Long Term Objective
The long-term objective of a company should be to ensure the value of all the solutions it provides is accounted for and that none is ‘leaking’ on its way to customers.
Every facet of value must be connected to a customer’s business performance metrics in a very tangible way.
The financial impact of the absence of that value on your customers’ bottom line, if your customers are not investing in your value, must be quantified.
Once value is understood, the focus turns to defining and designing the systems, skills and disciplines of a customised Diagnostic Business Development platform and developing a world-class sales and support organisation to execute a value-driven strategy.
So, what happens when a value-driven strategy falls short?
When value formulation and delivery are segmented and isolated into functions, that division of labour creates boundaries, and when those boundaries become barriers to overall performance, they create what has come to be called the silo effect.
When companies suffer from the silo effect value creation is negatively affected. As a result, one department completes its work in isolation from other functions within the company and then simply passes it over the wall onto the next function.
Each successive department does the same until the work goal is achieved.
In today’s complex organisations this isolation is one of the primary causes behind the failure of corporate value initiatives.
The most common results of the cross-functional dysfunction created by the silo effect are inefficient execution, inhibited communication, shallow thinking and slowed response times to customers and the marketplace.
An example is where engineers create new products with little or no input from the rest of the organisation and even without the input of customers; marketers create advertising campaigns and value messaging in a vacuum; and sales people uncover major customer needs and fail to report them.
What is often missing is the alignment of functions around corporate value creation. Whether you are buying or selling (whatever role you are playing in the value exchange) you require a business process that is a mechanism for creating a cohesive, cross-functional team that communicates and reinforces strategy, gets everyone working towards the same goal, and measures net value achieved.
Everyone in the organisation should be concerned with how to create value and leverage it for corporate and customer success. Everyone should feel a responsibility for the welfare of the organisation as a whole and its customers.
Start with the customer
Greg Lewin, former president of Shell Global Solutions, describes the focusing effect of customer value and diagnostic business development:
‘The model that we used in Shell Global Solutions was a globe that had the customer at the centre of our world. Delivering value to the customer became a shared vision. All of the vice presidents knew that everything was about delivering value to the customer and how we could best accomplish that.
“No matter what the issue was, we knew that the customer was where we were going to start. When we did our strategy-away days and our operational meetings, the customer is where we started. When we worked on technology or efficiency or delivery issues, the customer is where we started.”
Organisational change is difficult in the best of times. You need to use every means that you can to achieve it.
The most powerful forces are market forces and customers, and if you expose the organisation to them, it will drive change.
By starting with the customer, and I believe you can start with the customer in any business problem, a lot of the internal turf stuff either becomes so blatant or so dysfunctional that it drops away immediately.
Explore Value Opportunities
The four phases of a Diagnostic Business Development system – discover, diagnose, design and deliver – offer a single, customer-centred process through which each function can explore the value opportunities in the marketplace and ensure that its efforts are aligned with the rest of the company and its intended customers.
Align all functions
The pharmaceutical industry is a good model of how this alignment can play out in the real world. When the R&D function of a prescription drug maker undertakes the creation of a new product, it uses a process that can be framed around the four phases of the process outlined above.
R&D seeks to discover a market of patients that is large enough to support the investment required to create a new drug. It diagnoses the physical symptoms, causes, and consequences of patients’ problems.
It seeks to design a drug that will best solve the problems, including recognising the side effects (constraints to value) that the patient may experience. And it delivers the new drug through a highly regulated process of testing and government approvals.
The process is repeated as the drug maker’s marketers and then its sales professionals create and align their efforts to bring the drug to the health-care providers who will prescribe it.
This time, the discovery process is used to segment and refine the markets for the drug. The indications of each segment are diagnosed, the solution design is altered to fit each, and the solution is delivered.
The doctors who prescribe the medication repeat the process yet again. They discover at-risk patients by matching them to the profile of who is likely to need the drug, diagnose the individual patient, design the proper dosage and related therapy and then prescribe the best solution and monitor the patient’s compliance to the therapy and his or her progress throughout the delivery phase.
Each cycle of the process builds on the one before it; each is aligned with and supports the total effort.
These same four phases can be applied to the value proposition of any product or service that grows out of a corporate strategy.
In the absence of the process there is significant value leakage as the organisation moves from creating a strategy to achieving results.
Organisational Learning
The second mechanism that derives from the Diagnostic Business Development capability is an organisational capacity for learning.
Massachusetts Institute of Technology’s Peter Senge popularised the idea of the learning organisation in the early 1990s.
He wrote that ‘A learning organisation is one where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together’.
Interestingly, when Senge identified the seven learning disabilities common in today’s organisations, the first was the fact that employees tend to identify with their jobs and limit their loyalty to their functional responsibilities.
