Posted tagged ‘Value management’

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

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.

Customer Value Journey

May 22, 2014

Making the Journey Easy and Meaningful Creates Value

I gave a two day workshop on Value Creation Mapping in Malaysia in April 2014. I found that the concept of value was interpreted differently by different participants. Very few said it meant whether what you got was worth what you paid and versus competitive offers. Most confused value for either benefits or value for money or price. Value is actually a juxtaposition of benefits and price.

I also explained that while we think of the Customer Journey as one journey, it actually has to be viewed as three journeys by the company to be able to make the Customer’s journey more comfortable, and an enriching experience.

The first part of his journey and the experience is in searching for a product, shopping, buying, taking delivery, or having it delivered, the delivery and installation process (including self-installation), actual use experience, complaint experience, experience of getting something unusual done, getting a call back from the company, billing and payment, maintenance and service etc.

The second is the journey that the company makes to the customer, when contacting him for giving information, for getting the customer to buy, for order information, service information, for collecting bills etc. Is this journey that the company makes to the customer a comfortable journey or experience for the customer? Is it comfortable for the company? Does the company have enough information while making a call? How often do you get a call from a service guy asking for your address, and the model of your TV? Or when you get repeat calls for buying. Or after you have bought, someone calls you and says when will you buy?

Companies do not view this as a part of the customer journey, and often irritate the hell out of the customer and even aggravate the customer.

Lastly, there is the journey the company people make within the company for solving the problems of the customer and to make the customer journey comfortable. How often do you hear, as a customer from the company, this is not my department, you will have to call so and so. The company is palming its journey off onto the customer and making the customer embark on a fresh journey.

I just got a call from Citibank cards asking for my date of birth to check a statement (why?). I asked the girl to contact my branch manager whom I had sent all the information by email. She could not or would not. Could I call him to send her the information?

Companies delegate their work onto the customer and make him take unnecessary journeys, because the convenience of the company (or its executive) is more important than the convenience of the customer.

All these are Value Destructing. It is important that the companies use these journeys to Create Value for the customer, but this is not taught, this is not part of the culture. Too bad, Mr Customer!

The lessons:

The journey itself cannot be separated from the culture of the company. Are we inwardly focused or do we want to take in the needs of the customer and reduce his pain in the journey and increase the Value Creation, his sense of wellbeing, happiness and even delight? Is that your culture? If yes, why do these journeys happen in a way to cause some grief to the customer?

Creating Value in the Journey should be the cornerstone of the culture and the people.

To do this, a clear understanding of what Customer Value is and how to measure it through the Customer Value Added metric

(CVA) =       Value added by your company to your customers

                    Value added by your competitors to its customers

Last but not least, build a Customer Strategy, and break silos and build a Circle of Promises, so that the customer gets a seamless, fulfilling experience during the journey, so that he becomes loyal.

Your comments are welcome!

Call at (+91) 9971288580


Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055

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) transform 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.