Value Creation And Co-Creation In Outcome Selling Scenarios

I was very inspired reading Dave Brock’s brilliant thought leader post „Moving From Value Creation To Value Co-Creation“ including the great discussion on his blog. The essence of these thoughts made me challenging and rethinking the idea of the customer’s journey – especially in an outcome selling scenario.

My focus today is complex business: Customers want to achieve certain business outcomes and vendors are focused on how to enable customers to achieve their desired outcomes with the vendor’s capabilities in a kind of co-creation. That requires to use the customer’s capabilities and sometimes also capabilities from partners. What we shouldn’t forget – value co-creation can only happen, when vendors (and partners) as well can achieve their desired business outcomes. My hypothesis is, that value co-creation belongs to an outcome selling approach – based on a collaborative, customer-centric approach. Outcome selling not only requires that the vendor designs the whole selling system backwards from the customer’s journey, it also requires different selling skills and behaviors. It’s a place for value- and purpose-driven sales people rather than for quota-driven people.

Value hypotheses:
Very early along the customer’s journey, we should try to get our foot in the door, to challenge the customer, to share insights, best practices, case studies – to make them thinking differently about their challenges, to help them to change perspectives, to show them a first vision of a future state – how to better achieve their desired outcomes. Our value messaging should consider two dimensions: One is the stage along the customer’s journey, the other one is the buyer role model. So, we are working with a value hypothesis, tailored to the role of the potential executive owner regarding a specific challenge/outcome.
Let’s imagine you are talking to the VP Desktop Services – sounds a bit boring and „commodity“ at first sight. But we can easily draw a big picture, a vision, which covers mobile strategy, collaboration and unified communication all together, focused on the design and the architecture of a compelling future workplace. So, we act as a strategic partner, we are focused on the customer’s desired outcome. We challenge him/her in a positive way, we share insights, we communicate value. Now, he/she will look at the challenge in a different way. Maybe, even the customer’s desired outcome will change.

Tailored value propositions:
When the customer got the entire scope of challenge and impact, we can continue with building a more detailed future vision and develop together a high-level big picture of a solution – with the focus to define the customer’s desired outcome more precisely. We are still engaging the role of the executive owner, but we also address the different impacted stakeholders. These different stakeholders might have different challenges and perspectives, because their success is measured differently depending on their different roles. So, they will decide what’s valuable for them.
Now, we work with different value propositions tailored to different stakeholder roles. We might keep a strong focus on the desired outcomes, to make sure that we drive urgency and importance at the same time to avoid a „no decision“ situation. The best way to do that is to show that the current state is really uncomfortable and that the future state is a much better place to achieve the desired outcomes. The transformation into the future state has to be based on a step-by-step approach in a way, that the future state is perceived much better compared to the current state/pain, the related invest and the general and individual risks all together.

Then – hopefully we got it! The executive owner decided to take action! Let’s celebrate that for a moment. We have communicated value and – apparently – already created value, because the executive owner was now able to make a decision to move forward – coming from a situation where the problem and/or the impact as well as the question on how to achieve the desired outcomes were not completely clear.

So, value creation took place in two dimensions: First, we enabled the executive owner to make a decision to change the current state and we enabled him/her to sell the vision and the project internally in a successful way. Second, we created value internally for our own pipeline, we developed a lead to an opportunity – „selling internally“

This stage is also a critical moment. Why? Because the executive owners have a tendency to delegate the project now within their teams to another person who is now responsible to run the buying process.

Unique value messages:
Now we should evolve our messaging into unique value messages for each of the impacted stakeholders. That’s based on a prerequisite – having a competitive strategy. Important here is to decide on the strategy regarding the competition but to remain focused on working with the customer’s stakeholders – don’t allow anybody to shift the focus to competitors. The key to success in this phase is to enable the buying team to make the best decision on how to achieve their desired business outcomes. That means to enable this team to sell the project internally to prepare a positive decision.
In parallel, we have to adjust the unique value messages for internal purposes, to get the different delivery units and the internal legal and commercial managers on the same page, to get their buy-in, to persuade them with a compelling business case which helps both partners to achieve their business outcomes.
Selling internally is an own journey in parallel …
If the customer makes a buy-decision in favor of us, we know that we were pretty successful along the entire customer’s journey with our messaging. The value at this stage is already a co-creation because we created value for the customer AND for our own organization in terms of a win-win case – to enable the customer to decide for us and to enable our organization to make a „Go“ decision for this customer-outcome based project.

