Selling Productivity


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published February 5, 2003

In the past decade, we have continually heard selling messages focused on the provision of business value. But what is business value? How do businesses capture value and thereby improve their profitability? Business value is provided through enabling businesses to increase their productivity.

Increases in productivity are derived by improving one of the three core business dimensions: Business Processes, Human Capital Utilization, and Financial Capital Utilization. To position a product or service with regards to its positive affect on one of these core business dimensions is to position the business value.

Discussing the ability to improve a client’s productivity can be done in all industries. Staff augmentation firms, project consulting firms, technical strategy firms, product firms, and nanotech firms alike can communicate their ability to provide value through increased productivity.

Staff augmentation firms’ ability to improve industry productivity is tightly linked with their role in providing market liquidity for the labor market. In contrast with direct hiring, staff augmentation firms are able to meet the requirements of providing the right skills at the right time and improve labor liquidity by reassigning these resources to another firm when the project is complete. Alternatively, in contrast with full service consulting firms, staff augmentation firms are able to provide the correct level of resources for the correct duration and free the more expensive resources of the consulting firm to provide higher value services. Improving the liquidity in the labor market is improving the productivity of human capital and its utilization. The business value of the improved productivity is shared by the client, the worker, and the staff augmentation firm.

Project consulting firms’ ability to improve productivity is through their project management and skilled laborers. Their core competency in providing laborers with an appropriate depth of knowledge is also their source of productivity. Managing both the business process of successfully completing the project on time and in budget as well as the human capital utilization issue of providing the correct resources at the right time, project consulting firms improve their client’s productivity along two core business dimensions.

Technical strategy firms, like business strategy firms, have the potential to enable their clients to improve their organizational processes, business decision making, and capital expenditures. As technical strategy firms work with clients to improve their technical architecture, they must implement processes to measure the effectiveness of the current technical architecture and the proposed new architecture. Furthermore, they work with clients to improve their capital utilization and make expenditures where they have the most impact. Improving business processes and capital utilization are the key methods by which technical strategy firms provide value and increase the productivity of their clients.

Technical product firms directly address their client’s productivity issues, often in all three dimensions, of business processes, human capital utilization, and financial capital utilization. Businesses don’t buy technology to incur their costs, but to solve problems and increase their productivity.

Even the output of Nanotech firms addresses the productivity issues of their clients. Nanotech tools firms increase human capital utilization, Nanotech materials firms increase financial capital utilization through improved products that sell at higher values, and Nanotech firms focused on biosciences hold the promise to improve both human capital and financial capital utilization through improved diagnostic testing methods and potentially improved therapeutic regimens.

Underlying a profitable firm is a productive firm. Business leaders know this truth and continually search for new ways to improve productivity. This includes our customers. Effective sales and marketing messages are built on determining the business dimension affected by the value offering and by constructing the selling message appropriately.

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.