Tim Wood Powell     The value of knowledge

The early-winter holiday break is an opportunity to recharge our batteries and refocus our strategies. Amidst visiting with family and friends, I took time to reflect on the recent past and what the future holds.

Among other things, I realized that over time my clients have been paying more attention to the top half of the Knowledge Value Chain (how knowledge is used) and less about the bottom half (how knowledge is produced.)

What drives knowledge strategy?

Ideally, knowledge strategies spring from, and are tightly linked to, top-level enterprise strategies. In practice, however, many of the problems in knowledge production spring from misunderstandings of, or lack of clear linkages to, enterprise value.  Some of my research on this is cited in the KVC Handbook.  This knowledge-value gap raises several existential questions about knowledge-centric activities, among them:

• How does knowledge support our enterprise mission and strategies?
• What tangible benefits does knowledge provide us?
• Is our knowledge strategy optimized in an economic sense?

Any lack of clarity at the top of the pyramid tends to get driven down through the chain, where it causes tactical and executional confusion and ineffectiveness.  Those of you in the trenches will know what I mean…

Benefits-driven positioning

If you are a knowledge producer, do not wait for those problems at the top to get sorted out — seize the initiative yourself!

We’ve been advising our clients: Always position your product (and I use this term to include services) from the point of view of the needs of, and benefits to, your user/customer/client/patron. Not — as so many of us do instinctively — from how your product works, why it is wonderful, or even why it’s better than your rivals’.  The diagram below summarizes TKA’s discovery process for working with clients on this.

As has been said so often it is becoming a management cliché, customers in general seek to fill a need (the hole) rather than buy a product (the drill). Your user is at the center of the value ecosystem — not you, nor your product, nor your expertise, nor your enterprise.

Most of us will nod our heads in agreement with this, and will “talk the talk” about the importance of our User-clients. Yet many of us will continue in practice to (usually unconsciously) put the customer somewhere else other than at the very center of our competitive ecosystem.

Let’s be clear on this: customers are all-important because they are ultimately the major sustaining source of enterprise value — that is, the flow of financial and other resources that keep everything else running. Without customers, there is no enterprise.

What is positioning?

In many cases this is largely a matter of positioning. Positioning is basically the representation you create in your customer’s mind (and wallet) of what your product is and (more importantly) the job it accomplishes.

Positioning is an essential element of branding, and is captured in the words you use to describe customer benefits. Often these are contained in a tag line, like: “Be well” (Merck); “Be brilliant” (Ameriprise); “Performance with purpose” (PepsiCo); “Building a better working world” (EY). Each of these statements focuses more on the customer/client than on the product or its provider.

Customers don’t buy products — they fill needs

Customer benefits-driven positioning is needed for any product or service, not just knowledge-based services. In general, customers buy largely based on what they need (solutions) — not on what you sell (products). If those two coincide, so much the better. To the extent they do not, your positioning should be re-calibrated against current and future customer value expectations.

I personally experienced an example of this was when I worked early in my career as a marketing manager in one of the world’s four global accounting/consulting firms. This was during the 1980s, when the long-held legal prohibitions against marketing these services had suddenly been lifted — and these firms (along with law firms, whose marketing was likewise deregulated around that time) began to to test the marketing waters and to sharpen their competitive knives.

From “audits” to “assurance”

These firms at that time all had as their major product the audit — an elaborate, labor-intensive, expensive process essentially designed to determine whether their published financial statements accurately represented to stockholders their true financial condition.

Through positioning research both formal and informal, these firms became aware that their value proposition was fundamentally something like, “Give me, as a stockholder, the assurance that this company is telling the truth in their books.”

As a result, during this period, these firms moved their positioning away from “we do audits” toward “we provide assurance”; in other words, toward customer benefit-centric positioning. This re-positioning remains largely in effect to this day.

Strategic pivots

Aside from meeting the customer where he or she is, there is a strategic benefit to being benefits-focused, rather than product-focused. It opens up opportunities to provide other solutions that may supplement, or even replace, those solutions that you offer currently.

When Lou Gerstner was recruited in 1993 to lead the then-foundering IBM, he found that what they were selling — mainframe computers and software to run them — was not fully solving their customers’ data management problems. They quickly diversified (by acquisition) into services, a move which most of their rivals quickly followed. Services now make up 60% of IBM’s revenue.

Being customer-centric thus opens you strategic pivots that you might not otherwise consider.

Determining customer needs

Let’s assume you have truly adopted this customer-centric outlook. How do you determine your users’ present — and future — needs?

The most common practice is to ask them, in one form or another, “What do you need?” This makes perfect sense — but unfortunately is rarely effective. To paraphrase Steve Jobs, “It’s not the customer’s job to know what she wants — it’s OUR job.”

Our role, in other words, escalates to what I call knowledge leadership — to distinguish it from knowledge management, which sounds (and too often actually is) reactive, passive, and producer-centric.

Things to do

Take these steps now in developing a new product or re-positioning an existing one:

1. Identify your users — the crucial step (and typically not as straightforward as it sounds)
2. Assess those users’ needs, met and unmet, present and future — not by asking directly — but by skilled observation of their workflows, incentives, and goals
3. Productize your solution to satisfy those user needs
4. Iterate your productized solution to minimize the gap between What We Sell and What They Buy
5. Position your product as a tangible benefit within your client’s value ecosystem

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