Every successful product and business is built, knowingly or not, using value statements. Value statements describe what satisfactions are being delivered, how they are being delivered, and for whom. Fracturing value statements ahead of market changes can create opportunities for innovation and growth. Failing to proactively fracture a value statement can lead to loss of profitability or even viability.
Fracturing as applied to the value statement of a business or product can result in further segmenting customers in a market, creating a new smaller product form factor or opening up an opportunity for a new entrant between you and your customer. An organization can utilize this concept by drafting a value statement and then thinking through how the elements of that statement could be fractured to improve or create customer value and thinking though what outside forces could fracture that same value statement rendering it less valuable.
The Ford Motor Company’s Model T provided expanded travel freedom by supplying simple, reliable and low cost horseless transportation for every American. Henry Ford created an unprecedented Lean organization to turn basic raw materials like iron ore, trees and coal tar into automobiles. The efficiency of this process enabled Mr. Ford to continue to lower prices from $850 down to $260 per car and increase sales all the while continuing to improve profits. However, after nearly nineteen years with no real model changes customers began to want a way to differentiate a new Model T from a used one.
General Motors fractured the “for every American” element of Henry Ford’s value statement into income determined customer segments. GM designed divisions like Chevrolet, Buick and Cadillac to satisfy those new fractured customer demands. The Ford Motor Company was caught flat footed and lost significant market share as a result. In fact, Ford’s famous miss allowed GM to become the largest and most profitable car manufacturer for well over seventy years.
Portable music devices in 2001 provided personal music on demand using palm sized battery powered devices that could hold one album via CD or several hundred songs via MP3 but with slow download speeds for Western consumers the world over. Apple took that value statement and fractured it in five places when it brought out the wildly successful iPod; pocket sized, increased song capacity, blisteringly fast download speed, extended battery life and Apple design.
Amazingly, four of the five fractured elements were available practically “off the shelf”. The ultra small hard drive, however, was the single piece of technology that enabled all five fractured elements to come together into a world beating product. Apple was the first company to utilize the new ultra small hard drives to fracture the size element of the value statement. It was then a matter of identifying and applying existing solutions to the other fractured elements before anyone else.
Silicone adds oxygen permeability to contact lenses thus enabling wearers to enjoy glasses free vision correction longer with greater comfort. There are several contact lens manufacturers around the globe each with patented formulations for silicone materials in contact lenses. Over time this progression of patents has demanded a greater variety of modified silicones.
Early on, contact lens formulators were able to use the products silicone producers had off the shelf. As time progressed silicone suppliers held their own by increasing their offerings with sustaining modification technology. But eventually silicone suppliers and contact lens formulators found that a gap had opened between the needs for advanced modifications and the ability of suppliers to deliver. The technology gap was addressed three ways; contact lens formulators increased their technical staffs to build their own modified silicones, suppliers added chemists with non-silicone backgrounds and new entrants appeared well versed in the technology needed to modify silicones for the new requirements.
Technology will advance and customer needs will change. A company’s existing value statement will become less relevant. It’s only a matter of when. The central issue is whether a company will prepare for and meet the challenges of value statement fracturing and thus innovate and grow. Or will it turn a blind eye to fracturing and cede market leadership to someone else.
Bio Matt Edison works as the Reactive Silicones Business Manager for Gelest, a specialty chemical manufacturer north of Philadelphia. In his current role, Matt leads business development projects, manages the silicone technology group, and improves company business systems. His special interest in improving organizational performance to realize customer opportunities can be seen throughout his accomplishments and is the impetus for these articles. Since 1989, Matt has also worked for DuPont, General Chemical, and Inolex Chemical where his roles included Plant Manager and Engineering Manager, among others. He can be reached at [email protected] or at (267) 312-3537.
