Posted tagged ‘Value Creation’

Value Takers Vs Value Makers

July 4, 2018

Are You a Value Creator or A Value Taker

I am writing this, because I want readers to think about the future, and not be like me, when I was in middle and senior management to think only about the well-being of the company rather than the well-being of those we were impacting, the world at large, ecology and sustainability. While many might think this is meant for CEOs, this is the right time for all of us to start thinking about serious issues like ecology, corruption, value destruction or being one sided (my company uberalles, the company must win, right or wrong)

In my forthcoming book Value Dominant Logic, I tell the story of my heading a team to bring out and commercialise the one piece PET beverage bottle. We were led by the desire to win, to be ahead technically, and to see our product dominate. We never entered the debate of whether what we were producing could damage the environment, or not be good or sustainable. Why were we like that?

Were we driven by our customers’ needs, or for us to disrupt glass packaging? Or for helping our company make profits for its shareholders? Or for the larger eco-system?

Readers must start to think truly about the Customer (for most, it is what we can get out of the Customer). The Customer just not as a buyer, but the Customer representing us as a user, as part of society, as one who needs to improve the well-being of those around us.

In this article, I wish to debate Customer Value creation (and Value creation in general) versus value extraction. Too many people believe they are creating value whereas they are extracting value. The global financial crisis of2008 makes us rethink the modern capitalist system which is far too speculative: it rewards takers over true makers or wealth creators. It allows the growth of finance, and greater rewards for speculative exchange of financial assets versus investment that leads to new physical assets and job creation.

In the recently completed First Global Conference on Creating Value at Leicester UK, organised by DMU and me, Ashok Ashta, an attendee wrote:

I personally enjoyed the blend with the practical as instantiated by the Fujitsu presentations. The three speakers I found the most thought provocative were: Chris Baker, Scott Sampson and Michael Shafer. If there is one line that will remain embedded in thought, and that I will perhaps reuse is, “students looking to work in financial institutions such as Goldman Sachs etc. are aspiring to work in criminal organizations!”

Debates about unsustainable growth are increasing calling for reforms and rethinking of the financial system. We need the financial system to re-focus on the long term, and sustainable development rather than quarterly returns, and gaining exorbitant executive pay. This includes proper governance and thinking about the future of us, and our planet.

Mariana Mazzucato in her book, The Value of Everything argues that critics of the current financial system remain powerless – in their ability to bring about real reform of the economic system – until they become firmly grounded in a discussion about the processes by which economic value is created. It is not enough to argue for less value extraction and more value creation. First, ‘value’, a term that once lay at the heart of economic thinking, must be revived and better understood.

“Value has gone from being at the core of economic theory, tied to the dynamics of production (the division of labour, changing costs of production), to a subjective category tied to the ‘preferences’ of economic agents. Many ills, such as stagnant real wages, are interpreted in terms of the ‘choices’ that particular agents in the system make, for example unemployment is seen as related to the choice that workers make between working and leisure.”

By losing our ability to recognize the difference between value creation and value extraction, Mariana argues, we have made it easier for some to call themselves value creators and in the process extract value, like the financial services companies.

Thus GDP and corporate annual reports must reflect the quality of life indicators, happiness, caring etc. versus just financial gains.

Value extractors in finance and other sectors of the economy get more emboldened. Here, the crucial questions – which kinds of activities add value to the economy and which simply extract value for the sellers – are never asked. In the current way of thinking, financial trading, rapacious lending, funding property price bubbles are all value-added by definition.

When price determines value, and if there is a deal to be done, then there is value. Therefore, a pharma company can sell a drug at a hundred or a thousand times more than it costs to produce, there is no problem: the market has determined the value.

The same goes for chief executives who earn 340 times more than the average worker (the actual ratio in 2015 for companies in the S&P 500). The market has decided the value of their services – there is nothing more to be said.

Second, Mariana continues the conventional discourse devalues and frightens actual and would-be value creators outside the private business sector. It’s not easy to feel good about yourself when you are constantly being told you’re rubbish and/or part of the problem. That’s often the situation for people working in the public sector, whether these are nurses, civil servants or teachers.

