Become a Customer Expert! Start by Clearing 9 Misconceptions About Customer Value

Posted July 10, 2017 by Customer Value Foundation
Categories: Business & Management

Many of you are Customer experts, or close to being one. It is a matter of using what you have learnt, and what you keep on learning. If you are open to new ideas and learn better techniques, you will be a better Customer expert!

For being a Customer Expert, first convert to being a Customer Advocate. Embark on a Customer-Centricity and Customer value journey. Really understand what each of the Customer terms mean and what their limitations are. For example, what are the limitations of Customer satisfaction, Customer journey, or Customer experience?

Once you really understand the limitations, you must create value for yourself and your company by leading them to use the best possible techniques. Do not get swayed by how we compare ourselves vs. the past. We have always said comparing yourself with yourself does not tell you whether you have improved in the marketplace unless you have competitive data. Moreover Customer Satisfaction does not always relate to business results. Lastly, we know customer experience is measured by Customer satisfaction, which does not allow us to get enough data. NPS is an incomplete measure.

Why use also ran measures? Why not go to better data such as Customer Value data endorsed by Philip Kotler, suggested by Peter Drucker, endorsed by Jag Sheth, Don Peppers and others.

The first step in your using Total CVM is to get rid of misconceptions. Some are listed below:

Clearing Misconceptions on Customer Value

Here are some common ideas posted in blogs, and what is factually correct. The word Value is often misused and misunderstood. You can relate to some of these. These may help you in business or as a buyer.

1. Everyone has their favourite term to deal with Customers

People hone in on one Customer term or the other, because their company uses it, or because they read about it, or because it is fashionable to use. Many users of these methods do not delve deeper to understand the real meaning, its actual usage, and whether it relates to Customer buying or business results. Some of these terms are Customer Experience, Customer Goodwill, Customer Intimacy, Customer Relationship Management (CRM), Customer Response, and Customer Satisfaction, Customer Journey and so on.

Customer Experience is often used and is a good thought. It is one major aspect of Customer Value. It is often used as the experience with your company but not as a competitive measure. It is not strong on the cost of doing business (price and non-price). It misses many points of doing business which includes items you may not experience. A retailer may do business with your company because of future business potential of which you have no experience; or what you feel about the future of a company with whom you have no experience and you wish to buy. Is it the experience or the memory of the experience that is important? Of the user or the decision maker?

In the case of CRM, while a good concept, does not really work on the relationship but on the data base of Customers. Not much business good has come of it. It is as important as getting good Customer data and insight.

Total Customer Value goes far beyond all these in giving you a picture of why people buy and its correlation with business results, the competitive profiles you can build and use to better your competitive strategies, get prioritisation of, and what is important in the Customer’s buying motives and buying behaviour. You can understand competition better and why some Customers buy from you and why others buy from your competitors. You can understand how to create value, which might mean better experience, better goodwill, better loyalty, better retention, higher market share and profits, better pricing, decommoditisation.

Next, Total Customer Value helps begin a top down approach on Value Creation through a Customer strategy and mind-set changes, and we have pointed out how this happens or can be made to happen particularly by using Customer-Centric Circles. This is a bottom up approach. Moreover, Customer Value weaves in the Bill of Rights and the Circle of Promises, and makes the front-line people more pro-active by running Continuous Customer Improvement Programs.

2. Satisfaction alone is the reason why people buy

People buy because a product or a service is worthwhile to them versus competitive products or services. Satisfaction is a necessary condition but not a sufficient condition for purchase. Sometimes, we buy even when very dissatisfied. An example could be a neighbourhood petrol station, where we had a poor experience. The convenience or the price makes us buy there.

3. High Value products have low satisfaction

This implies value is price, and that if something is high priced it has low satisfaction. This is confusing value for price. Sometimes, people pay “money for value” which means they buy high priced items. Thus if you buy a BMW, you can be very satisfied.

4. Low Value products have high satisfaction

This implies value is price, and that if something is low priced it has high satisfaction. This is just not true. It has been proved that at every price point, Customers look for Value. What does that mean: If buying a pen, whether a Mont Blanc or a Bic, the Customer is looking for Value, and buys on Value. You may be very dissatisfied with a low cost ball pen, when it streaks while writing. You will not buy it again.

