Value – renierbotha ltd

Comprehensive Guide to Strategic Investment in IT and Data for Sustainable Business Growth and Innovation

May 10, 2024May 16, 2024Leave a comment

In this post, Renier is exploring the critical importance of appropriate investment in technology, data and innovation for continued business growth and a strategy to stay relevant.

Introduction

This comprehensive guide explores the strategic importance of investing in information technology (IT) and data management to foster sustainable business growth and innovation. It delves into the risks of underinvestment and the significant advantages that proactive and thoughtful expenditure in these areas can bring to a company. Additionally, it offers actionable strategies for corporate boards to effectively navigate these challenges, ensuring that their organisations not only survive but thrive in the competitive modern business landscape.

The Perils of Underinvestment in IT: Navigating Risks and Strategies for Corporate Boards

In the digital age, information technology (IT) is not merely a support tool but a cornerstone of business strategy and operations. However, many companies still underinvest in their IT infrastructure, leading to severe repercussions. This section explores the risks associated with underinvestment in IT, the impact on businesses, and actionable strategies that company Boards can adopt to mitigate these risks and prevent potential crises.

The Impact of Underinvestment in IT

Underinvestment in IT can manifest in numerous ways, each capable of stifling business growth and operational efficiency. Primarily, outdated systems and technologies can lead to decreased productivity as employees struggle with inefficient processes and systems that do not meet contemporary standards. Furthermore, it exposes the company to heightened security risks such as data breaches and cyberattacks, as older systems often lack the capabilities to defend against modern threats.

Key Risks Introduced by Underinvestment

Operational Disruptions – With outdated IT infrastructure, businesses face a higher risk of system downtimes and disruptions. This not only affects daily operations but can also lead to significant financial losses and damage to customer relationships.
Security Vulnerabilities – Underfunded IT systems are typically less secure and more susceptible to cyber threats. This can compromise sensitive data and intellectual property, potentially resulting in legal and reputational harm.
Inability to Scale – Companies with poor IT investment often struggle to scale their operations efficiently to meet market demands or expand into new territories, limiting their growth potential.
Regulatory Non-Compliance – Many industries have strict regulations regarding data privacy and security. Inadequate IT infrastructure may lead to non-compliance, resulting in hefty fines and legal issues.

What Can Boards Do?

Prioritise IT in Strategic Planning – Boards must recognise IT as a strategic asset rather than a cost centre. Integrating IT strategy with business strategy ensures that technology upgrades and investments are aligned with business goals and growth trajectories.
Conduct Regular IT Audits – Regular audits can help Boards assess the effectiveness of current IT systems and identify areas needing improvement. This proactive approach aids in preventing potential issues before they escalate.
Invest in Cybersecurity – Protecting against cyber threats should be a top priority. Investment in modern cybersecurity technologies and regular security training for employees can shield the company from potential attacks.
Establish a Technology Committee – Boards could benefit from establishing a dedicated technology committee that can drive technology strategy, oversee technology risk management, and keep the Board updated on key IT developments and investments.
Foster IT Agility – Encouraging the adoption of agile IT practices can help organisations respond more rapidly to market changes and technological advancements. This includes investing in scalable cloud solutions and adopting a culture of continuous improvement.
Education and Leadership Engagement – Board members should be educated about the latest technology trends and the specific IT needs of their industry. Active engagement from leadership can foster an environment where IT is seen as integral to organisational success.

Maximising Potential: The Critical Need for Proper Data Utilisation in Organisations

In today’s modern business landscape, data is often referred to as the new oil—a vital asset that can drive decision-making, innovation, and competitive advantage. Despite its recognised value, many organisations continue to underinvest and underutilise data, missing out on significant opportunities and exposing themselves to increased risks. This section examines the consequences of not fully leveraging data, the risks associated with such underutilisation, and practical steps organisations can take to better harness the power of their data.

The Consequences of Underutilisation

Underutilising data can have far-reaching consequences for organisations, impacting everything from strategic planning to operational efficiency. Key areas affected include:

Inefficient Decision-Making – Without robust data utilisation, decisions are often made based on intuition or incomplete information, which can lead to suboptimal outcomes and missed opportunities.
Missed Revenue Opportunities – Data analytics can uncover trends and insights that drive product innovation and customer engagement. Organisations that fail to leverage these insights may fall behind their competitors in capturing market share.
Operational Inefficiencies – Data can optimise operations and streamline processes. Lack of proper data utilisation can result in inefficiencies, higher costs, and decreased productivity.

