Archive for the ‘Business & Management’ category

Look at Value Destruction to Create More Value

April 4, 2019

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‘Every act of creation is at first an act of destruction.’ Pablo Picasso

Many companies analyse value destruction after the fact. Very few try to assess value destruction potential of a new strategy, a new product, a new technology or even a new hire, when they are looking at these. In the literature, the bulk of the papers are on analysing value destruction after the fact.

1.Problem from a diff angle

The exception is Dunn et al who discusses strategic risk to be studied up front. Furquhar suggests selective demarketing to get rid of non-attractive customers. Stokes and Mahajan discuss value creation and destruction in general terms. Were organizations and the managers within them do so, they would be able to avoid or reduce the value destruction potential and in fact create much more value. Many companies learn their lessons or become smarter from analysing value destruction that has already happened. This is the normal way companies have viewed value destruction.

In this article we are suggesting a hardly used technique: using, exploring, understanding and evaluating value destruction possibilities to create more value. What we suggest is that during and after a strategy session, or a review of a new project or a new product or service introduction, one should hold a session asking: In what way will this strategy, project or product or service destroy value for me, my company, my customer, my employees, my partners, my society etc. or what is the potential for value destruction to be there, even if the destruction is a non-optimal solution.

The aim is to carry out an in-depth analysis of possible value destruction. Understanding the causes of value destruction or possible value destruction, one would then analyse how one could avoid such value destruction and actually create more value. Looking at solutions that are generally accepted and asking how they might destroy value can help us figure out better and more value creating solutions. As an example, Sanghvi et al, 2107 suggests that just reducing value destructing waste is not enough.

An Example: Strategy

Shareholder value destruction over 10 years showed that strategic risks were a major cause of shareholder value destruction. This is because the strategic team does not look at risk and relegates this task to a risk evaluation team that does not have the ‘clout’ to change thinking. We would like to expand this value destruction thinking to beyond risk and shareholder loss, but also to other potential problems. The example of smart lighting highlights this and is discussed later.

Fabode shows how strategic digitisation (his focus is on virtual energy companies) destroyed value for GE, as virtual companies reduced demand for GE’s generating equipment.

Atasoy found that strategically designed digital goods get lower price than physical goods, and warns about digitisation.

Willigoose discusses Value Illness which prevents citizens from following the right things. Value starvation can also cause similar problems.

Liedtke states that value can be destroyed in mergers and acquisitions, even though moves are strategically thought through.

Along with pure strategic thinking, we have also to look at operational risk, compliance risk, political, operational and regulatory risk. We are suggesting that this should not be done in a cursory fashion and just stating these risks have been looked at is not good enough, but to see what the company’s leaders can do to mitigate these risks, reduce value destruction potential and increase value creation potential. Chris Dann of Price Waterhouse uses strategic risk to reduce strategic value destruction and create better value

The point is such value destruction should be foreseen and tackled in a serious manner.
One such thinking should be the impact of competitive disruptive moves. Companies should therefore embed value destruction and risk, operational and regulatory and political risk in their thinking. How could these happen? What can we do to prevent these from happening? In what way should our strategy change to reduce value destruction?

As an example, in earlier decades, we had business development people who were rewarded for bringing in new businesses. Many of them never worked on the new business they brought in, but were rewarded and moved on. I asked CEOs whether they rewarded business development executives for keeping them out of bad businesses. Most had not thought of this value destruction potential.

An Example: Smart Cities

1. Smart lighting: It is vastly understood and appreciated that smart lighting is the accepted approach for smart cities. While we agree, we also wish to examine what this means in terms of physical infrastructure:
The typical way of using smart lighting is to put poles on roads, and have lights that turn on when needed. This is all value creating.
What is potentially value destructing is:

a. Physical infrastructure is used less than 10% of the time. The cost of poles and the space required can be high. This is value destruction. So if we assume there is potential value destruction what can we do? We could think of replacing pole base lights by drones. Conceptually 50 poles could be replaced by a smaller number of drones.

The next thought is to look at using flying phones that can hover above the person walking, supplemented by fewer drones. Flying phones would belong to citizens, and therefore a smaller drain on the exchequer.

