Finding the Core Value Proposition is Key

I recently got introduced to an up-n-coming PLM (product lifecycle management) software vendor who shall remain nameless. There are several notable vendors already in the PLM space including IBM, PTC, Borland, UGS (a division of EDS) , and about 40 others that showed up on the first page of the Google scan.
There was value in their software, the value of their solution, and there is a BIG customer problem that needs solving. Having seen how companies make product design / customer offer decisions, I know they could use better tools to understand and make tradeoffs. Not only do most tech companies need to know what features to trade-off, but the implications of shifting product lines or prioritizing different investments against lines of business. The PLM software I reviewed seemed able to solve 80% of these challenges. It could revolutionize how products go-to-market.
The CEO and Sales VP were articulate, talented, passionate. And yet, I left the meeting feeling something was amiss. In fact, the meeting took place over a week ago, so it occurred to me that the reason I continue to dwell on the discussion is that my feedback to them is related to a common set of choices companies make. Thought I could talk about that here.
The first. They are making a mistake on serving the broad vs. the specific. Several dozen customers had already done deployments, so it was clear that the product technology was strong enough to warrant attention. But when asked which customer set or segment represented the breakthrough, they said they were going to continue doing a horizontal solution. It’s seductive to pursue many segments. To be a horizontal solution suggests a bigger market opportunity and thus better funding.
But the seduction is really an illusion. Any product should do 1 thing really well. And that 1 thing is solve a fundamental problem so big that it’s a value proposition in itself. Doing something really well means being able to understand a specific problem very well. And since most companies (heck product) really do only a few things (build products, serve customers, market), it seemed a little naïve to say this could be a horizontal solution. could be a horizontal solution because sales is sales. But product development is the same in fashion as in electronic chips? I would think that offering a horizontal solution that wide is not going to go deep enough.
The 2nd area. Defining whether they are creating a tool or a customer solution is critical. Technology can be used to apply a new process. Is that enough? Doesn’t the customer need help with the process transformation also? The PLM vendor is considering partnering with folks (like us) who can help clients drive the inherent optimization / change management process. Meaning, the PLM vendor builds technology, then have customer-facing vertical solutions providers who can drive and initiate the sales process as a result of doing that type of reengineering. What’s interesting is that this company is allowing the tracking of tasks/ requirements / features / products / line of business / portfolio integration. And yet they won’t do professional services. How can this be? Isn’t that a system completer?
So I got to thinking if a PLM (or any?) vendor could cause products to ship faster than competitors, more on point with customer demands, than isn’t that an incredible asset? Would that be worth more a $30K software solution, but a 1/2 million dollar solution? Then, the PLM space is central to a company’s innovation ccle. Couldn’t a PLM vendor then be the leading provider of product design technologies: the software, methodologies and services to enable a set of companies to create products and lines of businesses to capture market share. Just like some companies do yield optimization, they don’t have to ‘just’ offer a software tool. What they could also do is teach, coach, and drive change at those organizations so the tool helps yield change and results. Results matter. And given the cost improvements known for yield improvement there are very few vendors in the field who can do this. Is the same true for the PLM space, I wonder?
Getting a product value proposition right is a zen thing. I’m curious to see how the PLM space evolves and whether these guys are able to shift their strategies to win their market.

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  1. Retailers call it “narrow and deep.” And it requires the courage that can only come from having done effective research. If you don’t know your customer, horizontal feels safe. Fear is the enemy here. No services? Why make your customers go elsewhere?

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