Risks Associated with Data Underutilisation

Competitive Disadvantage – Companies that do not invest in data analytics may lose ground to competitors who utilise data to refine their strategies and offerings, tailor customer experiences, and enter new markets more effectively.
Security and Compliance Risks – Underinvestment in data management can lead to poor data governance, increasing the risk of data breaches and non-compliance with regulations like GDPR and HIPAA, potentially resulting in legal penalties and reputational damage.
Strategic Misalignmen – Lack of comprehensive data insights can lead to strategic plans that are out of sync with market realities, risking long-term sustainability and growth.

Mitigating Risks and Enhancing Data Utilisation

Enhance Data Literacy Across the Organisation – Building data literacy across all levels of the organisation empowers employees to understand and use data effectively in their roles. This involves training programmes and ongoing support to help staff interpret and leverage data insights.
Invest in Data Infrastructure – To harness data effectively, robust infrastructure is crucial. This includes investing in secure storage, efficient data processing capabilities, and advanced analytics tools. Cloud-based solutions can offer scalable and cost-effective options.
Establish a Data Governance Framework – A strong data governance framework ensures data quality, security, and compliance. It should define who can access data, how it can be used, and how it is protected, ensuring consistency and reliability in data handling.
Foster a Data-Driven Culture – Encouraging a culture that values data-driven decision-making can be transformative. This involves leadership endorsing and modelling data use and recognising teams that effectively use data to achieve results.
Utilise Advanced Analytics and AI – Advanced analytics, machine learning, and AI can transform raw data into actionable insights. These technologies can automate complex data analysis tasks, predict trends, and offer deeper insights that human analysis might miss.
Regularly Review and Adapt Data Strategies – Data needs and technologies evolve rapidly. Regular reviews of data strategies and tools can help organisations stay current and ensure they are fully leveraging their data assets.

The Essential Role of Innovation in Business Success and Sustainability

Innovation refers to the process of creating new products, services, processes, or technologies, or significantly improving existing ones. It often involves applying new ideas or approaches to solve problems or meet market needs more effectively. Innovation can range from incremental changes to existing products to groundbreaking shifts that create whole new markets or business models.

Why is Innovation Important for a Business?

Competitive Advantage – Innovation helps businesses stay ahead of their competitors. By offering unique products or services, or by enhancing the efficiency of processes, companies can differentiate themselves in the marketplace. This differentiation is crucial for attracting and retaining customers in a competitive landscape.
Increased Efficiency – Innovation can lead to the development of new technologies or processes that improve operational efficiency. This could mean faster production times, lower costs, or more effective marketing strategies, all of which contribute to a better bottom line.
Customer Engagement and Satisfaction – Today’s consumers expect continual improvements and new experiences. Innovative businesses are more likely to attract and retain customers by meeting these expectations with new and improved products or services that enhance customer satisfaction and engagement.
Revenue Growth – By opening new markets and attracting more customers, innovation directly contributes to revenue growth. Innovative products or services often command premium pricing, and the novelty can attract customers more effectively than traditional marketing tactics.
Adaptability to Market Changes – Markets are dynamic, with consumer preferences, technology, and competitive landscapes constantly evolving. Innovation enables businesses to adapt quickly to these changes. Companies that lead in innovation can shape the direction of the market, while those that follow must adapt to changes shaped by others.
Attracting Talent – Talented individuals seek dynamic and progressive environments where they can challenge their skills and grow professionally. Innovative companies are more attractive to potential employees looking for such opportunities. By drawing in more skilled and creative employees, a business can further enhance its innovation capabilities.
Long-Term Sustainability – Continuous innovation is crucial for long-term business sustainability. By constantly evolving and adapting through innovation, businesses can foresee and react to changes in the environment, technology, and customer preferences, thus securing their future relevance and viability.
Regulatory Compliance and Social Responsibility – Innovation can also help businesses meet regulatory requirements more efficiently and contribute to social and environmental goals. For example, developing sustainable materials or cleaner technologies can address environmental regulations and consumer demands for responsible business practices.

In summary, innovation is essential for a business as it fosters growth, enhances competitiveness, and ensures ongoing relevance in a changing world. Businesses that consistently innovate are better positioned to thrive and dominate in their respective markets.