2. Physical transportation: Smart cities imply improvement of wellbeing of (or creating value for) citizens. Just giving sensor based information is not enough. Value is destroyed because people have to live sometimes far from their place of work or schools or airports (and other transport hubs). One common example is moving from point A to point B in normal times and in times when tourists arrive in large numbers. The normal ride could be 20 minutes, but in the tourist season it could take as long as 2 hours. Perhaps a system of driverless cars and networked transportation or a ropeway is the added value over just better information. For example, the use of tubular transport as suggested by Elon Musk is important.

3. People skilling: The next potential for value destruction in smart cities is that we do not have “smart” workers. Most current workers are untrained for this. This is a form of value destruction for the smart cities program and so these people should be skilled. For example drone handling skills, driverless car management skills etc. are needed. Next sensor handling, sensor troubleshooting may be needed. Therefore skilling academies are needed. Responsive urban governance should result in smarter value creation.

4. Self-healing and self-powering systems: Sensors and other devices can detect cracks or defects in concrete structures or in offices/homes.. An analysis of this will reveal that this requires intervention by humans to repair these defects. Perhaps, if we could use of bio-concrete to selfheal cracks in concrete we could create even more value. Lastly, biomaterials have a great future. These include self-healing polymer building materials, graphene and the like and buildings that can change with temperature, or self-adjusting buildings.

Further analysis may show that energy loss or where energy is not easily available, self-powering systems use could add more value, and reduce value destruction due to power loss. For example solar power generation through solar layers on windows could add value.

There are other examples we can focus on:

Value destruction due to insolvency. The Indian Government brought in the Insolvency and Bankruptcy code 2016 to make insolvency easier. An example of possible value destruction is given below:

The potential for value destruction could occur if all the claimants were allowed to decide on the future of the company. Assured claimants would want their money fast and not worry about the value destruction to the company’s net value. To avoid value destruction of this sort, strategically only those claimants who have a significant stake and risk in the well-being of the company should then be allowed to decide the fate of the company. Thus people who design the law from a value creation (or least value destruction point of view) would have designed the law differently (Datta, 2016).

Value destruction due to short-term focus: It is well-known that short-term results and its reporting is a cause for value destruction in firms. A look at the value destruction potential would point out that companies must adopt a long- term view of their business, but the focus on stock prices and investor short term gains obviates that. CFOs are encouraged to gain or manipulate numbers through accounting practices allowed under GAAP. Retail investors are more long-term investors and they are short changed by this thinking (value is destroyed for them). A proper study of value destruction would reveal that this practice has to be changed. An example is what Paul Polman of Unilever did…he told his shareholders he would only concentrate of long-term results and not short-term gains, and the result was spectacular for Unilever. Value is destroyed in yet another way by short termism; lower returns mean lower investment which hits the entire society.

Value creation and destruction of society from technology and artificial intelligence (AI): While this is the topic of a conference with University of Kobe and Japan Institute of Science and Technology in Kobe, Japan, October 14-16, 2019, it is germane to point out that technology development outpaces its absorption by society. Society is unable to adjust to technology quickly enough, causing short term value destruction. In the long run, the danger of technology overtaking and controlling society are very real. Such value destroying potential must be mitigated and reduced by strategic thinking by the owners and designers of technology, and the designers of the recipient society, and all of us, in general.

Lastly, one value destruction potential of AI systems is when they do not respond to human commands. It might be possible to install a self-destruct system to circumvent such value destruction possibilities.

Value Creation/destruction of plastic bottles: Continental Group introduced the one piece plastic bottle as a source of large packaging (1l, 2l) for beverages. When they started work on the smaller sizes (half litre or less), the can making part of the business complained of value destruction for cans because plastics could possibly take over some of the market from cans.

The corporate strategy team examined this and found some minor cannibalisation was possible, and a risk to growth rate of cans. On the other hand, they found that the company could not stop the proliferation of bottles, because this would happen due to competition. Maximum corporate value creation would come from aggressive plastic bottle introduction by the company and also looking at upsizing cans to larger sizes and sealable metal bottles.

