Ask anyone in Atlanta where Peachtree street is and wait for the awkward silence. It’s not that they don’t know, it’s that they have at least a dozen answers. There is no one Peachtree street, there are dozens, everywhere. In fact there are seventy one streets in Atlanta with some form of Peachtree in their names: Peachtree Lane, Peachtree Avenue, Peachtree Circle, Peachtree Drive, Peachtree Plaza, Peachtree Way, Peachtree Walk, New Peachtree Road, Old Peachtree Road, and the list goes on and on! You get the idea. Ask any innovator, marketer, sales associate, CEO, engineer, or division head what a Value Proposition is and you may hear that same awkward silence. Look up “Value Proposition” in Meriam Webster online and you get this answer: “The word you’ve entered isn’t in the dictionary.” That’s a sign! And I like to read signs. The phrase Value Proposition is to the world of innovation what Peachtree Street is to Atlanta! Everyone has an idea, but no one knows what anyone else is talking about. We need a better map, with better signs! That’s just what we can give your company.
The Value Proposition is the most over-used and misunderstood phrase in innovation. What is it, why do we talk about it, and are we even thinking about it in the right way? I don’t think we are. I think we’re backwards. Let’s fix it!
A proposition is an invitation or an overture to consider. Everyone has heard the fedora-wearing Hollywood gangster say during a pivotal plot development, “I’ve got a proposition for you.” He doesn’t say “Here are all the reasons my request should be honored and here’s why you should work with me instead of all those other gangsters.” Why not? He doesn’t have to. The other guy, the patsy being worked over, already knows the value. It’s intuitively obvious! The gangster doesn’t have to sell what he has! The patsy gets to live, walk away, be free of the mess he’s gotten himself into! And you’re not on the edge of your seat waiting to hear the offer. You’re waiting to hear the OTHER part of the value proposition. Like the patsy, you’re waiting to hear the catch, the sacrifice, what he will have to do in return. What will he be asked to sacrifice? Will he have to provide some information? Rat out his brother? Lean on a friend? Steal something? What? That’s the essence of the value proposition when you’re the customer. What will we be willing to sacrifice in order to realize the benefit? What is the cost-benefit of the decision we are about to make?
We forget this when WE are the gangster. We throw in the word value and we get turned around. We lose site of the real point of the proposition. We forget about the sacrifice that’s being requested! It’s easy to understand why. We talk about value propositions when we’re trying to sell. We aren’t the gangster holding life and limb over the rat, we are a sales team trying to “convince” someone we have a “better” product. STOP! You’re missing the whole point! You need to think like the gangster! If you’ve done your job the benefits should be self-evident! You should have confidence that even when you’re not there to explain it, your customers understand the benefit. The harder thing for your customer to understand is the catch! When is the last time you explained the sacrifice you’re asking of your customers in return? I’m betting you haven’t. We almost never do.
Having a superior product or service is necessary, but not sufficient. Superiority is the proposition. The value hides in the cost-benefit equation. We must balance superior products with tolerable sacrifices. When you don’t understand the sacrifice, you lose. When is the last time you said to a customer “if you want what I have, you’ll have to give me something in return.” Never. We never say that. At least we don’t out loud. As a result, we forget that our products and services are always, tacitly, sending that message. Everything comes with a catch, a sacrifice to get to “better.” This is the part of value propositions we ignore. Consider your best product and try to state your value proposition this way. “Our product allows you to do this better, and in order to realize that benefit, you need to sacrifice this.” Welcome to the difficult, but critical part of the value proposition. Stop ignoring the hard part and make it an integral portion of your customer discovery.
So how do you figure this out? How can you quantify the sacrifice you’re asking from your customers? How do you integrate this new definition into your customer discovery, into your marketing and sales, and into your strategic decision making? That’s where we can help. We have developed proven tools and processes to help your company, from cubicle to C-suite, capture better customer information. Give us a call to find out how we can help you reach your portfolio goals.