Wednesday, September 26, 2007

If All Else Is Equal, Price Wins!

Duuuugh! What a great observation on the obvious---"If all else is equal, price wins!" You must be asking, "Dave, is that what your clients pay you for?"

Actually, they do. I am constantly surprised at how complicated people can make around the concept of creating value---for your customers, partners, stakeholders, others. Millions of dollars are spent on consultants every year, hundreds of pages in books, magazines, and journals. Everyone is looking for the silver bullet in maintaining their pricing or margins for customers, how to minimize discounting, and other similar issues.

It is so simple----if the customer cannot perceive any difference between the alternatives offered to them, then they are forced to make the lowest price decision---to think anything else is idiocy.

So what does this mean? It means that the organization (sales, marketing, others) must create meaningful differentiation. They must find a way---important to buyers---to set themselves apart from the alternatives. If this cannot be done, the only way to win is with the lowest price.

There are all sorts of ways to do this. Discussing them is not the purpose of this blog. It is important to realize that value is in the eye of the beholder---it is the customer that determines what value is. The elements of value can include all sort of "hard" and "soft" things.

In the end, this is not rocket science. Executives should not be surprised. Executives should not be asking how do we maintain our prices---this gets you down the wrong path. The critical question is "How do we create compelling and differentiated value for each customer?"

Your thoughts?

Tuesday, September 25, 2007

Both Sides Of The Story

We've all heard it, there are always two sides to every issue or story. It's a natural tendency to look at things from our own perspective and self interest. Sometimes it causes us to make mistakes. We really need to look at things from each person's point of view. It makes us more effective.
I could go on and write a lot of stuff about this, but I just saw Mike Hyatt's blog on the issue. He has addressed it very well, so let me direct you to his blog.

Focus Until It Hurts! Then Focus More!

Most of the organizations I encounter have one common challenge----focusing. In the past week, I have been involved in projects with 4 companies---2 Fortune 50 companies, a large company, and a very early stage start up. All had exactly the same problem:

They had not identified and committed to executing the 1-2 things critical to accomplishing their goals. As a result, each was failing to achieve their goals. Consistently, failure to focus is the biggest issue I see confronting organizations and people.

This got me to thinking, why is it so tough? Some thoughts:

Focus is boring: It is so much more exciting to look at new ideas, to try new things. If I focus, I am forced to complete one thing before moving to the next.

Focus is not cool: After all, we seem to measure our worth by how much we can multitask----multitasking is the enemy of focus---but it's what we are all about---how many meetings can we manage simultaneously, how many emails, phone calls, and the story goes on.

Focus requires thought: If I am going to focus on something, I have to think---really think----what is it that I need to focus on, what do I give up, is it the right thing to do, should I be doing other things? Once I've decided, then I have to continue to think. It's much easier to wander and react to crises.

Focus requires discipline: Discipline---it's such a boring word---isn't it much more fun to react? Why do I want to be so predictable?

Focus demands accountability: If I commit to one thing and just do that----people will have an expectation---I will actually be responsible for doing something---for accomplishing something. If I choose not to focus, then it is more difficult to pin me down---I can move from crisis to crisis, issue to issue, but I never really have to produce a result.

Focus demands courage: What if I choose the wrong thing, what if I am wrong? Everyone around me is not doing this---you can't pin them down---this makes me responsible for what I do---for the result I produce. Sometimes, we are all alone in doing this.

Lots has been said about focus, but we do everything we can to avoid it. Imagine the difference in each of our lives if we could just start to focus. Imagine what each of us and our organizations could accomplish.