Unfortunately, no one looked at the value destruction of the environment due to plastic waste. The risk analysis revealed that the risk would be minimal (meaning legislative and environmental) in the short-term would not act aggressively enough early on, till the problem became unavoidable. This is a classic case of value destruction.

The computer in the cockpit: The Economist and the Times of India based on the Boeing crash in Ethiopia in March 2019 talk about aeroplanes flying in autopilot and with automated systems.

Humans struggle to cope when automation fails. What this means is that strategically and operationally we are working on automating transport systems, and are training people in automation.

A study of this show there is value destruction potential. This can be reduced by thinking through:

What do pilots do when automation fails or plays up?

How do we train more manual controls in addition to the new training on computer control? Today pilots spend more time learning automated systems and less time on hands-on flying. Newer pilots who are more comfortable with automated systems cannot handle manual systems as effectively as older pilots.

What is the optimum manual-automated control? Which one should override the other and when?

The perils of the human-machine interface can then be reduced. Note that perhaps a cost-benefit analysis showed the current system is acceptable. Studying the value destruction aspect would cause better training and operating techniques to emerge.

Discussion and Conclusion

From a reading of the foregoing, and the examples shown, it becomes abundantly clear that the design and a pursuit of a new strategy, process, product, service looks predominantly at the positive value creation for the company or the people in control. Most do not pay heed to the value destruction potential, or even ignore this, or in their minds minimise its impact. Much of this impacts primarily third parties such as citizens, customers, employees (loss of jobs), and society.

However, from a corporate viewpoint, potential value destruction studies and analysis during the design process could have revealed better design, better processes, more effective service and more pervasive products. This includes risk analysis, compliance studies, operational analysis, environmental and societal thinking. This is a loss to the corporate entity. Companies can benefit themselves and their stakeholders including society from such analysis before the fact, rather than suffering after the fact or causing value loss to people and society and for the company itself.

In conclusion, this opens up the possibility of better value creating strategies. This means a different way of thinking, and a more reasoned solution. This has to be taught and embraced by practitioners. This becomes a fertile area of research for companies and academics to analyse value destruction potential to create more value. We must get away from reactive and ‘after the fact’ analysis to pro-active value creation and reducing value destruction, and learning from value destruction potential.

1. The author acknowledge that Shep Hyken gave permission to use this cartoon from his article: LOOK PAST THE OBVIOUS FOR A BETTER SOLUTION
https://is-tracking-link-api-prod.appspot.com/api/v1/click/5300357839192064/4549100380880896

Best,

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India
Founder Editor, Journal of Creating Value jcv.sagepub.com
New Delhi 110065 +91 98100 60368
mahajan@customervaluefoundation.com
http://www.customervaluefoundation.com
Twitter @ValueCreationJ Blogs: https://customervaluefoundation.wordpress.com/
Author of Value Creation, Total Customer Value Management, Customer Value Investment, How Creating Value Makes you a Great Executive

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The International Society of Service Innovation Professionals interviews Gautam Mahajan

February 28, 2019

Gautam Mahajan is interviewed by The International Society of Service Innovation Professionals

Eighth in the ISSIP series of interviews with Tech Leaders: a conversation with Gautam Mahajan, author and thought leader in the area of Value Creation.

This month, Michele Tomic, ISSIP Editor speaks with Gautam Mahajan.

MT – As a starting point, please tell us something about how you got involved with ISSIP and your experience.

GM – Five years ago, in 2013, Jim Spohrer encouraged me to work on customer value and service and introduced me to ISSIP. He then asked me to speak at ISSIP during one of my San Francisco events. Those activities resulted in developing professional and personal relationships with ISSIP Leaders and friends including Stephen Kwan, Doug Morse, Jim Spohrer and Yassi Moghaddam. I think ISSIP is a great organisation.

MT – It seems that you’ve lived, studied, and worked in different places around the globe. Please tell us about your background and how it influenced your life’s work in Value Creation.


The 2nd Global Conference on Creating

Value, May 15-16, 2019, New York USA.

Paper Submission due March 15, 2019.