5. Satisfaction measures Customer Value

Customer Value and satisfaction studies are different. Satisfaction measurements are done on transactions and generally right after the transaction by the user. Normally the top two boxes are measured. Customer Value studies are done a few weeks after the transaction and on the decision maker, not necessarily the end user, so as to get embedded perceptions. Customer Value studies are done versus competitive alternatives and are ratios. Thus a Customer Value study always compares you to competition and is not based on your score alone but their score also.

6. Value means Benefits

Value is what the Customer gets (benefits) vs. cost (price and non-price) versus competing offers. While colloquially we use Value to mean benefit or price, Customer Value is the actual worth of a product versus competing options. Value in the Customer context is not just the benefits, but what you pay versus competitive offers.

7. Values and Value are the same

Values are what someone stands for: ethics, morals, sustainability. Value is defined above. In fact, Values create Value.

8. Customer Value is newer than Customer Experience

Both are old concepts. However, the formal usage is more recent. Customer Value as a discipline started in the 1980s with Ray Kordupleski and AT&T, and CX in the 2000’s. Customer experience, Customer emotions, Brand Value are all measured by Customer Value.

9. NPS is a great measure of what the Customer perceives

NPS only answers a couple of questions on repurchase and recommendation. It does not portray what Customer thinks of the product and whether he has had a good or poor experience. NPS is better used with other Customer metrics

Why Have These Misconceptions Propagated?

My take is that most people tend to follow what they are told, rather than delving deeply into the actual meaning of, and truly understand how these concepts should be used. These concepts are used and understood loosely.

My suggestion to the Customer professional is to truly understand what each of these terms means, how they are used, and how they should be used. Reflection from one’s own experience will show what I am saying makes sense. (Remember your favourite restaurant or airline, and if you are dissatisfied, will you stop using them?)

One reason why companies and executives are not truly becoming Customer–centric is that such loosely used and understood terms confuse companies, and do not give the company true insight into what will really help. Thus just measuring NPS and stating that it tells the company what to do is misleading, and will prevent the Customer Value from truly improving (or Customer-centricity from happening).

Executives like you and Consultants can lead this change in understanding Customer Value and Customer data.

Lastly, stop being a functional Manager and become a Value creator. You will need to build your self-esteem and self-belief, and imbibe the 5As of outstanding awareness and observation, greater ability, fantastic attitude, agility and ambidextrousness. You will soon become a Value Creator.

Making Total Customer Value Management Happen

The COO renamed as the Chief Customer Value Creator: The COO (Chief Operating Officer) runs most departments impinging on the Customer. These include manufacturing, logistics, IT, marketing and HR. We want the Operations department renamed the Customer department, and COO renamed the Chief Customer Value Creator (CVCO)

The CEO becomes the Chief Value Creator: When the CEO is so renamed, his focus shifts to Value creation for the entire eco-system. His company starts to look different. A new organization chart is shown below:

gm_org_future

Discussion

Now that you know what Total Customer Value Management is, you have to see how to get Total CVM techniques into your company or among your cohorts. How do you undo years of incomplete measurements? How do you get rid of misunderstood terminology? If you are a functional executive, you will not make waves. If you are a Value Creating executive you will make changes. Do not be motivated by the fear of failure, but the joy of success. Do not be afraid to admit you may have used outdated measures in the past, so what?

You will have become a Customer Expert!

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The Big Bang Comes When Business Needs and Customer Necessities Coincide

Posted May 8, 2017 by Customer Value Foundation
Categories: Business & Management

For a business, there are many tasks that are relevant and many that are necessary from their point of view. There are tasks that a business performs or could perform that could be relevant or necessary to the Customer. Often Business needs and Customer needs do not coincide.

The first step is for us to understand what these needs could be, and then to plot them on the Task Matrix.

As definitions:

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 analyzing 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:

Relevant Necessary task table

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.

Mahajan Tast Matrix

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.

 

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 First Global Conference on Creating Value

Posted May 8, 2017 by Customer Value Foundation
Categories: Business & Management

The First Global Conference on Creating Value

May 23-24, 2018, Leicester Castle Business School

(De Montfort University, Leicester,UK)

 In partnership with the Customer Value Foundation

 

What is value and how do we create and assess‘value’ in a turbulent global economy?

