Co-Create Value with Your Suppliers and Partners

Posted March 4, 2017 by Customer Value Foundation
Categories: Business & Management

Tags: , , , , ,

Purchasing professionals are focused on adding value to their companies, and so are sales and marketing professionals selling to them.

Both of these professionals, however, focus on price or cost as the major source of value creation for their companies. Sales professionals want to discuss their value proposition, but the discussion often deteriorates into a price one.

Assuming both purchasing and selling companies recognise that mutual value and partnership has to be created, could they not discuss and negotiate this? Could they not discuss how to co-create value? Could they not agree that value creation is what additional the supplier should give at what price?

Let’s start with generally what the thinking is:

I am adding value to the supplier by buying from it (help him fill out capacity, help him make money); how much can we get by outsourcing to the supplier versus making on our own (and we do not fully price our self-manufacture).

My role is to increase total profit (not just reducing total cost of acquisition). Shouldn’t I look at the total value added? Shouldn’t the supplier do this? Does the supplier understand what creates value for the buyer?

Both these negotiating parties must understand that there has to be a sharing of value, and a co-creation of value.

How do you go about doing this? A Value Co-Creation Model is shown below

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The Financial and non-Financial benefits are shown below:

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The Financial benefit chart shows higher profits due to better collaboration and fewer delays and mistakes, sharing of profits (reduced price to start with profit incentives), lower costs for changes, spares, inventories etc.

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The Non-Financial benefits include happier employees/bosses, reduced time to market, happier customers, better acceptance and so forth.

Isn’t this a better model than just beating down the supplier on price, and trying to commoditise his offering? Build your Value chain!

Go from a supplier evaluation to a partnership collaboration.

Its just traditional thinking that prevents this shift in organizational behaviour.

If you cannot do this, then maybe an artificial intelligence system to buy and sell based on value (benefits –price) should replace the human purchasing person, as co-created value and collaborations are not required and price is king!

Customer Value Foundation are experts at co-creation of value: Mahajan@customervaluefoundation.com

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

 

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

CustomerThink Names 12 Global Thought Leaders as Advisers for 2017

Posted January 25, 2017 by Customer Value Foundation
Categories: Business & Management

CustomerThink, the world’s largest online community focused on Customer-centric Business, has named 12 global thought leaders as Advisors.

Advisors write columns exclusively for CustomerThink on topics critical to the editorial strategy, including analytics, customer experience, customer service, employee engagement, innovation, marketing, and value creation.

These experts are exceptionally well qualified to help executives understand how to create a successful customer-centric business in today’s challenging market conditions, where it’s essential to deliver differentiating experiences that create value for customers and the business. CustomerThink founder/CEO Bo Thompson says, “My sincere thanks to the Advisors for contributing their insights to help business leaders understand how to succeed with customer-centric business management.”

One of CustomerThink’s top-ranked authors and a founding Advisor in 2014 is Michael Lowenstein, Thought Leadership Principal at Beyond Philosophy. According to Dr. Lowenstein, who will be writing about the connection between employee and customer experience in 2017, “Perspectives from CustomerThink Advisors are a respected and highly authoritative resource for everyone involved in Customer Experience, helping organizations build more stakeholder-centric cultures. I am pleased to be among these contributors, where we can share insights and engage with the CustomerThink community.”

The complete list of Advisors, with their 2017 column topics, is as follows:

Ian Golding, Customer Experience Consultancy Ltd. (United Kingdom)
“Building Skills for Customer Experience Leadership”

  • Lynn Hunsaker, ClearAction (United States)
    “Keys to Customer-Centered Business”
  • Michael Lowenstein, Beyond Philosophy (United States)
    “Connecting Employee and Customer Experience”
  • Gautam Mahajan, Customer Value Foundation (India)
    “Customer Value — Step-By-Step Guide”
  • Nancy Porte, Verint (United States)
    “A CX Practitioner’s Playbook”
  • Bill Price, Antuit (United States)
    “Applying Analytics to Improve Customer Experience”
  • Ernan Roman, ERDM (United States)
    “Innovation in Personalization and CX”
  • Chris Ryan, Fusion Marketing Partners (United States)
    “Optimizing the B2B Lead-to-Revenue Process”
  • Krista Sheridan, TELUS (Canada)
    “How to Build a Culture that Empowers Your CX Vision”
  • Tony Ulwick, Strategyn (United States)
    “How to Innovate Using Jobs-To-Be-Done Theory”
  • Jeremy Watkin, FCR (United States)
    “Service Excellence in the Contact Center — People and Technology”
  • Thomas Wieberneit, aheadCRM/Epikonic (New Zealand)
    “Artificial Intelligence Trends and Applications”

A new Advisor for 2017, Christopher Ryan, CEO of Fusion Marketing Partners, will focus on how to optimize the B2B lead-to-revenue process. Mr. Ryan says that “CustomerThink should be commended for offering this terrific resource for businesses. I am honored to be part of a group of thought leaders that are committed to helping organizations optimize the customer-centric disciplines of CX, marketing, customer service, and more. The strategic and tactical advice we provide can help companies meet their important 2017 objectives.”

