CFO/Controllers Circle 2011, sessie 2

Geert Desmet Maastricht, 15-06-2011

Controller's Circle 1

value creation & sustainable competitive advantage

waardecreatie & duurzaam concurrentievoordeel

Geert DesmetAdjunct Professor of Strategic Marketing

the big picture



VISION

the ‘Value Model’ © Prof. F. Caeldries

• what business are we in

• vision

• mission• ambition

• external analysis

• market & business

developmentsvalue creation

value delivery

• business modelling

• value chain & web

• strategic leadership• capturing value

value architecture

• organizational modelling

• organizational challenges

value control

• performance

measurement

• what is perceived

to deliver value to

the customer: value proposition

Maastricht, 15-06-2011 4Controller's Circle

VISION


value creation

value delivery

value architecture

value control




(customer) value creation

(klant-) waardecreatie

business strategy

“Strategy is the art of creating value for the customer.

This can only be done by offering a product or service

that corresponds to customer needs. In a fast changing

business environment, the factors that determine value

are constantly changing.”

Adrian Slywotzky




customer value build up

(Based on Kotler, 2001,, Frambach, 2001, Anderson & Narus, 1999, Best 2000, )

- problem solving capacity

- what the product does

- technical quality

- complementarities

- compatibility

- innovativeness

- up-to-datedness

- etc.

custo

mer

valu

e c

reation

productbenefits

brandbenefits

servicebenefits



productbenefits

brandbenefits

servicebenefitsc

usto

mer

valu

e c

reation - its claim to fame

- trust

- reliability

- status

- brand personality / image

- etc. (see also Kapferer, 2003)





productbenefits

brandbenefits

servicebenefitsc

usto

mer

valu

e c

reation

- SLA’s

- location (retailer)

- parking space

- speed of delivery

- never out of stock

- on-site assistance

- pre & after sales services

- etc.



productbenefits

brandbenefits

servicebenefitsc

usto

mer

valu

e c

reation

price

acquisitioncosts

all efforts a customer must make to obtain the

product





productbenefits

brandbenefits

servicebenefitsc

usto

mer

valu

e c

reation

price

acquisitioncosts

customer value


how customers perceive value

thresholdattributes

(basicrequirements)

performanceattributes

excitement ‘Wow’attributes

competitiveperformance

L

L H

Hcustomerloyalty




value proposition

waardepropositie

value proposition

who

what

how

who: served customer

groups (segments)

what: served customer

functions (needs)

how: technologies utilised

(satisfaction mechanism)

Derek F. Abell domain matrix (Harvard)




value proposition - what

‘what’ =

bundle of attributes

• threshold attributes

• performance attributes

• excitement attributes

who

what

how


The ‘product’…. is the total

bundle of benefits the

customer receives when he

or she buys it”

Theodore Levit, 1980

historical perspective:what is a “value proposition”?




what to offer: value proposition

from the 4 P’s to the 4 (value driven) C’s

Product to Customer value

Promotion to Communication

Place to Convenience

Price to Costs

(based on Kotler, 2001,, Frambach, 2001, Anderson & Narus, 1999, Best 2000, )


value creation & innovation

thresholdattributes

(basicrequirements)

performanceattributes

excitement ‘Wow’

attributescustomer

satisfaction

competitiveperformance

L

L H

H

?

?

?

incremental

process

radical




sustainable competitive advantage

duurzaam concurrentievoordeel

competitive advantage

competitive advantage is all about choosing a

distinctive customer value proposition:

“A (marketing) strategy must start with a different value

proposition. Strategy delineates a territory in which a

company seeks to be unique. It is about making choices.

You can’t be all things to all people”

M. Porter, interview in Fast Company (March 2001)




distinctive value proposition

how to make the value

proposition distinctive:

– be different

or

– be better

(one way to be better is to

be cheaper)

who

what

how


developing a differentiated value proposition

what factors should be reduced well below the industry standard?

REDUCE

what factors should be raised well beyond the industry standard?

RAISE

NEW VALUEPROPOSITION

what factors should be eliminated that the industry has taken for granted?

ELIMINATE

what factors shouldbe created that theindustry has never

offered?

CREATE




differentiation:value curves

attribute 1

attribute 2

- ……

- ……

- ……

- ……

- ……

- ……

- ……

- ……

- ……

- attribute last

low performance high

industryaverage

value-attributes

“ideal”value curve

“typical”industry player

“almost ideal” value curve


“Competitive Strategy is about being different. It means

deliberately choosing a different set of activities to

deliver a unique mix of value.”

competitive advantage




not alle customers want the same …

so:

* niche-marketing

or

* portfolio-management

competitive advantage… per segment


se

gm

en

tatio

n

unsegmentation

niche

customization / 1-to-1• pure• tailored• standardized

segmentation• comprehensive / portfolio• selective




fundamental options for business strategy

�operational excellence

“best total cost”

focus: supply chain management

operationalexcellence

“best total cost”

customerintimacy

“best solution”

productleadership

“best product”

Treacy & Wiersema’s3 strategies

�customer intimacy

“best solution”

focus: customer insights

�product leadership

“best product”

focus: innovation




Gestandaardiseerde, modulaire product/dienst * Beperkte, iedereen-is-gelijk dienstverlening

Relatief lage prijs * Gemakkelijk door de klant te verwerven

State-of-the-art nieuw product/dienst * Nieuw type dienstverlening

Premium prijs * Snel door de klant te verwerven

Totaaloplossing product/dienst * Op klanten toegesneden dienstverlening

Premium prijs * Gegevens beschikbaar stellen aan de leverancier

operational excellence

product leadership

customer intimacy

Treacy & Wiersema’s3 strategies


- blanc -




value capturing

VISION


value creation

value delivery

value architecture

value control




who captures valuenot the firm due to

• resource suppliers increasing price of their resources

whereby price increase = differential value won from

customers– result from comparisons customers make & comparisons resource

suppliers make (differences in expectations about the resource’s

value)

– perceived bargaining relationships

– the absence / presence of close substitutes & low / high switching

costs

• no relation between– the nature of the value supplied by the resource supplier

– the role of this value in the production process

– the amount of value that the resource supplier captures


nightmareV>CP=C

hellV=CP=C

dreamV=CP>C

heavenV>CP>C

value creation

H

HL

Lvalue capturing

VC2 framework © Prof. Paul Verdin

legend:

V = value

P = price

C = cost




VC2 framework

value capturing

nightmareV>CP=C

hellV=CP=C

dreamV=CP>C

heavenV>CP>C

value creation

H

HL

L

new business model

horizontal game

law of gravity

innovation


never stop asking

[email protected]

Business

CFO/Controllers Circle 2011, sessie 2