Most companies talk of their strategic objective as “increase value for its shareholders”. Most CEOs harbour belief that shareholders are the owners of the company and hence the company is beholden to their shareholders. It is commonly uttered in most management forums that Business exists to make healthy returns on shareholder’s investment.
The most obvious step to shareholder value creation is to increase your sales by offering products and services to fulfil a particular need of another organisation or an individual.
So, in essence the profits of the company come from the customers whom the company sells its products or services. No customers, no profits. No value for shareholder.
Your value proposition to fulfil the needs and expectations of the customers is the core activity of the company.
If Customers are happy with you provide, your business will profitably grow and as a consequence, the shareholder’s value is created. The key task of the CEO is to make certain his whole organisation is geared towards customers.
As a company it is a common practise to set ourselves a Vision and a Mission and the credo. This is all internal. I am not saying that it is all waste of time. However, one must not forget that there are no results inside the walls of the enterprise: the result of the business is outside. The result of the school is a good citizen. The result of the vaccine research is people immunity from infectious disease.
Are the headlights pointing to the right direction?
Amazon company motto “Know Your Customer” is so simple. Building customer loyalty is its life blood. it’s wants to be the planet’s most customer centric company. Everything is done with a view from outside to inside. Its processes are designed and it work flows are created solely based on what their customers are looking for.
This aspect of priority must be understood by the whole organisation.
Here is the story a driver was carrying 25 boxes of the product urgently required by customer and on the way the hilly road had a mudslide. could have been a delay of 2 days for the road to open. so, the driver rented a two-wheeler motorbike and carried five boxes on the backseat as the maximum he could carry and delivered. No one instructed the driver what to do. What he did was from his heart.
He had Empathy for his customer. He clearly knew where his next meal comes from.
What would it take to win–
- Do we truly understand the expectations of the customer.
- Are we clear about the difference between needs and values of a customer.
- Do we educate our customers enough to understand in a way that it increases his expectations to benefit his business.
- What compromises customer is forced to make? Eliminating such compromises would release enormous trapped value.
A company can make its own destiny only if it has a clear and straight forward view on how the market is shaping. Having a clear idea of how the market needs will be different in 5 to 10 years from now?
In a recent statement made by Mr Tata ex-chairman of the TATA Group with market cap of $300 Billion—he said “probably the most important fundamental that is yet being ignored today is paying close attention to the customer to satisfy his needs, but also to understand and anticipate his expectations.”
In the increasingly complex and highly unsettled business environment, customers expects exceptional experiences.
Chairman of HP had made this wonderful remark- He said “successful company in the next 25 years will be those who do best job of capturing internal knowledge”
This statement is not only for technology companies. It equally applies to any. Over years the employees amass enormous amount of knowledge of the market, of the shop floor, of the customers, of processes, of competitors which if mined carefully and purposefully, could create enormous intelligence.
The “anticipation of expectations” is not about reading a crystal ball.
Customer talk Price but buy value. Today’s Procurement Manager is not merely bargaining for the lowest price.
- He is evaluating the supplier on what it COST him to maintain this relationship. He factors in time spend getting questions answered; follow up on unfulfilled promises; and on returning of flawed products.
- He finds it more expensive to deal with too many suppliers. they are looking to develop long term partnerships with suppliers. Changing to new supplier would hold too many unknowns for the Buyer.
- Buyers are ready and willing to share data and information with their partner- suppliers, more than ever before. They subscribe more for a collaborative relationship.
Finally, let’s talk of another aspect which is rarely understood.
Value must be Quantified
if you quantify the value you are providing to your customers the benefit of the value gets translated into a tangible benefit.
This would be precious data for both supplier and buyer. Supplier and the buyer can then develop a shared objective to work together. Both start to walk on the same road.
Measuring the value outcome of joint projects will give both a clear picture of what resources would be needed from each side to deliver the desired value.