Are Value Creation and Destruction Two Sides of the Same Coin

Value Destruction: Non Value Added Tasks Destroy Value

Companies have many non-value added tasks, processes, events, wastage that are non-value adding. These include starting meetings late (wasting time of many participants waiting for the meeting to start;) reading unnecessary e-mails; correcting mistakes (especially for Customers and in production or in tax reporting); unnecessary travel which could be replaced by calls or video calls; 20 people picking up bosses at airports; not doing legal or moral work.

Non-value added tasks are actually value destructing tasks. A whole discipline has been brought into play where value destroyed has become important. This in of itself is an important discipline because it looks at net value which is value created minus value destroyed minus non-value added activities.

Value co-destruction occurs mostly when there is a misuse of resources, either incorrectly, inaptly or unpredictably. This happens when the available resources are used, say in an interaction. Companies can misuse their processes to create more value for themselves, thereby destroying value for others such as employees and customers. This is planned misuse. Accidental misuse can also be disastrous for customers and destroy value for them. The reader has examples of what has happened in his eco-system Corruption destroys value for some while adding value for others.

Value co-creation has implied that both sides get benefit and that it is mutually acceptable. I get what I deserved. Value is destroyed when I feel I got less than I deserved or if something is unfair.

Or the value co-creation was one sided.

And then there is the question whether value can be co-destroyed. It can, as I explained earlier.

The definition of value is benefits minus cost. Others call this benefits minus sacrifice. Whatever you sacrifice could be construed as value destruction…Ouch, this takes too much time or effort, or they make me feel like a fool.

However, very few researchers have looked into the possible downsides of value co-destruction. The risk of losing customers this way is highly likely, as 40% of customers who had a bad experience will discontinue doing business at the offending firm. To prevent nearly half of consumers from churning after a bad experience, it is therefore crucial that both parties communicate their expectations extensively toward another so value can be co-created instead of destructed.

For Customers

Necessary work is essential for, vital to, indispensable to, important to, crucial to, needed by, compulsory required by or requisite for the Customer

Relevant work is pertinent to, applicable or germane to, or appropriate to the Customer. This is work that can be eliminated without deterioration of present service or product

What work is the Customer willing to pay for?

Every business enterprise has at least eight stakeholder groups, whose concerns must be considered when analysing business processes: customers, suppliers and partners, managers, employees, creditors, investors, governments and community groups

Customer Value added of task: (Value to Customer after the task) MINUS(Value to the Customer prior to the task)

Who is the Customer? Are some classes of work for internal customers necessary? If such work is free now, would someone pay for these services or work?

It is the final bill paying Customer at the end of the entire value chain who determines if the work/task adds value

Similarly, for Businesses

Necessary work is essential for, vital to, indispensable to, important to, crucial to, needed by, compulsory required or requisite for the Business

Relevant work is pertinent to, applicable or germane to, or appropriate to the B. This is work that can be eliminated without deterioration of present service or product

Let us list some of these tasks:

Customer Business Tasks List

The more companies can align their priorities with the those of the Customers and make the tasks that are relevant and necessary for Customers, that is make their business priorities the one’s important for the Customers the more successful they will be.

Customer anxiety, keeping them waiting, ignoring them, Unnecessary contact, annoying customers, poor quality all are a wasted effort for the company and the Customer and should be cut out. These are relevant to the customer as they are exposed to these all the time.

In the example, if the company was to take Customer Value, Customer experience and effort, customer redressal seriously and move them into the top right hand quadrant, then customer needs and company needs would start to coincide.

This is shown in the chart below.

GM Tasks Matrix BW

Gautam Mahajan

President, Customer Value Foundation and Inter-Link India

Founding Editor of Journal of Creating Value jcv.sagepub.com

New Delhi 110065 +91 9810060368
mahajangautam.mahajan@gmail.comcustomervaluefoundation.com 
www.customervaluefoundation.com  

Twitter @ValueCreationJ  Blogs: https://customervaluefoundation.wordpress.com/

Author of Value CreationTotal Customer Value ManagementCustomer Value Investment

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.

 

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