This identification and loyalty, said Senge, does not extend to the purpose and vision of the larger organisation. The silo effect and cross-functional dysfunction strike again!
The problem is that when learning is stifled, so is the ability of the organisation to adequately adapt its value capabilities and respond to its customers’ value requirements. This ultimately negatively impacts a company’s ability to retain customers and create profitable growth.
Whether an organisation must respond to new value opportunities, make changes in the market environment, or correct miscalculations in its current value strategy, it must have a mechanism capable of capturing and responding to feedback.
It needs to be able to identify, communicate, and respond to the customer’s situation throughout the value creation process. Diagnostic Business Development serves as that mechanism.
Continuous Value Innovation
Diagnostic Business Development requires that the various functions within the organisation that are responsible for delivering value to customers take to the field in one voice and one process.
To effectively discover, diagnose, design and deliver value, they frame their assumptions in terms of the customer, and they test those assumptions against the reality of the customer’s world.
The scientists in R&D must view their ideas and creations through their customer’s eyes. Marketing and product development need to go out into the real world where they can directly observe the symptoms of the absence of value and experience firsthand the challenges their customers are facing.
Sales professionals must communicate the issues they uncover as they conduct a diagnosis, and service and support staff must report the issues they find during the delivery and implementation of solutions.
This ongoing diagnostic feedback loop creates a learning flow that, in turn, can be used to generate continuous value improvement and breakthrough value innovation.
How might this play out in the everyday world of business?
Picture a financial software developer that has a 250-member sales force calling on CFOs around the world.
As the sales people are busy diagnosing the problems that their prospects are experiencing, they are collecting valuable information.
If at the end of a month they report back that 76% of the CFOs they have called on are experiencing and have identified ‘issue X’, as their greatest concern and they then relay that information to marketing, how soon can 50 000 messages aimed at CFOs having trouble with ‘issue X’ be delivered?
If the company’s software does not already address ‘issue X’ how soon after the information is delivered can an existing product be modified or a new one developed that can deliver the value? The crucial point: None of this can happen without a learning mechanism.
When a Diagnostic Business Development process is successfully traversed value is realised, delivered to customers and returned to the company in the form of increased profits.
The by-product of this end result is the lifeblood of corporate success; value in the form of long-term, profitable customer relationships. The corporate vision has been transformed into bottom-line results.
A Framework for the Creation of Value
An organisation’s concept of value grows out of its vision. This vision provides the foundation from which a value proposition is derived and corporate strategy evolves.
The value proposition, along with the products and services it generates, is delivered to the customer through a series of strategies that together comprise a go-to-market strategy.
The foundational belief of this framework is that the value achieved by the customer is the primary measurement of business performance.
Organisational Capacity
The market strategy defines the marketplace in which the company will do business. It identifies the markets and market segments in which the company will sell its products and services.
The competitive strategy defines a company’s position with regard to other organisations within its market spaces. It identifies other companies vying for business in the same marketplaces, evaluates their strengths and weaknesses, and offers a plan to successfully compete against them.
The product strategy defines the company’s products and services. It determines how each will fit the particular market segment for which it is designed. Finally, sales strategy defines how the company’s products and services will be offered to customers.
The sales strategy is created at three levels:
- The customer or enterprise level
- The opportunity level
- The individual or appointment level.
It details the content and flow of the sales process and diagnostic strategy and it is defined by the market, competition, and product strategy. This is why an organisational capacity for Diagnostic Business Development is critical to successful sales execution.
Value Proposition
The corporate value proposition is the foundation for each of the four strategies: Market, competitive, product and sales. The purpose of these strategies is to deliver the promise of the value proposition to market and, ultimately, value achievement to individual customers.
Through them the value proposition is extended to the market, yielding a hypothesis about customers’ situations and the ability of the company’s offerings to address those issues; the value hypothesis is explored, yielding clarity about the problems being experienced and the value required by the customer.
This leads to the collaborative design of the best solutions and the value expected from implementing those solutions; and the value capability is delivered and, in turn, yields value achievement for both the buyer and the seller. Value has successfully been exchanged and measured.
Capacity to Deliver
The Diagnostic Business Development process is travelled twice in the creation and delivery of value. The first pass through the process occurs as each of the four strategies under the Value Lifecycle is developed.
In this way, a company can ensure that each element of its strategic plan for creating value is aligned with prospective customers’ business requirements and leveraged at the product, process, and performance levels of customer companies.
In other words, we want to be sure that our strategies are capable of delivering value before we devote costly resources to pursuing them.
Value Achievement
The second pass through the Diagnostic Business Development process occurs during the execution of each of the four strategies. In this pass, a company ensures that each strategy actually works as planned and makes any necessary corrections in real time.
In other words, we want to ensure that each strategy is capable of fulfilling the value proposition we are bringing to market and creates the expected value hypothesis, value requirements, value expectations and value achievement.