 

In conjunction with the Gabelli School of

Business at Fordham University, Creating

Value Alliance, Customer Value Foundation

and the Journal of Creating Value. For more

details, please see the Conference website http://www.creatingvalue.co/conference/,

For submissions, see – http://www.creatingvalue.co/submissions/

Contact: Gautam Mahajan <gautam.mahajan@gmail.com>


 

GM – I worked for a Fortune 50 company in the US for 18 years and learned to create value for the Company by doing unusual things, opening markets they never expected and by inventions and innovations. It was ‘on the job training – I was not taught to be a value creator but rather learned it by practice.

Moreover, my experience made me aware that creating value was the role of all individuals, universally including in developing countries where it’s more for individuals subsistence. Everywhere people talk about value and creating value, but no one is taught what to do. Most people do not even think about creating value for themselves, and therefore for others. I felt people at the bottom of the pyramid also needed to be taught to create value.

MT – Congratulations on the publication of your new book, The Value Imperative. You have written other books so what prompted you to write this one?

GM – Value and creating value are an imperative for individuals, for companies and for other people. I wanted people to understand this and also learn how to create value. The book will help build a value creation mind-set and change thought processes.

The book shows why value creation is necessary and how to create value. Also it talks about a change in education to go beyond teaching people to be functional managers, good administrators and efficient executives to becoming value creators cutting across functional silos.

 MT – Through your companies, Interlink and the Customer Value Foundation, you have worked with different types of companies to help them with customer strategies. What is it like working across industries and what helps ensure success?

GM – Those companies that can create value for employees, customers, partners, supply and delivery chains and society are ensured longevity and long term success, versus those with a narrow view on only profit creation.

Companies have to start with a customer strategy before they build a business strategy so that their future is directed by the customer value they create. Companies with a focus on the ecosystem and its people are bound to become more successful.

MT – What types of backgrounds have you found give managers tools for success? Any suggestions for courses of study or training?

GM – Managers have to think like customers and not stop being customers in their dealings. Also they have to learn to let their front line people become value creators by forming customer circles where the front line people take responsibility for customers, and develop a service mentality.

MT – To ensure the next generations are ready to take on the challenge of Value Creation, if you could design a higher education program, what courses or focus would you incorporate?

GM – I have already mentioned using customer strategy to build business strategy. I will tell executives not to take off their customer hats when they enter the workplace and become and start to think like current company people, but to keep their customer hat on and be customer led. That is how they can give true service.

I would teach value creation at all levels and make people understand that their role is to create value, and how to become value creators to cause success for themselves and for their people and for their companies and society.

The MBA degree would be replaced by a Master of Value Creation.

I have also started global conferences on creating value. The 2nd Global Conference on Value Creation will be held in New York in May 2019 (creatingvalue.co/conference).

MT – Please tell us something about your day-to-day work – what is your average day like?

GM – I seek value creators and try to get them to grow the Creating Value Alliance (creatingvalue.co) to create more value. I spend time on the Journal of Creating Value jcv.sagepub.com, and in talking to people around the world to create more value, and to come to or speak at our Global Conferences. I also contribute articles to various media and speak around the world.

 

Best,

Narender Kumar,

Customer Value Foundation

Journal of Creating Value jcv.sagepub.com

New Delhi 110065 +91 9971288580

narender.customervalue@customervaluefoundation.com

http://www.customervaluefoundation.com

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

Value Creation, Total Customer Value Management, Customer Value Investment, How Creating Value Makes you a Great Executive, The Value Imperative, Value Dominant Logic

Are Firms Becoming More Human?

January 14, 2019

I am writing this article to help companies and executives to create value and prevent reduction of #CustomerValue in the future. All of you need to think about this as you plan for the future.

First one must accept that firms are really human, though they often pretend not to be. This is based on a simple thought. They are run and manned by people. This feeling within firms that they are inanimate is a major reason for the culture being non-human centric.

With digitisation and automation, there is an upheaval now. Humans are being partly replaced by robots. AI is being used to answer day to day questions via chatbots. Many mundane jobs are now being replaced by machines, and so there will be fewer humans within the companies. Thus companies will have a greater reason to pretend to be less human. This of course, reduces Customer and #EmployeeValue.

