Rob Bernshteyn is the CEO and president of Coupa and author of the book “Value as a Service.” The book focuses on what value as a service means and how businesses can prepare for the coming disruption. Rob is a guest lecturer at Harvard and Stanford business schools and a frequent contributor to Forbes and Fortune. He’s also a guest commentator on major news programs.
Kelly » What is Value as a Service?
Rob » In the world today, we’re seeing a conversion from product-based industries to service-based industries, particularly in the world of technology. For example, a product used to be delivered on a CD and you’d install it on site. Now we’re seeing cloud-based solutions being offered via the internet and being offered as a service. Customers actually subscribe to the services, pay on a monthly or annual basis and get some sort of output from that. Value as a Service is the next phase of that evolution. What is the actual value that a customer receives from that service, rather than focusing on the delivery model? When we look at other industries, in particular, the consumer goods industries or just B-to-C industries we see the value orientation already happening. Moving that same dynamic into the B-to-B world is what this book is about.
Kelly » Value, of course, is very subjective. How do you satisfy all of your customers?
Rob » You’re not in the business of satisfying anybody. You really ought to be in the business of driving real measurable results for key individuals. But you’re exactly right. Some customers may be looking for speed, or there may be a cluster that are looking for efficiency or lower cost. Being able to clearly articulate the value proposition for your target audience and then driving your value proposition against that is the primary challenge we see in a lot of different markets. In the B-to-B world, it means actually partnering with your customers, sitting down and articulating together what the value drivers would be for a successful outcome.
If you think about the way companies buy, let’s say, a piece of enterprise software technology, they’re focused on the how. They write 100-page RFPs of the different ways they think they need to be served. But they ought to be focused on the “what.” What is the outcome they are actually seeking from that technology provider? It’s the technology providers job to best figure out how to deliver that outcome, or value. That’s the evolution that’s occurring. Customers should be more relaxed about the “how,” but they need to clearly articulate the “what,” or the outcome, they’re seeking. That puts us in a position of articulating our value proposition in clear measurable ways the customer would be interested in embracing.
Kelly » You stress that it’s not enough to define the value proposition. You also have to quantify it. Why?
Rob » Math is an interesting language. It’s unquestionable. We use math to quantify something, and we have to quantify some sort of business driver as an outcome for someone else. Speed can be quantified. Savings on gas can be quantified. Time that it takes to go from one place to another can be quantified. Time not wasted on maintenance can be quantified. Once you quantify things, you are able to measure them and you are able to understand improvements or lack of improvements. Something that’s very qualitative begs for quantification; otherwise, it’s very subjective and there’s room for ineffiency. Squeezing out that inefficiency early on can give provide focus when you partner with your customers.
Kelly » What is the ultimate impact of value as a service?
Rob » Globalization is happening, and it’s happened over the last few decades at a very rapid pace. If you have an interesting innovative product or service, you have a marketplace of billions of people around the world who can get access through the internet or other means. The next question is how operationally efficient can you be at actually delivering it, and how can you deliver it in a way that drives measurable value? We’re going to see much improvement in operational efficiency in the next decade and a focus on value outcomes like we’ve never seen before. That’s going to be very disruptive. And that’s something that we simply have to embrace rather than fight because if we fight it, we’ll be left behind.