“It’s very nice to meet you! So, Bill Taylor, what’s your value add?”
This very probing and jarring question was first asked of me by Scott McNealy and Ed Zander from Sun Microsystems back in 1992. It was my first meeting with these very iconic, very charismatic superpowers of the computer industry. I was working for Access Graphics, a now defunct, little known computer distributor who oddly had their offices on the Boulder Mall in Boulder Colorado – this was, of course, awesome.
Sun Microsystems was our biggest supplier; our primary source of revenue – I couldn’t screw this up!
This is a very off-putting question the first time you are confronted with it, and if you’re not prepared to answer it. I had just started working with Access Graphics; we had just won the Sun Microsystems distribution business, and Scott, and Ed (who I would encounter again at Motorola) were visiting to see if we had what it took to sell and support these very complicated microcomputer workstations and CAD software that they produced.
Scott and Ed naturally wanted to know what my importance to them was (I was attending the meeting afterall) – what astonishing, innovative thing was I going to tell them that would set their business on fire? I couldn’t even show these guys where the restrooms were – this was practically my first day on the job.
What was my value add? This is a question you need to have a very well thought out answer for; not one you want hesitation, or lack of confidence in your answer. I could program their Unix-based computers. I could put an outstanding marketing campaign together to position and sell these computers to our dealers. I could create a multi-layered spreadsheet that would interface with our warehouse system and track those sales, and even plot the geographic distribution of those sales on a wall-sized map of the USA. I could have done any number of other things. After all, I had an MBA, and plenty of practical experience. But, this was not why I was in this meeting.
I would learn more about Adding Value, and Value Chains, and the Forces of Competition when I became an avid student of Michael Porter, Harvard Professor and author of Competitive Strategy, Competitive Advantage, and a dozen other books on the subject of competition and adding value. But, I hadn’t read his books yet!
“What’s your value add?” has been the quintessential question for me since the first time I heard it asked those many years ago; one I challenge myself, and the folks who work with me – every day.
Value is what companies bring to the market to differentiate themselves from their competitors, and it’s what creates uniqueness, desire, and importance with your customers. More critically, your added value establishes what your customers are willing to pay for the value you bring to them; ultimately creating profits you’ll need to re-invest to create even more added value for your customers.
No value = no customers. No customers = no sales. No sales = no business. Got it?
Value is also what individuals in your company add, to help you create the company’s added value and, if they aren’t – well – they’re not adding value, and we all know what happens when you’re not adding value…
Value, by the way, is incredibly subjective. One person’s perception of value differs greatly from another’s. It is your job to determine what those perceptions are, how they vary, and what you bring to the party to position your solution against those varying perceptions. This is Big “M” Marketing.
Okay, no pressure, no diamonds – so what was my value add?
What was the biggest problem keeping those guys awake a night, and how could this little distributor from Boulder change the fortunes of Sun Microsystems?
The answer was quite simple. Access Graphics distributed CAD printers and supplies through a well established, vast dealer network; a dealer network that Sun needed to get its products and software in front of more customers in the vast expanse of the United States geography (3.8 million square miles to be more accurate). We had figured out how to bring our dealers together as a collective, and use them to implement large-scale project installations at say Boeing, or Lockheed, or a dozen other very large companies that had broad engineering presence in the US, and needed the computing power that the Sun Microsystems workstations could provide (Sun’s added value).
Sun wouldn’t have to worry about credit or bad debt, or managing these dealers. We had figured out how to qualify, and provide financing for those dealers, and to invoice and collect from them. We had a state-of-art training center to teach them how to use these gizmos. We had other useful products that attached to these workstations, including large-scale printers from Hewlett-Packard to print the engineering drawings (HP’s added value). We had relationships with regional repair centers that could fix these things when they broke, and we had a way to communicate with all these dealers that Sun didn’t have.
In short, we added value in one of the most critical Big “M” Marketing variables – we could get the Right (Sun) Products, to the Right (Engineering) Customers, for the Right Price, at the Right Time – customers and dealers Sun Microsystems didn’t have relationships with.
