Wednesday, May 5, 2010

Creating Value – What is a JVP anyway?

As I have thankfully been quite busy since January, I have been talking to my friend and colleague John Soper at New Paradigms Marketing about collaborating on some postings - this is the first in that series of work. Thanks, John, for taking the initiative!

In a previous blog [Northeast, you say?] I have talked about Creating Value with an alliance partner, leading to a compelling Joint Value Proposition (JVP). This is one of most important components of a successful alliance and requires focus over the life of the alliance.

Creating Value is about connecting points of value in you and your alliance partner's business that yields "1+1 is greater than 2" value to your joint customers. But as I pointed out earlier, the best yields usually come from looking beyond existing products; or existing systematized marketing and sales channels; or the existing structure of the support organizations: beyond what's already in your collective "sales bag."

Rather, the Joint Value that often yields the highest return is found by peeling back the layers and looking at the underlying technologies, marketing and sales capacities, service offerings and so forth. For example, you might find move value in combining a platform underlying your product with capabilities in your partner’s application to expose higher value functions that are “must have” upgrades for your collective customers. Or more value in adjusting sales processes to better complement each other (e.g., in combination, broader market coverage, more technology depth). Or, possibly, you can create more value by combining an innovative product offering with your partner’s strong service expertise, so they are seamless to customers.

Progressing down this path of value creation is an evolutionary risk-taking exercise for both companies. So, often you will find executive resistance to devoting effort and expending time and money towards new value creation when you have not yet extracted the obvious value that brought you and your partner together, or there is concern that you don’t yet know the “joint customers” needs well enough to devote more scarce resource. The challenge for the Business Development executive is, then, to lead the formulation of an evolutionary plan that creates sufficient value for launch, demonstrates success and learning from that value creation and then builds on the success to create new value. And repeat! Easy to say, but harder to do successfully – it requires a commitment on both sides to stay in tune with the pulse of the alliance, to learn from each experience, and to have well-supported plans ready to move down the evolution path together.

This search for new Joint Value can be the most creative. And fun! But how do you do you get this value to your bottom line? How do you Extract Value so you are getting your share?

In the next blog, I will discuss some examples, leading into how to Extract your fair share of the Value Created.

Until then - Michael