Then test a prototype, an MVP, get feedback. Validate the economic assumptions with real potential customers. Then validate the adoption requirements. Can they actually implement and use it realistically?
Speaker 1:Test and learn, basically De-risk as you go, practice. Four map the full adoption journey.
Speaker 2:Right Selling. It is just the start. You need to map out the entire customer experience, from becoming aware to evaluating, to buying, implementing, using it day to day, getting support. Identify all the potential friction points. Your value proposition has to be strong enough to pull them through that whole journey.
Speaker 1:Think about the entire life cycle, and practice five Address the complete value chain. And practice five address the complete value chain.
Speaker 2:Back to the PVC pipes. Your value proposition needs to resonate, or at least be acceptable, to everyone who influences the decision. Distributors, installers, specifiers not just the end user Understand their needs and potential objections too. A value proposition that works for one but angers another is likely doomed. These five practices really give you a roadmap to proactively tackle those three failure modes and build something genuinely compelling.
Speaker 1:It feels like a much more rigorous, customer-centric approach, moving from deep understanding to validation across the board.
Speaker 2:And the article really hammers this home at the end. A strong value proposition isn't just marketing fluff. It's the absolute bedrock of B2B product success.
Speaker 1:It underpins everything else. Right your messaging, who you target, how you price the sales tools you need.
Speaker 2:Absolutely, and that quote from the article is worth repeating. When it's weak, no amount of launch execution excellence can compensate.
Speaker 1:You can't polish a fundamentally flawed offering.
Speaker 2:Exactly. It comes back to that Bosch example again. Retiring 70% of ideas wasn't failure, it was smart strategy, ensuring that what they did launch had a rock solid, validated reason to exist.
Speaker 1:It's about prioritizing customer evidence over internal hopes or just cool tech. The article leaves us with some tough questions to ask about our own products.
Speaker 2:Yeah. Questions like is your value proposition really based on validated customer needs or is it more built on your internal assumptions?
Speaker 1:Does it offer differentiation that customers genuinely value and see as clearly better?
Speaker 2:Does it provide enough measurable incremental value to make switching worth the pain and cost for the customer?
Speaker 1:And critically, have you actually tested and validated these things progressively throughout development?
Speaker 2:Asking those questions honestly and applying these practices that's how you start to beat those daunting 80% failure odds.
Speaker 1:These insights we've been discussing really stem from Arkaro work helping B2B companies tackle these very challenges in strategy, in innovation and in getting products successfully to market.
Speaker 2:If this resonates and you'd like to learn more about how Arkaro helps, you can visit their website. It's Arkaro A-R-K-A-R-O dot com.
Speaker 1:You can also follow Arkaro on LinkedIn.
Speaker 2:They share a lot of insights like the ones in the article we discussed today, and if you're wrestling with your own value proposition and think you might benefit from a conversation, mark Blackwell offers a free consultation. You can email him directly at mark at Arkaro.
Speaker 1:Really hope this deep dive into the value proposition challenge has given you some practical things to think about.
Speaker 2:Thank you for tuning in to the Arkaro Insights podcast and please, if you found this valuable, share it with colleagues who might benefit too.
Speaker 1:And just as a final thought, the article does hint at the next challenge. Even if you nail the value proposition, customers want, it, it's different. Switching is justified. It can still fail if the business model behind it isn't viable. So how do you actually capture value sustainably? Something to chew on for next time.
