Our upcoming, complimentary webinar, Resolving Complex Business Problems, is built around a dozen questions that must be answered. The first question deals with understanding the real problem. Can you write (yes, WRITE) a statement of the problem that ……..
Ken Vermilion
Value can be viewed through a set of lenses that include your customers, internal business processes, and traditional financial perspectives. This article looks at value through the customer lens.
As stated in the first article, Conversations About Value, I put forward the hypothesis that value is in eyes of the beholder. When customers use phrases like “I really enjoy” or “It’s our favorite place,” it’s difficult know exactly what customers mean. Steven Lauer and I co-authored a book, The Value-Able Law Firm. We developed Steve’s Value Related Qualities (VRQs) concept to help law firms better manage the creation of value by better understanding client expectations.
VRQs can help define value and can be applied to many consumer service or product relationships. For example, when a customer indicates they really enjoy a particular restaurant, they could be indicating:
Each of these elements can be viewed as specific VRQ that contributes to the consumer’s overall evaluation of enjoyment. The consumer’s value equation.
Value Related Qualities (VRQs) can be found in any consumer product or service. The key to understanding how VRQs create value is to understand the VRQ’s order of importance to the consumer.
Remember, value is in the eyes of the beholder. For a particular restaurant, is easy parking more important than delicious food or for a burger joint, is feeling like one of the family more important than speed of service or consistency of product? And are consumer VRQs fixed in order of importance or do changes in the business environment change consumer VRQ priorities?
Consumer VRQs don’t necessarily remain static over time. And, as often as not, changes in the business environment can dramatically alter how consumers prioritize VRQs, no fault of the provider of consumer goods and services. Value is further complicated because not all VRQs are created equal. Some VRQs are convenient or cosmetic in nature while others can change the way we think about ourselves.
As COVID-19 spread and news coverage of a possible pandemic declaration became more likely, social media lit up. Hoarding was the order of the day with toilet paper and hand sanitizer being at the top of the list. Almost instantly, these two (2) items went from ordinary household supply items to high value and scarce items subject to rationing. Worse yet, they became items worth fighting over in big box retail outlets!
People were forced to bunker at home meaning the home galleys were pressed into service like never before. Pasta inventories quickly shrank. One of our favorite pastas is bucatini. Manufactures of this specialty pasta shelved its production to accommodate the increased demand for more pedestrian pastas. If you can find bucatini and can’t live without it in your pantry, be prepared to pay between $10 and $60 per pound. Some specialty foods have become scarce causing the consumers VRQ structure, or order of importance/priority, to shift. Cheese and yeast were other items that suddenly became scarce and therefore more valuable.
Grocery pickup services, shopping services and meal kit services also mushroomed as the pandemic took hold of society. What drove the value? People didn’t want to subject themselves to crowds. Grocery shopping could be seen as a COVID-19 super spreader activity and therefore too risky.
There were the political influences related to the pandemic. Were facemasks really necessary to slow the spread of the virus? Are vaccinations key to eradicating the virus? The science unequivocally says yes and citizens found value in following the guidance and being vaccinated.
However, there was the spread of conflicting non-science-based arguments that convinced others to believe the value to them was in not masking-up or being vaccinated. Depending on the consumer’s point of view, the VRQ for facemasks could have been rooted in personal safety or freedom.
An example of consumers being forced to reprioritize VRQs would be General Motors doing away with the Pontiac and Oldsmobile brands. General Motors needed to look strategically at production costs throughout the organization. A question raised was whether or not there was enough differentiation between Chevrolet, Buick, Pontiac and Oldsmobile. A result of General Motor’s brands introspection resulted in Pontiac and Oldsmobile consumers being forced to reevaluate their VRQs related to the feelings of a car’s attractiveness or prestige.
The trash heap of failed innovation is littered with great ideas and products with mismatched marketing strategies, e.g. Sony’s Betamax.
Sony’s marketing pitch was, “Watch whatever, whenever.” Their emphasis was on recording TV programing. The Betamax recording machine was solid as a rock at 36 pounds and produced superior recordings on 60-minute tapes. And it was expensive. Early adopters didn’t care about the cost.
Enter JVC and the VHS tape format. JVC’s machines did not produce as quality a reproduction of images and sound as Betamax, but was lighter by 7 pounds which allowed for a significantly less expensive product and their tape recorded for 2 hours which could accommodate TV programming and the length of most movies. Sony thought they would prevail in a battle with JVC.
JVC developed relationships with the now extinct video rental industry and the rest is history. While consumers entertainment VRQ lit up about being able to record their favorite TV shows and watch the shows when it was convenient for them, watching movies at home on an okay tape format using a machine that was significantly less expensive trumped quality and created different entertainment VRQ priority.
