June 29, 2017


















Article 1.14

Developing Unique Strategic Insights (USIs) in 2006

The business term "Unique Marketing Proposition" (UMP) is so old it could be new to some. It alludes to a firm having a compelling-to-the-customer value proposition that no other competitor can readily match. Without an UMP today, we may be selling our commodity products and services for a lower price more often than we would like.

To escape commodity hell, how do we create new, successful UMPs? UMPs actually start with Unique Strategic Insights (USIs) that occur at the center of a four-way intersection of different types of knowledge. The four types are:

  • Knowing who our most innovative employees are and that they are ready to make next level UMPs happen. They must have the necessary slack time, resources, skills and desire to execute value-creation experiments with willing, key customers or suppliers. Dropping great idea balls is most frustrating to our best, most ambitious stakeholders – employees, customers and suppliers – whom we don’t want to lose.
  • Knowing the general strengths, weaknesses, opportunities and threats that are within our competitive industry as a result of doing a traditional SWOT analysis.
  • Knowing what the next-level, value-creation opportunities are with strategically important customers of three stripes: most profitable, most innovative/fastest growing, and biggest-losers. These opportunities, still looking for final solutions, must be co-discovered through team-to-team visits with the customers.
  • Knowing where to find a lot of credible stories about breakthrough, value-solutions that have been implemented in many other industries. These imported solutions can then be proposed –in an adapted form – for both company and customer teams to shape into something that might fit an opportunity. This process of connecting solutions from other places with the problems before us is called "bisociation"; Google it.

HOW TO INCREASE THE FOUR KNOWLEDGES

Few companies consciously try to upgrade and integrate the four knowledges described above. Maybe that’s why there are so few UMPs. Here are some quick tips for upgrading each of the knowledges:

First, we need to identify and activate our best in-house innovators by making them part of the quest for finding and developing USIs. Many can be invited into the process, although few will excel. For those who do, have them read this article, as well as other references below, to jumpstart an on-going team conversation and process development that will enable the continuous uncovering of USIs.

During the initial stage of building our innovation team, we should think openly or "divergently" – not judgmentally or convergently – about any ideas that might come up. All initial ideas and questions are far weaker than they will be after proper nurturing, further study and incubation. There will be plenty of time later to judge which of many good experimental paths should be pursued, because of the best fit between the upside potential of the idea and the company’s strengths.

Second, brush up on SWOT analysis capabilities; the web has many how-to documents – just google: "swot analysis" + how to do + article. For those who prefer longer articles or documents with cool graphics add another "+" sign in the search box and then add a "pdf"; or, "ppt" for powerpoint slide shows on the topic.

Third, zero in on the most strategically important and open-minded customers in a way that is much more effective than what most competitors might be doing, then study them more deeply. Here’s how:

  • Do a first approximation customer profitability ranking report to find out which customers are the top 1% that generate about 30% of the company’s operating profit. At the bottom of the report, we usually discover that the bottom 1% lose as much as 20% of the company’s profit. The analytical prism of profitability ranking reports will be far more insight laden than 20/80 thinking. While SWOT analysis reveals general strengths and weaknesses, customer profitability rankings reveal the location, not the articulation, of our greatest, specific strengths (most profitable accounts in one common customer niche) and weaknesses (biggest losers).
  • Within the super-profitable accounts at the top of the report, look for clusters of similar types of customers to find out what the firm’s number one most profitable niche of customers really is. Set sub-objectives to visit some of these customers to achieve next level understandings about them and their niche in general. We should strive to capture 50 to 80% of the profit pool from one target niche of customers at a time. Our customer niche value invention locomotive will then grow our sales volume caboose for the commodity products that happen to be what the target niches best customers are buying.
  • We then want to do the same discovery process for the few, larger and faster-growing-through-innovation customers (ideally in the same niche as our most profitable) for which we aren’t the number one strategic supplier. We can make inroads with these "gazelles" if we focus on them with more innovative, team, account-cracking power; ex-budget creative spending; and heroic service support from all employees. An entrenched competitor’s sales rep will be – without similar support – overwhelmed as will the customer by our next-level, total value.
  • Call on the super-losers to turn lose-lose relationships – on a transactional cost basis – into win-win ones. The USIs and solutions that these calls generate will create more company profits while reducing activity costs faster than any other initiative an executive can pursue.
  • For much more how-to details for growing this third type of knowledge, go to www.merrifield.com, click on "articles" and skim through the following numbered articles: 2.20, 4.9, 4.10; then check out "slide shows" #ed: 10, 8 and 3.

And finally, raise the corporate "bisociation" capability. P&G, for example, set a goal back in 2000 to eventually get 70% of all of their new technology solutions from outside their company. Because all of the smartest, most creative people don’t work for us, who should we tap to increase our bisociation ability? Try these resources:

  • Most innovative customers and suppliers can be sources of cool solutions that have been implemented by and with other most innovative firms that they touch.
  • Industry consultants can often offer their best ideas-from-elsewhere within minutes of reading through a "Phase One" report that identifies new problems and opportunities. Here’s a quick, cheap experiment: invest one hour or less of phone consultation with two or more industry consultants to see what they suggest.
  • Third-party service providers have windows into the operations of many innovative companies in other industries. Professional service providers may be able to introduce you to very progressive, non-competing firms within your local trading area.

Our business future is already here, but all of our future solutions are unevenly distributed amongst innovative businesses of all types. We need to network our way towards finding those solutions that match up with our present, best customer opportunities.

SOME FINAL QUESTIONS FOR 2006

  1. Does our company have any real UMPs for the right customers in the right niches that we currently serve?
  2. Innovating value for customers is a continuous process. If USIs lead to new UMPs, what USIs do we already have written down that need further development?
  3. The best way to have great, experimental ideas to pursue is to start with a lot of "good" ideas and then work to expand them into more comprehensive, "great" ideas. Do we have an effective idea development and management pipeline process?
  4. Ideas for growing profits can come from everyone and every place in the company, which is a nice objective to pursue. But, the best, most profitable ideas are apt to come from and be co-created with the right customers. In a world of excessive, excellent supply a good-paying, growing customer has the most power. How are we going to find and develop the very best of these customer-value-centric ideas from the best lifetime value customers in 2006?
  5. What outside resources should we cultivate to eventually import a majority of our new solutions from outside our company? Google’s great, but the best search engine for business solutions will be talking to the right person for a few minutes.
  6. What's our future if we don't answer these questions?

 

 

Ó Merrifield Consulting Group, Inc., Article 1.14

D. Bruce Merrifield, Jr.

bruce@merrifield.com

 

Merrifield Consulting Group

June 29, 2017