Why innovative value propositions are killed by misguided value delivery implementation

Execution – Implementation – Delivering — These are table stakes today. If you can’t do them you don’t get a seat at the table, much less a chance to play the game. But, unfortunately, all too often tactical implementation decisions are made by tactical “experts” without proper consideration of the strategy. And one bad tactical decision can kill the entire business by not living up to the value proposition.

Take for example a small company named NakedWine.com that created a potential death trap for its business by implementing one crucial execution mis-step.

The Naked Wine value proposition is simple. They will find wines you never heard of and skip the costs of distributors and retailers by matching the customer and winemaker. Customers ostensibly get wines far cheaper because the winemaker’s cost of marketing and sales are avoided. Decent value proposition for both the customer, and the manufacturer.

The Naked Wine strategy is to convince people that the Naked Wine wines will be good, month after month. The Naked Wine brand is crucial, as customer trust is now not in the hands of the winemaker, nor wine aficionados that rate known wines on a point scale, or even the local retail shop owner or employee. Customers must trust Naked Wine to put a good product in their hands. Customers who most likely know little or nothing about wines. Naked Wines wants customers to trust them so much they will buy the company’s boxed selections month after month, delivered to their home. These customers likely don’t know what they are getting, and don’t much care, because they trust Naked Wine to give them a pleasurable product at a price point which makes them happy.

When implementing this value proposition Naked Wines doesn’t target wine enthusiasts, because those customers already have their wine sources, and they are varietal, geography and brand picky. Instead Naked Wine pays on-line retailers like Saks Off 5th, and others, to put flyers into customer packages of semi-luxury goods. Naked Wine provides deep discounts for initial purchases to entice someone to take that first purchase risk. Naked Wine incurs big costs finding potential buyers, and hooking them to make an initial purchase so they can bring them into the brand-building cocoon. Naked Wine wants to build a brand which keeps the allure of good wine, a sophisticated idea, for a customer who would rather trust Naked Wine than become a wine expert. Or experiment with a local retailer.

But, Naked Wines blew the whole strategy with one simple execution mistake.

Not everyone lives where they can accept a case of wine, due to weather. As northern Californians, maybe Naked Wine leaders just forget how cold it is in Minneapolis, Chicago, Buffalo and Boston. Or how hot it is in Tucson, Phoenix, Houston, Palm Springs and Las Vegas. In these climates a case of wine left on a truck for a day – or 2 if the first delivery is missed – spells the end of that wine. Ruined by the temperature. Especially heat, as everyone who drinks beer or wine knows that a couple of hours at 90 degrees can kill those products completely.

The only time the customer finally connects with Naked Wine is when that wine enters the house, and over the lips. But that step, that final step of getting the perishable wine to the customer safely, in good quality, and aligned with customer expectations was not viewed as part of the brand-building strategy. Instead, leadership decided at this step Naked Wines should instead focus on costs. They would view delivery as completely generic – divorced from the brand-building effort. They would use the low–cost vendor, regardless of the service provided.

Naked Wine decided to use Fedex Ground, even though Fedex has a terrible package tracking system. Fedex is unwilling to make sure (say, by drivers using a cell phone) that customers will be there to receive a shipment. The driver rings a bell – no answer and he’s on the run in seconds to make sure he’s meeting Fedex efficiency standards, even if the customer was delayed to the door by a phone call or other issue. When the customer requests Fedex send the driver back around again, Fedex is unwilling to attempt a second delivery within short time, or even any time that same day, after delivery fails. If a customer calls about a missed delivery, Fedex is unwilling to route a failed delivery to a temperature local Fedex Office location for customer pick-up. Or to tell the customer where they can meet the driver along his route to accept delivery. Despite a range of good options, the Naked Wine product is forced to sit on that Fedex truck, bouncing around all day in the heat, or cold, being ruined. Fedex uses its lowest cost approach to delivery to offer the lowest cost bid, regardless of the impact on the product and/or customer experience, and Naked Wine didn’t think about the impact choosing that bid would have on its brand building.

Brand Building at Every Step

Simply put, in addition to flyers, advertising and product discounts, Naked Wine should have followed through on its brand building strategy at every step. It must source wines its customers will enjoy. And it must deliver that perishable product in a way that builds the brand – not put it at risk. For example, Naked Wine should screen all orders for delivery location, in order to make sure there are no delivery concerns. If there are, someone at Naked Wine should contact the customer to discuss with them issues related to shipping, such as temperature. If it is to be too hot or cold, they could highly recommend using a temperature controlled pick-up location so as not to put the product at risk. And they should build in fail-safe’s with the shipping company to handle delivery problems. That is implementing a brand building strategy all the way from value-proposition to delivery.

Leaders Execute Plans

Too often leaders will work hard on a strategy, and create a good value proposition. But then, for some unknown reason, they turn over “execution” to people who don’t really understand the strategy. Worse, leadership often makes the egregious error of pushing those who create the value delivery system to largely to focus on costs, or other wrong metrics, with little concern for the value proposition and strategy. The result is a great idea that goes off the rails. Because the value delivery system simply does not live up to expectations of the value proposition.