Mazzucato adds that when Apple or whichever private company makes billions of dollars for shareholders and many millions for top executives, you probably won’t think that these gains actually come largely from leveraging the work done by others – whether these be government agencies, not-for-profit institutions, or achievements fought for by civil society organizations including trade unions that have been critical for fighting for workers’ training programs.

All of which serves only to subtract value from the economy and make for a less attractive future for almost everyone. Not having a clear view of the collective value creation process, the public sector is thus ‘captured’ – entranced by stories about wealth creation which have led to regressive tax policies that increase inequality.

This is not only true for the environment where picking up the mess of pollution will definitely increase GDP (due to the cleaning services paid for) while a cleaner environment won’t necessarily (indeed if it leads to less ‘things’ produced it could decrease GDP), but also as we saw to the world of finance where the distinction between financial services that feed industry’s need for long-term credit versus those financial services that simply feed other parts of the financial sector are not distinguished. You can think of other examples: poor road construction leading to increased repairs builds GDP. M&A fees add to GDP. The middleman making more than the producer

So think of becoming a value maker, a value creator and not just a value extractor, the role of many when they are in management. Maybe this is the time for you to think of your role. Are you going to be a blind follower? Can you do something at your level? Examples of what you can do at your level, is to be transparent, caring for your employees and society, not accepting dishonesty from above. You can start to provide an island of ‘goodness’ in your department, and if many do this, the message will be heard at the top. We call this the bottom up approach, versus the top down system we live in. The power is with you.​

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 InvestmentHow Creating Customer Value Makes you a Great Executive 

Come to the ​Second​  Global Conference on Creating Value, May ​2019 ​ in New York, U​SA

Business World on Gautam Mahajan’s Book, Value Creation

April 15, 2017

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.

Co-Create Value with Your Suppliers and Partners

March 4, 2017

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.

The 8 Principles of Customer Value Creation

September 9, 2016

To appreciate Customer Value Creation, you must understand the principles of Customer Value Creation. The principles of Customer Value Creation, enunciated by Gautam Mahajan are:

The 1st Principle: Customers tend to buy or use those products or services that they perceive create greater value for them than competitive offers. It is essential for executives and leaders to create higher value for their Customers than competition can.

 The 2nd Principle: Customer Value Creation is applicable in all fields, such as business, service, education and academics, society and government, social work, innovation and entrepreneurship. It impacts humanity.

 The 3rd Principle: Customer Value Creation touches all stakeholders, you, your colleagues, your employees, your partners (supply chain, delivery chain, and unions), and society to create resounding value for the Customer and thereby for the shareholder. It is the source for creating Customers and retaining existing ones, increasing loyalty, market share and profits

The 4th Principle: Customer Value Creation is proactively exceeding what is basically expected of you or your job and is going beyond your functional and routine roles to creating value in your eco-system. Value creation can be planned or spontaneous, and in both functional and emotional thinking

 The 5th Principle: Customer Value Creation leverages a person’s or an organisation’s potential, learning and creativity while making it meaningful and worthwhile for people to belong and perform, both physically and emotionally

 The 6th Principle: Customer Value Creation presents a very powerful decision making tool for companies to decide on actions, programs, strategies for the Customer that can increase the company’s longevity and profitability.

 The 7th Principle: Value Creation must exceed Value destruction or reduce negative value and be done consciously (not just unconsciously)

 The 8th Principle: Values (what you stand for, integrity, honesty, fairness etc.) creates Customer Value (that is Customers Value your Values)

 These principles form the foundation of the Customer Value Creation strategy and implementation, resulting in great value for you and your company.

 

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.

Invisible Manipulation

August 7, 2016

Jonah Berger in his brilliant book, Invisible Influence discusses how consumers get influenced. Some have to do with influence which is exerted without meaning to influence. A person wearing a particular necklace may influence you to think about that type of necklace. Some are meant to influence subtly, like the aroma in a store to induce you to buy baked goods. Others are really invisible manipulations, meant to manipulate your thinking and accepting lower standards of service.