Customers, especially the younger ones are comfortable with net based interactions, including emails. Getting emails on your mobile a few years ago was a novelty. Today it is a necessity. The younger Customers are getting used to non-human companies and non-human interaction. They are comfortable with robots, and working on the net/mobile.

Some of the downside of automation and AI is loss of jobs and having to fire people. What will these jobless people do? They need to be re-trained to make them re-employable.

Those people left behind in companies that are reliant on automation and robots will need more service skills in an automated world. History has shown deep automation in industries like banking led to a crisis twenty years ago, because of job losses. Today, banks for example are making deep labor cuts in departments including customer facing people and also are letting go back end people. Those who are left have to be re-trained in new working ways and skills that are different from the past. Is this meant to add more Value? For whom? The company or the Customer? Guess who will lose?

Customers are expecting and getting used to more voice/data/net type of interaction and less face to face or direct interaction. This requires more humanness in the backend machines. Services have to be more personalised, and help the customer manage his portfolio, his home, his transportation. The demand for services will increase and that for goods will decrease as demographics change to a larger aging population.

Care giving services like caring for old people will need people, and in countries where population is decreasing this could be a problem. In companies, reduction of caring staff could lead to reduced #CustomerValue, though costs will reduce. Much better customer support will be needed with the people left after automation.

Will this reduce humanness, or reduce #CustomerValue? Well, there will have to be ‘creative destruction’ of jobs because new skills will be needed with automation of routine processes and backend work, Very well designed customer support will be required. So all of us looking of the future must pay heed to this.

A positive could be, for example, customised products including mortgage products, all being given to the customer in 10minutes with machine decision making help. This will happen because AI will get a deeper understanding of customers, and make decision making easier.

Humans will survive because there will still be a need for curiosity, creativity and communications. And for using my 6As combining awareness (and cusriosity), ability, agility, anticipation, ambidextrousness and attitude. And all this with listening empathy.

These skills do not exist and will have to be taught.. And new jobs such as “mixed reality experience designer”, “algorithm mechanic” and “universal service advisor.

And so the inhuman companies (read bosses) have decided what their people have to do and what their customers should expect. Nowhere do they talk about themselves and their humanness.

The human touch requires deep emotional understanding. Re-training will have to include soft skills along with software and digital thinking. New AI and digitisation aid humans to improve their soft skills by reminding them to be more thoughtful and empathetic in their customer interactions. Simultaneously, the training will be on improving technology skills of the people. The company’s people will have to apply their humanness with sector knowledge, technical knowhow and human skills.

A BrightEdge survey states that 60% of the marketers that were surveyed say they will be using AI or automation. 31% say this will improve customer understanding, 27 % cite productivity gains and only 8% claim higher ROI. The major prize is personalization.

Other questions are:

Will the remaining work force be more human, more caring?

Will added data collection allow better #CustomerValue to be created?

Will the bosses become more human so as to create #CustomerValue? Will companies become more human and accessible and less inanimate?

I can (and I am sure you can) give examples of companies not being helpful and showing their not so human face. Let me give you examples of the human face of companies.

I was in San Francisco and had to go to San Francisco General for emergency treatment. I had medical insurance, and the hospital billed the insurance company, who did not pay, as the policy would reimburse payments made by me. I tried to pay the hospital, but they would only bill me and give me no information on payment or give me bills the insurance company could use to re-imburse me. I found it very difficult to communicate with the hospital. Try doing this from India.

Finally, I called Tata AIG and the call center put me in touch with someone who was willing to listen to me and go beyond the rules. They said they would waive the re-imbursement rule and pay the hospital directly. They were human in understanding my predicament and created value for me.

A second example is a large group of doctors, where I went for follow up treatment. The doctor and the staff treated me, my predicament of being unwell in a foreign country and just helped me out in all kinds of different ways. They never worried about billing. They were always accessible and caring. I could call and get answers and see them without an appointment. They also gave me a care kit free of charge to help me on my journey back to India from San Francisco. Great #CustomerValue.

