Do One Thing Well and Invest in It. - Agema

Do One Thing Well and Invest in It.

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It’s 2017, welcome to the New Year. I hope you share the same energy and excitement we have as we start executing on some really interesting projects. We spent the last couple months working with many of our clients clarifying priorities and developing clear, focused strategic plans for this year. These are short, clear declarations of what the company does, where they are going, and the objectives and key results to get there. They empower both leaders and employees with the framework, resources, and direction to drive success.

The most important aspect of a successful strategy is defining the one thing that your company does better than anyone, your Unique Value Proposition, then investing heavily in that. It doesn’t matter if you’re in a highly competitive industry or alone with a unique product. The future of commerce is highly competitive, and medium-sized firms that divest away from the thing that makes them unique will lose to those with laser focus. The key is to clearly define that unique value and ensure that your time and resources are constantly flowing directly into increasing that value.

What is it that your organization does?

Defining your unique value can be challenging, and in many organizations it’s unknown. If you look at extraordinarily successful companies, though, it’s clear as day. Take Amazon.com for example, “the most customer-centric company on earth” according to Forbes. You’d be hard pressed to identify any investment in innovation that Amazon makes against that proposition. Amazon is driving growth by providing services of all types, server architecture, drone delivery in rural areas, robots that can work in your warehouse, and when we order toilet paper or a book it arrives at our office that same day. I’ve never talked to anyone at Amazon as a customer but competing with them directly on anything in their crosshairs would be extremely difficult without strong and distinguishable differentiation.

Unique Selling Proposition is Only Part of the Equation

While a common business term, the Unique Selling Proposition is only the front-end. It’s generally defined by what the market wants, which is clearly important. The Unique Value Proposition is the value that your company actually provides within the market. It’s identified on the by the investments, product development, and the value you provide to your customers.

Your Unique Value should be visible through your investments

An Executive must allocate resources which include both people and money toward growth. Every day you must make choices about how you’ll proceed, what markets you’ll pursue, and how you’ll deliver your value. These choices must pass the simple test of “are we increasing our unique value to our customer” by this plan, decision, or action.

A Short Case Study

A mid-size company grows organic produce which is delivered weekly to customers in assorted boxes. Everything is grown by them, boxed up and delivered to customers. They are very succesful with a large network of happy clients and restaurants. They continue double-digit growth and had planned to invest in a fleet of vehicles to do their own deliveries which occur in the dark hours of the morning. They’ve had strong interest from several other delivery companies requesting their high-quality produce to be included in their deliveries.

Does the investment make sense? Maybe it does, but what is the unique value the company provides? They are farmers and highly-skilled at that. People want their produce and they have a hard time keeping up with demand. Wouldn’t it make more sense to partner with a company who’s unique value is logistics and delivery? There are multiple delivery companies who optimize through software and multiple clients. From a brand standpoint, there’s very little interaction at 4 AM when your groceries are delivered in a box on your porch. Investing in providing more value, expanding to new areas, or leasing more land should be a much higher priority.

The danger of vertical integration

Vertical integration can be a viable and smart strategy, but for companies looking to grow it can be a serious drain on resources and expertise. The idea is that one company incorporates the capability to handle multiple stages of production generally reserved for separate companies. In a rapidly growing company, it’s generally not the most efficient way forward and can increase costs.

Growing companies often unintentionally take steps in this direction with negative results. We see this often with computer hardware infrastructure and warehousing. As the need for capacity increases, the idea that “we can do this all ourselves” leads to heavy investments in onsite servers, custom software that doesn’t perform as well as off the shelf solutions, and expanding physical warehouses. Each of these decisions often results in heavily increased costs of management, labor, and management time spent on the challenges outside the core competencies of the organization.

Check your plan against your Unique Value Proposition

Take a moment and revisit the plan for this year. Do you have a clearly identified and communicated unique value proposition? If you do, are the priorities and investments supporting that unique value? Where can you partner, outsource, or divest from those things that don’t support that unique value? How does your marketing and sales strategy communicate that unique value?

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