37signals, business acronyms and screwdrivers

I want to lift the lid up on a business acronym ‘Value Propositions’. In the creative industries we tend not to be a fan of ‘business speak’ as it can appear generic and irrelevant or something that only corporate companies should have on their agenda.

However, ‘value propositions’ is one of the most important ones out there as it is shapes the centre of any business and is the key to growth. I wanted to share with you the latest thoughts and application of this, as once understood this could be one of the single and most important things you can uncover about your company.

What is it?

A simple definition is that a value proposition is a promise of value and the belief from the customer about they will experience. It goes beyond what a customer needs to the functional, emotional and social job that needs to be done.

Poor analogy alert - You may need a screwdriver but the job you are trying to do is putting up a piece of self-assembly furniture and a variety of screwdrivers or even a drill could do the job.  When you identify customer needs, these can be broadly defined in relation to existing products or services. But, by focusing on ’jobs to be done’ you are looking beyond what type of products people are currently using to what they are trying to get done in their lives. Mark W Johnson tells an interesting case study in his book ‘Seizing the white space’ about a shop selling milkshakes and rather than asking customers what flavours, thickness they need to asking why are they buying milkshakes, what job is it doing for them. It might look like a strange question but this subtle difference can dramatically change the results.

What are the benefits of having one?

Instagram grew to 2 million users in 4 months, something not even Facebook could do. But when it first was created it was called Burbn and had a variety of features but it didn’t manage to communicate its value to customers. By both simplifying the product and creating a proposition that enables ‘users to share beautiful photos quickly’. People got it, and used it.

Having a VP (value proposition) can differentiate you from competitors, show specific benefits and it shows your customers why they should purchase from you, rather than anyone else.  More importantly, it can keep you relevant by updating your business model, offer customers what they want, move away from outdated models and uncover new business models.

Here is a series of questions I have used with a variety of different companies which can start the process of uncovering your value proposition.

•              What do you offer to customers?

•              What type of value or benefit (e.g., cost savings, time savings, revenue increase, customer/employee satisfaction) do you offer?

•              Who you are offering that value to?

If you were to research VP’s  you would notice that few people agree 100% on what one looks like. Some describe it as an evaluator pitch, some others as a longer statement.

If you can answer these above questions then you are on your way to build your Value Proposition. Each business is different; therefore every value proposition should be different.  It doesn’t matter whether it is one sentence or a short statement. As long as it is; simple, free of business jargon and true to what your customer’s value. There is a reason that many companies can co-exist in the same industry because they offer a unique proposition to a unique set of customers and therefore, each of their VP’s should be different.

37 signals have a great example of a value proposition on the front of their website.  It talks about what value they are offering to their customers and what pains they are diminishing and have incorporated it into their three main products.

'Making collaboration productive and enjoyable for people every day. Frustration free web-based apps, sharing information, and making decisions.'

In the next blog I will share with you a tool that allows you to delve deeper and discover what is valuable to your customers.

Find out what 1700 CEO's think & how it can help your business

Recently IBM released their latest Global study based on face to face interviews with 1,700 chief executive officers in 64 countries. I wanted to share it with you as it gives an interesting overview of the opportunities and challenges of running a 21^st Century business.

IBM produce a study every two years, their latest report ‘Leading Through Connections’ states that CEO’s, for the first time, see technology to be the key driver that is driving change in their organisations. Company execs are now realising the impact of social and digital and how it is changing supply chains and relationships between partners, employees and customers.

Here is a summary of some of the key findings from the report:

·         There is a shift to building open and collaborative cultures to connect and learn from each other.

·         Customer insights is a key area that CEOs are investing in, understanding individual customer needs rather than a mass need. Over half expect social channels to be the main way to engage with their customers in five years’ time.

·         Over half of the CEO’s are partnering in order to drive much needed innovation in their field.

There recommendations, based on the study outcomes, are as follows:

·         Organisations should be built around a purpose and a value system which is understood and practiced by employees. As an organisation becomes more open it needs a stronger value system to improve decision making.

·         Companies should engage customers as individuals- using better analytics to draw insight on individual customers then to be able to action this.

·         Amplifying innovation with partnerships is key in order to manage increasing levels of complexity. Companies will have to seek new partners. These will be deeper relationships than before. Not only will collaborative environments have to be shared but also data and control.

These changes have also been occurring in the creative industry for many years. Most of us, depending on what sector we are in, are used to collaborating in one way or another. It is useful to see how the rest of the corporate world is responding to changings and there is definitely a shift to building open, collaborative organisations that are more agile, smarter and have a purpose to drive their business.

In 2010 IBM completed a similar report asking ‘What will the Enterprise of the Future look like?‘

Their findings were:

·         Over 40% of CEO’s were adapting their business to be more collaborative.

·         Nearly all CEOs are adapting their business models; two-thirds are implementing extensive innovations.

