Customers Define Value

In the old world, we defined value for our customers. We typically left the buyer out of the equation, while we defined and pre-packed the value. We then set out to persuade and convince the buyer it was right for them.

Solutions vs. Products

Flounder

In the new world, this coming is no longer effective. In the new world, the buyer defines value. Customers want solutions. Solutions must be created dynamically for each customer. We can no longer afford to push "one-size-fits-all" or pre-packaged products. Although we've come a long way from Henry Ford's "they can have any colour they like as long as it's black.", we still expect our customers to make sacrifices in order make our products or services work for them. Idiosyncratic preferences are inconvenient to us. Changing preferences are inconvenient to us. If we had things our way, we would design algorithms for every aspect of yield and set up assembly lines and cheap labour to turn out lots of product. Every time an prominent customer's preferences change, we need to modify our assembly line. Every time an algorithm is challenged, we need to hire expensive, reasoning labour. Just as we find our stride, the pace or direction of the race changes. As it changes, those who can't deal with complexity, put their head in the sand. Those who can, keep their head up and pick up the pace.

Change is Constant

Not only do we have the new dynamic of who defines value, but we also have rapidly changing perceptions of value. Where once we could originate the right products and rest on our laurels, now we must constantly re-evaluate our value proposition. Value is just a perception and perceptions can change in an instant.

First, we have to accept that change is a constant. Then we need to outline out how to reserve the entrepreneurial talent that exists in our organizations. As we systematize enterprise and introduce indispensable discipline, we often inadvertently originate an environment, which is hostile to entrepreneurial individuals, but animated to what I call the "professional managers".

Professional managers are great at implementing systems and enforcing compliance. This talent pre-supposes a known and understood environment. Professional managers flounder in complexity. Complexity and uncertainty is where entrepreneurs thrive.

In the new world, we need to administrate our businesses as two detach businesses: OldCo - the part of our enterprise which can be reduced to an algorithm and therefore can be systematized. And NewCo - the part of our enterprise that responds to new challenges and opportunities.

The Knowledge Funnel

According to Roger Martin, Dean at the Rotman School of enterprise in Toronto, knowledge comes into our organizations straight through a funnel. At the top of the funnel, something is a mystery. It forces us to ask questions. As we begin to outline it out, we begin to form rules of thumb or heuristics. Once the rules of thumb become great understood, we are able to change our knowledge into an algorithm. Algorithms allow us to hire cheap labour to do repetitive tasks. OldCo lives with algorithms. NewCo deals with strangeness and heuristics. NewCo requires far greater cognitive faculties and never shies away from new data, no matter how disruptive it may be. OldCo managers must be great analysts. NewCo managers must be synthesists, possessing the quality to put facts together in new and creative ways. This quality to synthesize is what enables them to spot and originate opportunities before anything else.

Once we understand that our enterprise comprises OldCo and NewCo, we can become proactive about change. We can get facts about how the world of our key clients is changing and we can anticipate their emerging needs and changing priorities. We can then collaborate with them proactively to outline out how to address their new challenges. The OldCo part of our enterprise is about following and repeating a known but rapidly aging success formula. The NewCo part of the enterprise is more about "sense and respond" to our changing landscape. There is no algorithm because there are too many unknowns.

Crm as Digital Nervous theory

In order to stay ahead of these changes, we must design a digital nervous theory that enables us to see and hear what's going on with our customers. OldCo must become adept at convention buyer information. NewCo must be adept at synthesizing and interpreting buyer data.

Are your Crm and other supporting systems and processes set up to reserve both OldCo and NewCo?

Customers Define Value

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