Is your value proposition authentic?

• For years, Intel sold its microprocessors on the basis of Mhz (megahertz, or speed), even though the vast majority of PC users needed only a small fraction of the Pentium’s Mhz. The value proposition was: more Mhz is better. For the most part this was not true.

•  For years, digital camera producers have sold cameras on the basis of megapixels — the equivalent of megahertz.    

More megapixels is better. This too is false.

Writing in the New York Times*, camera expert David Pogue notes:

For years now, the world’s camera companies have been taking the public for a ride. They’ve taught us to believe that what makes one camera better than another is the number of megapixels it has — when, in fact, the number of tiny colored dots making up a photo has very little to do with its color, clarity or even detail.  

How can a value proposition that lacks authenticity — or, more bluntly, a value proposition that is utterly false — survive for so many years? It’s a mystery. Or, perhaps a conspiracy — a kind of industry paradigm that all players find it convenient to adopt. 

Sooner or later, though, as Shakespeare observed in The Merchant of Venice,  “the truth will come out”.   

Slowly, though, the truth is getting out. Recently (at long last), camera companies have begun diverting their research efforts from “how to get more megapixels” to “how to get better photos.” They’re working on things that really do matter in a consumer camera, like sensor size, stabilization — and fixing low-light photography.

Sony and Canon have now each brought out digital cameras that have new value propositions — customer benefits that really do matter. They take great pictures in very low light — something ordinary digital cameras cannot do, megapixels or not. 

Earlier, Intel radically changed its business model, shifting from selling megapixels to selling longer battery life (with its Centrino chipset), so that we could “unwire our world”. It was a risky gamble, but in general paid off, because it was authentic. We consumers do like to unwire our world, do enjoy longer battery life through smaller cooler microprocessors, and really don’t care that much for Mhz. The Centrino concept and design originated in Israel.
 
An important management issue is illustrated here. Ask yourself these questions:
•  What technical parameter or parameters drive my value proposition?
•  How do these technical parameters translate into clear simple value creation and customer benefits?
•  Is this value proposition authentic, or synthetic?
•  If synthetic, how can I alter our value proposition, to link it more closely with true customer benefits, and how can I achieve competitive advantage by doing so?
 
Intel did it. Now Sony and Canon are trying. So  should you. Start with your customer. Ask what the customer really wants and needs. Translate that into a  technical parameter. Seek enabling technology, and when you achieve it,  communicate the benefits to your customers clearly and simply — and authentically.

* David Pogue. Low light becomes a highlight. New York Times, Aug. 19, 2009.