For 2017, more business practitioners will be sharing their insights based on real-world experience. For example, Jeremy Watkin, the Head of Quality at contact center outsource firm FCR, will be writing about how to deliver excellent service experiences in the contact center. “We have a unique opportunity and challenge as customer service leaders to balance the needs of our agents and customers with those of the business,” says Mr. Watkin. “I aim to explore this balance and highlight ways in which better customer service, along with smart use of technology, drives success.”

For more details, please visit the Advisors home page at http://customerthink.com/advisors

 

Narender Kumar,
Customer Value Foundation and Inter-Link India

Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 9810060368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

The Next Big Leap: From Total Quality to Total Customer Value Management

Posted January 25, 2017 by Customer Value Foundation
Categories: Business & Management

The Quality Revolution was meant to be customer focused, instead became process centric and one of record keepers. Nonetheless, Total Customer Value Management can learn from the Quality movement. There is much to learn.

The Value of Quality

  • Quality has excellent ideas, discipline and methodology
  • Huge resource available, great and dedicated people

Question: How to use the Quality resource and Quality ideas and Quality thought processes for Customers?

  • Advance from a Quality Strategy to a Customer Strategy
  • Use Quality Circles concept to form Customer Circles
  • Go beyond Zero Defects to Zero Complaints
  • Institute Systemic, Mind-set and Attitude changes in Customer thinking

How to Leverage Quality for Customer Value

  • Going beyond:The role of executives is to create value for employees and Customers and thereby for shareholders.
  • Creating Customer Value goes far beyond experience and quality and leads to increased loyalty and increased market share.
  • Measuring Value allows you to create more value effectively.
  • Quality People should become Value Creators

To achieve this, Quality must create value for Customers and Employees

People who led the Quality revolution could easily lead the Customer Revolution. Are you ready to re-deploy your Quality resource for Customers today?

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

The Negative Experience can be Destructive for you: Don’t just focus on the positive experience!!

Posted January 25, 2017 by Customer Value Foundation
Categories: Business & Management

Most companies work on giving a positive experience to Customers: Most of the time, not all of the time.

The positive experience works when everything goes right. Your systems and your digital interaction work well. The order is placed.

The problems really start when something goes awry. The wrong item arrives, or the item gets delayed. Then what? Most companies fail here. Just as Amazon did. I wrote an article on LinkedIn on my negative experience: https://goo.gl/5h2HuN where the wrong ink cartridge was sent by Amazon (not once but twice) and I could not use the printer. Amazon had no system to correct the wrong, other than, return it and re-order. The people I talked to hid behind “this is our policy” to hell with the Customer statements!

I am sure if I had talked to the right person at Amazon, they would have righted the wrong, right away and got me the ink replacement pronto.

But I am not sure they would have corrected the process to change the system, the policy and the blasé attitude.

Negative experience….the seller makes a mistake. He does not try to rectify it. He wants you to do many things (Take photographs, re-order, repack the product etc.) all a unnecessary Customer journey and Customer effort one had not bargained for!

Companies need to work on preventing negative experiences, or at the very least turn them into positive ones! Do not destroy value! Else face deterioration of business.

Lets get to zero complaints and avoid these problems for the Customer.

Have you ever faced such problems with suppliers?

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

 

Amazing Amazon slipups: Lessons to be learnt

Posted January 25, 2017 by Customer Value Foundation
Categories: Business & Management

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Amazon has an amazing name for great service and being customeric. So much so that Shep Hyken lauded them. And I have been an admirer, till recently. They had many slipups in Amazon India, and there is a lesson to be learnt from these slipups. Hope Amazon and others will take heed and move closer to zero complaints.

Let me tell you of the problems I have had with Amazon (are they listening? Are they reachable?)

  1. Ordered HP 934XL printer ink on the 31st December, 2016. What I received was a 934 setup ink on 6th January, 2017, which has less ink than the normal ink which has less than the XL version I had ordered. Sent an email, complaining about it. Answer was your order is cancelled, and how do you want the refund. Refund will be given after pickup of the item. The pick-up receipt also says ‘picked up 934XL’. So on record, except for my saying I got a 934 setup there is no proof. There is no way to get Amazon to understand they shipped the wrong item. Also HP tells me one cannot use the 914 setup cartridge!