Value creation underpins all business transactions and engagement. We all seek value for our businesses, as well as for ourselves and for our society (Mahajan, 2016). However, because we are so immersed in our day-to-day functional management, we often overlook opportunities for value creation, possibly to the detriment of our businesses and society (Eisenhardt & Martin, 2000). Successful businesses and leaders create value for their eco-systems which include themselves, their companies, customers, employees, partners and society, mostly unconsciously, yet there are challenges in gauging and assessing ‘value’ (Hinterhuber, 2017). This conference is a wake-up call to improve our understanding of the concept of value and, moreover, to find ways of creating value consciously and more abundantly which will in turn allow us to compete more effectively, to build social value and to thrive and be ready for the challenges of a changing and disruptive world. Carl Jung stated: “unless you make the unconscious conscious, it will direct your life, and you will call it fate.”

In the First Global Conference on Creating Value, business leaders and leading academics from around the world will come together to exchange views, and to share and learn from each other regarding the problems, the potential and the real life uses of value creation, and how it can transform people, management, organizations and institutions.The conference facilitate business leaders and academics to work together to establish the action research and development projects they wish to see emerge and what would help them create value. The conference will provide relaxed, meaningful and purposeful opportunities to talk about and discuss latest thinking on value creation and service for improving the worth of companies, their longevity, their ability to be ahead of and tackle disruptive forces, and to embeda value creation leadership style going far beyond traditional and functional management so as to engender a value creation mind-set and reduce value destruction in the future.

The Conference will also focus on value, social good and the well-being of the interconnecting dynamics of production, profit, people and planet invoking consideration of sustainable and responsible value creation (Elkington, 1999; Skene and Murray, 2015). It will help you examine the change in value for constituents and yourself as a host of new ideas such as driver-less cars, artificial intelligence, IT transformations, changing ageing profiles and health care, impact on corporations, businesses, society, service providers, governments, taxes, insurance, suppliers and sellers, infrastructure etc. Value is all around us and the conference will help you become aware of this value and facilitate the generation of ideas and understanding so as to be creative and innovative.Rub shoulders with the best thinkers and the best practitioners in the world to be ahead of competition.

The Conference welcomes presentations and seminars in a wide variety of formats. If you have a particular original idea for a session or an event at the Conference please contact the organisers to discuss it – we will be delighted to support your ideas.We welcome innovation and fresh and thought-provoking approaches.

Possible suggested topics on which papers, presentations, talks, films, documentaries etc. may be offered include, by way of illustration and in no way intended to be comprehensive include:

– Investigating and understanding value;

– Creating value for yourself;

– Creating value for others;

– Value creation for customers;

– Creating value for your businesses and society;

– Creating value in the future;

– Value creation and leadership;

– Manufacturing processes and value creation;

– Value destruction;

– Operationalising value creation;

– Value creation and the circular economy;

– Value creation in relation to specific functional areas: accounting, finance, HR, IT, marketing, sales, strategy, production, after-sales service, customer relations etc.;

– Values as a belief, attitude and perspective;

– Value and Values and the relationship with (organizational) culture(s);

– Future prospects for value creation in education, society and business; in innovation and creativity;

– Threats, risks and dangers for value creation;

– Non-market strategies and value creation;

– Sustainable and responsible management and leadership and value creation;

– Corporate Social Responsibility and value creation;

– Organizational development and value creation.

 

Key Dates:

1stOctober 2017: Deadline for submission of abstracts, session proposals, roundtables etc.

1st November 2017: Notification/Decisions returned on abstracts and submissions etc.

6th January 2018: Author submission of final papers, sessions, prepared sessions etc. in discussion and collaboration with the conference team.

Early Registration – 31st January 2018

Registration Deadline –28th February 2018

 

Submission Guidelines:

 Written abstracts and proposals should typically be no more than two pages in length.Font should be Times Roman – size 12

Sources and referencing should follow Harvard formatting.

Final submitted papers should typically be no more than 7000 words in length.

n.b. We welcome, and indeed actively encourage, innovative, insightful and varied approaches and formats of materials, sessions and presentations submitted to the Conference.  Therefore, we recognise that these guidelines are only indicative and you may wish to propose a session which requires alternative media, presentation and styling. Please feel free to discuss your ideas with the Conference organisers (see below)

Conference Co-Chairs and Co-Convenors:

Gautam Mahajan (President Customer Value Foundation and Founder Editor of the Journal of Creating Value)

Gautam Mahajan, Founder Editor of the Journal of Creating Value and President of Customer Value Foundation is the leading global thought leader in Total Customer Value Management and Value Creation. Mr Mahajan worked for a Fortune 50 company in the USA for 17 years and had hand-on experience in consulting, training of leaders, professionals, managers and CEOs from numerous MNCs and local conglomerates like Tata, Birla and Godrej groups.