A great example is Air India during the floods in Mumbai a few years ago. The airport was closed for two days. Passengers with other airlines were stranded as their staff had left. Air India had its entire staff at the airport, and took care of passengers (even from other airlines), fed them and took care of them. What caring!

Would this have happened if there was no human staff or reduced human staff (replaced by robots)?

Recommendations

 I don’t want to leave you with questions. I want to leave you with actions:

  1. Accept you are human and your company is human
  2. Notice when the company pretends to be not human with employees, partners and customers. How can you change this?
  3. Does the company ask you to wear a not so human company cap and ask you to deal with others wearing that kind of a cap?
  4. Ask how you can make the company more human?
  5. Finally ask how you can make your systems more human. Ask how you can design your AI and non-human assets to be more human.

See the difference it will make. Your customers and your people will notice this. You will leave the not so human companies and people behind.

Best,

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

Founder Editor, Journal of Creating Value jcv.sagepub.com

New Delhi 110065 +91 98100 60368
mahajan@customervaluefoundation.com
www.customervaluefoundation.com

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

Author of Value Creation, Total Customer Value Management, Customer Value Investment, How Creating Value Makes you a Great Executive

Call for Paper for the Second Global Conference on Creating Value

January 14, 2019

Dear Friends,

Do come to the 2nd Global Conference on Creating Value in May 2019 in New York. Please plan to speak also. Details are below:

fordham alliance cvf combined logo

The Second Global Conference on Creating Value

Gabelli School of Business – Fordham University

Lincoln Center Campus, New York City

May 14-15, 2019

(more…)

Customer Value Economics: The High Cost of Poor Service

November 25, 2018
This doesn’t make sense, you think. Doing less cannot cost more.
You have to look at the net cost. Many actions that #addvalue do not cost much. Smiling, being courteous, listening to customers, keeping promises, going the extra mile, wanting to help, being on time, not making the customer anxious, not making him wait, not making him spend energy, not insulting his intelligence, not destroying his self-image, being prompt, being knowledgeable, etc. etc. can all #addvalue.
And that adds up to higher relationship, better retention, higher sales, better prices and ROI.
The reverse is not caring and adding less value. The net cost in loss of sales, loss of advocacy, loss of referrals, loss of customers and loss of profits and ROI. This all leads to #valuedestruction. You must manage #valuedestroyers (or what I call DNA, Do Not Annoy factors).
The cost of poor experience, bad service leads to not being able to charge higher prices or loss of sales.

Airlines: Expectations vs. Delivery

Let’s take an example of airlines. Some of them are full fare and some of them are low cost. Note they do not say high class and low class, nor do they say high value and low value. Full fare connotes certain givens like free baggage allowance, free food, faster check in for business class. Low cost means none of these.
So if you do not want the hassle of paying for your luggage or seat, and cost is not that important you go full fare.
Let’s say you travel low cost. Your experience beyond what you expect of poorer check-in and luggage may still be good. I just took a Ryan Air flight. I had prepaid for my luggage. The flight was on time, the seats were ok, the price was great, the staff smiled, the luggage was retrieved fast, all adding to the value.
The other day I took a full fare airline. One bag was a hair over 23 Kg, and the other was 12Kg, and I was asked to take things out of one and put into the other. The food was bad, and my luggage came late. The value was awful and the cost of this poor value is high to the customer and to the airline.
Let’s take a person who flies mostly by high cost airlines. He is used to higher prices. Let’s look at his #valuetree:
Value Score 9
He finds the value is 7 which is about average.
Now imagine this traveler has to use a low cost airline. His expectations are lower. His price is low. But the airline staff is friendly and they handle him well. So he is happy.
Value Score 7
When you compare the value score it is very high at 9 versus 7. It did not cost the airline more to increase the value. They performed better than normal and the cost was low. So he may consider the low cost airline in the future. (Note the importance of cost was less (30%) for him!)
A third example is a low cost person traveling on a low cost airline. His expectations are low, and he is price conscious. On this flight the airline did not insult him or aggravate him. They were ok to him. His score is 8, even though the experience was average. Note price has become 70% in Importance.
Value Score 8
The above example tells you the following:
Segmentation is important to position your product
Much of your offer is based on Customer expectations
When expectations are high, you have to perform better. Poor service, food or unhappy or unsmiling staff lowers the benefits and the value. Cost to airline has not gone up
When expectations are low, performing better (like staff being polite and helpful, which costs nothing) increases value
In this example if the normally full fare flyer found the low cost airline gave more value than his normal high cost airline, he may use the low cost carrier more often than he had in the past, a loss to his full fare airline
Gautam Mahajan, 
President, Customer Value Foundation and Inter-Link India
Founder Editor, Journal of Creating Value jcv.sagepub.com