Let me give you some examples

Nike and shoe colours: Recently, I have been seeing a few of my fellow walkers wear coloured walking shoes. I told myself I would stick to my white or off-white or light grey non-descript shoes. At the Nike store most shoes were red, orange, blues in all shades, and yellow. A few old design shoes were in my preferred colours (but my size was not available). The shoe that fitted and was comfortable was a vivid blue. I liked everything about the shoe but the colour. I thought, what the hell, others are wearing red too…so blue is ok.

Was this invisible manipulation, by giving me no choice? Yes, you can well say I had a choice of going elsewhere. I had been to Puma, and the same colour problems existed, and I did not like the shoes either (even though lower in price than Nike)…Value would have been further destroyed if I had to go elsewhere. So I decided to buy from Nike.

Now, these coloured shoes will become fashion statements for the fashionistas. Just like the colours for dresses from the fashion houses described by Jonah.

The next day I realised people were noticing my new blue shoes, and an invisible influence was being exerted on them!

Next I come to a more subtle but more frightening invisible manipulation that Amazon, Microsoft, Google have on our habits. They have a one-way policy of being contacted. They can contact us and we cannot contact them. Many of the younger generation are happy with this, but the older generation finds this irksome. In India let’s say I am told a delivery will be on the 20th, I am not told the time. I cannot find out. And if I am not at home, I get a call from the delivery person saying you were not home and we will re-deliver. I am not allowed to give an input. The part, I am told, on the 21stby a text message will be delivered on the 22nd. What if I am not home that day too? And on and on. Totally unacceptable to me but acceptable to the providers of service. In due course of time we will accept this as a norm and a way of doing business. The definition of normal business would have been re-written.

I just got a call from Airtel that their technician will be at my house in 15 minutes. This is one hour later. So I called the caller. I got a message saying “incoming calls to this number are barred”. So much for customer service and customer value!

Not so subtle are companies, where you cannot find a way to contact anyone except for investor relations.

Value is being destroyed.

Jonah, we poor consumers need your influence in exerting invisible and visible influence on these companies. HELP!!!

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.

Clearing Misconceptions on Customer Value

May 6, 2016

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. Satisfaction 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 neighborhood petrol station, where we had a poor experience.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. Values and Value are the same: Values are what someone stands for: ethics, morals, sustainability. Value is defined above. In fact, Values create Value.
  7. 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.
  8. 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 are these misconceptions propagated and misunderstood? 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 lay reader 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 favorite 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 Customer 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 from truly improving.

Executives and Consultants can lead this change in understanding.

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.

How Net Promoter Score is Like Global Warming

April 18, 2016

Scott Broetzmann, President of CCMC has written a brilliant piece on NPS. It is given below. For those of you using NPS, this article may make you re-think:

“Some have suggested that global warming’s “murky consequences aren’t vivid enough to impress our distracted brains.”

And so it is with many omnibus corporate customer experience metrics like the Net Promoter Score (NPS). These oversimplified measures are all too often failing to embolden leadership to act on the impending doom and disaster that accompanies a mediocre customer experience.

Addressing the fatal flaws of an orthodox NPS approach is simple but not easy; NPS can be supplemented by the use of three corrective “measures.”

The three compensatory analytical techniques include:

  • The Market Damage model
  • A proper key driver and sensitivity analysis
  • A commitment to formal action planning

The MDM effectively offsets each of the three weaknesses of an NPS-only approach. Specifically, the MDM:

  1. Identifies specific problems in each phase of the customer experience that cause damage.
  2. Facilitates the identification of the cause of problems and accountability for action.
  3. Quantifies the revenue and word of mouth damage of the overall level of problems (think temperature or CO2 increases in the global warming analogy) and of each individual problem in a manner that is credible to Finance and Marketing.

A Proper Key Driver & Sensitivity Analysis: When executed properly, key driver analysis (the methodology for identifying what matters most) is central to getting executive attention. Executives care less about “what’s important” and care more about an understanding of what can be learned by effectively acting on things that matter.

Assuming that the ultimate goal of any survey is to contribute to a positive, incremental and sustainable improvement in the customer experience, action planning is the magic elixir to bring about this outcome. It is the antidote to complacency.

As we define it, action planning is the intentional and ongoing process of identifying, operationalizing, and implementing specific actions that affect enough customers, over a long enough period of time, to increase positive ratings for those selected elements of the customer experience that yield the greatest payoff.

