Saturday, September 16, 2006

Red Notebook - Entry 2

Simply put, your “Value Proposition” is why people buy your product or services. For a place like Wal-Mart, the value proposition is at the intersection of low prices and good-enough quality.

While at first, this may seem like a knock, I don’t mean it to be taken as one. If you take a closer look at that statement, you will see what I’m getting at.

1) A low price is easy enough to accept. It’s hard work making a profit with the lowest prices in town. Besides, who doesn’t like paying less? So, no knock there.

2) Quality is a little different. Who wants to be known for selling or buying low quality? But let’s face, Wal-Mart is not the center of the universe when it comes to quality. When was the last time you said to you self, “I have to have the very best money can buy, where is the closest Wal-Mart?” Almost nobody goes to Wal-Mart for high quality goods. But that’s okay because Wal-Mart has figured out where good-enough is an acceptable substitute. I mean really, do you have to have the very best that money can buy every time you shop? Can you afford it? So, no knock there.

When you find and bring together the attributes that people need and offer them in a package that people can and will execute, you have a value proposition. Wal-Mart has done an amazing job of bringing low-price and acceptable substitutes together and delivers a remarkable value proposition. So, I say, “Good on Wal-Mart!”

The point isn’t product quality at Wal-Mart. Rather, it’s their value proposition. Wal-Mart has built a machine, rather, is a machine that delivers a specific value proposition. If you work at Wal-Mart, you are part of that machine and the more you know that machine the better equipped you will be to become a part of the process that defines the evolution of the machine. The same is true whether you volunteer at your local hospital; work in your parent’s auto parts store or are a VP for a Fortune 500 company. If you want your organization to succeed, the ability to identify and understand your value proposition, i.e. “Knowing the Machine” and how you can influence it’s evolution toward the next value proposition/machine is the single most important skill you can develop.

Take care...


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