Value-based transformation of business engagements for software suppliers to the process manufacturing industries.

In this article I intend to summarise my observations of the value creation enablement process focusing on B2B engagements in the process manufacturing industries.?

I will be discussing business practices in this respect and my observations are solely related to businesses that provide value creation opportunities and enablers through software to improve operational and maintenance performance in the process manufacturing industries. Although I believe the proposed framework can be applied for other industries as well.

The observations I made over the years might be right or wrong, but whatever is the case, I believe they are worthwhile to share.

Introduction

Many companies are still struggling with communicating the value that they are able to deliver to another organisation, which can be very harmful in B2B engagements, resulting in business agreements that are not mutually beneficial and finally can lead to loss of interest in continuation by either parties.

There could be many different reasons for why a business engagement does not deliver on its promises to one or both of the parties. But I believe the underlying reason is always the same: misalignment of business value or miscommunication of it.

Marketers, sellers and customer success professionals are continuously working on communicating their business’ unique differentiators to their potential or existing customers. They create superb value propositions that they believe represent the set of business values that they convey the best, and refine it as they go. What is the problem with that?

Well, the issue is that those value propositions are only relevant to the supplier’s business itself and are generic. It states how the supplier delivers value in general to another business, which is absolutely necessary, but not enough.

What makes the situation worse is that those generic value propositions are taken by some inexperienced sales representatives and getting repeated over and over again in front of customer prospects like a broken record.?

Let me make a side note at this point about the frequent use of the word: sales. I believe it is highly inappropriate to use it in this context. I am talking about establishing a high value, strategic engagement between two businesses. The word “sales” implies a transactional engagement in itself, which is only a minor, yet important element of the process. But we all know it takes much more than that. It is a journey centred around joint value creation based on a collaboration of two businesses that share common goals.

What is in it for me?

Might be the question what the customer prospect asks after hearing a generic value proposition.?

As I mentioned before, the generic, corporate level value proposition is purposed for communicating the value that one business can deliver to another. In an ideal situation it must be giving answers to the questions of why the supplier’s business exists (why you do what you do?), how they realise their purpose (how you do what you do?) and what is their business (what you do?). This is the Golden Circle of a business value proposition, which has been established and explained in an elegant, yet simple way by Simon Sinek in his book titled as: Start with why, published in 2009 (2). People, teams and organisations in a B2B relationship are buying from each other not because of what they do, but because of why they do it!

I must admit that I am a strong believer and advocate of the Golden Circle (2) and convinced that its significance is even larger than what it was originally designed for. It is almost like a philosophy that can be applied to many situations.

Value propositions must be developed further though in order to address the specificity of the business partner (potential customer) and their situation. It must be business engagement specific, aligned with the generic values of the supplier’s business.

Business executives who are in the forefront of their company, representing its value and business interest must be taking the lead on establishing a long-term, strategic value-based business relationship with their customers and prospects.

Tapping into the business partner’s (future customer’s) organisation they must create multiple value delivery channels throughout the engagement, making sure that value will be constantly and concisely delivered to the customer in each and every layer including inspirational, individual, business conduct, functional and table stakes level (1).

They listen and make the effort to create and communicate flawlessly the value specifically to the business they are dealing with. They must be building up value layer by layer in the business partner’s organisation by emphasising objective and creating subjective value.

It sounds quite obvious, I know. I also know that it is already happening in several ongoing business engagements. What I am missing in many cases when I observe a business relationship formulating, is the consciousness and the lack of understanding the flow of value!

A holistic approach

There is a need for a streamlined approach to develop a detailed understanding of what is the nature of value one business can deliver to another. It must be overarching, comprehensive, repeatable and applicable to many different kinds of individual business engagements.

There are several methodologies out there that try to help suppliers mapping out the value that they can deliver in specific business engagements. They are all great in their own way. What they lack is the comprehensiveness and a holistic approach to value transfer and enablement.

In my view, the most comprehensive representation of the multi-layered and multi faceted value in a B2B engagement is developed by Bain & Company which was published in the? Harvard Business Review back in 2018 (The B2B Elements Of Value by Eric Almquist, Jamie Cleghorn and Lori Sherer - HBR Magazine March-April 2018 (1)).