Consumer driven VRQs are a dynamic ever-changing set of variables. Keep an eye on your industry competitors and work, strategically, to avoid being surprised by the direction your industry may bend to accommodate the VRQ variables your customers rate higher than others.
We are offering a complimentary webinar, Resolving Complex Business Problems, as part of our preparations for our new Pragmatic Leadership series of workshops. (You can learn more about the webinar HERE.)
A question always arises when we discuss the work of resolving complex problems – “What’s a good solution?” We can glibly respond with “that depends on what the stakeholders want.” But what do they want and are they all in agreement?
The answer to the second part of the question is almost always “No!” What may make the CFO happy might really upset HR. And, certainly, “management” and the workforce have different wants and need.
The best you can do is to explore the eight facets shown in the graphic and break the concept of “good” into multiple avenues of discussion. We will explore these in the webinar and will dig deep in the upcoming course.
That said, you you might want to at least consider the following:
The webinar dates and times are April 27 at 9:00 AM CT and April 29 at 6:00 PM CT. You can learn more and enroll HERE. Come and join us.
All business problems evolve in the context of their external and internal environments. Department problems lie within the business and business problems lie within the industry. And, surprise, internal stakeholders are NOT aligned. Goo problem definition requires that you look out into the larger environment and pay attention to what’s happening on the inside.
We are offering a free 60-minute webinar addressing a dozen questions you must answer if you are going to resolve your complex business problems. Since this is a webinar and not our full workshop, the session is high-level, but valuable.
Also, it is not an infomercial!
The webinar will provide an overview of the 12 questions and the knowledge and skills you need to answer them. You can learn more and enroll HERE.
Thanks for reading. It’s lonely out here in the blogosphere. (Wow, it that an old-timer word.)
Complex business problems are increasing and middle managers are at the front line of the battle. Our position is that the work of resolving complex problems starts with asking important questions about the problems and then structuring your resolution efforts around the answers to these questions.
We are offering a free 60-minute webinar addressing the questions you must answer if you are going to resolve your complex business problems. Here are the first five questions and some of the suggestions leading to answers. We will “fill the blanks” during the webinar. Since this is a webinar and not our full workshop, the session is high-level, but valuable. It is not an infomercial!
The webinar will provide an overview of the questions and needed skills. You can learn more and enroll HERE.
If you don’t have time for the webinar, feel free to drop me a line and I’ll send the full list of questions.
A Chief Who Asks the Warriors to Do What They Will Not Do Is No Longer Chief
Amazonian Xingu Tribal Leader
By Oliver Cummings
I am not certain that this story happened just the way it was told; but I am sure it makes an important point for anticipating, planning, and acting with the future in mind.
It was a crappy day in 1943 in the foothills of the Apennines near Florence. There was a house up on a high hill about a mile away from where the company was bivouacked and recon had informed the officers that it was full of enemy soldiers.
The recently installed Second Lieutenant, a replacement for one that was killed some days earlier, called upon Dad, a platoon sergeant, to assemble his squad and “take that house up the hill.” Dad surveyed the situation and concluded quickly that the mission would be disastrous. There was no real cover going up the hill and the location of the house gave its occupants a wide, clear field of fire. Certainly the Americans were being observed now and just as certainly if they maneuvered to move up the hill they would be seen early in the process, with no place to go if they came under fire.
This new shave-tail Lieutenant had postured as a hardass, something that didn’t impress my years-older and battle-hardened father. He saluted. “Yes, Sir.” And he turned smartly and marched off toward where his platoon was in repose.
He called his squad together and had them fall in with their gear, in formation, in the open field in front of the bivouac area. When the twelve men in his squad had assembled, Dad called them to attention facing the direction of the house on the hill, had them dress the formation and called, “About face.” Then he started calling cadence as he marched the men directly away from the objective.
Seeing the odd sight of men marching as if on a parade field here in the middle of a real shooting war, the Lieutenant ran out and fell in step with Dad. As they marched along, the Lieutenant said, “What the hell are you doing, Sergeant?”
“I’m going to take that house back there?” Dad said with a jerk of his thumb over his left shoulder.
“Just how the hell do you think you’re going to do that?”
“I’m going around the world to get there.”
With that the apoplectic Lieutenant halted the squad, dismissed them and took Dad up to the command post where the Company Commander, a respected Major, stripped him of his stripes for insubordination. The busting back to PFC stuck, but the squad did not have to pursue taking the house and later that morning an air force support sortie bombed the house and cleared the way for the Company to take the hill without much of a fight.
Think about the foolish things a leader can do when they are faced with a crisis:
And, there are more.
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