It would not be difficult to argue that NPS and related omnibus metrics have helped propagate a certain customer experience groupthink. The “magic” of NPS has fostered the evolution of a virtual and overly cohesive group of corporate decision makers which believes itself to be infallible or invincible when it comes to the customer experience. In many cases, nothing could be further from the truth. In such cases, it’s more likely that no one is paying attention to signs of impending customer doom because they lack the right data and processes.”

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.

C2C: Its Importance

February 24, 2016

C2C is normally Customer to Customer or Consumer to Consumer, or Citizen to Citizen

Contextually, it has meant one citizen selling to another, and a company or a portal like eBay supporting this service.

In my article today, I want to go beyond one customer selling to another.

I want to talk about the portals that allow interaction between customers:

Self-help or help: These are apps or bogs that allow people to solve the problems created by products or services, which the company does not solve. Such C2C sites are a great help whether you want to learn about an excel issue, or whether your dialer is hanging on your cell phone, or your computer is getting a blue screen problem. Very often, if it weren’t for these sites allowing C2C interaction, we (and our suppliers) would be in deep s—-.

Advice: This is similar to self-help, but goes beyond problem solving to getting advice. Is it a good idea to be in Macedonia in December? Is it good to load SideSync? What is the best treatment for this ailment? The company does not have to field such questions from Customers.

Citizen2Citizen: Citizens can help each other through such portals: What is the best time to transact with the government office, whom to go to for help, where to complain, what is the right rate for land etc.?

Customer Ratings:  Customers tend to give ratings on the net. Basically, the importance of a net based customer rating of a product, place, service or portal is not properly understood, or is underplayed, the primary focus being on traditional methods of getting ratings. Thus often the C2C portal rating takes second place in importance to the traditional brand rating of a company. On the other hand, companies with poorer brand ratings or even unknown companies can become extremely important or as known as “brand-known companies” almost overnight, if they get good scores or they get noticed.

The company’s ability to find and understand the Customer’s ratings on sites like TripAdvisor, Amazon etc. is important. Such ratings help other customers understand various options, and help them buy. One can argue that these ratings are becoming more important than the brand. Dave Aaaker, the brand guru just bought his wife an unbranded laptop based on the ratings!

Customer Journey: Comments, ratings made by the Customer often show the extra Customer Journey that was (hopefully) never intended by the supplier. These C2C sites are places to understand how to minimise the Customer Journey, and make it a happier experience in the future.

The C2C interaction takes place also in social sites, and generally with your extended friend circle.

Companies have to work on getting betterC2C ratings. First they have to analyse why people are saying what they are saying. If someone says he got used or unclean bedsheets in a hotel, the hotel manager cannot just say, no way we always have clean sheets. Should he not check why the Customer said that? Better for him to check on made up rooms to see if all have fresh sheets than to say to the Customer, this isn’t possible, not in my hotel. They have to get to think of eliminating complaints or negative comments. Not by bumping off the guests’ complaints but by actually bumping up their systems and processes

Even branded products need good C2C interaction and scores, or the unbranded people will overtake them.

C2C helps companies, because there is feedback, Customer scores, Customer chats. C2C is a source of communication for companies to Customers, and a way to solve Customers’ problems through a community effort. Companies can find out future trends, and can work towards zero complaints by understanding Customer issues, and ensuring Customer problems do not re-occur. Customer journeys can become shorter and more pleasant. Lastly, by working with these sites, companies can identify Customer advocates who can promote companies through their networks.

C2C and what it means to your company: You could be on an informal C2C interaction, through the social media. Or, you could have a C2C system in place. Or you could have none.

Given that the C2C interaction could be very valuable to you in:

  1. Building a Customer Community
  2. Customer interaction and relationship
  3. Customer self-service taking pressure off you
  4. Causing Customers to offer ideas and new ways or new things to do with your offerings
  5. Getting to know and understand Customers, their needs and in keeping a finger on the pulse
  6. Going beyond building a brand, by using the Customer score

Therefore, you should organise the C2C interaction and build your strategy for giving the most to the Customer and getting the most from it. Let C@C (Customer at your Customer Portal) work for you.