Strategic Investment in Technology, Product Development, and Data: Guidelines for Optimal Spending in Businesses

There isn’t a one-size-fits-all answer to how much a business should invest in technology, product development, innovation, and data as a percentage of its annual revenue. The appropriate level of investment can vary widely depending on several factors, including the industry sector, company size, business model, competitive landscape, and overall strategic goals. However, here are some general guidelines and considerations:

Strategic Considerations

Technology and Innovation – Companies in technology-driven industries or those facing significant digital disruption might invest a larger portion of their revenue in technology and innovation. For instance, technology and software companies typically spend between 10% and 20% of their revenue on research and development (R&D). For other sectors where technology is less central but still important, such as manufacturing or services, the investment might be lower, around 3-5%.
Product Development – Consumer goods companies or businesses in highly competitive markets where product lifecycle is short might spend a significant portion of revenue on product development to continually offer new or improved products. This could range from 4% to 10% depending on the industry specifics and the need for innovation.
Data – Investment in data management, analytics, and related technology also varies. For businesses where data is a critical asset for decision-making, such as in finance, retail, or e-commerce, investment might be higher. Typically, this could be around 1-5% of revenue, focusing on capabilities like data collection, storage, analysis, and security.
Growth Phase – Start-ups or companies in a growth phase might invest a higher percentage of their revenue in these areas as they build out their capabilities and seek to capture market share.
Maturity and Market Position – More established companies might spend a smaller proportion of revenue on innovation but focus more on improving efficiency and refining existing products and technologies.
Competitive Pressure – Companies under significant competitive pressure may increase their investment to ensure they remain competitive in the market.
Regulatory Requirements – Certain industries might require significant investment in technology and data to comply with regulatory standards, impacting how funds are allocated.

Benchmarking and Adaptation

It is crucial for businesses to benchmark against industry standards and leaders to understand how similar firms allocate their budget. Additionally, investment decisions should be regularly reviewed and adapted based on the company’s performance, market conditions, and technological advancements.

Ultimately, the key is to align investment in technology, product development, innovation, and data with the company’s strategic objectives and ensure these investments drive value and competitive advantage.

Conclusion

The risks associated with underinvestment in IT are significant, but they are not insurmountable. Boards play a crucial role in ensuring that IT receives the attention and resources it requires. By adopting a strategic approach to IT investment, Boards can not only mitigate risks but also enhance their company’s competitive edge and operational efficiency. Moving forward, the goal should be to view IT not just as an operational necessity but as a strategic lever for growth and innovation.

The underutilisation of data presents significant risks but also substantial opportunities for organisations willing to invest in and prioritise their data capabilities. By enhancing data literacy, investing in the right technologies, and fostering a culture that embraces data-driven insights, organisations can mitigate risks and position themselves for sustained success in an increasingly data-driven world.

In conclusion, strategic investment in IT, innovation and data is crucial for any organisation aiming to maintain competitiveness and drive innovation in today’s rapidly evolving market. By understanding the risks of underinvestment and implementing the outlined strategies, corporate boards can ensure that their companies leverage technology and data effectively. This approach will not only mitigate potential risks but also enhance operational efficiency, open new avenues for growth, and ultimately secure a sustainable future for their businesses.

Are you ready to elevate your organisation’s competitiveness and innovation? Consider the strategic importance of investing in IT and data. We encourage corporate boards and business leaders to take proactive steps: assess your current IT and data infrastructure, align investments with your strategic goals, and foster a culture that embraces technological advancement. Start today by reviewing the strategies outlined in this guide to ensure your business not only survives but thrives in the digital age. Act now to secure a sustainable and prosperous future for your organisation.

Building Bridges in Tech: The Power of Practice Communities in Data Engineering, Data Science, and BI Analytics

March 5, 2024March 7, 2024Leave a comment

Technology team practice communities, for example those within a Data Specialist organisation focused on Business Intelligence (BI) Analytics & Reporting, Data Engineering and Data Science, play a pivotal role in fostering innovation, collaboration, and operational excellence within organisations. These communities, often comprised of professionals from various departments and teams, unite under the common goal of enhancing the company’s technological capabilities and outputs. Let’s delve into the purpose of these communities and the value they bring to a data specialist services provider.

