Create New Value Rather than Compete for Value Created by Others
Many marketing people are obsessive about the urgent work of competing rather than the more important work of creating.
Brand owners and managers are busy people! They’re busy everyday in back-to-back-meetings. They’re under increasing pressure to create more revenue, and get more stuff done as cost effectively (cheap) as possible. They’re thinking about supply-chain logistics, product development, pricing, channel strategy, promotions, customer service and their competitors.
Managers are hyper-focused on their marketing ROI– the urgent metrics executive management values most and forms the basis of reward and compensation. It’s easy to see why the focus is on the urgent rather than the important. Only a select few of enlightened marketers are afforded the luxury of paying much attention to the more important work– creating!
One of the important principals we hold near and dear in our brand strategy practice needs to be mentioned:
Tis better to create new value than compete for the value created by others.
Why on earth do really smart people invest tens of millions of dollars bringing me-too products to market? It makes no sense at all, yet it happens all the time in every product category.
The most important things are often neglected.
Think about your own personal life. There are important things that inspire your imagination and are worth pursuing, but somehow they get pushed back while you focus on the expedient matters at hand. It’s no different in organizations.
Increasing revenues with the greatest profit margins is the urgent work of business organizations. The more important work of increasing their value to people is often neglected in the frenzied money-making process. This is where most organizations experience dynamic tension – create new value vs. milk the status quo.
If your company/product/brand no longer existed would any one care? Does your enterprise represent an ideal (beyond your product/service) that people highly value? Does your organization focus on innovation that provides people just what they’re asking for, or do you focus on providing people what they’re dreaming of and waiting for?
Increasing your value to people requires the insight to be two steps ahead of the customer’s stated needs and connecting with their unspoken aspirations and dreams. This is what people really care about. The products/brands that best represent these higher ideals are usually the ones that reshape categories and lead markets.
If you’re discounting your prices, you’re not leading anything.
Only market leaders command premium pricing. There can only be one leader. Everyone else sells on functions and price. And in an over-crowded marketplace, where there is abundant choice, any price is too high. You can’t grow your business discounting your prices. Nor can you increase your prices without providing the equivalent “new value” people are dreaming of and waiting for.
Innovate around a higher meaning.
Creating new value always involves proposing new or unexpected meanings. What matters most to people is not the function or performance of a given product, but their emotional, psychological and cultural connection to what the products means to them.
New value is in the “meaning” not in the physical thing. People don’t just buy product, they buy into a higher meaning. This unexpected idea, unsolicited by user needs, once discovered, turns out to be the very thing people were waiting for, just not asking for. Nobody was asking for an iPod, Facebook, baked potato chips, the Swiffer, or any other product innovation that has redefined or reinvented a category.
Moving up the value chain implies more than a fair exchange.
It’s no longer enough to meet customer quality expectations. Today, everything is good. Good=the same! To thrive, enlightened business leaders will focus less on urgent transactions and more on creating scintillating, dramatic, unique, relevant and transformative experiences. This will always involve innovating new value ideas that provide far more “use value” than customers pay in cash value. This is the over-looked source code to customer advocacy.
Creating a bigger future in unreasonable times.
In previous recessions, consumer spending was our ticket out of the dip. Not any more. Consumer spending still holds at 72% of GDP. It’s unlikely to grow further. And in the face of nearly 10% unemployment, productivity has not declined, so it’s unlikely there will be big demand for more workers either. The only way out of this mess is to innovate your way out. Creating bigger futures is the important work to focus on. This requires lots of inspiration, freedom and creativity.
No other strategic activity is more important (and elemental) to business growth than creating new value for people. At the end of the day, it’s simply a matter of choice to commit to do this important work.
Link to the original post: Focus on Value Creation Instead of Competition
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