Value demystified

KVC BoardWe’re obviously proud of our KVC model.   We think it helps explain a lot of the mystery surrounding “how to compete in the knowledge economy.”

But the KVC is more than just a theoretical framework.  At TKA, we use it every week as a tool to solve live client problems.  In our offices, we have a KVC whiteboard that helps us understand and solve these problems.   We’ve a developed a structured technique called Value Alignment™ that helps us identify a client’s distinctive sources of value, and bring them in line with the current needs of the market.

Here’s a photo of the whiteboard at the end of a typical session.  The client was in this case designing an information-based product offering, and TKA was helping him determine with some precision HOW and FOR WHOM value was to be created.

He liked what he found so much that he used it in a pitch to investors.  Using the KVC, he could graphically map exactly where and how his product fit into his customers’ value propositions.

Russian dolls

We originally developed the KVC to help us illustrate the value-added or ROI of a knowledge-based business process—for example corporate intelligence or market research.  But now we’re using it to solve even bigger problems.

Several months ago I was honored to deliver a webinar to the UK Competitive Intelligence Forum on the topic of adding value to corporate intelligence.  CI professionals—like most of us these days—are keen on knowing how they add value, so they can focus on adding even more.  My advice to them started with something on the order of, To add greater value, you first have to understand how you currently add value.  And to do that, you need to understand how your clients (individual, product, and company) themselves add value.

While I was speaking, an image formed in my mind of “value” as a set of those wooden nested Russian dolls.  The value added by intelligence (or any other knowledge based process) must be gauged within the context of how the intelligence client—strategy, sales, senior management, or whomever—provides value.  And the client’s own value must in turn be judged in light of how value is created by the overall enterprise— the product, or even the line of business.

In this sense, understanding value creation and value dynamics at the macro level are key to the whole rest of the puzzle.  Once you know that, everything else begins to fall into place.  And until you know that, you can waste a significant amount of resources pursuing dead ends.

The failure to understand value at a macro level is the root cause of most failures of intelligence.  Intelligence just gets the blame if things go wrong.

The Value Wheel

Value is in one sense like air—it’s all around us, hidden in plain sight—and it’s therefore easy to misunderstand or to overlook entirely.  Our view is that if—and only if—you can document value, can you manage it.

At TKA we’ve developed several “power tools”  to help us in the Value Alignment process.  One of these we call the Value Wheel, because, well, it looks like a wheel.

Value Wheel 04-20-2010

Businesses conceptualize and measure value in various ways—some of them quite elegant and abstract.  During our KVC Clinic, we review these methods—but come down in favor of more down-to-earth, non-jargon-riddled solutions.  Solving a problem, overcoming an obstacle, saving time or money, and so on—you must as a knowledge professional be positioned firmly at one (or several) spokes on the wheel in order to be effective.

I had a client— an intelligence director at a global corporation—remark that, of the 100 or so slides we cover in the KVC Clinic, this was the single most helpful to him in managing his team.  Why?  It focused them on the core issue:  the practical test of value as defined by their intelligence clients.

Works for the boss, too

TKA has used Value Alignment successfully at all organizational levels, not just for “knowledge professionals”.  And it can work with non-information-based products too.  For example, we’re currently working with the CEO of a niche company making industrial lubricants to identify “market sweet spots” for his product.  How his product creates value for his various potential market segments is key to understanding this.

Too many companies are selling “solutions chasing problems”, rather than the other way around (as it should be).  “What problem does this solve, for whom?” is the question that can guide successful product development and positioning better than most any other.

It can help in repositioning existing products, too.

We eat our own cooking

I use the Value Wheel as an informal guide in my own work at TKA, in several ways:

  • Before a project, to discuss my client’s EXPECTATION of how value is to be created
  • During a project, to maintain our FOCUS on that goal
  • After a project, to facilitate MEASUREMENT of the extent to which the value goal has been realized

And speaking of value, I’m proud to announce our first YouTube video, a brief introduction to the Knowledge Value Chain®.  You can see it by clicking here.

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