Engineering Solution is SmartPlant P&ID, which enables customers to define the flow processes (i.e., through valves, pumps, and piping) within plants they are designing and to generate piping and instrumentation diagrams (P&ID). Intergraph’s resonating-focus value proposition for SmartPlant P&ID consists of one point of parity followed by three points of difference:
Using SmartPlant, customers can create the P&ID graphics (i.e., drawings or reports) as fast, if not faster, than the next-best alternative.
SmartPlant P&ID checks all the customer’s upstream and downstream data related to plant assets and procedures—using universally accepted engineering practices, companyspecific rules, and project- or process-specific rules—at each stage of the design process so that the customer avoids costly mistakes, such as reiterating the design or, worse, ordering the wrong equipment.
SmartPlant is integrated with upstream and downstream tasks, such as process simulation and instrumentation design, thus requiring no reentry of data (and possible errors).
With SmartPlant, the customer is able to link remote offices to execute the project and then merge the pieces into a single deliverable database to hand to its customer, the facility owner.
Intergraph has found it necessary to include the point of parity in its value proposition because some prospective customers wrongly presume that SmartPlant’s drafting and graphic drawing performance is not as good as that of the next-best alternative. This presumption sometimes occurs because the next-best alternative is built on a computer-aided-design platform, whereas SmartPlant is built on a relational database platform. To counter this misperception, Intergraph has gathered data at reference customers to substantiate that this point of contention is actually a point of parity.
Resonating-focus value propositions have the potential pitfall of requiring customer value research. We find that customer value research is something that most suppliers, despite all the talk about customer value, have not actually done in a systematic way. Customer value research is not easy; it requires time, effort, persistence, and some creativity. Yet, as the experience of a leading resin supplier amply illustrates in chapter 4, not doing customer value research may actually be a greater pitfall.
Customer Value Propositions and Superior Business Performance
Constructing value propositions that resonate with target customers and substantiating them with customer value research enables suppliers to achieve superior business performance. Let us provide a proof point for this. Consider the results for Intergraph. It has posted revenue growth of 35 percent per year versus 10-12 percent for its industry. And, with today’s emphasis on profitable growth, Intergraph has a profit margin of 26 percent versus 14-16 percent for the industry.
Some managers, though, simply view value propositions as something that the marketing folks do as a basis for creating business marketing communications such as advertising or signage for trade show booths. We believe that this view is shortsighted and neglects the potential contribution of value propositions to superior business performance. Properly constructed, customer value propositions force companies to rigorously focus on their target customer’s requirements and preferences and what it is worth in monetary terms to fulfill them. By involving managers from all the relevant functional areas in the process, at least to some extent, the creation and assessment of value propositions provide a means of forging shared understanding of what the supplier is seeking to accomplish in the marketplace.
Viewed in this way, the value proposition statement can serve as a guiding beacon and touchstone for the agreed-on market strategy and, especially, as the answer to this question: “What do we want to accomplish?” It puts into sharper focus which firms the supplier regards as the relatively important customers, what the supplier wants to emphasize about its market offering, and what promise the supplier is making to customers about the value they will receive. Everyone in the supplier’s workforce needs to have a good grasp on these issues.
Yet not everyone in the firm may want the greater direction and focus that value proposition statements provide. For example, some may want to avoid value proposition statements, or to write only vague ones, because they are afraid that customers might find out that the supplier does not consider them the targets for an offering. These suppliers would rather have the customers, and their own sales force, believe that all customers are equally good prospects for an offering! This not only dilutes the sales force’s efforts and diminishes its motivation but can have further negative consequences when customers purchase an offering that was not designed to meet their requirements.
The resonating-focus value proposition for a market offering serves as the cornerstone for brand building in business markets. Although a number of points of difference and points of contention may have positive value estimates, we counsel suppliers to highlight in their resonating-focus value propositions the one or two that have the most value to target customer firms. Brand building for a market offering would then include devoting resources to significantly improve functionality or performance on those elements, demonstrating and documenting success in such improvements with customer value management, and persuasively communicating this progress to target customers.
Over time, customer value propositions can function as a reference standard in making decisions about contemplated changes in the market offering. Are the changes congruent and reinforcing, or will they subtly shift the character of the market offering? Either may be desirable, but by actively managing change, firms can avoid blurring their positioning in the marketplace. Thus, for example, the general manager of a business unit should be able to rely on a value proposition to guide decisions among conflicting tugs and pulls within the organization on how to further develop a market offering. In doing so, she focuses scarce resources on making the offering outstanding on the few elements that targeted customers value most and would be willing to reward the supplier for providing.
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