- A clearly defined Value Proposition is critical to becoming a market leader.
- The first step in defining a Value Proposition is determining your organizations Value Discipline.
- Value Disciplines are either Operational Excellence, Product Leadership or Customer Intimacy…you only get to choose one!
- Crafting a Value Proposition is not an event, but an iterative process.
- Once defined, your Value Proposition should be communicated internally and woven through all external messaging to create a consistent brand image.
How Clearly Have You Defined Your Value to Your Customers?
You have an obligation to clearly communicate your organizations’ intended value to the marketplace. This allows customers to choose your organization as the best alternative. The fact is customers have a choice to come to you or go to one of your competitors, so it is up to you to clearly articulate and demonstrate what it is about your company that makes you their best choice.
A clearly defined Value Proposition is the vehicle to articulate what it is about your organization that should lead customers to choose you. The initial step in crafting that Value Proposition is gaining alignment internally on the primary Value Discipline that an organization will use to guide both strategic and tactical decision making. No sound Value Proposition can be created without first obtaining this alignment.
In this issue of News You Can Use, we will share with you the alternative Value Disciplines available to organizations and how, once identified and agreed upon, this information can be used in crafting and publishing that Value Proposition.
What is the Value Discipline Model and how does it affect an organizations’ Value Proposition?
The Value Discipline model is an overarching strategic direction your company decides to take describing the type of value you want to provide to your customers or potential customers. A Value Proposition is a marketing statement that describes this Value Discipline in a way that will make it clear to your customers how you are unique. Few companies can reach their fullest potential in today’s market by attempting to be all things to all people. This process of determine your Value Discipline and then articulating it through a clear and concise Value Proposition is critical to long term success.
Value Discipline Model 1
These are the three options when selecting a Value Discipline as defined by Treacy and Wiersma in “The Discipline of Market Leaders”; Operational Excellence, Product Leadership, and Customer Intimacy. Organizations use Operational Excellence as a value discipline to provide clients with the lowest price with hassle free service. Product Leadership describes the offering of products that push performance boundaries. Customer Intimacy is a value disciple when your company means to deliver services to one or a small few high-value customer niches.
WARNING: An organization can select one and only one of these disciplines to be their primary area of focus. It is true that every organization must do all three of these disciplines at some minimum baseline standard, but there must be one chosen as the over-arching strategic and tactical beacon in the context of which all corporate decisions should be weighed.
1 Value Discipline model information – “The Discipline of Market Leaders” written by Michael Treacy & Fred Wiersema (1997).
Below is a more detailed description of each of the Value Disciplines.
Operational Excellence: Best Cost
The first value discipline is Operational Excellence, which is an approach to the market dedicated to providing the lowest cost goods and services, using efficient processes and technologies, while at the same time minimizing problems for the customer. This discipline bases its success on several key principles:
- The efficient management of people
- The management of transactions efficiently
- The dedication to metrics and measurements
- The management of customer expectations
Product Leadership: Best Product
The second value discipline is Product Leadership, which is dedicated to providing the best possible product from the perspective of the features and benefits offered to the customer. Product leadership is based upon the following principles:
- The encouragement of innovation
- A risk-oriented management style
- A recognition that the company’s current success and future prospects lie in its product design team and those who support them
- A recognition of the need to educate and lead the market regarding the use and benefits of new products
Customer Intimacy: Best Solution
The third value discipline is Customer Intimacy which involves the selection of one or a few high-value customers, followed by an obsessive effort at getting knowing the customers in detail. This requires anticipating the target customer’s needs to continually shape products and services to fit their customers’ specific needs. Sometimes this even includes the sharing of risks with the customer when the development of new products or services are required or offered. The operating principles of this value discipline include:
- Having a full range of services available to serve customers upon demand
- A corporate philosophy and resulting business practices that encourage deep customer insight and breakthrough thinking about how to materially improve the client’s business are essential
Although all three disciplines are important, only one can be the true strategic focus for an organization. Where does your company excel? What is your Value Discipline?
Once you have determined the Value Discipline that best reflects your organizations unique place in the market, you are ready to craft your Value Proposition.
Crafting a Value Proposition
Crafting a Value Proposition is a formal process of gathering input from senior leadership on the needs of your customers and the ability for your organization to meet those needs. Remember that your Value Proposition is a marketing statement describing your Value Discipline in a way that makes it clear to your customer how you are unique. The team should discuss:
- What do your customers and potential customers want that you can provide?
- How does what you currently provide reflect your chosen Value Discipline?
- How do you want to be perceived by your customers and how can you articulate these concepts to the market:
- Lowest cost?
- Most innovative?
- Most customer-friendly?
- What do your current customers value most about your organization?
- How does your organization need to change to fully embrace your chosen Value Discipline?
What follows then is an iterative process to further refine and define the language that will become your Value Proposition. This can take several iterations or interactions with time allowed for ideas and concepts to percolate and solidify. Keep in mind that the clearest Value Propositions are those that have been so refined that it can be articulated in one sentence.
Once defined, this Value Proposition should be communicated internally and become the governing theme for all external marketing and communication consistently reinforcing your brand and image to your current and potential customers.
A defined Value Discipline combined with a well articulated Value Proposition is the foundation on which all strategic and tactical discussion-making can rely. Doing these two things effectively will lead your organization into becoming a more competitive market leader.
For additional information on this topic or to learn how Himes Consulting Group can help you determine which Value Discipline is best for your company, please contact us at INFO@HIMESCONSULTING.COM
About Himes Consulting Group
Himes Consulting Group (HCG) is a Business Optimization Company dedicated to helping organizations ensure the basic business essentials are in place to repeatedly deliver predictable results. HCG provides consulting and sourcing advisory services combining industry expertise and operational improvement experience at an affordable rate. With a primary focus on strategic and tactical fundamentals HCG is able to improve knowledge worker productivity by up to 50%.