The Alignment Principle: Closing the Loop
In this expanded edition, Kim and Mauborgne added Chapter 9 on alignment—a critical addition that addresses a major gap.
The Three Strategy Propositions That Must Align:
VALUE PROPOSITION
(What attracts buyers?)
↕
ALIGNMENT
↕
PROFIT PROPOSITION ←→ PEOPLE PROPOSITION
(Business model) (Motivating employees/partners)All three must pursue both differentiation AND low cost simultaneously.
Comic Relief Case Study:
Value Proposition:
- Eliminated guilt/pity; created “fun-draising” with Red Nose Day
- Low cost (£1 red noses) but differentiated (funny, community-based)
Profit Proposition:
- Eliminated expensive galas, grant writing, charity shops
- Community volunteers do bulk of fundraising (differentiated + low cost)
- Corporate partners cover operating costs (golden pound promise: 100% of donations to charity)
People Proposition:
- Volunteers: Fun, time-saving (one day every two years), become part of greater cause
- Celebrities/Corporations: Massive free publicity from media attention Comic Relief generates
- Result: All stakeholders win
Over 30 years later, no credible imitators. Why? The aligned system is hard to copy.
Where This Chapter Excels: It synthesizes everything into a coherent whole. Too many companies nail one or two propositions but miss the third, leading to failure or short-lived success.
Missing Element: While alignment is clearly essential, the book doesn’t adequately address what to do when propositions inherently conflict. What if the value proposition that attracts buyers requires resources that make the profit proposition impossible? Real guidance on navigating these trade-offs would strengthen this section.