Nietzche once said, "The entire cognitive apparatus is an apparatus for abstraction and simplification—designed not for knowledge but for gaining control of things". In order to build a strong and sustainable business model in the present day economy, companies need to start asking themselves do they really have "control of things" when it comes to delivering value to their customers. I recall reading a recent article on VentureBeat that mentioned that there are 2,371 apps produced per day. Now if that statistic holds true, then that means 865,415 new apps are introduced into the market every 12 months. Now here is the billion dollar question, how many of these apps actually has a real value to customers?
On the opposite end of the table, companies that do manage to create something valuable, often fail in consistently replicating it. For example, how many times have you stopped at Mcdonalds and found they forgot to put the extra cheese you paid for on your cheeseburger? How many times have you had to return a smartphone or laptop because of a product malfunction? And think about the number of automobile recalls that are quietly sweep under the rug every year. Did these organizations really know how to replicate unique value that customers actually care about? If they don’t, what systems can they begin implementing to help guide value creation and delivery?
Developing Systems That Guarantee Value
Understand the road to creating and sustaining value for customers begins and ends with developing and perfecting effective business processes that can deliver value repeatedly. Effective business processes are what guarantee that the desired value you want passed to the consumer actually gets delivered. In business modeling this concept is often referred to as the "Value Chain". Organizations must perfect their value chains in order to remain relevant in today’s market. The world is a lot smaller than it was 10 years ago. The average consumer now receives an estimated 5,000 marketing messages per day. Delivering products and services with skimpy value won't sustain or grow your organization (or our economy).
"How can we strengthen the way we deliver value to our clients?" That is the question I ask myself weekly. Whether you’re a service provider or product manufacturer developing that is the question that should rattle through the minds of every business leader. Improving the system that guarantees value to your customers, strengthening the way you deliver value to customers should be your chief concern. Startups as well as mid to large organizations need to start exploring innovative approaches on value delivery.
How To Develop A Value Chain
There is a lot information published on how to develop a value chain for businesses that have tangible products. Supply chain managers and experts still worship at the feet of Michael Porter and his diagrams for value chain management for products. However one of the biggest problems I stumbled acrossed in designing my own value chain for my firm four years ago, was the lack of information available on service value chains. I can’t tell you how astonished I was to see nothing helpful pulled up when I typed into Google search, “books service value chains”. Literally it is as if the whole world believes that the only organizations that need value chains are product manufacturers! Do publishers and business writers not realise that more than 80% of the businesses in the U.S are service organizations?
After lot of researching on service design, supply chain management and relationship management, I devised the following five step value chain formula for service organizations.
- Service Concept: Services like products, are built first from an awesome concept. In order to guarantee greater value to consumers today’s startups and small businesses need to carefully look at how they can improve the concept of their services. Awesome service concepts are built upon excelling in four areas, service operation, service experience, service benefits and service results (value).
Can you imagine walking into a Subway and not having the benefit of watching a person actually prepare your sub by hand? Or what about suffering through the experience of sitting in a Starbucks with no wifi, music and only a bench to sit on? Or how about having to deal with site crashes from Netflix and Hulu when watching your favorite movie or TV show? Each one of these scenarios describes an important area of a awesome service concept you have to come to love and expect.
- Service Marketing: Great services that regularly deliver value know how to market themselves. Websites like Priceline.com and Freecreditreport.com have created some of the most memorable commercials by selling their value through comedy. William Schaffner different priceline moments are classic and hilariously funny. And no one can forget the small somewhat hippie looking group of guys who sing and rap the Freecreditreport.com jingle.
- Service Operations: Value centered services always have incredible backend operations and processes. Take for example a restaurant like a Chipotle, have you ever noticed not matter how long their line is its always moving extremely fast? According to the Wall Street Journal,
“Chipotle averages more than 350 transactions during the lunch hour—about one every 11 seconds” - WSJ
- Service Support: Value rich services also outperform competitors in providing great customer service to their customers. Zappos founder, Tony Hsieh mentions in almost every interview how by putting customer service first actually helps drive sales and brand image.
- Service Delivery: Services that know how to speak value know how to deliver it consistently on a large, and small scale. Companies like Google, have set the bar on the way we use GPS navigation on our phones and computers. I remember back in early 2000 if you needed directions to a business or anywhere, you’re only option was Mapquest.com. A website who, for it’s time was brilliant and incredibly useful. Then Google unleased Google Maps.
A massive project that allowed the average person to get a 3D of any business, street or location in the world! What made this service superior was not only the 3D features, but the way Google tied the mapping features into it’s search results for it’s flagship service, Google Search.
We exist to change and we change to exist. Always unsatisfied with yesterday, maybe that is the reason why majority of us are always looking for the next best thing. Successful products and services are built by taking risks on how you create and deliver value. Legendary entrepreneurs like Steve Jobs, Henry Ford and even Nikola Tesla lived and embraced this philosophy. Everytime we turn on a kitchen light, plug up our Ipad, drive to work or watch Toy Story with our kids, we are benefiting from their creativity and innovation. To avoid the product/service graveyard startups and corporations need to stop playing monkey see monkey do. Organizations need to do a better job of building and managing processes that create not only the desired output, but the desired value consumers are willing to pay for.