I’ve been blogging and writing books about how to implement a value-based strategy in capital equipment companies for more than ten years. In my writing, I have strived to give you fat-free, how-to approaches to create and capture customer value.
I didn’t invent the value-based strategy concept. I just figured out how to apply it to capital equipment and then help others do the same. Along the way, I had a lot of help. This includes some great books that articulate the theory, rationale, and evidence behind a value-based strategy. Here are four of my favorite value strategy books.
by J Nicholas De Bonis, Eric Balinksi, and Phil Allen
The author’s message here is pretty straightforward. Customers buy value, not products or features. They buy from the company that provides the most value. The authors spend most of the book showing you how to implement a value-based strategy by these following five steps:
- Discover and quantify your customer’s wants and needs
- Commit to the most important things to your customer
- Create customer value
- Assess the organization’s ability to deliver that value
- Improve your value package to keep customers coming back
This book, originally published in 2002, was one of the first books I read on value-based strategy. It helped me put a name on, and some structure around what I knew worked and had been doing in equipment companies most of my career.
by George Day and Christine Moorman
This value strategy book is different from the others in this post. It is not a how-to book. It is a how-to-think book. Instead of steps-to-take formulas, the authors share four customer value imperatives and then take a deep dive into the organizational and leadership conditions necessary to respond to them. The authors put it this way in the beginning pages:
- These companies approach strategy from the outside in rather than from the inside out.
- They start with the market when they design their strategy, not the other way around.
- They use deep market insights to inform and guide their outside-in view.
- Their outside-in strategy focuses every part of the organization on achieving, sustaining, and profiting from customer value.
by W.Chan Kim and Renée Mauborgne
Kim and Mauborgne’s blue ocean metaphor elegantly captures their vision of expanding, competitor-free markets that innovative companies can navigate. Unlike “red oceans,” which are well explored and crowded with competitors, “blue oceans” represent “untapped market space” and the “opportunity for highly profitable growth.”
The author’s don’t frame their blue ocean strategy in the language of a value-based strategy. However, they should have. The idea of creating uncontested space by finding new, valuable customer problems to solve is the ultimate application of a value-based strategy. A company pursuing a value-based strategy puts as much focus on discovering new, hard, valuable problems to solve for its target customers as it does trying to create superior products.
Companies pursuing a value-based strategy, often find the create-uncontested-space concept the most difficult to operationalize. If you’ve had a similar experience, I recommend grabbing a copy of Blue Ocean Strategy.
by Thomas Nagle, John Hogan, and Joseph Zale.
This very comprehensive college text covers just about every aspect of pricing strategy, analysis, and implementation you can imagine. It’s particularly useful because it takes on pricing topics not covered by the other texts I’ve listed in this post. This includes pricing
- Policy implementation,
- Sensitivity measurement,
- Over a product’s lifecycle, and
- Law and ethics.
That’s not to take anything away from the author’s treatment of the core tenets of a value-based strategy. Chapter two on value creation is particularly well done. While this is not a breezy, feel-good, page-turner, you will not find a more thorough pricing manual.