He is also the author of widely acclaimed books”Value Creation: The Definitive Guide for Business Leaders”, “Total Customer Value Management: Transforming Business Thinking” and “Customer Value Investment: Formula for Sustained Business Success”.

He was President, of the Indo-American Chamber of Commerce, and was Chairman, PlastIndia Committee, Vice President All India Plastics Manufacturers Association, Trustee Plastics Institute of America. He was a member of the US India think tank. He was Chairman of the US India Economics Relations Forum. Among his honours is a Fellowship from Harvard Business School and Illinois Institute of Technology. He has 18 US patents. He was honoured by the Illinois Institute of Technology with its Distinguished Alumni award in 2001. He has spoken at various businesses, universities and conference around the world on globalisation, strategy and value creation, (course design and research).He was written up in the Wall Street Journal. He gave the first Distinguished Engineering lecture at the Illinois Institute of Technology followed by a Distinguished Management lecture. Mr Mahajan is a graduate of IIT Madras, where he was an Institute Merit Scholar, has a Master’s degree in Mechanics and has completed his PhD coursework from the Illinois Institute of Technology, and an MBA from Suffolk University.Email: Gautam.Mahajan@gmail.com

Professor Peter Stokes (Professor of Leadership and Professional Development, Leicester Castle Business School)

Peter Stokes is Professor of Leadership and Professional Development. Previously he was a professor in the University of Chester Business School where, in addition to successfully completing faculty-wide Deputy Dean (2012-2015), Acting Executive Dean (2012-2014), Director of Research and Knowledge Transfer (2014-2015) assignments he played a leading role in national and international research and knowledge transfer projects.

He has taught, researched, published and reviewed extensively in world-class journals in the areas of, among others: Human Resource Management; Leadership Values and Behaviours; Business Ethics; Management Philosophy; Organizational Design, Critical Management Studies, and Research Methodology. His work has appeared in leading journals such as, for example: Human Resource Management; Organization; Studies in Higher Education; Journal of Organizational Change Management; Employee Relations; Entrepreneurship and Regional Development and Thunderbird International Business Review. In addition, he has published books on research methods, postgraduate research, critical management studies and organizational management. He is Editor-in-Chief of the International Journal of Organizational Analysis and serves on a number of international journal boards including the EuroMed Journal of Business and the Journal of Creating Value where he is an Associate Editor. He has been visiting professor and academic advisor in businesses and university business schools in a number of countries including: France, Holland, Spain, Ireland, Germany, Senegal (West Africa),Vietnam, Morocco, Hong Kong, China, India and Dubai. 

 He has applied his work through national and international knowledge transfer and consultancy projects across a range of business sectors encompassing utilities, construction, publishing, aerospace, diplomatic, emergency services and local government. He currently hold a number of positions on major international bodies including: Vice-President-Business Relations and UK Country Director for the EuroMed Research Business Institute (EMBRI); UK Ambassador for the Association Francophone de Gestion des Ressources Humaines (French Academic HR Association); Organizing Committee of the Research Methodology SIG – British Academy of Management; member of the British Standards Institute (BSI) Human Capital Standards Committee; member of the Steering Committee of the Spiritual Capital Development Company, Institute of Directors, and Associate of the MBRF Foundation (Dubai). Peter.stokes@dmu.ac.uk/peterstokesmail@gmail.com.

 Professor Dana Brown (Pro-Vice Chancellor, Enterprise and Principal Leicester Castle Business School, DMU)

 Raised by her mother in America with her father in England, Dana’s life and career has spanned the two countries and beyond. While completing her BA in Political Science and Slavic Languages at Rutgers University in New Jersey, she spent a year at Exeter University and a further year on Exeter’s Russian language programme in Moscow. After completing her BA, Dana was awarded a Rhodes Scholarship to study for the MPhil in Russian and East European Studies at St. Antony’s College, Oxford University. She later earned her PhD in Political Science from the Massachusetts Institute of Technology (MIT), completing a dissertation on the intersection of market and social reform in former Soviet countries.

Dana has worked in and closely with business, starting in high school when she had the opportunity work alongside a former chief executive of F.W. Woolworth during the launch a new start-up retail venture. She was also amongst the first employees of Amazon.com, where she worked as Senior Manager of Operations in the period leading up to the company’s IPO. At MIT, she was part of an initiative of Sloan School of Management that invited executives from the global clothing and footwear industries to participate in emerging discussions about labour issues in global supply chains. She has worked with several companies in executive education and has supervised a number of student entrepreneurship projects, many of which have been launched into successful businesses.

