GSP & Associates LLC
Achieving Growth Sustained Profitability

Value Based Strategies

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Start up and corporate strategies that are not based on delivered value to specific and targetable customer segments are essentially wish lists.  Organizational success is based on rallying around a well defined concept of who the customer is and what the customer views as value.  The following white papers provide an overview of these topics.


Business Models & Blue Ocean Strategies:

For decades, analysts have theorized that the industry that a company competes within dictates its potential for profitability.  However, recent research has identified how some companies found ways to outstrip their competition by creating and delivering new configurations of value.  This new form of competitive advantage is called Blue Ocean Strategy.  Researchers have identified a series of questions that can help organizations develop effective strategies but these questions do not directly lead to the generation of a viable value proposition.  This void can be filled with the use of a business model template.  The template can be used to generate alternative value propositions that can be compared and presented to potential clients for attractiveness and sustainability.
Business Models, What Are They?

A business model is a template that conveys the essence of how a company creates,  delivers, and captures value within a customer segment.  It is more detailed than an elevator speech and established corporations as well as startups are beginning to recognize its value from an organizational alignment and strategic planning perspective.  This white paper describes the use of a particular format called the Business Model Canvas.  The canvas is designed for use in a group setting and enables rapid integration of ideas that generate unique versions of value generating configurations.  Thus, executives or startup teams can efficiently create, evaluate, and select what they consider the best competitive configurations and  then test them with prospects or customers.  This type of iterative process facilitates a robust strategic process that is appropriate for all organizations including startups.

Business Models, Relevance to Startups

Startup businesses represent a wide range of risk factors.  Typically, there are questions regarding technology and the ability to scale in an economic manner; likewise, there are often parallel questions regarding customer acceptance and growth.  Failure in these endeavors revolves around the burn rate of cash associated with creating an elegant solution that is not attractive to potential customers.  Addressing this issue requires an iterative process that focuses on generating alternative value propositions that can be reviewed with perspective customers.  The objective becomes one of discovering a minimal design that is saleable to customers using a repeatable sales process.  A template, referred to as the Business Model Canvas provides a tool that startups can use to generate ideas to test with potential customers.  This white paper provides an overview of the template and its relevance to creating startup success.
ROI & Shortening the Sales Cycle

In the world of B2B transactions, if you are selling on a value proposition then most likely you are assuming that the customer is achieving a return on their investment using your product or service.  If you are selling a premium product at a significantly higher price point, then it is also likely that the customer must intuitively or explicitly derive a benefit in excess of the total cost of ownership.  Depending on the magnitude of the investment, the customer may have to create a formal return on investment (ROI), before any purchase decision can be made.  The reality is that most sales organization must communicate value to customers as an integral part of their function and that the exceptional sales person can position value in the context of the customer’s frame of reference.

 

Particularly when the economy is soft, the ability to demonstrate ROI becomes an essential element of closing the deal but more importantly, if used strategically, ROI concepts can reduce sales cycle times, leverage sales and marketing effort, and support customer retention.  In an era where spending is down and decision processes are extended, sales organizations need to apply every ounce of energy and creativity to make things happen.  This white paper will provide a framework for examining the sales process and the opportunity for improving performance using ROI as a sales tool and competitive weapon.
The Profit Maximization Paradox

Long term profitability that exceeds industry norms is the essence of shareholder value.  Based on studies of the Fortune 500, few companies can boast of long-term growth for five much less ten consecutive years.  Management experts have written volumes regarding the traits of successful companies only to see these observations vaporize when these same companies flounder a few years later.  Perhaps the issue of long-term profitability is not tied to some unique capability or a more fundamental operating perspective.

 

As the title suggests, this white paper makes the argument that there is a major flaw in the assumptions companies make in their strategies to maximize profitability.  This flaw can be characterized as a paradox in management thought.  A paradox is an apparently true statement or group of statements that leads to a contradiction or a situation that defies intuition.  In the case of profit maximization, it is broadly assumed that maximizing functional performance will maximize profitability; it is the basis of how we manage, it is intuitive, but in today’s competitive landscape, such an assumption leads to inconsistent results and pervasive alignment issues.  This is the core of the paradox.  This white paper will explain why a functional perspective is almost guaranteed to lead to sub-optimization and will suggest an alternative which will serve as a more effective focus for optimizing performance.

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