How can we turn “interesting” ideas into customer value?

In my previous article, I talked about the third process of value creation, “Derivation of Strategy Story Elements.” In this article, I would like to talk about the fourth process, “consolidation and story making.”

The whole value creation process is shown here.

Connect the new value elements to the overall strategy story

4) Consolidation and story making
Connect the chain of values between strategy story elements to create a development story.

Once the new value is conceived, it should be connected to the overall strategy story. Here, we confirm the consistency of the concept, design the effects of interaction, and clarify the customer value and competitive advantage.

First, reconfirm whether the newly conceived value is connected to the concept or not.

Does it embody the concept?

“Since we’re thinking about the value that might lead to the concept, don’t we need to go over it again?”

Some of you may ask this question. As you say, it is unlikely that there is no connection to the concept at all. Nevertheless, I think it is important to make sure that the concept is not weakened or contradicted by the newly conceived value itself or its effects.

For example, Starbucks experienced a slowdown in its growth around 2008. Howard Schultz, in his book “The Starbucks Rebirth Story,” describes how the emphasis on sales growth and efficiency led to baristas being assigned to stores without adequate training, and the increase in the number of side dishes led to a situation where the smell of the side dishes spoiled the aroma of the coffee in the store.

In this way, even if we think we are working while connecting to the concept, we may weaken or contradict the original concept when agendas other than the concept enter the picture, such as maximizing sales and profits or maximizing stock price.

This is not to say that efforts to increase sales, profits, and stock prices are bad. It is important to do so. However, if our concept is weakened by such activities, we will lose the hearts and minds of our closest stakeholders, such as customers, partners, and employees, and as a result, we will not be able to achieve medium- to long-term growth in sales, profits, and stock price.

After confirming the connection with the concept, the next step is to design a lot of interaction effects, connecting the new value with the existing value as much as possible.

Creating value by itself is only the first step

The interaction effect refers to the strength of the connections between value elements and the number of combinations. It is important not only to create new values, but also to strengthen the connections with existing values, and to design and embody many combinations.

The importance of this process cannot be overemphasized. If we compare creating new value to climbing a mountain, we are still at the first stage. There is usually a long way to go before this new value is realized as customer value by connecting and blending it with existing values.

“Once we come up with a new value, why not just combine it with existing values?”

Some of you may have this kind of question. As you say, conceptually it is just a matter of combining the elements, but there are several hurdles to overcome in order to embody this value to the point where the customer realizes it.

The first hurdle is that many of the customers and employees of the existing business are still unaware of the new value. Employees are busy working on their existing businesses, and customers assume that the products and services are the same as before, and have no way of knowing that there is new value. In such a situation, it is not easy to get employees and customers to recognize the new value and to spend time on it.

The second hurdle is that business processes and workflows are not yet in place. The existing business processes for providing value are in place, but the business processes and workflows for including new value are not yet in place. If we launch a new value as a product or service in a situation where these are not sufficiently prepared, it will lead to an increase in the workload of some employees, problems and complaints because the workflow is not prepared.

In order to overcome these hurdles, an effective method is embodiment through prototyping. Prototyping refers to the process of creating (incomplete) samples of a service or product, rather than a complete service or product, in order to increase the speed and certainty of the realization of the value (and the realization of the connection with the existing values) through trial and error.

Prototyping is not only a trial and error process to realize new values, but also a way to verify the connection with existing values, create business processes and workflows, and enlighten relevant employees and customers about the new values, in a design that kills three or four birds with one stone.

Once the design and prototyping of the alternating effects is underway, the last step is to clarify the customer value, competitive advantage, and accumulating assets.

A sense that customer value and competitive advantage are already embodied

Customer value refers to the value that a customer perceives as the reason for choosing a company or its products. In the example of Starbucks, customer value includes the taste of the coffee and the comfort of the store. On the other hand, one of Starbucks’ values, the “direct management system,” is not a value that customers realize, so it is not called a customer value.

Clarify what new customer value has been embodied or what changes in customer value have occurred as a result of the creation of new value elements and the realization of interaction effects with existing value.

Similarly, identify what competitive advantage has been created or changed by the creation of the new value element.

The important thing is not to think of customer value or competitive advantage as something that we should come up with here, but rather as something that we can verbalize what we already have embodied. Customer value and competitive advantage are naturally created by the processes that have gone before.

What does it mean to say that customer value and competitive advantage are created naturally?

Thinking back on what we have been thinking, customer value and competitive advantage are not created by a single value element, but rather by the entire concept and strategic story.

In a previous article, I talked about how the concept involves the resolution of partiality of consciousness. The new customer value is secured as a value that eliminates the partiality of consciousness. In the case of Starbucks, the concept of the third place creates customer value in a life trapped in the first and second places.

Competitive advantage is also almost automatically ensured by the “ resolution of partiality of consciousness” factor. This is because many of the services and products of competitors are conceived in the existing structure of consciousness. When a concept that includes the element to resolve partiality of consciousness is realized, the company will naturally be in a position to differentiate itself from the competition. I am sure that everyone has felt that Starbucks is different from other coffee shops.

As new value is added, new assets accumulate or the speed of asset accumulation increases. It is also important to have a clear idea of these accumulating assets, as they will work to our advantage when we come up with the next new value.

So far, I have discussed the three main points of “consolidation and story making” (confirming consistency, designing interaction effects, and clarifying customer value, competitive advantage, and accumulating assets). In the next article, I would like to elaborate on the theme of “consolidation and story making” using specific examples.

Here are the quests of the day. (If you’d like, please share your thoughts in the comments.)

・In what cases, if any, have you been involved in (provided or purchased) services or products where the concept was weakened by an agenda different from the concept?

・What experiences, if any, have you had that required you not only to conceive of new values, but also to connect and blend them with existing values?

Bunshiro Ochiai