Where does true value add come in to your business or professional strategy?
Hedge fund and other investment managers call it alpha. That’s the value a particular investment or configuration of investments creates after you strip away all the risk taken by making the investment.
Baseball statisticians call it WAR, or “Wins Above Replacement.” That’s the number of wins a particular player theoretically accounts for by being on the field instead of a backup player.
Any old general manager might simply call it value add. That’s the very tired but still useful term for what’s added to a product or service that a customer actually wants.
Your business strategy is about choices. In running your business or building your career, you are going to make two very important choices.
One is about where to play. That’s about what kinds of customers to serve, what segments to specialize in, or what company to work for.
The other is about how to win. That’s about what value proposition you are going to offer the world. This is true for you as an individual or for your company.
But, here’s the rub: In thinking about these choices, what you really ought to be thinking about his how to create alpha…or WAR…or value add.
In other words, the question on your mind when creating strategy is one of how to create excess risk-adjusted value in the eyes of your customer. The fundamental question should be about how you create wins for your customer above that customer’s next best alternative. After all, the only thing sustainable (at least in the private sector) is to create excess value for customers.
A good test of this that you can practice right now is to think about a current client, boss, or other customer relationship. Take a recent case, and ask yourself: Were you a differentiating partner, or were you along for the ride? Did you “sell” to the customer, or did you really “add value?” The proof is in how you answer that question. Usually a positive answer comes with some kind of phrasing like “they would have had a very hard time finding a partner who could have accomplished X in that particular case…and we (or I) did that.”
That’s a “Win Above Replacement.”
That’s value add in the moment.
So many businesses have client or customer case histories that read like a “who’s who” mashed up with Good to Great and In Search of Excellence. But when you dig into the details, the business itself was a bit player. They perhaps have some reflected glory from a project or get tremendous cachet from merely referencing a huge brand name on their customer list; but the huge brand name might say “who?”
Don’t let your business be a “who?”
Don’t just be “there.” Be alpha. Be WAR. Be value.
What do you think? How do you employ a WAR mindset?