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

 

Gautam Mahajan                                                                                                                              Founding Editor, Journal of Creating Value,

President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.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 Companies Loyal?

December 29, 2015

I came across a cartoon at Economic Times, which showed two executives speaking and one saying:

It’s no more about employee loyalty… try winning company’s loyalty…

It got me thinking. Should a company be loyal? Can a company be loyal? To whom? I quickly googled, and there was hardly anything on a company’s loyalty.

The first question is an easy one, a company can be loyal.

Should a company be loyal is more complex, till we answer the question to whom.

I guess we have to scroll through the stakeholders: Employees, customers, partners, shareholders and society. The easy answer is that a company should be loyal to all of these. If this is true, then we have to ask are most companies you know loyal, and to whom? Are companies you buy from loyal to you? I have found that whenever we as Customers have been good and fair to our suppliers, they tend to be more loyal to us than to other customers who are not as fair or good to them.

I would imagine most companies tend to be loyal to their major shareholders. They generally show their loyalty to the shareholder by offering him what he wants most: dividends, stock price, long term growth and market leadership. I suspect most shareholders want either dividends or stock price growth. Thus the loyal management works on these aspects.

Are companies loyal to employees? Is this loyalty secondary to the loyalty to shareholders? This makes us think of the Japanese lifetime employment system (only 8.8% of Japanese companies have this now). There were three models: Stationary (governed by a set of rigid rules, and the expectation that some non performing employees would voluntarily leave), Growth (depends on organisational growth, and all grow with the organisation), stagnant (where the company when in bad shape let’s employees go) …Assuming employees were given life time employment, what value was this loyalty? Apart from a somewhat guaranteed employment, this system did not allow employees to easily switch and they became captive employees. Was company loyalty good for employees?

Outside of Japan, I am sure there are examples of companies being loyal to employees. I cannot think of many. We also notice that companies work on making employees loyal. One way is to make the employee feel indispensable. Or by giving golden handcuffs…If you leave you will be worse off or lose bonuses, or stock options.

The less said about true loyalty to customers. As long as the customer can be milked (can buy), he is worthwhile. In this instant gratification society, even this is short lived. Also, as I mentioned earlier, there is some loyalty to customers who are good to them.

I had written about company loyalty to suppliers, and that too is minimal and based on the benefit to the company (sometimes called mutual benefit). This loyalty is generally purchasing department led, though it is true mutual bonds between the supplier and the end user in the company do form.

The company’s loyalty to society and to sustainability has yet to be proved. There are examples of Unilever and others who are trying to be loyal to the environment and sustainability

So, the company is loyal to the Owners…in reality!

How can they change or be otherwise. Others have written that the company has to think of itself first. I think this is true for survival (first put the oxygen mask on yourself, and then on the kids…but not put the oxygen mask on yourself and abandon the kids). So instead of abandoning the other stakeholders, companies try to sustain them to the extent their loyalty to the owner will let them.

Many Customer consultants would want the company to be customer-centric. Does that include company loyalty?

I think company loyalty and customer-centricity is a thought process and requires enlightened owners, and enlightened managers, who look beyond profit being the purpose of a company.

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

 

Gautam Mahajan                                                                                                              Founding Editor, Journal of Creating Value,

President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.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.

8 Reasons Why your Company Isn’t Creating Value

December 16, 2014

Value Creation is a distinctive mind-set. It is a mentality driven by enhanced self-esteem, awareness and pro-activeness. It goes beyond just doing your job, it is doing something extra.

Value Creation is executing proactive, imaginative or inspired actions that increase the net worth of products, services or an entire business to create better gains or value for Customers, stakeholders and shareholders.  Value Creation stimulates executives and business leaders to generate improved value for Customers, driving success for the organization and its stakeholders.

Value Creation creates Customer conscious companies.

If Value Creation is so good and basic a management technique, why is it not being adopted in a universal fashion? Which of these is holding your company from using it (If you are using value creation techniques, you would be aware of this! Are you?) You will find that smart people like you will be able to create more value when you focus on doing so.

