Building a great company-Part 2: Great Value

One of my earlier mentors at Rational (John Lovitt) and I conducted a series of workshops back in the 2000-2002 time-frame addressing this question as well as others.

Our primary objective was to help our management team understand the various dimensions of Building a great company. It applies equally well to building a great team or a great division of a larger company, or a great brand.

Here was the starting point.

A great company will result when:

  1. Customers realize great value from our products and services
  2. Employees realize a great career
  3. Shareholders realize great return on their investment

This post examines the 1st dimension: what do customers mean by great value?

In our management workshops, we examined customer value and elaborated it into several dimensions. Our perspective was dominated by the definition of customer as a business who was looking to buy our productivity tools to improve their software development capability. Extrapolating the results to businesses where customers are individual consumers, or the government, or some other perspective should be relatively straightforward.

Here is some elaboration and synthesis of the workshop discussions on what constitutes great value to customers. I have generalized our workshop discussions slightly since they were pretty context specific.

Enduring improvements in their businesses

  • Help solve urgent problems
  • Products or services that deliver results
  • Sustained and growing value over time

Market leadership

  • Stability and financial strength, continued investment
  • Current position and trajectory toward a vision

Good business relationship

  • Meet commitments, integrity and reputation
  • Consistent business practices
  • Effective sales channels and easy to do business with

Empathy for their priorities

  • Domain experience
  • Client intimacy and understanding of their values and culture
  • Value for price leverage

Access to knowhow

  • Broad knowledge of product/service features, costs, benefits, alternatives
  • Deep knowledge of usage models or expertise in your service skill-set or thought leadership

A great company must provide great value to customers. Value may be delivered through products or services and it can be measured in many ways. But typically, it is measured through customer satisfaction or customer success. There is a big difference between customer success and customer satisfaction? Customer success is a strong result because you can quote forever. Customer satisfaction is a weaker result because it is a transient opinion. It is amazing to me how many people in some businesses are overfocused on satisfaction and underfocused on success.

When you go to the emergency room to get an ailment resolved, you may be satisfied that the staff was pleasant and inexpensive, but if you don’t resolve the ailment, they have not delivered success. Same with your car repair shop. There are many products and services that can be measured mostly through customer satisfaction. A hair dresser, a car dealer and retail sales outlet are good examples. But, many high tech businesses, like system integrators, software developers, and software product vendors, sell a product or a service that is intended to deliver a specific benefit or result to the client. In these situations, there can be a significant difference between customer satisfaction and customer success.

Company X Delivering a product 3 months early (a result) is a much stronger statement than Joe Blow CEO believes our product is best of breed. What are you going to do with that quote from Joe Blow (clearly a satisfied customer) when he moves to a new role? Which would you rather have on your resume: Graduated valedictorian with a 4.0 GPA, or voted most likely to succeed by classmates? Finally, which car would you buy? The one that says: 95% of these vehicles last over 200,000 miles, or the one that says 95% of our clients are satisfied with their purchase? These are rather stark examples just to make an important point: customer results and success are stronger than customer satisfaction in many businesses. Consider them both when measuring the performance of your organization and employees.

Answering the question: How would our customers define “great value” is a great exercise for any organization to discuss and synthesize a common understanding.

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