Running a technology company in today’s fast-moving marketplace is no easy task.  The rate of change has accelerated to a blistering pace, and the number of balls that need to be kept in the air – while simultaneously being synchronized and aligned – can be overwhelming.  In order to make sense of the chaos (and maintain sanity), it helps to have a mechanism for modeling the inter-relationships of all the pieces in the puzzle.  This is the context from which we have developed our “Value Engine” framework.

 

There are two basic principles upon which our model is based:

 

1)     The purpose of a company is to create value for its shareholders

 

2)     The best way to create value for shareholders is to deliver value to customers and prospects of the business

 

Building on these two principles, we posit that companies should strive to operate as a “Value Engine” – creating value for investors by delivering value to customers and prospects.  The analogy to a mechanical engine translates in a variety of ways:

 

·         Just as a mechanical engine converts fossil fuel to kinetic energy, a Value Engine converts investment and resources to shareholder value.

 

·         In order to optimize the output of either type of engine, the inter-relationship of each of the individual components needs to be synchronized or “tuned”.

 

·         While the primary role of the owner is to “drive” the engine, it is their responsibility to make sure regular maintenance is performed (whether they do it themselves or bring in appropriate experts).

 

·         It is critical for the people operating the engine to have a “dashboard” that provides real-time information about performance, so that adjustments can be made while the engine is running.

 

Another benefit of a framework based on an engine analogy is that it provides a “systems” view of the company to which an engineering audience can relate.  Given the preponderance of people with a technical background in many technology companies, this can help bridge some of the gaps that sometime exist between market development (sales and marketing) and other parts of the company.

 

A graphical depiction of this Value Engine – along with the relationships between the elements – is provided in Figure 1 below.  Each of the elements are defined and discussed later.

 

 

 

Figure 1: The Value Engine Model

 

 

The central elements in this engine are the company’s Value Proposition to its market, and its knowledge of the customer’s buying process.  Value Proposition is the cornerstone for all activities related to strategic marketing.  Branding, Differentiation, Positioning, Segmentation, Competitive Analysis, and Partnering Strategy (among other activities) all flow into or are derived from the Value Proposition.  Without a clearly understood and articulated Value Proposition, it becomes exceedingly difficult to develop an effective marketing strategy or message.

 

Just as Value Proposition is the foundation for all strategic marketing tasks, so is “customer buying knowledge” the Rosetta Stone for all sales-related tasks.  It is only by understanding 1) who your target buyers are, 2) what their business problems are, 3) what total solution is required to solve their problems, and 4) how they make purchase decisions, that the sales process and resulting sales cycle can be streamlined to its optimal efficiency.

 

The major components of this model include:

The graphical layout of these components conveys the continuity of the model from strategic thought through to execution (from “identify” to “architect” to “build” to “deliver”).  Throughout this continuum, there is a set of functions and disciplines which need to be consistently applied to the engine.  This includes things ranging from brand translation, to measurement/metrics, to insightful research, to the marketing programs and tools that are required to support a complex, consultative sales process.

 

Bottom line:  To maximize shareholder value, a firm should view itself as "value engine" converting investment and revenues into more value for customers and repeating the cycle over and over.  Most enterprise technology companies have a sub-optimized value engine which, ultimately contributes to poor yields in margin and growth objectives and manifests in low value comparables (P/S, P/E) against like competitors.  Companies should focus more of their attention and investment on micro-marketing investments targeted at specific executies, in specific companies, about their specific issues.  By creating a centralized framework to provide the content to fuel these discrete interactions, and by reducing the burden of research placed on the backs of sales people, a firm can dramatically imrpove its performance.  

 

 

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