Use Your Value Proposition to Align Your Business

We hear all the time from small business presidents and owners who are frustrated by the inability of their companies to deliver. On a bad day, customers are dissatisfied, prospects balk at committing to business, execution is sloppy, and employees are unhappy.

Sometimes this is because the Cubs blew the playoffs – again.

But most times, the problem is that your business processes are not aligned with your business goals, and neither is aligned with your customers’ wants. In short, instead of a seamless profit machine, you have a dysfunctional business.

How can you figure out if that is the case at your company? And if it is, how can you fix it?

A helpful tool is the Value Proposition, a description of your business in terms of value received by customers:

• Your target customers
• Benefits they receive
• What you charge (the difference = value received)

The challenge is specificity: for example, stating that you deliver “high quality” benefits is insufficient to help all parts of your company, plus your suppliers and partners, pull together. Instead, the Benefits must be understandable and measurable to guide actions and resolve conflicts within your extended organization.

Here are a few familiar examples of Value Propositions:

Perdue (http://www.perdue.com/) sells chicken to quality-conscious consumers who value tenderness and low fat, for a 10% premium compared to competitors.

Volvo (http://www.volvo.com/) builds station wagons for safety-conscious upscale families who seek durability and safety, for a 20% premium.

Weyerhaeuser (http://www.weyerhaeuser.com/) manufactures particle board for furniture makers whose customers want a smooth appearance, which eliminates their need to laminate the material while providing a smoother final surface appearance, for a 35% premium.

You can use your Value Proposition in several ways.

• Measuring stick – are you doing what you say?
• Motivational tool – keep your employees aligned with the customer and focused on his prize.
• Planning and evaluation tool – stop doing things you shouldn’t and do more of what you should. In other words, if a piece of your operation doesn’t help you deliver your Value Proposition, fix it.

In short, your management task is to make sure everyone in your company and their counterparts with your vendors, suppliers, and channel partners know what your Value Proposition is, understand it, and use it to guide their everyday decision making.

-- Craig Elderkin