As I’ve previously noted, all machines are amplifiers, including the hardware and software machinery that makes up today’s computer systems. The technology market is, therefore, a series of leapfrogs as providers work out new ways of amplifying, augmenting, or replacing human effort.
For technology to deliver, it must enable people to achieve their desired goals. This means determining how to define value in a way that assures business fit at both a strategic level and in operational and organizational processes.
Let’s get to it.
Defining Value for Strategic Business Fit
Should we develop and implement the solutions we conceive of in our heads? That is as much a value question as an economic one. How can we weigh, compare, and contrast cost to value to proffer a decision? Should we consider cultural and societal impact? Sometimes, value is measured in terms of what happens if you don’t do something, rather than if you do.
At the core, a business is trying to do some fundamental things. If it’s publicly traded, executives are trying to drive shareholder value—that is, make money or save money, or save time (to make or save money). From this standpoint, being profitable is an ongoing concern.
My preferred definition of a business is exactly that—an ongoing concern. To succeed in business, you must successfully define and execute a strategy. Using business school principles, we can define a value-based strategy based on three pillars: operational efficiency, customer intimacy, and product/performance superiority.
Operational efficiency is about saving, reducing, optimizing, and modernizing (waste, costs, processes, infrastructure, etc.). It’s an expense you’re trying to reduce or a process you’re trying to improve or optimize.
Customer intimacy is about investing to gain more customers, drive more revenue, and make more profit. That’s an investment in doing business in the manner and location your customers wish to do business with you.
Product/performance superiority is an investment in staying ahead of your competitors, attracting more business, or developing new business to generate more revenue and profit.
Digital transformation is nothing more than those three things: business strategy leveraging digital technology and delivery as a primary lever. Tying a solution to one (or more) of these three pillars provides the relevance required to convince decision-makers of fit for purpose within their business strategy.
For providers, trade-offs and leapfrogs can be translated into sales value. For instance, I can create a technology or system that will provide 100% data availability, or unfettered performance, or unlimited capacity. But what must I trade off to provide that, and what leapfrog technology must I use—or convince you of its value—to get you to accept it?
At a customer executive conference over 20 years ago, we asked the audience to consider what they could accomplish if we, as an industry, could provide them seemingly infinite data storage capacity, network bandwidth, and compute resources. Today, we are on the brink of achieving that aspiration. In many ways, we are already providing it.
Even so, why would a business buy? Sellers must relate, or translate, how a technology solution enables enterprises to accomplish their strategic business goals. It must fit the strategy—or strategies—they are trying to implement.
If technology providers want to align with value-based strategy, they need to ask three questions:
How and where does my solution impact the three pillars?
Does that align with the customer’s strategic direction?
How can I best translate my resources and capabilities to reflect that?
For vendors, that is how you create marketing value statements and how you tie your technology to business at the strategic level.
Defining Value For Operations Fit
Even with a technology solution that fits their business strategy, you have to convince decision-makers and budget holders to buy and implement the solution. To do this, you must address their specific, persona-based decision criteria that are inevitably based on people and operational models.
There are, broadly, three buying personas that need to be satisfied: the executive buyer, the architect buyer, and the engineer buyer. Each has unique buying decision criteria you must address by translating your solution to meet those terms. Their perspectives are going to be influenced by how they view the impact to the operating model. In my experience, here is how all that shakes out.
For the executive, you must address aspects related to awareness, urgency, and trust.
For the architect, you must address aspects related to technical fit, scalability, and security.
For the engineer, you must address aspects related to use and function, performance, and support.
Vendors must address each persona’s unique buying decision criteria to convince them to allocate the scarce resource known as budget. You are fighting for that resource and must convince both decision-maker and budget-holder of the operational value of your solution.
Combining Value For Best Fit
Your marketing and sales organizations must be able, and enabled, to translate and bridge the technical aspects of your solution to an organization’s business aspects and buying criteria. And as a seller, you won’t be the only one attempting to do this. You will have competition.
Ultimately, as a provider, the goal is to map your own value-based business strategy onto your buyer’s business strategy and values, through value statements that reflect their needs and provide resources and capabilities to enable them to achieve their desired business outcomes.
You need to know what target you’re aiming at and how you are responding, at a business level, to hit that target. Technology marketing teams are always striving to develop a value statement, but they’re typically thinking in terms of speeds and feeds or technical capability and differentiators. This approach will have limited appeal and “legs” beyond the specific buying persona or decision-maker interested in these aspects.
As a buyer, challenge your providers and sellers to meet your organization’s needs, strategies, and values on your terms. Analyze, review, and judge them on that basis. Why buy, otherwise?
Next Steps
At GigaOm, we work with clients to develop, enable, and activate the value propositions and statements unique to them based on the research we produce, matching users and providers for best technical and operational fit to needs and requirements.
How do you feel about your organization’s resources and capabilities to do this? Would you like some help?
If so, contact us to get started.
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