How do I know that my organisation is creating customer value?
Arguably, all organisational activity should be about generating value for our customers.
Each team contributes to the value that the customer receives
Each team in your internal value chain is contributing something to that end-value. But few people are able to define ‘value’ as something that’s actually meaningful in the context of an employee or a customer, or state with any certainty where that value originates across the internal value chain.
- How do you know if work done by a particular team results in value?
- Is all delivered (working) functionality directly valuable to the organisation?
- How does activity undertaken by an enabling function contribute to organisational value? What is its value?
- How do you know which functionality has more business value over other functionality?
- What does ‘maximizing value’ mean in terms of behaviour and decisions?
- Are there different kinds of value? Are they equal? How do you compare them?
- Whose perspective do we take when deciding what has ‘value’?
The work that a team does should benefit the organisation or business as a whole somehow. But this is all a bit vague. Ideally, we need a way of deciding if this is the ‘right thing to do’ and ‘is it a good time to do it’.
To do this we need an enterprise architecture against which we can objectively check if the work that creates the value is a ‘good thing’ and opex funding to underwrite the money to be spent on it. With this high-level direction, our engineering and delivery teams, and enabling functions, can work secure in the knowledge that their efforts are well-founded. Even if we can't pinpoint where in the value-chain value is added, at least we know that the sum of all contribution does provide worthwhile value to the customer.
What is Value?
Let's hypothesise that there are several different types of Value:
Commercial Value – work which results in revenue and profit, such as a new version of a product, a new product or a reduction in sales or operating cost
Market Value – work which increases the potential number of customers, such as products that appeal to a new set of customers, the availability of a product in a different market, feature that the competition can’t provide or are better implemented
Efficiency Value – work that increases efficiency and therefore decreases operating costs, such as increasing product usability, reducing time to market, reducing time to set up peak operating capability, changes which reduce calls to a help desk
Future Value – work which increases the chances of more easily achieving any of the above values in the (near) future by investing in innovation and learning; reducing technical debt.
Cumulative work on all of the above by teams across the company will create tangible value for the end-customer
Do you agree with these definitions? Are there any others?
Marketing Manager @ Astrofil Consulting
4 年Interesting read, thanks for sharing
I think the values mentioned are more about shareholder value than customer value. Don't get me wrong, a company needs to be commercially viable and efficient to deliver customer value but companies need also to assess how their customers value them and how that value can be increased. In addition to customer value, responsible companies should also be looking at their value add to society and the environment.
Digital Riser Founder | Digital Marketing Expert | Helping Small Businesses Thrive Online ???? Digital Marketer at Kite Group
4 年A really insightful article here David
Transformational Change Advisor | Transformation Programme Director | Helping insurers, MGAs & brokers deliver successful business & digital transformation outcomes | Programme turnaround | Award-winning author
4 年One way of considering 'value' may be to view it in similar terms to that of 'benefit' i.e. you can have tangible benefit (ie what you can directly measure; this can be positive or negative of course), and intangible benefit (typically harder to measure as not directly measurable). The 4 definitions of value listed are broadly tangible. An example of intangible value would be the knowledge that staff have about the job they do (what is good, bad and ugly etc). Leveraging / tapping into this would provide an additional (and I would argue valuable) perspective that would contribute to 'overall value'. However, this seems rarely done as people working at the same company for a long time often get treated as part of the furniture and their voice is ignored.
Reliable Events & Corporate Hospitality Services | Venue Searching & Event Support | MD of Sheer Edge & Editor in Chief of Inside Edge
4 年A really insightful article here David Seacombe the value that the business and employees offer can sometimes be hidden and never seen or appreciated.