There are several reasons:

  1. You are captives to what you have been taught and what you have learnt.

 

  1. You have been taught to be executives, and hard driving at that to create value for the company.
  2. Customer believe that Value Creation for the company means increased profits, typically by reducing costs, increasing efficiency and trying to increase market share
  3. You are taught to forget that you are Customers too. You therefore find it difficult to think like an executive and a Customer at the same time
  4. You have to take advantage of everything in your power to create value for the company. This could mean exploiting the employees, Customers and partners, of society and ethics, if you have to. This concept is undergoing a sea change, as executives now know the importance of employees, Customers and partners and society and ethics (values). But it hasn’t gone far enough.

All these prevent us from adopting Value Creation in the proper manner.

  1. In the last 20 years, CEO compensation has gone up much faster than profits, and is based on short term profits. The lifespan of CEO’s has gone down, making them look for quick wins.

 

  1. More and more of the executive bonuses are now being based on short term profits. Stocks and options compensation have gone up sky high. Huge motivation to make more money now. Why worry about the long run? The CEO may not last that long

See the two charts below, showing the lifespan of companies and executives is reducing and executive compensation is going up, especially through stocks and options

 Featured image

Taken from James Montier

Featured image

The short term thinking is against Customer Value Creation and Value Creation in general, except for Value Creation for the shareholder.

  1. MBA and professional schools teach students to become executives, and teach them that shareholder wealth is the real purpose of the firm, then that is what they will practice. They do not understand that shareholder wealth is a result and not the purpose of their existence

 

  1. Shareholder value is not necessarily shareholder wealth. It can mean much more than that. It could be a focus on employees and Customers or even societal value
  2. Shareholder Value (read Profits) grows by increasing Customer Value Creation because it grows loyalty and market share
  1. There is an overemphasis on efficiency, systems and processes. Not enough thought is given to mind-set and attitudes, which are required to increase employee and Customer Value.

 

  1. Mind-set comes from education and awareness, and wanting to create value rather than being forced to do so
  1. More time and emphasis is paid to correcting problems and settling complaints, rather than to get to Zero Complaints

 

  1. Every time there is a complaint, it takes away the value you are providing. What are you doing to prevent complaints from happening?
  2. This requires a mind-set that works systemically to avoid complaints, driving the business to a Zero Complaint state
  3. There is a feeling that complaints give you the opportunity to interact with a customer. Surely, there are better ways to do so! Imagine, the waiter drops soup on you; a true cause for a complaint. Is this what you want as an interaction? Better to find more positive ways of interacting with customers
  1. Competition is doing the same thing, why change. Let’s all make merry and get our bonuses.

 

  1. Why do we need to be different? Because we will gain competitive advantage and be ahead of competition, rather than be followers

 

  1. Customer concepts apart from being executive led are also embedded by consultants who in a race to get ahead come up with niche phrases like CRM, CX, Customer Journey, Customer Effort etc. but all focused on processes.

 

  1. There is confusion on basic definitions. So work is done in bits and pieces instead of a real sea-change as outlined in my book, Total Customer Value Management: Transforming Business Thinking.
  2. You may not realise a customer journey requires an effort. You may not realise that the basic product and the service should provide the experience, and other experiences other than delightful ones are unnecessary. Thus, a good experience is when you are upgraded by an airline or being allowed to get free miles for lower points.

The reverse is having an experience such as cancelled flights. We do not want this experience. If it does happen, the Customer journey to get the problem solved should be minimal.

 

  1. Employees and departments such as HR and IT are not taught to create true value and remain staff functions

 

  1. Owners or managers or employees must realize that company’s place a value on their positions (what the company will get vs what it costs them to have the employee). Value is created when employees do something extra and go beyond what is expected of them. Employees add value by doing things better than others. If actions are worse employees destroy value. Those that add value get promoted and get better raises.
  1. Employees destroy value sometimes. Why would one wish to destroy value? But value gets destroyed, too, unconsciously
  1. Put your Customers at the centre of your business decisions on making organizational changes

Destruction of value happens unconsciously just as creation of value. If you created value consciously and you understood this you would work differently.

And companies, if they understood the true intent of shareholder value and that there is a strong connection between creating value for employees and employees creating value for Customers to increase profits will embrace Value Creation.

Your comments are welcome!

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.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.