In higher education, Dana served as Director of the Trenton Academic Centre at Rutgers University, facilitating early experiments in distance learning. After her Ph.D. she was appointed as University Lecturer in International Business at Said Business School and Clore Fellow of Management at Lady Margaret Hall, Oxford University. At Oxford, Dana sat on the LMH Governing Body, Development and Strategic Planning Committees, and led the college’s student exchange programme. At Said Business School, she co-directed an interdisciplinary forum on Corporate Social Responsibility, the Oxford-Achilles Working Group on CSR. She moved to France in 2010 to take up a Professorship of Strategy at EM-LYON Business School, where she was also the Academic Director of the Doctorate in Business Administration run jointly with Sun-Yat sen University. In 2013, she returned to Oxford as the Director of the MBA at Said Business School and oversaw a curricular reform and significant growth and internationalisation of the programme. Dana has also taught executive education and MBA courses at Oxford, EMLYON, IE Business School and the American University in Cairo.  

In 2014, Dana completed certification as an Executive Coach with Meyler-Campbell in London and practices informally. She has worked for eight years as a selector for the Alfa Fellowship Programme, which sends young professionals from America, the UK and Germany on a ten month professional development programme in Moscow. Dana is also involved with Warm Heart, a social enterprise providing opportunities for children and their communities in the Phrao region of Thailand. Email: dana.brown@dmu.ac.uk

 Leicester Castle Business School.

Leicester Castle Business School has been created by De Montfort University Leicester (DMU) to meet the needs of 21st century business.

Under the leadership of Professor Dana Brown, the school will go beyond business as usual, offering a unique learning environment where students are encouraged to challenge convention and are given the opportunities and tools to think, create and inspire.

Students will enjoy a transformational experience, benefiting from:

DMU is a vibrant, multicultural hub of learning, creativity and innovation and Leicester Castle Business School sits right at its heart, offering a career pathway to students who want to stand out in the international employment market.

*Terms and conditions apply

 

References:

Mahajan, G., (2016).Value Creation: The Definitive Guide for Business Leaders, Sage, New Delhi

Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: what are they?. Strategic management journal, 1105-1121.

Elkington, J. (1999). Triple bottom-line reporting: Looking for balance. AUSTRALIAN CPA69, 18-21.

Hinterhuber, A. (2017 forthcoming). Value quantification capabilities in industrial markets.Journal of Business Research.

Skene, K & Murray, A. (2015) Sustainable Economics: context, Challenges and Opportunities for the 21st Century Practitioner, Sheffield, Greenleaf Publishing.

Smarten People: The Internet of People is not Just for Smart People

Posted April 23, 2017 by Customer Value Foundation
Categories: Business & Management

I continuously hear about smart systems, smart cities, smart this and smart that, and the Internet of Things. They all need smart people, I am told.

Now I hear smart cities need smart people and smart citizens.

Vítor Pereira who won the Spanish smart cities award said “With no smart people, there are no smart cities”. Paul Budde, the managing director of BuddeComm, an independent research and consultancy company says smart people are the key to smart cities.

The Hindu newspaper in India calls for smart citizens.  They say building smart cities starts with smart people. IoT requires smart people, I am told. Others say we need a smart economy, smart governance, smart people.

Whoopie, get rid of all unsmart people, for smart cities to work, for IoT to work.

But wait, maybe there is a better way. I say, co-create value in use with the ordinary people….give them tools that smarten them instead. It is like the poor kid who had never used a computer who got smartened by being given a iPad, and started to use it with no help.

Smart people means people who have been enabled and smartened to use smart cities. It means they are skilled to use these facilities or the facilities should be self-obvious, self-usable.

I am told UK will help make sure people have the right skills for the digital economy. More than four million free digital skills training opportunities will be offered. Hmm! Skill people, smarten people?

Cognizant talks about robot-and-how-new-digital-technologies are making-smart-people and businesses smarter.

Accenture Technology Vision 2016 states that winners in the digital economy will place people first .

In my thinking, the winners will be those who enable and empower people to use their offerings, and not just making things for smart people, smart citizens and smart economies. Make these for the ordinary person.

The Internet of People is more powerful than the Internet of things.

