What’s this got to do with value propositions? Everything, and here’s why.

The reason we called our book ‘Creating and Delivering Your Value Proposition’ wasn’t just because we needed a snappy title but because we know that you absolutely must create your value proposition first before you can deliver or implement or communicate it. If you don’t create the suit first (aka value proposition) then you’re just dealing with the Emperor’s New Clothes, ie. making marketing stuff up and expecting people to believe you.  Telling people you’ve got a beautiful new suit/value proposition but really there’s nothing there.  Just because you believe something is real, often from your own internal perspective it doesn’t mean anyone else does.

First of all, you’ve got to decide what kind of material you want, what cut of suit, stitching type, etc or, in value proposition terms, what market you want to focus on (link to blog post). Then you really need a tailor – someone who can give you a third-party truthful perspective…”You’re a size 16 not a size 10”.  Someone who can make the suit, make sure it fits and has got the right material and cut and most importantly, making sure it is right for you and makes you look good…making sure everyone believes you look good in it too.  This is akin to our value experience stage where we get real insights into your customers’ experience of you from guess who…your customers.

Value propositions are not something to be made up from no substance.  They must be created from a mix of what you want to achieve combined with your values and the experiences of your customers.  Only when you’ve created your value proposition can you then think about how you need to communicate it to your different and varied audiences.  If you communicate something you haven’t created then it’ll just be seen for what it is, the Emperor’s New Clothes with no grounding substance, no longevity and no long profit tail.

And no-one wants to walk about the town with small children pointing out our nakedness.

Related posts:

1. Are we too obsessed with customers? by Iain Lovatt, Executive Chairman at  Blue Sheep. Don’t worry...
2. Value Proposition: 6 essential need-to-knows Now we all know rationally that nothing in life is...
3. Create your Value Proposition You need to create your value proposition before you can...

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We bang on about how we have the best team with some of the finest star players in the world. We talk about how “technically” we have a very good team. The media builds up expectation and hype and then when the game is played we get knocked out of the competition in the early stages by teams who on paper are much weaker than ours. Then what follows is lots of examination and recriminations about how in spite of spending a vast amount of money we did really badly and that the manager should be sacked.  Small wonder we have increasingly become the laughing stock of world football.

We forget the most important lesson every time. Football is no longer merely a game, it is a business and a very big business at that.  So if we were going to put together a world class business case for holding the World Cup in the UK would you give it to the FA to put together? Er no. Would your key lobbyists be Prince William, David Beckham and David Cameron, none of whom, to my knowledge, know anything about business? So here we have it, this bid was about business not really about football. We answered the wrong brief, we talked too much about football and not nearly enough about money and the business and personal motivations and ambitions of those who were going to make the key decisions. We were also well aware that we were not popular with FIFA for a variety of reasons and yet we assumed that a few hand bags and a good report would fix this problem, how naive is that?

My team would have been made up of deal makers from companies like GSK, BP, Shell,  BHP Billiton who know how to do back room deals and persuade both governments and senior decision makers to do things they don’t really want to do. To have any hope of winning a large B2B deal you need to have effective strategies that cover the emotional, rational and political. Anyone with any experience in B2B could tell you that. We may have covered the rational (if the report that we had the best technical bid is true) but as for the others, even an outsider can see, our performance was woeful.  When we needed business skills we sent showbiz.  Post the event we have heard comment from many individuals involved in our bid but nothing from the Marketing Director. Did we even have one? As a large part of the success criteria would have been effective marketing it would not surprise me to find out we didn’t have a heavy weight Marketing Director on the bid team. If we did then I assume the subject of marketing never came up because everyone on the bid team was too busy talking about football.

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A former Design Council chair once remarked. We seem to be great in the UK at innovation but not so good at bringing ideas to market and making a profit.  Why are we so bad at commercialising innovation?

