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e-Xpertise in Industry Issue #31
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October 2007

In this issue...

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Quote for Today

Wise are those who learn that the bottom line doesn't always have to be their top priority. 
William Arthur Ward

Feature Article: What is your value proposition?

We would probably all agree that it's a good idea for our company products to have a "value proposition". However, I wonder if we ever stop still long enough to reflect upon what it should actually be - or take the trouble to review our portfolio of "value propositions". Even though everyone in marketing and sales talks about these things as though they are actually written down somewhere, sadly I believe this is very seldom the case. Yet value propositions are something over which IT vendors should be able to exercise complete control. The value proposition ought to be about the values the customer will realise from adoption of the solution - essentially a distillation of the main benefits of the product or solution offer. Ideally it should include explicitly the company's differentiation. So what's the problem?

In an enterprise, establishing a single action that leads to a specific benefit, is almost impossible. Similarly, it is seldom clear that a specific investment led to a specific effect. Too much is changing and processes are interlinked in complex patterns. Success in one enterprise is no guarantee of success elsewhere - too many other factors may play a part. The value proposition has to be appropriate for the person or team you are selling to at a point in time - at another time, or with a different team, the value proposition may need to be very different. Lastly, to be credible with customers you need to be able to offer evidence in support of the proposition. Value propositions that fail to meet this criteria aren't worthy of the name.

The differentiation piece of the value proposition is actually all about the "position" the company (or product or solution) takes in the market. You choose to be better than your competitors at one specific thing and that provides the differentiation. If you pick something that customers already value, or can be taught to value, your company will be successful. You will be most successful with those customers for whom this specific thing has the greatest value. In the bad old days, when we only had to sell products, this was quite a bit easier. It also helps if you are selling the same kind of product to the same kind of person every time - because it is easier to anticipate what they will value (and produce the supporting evidence). And, of course, the objections they will raise - so that you have suitable responses (and evidence) available.

In fact, the further down the solution selling road that you go, the harder it becomes to formulate a value proposition. Perhaps we need to get back to some really basic truths with which all sales people are familiar. The first job is to sell your self. Next you've got to sell the company you represent. After that you can worry about the details of the solution.

The first of these is personal - let's take that as read for the moment. The last is with the marketing teams for individual product or solution offerings. The second is the responsibility of corporate marketing - what is the core value proposition of doing business with my company? And remember, it needs to be about benefits - customers must believe your solution will deliver exactly what they need. Failure to deliver on this last point means that, while you may win a project, you will limit your opportunity to develop the account. Most of the big IT players are present in most of the accounts. Gaining share of wallet means making sure the customer knows why your company has the flexibility to provide the solution they want, with specific skills, techniques and products that deliver this better than the competition.

Bob Brown

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Hot Topic: “Simple is best”

How often have I been reminded of this fact? Indeed how often have I used this quote myself? Well, I for one need to be reminded (very often) of this fact. I'd also suggest that many of us in the software and hardware development community could do with an occasional reminder! I'm not suggesting that the complexity of our solutions be diminished; only the access to the solutions - the user interface to be more precise.

Applying technology intelligently to shield us from complexity isn't new. We've some stunning positive examples from the recent past; Apple with the iPod and Google with Google Search.

Engineering design and data management are two good examples of products whose remit, is by application, complex. The user interface of many of these products appears to evolve somewhat exponentially in multifarious ways along the evolutionary trajectory of the product. I accept that providing human access to a plethora of options isn't a simple task. Surely more of the intelligence of the product should be applied to making it manage complexity automatically, as opposed to providing functions that merely automate tasks. We've all seen many an improved mousetrap!

I asked a well respected leader of a design software company if they'd asked their target market what they wanted from the user interface of their 'next generation product'. I was met with a stony silence. Perhaps, I contemplated, here lies a missed opportunity to create the 'Google' or 'iPod' of the engineering software world? Dare I mention that features don't necessarily make a product great? Does the customer really care how clever the technology is that he's using to get a job done or does he care more about his own product's features and functions? I'd argue the latter.

Of course we have to be realistic; at the end of the day we all need to get the job done, and software isn't a miracle cure for all ills. But what really is the job? Perhaps emphasis on investigating the customers' tasks, without the blinkers imposed by past generations of computer science, thinking would make a difference?

Take data management as an example. We continue to cite that one of the most costly overheads in a business is re-designing, as opposed to re-use. The dilemma is that unless we apply (usually significant) effort to electronically categorise parts, drawings, documents etc, we cannot hope to find out if we've done something before. The overheads of this task often limit the in-use value to many smaller companies. 'It isn't worth the effort' is a phrase I've heard far too often. In this instance I look at Google and sigh - why can't all product searches be this simple? Well at least for the bulk of our needs - the significant 80%.

Allan Behrens

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Book Review: Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renée Mauborgne
Harvard Business School Press, £16.14, ISBN-10: 1591396190, 256 pages.

Simply put, Blue Ocean Strategy is about thinking out-of-the-box and creating new attractive value through an innovative business model rather than a new innovative technology. The book offers several practical analysis tools and methodologies that can be easily adopted and added to an existing tool box, which already include SWOT analysis, Porter's generic competitive strategies, Porter's five forces, a comprehensive industry analysis, and other methodologies used in strategic planning.

The major concept presented in the book is that companies compete in red oceans, which are markets that are blood red from the battles among the incumbents. The authors encourage leaders to develop pristine blue markets, which have not yet been tapped. To tap these markets, the authors present the Strategy Canvas which is the primary tool used to define a new high level business approach. Generally, the Strategy Canvas lists the factors that are the building blocks of the overall strategy of each company competing in the industry. This provides a clear visual representation and enables one to construct a strategy which breaks away from the pack by addressing a different market using a different business model.

There are two primary thought processes that are part of strategy definition. The first explores constructing the Strategy Canvas and the second develops a feasible business model that will use the chosen strategy. The authors take the reader through these thought processes and offer simple tools and examples to maintain that valuable out-of-the-box thinking.

The authors use many real life examples such as South West Airlines, CNN, Cirque du Soleil. The writing is flowing and engaging although at times it felt somewhat repetitive. The chapter about executing the strategy seems to be about change management and the tipping point leadership concept, which in my opinion may be more appropriate to turnaround situations rather than an innovative strategy to address a new market.

Overall, the terms, ideas and frameworks presented in this book are very simple and clever. They may well be adopted by consultants, entrepreneurs, business strategists and executives, as part of their regular business jargon..

Michael Morein

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Noticeboard

Events

Innovate 2007: 8 Nov 2007, London, UK

A full list of industry events can be found at IT industry events on the Cambashi website

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