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Commentary & Analysis

The Elusive Value Proposition

By Pat Taylor,

By WhatTheyThink Staff
Published: April 12, 2004

By Pat Taylor, President of Proactive Technologies April 12, 2004 -- I was making sales calls with a friend of mine on a windy, overcast day in Chicago. The weather had worked its way through the windows of the car and darkened the mood of my companion. "It's all about money with these guys anymore," he complained. "They just don't get 'value-add'." I laughed louder than I should have, and he jumped on me like a chicken on a June bug. "That's funny to you?" he snarled. "I sell twice what I used to sell and make half the money. Guys I've known for fifteen years treat me like an outcast, and they nickel-and-dime me to death." He clenched the steering wheel tighter, and the furrows in his brow were deep enough for planting. "Sorry, Jack. I wasn't laughing at you." I paused to give him a minute to relax, and then tried to make my point. "Remember McCormick Center during Graph Expo last year?" "Yeah," he grunted. "What's that got to do with anything?" "Well, the only line longer than the one waiting on taxis was the line of printers at Starbucks waiting to pay $3.00 for coffee. And if that ain't 'value-add', then I don't know what is…" Values Change with the Times Printers, like most people, don't mind paying a little bit extra for a little bit more; they just want to feel good about it. They need to know their money is well-spent, and it's hard to feel good about spending money right now. Our industry is changing, and uncertainty spawns fear. I believe our industry is in the midst of what Andy Groves would define as a Strategic Inflection Point. Mr. Groves is a former President of Intel and Time magazine's 1997 Man of the Year. In his book Only the Paranoid Survive , he teaches that these inflection points occur when the balance of forces shift from the old ways of competing for and conducting business to the new. Unfortunately, one of the first indications of this strategically profound event is surprisingly subtle. There is an unspoken, yet tangible sense that things are somehow different. Customers are more aggressive with vendors and old relationships become strained. Formerly successful organizations start floundering, trade shows become lackluster, and competitors you've never heard of start taking your work and your customers. (Does this sound familiar to you?) For some companies, a strategic inflection point represents new opportunities for growth and the possibility of reaching new heights. For others, it means The End. What are You Worth to your Customers? What can a company do to survive and thrive in these chaotic and confusing times? First, we're advised to perform critical self-analysis of our companies. Ask the tough questions; be honest, and throw away the rhetoric and consultant-speak. What is our value proposition to our customers? Here are some hints from my mentors: (a) if it takes more than two sentences to explain your value to a customer, you have already lost credibility, and (b) if your value to the customer is difficult to demonstrate, it will certainly be difficult to sell. The next thing to do is to act on the findings of these evaluations. If it is discovered that the value proposition is outdated, have the courage to change it. Sometimes this is as simple as changing a business process, or as dramatic as changing a company's culture. Regardless, leaders must create a value proposition that is simple to explain and easy to demonstrate. Be willing to re-invent the organization to become the [business or technical] resource your customers feel they need for support. If customers question the ‘value-add' you provide, then change the value proposition to one that makes sense to the customer. Remove FUD (Fear, Uncertainty, and Doubt) from the equation by presenting a clear, concise offering of value that is meaningful to the customer. Change to Create More Value The key to successfully navigating this strategic inflection point is having an awareness of the need for and the willpower to initiate Change. This will prove challenging for our industry, where many struggle with changing from a traditional manufacturing mindset to a business model offering professional services. Whether we like it or not, change in our industry is inevitable; it is upon us. We need to encourage Change and ignite our industry with enthusiasm for the possibilities that Change represents. If we are to build on our strengths and secure a better future for our companies and our industry, Change--and the risk that it implies--is a necessity. This is succinctly described in a quote taken from the book Competing for the Future by Hamel and Prahalad: "It is not enough for a company to get smaller and better and faster; a company must also be capable of getting different." I like remembering what the old man used to say. . . "Be brave and strong, and do good things." Credibility has a way of attracting good business.

 

 

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