In my experience, one of the most difficult tasks for an organization is defining their corporate value proposition and their key differentiators: The ”Why Us” question. We were in a meeting recently with a company and they told us that the last agency resigned from the account because they went through 400 iterations (not making this up) on the value proposition and still couldn’t agree on one.
Organizations fail for many reasons when developing corporate value propositions: too little collaboration yielding no buy-in, a meddling CEO, a lack of a disciplined approach, failure to properly test externally, etc. But in this particular case, the company’s past success was now causing confusing among executives as they plotted their future course.
The organization enjoyed 25 years of strong growth and profit performance (prior to the recession). A portion of this success was attributed to allowing the business units to operate nearly autonomously. However, that freedom came with a price: it formed separate cultures, brand identifies, logos, sales collateral, even the “language” that was used varied when talking about “what the company was, what they stood for, and what it should be in the future”.
As a result, tying the organization together under one umbrella message and value proposition was a huge challenge.
Defining Value
Michael Treacy & Fred Wiersema, in their ground-breaking book The Discipline of Market Leaders, suggest that there are only three ways an organization can define it’s value and hence, how they define themselves in the market:
Each type requires different operating models, corporate cultures, and marketing communication strategies. While companies may be able to provide value beyond one category, they must first define their primary value definition through a competitive and self-analysis. Part of this review includes an evaluation of an organization’s ability to deliver the value that is defined through its core-operating model.
An assessment revealed the company to have good products, but it was not a product leader, in the example that it employed no Product Managers. It also had strong relationships with customers, but could not be considered “Customer-Centric” since it had just launched an Account Manager role a few months prior.
It was clear. The company's success was built on a core-operating model that emphasized scale and efficiency. The model delivered operational excellence, however, too many in the organization equated that with being "Walmart." Because they were in they were a professional services firm this view appeared to lack the important customer intimacy component, with was true, given their customer retention and satisfaction rates.
Being presented as “Operationally Excellent” despite the performance it could deliver (EBITA 20+%), wasn’t viewed as “sexy” enough. For someone who interfaced with the customer on a daily basis to solve complex problems, that value proposition seemed inadequate and incomplete. While these points were accurate, they were secondary value propositions.
And this became a key insight. Treacy and Wiersema point out that to determine the right corporate value proposition you have to look at how the company is delivering scalable and sustainable value to customers. What we learned was that employees have a tendency to perceive the value the organization delivers through their own experiences (that are generally not scalable), and not based on the core business model.
In some cases, companies have been able to successfully shift their core value delivery model, for example, from delivering a product to a service, and as a result need to redefine their value proposition and how they communicate it. In other cases, executives can get caught up in trying to define the company’s value from their personal point of view even though the core business model has not changed. There is nothing wrong in wanting company to be more than it is, the problem is communicating and delivering on it.
If you find yourself in that situation, take a look at what customers value and how you are delivering it. It usually starts with understanding what built the company in the first place. Starting there will guide you to your destination with most of your colleagues in agreement…and in less than 400 rounds.
