The V-Zone

February 28, 2017

Paddy Barwise of London Business School and Thomas Barta formerly with McKinsey have just released an excellent new book “The 12 Powers of a Marketing Leader” focused on what it takes to lead marketing rather than just do it (Nike pun intended!).  

They summarize their advice to marketers under three main truths:

  1. Your power lies in the space where customer and company needs overlap (the “V-Zone”)
  2. Success requires mastering the 12 powers that form the focus of the book
  3. Leadership skills are not innate, they need to be acquired

Truth #1 is a nice articulation of the message that this blog has been preaching.  Marketing strategy is about the intersection between what creates value for customers, and where value can be captured by the business.  I have been using the moniker “marketing finance” to express this idea.  Marketing and Finance are siblings.  Combining their respective skills allows a company to formulate go-to-market strategies that are focused on delivering value to customers (Marketing) while doing so with a cost structure that enables the company to earn an attractive economic profit (Finance).

Barwise and Barta are right to call this the “V-Zone” (V for Value) as it is the zone in which the consumer and producer concepts of value are both met.  Consumers define value as the difference between the benefits offered and the price asked.  Producers define value as the difference between the revenue earned and the costs incurred.  Since the price paid by the consumer is the revenue of the producer, then the goal of business strategy is to maximize the difference between the benefits delivered to the consumer and the economic costs of delivering those benefits.  That is, indeed, the Value Zone.

Leave a Comment