Community Unity

At the heart of practice communities is the principle of unity. By bringing together professionals from data engineering, data science, and BI Analytics & Reporting, companies can foster a sense of belonging and shared purpose. This unity is crucial for cultivating trust, facilitating open communication and collaboration across different teams, breaking down silos that often hinder progress and innovation. When team members feel connected to a larger community, they are more likely to contribute positively and share knowledge, leading to a more cohesive and productive work environment.

Standardisation

Standardisation is another key benefit of establishing technology team practice communities. With professionals from diverse backgrounds and areas of expertise coming together, companies can develop and implement standardised practices, tools, and methodologies. This standardisation ensures consistency in work processes, data management, and reporting, significantly improving efficiency and reducing errors. By establishing best practices across data engineering, data science, and BI Analytics & Reporting, companies can ensure that their technology initiatives are scalable and sustainable.

Collaboration

Collaboration is at the core of technology team practice communities. These communities provide a safe platform for professionals to share ideas, challenges, and solutions, fostering an environment of continuous learning and improvement. Through regular meetings, workshops, and forums, members can collaborate on projects, explore new technologies, and share insights that can lead to breakthrough innovations. This collaborative culture not only accelerates problem-solving but also promotes a more dynamic and agile approach to technology development.

Mission to Build Centres of Excellence

The ultimate goal of technology team practice communities is to build centres of excellence within the company. These centres serve as hubs of expertise and innovation, driving forward the company’s technology agenda. By concentrating knowledge, skills, and resources, companies can create a competitive edge, staying ahead of technological trends and developments. Centres of excellence also act as incubators for talent development, nurturing the next generation of technology leaders who can drive the company’s success.

Value to the Company

The value of establishing technology team practice communities is multifaceted. Beyond enhancing collaboration and standardisation, these communities contribute to a company’s ability to innovate and adapt to change. They enable faster decision-making, improve the quality of technology outputs, and increase employee engagement and satisfaction. Furthermore, by fostering a culture of excellence and continuous improvement, companies can better meet customer needs and stay competitive in an ever-evolving technological landscape.

In conclusion, technology team practice communities, encompassing data engineering, data science, and BI Analytics & Reporting, are essential for companies looking to harness the full potential of their technology teams. Through community unity, standardisation, collaboration, and a mission to build centres of excellence, companies can achieve operational excellence, drive innovation, and secure a competitive advantage in the marketplace. These communities not only elevate the company’s technological capabilities but also cultivate a culture of learning, growth, and shared success.

Artificial Intelligence Capabilities

November 8, 2018October 21, 20236 Comments

AI is one of the most popular talked about technologies today. For business, this technology introduces capabilities that innovative business and technology leadership can utilise to introduce new dimensions and abilities within service and product design and delivery.

Unfortunately, a lot of the real business value is locked up behind the terminology hype, inflated expectations and insecure warnings of machine control.

It is impossible to get the value from something that is not understood. So lets cut through the hype and focus to understand AI’s objectives and the key capabilities that this exciting technology enables.

There are many definitions of AI as discussed in the blog post “What is Artificial Intelligence: Definitions“.

Keeping it simple: “AI is using computers to do things that normally would have required human intelligence.” With this definition in mind, there are basically three things that AI is aiming to achieve.

3 AI Objectives

Capturing Information
Determine what is happening
Understand why it is happening

Lets use an example to demonstrate this…

As humans we are constantly gathering data through our senses which is converted by our brain into information which is interpreted for understanding and potential action. You can for example identify an object through site, turn it into information and identify the object instantly as, for example, a lion. In conjunction, additional data associated with the object at the present time, for example the lion is running after a person yelling for help, enables us to identify danger and to take immediate action…

For a machine, this process is very complex and requires large amounts of data, programming/training and processing power. Today, technology is so advanced that small computers like smart phones can capture a photo, identify a face and link it to a name. This is achieved not just through the power the smart phone but through the capabilities of AI, made available through services like facebook supported by an IT platform including, a fast internet connection, cloud computing power and storage.

To determine what is happening the machine might use Natural Language Understanding (NLU) to extract the words from a sound file and try to determine meaning or intent, hence working out that the person is running away from a lion and shouting for you to run away as well.

Why the lion is chasing and why the person is running away, is not known by the machine. Although the machine can capture information and determine what is happening, it does not understand why it is happening within full context – it is merely processing data. This reasoning ability, to bring understanding to a situation, is something that the human brain does very well.