They have conducted a thorough research on businesses to help suppliers to understand better what B2B buyers really care about. As a result, they have identified 40 value elements that represent what matters the most, grouped them into five individual categories and arranged them into a value framework that resembles Maslow's pyramid of needs.

If you were not aware of this article, then it is definitely a recommended read!

I still see many business relationships got stuck in the table stakes value layer, because marketers and sellers are still trying to differentiate themselves on this basic level. Company A provides a product or solution that has the features and functions to perform a task or multiple tasks, they have the price that is acceptable by Company B which was likely negotiated on the basis of those features and functions in a competitive situation, the product and services comply with the regulatory requirements of the industry and finally Company A meets with all the ethical standards when they transact.

A large portion of companies embrace functional value when they articulate the potential benefits and savings of their offerings and/or differentiate themselves based on performance (product quality, scalability and innovation). A relevant example could be an Advanced Process Control offering (improvement in yield, throughput and energy consumption can be estimated and quantified in advance). However, quite often they still break their offering down into features and functions and represent it as table stakes.

Some companies advance further in their practices and recognise the importance of articulating the value that helps their customers to do their business easier (ease of doing business value layer). They emphasise objective value elements related to increased productivity and improved operational performance such as time, efforts, connection, integration, simplification.

But more importantly this is the value layer, where subjective value elements come into play as well, which carries the opportunity for making a business engagement more long lasting and strategic or in other terms making a product or service “stickier”.

Elements as such, are cultural alignment between organisations (similar core values), transparency, flexibility, accessibility, responsiveness etc. Some of those elements can be recognised in value propositions, but I have not seen one yet that covers the elements relevant to the particular businesses articulated systematically.

Finally, there are only a few companies on the market that are prepared and confident enough to inspire their customers and paint a vision based on the detailed understanding of the customer’s business.

The ones that are doing it successfully, understand the individual value of the key corporate stakeholders of their current or future customer, as well as the goals and objectives as it was their own business’ and capable of paving the way how they can be achieved in a co-authored and validated manner.

Sometimes they do an excellent job in inspiring their customers by communicating a vision and emphasising social responsibility on the executive leadership level, but they fail to walk the talk and at the end of the day they still compete on table stakes value. What they miss is an appropriate strategy to transform and translate the inspirational value into the other layers in the pyramid and articulate other? facets and elements of value concisely.

They create a fundamental gap in between their inspirational and table stakes value, which remains unbridged during the engagement, finally resulting in a transactional relationship. It causes confusion, since the employees are losing their capability to embrace the value of what the company is trying to convey to its customers. Also, the customers’ value perception will be compromised significantly which can also erode the supplier’s credibility.

Vehicle for delivery

Another potential failure mode in B2B engagements when an inappropriate commercial and contracting framework is chosen, that can undermine the efficiency of the value creation process by lack of flexibility, transparency, scalability. A series of individual transactions attached to a roll-out plan can be very costly and time consuming and lead to compromises on time to value.

Experience shows that only medium or long-term strategic business frameworks can ensure the flexibility that allows the business parties to tap into the full value potential of the engagement mutually, enabling accelerated value creation and delivering high rate of return.

Conclusion

I certainly believe that B2B business engagements can be improved by applying a holistic approach to the value creation / enablement process by taking the above mentioned holistic approach.

It is a process that requires a high degree of commitment and a well orchestrated effort involving many different players in both parties in a B2B engagement.

It also requires:

- Value centred mindset and culture

- Understanding of value can be delivered in each layer of the engagement

- Overarching strategy to translate value specifically to the engagement

- Articulation of value in a concise manner

- Validation of value by key stakeholders

- People who can deliver and vehicle for delivery

(1)

https://hbr.org/2018/03/the-b2b-elements-of-value

(2)

Simon Sinek - Start with Why: How Great Leaders Inspire Everyone to Take Action is a book by Simon Sinek. Originally published: 2009