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.

Are you Adding Value to Employees, So They Can Add Value to Customers

October 27, 2018

From my recent posts in my column, you know about Total Customer Value Management, how we add value to Customers, and how we help employees manage Customer-Centric Circles, and bring the top brass to focus on the Customer through the Customer Strategy and the Customer’s Bill of Rights you also have to think about adding value to the employee. Total Customer Value Management (and common sense) requires that you must also add value to the employees, and your partners (supply and delivery chain) and to society if you wish to add value to the Customer.

Value added employees can and will add value to Customers. This increases Customer Value, and which in turn, increases loyalty, market share, wallet share and profits as we learnt earlier. To add value to the employee, we must learn what the employee values. Ask yourself what is important to the employee?

One significant way of figuring employee value is to measure a parameter called Employee Value Added. We can just measure employee value with our employees, but it is always desirable to also measure the value your competition adds to its employees. We can then compare the value we add to our employees to the value competition adds to its employees.

Defining Employee Value Added (EVA)

EVA = Value we add to our Employees / Value our competition adds to their employees.

We build attribute trees of Benefits and Financials as follows:

 

Employe Value Image

Of course, you should modify this for your particular case, and the employee segment you are looking at.

Advantages of Employee Value Added

  1. It is a measure of what your employees value, and what motivates them
  2. Tells you what is most important to them in their work life
  3. Reveals whether you are delivering what they value
  4. Helps you improve Employee Value
  5. By measuring competitive data, tells you whether your company is adding more or less value than competition
  6. If you add less value, employees will migrate to a higher value adding company
  7. Helps you find the causes of employee churn and to reduce it

How to use Employee Value Added for your Benefit

First, employ a Chief Employee Value Creator. The Chief of HRD should be renamed the Chief Employee Value Creator. Value added employees add value to Customers.

The Chief Employee Value Creator or the head of HRD has to learn to add value to the employee and not just police the employee and be the management spy or hatchet person in the eyes of the employee.

Reducing employee churn has high financial benefits (eliminates hiring and replacement costs, training, lost time and efficiency)

Discussion

You can see that employee value add helps you in your Total Customer Value journey.

It helps create value for employees and thereby improved value for Customers. Customer-Centric Circles creates value for employees and for Customers.

It reduces churn, and increases your company’s efficiency. Lost employees and replacing them costs a considerable amount to the company.

Do it Yourself

Do you consider yourself a value added employee? Why? How much of this has to do with you and how much is dependent on the company?

Are you adding value to your employees? How?

How could the company increase value for you?

How could you increase value for yourself, your colleagues, partners and society? And for Customers?

How will they know that value is being increased?

Do you need to communicate value?

 

Gautam Mahajan, 

President, Customer Value Foundation and Inter-Link India

Founder Editor, Journal of Creating Value jcv.sagepub.com

New Delhi 110065 +91 98100 60368
mahajan@customervaluefoundation.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.

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Plastics Ban or Big Bang

July 4, 2018





The Big BAN, no Big Bang!

India is fast becoming a country that cannot control many of its day to day issues. Is this because of lack of governance or will, or just a lackadaisical attitude?

The net result is deteriorating services, which when they reach the stage of unmanageable problems, the only solution the government can think of is banning….they cannot think of managing such issues.

The ban on cars more than 15 years old is so ridiculous. We cannot inspect cars for their usefulness and viability? The easiest is to ban.