Dispite all the technological advancements, can machines today only achieve the first two of the thee AI objectives. With this in mind, let’s explore the eight AI capabilities relevant and ready for use, today.

8 AI Capabilities

Capturing Information
- 1. Image Recognition
- 2. Speech Recognition
- 3. Data Search
- 4. Data Patterns
Determine what is happening
- 5. Language Understanding
- 6. Thought/Decision Process
- 7. Prediction
Understand why it is happening
- 8. Understanding

1. Image Recognition

This is the capability for a machine to identify/recognise an image. This is based on Machine Learning and requires millions of images to train the machine requiring lots of storage and fast processing power.

2. Speech Recognition

The machine takes a sound file and encodes it into text.

3. Search

The machine identifies words or sentences which are matched with relevant content within a large about of data. Once these word matches are found it can trigger further AI capabilities.

4. Patterns

Machines can process and spot patterns in large amounts of data which can be combinations of sound, image or text. This surpasses the capability of humans, literally seeing the woods from the trees.

5. Language Understanding

The AI capability to understand human language is called Natural Language Understanding or NLU.

6. Thought/Decision Processing

Knowledge Maps connects concepts (i.e. person, vehicle) with instances (i.e. John, BMW) and relationships (i.e. favourite vehicle). Varying different relationships by weight and/or probabilities of likelihood cn fine tune the system to make recommendations when interacted with. Knowledge Maps are not decision trees as the entry point of interaction can be at any point within the knowledge map as long as a clear goal has been defined (i.e. What is John’s favourite vehicle?)

7. Prediction

Predictive analytics is not a new concept and the AI prediction capability basically takes a view on historic data patterns and matches it with a new piece of data to predict a similar outcome based on the past.

8. Understanding

Falling under the third objective of AI – Understand what is happening, this capability is not currently commercially available.

To Conclude

In understanding the capabilities of AI you can now look beyond the hype, be realistic and identify which AI capabilities are right to enhance your business.

In a future blog post, we’ll examine some real live examples of how these AI capabilities can be used to bring business value.

Also read:

Value!?

May 17, 2018May 18, 20182 Comments

“Creating value”; “delivering value”; “the value proposition”; “focus on value, not cost”; “price is a reflection of value” – just a few of the statements we are using on a daily basis.

But what is value?

Value comes in different forms and types and can be different for a business, it’s shareholders, clients/customers, suppliers, employees. For example: A business might define value in recurring business and it’s loyal customers; the Board might value the increase in assets on the balance sheet; Shareholders define value in the profitability of the business that convert into dividend payments or an increase in the share price; Suppliers sees value in market penetration; Employees perceive value in an inviting work environment, culture, recognition and benefits received from their employer.

In previous posts, we covered “how to build a compelling value proposition” and what is “your value proposition“. Value was associated with what you offer (sell) into a buying market – a product or service that addresses a specific need and is of value in a commercial world. “Remember – you define your value proposition, but it’s true value is in the eyes of the beholder – your customer.”

So you are creating value for your customers in solving a specific problem or providing to a specific need in a way that makes your product of service desirable. So when you want to describe your value, it is important to think about the customer’s need first. Being customer centric in your product or service design ensures your business is aligned to deliver to a specific customer (market) need, in a profitable way – value to the customer drives business results in revenue. Excellent customer service ensures recurring customers, customer retention means future revenue growth. Satisfied customers talk about your product and service which brings revenue growth. Thus focussing on the customer value first will lead to the other types of value, as mentioned above.

But how can you define value for your customers? Well, by simply asking if your product or service helps the customer to:

make their life easier or better?
save them time?
save or make them money?
be happier?
be more positive?
be healthy?
be more productive?
improve their effectiveness and/or efficiency?
achieve their goals and objectives?
build relationships?
make more friends?
get more customers?
etc…?

Place yourself in your customer’s shoes – be a customer to your own product and service. How does it make you feel? Does it help you – in what way? Use the answers to these questions to continuously improve your value.

Action: Have a look at your value chain and identify how the different processes, teams and people, add value in different ways and how these combine, to focus your value proposition onto the customer.

Related Posts:

NED :: Non-Executive Director’s proposition

April 16, 2018October 4, 2018Leave a comment

Are you aware of the substantive and measurable value a Non-Executive Director can bring to you and your business…?

