Introduction: It’s all about customers.
You’re sat in yet another 2 day strategy workshop, surrounded by charts, graphs, and a sea of acronyms. But something’s missing, right? That’s it – the customer.
It’s all too easy to get caught up in the numbers and forget about the people who actually keep your business afloat, the people who pay you.
This is where ‘Proposition Thinking’ comes in.
Now, before you roll your eyes thinking, ‘WOW, another buzzword!’ hear me out. Proposition Thinking isn’t some complex, grandiose concept. It’s actually quite simple: it’s all about putting your value proposition – what you offer your customers – at the very centre of your business, especially your strategy.
In fact, when it comes to strategy it’s more exciting than that. Usually, in developing your value proposition you’re often left with wrapping a creative and compelling story around what you already do (including the things you don’t do very well). In strategy, by using Proposition Thinking you’re able to be inventive and seek to establish an entirely new value proposition for the business going forward. A proposition that will put you ahead of the competition.
Think of IBM’s value led strategy to ditch PCs and aim for higher margin services. Higher margins usually mean more customer need or less competition (look at that, we’re already using two of the pillars of a good proposition – Customer / Competitor / Company).
By applying Proposition Thinking, you’re actively choosing the future Value Proposition your company will deliver to customers and then building a plan to deliver it. It’s more like defining the ‘North Star’ for your business, which ultimately helps to guide every decision you make.
So, let’s look at why this approach could be the game-changer your business needs.
Proposition Thinking: What’s all the fuss about?
Proposition Thinking is essentially a way of approaching challenges in your business (including strategy development) in a customer centric way by putting your value proposition front and centre.
Great, I hear you say, but what does that actually mean in practice?
Traditional strategy often gets bogged down in internal processes, market analysis, and deep, deep competitor benchmarking. And while these are all important, they often miss the most crucial element: what your future customers will actually want and need.
In the end, that is all strategy is, making the choices needed to deliver value and solve for your customers needs better than competing solutions.
Proposition Thinking helps you lean into this. It starts with your customer and works backwards. Who do you want your future customers to be? (e.g. segments, sectors, etc) What problems will they have that you will solve for them? What value will you bring to their lives? How will you be different from every other Tom, Dick, and Harry out there offering similar products or services?
Roger Martin talked about finding your ‘where to play’ and your ‘how to win’ which is similar to this way of thinking. Identifying who your future customers are is a ‘where’ question and the value you uniquely bring is ‘how you win’.
The beauty of this approach is that it forces you to really get to grips with your future customers. You can’t hide behind spreadsheets and graphs. You need to get out there and understand how your customers’ needs, desires, and pain points are going to evolve over the coming years.
Proposition Thinking isn’t just about understanding your customers better (although that’s clearly a big part of it). It’s about using that understanding to shape every aspect of your business. How you’ll develop your products, your marketing, your customer service – ensuring all align with your desired future value proposition.
And the benefits to doing it this way?
Well, they’re pretty significant. For starters, you’re more likely to create products and services that your customers actually want (wouldn’t that be a good thing?).
You’re also likely to communicate your value more effectively, which can lead to better marketing and sales outcomes. And perhaps most importantly, you’re more likely to build lasting relationships with your customers, because you’re genuinely focused on continually delivering value to them.
Proposition Thinking is about putting your customers at the heart of your business strategy, and using your value proposition as a guiding light for every decision you make.
Simple, but very powerful.
Your Value Proposition: The North Star guiding your ship
Now we’re getting to the good stuff. Shifting mindset to putting value proposition at the beating heart of your business strategy. It’s not just some marketing fluff or a catchy slogan – it’s the reason your business exists.
Peter Drucker said a ‘business’s true purpose is to create and maintain customers’. If what you need, to create a customer, is a more compelling value proposition than anything else it stands to reason that your value proposition is the most important tool you have in delivering against that purpose.
So, what exactly is a value proposition in the strategy world? Well, it’s your [future] offer to your customers. It’s what [will] set you apart from the competition. It’s the reason why someone [will] choose you over everyone else.
Think of it as your business GPS. Just like how your satnav guides you to your destination, your value proposition guides every decision in your business. Should you launch that new product? Does that marketing campaign make sense? What should your customer experience feel like? Your value proposition will help you answer these questions.
But what makes a value proposition truly powerful? It’s not just about being unique (although that helps). It’s about being relevant and meaningful to your customers. It’s about solving real problems or fulfilling genuine needs.
Your value proposition also shapes your vision and purpose. It’s not just about what you do, but why you do it. It gives your team a reason to come to work every day, beyond just earning a pay check. It gives your customers a reason to choose you, beyond just the features of your product.
So with any growth strategy, start with your future value proposition. Who are you going to serve? Why should they care? How are you going to be better than competing solutions (including how they currently solve issues)?
From Vision to Reality: Implementing your Growth Strategy
Right, so you’ve identified and explored your future customers and crafted a cracking future proposition and everyone’s bought into the new direction. Now what? Well, it’s time to plan how you’ll turn that vision into reality.
That starts with building an understanding of the gap between your chosen proposition and your business as it stands today.
You need to take a hard look at where you are now versus where you want to be. What’s your current value proposition? How well do you deliver it today? How does this stack up against your vision for the future?
Be honest – this isn’t the time for rose-tinted glasses.
Once you’ve identified the gaps, it’s time to start designing the bridges. How are you going to close that gap between today and your future vision? It’s about crafting a plan that actually works – to a destination that your customers will actually find compelling.
Too many strategic plans are little more than lists of desired features or technologies you want to build (tech roulette, can I hear a big data, blockchain, cloud or AI anyone?). By using Proposition Thinking and developing your strategy around a compelling value proposition, you’ll be able to prioritise activities that help you build to something that stands out and to a business that matters to your customers.
Learning from the best: A Success Story
The oft cited Southwest Airlines is an organisation that exemplifies proposition-driven strategy with its core values offering fast, fun, and friendly low-cost air travel for everyone. Their value-proposition has guided all strategic decisions since 1967. This resulted in strategic decisions to align operations by using a single aircraft type and point-to-point routes, reducing costs and travel times. Their no-frills service focuses resources on customer priorities. Southwest differentiates through empowered, friendly employees and humorous communications. They’ve evolved their proposition to include business travel features and technology integration, all while maintaining their core promise. This consistent alignment with their value proposition has resulted in 47 years of profitability (pre-COVID), high customer satisfaction, and a strong, differentiated brand in a commoditised industry.
So, will you build your strategy around a proposition?
So, there you have it. Putting customers at the heart of your strategy shouldn’t be seen as a nice-to-have – it should be seen as a game-changer. By embracing Proposition Thinking, you’re not just building something for the next quarter or the next year, you’re setting yourself up for long-term success.
Remember, this isn’t about quick fixes or overnight transformations. It’s about fundamentally shifting how you think about your business and your customers. It’s about aligning every aspect of your organisation around delivering real value for customers now and in the future.
So, let’s start, take a good, hard look at your current value proposition and what you think your value proposition will be in 3-5 years’ time. Are they truly customer-centric? Does your desired future proposition guide every decision in your business?
If not, it might be time to roll up your sleeves and get to work, your future self (and your customers) will thank you for it.