The ban on plastics is another example. Why don’t we see such huge issues in USA, Japan, Saudi Arabia and Europe. How do they manage?

Our pet excuse is we have a huge population, but our use of plastics is less than in the US. How did they manage plastics waste? What methods did they use, from strict collection policies, to even stricter littering laws?

We just seem to turn a blind eye to problems such as this, till someone in the press talks about it or posts a picture. A few days of seeming activity follow and we are back to the status quo of garbage, filth and plastics waste.

This banning culture instead of leading to big bang solutions will lead to our banning everything:

We will ban pollution. Oh, oh, we cannot, because that is the solution. Let us ban the environment. Then we won’t have to care about clean air, and we can all be banned (read die).

Let us ban old people because we cannot take care of them.

We should ban traffic because we cannot manage it. Just drive to the airport, and see the many cars parked en route, some next to police stations. Instead of being challaned, they have now encouraged street vendors selling food and drink.

Let us ban till we have nothing to ban other than big government with no big bang solutions other than bans.

Perhaps we should ban them before we ourselves get banned, as the polluters and the source of the problem.

Most of us in business or as users do not think about pollution, ecology, society or any of these things. We think of ourselves and our convenience. The convenience of the company is to make products that sell, and make money. The convenience of users is being able to use something as one desires, conveniently.

Convenience is in a sense, selfishness. What is good for me seems to overtake what is good for all of us, and the earth. Remember, if we abuse, Mother Earth, we will suffer. Mother Earth can survive without us, but we cannot survive without her.

So the first thing is how the user can be brought to curb plastics pollution:

  1. Make it convenient for him to throw the package into bins and recycling streams. Sadly, these do not exist.
  2. Make it inconvenient for him to use the package: This does not mean inconvenient packages, it means a large cost to prevent throwaway packages. Let’s take Sunset point at Naddi, Dharamsala. Once a pristine site, now it is littered mostly with plastics and also with paper, cans, etc.

Can we charge a punitive fee like Rs 15 for a plastics or glass bottle, whereas the cost of the bottle and product maybe Rs 12. At the exit of Sunset point, let the user deposit the bottle and get his money back.

This will send an instant message to the user and also the seller and the manufacturer, that it is not business as usual. Let it be inconvenient to pollute.

  1. Build awareness. Let us use neuroscience to get dreams of being capsized in plastics bottles, or the like. Let us use social media.
  2. A large scale ban can force manufacturers to react. Let them look at pollution when they sell raw materials. What if a GST like tax was added to the raw material and refunded through proper recycling of the end product?

Users can:

  • Bring their own shopping bag. …
  • Stop buying bottled water. …
  •        Bring their own thermos to the coffee shop. …
  • Choose cardboard or paper over plastics bottles and bags. …
  • Say no to straws. …
  • Get the plastics off your face. …
  • Skip the disposable razor. …
  • Switch from disposable diapers to cloth.

All add to inconvenience. Do we have a choice?

The manufacturer has to start a circularity program of:

  1. Using biodegradable materials. For example, millet based spoons are available for ice-cream, and the spoon can be used along with the ice-cream. The plastics technology has to be biodegradable.
  2. The products have to be re-usable, and easily re-cyclable
  3. Encourage users to participate in ecology, as outlined above.
  4. Set up a fund for picking up plastics waste

Plastics pollution, indeed all pollution is a clear and present danger. There is no time for pussyfooting. Manufacturers and users have to become serious about the dangers. Let not the plastics industry hide behind the statement we are only 12% of all solid waste.

The time has come for the plastics industry and individual companies to get together with the Government and set up a time bound program for plastics to shift to biodegradable, to pick up larger percentages of plastics waste, and larger conversion of waste to useful products.

This has to be like the automobile Bharat Stage emission norms and the Euro emission norms. These have to be strict and enforceable. Companies should fear being banned.

 

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

Founder Editor, Journal of Creating Value jcv.sagepub.com

New Delhi 110065 +91 98100 60368
mahajan@customervaluefoundation.com 
www.customervaluefoundation.com  

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

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