The pace of technological change is rapidly connecting your customers to all aspects of your company’s revenue-generating activities.
That’s why it is time to take another look at how you create, deliver and articulate value.
Creating value for Internet of Things (IoT) connected customers can result in competitive advantage for your company. Your own value as a business person of worth earns you an invitation to sit at your customers’ tables.
This is not an academic exercise. Creating value, and delivering and articulating that value, fuel the business dynamics of your own company and your clients’ organizations.
If you are a seller, your focus is fine-tuning your delivery of your company’s well-crafted value proposition. Your selling value proposition describes the tangible benefit that customers derive from purchasing your products and services. The selling value proposition creates a compelling reason for doing business with your company.
Ponder, however, whether what you are spieling to IoT connected customers has any relationship whatsoever to its foundation: your company’s value chain.
A value chain, as defined by Michael Porter in his book “Competitive Advantage” describes the fundamental and support activities which create value in a product or solution. The value chain focuses on production-, marketing- and service-related activities which ultimately can make your company more competitive in the marketplace. When your company focuses on value chain activities, they start to separate useful (value-add) activities from wasteful activities.
The Internet of Things (IoT) makes your connected customers the equivalent of customers on purchasing steroids. Their access to knowledge about your company, and the speed at which they will offer feedback about service quality delivery, are notorious. Their expectations about the overall nature and quality of their experience in doing business with you and your company is enhanced. So is their fickleness or, alternatively, loyalty.
We are going to stick with value chain basics in this post (instead of diving into value stream mapping and value chain analysis). The focus of the value chain is profit margin and profitability. How does each of your company’s systems, working in concert with each other, create value and drive revenue resulting in company profitability? A company’s systems are defined as business model/infrastructure, human resource management, technology development and procurement (including marketing and sales).
Since your company’s systems are intrinsically involved in creating value, each of these systems can and should create their own value proposition. Each system’s statement describes the tangible benefit which internal customers (colleagues) and external customers acquire from being on the receiving end of their input, throughput and output.
Too many of us hear the term “value proposition” and attribute it to marketing slogans and sales spiels. We roll our eyes and write the phrase off as being superficial and insubstantial. The breadth and depth of this phrase comes from relating that value proposition back to an organization’s value chain.
A Big Idea question for you: What are the value proposition statements throughout your company’s infrastructure? If you do not know the answer to my question, go on a scavenger hunt throughout your company. Here’s why this exercise is hardly a waste of your time. In fact, it is valuable use of your time. Compare and contrast value statements throughout your organization. How consistent are they? How do they complement each other? What have you learned?
Another Big Idea question for you: Focus on the system-specific value proposition you, yourself, articulate to customers, whether internal or external. If you a seller: what is the value proposition you are charged with delivering to your customers? Do you work in marketing, logistics, operations, service? If you do not have a value proposition, ask yourself why? Again, compare and contrast your system-specific value proposition with your own definition of your value. What do you learn?
The final Big Idea question for you: Factor in your understanding of your own company’s value chain into your relationships with your connected customers’ organizations. What are the ways in which your customers create value when working with you? What are the ways in which you create value when working with your customers?
When you start looking at your IoT connected customers from the perspective of delivering value to each other, your conversations change. You talk less about features and benefits. Now you are better able to connect the value chain dots throughout your own organization and walk that chain into your customers’ houses. Similarly, you become more discerning about your own customer experience.
Which types of connected customers do you most enjoy working with? Which connected customers add value to what you bring to their tables?
Something to chew on this week?
Babette N. Ten Haken is a strategist, analyst, author and blogger. Her focus: the interrelationship between teams, leadership and culture in technology and manufacturing. Her Workshops target excellence in the execution of strategy. Babette began her career in clinical research where she was asked to bring clarity to stalemated cross-functional conversations. Her Playbook of collaboration hacks, Do YOU Mean Business? is available on Amazon.com.