How to Assess Your Value Against Your Competitors with Value Curves – Part 2
Recap
In part one of this article we described the backstory to value curves, their use, and how to estimate value. To complete the picture, here we’ll describe the steps needed to put them into action.
Value Curves in Action
There are typically three phases in developing and using value curves.
Build Your Value Curve
- Identify the main competitive factors in your industry
- Add these to the horizontal axis.
- Score your company and the competition for each these factors, based on either value delivered to the customer, or where you and the competition invest. See part one of this article for more detail on how to do this.
Review the Model – Better versus Different
Review your market position against your competitors. Look carefully at where you offer better or worse value against the same factors. Consider where you are different and offer value that you competition does not and how this might enable you to reframe how you are considered in your product category.
Refine your Proposition
Kim and Mauborgne developed another important tool for use with Blue Ocean Strategy. This is The Four Actions Framework . You use it to re-profile buyer value by adjusting and improving the value curve. The framework requires four decisions. In the original, Kim and Mauborgne used the term industry to describe these factors. We have substituted product category.
- Eliminate – Decide which factors taken for granted in the product category you should be eliminate.
- Reduce – Decide which factors you should reduce below the standard in the product category because customers are being over served and costs are being increasing unnecessarily.
- Raise – Decide which factors you should be raise above the norm for your competitors.
- Create – Decide which factors not currently offered within the product category you should be create – making you different, as well as better.
Refining Your Proposition
We find these questions very helpful in refining a proposition. In B2B tech markets, we tend to use the term Product Categories instead of Industries:
- Which factors are unique to you and make your proposition different? If you have none, consider working on your proposition to develop some unique factors.
- In which common factors in the Product Category does the competition outscore you? How can your proposition minimise the impact of this?
- Which common factors in the Product Category add little or no value to your proposition and could be eliminated or de-emphasized?
- Which common factors in the Product Category are of high value and should be emphasized in your proposition?
The Advantage of Value Curves
The main advantage of value curves of how easier they are to read, as they are both simple and visual. We’ve found that their simplicity helps to make decision making easier and because of that they have far more utility in decision making than a lengthy report!
Like most of the models we use, they are low precision and based on estimation, and it’s important to treat them as such. What matters, as always, is that we’ve made the best use of the information available to us to make the best decisions possible in a world where we never have all the data we would like to have.