But, what was MY value add?
Sun Microsystems had just begun using distribution as a sales channel model. Access Graphics had convinced them that ours was a natural partnership because we were a CAD supplies distributor and knew who and where all these design engineers were. However, Sun’s business represented more than 75% of our sales revenue! This was very distressing – if Sun changed their distribution model, or changed their margin model, or found another distributor, it could destroy Access Graphics.
My value adding activity, as it turned out, was to discover other suppliers that potentially competed with Sun, and bring them on board. We needed more diversity in our line card, so Sun Microsystems wasn’t in such a threatening position to our business. I was in this meeting to discover what we could do to diversify our portfolio. Not value I thought they would appreciate at the time.
So, my added value, at that exact moment, was to provide a more diplomatic answer – I asked if I might take their coats, bring them water or coffee, or if there was anything else I could do that would make their visit to Boulder and Access Graphics more comfortable. Then I sat back, and started taking lots of notes…
So… What is YOUR Value Add?
Bill Taylor, Founder Downing Goliath
© 2013-2022 Downing Goliath. All Rights Reserved.
9 responses to “What’s Your Value Add?”
When I saw the question ‘What’s Your Value Add?’ I got interested. It is a question I am asking all the time, but in my case it is not simply about the value add for the organization, but the bigger question of value add for the three elements of the Triple Bottom Line (TBL). Actually the question usually becomes what is the net value destruction because plus for profit usually gets associated with minus for people and minus for planet.
We don’t do the TBL calculations very well. For some reason we are very rigorous about the accounting for money profit, but we do not have any of this rigor for impact on people and impact on planet. For some reason we have never quantified impact value in a serious rigorous way. It may not be easy, but it certainly is not impossible. As a former corporate CFO I have established standard costs for everything the company manufactured, and something similar could be put together for all the elements of value. The technical tools are available, but my guess is that much of the established corporate leadership may not really want to see these important value flows in society and the economy quantified in a meaningful way.
I have a passion for metrics. There should be meaningful metrics about everything that matters. If we change the way we score the game, we will change the way we play the game.
This article was very helpful in understanding the value add for the organization. Now I would like to see a similar analysis of value add for place, and people and planet.
Peter Burgess – TrueValueMetrics
Multi Dimension Impact Accounting
Peter, this of course, is an excellent request. I’m reminded of a project I worked on during my time with Panasonic. We were developing Panasonic’s eco ideas(TM) concepts, and we had created a commercialization project for some very innovative energy saving products and services (including fuel cells and highly efficient solar cells). The company (at the time) was very focused on its public mission to reduce CO2 emissions from its manufacturing facilities, as well as produce products that used less energy, and thus reduce CO2 emissions even further. Worthy endeavors to be sure, but when we polled our customers in the US about their interest in “doing their bit” to reduce CO2, the reaction was divided into two responses. The first was “I care about the environment, but I don’t know if can afford to help.” The second was “I don’t really care, but I do want to save money.” The interpretation of this had us focus on “Saving energy, saves money.” In so far as we can save energy for consumers, we would be doing our corporate bit to cut back on CO2 concentrations. Reducing overall global CO2 is much bigger than any one company can tackle, but if everyone “did their bit” it might just add up to a bigger value add, than any one company alone…
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As you said, your perceived value and that perception by others may present two different pictures. But if at the end of the day both viewpoints converge into a business metric that adds value to your organization, cooperative objectives are met. The biggest take away here is that you must be confident of your own value proposition and be able to convey it like a salesman’s elevator pitch when asked.
Absolutely. This takes a lot of up front work and is not just the result of a clever marketing campaign or slogan. A great product combined with great operations, and delivering on those marketing promises is where you start to see the value aligned with these perceptions Steve.
You can’t learn if you don’t listen, Will. But you also need to stand up and be counted when that’s necessary as well.
Your final words on this are the most instructive for me. “Then I sat back, and started taking lots of notes…” I’m a big believer in listening.