Five Rs of Value Proposition

Five Rs of Value Proposition

I have always daydreamed about the importance of the Oracle of Delphi, where ancient Greeks asked Pythia about the gods’ commandments related to their issues. Today, if it wasn’t a ruin, it would still be possible in my fantasy to propose existential dilemmas, always considering the inscription at the entrance of the temple: “Man, know thyself and thou shalt know the gods and the universe.”

In the absence of mythological gods, we can still investigate the meaning of the term “value” through a few 20th Century renowned thinkers. According to Philip Kotler, “value is primarily the putting together of the right combination of quality, service and price for the target market.” Nothing more, nothing less. It is worth highlighting the emphasis on the right combination of quality, service and price for the target market. There is no perceived value in quality or services that go beyond clients’ needs, however painful this realization may be to many managers.

Peter Drucker rmly states who ultimately decides what value is: "What the business thinks it produces is not of first importance. What the customer thinks he is buying, what he considers value, is decisive. And what the customer buys and considers value is never a product. It is always utility, that is, what a product does for him.” I favor this assertion because it clearly shows the difference between the product technical features and the customer expected benefit. Though this is very intuitive, it is far from being a general rule in companies.

Steve Jobs was acclaimed as one of the greatest geniuses of the 20th Century and beginning of the 21st Century. He turned Apple into the most valuable company on the planet, with iconic products such as the iPhone, iPod, iPad and MacBook. His vision on the process of value creation is therefore interesting: “You’ve got to start with customer experience and work back toward the technology—not the other way around.” Jack Welch, one of the most respected business leaders of the 20th Century, claims a company’s obsession for quality and cost is imperative: “If you can’t sell a top quality product at the world’s lowest price, you are going to be out of the game.” Many years later, C. Kim and R. Mauborgne used this mantra to build their own theory about blue oceans.

Michael Porter, arguably the most influential thinker in the second half of the 20th Century, warned about the risk of not focusing on value: “It is incredibly arrogant for a company to believe that it can deliver the same sort of product/service that its rivals do and actually do better for very long. It is extremely dangerous to bet on the incompetence of your competitors.”

It is that simple. But it is not easy. 

The organization needs to ask itself a very simple question: why would people consume its products and services in preference to so many other alternatives?

The answer is: it depends on its value proposition.

A value proposition is simply the value promised to a customer after acquiring a product or service. When well drafted, it explains clearly its relevance from the client’s perspective, identifies specific and measurable benefits and praises its differences when compared to similar others in the market.

It is worth pointing out that a value proposition is never related to technical features and it is not just a creative tag line. It is the basis for the entire relationship between an organization and its clients, and it defines: target segments; specific, significant and valued benefits; measurable impact of benefits beyond price; superior benefits-price relationship when compared to the competition; and, process to effectively deliver the value promised by the company. 

During my career as a management consultant, I have been engaged with several projects focused on the development of high-performance sales teams, change of business models and optimization of sales processes. By linking these sales&operations engagements to organizational cultural and strategic design, I have always approached them by applying my 5Rs drivers of value creation:

  • Restore a winning attitude to the sales team;
  • Renew the value proposition;
  • Refresh processes and competences;
  • Recreate continuously new competitive advantages;
  • Rethink actions that create real value to the customer. 

 __________________________________

Daniel Motta is the Founder and CEO of BMI Blue Management Institute, a leading niche consulting firm. He is an expert in culture, strategy and leadership. He has a PhD in Economics, MSc in Financial Economics and BA in Economics. He is also an OPMer from Harvard Business School. He is Managing Director of USA-based VC company White Fox Capital. He is also Partner and CEO of start-up Nexialistas. He was a co-founder of Brazilian Society of Finance and has served as board advisor for Ethisphere Institute. He currently serves NGO UNIBES as Strategic Planning Principal. He is the author of the best selling book Essential Leadership and forthcoming book Anthesis. He also has three articles published by Harvard Business Review.

Ricardo Bendoraitis

Tierum founder, CEO ? Open Economy ? AI, analytics ? IT strategy, capacity ? r&d behavioural economics, neuromarketing, mental health ? 5 continents

6 年

Great compilation and insights Daniel!

要查看或添加评论,请登录

Daniel M.的更多文章

  • A fragilidade penitente nas cinzas da Quarta-Feira

    A fragilidade penitente nas cinzas da Quarta-Feira

    A Quarta-Feira de Cinzas n?o é apenas o dia do retorno do feriado de Carnaval. Mas sim o início do período de…

    33 条评论
  • Too Big To Comply

    Too Big To Comply

    Em novos tempos de capitalismo engajado, novos dilemas se apresentam. O liberalismo econ?mico dos anos 1980 e 1990 -…

    18 条评论
  • Por que Escolhemos o Belo como Essência HOB?

    Por que Escolhemos o Belo como Essência HOB?

    Quando escolhemos o nome House Of Brains para nossa holding, o objetivo dos sócios foi reconhecer que, muito além de…

    19 条评论
  • Quem tem medo de lobo mau?

    Quem tem medo de lobo mau?

    A cultura é uma for?a insuperável, mesmo quando silenciosa. Modela, direciona, filtra, alavanca, limita, valida…

    19 条评论
  • Roda Viva na Terra do Drag?o

    Roda Viva na Terra do Drag?o

    Estive no But?o por algumas semanas. Em tempos frenéticos e histéricos, apenas contempla??o naqueles poucos povoados…

    21 条评论
  • Brain Rot

    Brain Rot

    A express?o Brain Rot foi a vencedora no aguardado prêmio Oxford Word of the Year for 2024! Vide: https://corp.oup.

    6 条评论
  • jaguar...

    jaguar...

    Há alguns dias - 19 11 2024 - a montadora Jaguar tornou-se jaguar. Assim com letra minúscula como dita os novos tempos…

    7 条评论
  • Os 6 Pilares de Engajamento do Crime

    Os 6 Pilares de Engajamento do Crime

    O ditado popular afirma categoricamente que "o crime n?o compensa". Mas isso n?o impede o magnetismo do crime na…

    16 条评论
  • A lista das listas da lideran?a

    A lista das listas da lideran?a

    Há centenas de livros dedicados a listas de melhores práticas sobre todas as dimens?es imagináveis da gest?o de…

    22 条评论
  • Todo Mundo é Muita Gente

    Todo Mundo é Muita Gente

    A controvérsia do trabalho híbrido continua latente nas mesas executivas das empresas. Ainda mais quando gigantes de…

    9 条评论

社区洞察

其他会员也浏览了