·         CEOs are moving aggressively toward global business designs.

Companies that were outperforming their peers anticipated more change, and managed it better. They were global in their business designs, partner more extensively and choose more disruptive forms of business model innovation.

If you are interested in finding out about building future proof employees, suggestions on how to collaborate on a mass scale and more download the document here.

It would be good to hear from you about what do you think the Enterprise of the Future looks like. Do you agree with these studies or have you had a different experience?

cc picture IBM

What's the story of your business?

If you were to attend a creative or digital conference, across any industry the mention of business models would at some point waft from tweets and discussions throughout seminars, panel discussions and networking breaks. These may include thoughts about how business models need to change, or what business models are disrupting industries.

However, if you were to ask a selection of folk 'What is a business model?’ they might suggest it is about pricing or the exploitation of IP or what a customer wants. The answer to the question is all of the above and more. The standard definition is a business model explains how a company creates, delivers, and captures value.

In this blog I want to lift the lid up on the term ‘business models' and look at what it really means. 

According to a variety of sources including Business Model Generation the segments of a business model are the following:

Customer Segments - This is the different groups of people your content/product/service is for. You also need to think if your users and customers are different i.e creating content for broadcasters. You have both the broadcaster and the viewers.

Customer relationships – How to build a relationship with your customers - do you need different styles depending on who you are targeting? Does the interaction need face time or an automated process?

Value Proposition – A light bulb moment for me was starting to ask customers not what you need but what ’job’ are you trying to get done. This approach changes the thought process for both the customer and you and jointly moves you into an innovative space. What do your customers consider valuable? What will they pay for?

Revenue Streams – How are you generating an income? Are you being paid for a job? Or licencing your content? Do you have a residual income? Who is paying the users or customers?

Cost Structure - How much are you charging for the value you are delivering to your customers and users? What is your cost structure? How much are the materials etc to create your value and what is your pricing structure?

Channels - How are you distributing or delivering your content/product/service to your customers?  What methods are you using to deliver the value you are offering?

Key Resources – What resources, people do you need to make your business model work effectively? This could be physical assets or skillset.

Key Activities –What activities do you need to do to build relationships, earn revenue, to achieve your business model?

Key Partnerships –What partnerships do you need to build and maintain your business model? This could be suppliers, distributors or a new collaboration to reach new markets or launch an innovative product.

There are many elements to make up a business model. Obviously, each section contains a greater depth and complexity than shown above but it is useful to look at an overview to map out and strategise your current activities, then see if any changes or tweaks can be made to improve the way you are doing business. If you are interested in seriously reviewing your business model check out our free worksheet which has questions based on each section above which can enable you to evaluate your business.

It is worth mentioning that although internal resources and activities are not as sexy as pricing and IP, they can still offer a lot of value. Changing the way you do things internally can impact on, cost, customer relationships and profit.

To conclude I would like to share with you one of my favourite quotes from Joan Magretta, former editor of the Harvard Business Review : ‘Business models are the stories that explain how enterprises work’. Taking that one stage further, just as in a story there tends to be characters, action, and motivation, in a business you have customers, users, their motivation and what the company needs to do to deliver. Customers, partners buy into your business story. This will be how you will differentiate from your competitors. So one thing you can ask your self is what is the story of your business?

For additional info here is a video guide by Tom Hulme, Business Design Director from Ideo.

Creative Leaders Round table discussion to be continued

A few weeks ago as part of the Theme Champion role I put on a round table discussion about business models in the digital creative industry for creative leaders. Some of the companies attended included: Mint Digital, Poke, NixonMcinnes, Golant Media Ventures, Moo, BBC, Putitout.  We had apologises from Aardmann, Keo Films, and Berg who through illness and urgent work matters couldn't make it but would like to be involved in other activities. 

We chatted over dinner about what digital entrepreneur need to support them, the challenge of developing a business as well as running the day to day activities. We also discussed the current level of understanding about business models, how to move from a gun for hire company to creating and selling IP.

All the companies mentioned they were interested in continuing the relationship and discussion and so we will be running another one over drinks in a month or so. The format would be we would have a short talk by an expert, another by one of the companies who would be attending then a chat. If you are interested in joining us please drop me a line at Mel@media-sauce.org.

Slides from Digital 2012

Now that I am back from Digital 2012 in sunny Glasgow ( yes - believe it or not it was!)  I though it would be worthwhile to share with you my slides for the event.

Interactive Scotland asked me to run a workshop on how you can accelerate sales and generate income (hence the title) for their digital and creative sectors. We had around 180 people at the workshop and in approximately one hour we whizzed through how a company can apply a few new business development techniques to increase the amount of customers they have. Thanks to Alisdair and the Interactive Scotland Team for making me very welcome and for running a fantastic event. I look forward to returning soon.

Digital2012final

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