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 Editor's Note
 It's sailing season here in Annapolis, which also means it's racing season. I'm a pretty
competitive person, and I race on a pretty competitive boat. When things get tough, I often remind people that if we don't think we can win, we shouldn't be on the race course.
Not all racers believe that (though everyone on our boat does)! In sailboat racing, it's okay to be out there for fun.
But, in business, it's a different story. We're in a for-profit game, and it's not okay to be out there just for fun. When it comes to just having fun versus winning the game, a good
value proposition versus a breakthrough value proposition can make all the difference.
This introductory newsletter focuses on breakthrough value propositions. We hope you enjoy reading the first issue of "Winning Moves". If you'd like to continue receiving "Winning Moves", you
don't have to do anything. If you'd like to unsubscribe, please follow the instructions at the end of this newsletter. If you think it would be valuable to someone else, please forward it along!
Molly Hughes Wilmer
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Feature
The Value of a Value Proposition
Blueprint to a Billion, a new book detailing findings from a study by David Thomson, defines
"Seven Essentials"—management practices to get companies to a billion dollars in revenue in four to 12 years. Leading the list of essentials? #1: "Create and sustain a breakthrough value proposition."
Different business philosophies call it by different names. Eli Goldratt in the Theory of Constraints
calls it the un-refusable offer, or the "mafia offer". Geoffrey Moore in Crossing the Chasm
states, "Positioning is the single largest influence on the buying decision," reinforcing Thomson's position of the value proposition as first on his list of essentials.
Why is a breakthrough value proposition so essential?
Any business should have a value proposition—it's the crux of any business. Value propositions contain a statement of the value you offer your customers and positioning of the value in
differentiation from the competition.
Breakthrough value propositions clearly differentiate you from your competition—in a way that isn't easily copied. Breakthrough value propositions illustrate well-defined value for your
customers—obviously more valuable than your competition's offer. Breakthrough value propositions keep you on your toes to maintain the differentiation and continue to provide unique customer value.
Good value propositions capture the essence of your marketing strategy. Value propositions can capture different strategic approaches: creating a whole new market, converting commodities
into luxury items, optimizing supply chains to undercut competitive pricing. Thomson cites well-known blueprint companies in all three categories: Microsoft in the first, Starbucks in the
second, and Home Depot in the third.
"Mafia offers" or breakthrough value propositions share one important trait—they are not easily copied by the competition—now or in the future. When the competition copies the original
proposition, the originators have grown increasingly sophisticated to maintain the strategically competitive edge. To maintain growth, the value proposition has to be sustained.
The extent of internal and external analysis involved in crafting a good value proposition illustrates its benefit both as a tool and as a value statement. A killer value proposition will
address all these areas very well. Internally, you have to look at
- your core competencies, and how they are differentiated from the competition,
- how your company creates value throughout the value chain (idea/product to creation/production to sales and marketing to delivery to service),
- capabilities (internal/external, alliances, existing relationships) that impact your value proposition, and
- why your customers should value your offer.
Externally, you need to consider
- how your audience measures the value you deliver,
- how your value proposition is connected to your audience's needs and pains,
- how is your value differentiated from the competition,
- how you generate credibility for your value proposition, and
- how will you deliver higher levels of value in the future?
Value propositions exist for different audiences. For example, the most important value proposition for Berkshire Hathaway is focused on financial strength for its shareholders. For the
Berkshire Hathaway companies, however, their most important value propositions focus on their customers. (And Warren Buffett ties this all together by encouraging shareholders, who want to
make money, to also save money by buying from Berkshire Hathaway companies!) A large company may have separate value propositions for vendors, investors, and partners, but all should be working together.
Externally, value propositions give your target audience (partners, vendors, customers) a compelling reason to do business with you—you meet their needs better than anyone else can.
Internally, value propositions give your company cohesiveness—everyone understands a clearly spelled out end goal, and what they contribute to reaching it.
Because win-win situations aren't obvious, value propositions need to be, at the very least,
compelling statements. At the most, breakthrough value propositions are strategies for success.
Whether you are following the "Blueprint to a Billion" or a shorter-term growth plan or exit
strategy, a breakthrough value proposition is going to help you get there faster, more smoothly, and more cost-effectively.
How do you bring your killer value proposition alive? That's a topic for a future newsletter.
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 What Can You Do?
Questions to ask yourself: How does your value proposition stack up?
- Is your value proposition clear and compelling?
- Is your value proposition innovative and strategic?
- Is your value proposition a good offer, or a breakthrough strategy?
If you have a breakthrough value proposition, you probably know it. But you may not feel comfortable that you are presenting your offer strongly enough.
If you don't have a breakthrough value proposition, you probably know it. The question for you is, how can you transform your good value proposition
into a breakthrough one?
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Ask the Expert
Question
Does a value proposition have to be just one sentence?
Answer
YES. If it gets too long, you aren't focused enough on the value you are delivering to your customers, and it's hard for anyone else to focus on the value proposition.
AND NO. There are times when it's appropriate to use a second sentence to clearly define your competitive differentiation.
Submit your questions to the editor: molly@visionsmc.com
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