This is an update made on 11 January 2017. I had re-ordered on the 6th January, 2017 and again the set up ink arrived. I checked with HP, it will not work (my printer gave a message, setup ink cannot be used). Called Amazon, and was told their policy was I had to re-order. They cannot replace the wrong product. They have my money from the previous two orders (I am awaiting refunds) and expect me to pay again for the third order

This update on January 12, 2017: After last evening’s horrible experience, I ordered a cartridge from HP. It arrived at 10 am, no hassles, no mistakes!

  1. Ordered a Samsung phone, paid for it, and 3 days later was told not available and order being cancelled. Refund took 10 days. I had to order from a competitor at a higher price than what the competitor had posted 3 days earlier,
  2. I placed an order for three types of fire extinguishers. One type was delivered. The second type was promised a few days later (and it arrived fine). On the delivery date of the third one, I got a call from someone (not Amazon, maybe third party logistics partner. He said we have a better product, can we ship that. I said, no I want the brand (a known brand) I ordered. I got another call the next day, and same conversation. Then I find Amazon cancels the order, claiming I had cancelled it. Refunds take forever.
  3. I placed an order for a phone. It arrived and I was not home, but my wife was. Amazon would not deliver it to her. She said I would be home in 5 minutes (which was true). He would not wait and said he would come back. When, he did not know, maybe tomorrow. I had no way of finding out or tracking the last mile of the delivery.

Did Amazon expect me to be home the whole day awaiting the order? Or should they have a system of letting me know approximate time of delivery

The message is simple:

  1. You cannot get too big and too automated to ignore the customer’s problems.
  2. You cannot have a one way communication system, which prevents the customer from communicating with you. Also listen to the Customer
  3. And when you have a two way communicating system you cannot allow the customer only to answer from drop down menus where his/her problem does not exist or he cannot explain it.

Amazon and others have to learn from this, or else they will go downhill. Or as Donough Obrien wrote: Banana Skins: The Secrets of the Slip-ups and Screw-ups That Brought the Famous Down to Earth.

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Meet the Author

Posted January 9, 2017 by Customer Value Foundation
Categories: Business & Management

Meet the Author of “Value Creation: The Definitive Guide for Business Leaders”, Gautam Mahajan on 12th January, 5 PM at Delhi Literary Festival, Pragati Maidan, Hall No. 10 & 11, New Delhi.

mahajan_flyer

 

From Value Grabbing to Value Creating : Lesson for Leaders

Posted December 25, 2016 by Customer Value Foundation
Categories: Business & Management

Sage’s Whitepaper:

Delivering happiness, giftivism, and conscious capitalism all have common messages, one of which is “give forward.”

That is, you Create Value for someone, often without thinking of a reward. When companies start to understand that they have a greater purpose than just to make profits, they move from being Value grabbers to becoming Value Creators. They realize that the company’s purpose is to give to society and the world and, in the process, to employees, Customers, partners, and unions. In doing this, they are Creating Value for the stakeholders, and Customers in turn will help the company Create Value.

Imagine doing something out of the ordinary for the Customer, such as creating unexpected delight. The returns may not be immediate. In the long term the returns will
become visible.

I remember when I came back to India after living in the US for around 20 years; I was deeply capitalistic. A good friend, an industrialist asked me for some ongoing help, and I suggested we first negotiate what I would get paid. Everything was measured in dollars and cents.

A few weeks later, I went to meet a famous lawyer about helping me with a case. He said he would. I asked him what his fees would be. He got angry. He said I know your family and your grandfather who had attended my wedding and I cannot take money from you.

I walked out quite dazed and chastened. I appreciated there was something called lihaz (respect and consideration for others, having a concern, and being considerate) in the Indian world. The lawyer had given without any expectation from me. He got in me an admirer and a well-wisher in return.

And I learnt also to give forward, without expecting something in return. It is a satisfying experience.

This lesson is easier for individuals to accept. But when you make a corporate inanimate, it can only think in dollars and cents. Corporates are humans hiding behind the anonymity of the company, humans trying to be tough, and only concerned about profits. This is what happens when you convert from being just ordinary people to becoming company people.

Harvard Business School’s Professor, Brian J. Hall, calls this paying forward. Pavi Mehta in Giftivism echoes the same and gives wonderful examples of giving without expecting returns  or any-thing in return.9 Brian Hall calls this Value Creating behavior and he goes on to say this is a requisite for successful leadership. Winning leaders have a Value Creation mind-set where they do good turns on behalf of the organization without
expecting any returns.

Value Creation by definition increases Value and there is more to go around and share. The pie gets smaller or is shared by fewer when leaders are Value grabbers, who are trying to
maintain their place in the organization by any means.

Value Creators also create happiness, and they share credit and profits. They tend to be team players and work for the team.

Value grabbers tend to be Value destroyers in the long run. I remember when I worked with the University of Wisconsin to set up a campus in India, most Indian professors at Wisconsin were motivated by what they could get out of a campus in India, rather than the fact that an India campus would Create Value all around, for the State of Wisconsin, for the university and its stake-holders, and for India and Indian youth. By being Value seekers, they played a negative role.

