Why is the Value Proposition so Important

Why is a Value Proposition considered STEP ONE in strategic planning? Our take is simple. How well an organization creates value for a chosen customer is the number one reason for bottom-line success. A value proposition is NOT a marketing term. It is not something the biz dev, marketing, and sales guys/gals should be exclusively in charge of. The value proposition surpasses everything else inside the firm as the single most important element to driving shareholder value. Without this crucial element in place, how can the customer be expected to select your offering over others? Without this crucial element in place, how can your employees possibly know how to execute?

A value proposition shapes decisions that managers make: budgets, channels, and corporate culture. Executive teams spend weeks discussing the mission and vision of the company without touching on the most vital of all elements. Why? Our experience has shown that customer value propositions become marketing ploys. They change constantly any time a competitor does something new. Also, executive managers don't understand the value proposition concept as a key step in strategic planning. Many managers will put in place an operating initiative such as reengineering or Six Sigma and believe those concepts will create a sustainable advantage. The only sustainable advantage is decided by the customer. Market leaders don't change their fundamental customer value. They continue to improve it.