It’s the Economics Stupid!
Since it was first uttered in the early 1990s, the phrase “It’s the economy stupid” has been used and misused extensively.[i] Let’s squander the lexicon one more time.
The US ‘silly’ political season is well underway and forecast to last almost 13 more months—no telling what voodoo economics will emerge.[ii] Those of us with our business noses to the grindstone must ride this stormy weather to a safe port next November.
Most have an interest in the macroeconomic policies nation states put forth but other than voting and perhaps lobbying, there is little many can do to materially impact the economy. What we can do is focus on the economics of our business—CAPEX.[iii] Hence, our daily mantra should be, “It’s the Economics Stupid.”
What Is Your Value to the Customer?
For over the fifteen our organization has been, “Helping Clients Achieve Organizational Agility, Resiliency and Sustainability.” Assisting clients develop and articulate a viable economic value proposition has been one of the most elusive and vexing challenges.
There is a strong tendency to make statements that are Overstated, Not Demonstrable, and Not Defendable. Declarations such as, “Enhanced credit control system for partners through increased information visibility” are effectively meaningless—yes, this is an actual quotation from a software company. Customers are left with the question, “What does that mean for me?”
Translate Technology into the Language of Business
If you leave your customer with the above and/or other questions regarding your value to their enterprise, likely the sale will not close. Probably, a more coherent competitor will leave with the deal.
CAPEX always undergoes extensive scrutiny; even at the Board level in some cases. While new and cool technology may ultimately be disruptive and of extremely high value, peddlers must speak the language of the Chief Financial Officer and her staff. These are ‘green’ deals!
Those tasked with generating revenue from technological solutions must also take on the role of translator. Bridging the cultural differences between cool stuff and the bottom line requires a Rosetta Stone.[iv]
The Economic Value Proposition Matrix® model (EVPM) was originally developed with a Super Independent oil and gas operator at the first part of the century to become that Rosetta Stone. Working with customers, technology providers can now prepare for the inevitable decision by the CFO. Usually, the vendor will not attend said meeting but preparing the customer staff to make the case is mandatory.
This video tells the whole story in less than 43 minutes. Is winning your next deal worth an investment of three quarters of an hour? If not, keep doing what your doing and hope for a different result.
The video makes the case that technology offerings often seems similar. The same buzzwords and euphemisms often confused clients and make it appear that since the solutions are basically the same, just go with the low dollar. Rising above this clutter is required to be successful.
How is Your Value Proposition Better Than Your Competitors’?
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Critical Mass: Value from the RBC Framework
Nuclear physicists define the term, “critical mass” as the amount of fissile material whereby a nuclear reaction is self-sustaining. From that original definition, the construct is further developed along societal and political terms as a function of the environment and number of adopters and their interdependencies that create enough of a consensus for individual actions that sustains an undertaking.
In 1996, the author published the first of several case studies on a societal interaction model based on the Relationships, Behavior and Conditions (RBC) construct among economic actors. Previously the model was only in the domain of academia.
This blog addresses contemporary issues from the RBC perspective and whether in the present state they are sustainable or not. Many readers may be familiar with the “Innovation Adoption Curve.” RBC seeks to enlighten the causality of behaviors that cause movement towards the critical mass that generates movement along this diffusion curve.
Other Blogs by Dr. Shemwell
Dr. Shemwell is an author/contributor for the following 3rd party blogs.
So, You Want to be an Entrepreneur
Dr. Shemwell is a member of the Global Energy Mentors (GEM) Leadership Team. Every month he or one of his colleagues is posting timely tips to help entrepreneurs navigate the energy start up sector. Check out the Landing Page.
Governing Energy Blog
BTOES Insights is the content portal for Business Transformation & Operational Excellence opinions, reports & news. Dr. Shemwell is a contributor.
Consult 2050 connects organizations with a wide range of consultants all around the world. The firm operates an online marketplace for consultancy services.
Essays on Business and Information
This two volume set covers a series of newsletters and opinion pieces published circa 2002-2009, including Bug Lore–Lessons for the Online Economy that addressed real time systems vulnerabilities from Y2K (1998-99).
About the Author
Dr. Scott M. Shemwell has over 30 years technical and executive management experience primarily in the energy sector. He is the author of six books and has written extensively about the field of operations. Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling Operational Excellence and regulatory compliance management. He has studied cultural interactions for more than 30 years—his dissertation; Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study) is an early peer reviewed manuscript addressing the systemic structure of societal relationships.