Introduction

The Non-Executive Director, no longer a role that is associated just with large organisations. There is a growing awareness of the NED role and more and more organisations are appointing NEDs of various types, and specific specialities, often within technology and digital transformation, to enhance the effectiveness of their boards as standard practise.

With the pressure on organisations to compete globally, deal with digital transformation and respond to rapidly changing market conditions, new skills are needed at board level. This leads to the role of the NED diversifying and introduces a need to refresh the NEDs as circumstances change, bringing in new specialities, experience and challenge when the organisation needs it.

A good NED can, and should make a substantive and measurable contribution to the effectiveness of the board. Do not see a NED as a consulting advisor – a NED, within the remit of the role of a company director, play a full and active part in the success efforts of an organisation. Irrespective of the skills, experience and network contacts that NEDs will bring, they must above all, provide appropriate independent and constructive challenge to the board.

Both the organisation and the NED must understand the purpose of being a NED, within the specific organisation, for the role to be effective. This includes a clear understanding of what value the NED is expected to bring. A NED’s value goes beyond just the statutory requirements.

On appointment a Non-executive director can:

Broaden the horizons and experience of existing executive directors.
Facilitate the cross-fertilisation of ideas, particularly in terms of business strategy and planning.
Have a vital part to play in appraising and commenting on a company’s investment/expenditure plans.
Bring wisdom, perspective, contacts and credibility to your business.
Be the lighthouse that helps you find your way and steer clear of near and present dangers.

The role of the NED

All directors, including NEDs, are required to:

provide entrepreneurial leadership of the company
set the company’s vision, strategy and strategic objectives
set the company’s values and standards
ensure that its obligations to its shareholders and others are understood and met.

In addition, the role of the NED has the following key elements:

Strategy: NEDs should constructively challenge and help develop proposals on strategy.
Performance: NEDs should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.
Risk: NEDs should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible.
People: NEDs are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, executive directors, and in succession planning.

“In broad terms, the role of the NED, under the leadership of the chairman, is: to ensure that there is an effective executive team in place; to participate actively in the decision–takingprocess of the board; and to exercise appropriate oversight over execution of the agreed strategy by the executive team.”; Walker Report, 2009

A non-executive director will bring the follow benefits to your company:

strengthen the board and provide an independent viewpoint
contribute to the creation of a sound business plan, policy and strategy
review plans and budgets that will implement policy and strategy
be a confidential and trusted sounding board for the MD/CEO and keep the focus of the MD/CEO
have the experience to objectively assess the company’s overall performance
have the experience and confidence to stand firm when he or she believes the executive directors are acting in an inappropriate manner
ensure good corporate governance
provide outside experience of the workings of other companies and industries, and have beneficial sector contacts and experience gained in previous businesses
have the ability to clearly communicate with fellow directors
have the ability to gain the respect of the other directors
possess the tact and skill to work with the executive directors, providing support and encouragement where difficult decisions are being made
have contacts with third parties such as financial sources, grant providers and potential clients

Looking for a NED?

Now that you understand what a NED can do – What are you waiting for?

Contact Renier Botha if you are looking for an experienced director with strong technology and digital transformation skills.

Renier has demonstrable success in developing and delivering visionary business & technology strategies. His experience include Mergers & Acquisitions (M&A), major capital projects, growth, governance, compliance, risk management as well as business and organisation development. From startup to FTSE listed enterprise, the value Renier can bring as NED is substantive, driving business growth.

Your Value Proposition

March 21, 2018May 17, 20182 Comments

Your Value Proposition

Being in business means that you have something of value for sale, that is desired by someone else who is buying. Being in business isn’t just about running your own business, it also means that you are working within a commercial workplace where goods or services of value are being sold and delivered to a customer who is buying. These customers can be external to the business for example selling products and services to another business or to the public, or these customers can be internal if it is delivering value to another department or to your colleagues within the organisation or your workplace. Apart from providing your services to the customers, other people also benefit from your deliverables. These people are stakeholders and they can include your business partner, the board of directors, your manager or team leader, your team, the shareholders or even other businesses for example your vendors and suppliers who would all benefit from your success.

Even if you are not running your own business and are working for an organisation to earn your living, you are in business – the business of selling your own skills, experience and knowledge, which is of value to the company you are working for, in exchange for a salary or wages. The organisation hiring you is in essence your customer.

