‘We provide a complete range of … equipment to meet all your customer needs. Based on the latest science and advances in technology, our premium equipment is designed to offer the best user experiences… Known for industry leading reliability and service, our solutions will make sure your business stands out from the crowd.’
If this VP sounds generic, it’s because it is. Go to the web site of any major manufacturer, remove the brand name and pictures, and you will be hard pressed to tell one brand from another. Fill in the blanks with any company or product and you probably cover 90% of the superficial VPs out there.
There are no universally accepted definitions of a value proposition but there are a growing number of tools that can help in the development of compelling value propositions. Rather than try to focus on a single definition the following list of characteristics by Alex Osterwalder provides a solid guide:
- Are embedded in great business models
- Focus on few pain relievers and gain creators, but do those extremely well
- Focus on jobs, pains, or gains that a large number of customers have or for which a small number is willing to pay a lot of money
- Align with how customers measure success
- Focus on the most significant jobs, most severe pains, and most relevant gains
- Differentiate from competition in a meaningful way
- Address functional, emotional and social jobs all together
- Outperform competition substantially on at least one dimension
- Are difficult to copy
- Focus on unsatisfied jobs, pains, and gains.
According to Hub Spot, the value proposition explains how your solution solves customer problems/improves their situation, what specific benefits they can expect, and why customers should buy from you over your competitors. It is not a slogan or positioning statement.
Below are a few meaningful VPs from traditional manufacturing firms which have adopted Business Model Innovation (BMI) using a product service system (sometimes known as servitization):
Hilti – Hilti offers holes not hammers. With its Tool Fleet Management System, the company provides guaranteed availability, maximum uptime, with no upfront costs. Customers get access to the best tools whenever and wherever they need them.
Kone cranes – At Konecranes, we are not just lifting things, but entire businesses. We have real-time knowledge of how millions of lifting devices perform. We use this knowledge, around the clock, to make our customers’ operations safer and more productive.
Otis Elevators – Using smart, internet of things (IoT) technology, Otis ONE™ brings you and your passengers the next generation of service. With 24/7 real-time, connected service combined with our foundational historic data your elevator experience will be transformed as you receive new insights. Transparent, proactive, predictive: this is Otis ONE™.
Royal DSM – the new resin addresses the growing market demand for powder coatings that can be cured quicker or at lower temperatures. In particular, the Uralac® EasyCure P 3225 resin can either be cured in just 5 to 6 minutes at 180ºC, compared to the 10 to 12 minutes of market alternatives, or in 12 minutes at 160ºC. In this way, the resin enables higher production output and can help prevent bottlenecks, as well as lowering energy consumption, reducing natural gas usage by up to 30%.
Siemens Health Care – We assist you in reducing risk. We increase machine uptime and increase your profitability.
What is striking about these VPs is how similar they are despite coming from very different industries. They focus on a few key resonating points which act almost as unique selling propositions (USP) whilst aligning with customer measures of success, namely reductions in cost and improved productivity. They are also embedded in strong business models which make imitation difficult. As Didier Bonnet and George Westerman explain (The New Elements of Digital Transformation, MIT Sloan Management Review, 2021), as some firms are still implementing traditional automation approaches such as ERP and product life cycle management, others are moving far ahead by digitally reinventing operations. ‘Thanks to the growing availability of cheap sensors, cloud infrastructure, and machine learning, concepts such as Industry 4.0, digital threads, and digital twins have become a reality. Digital threads connecting machines, models, and processes provide a single source of truth to manage, optimize, and enhance processes from requirements definition through maintenance (p.4)’.
VPs are not just statements. They are fundamentally strategy questions that address the entire go to market (GTM) capabilities of the firm. If the underlying competences are not there to deliver on that VP that the entire dance that most organizations engage in when working through VPs is nothing but innovation theatre.
Below is a useful model from Camlek (2010) that depicts a journey from basic product features to actual customer value that is tangible. If you are not able to get to customer value, something needs changing in your organization.
Strategy & Competitiveness 