I think there are 4 main reason gaps for this –

1. Culture gap

Unlike the US we fear failure more and take rejection more personally. Maybe we need to learn to accept failure more as part of business and stop being so risk averse. Recognising that the US sets the standard for entrepreneurship, the UK government and the Kansas City based Kauffman Foundation have set up scholarship programmes for British innovators to learn from American entrepreneurs.  Some of the participants have been struck by the level of altruism among successful, self-made Americans. The participants say that in the UK people are more reticent to help in an altruistic way. The American mentors will give their time for free and open up their Rolodex and give them contacts.

2. Skills gap

Commercialisation for many inventors is a barrier as they have little experience of the commercial world and an adverse nature towards spending money on bought in expertise. Some view commercial assistance with hesitation and mistrust due to the blood sweat and tears that have gone in to creating their baby. Why should they just hand their baby over to someone else and also pay them to look after it? Sales and marketing is deeply mistrusted and misunderstood. Any new money that comes in will be used for more R&D, as this is their comfort zone.

3. Valuation gap

Inventors are often cash-strapped, good ideas people or academics with a major inability to communicate with business. Often inventors try to use money spent already on R&D to value their equity stake which just doesn’t cut it with commercial investors. They’ll over value their ideas and are reluctant to give up any of their ‘asset’ when it comes to wanting finance to move towards final development or commercialisation. They are largely adverse to releasing equity or control to attract further investment, preferring to own 100% of nothing as opposed to 50% of something.  We see this all to often in the Dragon’s Den!

4. Funding gap

Funding is often available from seed funds and grants to get the idea to a point of final development and to prove a first version. However after that time, any funding is given through a different scheme with its own specific sets of criteria which the companies are not at the right point yet to comply with. There is therefore a funding and assistance gap from final development to commercialisation.  Even before venture capitalists went into hiding, they only invested a fraction of their cash in early stage UK technology (£200m out of £34bn in 2007) and commercialisation capital often falls below minimum venture capital levels.

James Dyson was rejected by the UK government under the previous technology grant SMART scheme 6 times. His project was deemed commercially unviable as they could not see how he was going to take on the current market incumbents. However he did and sold 64 million units in 2008. Why was he rejected? Dyson spends around 11% on R&D per annum. A much higher average than others in the UK I would bet.

So what can be done?

Government – needs to look at more funding towards strengthening the link between R&D and business, as opposed to putting it all into R&D itself. After all, what is the point in inventing something if nobody gets to reap the benefits?

Market test early – the sooner you can bring a prototype to market, the sooner you’ll get good market feedback and the sooner you’ll be able to launch. Never underestimate the power of early customer experience feedback in helping to design a product or service that will be a market winner.  I have known too many inventors who polish their diamonds for years and years before even engaging with the market. Ideally build your value proposition from the beginning and refine it regularly with customer experience. My experience of working with early stage companies suggests that if they build their value proposition early in this iterative way, they get to market much faster and start generating profits much faster than companies who don’t.

Build whole-brain teams – innovators are often discerning, thoughtful and meticulous and have a certain intellectual snobbery about their creations. They are often not the best people to bring their creations to market and sometimes view sales and marketing with suspicion, even contempt.

Recognise that there is a need to bring the detail, rational types together with the more relationship focused, doer types into whole-brain innovation and commercialisation teams.

Some of the best innovation and commercial marriages are between the so called left brainers and right brainers. The Pixar director Brad Bird and the producer John Walker are “famous for fighting openly”, Bird has been quoted as saying, “because he’s got to get it done and I’ve got to make it as good as it can be before it gets done.”  (the CTQ tool can be used to help profile people to create whole-brain teams)

What are the other key ingredients to making the UK better at bringing ideas to market?

Cindy

With thanks for input to this article from Ian Heywood, UK Grants Ltd.

Acknowledgements to The Design Council’s ‘Inventing a Profit’ paper and the Harvard Business Review article ‘Innovation in Turbulent Times’.

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