What Makes Value Propositions Distinct and Valuable to New Companies Committed to Scale Rapidly?

Abstract

We focus in this paper on value propositions for external stakeholders created by new companies that are committed to scale, that is, to growing the amounts they are worth rapidly. For example, a company that grows its value from $0 to $1 billion in less than ten years is a company that scaled. Scaling company value is the guiding principle that these focal companies use to manage their internal affairs, as well as their interactions with external stakeholders. For these new companies, the value propositions that matter most are those that help them scale, and value proposition portfolios for their stakeholders are their most valuable assets. The purpose of this article is to identify (1) features that make a value proposition for an external stakeholder different from other new company resources, and (2) factors that make a value proposition beneficial to a new company committed to scale. Important contributions have been made to improve our understanding of the value proposition concept since it was first introduced in 1983 (Lanning & Michaels, 1988; Lanning, 2020). While these contributions have been widely discussed and cited (Goldring, 2017; Payne et al., 2017; Eggert et al., 2018; Wouters et al., 2018; Payne et al., 2020), we find it difficult to understand what the features are that make a value proposition distinct from other company resources, what the factors are that make a value proposition for external stakeholders valuable, and how new companies that wish to scale can costeffectively develop, communicate, and deliver value propositions. Most of the extant research on value propositions focuses on established companies, rather than new companies committed to scale. These studies implicitly assume that a company that can invest in refining or enhancing its value propositions already has an established customer base, distribution channels, One of the most valuable resources a company owns is the "portfolio of value propositions" to its diverse external stakeholders, such as customers, investors, and resource owners. In this article, we fill a gap in the value proposition literature by identifying features that make the value propositions of new companies different from other resources, along with factors that make them valuable. A value proposition is conceived as being what enables and improves business transactions between a new company and external stakeholders. We reason that two features in particular make value propositions of new companies distinct: (1) business transactions between a new company and one or more external stakeholders, and (2) investments to create and improve a new company's value propositions that enable business transactions. We provide a definition of "value proposition" and postulate that a value proposition will benefit a new company when it: (1) strengthens the new company's capabilities to scale; (2) increases demand for the new company's products and services; and (3) increases the number, diversity, and rapidity of external investments in the new company's value proposi...

Editorial: Aligning Multiple Stakeholder Value Propositions: the challenge of new companies committed to scaling early and rapidly

“…Second, most of the extant research examines the context of established companies. However, the reality faced by new companies committed to scale is quite different because of the challenges they face in engaging with external resource owners to access, combine, deploy and align internal and external resources, they need to operate across borders, innovate relentlessly, adopt emerging artificial intelligence (AI) and digital technologies as part of their scaling mechanisms, and negotiate with investors to enable the execution of capital investment programs that could help them meeting their scaling objectives (Bailetti et al, 2020). Thus, new scaling companies need to adopt an explicit multiple stakeholder perspective on VP development and explore how AI resources and digital capabilities can help them enhance the scaling potential of their VPs.…”

Interview: Discussing Value Proposition Research in the Context of New Companies Committed to Scaling Early and Rapidly

“…Value proposition (VP) development has become the subject of growing research interest in the last 20 years. The number of research studies has grown especially in the last 5 years, including several recent review papers summarizing key developments and identifying directions of future research (Goldring, 2017;Eggert et al, 2018;Bailetti et al, 2020;Payne et al, 2020). In addition, the VP concept has successfully joined the vocabulary of business practitioners and entrepreneurs.…”

“…However, the reality faced by new companies committed to scaling is quite different. In addition to the challenges that such companies face in engaging with external resource owners to access, combine, deploy, and align internal and external resources, they need to operate across borders, innovate relentlessly, and be ready to adopt emerging artificial intelligence (AI), and other digital technologies as part of their scaling mechanisms, as well as negotiate with investors to enable the execution of capital investment programs that could help them meet their scaling objectives (Bailetti et al, 2020). Thus, new companies that wish to scale early and rapidly need to acquire VP development capabilities that go beyond those required by companies with moderate growth objectives.…”

Framing Multi-Stakeholder Value Propositions: A wicked problem lens

“…For instance, there can be expectations to create products customers want, increase profits to maximise investor returns, produce what the co-founders think the market needs, and ensure business activities promote sustainability (Gladwin et al, 1995;Chesbrough & Rosenbloom, 2002;Liu et al, 2015;Loureiro et al, 2020). To avoid stifling tension between these seemingly opposing needs, a firm needs to create propositions that align stakeholder needs and expectations (Ballantyne et al, 2011;Bailetti et al, 2020). This alignment is even more crucial for new technology ventures, which operate in a highly dynamic environment, and often lack the resources and capabilities needed to manage the VP development and alignment process (Scherer et al, 2013).…”