To be successful in business it is clear that you need to have something of value. Something of value means you have a defined product or services (skills, knowledge and experience) and a market with customers who value what you have on offer and are willing to exchange it for money. The customer must be aware of your product or service and more so must understand its value, before they will engage and buy. Creating this customer awareness is done through marketing, which is dependent on a clear definition of the product and it’s value to the target audience (the customers). This value definition is your value proposition.

Remember – you define your value proposition, but it’s true value is in the eyes of the beholder – your customer. Ultimately it is the benefits that your product and service bring to the customer that defines it’s value.

The value proposition is the backbone of the business – everything what your business is about evolves around delivering and continuously improving the value proposition. To gain new customers and to keep current customers and stakeholders involved and happy, you need to be crystal clear of your well defined value proposition.

Having a look at the value proposition examples of some of most successful companies like Uber, Apple, Slack, Digit, reveals that a good value proposition includes four elements:

Need
Approach
Benefits
Competition

Need – understand what your customer really wants, what do they need, what problems are they looking to solve. This is probably the most important part of the value proposition as without understanding the need, you’ll find it hard to define the solution (the product or services) that will satisfy the customers need in such a desirable way, that they are willing to spend money to get it.

Approach – having a solution to the customer’s need, your approach explains how you go about applying your solution (product or service) to satisfy the customer need – how the solution will solve their problem. The solution must be a direct fix for the problem. The approach you choose in delivering your solution must be the most effective means to apply your solution to the specific problem or customer need. Your approach will consist if specific components i.e. methodologies, solution architecture, prototyping, processes, templates, standards, etc, selected specifically to optimise the success in applying the solution (product or service) to the customer’s problem (need).

Benefits – focussed on the customer, what benefits would they get from using your services or products. Back to defining what value will you bring to the life of the customers when they are using your product or receiving your service. To understand this, you have to understand how the customer experiences your offering, answering fundamental questions like: “How much does this cost?”; and “Is the benefits worth the price?”. Benefits are tangible and measurable – usually in monetary terms. Benefits are not just ideas. Define the benefit in the terms the customer will relate to. Benefits should attract customers to what you offer.

Competition – what is your unique differentiator that sets you apart from your competition in the market. Again this should be approached from the customer’s perspective. How does your customer perceive your offering in relation to the other providers competing for their money. In what way does your offering differentiate from the competition i.e. quality, durability, reliability, guarantee and price.

Example: Let’s apply this to the Apple iPhone Value Proposition

Need: everyone uses smart phones – but it can be complicated to navigate. Your phone has become an accessory, and expression of your personality, a needed tool conducting our day to day lives.

Approach: Apple offers a unique user experience and design; it is not just a phone but also a lifestyle.

Benefits: Hassle free, superior operation – “It just works”. There is nothing quite like iPhone as every iPhone is built on the belief that a phone should be more than a collection of features. Exceptional design and state of the art engineering that oozes with built-in quality. Simple, elegant, beautiful and magical to use. (Just listen to their launch keynotes)

Competition: Genuinely unique iPhone features are highlighted on all marketing media i.e. security. Most of the iPhone features are not unique but experiencing the already known features on a iPhone is magical – that is what sets iPhone apart.

Using your Value Proposition

Breaking down your value proposition using the four elements mentioned above, puts you on the front foot to easily position all customer conversations towards insight and perspective of your proposition, to the value you deliver for your customers and your stakeholders. Following through on all four elements during conversations takes the customer on a journey, a journey that makes it easier for them to relate to you and a clear holistically understanding your offering in context to the bigger picture. It also gives them the reassurance that you have the needed insight in what matters to them. Even if a prospect customer wants to focus on only one area for example the benefits aspects, you will be prepared for the engagement.

Keeping your value proposition front-mind during all customer and/or stakeholder engagements. This keeps you focussed on what’s important for business success – satisfied and happy customers.

To Conclude:

In real live you cannot predict the future, especially as you know that every situation is unique in it’s own right. In presenting your value proposition, it is your responsibility to have the agility to adapt to situations as needed, to ensure that you can validate the actual need, have reassurance that the approach will work, know that the benefits as real and that you are a competitive player in the market.

How well you can demonstrate agility in aligning the right value proposition to the customer, will determine your success in business.