Each agency has to understand its clients and their customers to provide a service to meet their needs. Seems a simple statement but it has a complex strategy behind it. Understand the strategy for your business and you can apply it to your clients.
A well-thought-out positioning strategy will identify the right problem/solution/service/client fit.
Strategic positioning sets the choices an agency makes about the value creates and how differs from their peers. Strategic positioning should translate into one of two things: a premium price or lower cost (which increases your profit).
In our mentoring we use a value proposition canvas to define design value for clients. Our June Lunchtime Learning session shows how we do this.
Your positioning has to answer the key question clients ask; “Why should I buy from you?”
That’s where ‘fit’ comes into it; identifying the right problem/solution/service/client fit.
According to Michael E Porter;
Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them.
Although fit among activities is generic and applies to many companies, the most valuable fit is strategy-specific because it enhances the uniqueness of your offer. There are three types of fit, which are not mutually exclusive:
1. First-order fit: Consistency ensures that the competitive advantages of activities cumulate and do not erode or cancel themselves out. Further, consistency makes it easier to communicate the strategy to clients, employees, and stakeholder. This also simplifies implementation through single-mindedness.
2. Second-order fit: Occurs when activities are reinforcing. Account service reinforces the message used in new business development which represents the ethos of the agency.
3. Third-order fit: Goes beyond activity reinforcement to what Porter calls ‘optimisation of effort’. Coordination and information exchange across activities to eliminate redundancy and minimise wasted effort are the most basic types of effort optimisation. Developing a sophisticated client management process will ensure that communication with the client happens with a minimum of fuss at the right time.
In all three types of fit, the whole matters more than any individual part. Competitive advantage stems from the activities of the entire system. The fit among activities substantially reduces cost or increases differentiation. Moreover, according to Porter, companies should think in terms of themes that pervade many activities (i.e., value add) instead of specifying individual strengths.
Understanding the design value canvas for your studio will help you develop a value proposition workshop for clients.
Contact me if you would like to learn more about becoming a the Business of design short course.
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Greg Branson
Greg’s passion is the research and development of methods that improve design management and the role of design in business.
Greg has developed The Design Business School to help owners manage their business better along with showing designers how to get more involved in the studio and develop their career path. Contact Greg.
