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Sep17
Maybe if more mortgage brokers and lenders had real value propositions, brands like Lehman and AIG wouldn't be mud today

You can read about the consequences of greed elsewhere.  Here, we focus on the value of a value proposition.  Too bad more banks didn't take their value propositions more seriously during the formation of the housing bubble.  If they did, no bubble would have formed.  This assumes, of course, that they even knew what a value proposition is in the first place. Many did not, and do not to this day. 

What is a value proposition?  It's a basic organizing principle for your business.  It's made up of three elements: knowing what benefit your customers place the most value upon, pricing it accordingly and minimizing the cost of adopting your product associated with this high-value benefit.  Let's take a lending bank.  Most customers put highest value on knowing their money is secure.  Banks are supposed to "price" their loans in such a way as to ensure that their borrowers can pay them off, thereby honoring the high value their other customers place on the benefit of security.  Not understanding what a real value proposition is would lead to bad loans.  Which is exactly what's led to the wreckage we're untangling today and the damage its done to some venerable brand names. 

 

It's all about the value proposition and it's never been more important to have one. But first, you must understand what it is.  


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