August 18, 2014
Everyone needs to understand the value proposition
A common challenge for businesses developing new products is having a coherent and universal understanding of what the value proposition for the organisation is. This will depend on the type of organisation: A commercial organisation is primarily driven by making profit, where a non-profit organisation would focus on a societal benefit. The value proposition is the reason that the organisation exists.
From the customer perspective: Value = Benefits – Costs
There are 2 ways to increase value then, increase benefits or reduce costs – and that is a topic for a later blog.
“So what?” you may think, “Why should I in my role need to know, it isn’t part of my job!”
There are 3 critical reasons for this:
1. Building a greater team
2. Collective ownership
All of these factors affect how the people who make the business operate go about their daily work, and it is essential that they are all striving for the same thing. This is often visibly demonstrated in successful sporting teams, where the side with the strongest team ethic achieves most.
Imagine a rowing team, when they are united in direction and collaborating together, progress is smooth and fast. When they are not working together, the result is chaos – clashing oars, careering around, even capsizing.
Building a greater team
We people love to belong. Being part of a team supports our sense of identity and helps us feel good. When we can identify with a team we will proudly state “I am a part of <insert group name here>”. When this happens we will work harder to make sure that the team succeeds. We see this every day when we benefit from great service.
Let me introduce Zappos, who have built a great business around their people – so much so that they share their learning .Zippos has built this into their corporate identity, and is growing as a direct result of this team ethic in the Zappos family.
This moves the responsibility for tasks and products from mine or yours to ours. This subtle and profound shift in thinking results in a wider discussion, and regular open challenges if people don’t meet the expected standards. In high performing teams, the correction will be made by the person who made the error, and their colleagues will support them and praise them for fixing it. This is a movement away from blame to continuous improvement. If someone is not meeting the standards then whoever notices this will challenge and encourage the transgressors, it is not reported to a manager, or fed in to a process. This results in prompt correction, before any potential impact of the error (lack of quality) can affect any other part of the business. This then sets the conditions for a mind-set of continuous improvement to be adopted.
In “Drive” Dan Pink identifies this as one of the three motivations for people, regardless of nationality and culture. It explains why people volunteer and spend so much time on open source software projects. Once we take the urgent needs of housing, food etc. away, then this is what helps people go out of their way to do something. When we satisfy this need at work, we can channel everyone’s energy into productive activity instead of the churn caused by not understanding what is meant to be accomplished.
Clarity of Value
Therefore, to enable everyone to be a champion for value, we need to articulate the value proposition in a clear and simple way that everyone can relate to. This must be an understanding that all in the organisation “get”, as opposed to generating some generic artefacts and posting them on the company intranet (mission, vision, values). The artefact without the deeper understanding is effectively useless (http://cmorse.org/missiongen/).
Not Cargo Cult
The term Cargo Cult describes the behaviour where the belief that following certain practices will bring a real benefit. This was widely witnessed after World War 2 where Melanesian Islanders built runways, bamboo control towers, and mock aircraft in the belief that aircraft would arrive supplying food, clothing and medicine.
In many instances there is a duplication of practices that successful companies use, without the broader understanding of the reasons behind the practice. This is often seen in Agile adoptions, where the implementation of a task board and a daily gathering is deemed to be a successful Agile adoption. In my experience this simply confuses as people as they have more time to collectively wonder what is meant to be going on. You can fall in to the same trap with a value statement for the organisation – to be useful there must be a continual discussion around how each division, team and person is adding to the value of the organisation.
Call to action
A few questions for reflection
What is the value proposition for your company? What is the feature or team that you work with doing to grow that value proposition for the organisation?
Does the person who sits either side of you have that same understanding?
When did you last take this value proposition out and examine it, service it, and make certain that what you are doing builds towards it?
If you don’t focus on value, your competitors will.