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     KEYZINE: An e-zine for LEADERS:
   ABOUT THE PEOPLE PART OF BUSINESS
             Volume 90, September 2008
  Publisher: © Key Associates, 2008
              ISSN # 1545-8873
           http://www.mkkey.com/

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This Issue: On "Value Management"

Contents:

"Price is what you pay.  Value is what you get.”
                              - Warren Buffett

"Try not to become a man of success, but rather a man of value.”
                              - Albert Einstein

"Our value is the sum of our values.”
                              - Joe Batten

"You build on cost and you borrow on value.”
                               - Paul Reichmann

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WHAT'S HOT IN LEADERSHIP
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USING VALUE AS A DECISIVE MEASURE OF WORTH.
 
MANAGING CUSTOMER EXPERIENCE ALONG 
THE DIMENSIONS OF COST, QUALITY, AND SERVICE.
 
REMOVING NON-VALUE-ADDED WORK 
(e.g.,  ERRORS AND WASTE IN PROCESSES).

DOING AWAY WITH LAYERING OF INITIATIVES.

SEEKING LIFETIME RELATIONSHIPS WITH 
CUSTOMERS.

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MAINTAINING YOURSELF AS A LEADER
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Every business seeks to create something of value 
in today's competitive business environment.  Those 
that survive do so by acquiring the right customers, 
building a relationship with them, and keeping valuable 
customers (repeat business) for a long time.

Several methodologies exist for putting measures  
onto business economics--value management, for one.  
Improving the performance of processes begins 
with an understanding of customer needs and 
requirements.  Embrace your book of business 
to learn everything you can about adding value.

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FREQUENTLY ASKED QUESTIONS
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How do we know if we add VALUE?

Ask:

* Does our company have the right strategy for 
attracting and retaining customers?

* Are we certain that our company provides 
better value than our competitors?   Do our 
customers agree?

* Does our company have programs entitled 
"customer satisfaction", "customer loyalty", 
"customer delight" or "customer relationship 
management?"  Are they are paying off?

* Does everyone in our company understand and 
agree on how they contribute to the markets' perception 
of the value of our products and services?

 


Is there a formula for VALUE?

Every customer does a mini-cost/benefit analysis, 
when choosing a product or service.

Value = Outcomes + Customer Service/Cost

Value is Quality relative to Price.  In marketing terms, 
a "Value Proposition" consists of the sum total of benefits 
which a vendor promises that a customer will receive, 
in return for the customer's associated payment or other 
value transfer (Wikipedia).  In other words, what the 
customer gets for what the customer pays (payment 
and access costs).  

 

Is there a way to better manage the customer experience?

One of the best ways is to be a customer yourself 
or to shadow another.  See your processes through 
your customers' eyes.  This is sometimes called 
"The Walk of Shame."  Do their outcomes include 
innovation or other results that improve the 
quality of their lives?  Does their service not merely  
satisfy, but delight?  Does the cost include more 
than the price--e.g., inconvenience, discomfort, 
time?  Count the steps, the barriers, the number of 
staff encounters, the pointless efforts.

We need to study processes from the perspective 
of removing waste or CRUD™ -- Complexity, 
Redundancy, Unnecessary Steps, and Delays.  
These are non-value-adding components that 
drive customers to the competition.  This is the 
core of the LEAN movement.

 

 

How do I view processes and their improvements?

Value Stream Mapping is a one-page picture of a 
process.  A how-to is given here:
 http://www.nwlean.net/toolsCD/VSM/4%20steps%20to%20VSM.pdf

Value Stream Mapping Symbols:
http://www.strategosinc.com/value-stream-mapping-3.htm

Or a simple work flow map or flowchart:
 http://www.mkkey.com/EZines/ezine50-flowchart.htm



EXERCISES AND ACTION ITEMS:

* Pin down exactly what "value" your business banks on.  
Where are you "value-adding?"

* Mystery shop or otherwise shadow your customers' 
experience.  What is their "cost" to do business with 
you?  Where are the waits, delays, redo's, aggravations?

* Become a "CRUD-Buster."  Remove one piece of waste 
every day.
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EDUCATIONAL OPPORTUNITIES
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 Managing the lifetime profitability of your customer base
http://www.businessobjects.com/pdf/solutions/white_paper_cvm_new_techniques.pdf

Blogs about Customer Value Management (CVM)
http://wordpress.com/tag/customer-value-management/

A PowerPoint on the process of CVM
file:///C:/Documents%20and%20Settings/M.K.%20Key/Local%20Settings/
Temporary%20Internet%20Files/Content.IE5/9WHCXI24/a%255Br10-
custmor-mahajan%5B1%5D.ppt#256,1,CUSTOMER VALUE MANAGEMENT

Key Associates offers Customer Service and Value Management 
training, facilitation, and consultation: Call  1-888-655-3901 
or visit http://www.mkkey.com/.

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OTHER USEFUL WEBSITES 
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 Process Value Management 
http://www.thomasgroup.com/enterprise-solutions.aspx

The value creation process
http://www.deep-insight.com/en/cvm.html

The voice of the customer in value measurement
http://www.marketvaluesolutions.com/

Former Keyzines on related topics:
Volume 19, October 2002 - Lean Does Not Have to Be Mean
Volume 39, June 2004 - Bureaucracy
Volume 47, February 2005 - Whither Quality
Volume 50, May 2005 - Picture of a Process
Volume 71, February 2007 - Lean Organizations
Volume 80, November 2007 - Balanced Scorecard
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ARTICLES/PUBLICATIONS                              
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Alexander, Jack.  Performance Dashboards and
Analysis for Value Creation.  Wiley, 2006.

Bloxham, Eleanor.  Economic Value Management:
Applications and Techniques.  Wiley, 2002.

Grant, James L. Foundations of Economic Value Added,
2nd Edition.  Wiley, 2002.

Hafiz, Khalid & Scott Hendricks.  Customer Value Management: 
A Guide for Your Journey to Best-Practice Processes.
APQC's Passport to Success Series, 2001.

Hardy, Jack G.  The Core Value Proposition: Capture 
the Power of Your Business Building Ideas.  Trafford 
Publishing, 2006.

Herman, Roger E. & Lioia, Joyce.  Lean and Meaningful:
A New Culture for Corporate America.  Oak Hill
Press, 1998.

Kordupleski, Ray.  Mastering Customer Value Management.  
Pinnaflex Educational Resources, 2002.

Lewis, Audie G. Streamlining Healthcare Operations:
How Lean Logistics Can Transform Healthcare 
Organizations.  John Wiley & Sons, Inc., 2001.

Stewart, G. Bennett, III.  The Quest for Value.  Collins
Business, 1991.