Posts Tagged ‘value proposition’

I was discussing the importance of “core purpose” with a client when their newest team member (a newly minted marketing MBA) piped up and argued that “The core purpose of a business is to make money.” I was gobsmacked. (Really? That’s what they’re teaching? What do you call an observation that is simultaneously obvious and useless?)

In September 1996, Built To Last authors Collins and Porras observed in the Harvard Business Review, “Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.” They go on to say that companies that do “have historically outperformed the general stock market by a factor of 12.” By contrast, those that don’t often find themselves scurrying after minor market opportunities and living off the crumbs left by more successful competitors.

The article, Building Your Company’s Vision, is part of the collection HBR’s 10 Must Reads On Strategy.  The Kitchen highly recommends reading it cover to cover. Until you find the time, here’s the gist reduced to a single illustration.

Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies endlessly adapt to a changing world.

This picture says you need to have a goal. Not just hitting this year’s revenue numbers, but a Big Hairy Audacious Goal — something like “displacing Microsoft” or “a store in every town in America.”  That goal should be a byproduct of your adding value to the world in ways that no other company can — your envisioned future. (Henry Ford envisioned a world where the streets were free of horse dung because every man owned a car. Seriously.) You get there by leveraging your core technology into a unique and compelling value proposition delivered by a business model designed to capture the market. When things get ambiguous, you and everyone in the company can make good decisions focusing on the company’s core purpose and not straying from its core values.

Sound like too much “peace and love?” Anyone who is invested in your company for the long term will love it. And it will bring you peace of mind.

It’s easier than ever to satiate our needs and wants. There are more products in more focused categories delivering higher quality for less cost than ever. We’re less willing to offer our allegiance to any product when a better one is likely in the offing.

Product or category leadership is an increasingly specious objective. Simply deliver a superior product, and you’ll be rewarded with an onslaught of competitors and the pressure to make your product both cheaper and better — a battle for market share where margins are the casualty.

Those who do become leaders are increasingly hard to categorize. Apple Inc. dropped the word “Computer” from its name in January 2009. Rather than pursuing leadership through product excellence within the commoditized computer category, it pursued a strategy of bringing enrichment to people’s lives through creativity, music and self-expression.

Similarly, after Harley Davidson successfully petitioned the International Trade Commission for a 5-year tariff to protect its outdated motorcycles against low-cost Japanese imports, it did very little to make its products technically competitive. Instead it took the opportunity to make cartilage-compressing vibration and oil leaks an identifying part of the brand experience, and gave a market of Reagan-era white collar professionals something more — a culture they could proudly belong to — one that artfully melded Reagan’s 50s-era patriotism with an outlaw rebel persona.

We call the kind of loyalty enjoyed by Apple and Harley Davidson “brand significance.” Brand significance is not the result of branding. It is achieved by a combination of two, uniquely integrated accomplishments:

1. inventing a culture that brings meaning to people’s lives; and
2. providing a personally enriching experience that reinforces the culture.

The relationship between meaning, enrichment and significance can be illustrated as follows.

The company’s goal is to push its coordinates up and to the right by finding ways to make the brand more culturally meaningful (y axis) and personally enriching (x axis), resulting in the highest possible brand significance score.

The mechanisms for doing this work will be explored in other posts. First it’s important to see that significant brands go far beyond serving the needs of individuals and their current cultures. Equally important: brands should pursue this by design, not hope to get there by magic.

Felix Hoenikker, the world-famous scientist in Kurt Vonnegut’s “Cat’s Cradle,” shirks his duties as “father of the atom bomb” because of…turtles.

You see, Felix had a tank of pet turtles in his laboratory, and he just couldn’t tear himself away from them. Playing with turtles was such a big draw for his attention that the Manhattan Project staff removed them from the lab so he could focus on work.

Applying that metaphor to the real world, let’s examine some of the turtles in today’s marketing tank: Facebook, LinkedIn, Twitter, YouTube, blogging.

I’m not proposing these things are not valid work. It’s just that, in a 3.0 world, the foundations of a business relationship system lay elsewhere, and are more important than ever…

• Understanding the company value proposition  —before blogging about it
• Attending to customer service — before setting up a Twitter channel for it
• Making products truly great — before setting up FaceBook fan pages for them

It’s worth remembering that turtles can be dangerous; if you’re not careful, you might get bitten.

Now, if you’ll excuse me, I’ve got to get back to Mafia Wars…