Such people tend to be secretive, they get a sense of security by keeping their knowledge to themselves and not sharing it, because they fear they will lose out or others will become smarter than them. They destroy Value. And those who share knowledge encourage people to grow, and act as catalysts; those who teach people how to apply knowledge and Create Value are winners.

And this is true in negotiations. The “I must win at any cost” think-ing, the thought of having it all and not leaving anything on the table are Value grabbing syndromes. Many purchasing people are either taught to win or their ego wants them to extract all
they can from suppliers. When you ask them this is true, they will say, oh, no! We believe in a win-win with our suppliers. Carlos Cordon of IMD says this is often win-win for one side (the purchasing guy winning twice).

Purchasing people often do not try to create Value for their suppliers. The Value starved suppliers will seek to take revenge whenever they can. As an example, Nippon Steel
starved Nissan during a steel shortage, causing huge losses.

I had a boss, who taught me the art of reverse negotiation. Negotiate hard but then give something away, that the supplier will remember.

I recall negotiating an annual plastic resin contract for 33.0 cents a pound when the going rate was 32.5 cents. My reasoning included that we needed the supplier’s un-restrained support for new products, specification changes when required, and potential price increases. My purchasing director (who had negotiated the supplier down to 32.5 cents a pound) was aghast. But a few months later when the prices had gone up to 60 cents a pound, while our competition was forced to pay higher prices, we enjoyed lower prices for a period of time, a great competitive advantage.

Conscious capitalism suggests that companies should make the world a better place. Blatant denuding of the earth of its resources for short-term gain (like the illegal mining in the State of Haryana, in India; or the cheating in getting telecom licenses in India by Minister Raja and the companies he favored, or in getting illegal advantage in coal mining leases; or in the mortgage crisis in the US, born of greed) is Value and resource grabbing.
Large-scale Value destruction occurs as a result. Conscious companies or conscious executives will not participate in Value grabbing.

Pavi Mehta tells of her family charitable Arvind Eye Foundation, and eye care hospitals, where every patient is treated equal. His or her ability to pay has no bearing on the treatment. Everyone pays what they want to (not what they can). And those that pay more
than the treatment cost fund those who cannot pay. As an aside, Arvind’s cost structure is very low, as the volumes are high, and the cost of consumables and equipment is low. An eye doctor conducts a cataract procedure every three minutes in an assembly line
process.

Pavi talks about restaurants where this happens. Your meal is paid for and whatever you want to give for the meal is used to feed someone else. This is the paying forward concept.

Paul Polman of Unilever states that companies with a purpose beyond profits tend to create more shareholder wealth in the long run and have less fluctuation in share prices in the short run. Firms of endearment, a term coined by Raj Sisodia, David Wolfe, and Jagdish Sheth, that tend to have a purpose and practice conscious capitalism are shown to have 14 times greater returns than S&P companies, and 6.4 times the returns of good to great companies in 15 years.

McKinsey in “Redefining Capitalism” (written by Eric Beinhocker and Nick Hanauer) argues that capitalism has served the world well and has led to growth. However, CEOs and investors are at a crossroad today. Should the role of the business be to make money or advance the good for society? They conclude, “the essential role of capitalism is not allocation—it is Creation. Prosperity in a society is the accumulation of solutions to human problems.” Ultimately, the measure of the wealth of a society is the range of human problems it has solved and how available it has made those solutions to its people.

Thus, argues, McKinsey, instead of celebrating wealth, we should celebrate innovative solutions to human problems. I would contend that if done well, creation of wealth is another result of doing the right things for society and other stakeholders. Shareholder Value and profits are a result and a measure of how leaders work, not a goal. Such Value Creating leaders create happiness, not just profits, and are greatly successful.

Value Creation Pointers

• Value Creation by definition increases Value and there is more to go around and share.
• Delivering happiness, giftivism, and conscious capitalism all have common messages, one of which is “give forward” and, thus, Create Value.
• Giving forward and Value Creation is easier for individuals to accept. But corporates can also do this if they remember they are human and have employees who are humans.
• Winning leaders have a Value Creation mind-set.
• Value Creation by definition increases Value and there is more to go around and share.
• When leaders are Value grabbers, overall Value is decreased.
• Conscious capitalism and firms of endearment create higher shareholder returns.
• According to McKinsey, “the essential role of capitalism is not allocation—it is Creation. Prosperity in a society is the accumulation of solutions to human problems.”

 

About the Author

Gautam Mahajan is an internationally acclaimed expert in strategy, general management (including Customer Value), and globalization. He is President of Customer Value Foundation and Inter-Link Services Private Limited.

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net, Twitter @ValueCreationJ