What’s Your Value Add?

“It’s very nice to meet you! So, Bill Taylor, what’s your value add?”

This very probing and potentially threatening 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. 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 – 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.

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?

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