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Disruption Selling: Using Value Stages to Build Unassailable Value Propositions

Updated: Apr 13, 2023

“The best sellers win because how they sell increases the value of what they sell. In fact, how they sell adds value for their customers and for their own company, beyond the value inherent in their company’s product, price, and brand.”

Most people in business regard the positioning of a product or service as set by the corporate strategy. The truth is: it’s not. The best salespeople can position their offering on various value stages by sheer imagination.

In Disruption Selling we differentiate four value stages with Commodity, Product, Solution, and Strategic Alliance. While moving to higher stages is always possible, moving to lower stages requires the offering to fulfill specific requirements.

On Commodity level an offering only differentiates itself by price and convenience. The lower the barrier to acquire and utilize it the better it competes in the market. On Product level the offering differentiates itself in feature, function, benefits and its adaptability to individual customer needs. On Solution level the offering drives a business outcome and is hence specific to the individual customer environment. On the highest level two or more parties join forces in a Strategic Alliance to drive a break-through achievement in the market.

AWS is a great example where a Commodity (e.g., AWS’ original core services for compute, storage, and networking) grew into Products (e.g., managed databases), Solutions (e.g., for call centers), all the way up to Strategic Alliances (e.g., the VW Industrial Cloud). While the AWS services were still the same the organization developed the capability to package them on higher value stages disrupting markets owned by powerful Incumbents (e.g., Oracle, IBM).

In contrast, moving south is a far more challenging undertaking: Turning a customer-specific Solution into a standard Product and ultimately into a Commodity not only requires significant investments but also goes along with rapidly shrinking margins. Which is the reason why vendors on a higher value stage are usually disrupted by vendors attacking them on a lower value stage (e.g., the Product level cloud offerings of Incumbents like IBM and HP failing to successfully compete with AWS on Commodity level ten years ago).

Consequently, a Disruptor must make a conscious decision on where to initially position their offering and when to move north or south.

For the inventor of a Disruptive Innovation, it is ok to start on Solution level (e.g., by co-innovating with a customer), but selling Solutions is not a scalable model so the Disruptor must productize its offering to succeed in gaining a leadership position.

The ideal starting point for a Disruptive Innovation is on Commodity level as it provides almost unlimited scale and low barriers to adoption. And leaves full freedom to the sales organization to move north by developing the offering into higher value stages with own or partner enhancements.

For more information on value stages go here.

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