Value implementation and communication:
Now, many sales people declare victory too early (order entry is booked!) and aren’t focused on the last phase of the customer’s journey any more. But this is the most important one to make the customer’s journey successful, which means that they can achieve their desired outcomes – and ours as well. Also, our contract might depend on the customer’s outcomes – if we are really serious and consequent in terms of outcome scenarios. We have to deliver, we have to implement the value we communicated, exchanged and created so far – step by step, phase by phase, as outlined before. The customer will also have to take actions, but the biggest part will be the vendor’s responsibility.
Attention – there will be different time frames between the implementation of technology and the achieved business outcomes! Imagine an outsourcing scenario, the desired business outcomes will take some time…
If we achieved all that, let’s not forget this final step – to communicate the co-created and now implemented value accordingly. First, to the stakeholders running the project day-by-day. Second, to the executive owner, the person we started the project in the very beginning. If we take this step seriously, we have a great chance to hear more about upcoming challenges, potential future opportunities, served on a silver platter…

What’s the necessary foundation for value co-creation, for real outcome selling like this? A selling system designed from the outside to the inside, a clear statement that both the vendor and the customer consider this relationship as strategic, based on a collaborative partnership with a strong commitment to achieve the outcomes of both partners.

What are your thoughts on value creation and value co-creation?
What do you think about the outcome selling approach?

Chime in and share your thoughts!

4 Comments

  1. Fantastic post Tamara! (Thanks also for the reference to mine).

    I really like the way the post describes the progression of value development with the customers and the focus on the outcomes. The concept of co-creation allows us to think that through collaborating, we can achieve outcomes we couldn’t have otherwise achieved.

    Imagine solving customer problems in much richer ways than just by giving them a product to buy and implement.

    Also, as Tim Ohai has stated in the comments on my post, we have to remember value is exchanged. So the value we get from those collaborations–beyond just money can be very rich. It can give us deep experience to better position us in producing great outcomes for other customers—-and so many other things!

    Thanks for continuing the discussion in such a thoughtful manner! Regards, Dave

  2. Thanks, Dave!
    My pleasure 🙂

    You are so right, Tim Ohai made a really great comment on value exchange. It’s absolutely worth to write a separate post on that! I think, this exchange aspect is increasing along the customer’s journey and could have a special focus during transformation and implementation phases.
    What are the partners doing with the newly achieved wisdom on value? Creating additional and unique value for new products and services and for new customers… Even more outcomes!

  3. It is a good post, and you know I would not say that if I did not mean it!

    Value Co-creation is just an awkward way of saying Value Construction, the original label used at McKinsey 20 odd years ago, and a frequent area for BMAC blogs. It is the way to go BUILD Value with your Customer, FOR your Customer!

    Value happens where the “Rubber meets the Road” value is built with Customers who have Salespeople who can increase their Customer’s Value Generation Process.

    Tamara, your increasing use of the Challenger Sale vocabulary does not surprise me either, as it just works! Now some 14 months into the TCS process, we are seeing, what YOU so rightly highlight “Value Implementation and Communication.”

    In BIG IT, we are using a “Value Register” WITH the Customer to record and communicate the real Value derived from our Value Construction.
    In 2013, what you call “outcomes” will become an increasingly important part
    of Cost Justification and Sales Success.
    The Firms, who have built their Customer Value Registers in 2012,
    will enter 2013 at a Value Based Comparative Advantage.

    Thank you for an insightful post and best wishes for 2013.
    Brian

  4. Brian,
    thanks so much for taking the time and sharing such a valuable comment on value creation and value construction – it is valuable 😉
    Best wishes for 2013!

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