Monday, January 18, 2010

Value Creation - Developing a Joint Value Proposition

First, I would like to wish a Happy and Prosperous New Year to all of my readers! I have to say that 2009, while a year of hope and change, was also one of challenges for many friends as everyone figured out how to live in a recession. Although the news from Haiti makes us all realize the importance of basic life, health, family and friends, 2010 promises to be an exciting year!

I have circled around the subject of Value Creation in previous blogs, so I thought I would spend some time discussing development of a successful Joint Value Proposition (JVP). As discussed in my October 1 blog "Moving Northeast", developing a Joint Value Proposition involves considering the potential of value created by the alliance. Sounds simple enough, right? Well, there are challenges to getting it right.

First, you are probably trying to figure out the JVP at the same time as you are forming the alliance and, hopefully, even quite early in the alliance (see August 1 blog, "While using a chainsaw..."). So, the target is moving. And, it will continue to move as the alliance evolves, so there will be ongoing opportunities for Value Creation that should be exploited.

Second, you don't know what you don't know - about your potential partners strategies, goals, potential market-changing moves, acquisitions, development plans, constraints and so forth, so you will need to listen well along the way.

Lastly, it is important you are not representing your company's offerings as they exist today, but the entire company's capabilities, including subsets of products and services that might be pieced together with those from your partner to create value. That takes a special skill.

So, how do you get to a JVP?

In my experience, one key to success is building a trusting relationship early in the alliance development phase, so that you can explore opportunities for value creation with your counterpart. Another is having the right people in the room - so that you can seize opportunities to explore value creation when presented.

Personally, I favor the 2-hour brainstorm, where one or two business and technical people from each partner can jump to the white board and test out concepts for value creation and explore the other party's interest. It is always best to walk in with a few ideas of your own, of course - your "agenda", I suppose - so that you can steer the discussion in a direction that is based on your knowledge of markets, products, services and customers. I have been amazed at the results we've obtained when the right people are in the room, with the right attitude. Setting the scene for this is part of the critical skill set of BD professionals, in my view.

Let's contrast this with the typical selling proposition or reseller recruitment effort. In that case, I have a set of products and services in my sales bag, and my goal is to consult with and sell those to my prospective customer or channel partner. Developing a JVP is closer to consultative, solution selling than to traditional sales, but solution selling still lacks the flexibility. The sales exec is, by design, constrained to offering what is in the bag.

With Business Development, the whole company's capabilities are in the bag, and we need to be able to represent all of them to a prospective partner, without going so far out on a limb as to suggest something that cannot be done.

Identifying opportunities for Value Creation definitely uses skills from the artistic side of the Business Development tool set, but following some basic steps can increase the likelihood of success. A marketable Joint Value Proposition is the basis for all truly successful relationships.

See you next time.