An Internet of People Event took place on December, 2016, in Eindhoven, The Netherlands to go Towards a Smart Future: From Things to People.

IoP = IoT + the ’WOW’ factor, The Human!

Let not IoT takes over the IoP! Let not IoP become all about technology, let it be about people. Create Value for the Human.

 

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.

Business World on Gautam Mahajan’s Book, Value Creation

Posted April 15, 2017 by Customer Value Foundation
Categories: Business & Management

Tags: , , ,

Here is an excellent review on Gautam Mahajan’s book on Value Creation written by Nitin Motwani,Co- founder and CTO of Bookmyforex.com

He says:

“The funding frenzy that we recently witnessed in the Indian startup scene has caused several companies to focus on short-term objectives instead of focusing on creating sustainable value. The massive influx of funds in the recent past has caused the mind-set of many existing and aspiring entrepreneurs alike to focus on glorified yet unimportant metrics such as GMV and valuation.

Value Creation: The Definitive Guide for Business Leaders (Sage) by Gautam Mahajan reminds us that businesses today need to focus on value enhancing practices to build a long-lasting enterprise.

The defining quality of the book is that it is not restricted to a linear perspective, but covers an array of synergistic elements that collectively create value within an enterprise. Transformation, as mentioned in ‘Business Transformation Ideas for CEOs to Create Value’, is extremely important to maintain relevance with the market. Even if a particular organisation is the market leader in its domain, its resistance to change can be its downfall. Leading organisations have been replaced by relatively younger ones due to former’s resistance to change. Mahajan also advocates practices that help an enterprise to deliver optimum results, including the development of individual accountability of business leaders and managers rather than maintaining an inclination towards a ‘self-serving bias’.

The systematic progression of the book enables the reader to understand what a customer-oriented business strategy is and how it stands apart from conventional approaches. The account of the market and topic-wise depiction of examples make for a pleasurable read while also educating the reader about the most important business principles. The analysis of business processes in the book prompt ingenious ideas that the reader can exercise to increase productivity. Interesting anecdotes make the book even more engaging. One such example is that of Karl Slym, ex-MD, Tata Motors, who “got 357 ideas just by talking to TCS employees, many of whom were his customers”.

The book also stresses on shifting from an assessment based on financial assets and performance towards other more promising priority areas that include human capital, organisational capital, knowledge and information capital, etc., to develop higher value for an organisation.

The book highlights the typical behaviour and pre-dispositions that ultimately leads to value destruction and suggests that businesspersons avoid them completely. It defines the roles of various key players in the value creation process, including HR, CIOs, CFOs and explains how to leverage these valuable resources effectively. Mahajan, with his vast experience, has managed to extract the most important lessons for entrepreneurs to truly connect with their customers and to use that as a basis to derive value for the organization as whole”.

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 Virtual Company

Posted March 28, 2017 by Customer Value Foundation
Categories: Business & Management

Purchasing professionals are focused on adding value to their companies, and so are sales and marketing professionals selling to them. All this will change with the Virtual Company.

Some time ago I wrote about the anonymous company. That companies hide behind the inanimate idea of a company. It has no heart, no soul. It is as if the humans in the company have let go of their humanity to the clutches of efficiency and corporate profits. The more virtual we become, the more virtuous we will be.

The company (read its people) are driving it to a robotic virtual existence, where the emotional connect has to come from the brand, the product or the customer eco system, discussing the pros and cons of the company and its products.

In so doing, the cleverness of the company comes from making the Customers believe this is best for them, this is good for them, and in making them conform. Some conform because they have no choice, others because they don’t care (read apathy or inertia). But a large proportion adapt because they believe they are first movers, they believe they belong; they believe they are in control, (what the company is trying to depict)

The company will have virtual vendors, virtual partners, virtual supply chain and virtual shareholders; a state of perpetual motion trying to make society virtual.

But we humans are in the clutches of the virtual company. All is well till something goes wrong. What is your recourse? Whom do you talk to? Where do you take your complaints? Where do you get justice?

Companies will tell you are getting a great experience. I think in the future, marketing will focus on the emotional part of the customer, and also on the neural suggestive marketing

Do you believe it? Do you want it?

This will lead to virtual parents, virtual children, all in one great amorphous cloud, an amorphous society with all boundaries blurred. The Customer becomes also the employee and the owner, and perhaps this gives him an emotional connect.

What then, will happen to real people?

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.

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.