How do we come up with the “interesting” elements of our strategy?(2)
In my previous article, I talked about the fourth process of value creation, “connecting and story making. In this article, I would like to continue discussing this theme using specific examples.
The whole value creation process is shown here.
Does it connect to the concept?
As an example of “consolidation and storytelling,” I would like to pick up the strategy of our training business for large corporations about five years ago, as I have mentioned in a previous article.
Until about five years ago, we had assumed that we would provide face-to-face employee development services, but when we returned to the concept of focusing on training outcomes, we sometimes felt that face-to-face services alone were insufficient, and we were considering the creation of new value elements.
As a result, the business acquisition of an e-learning platform (LMS=Learning Management System) called etudes in 2019 has paved the way for us to do so. In addition to providing face-to-face training services, we are now able to combine e-learning or LMS service delivery, changing our service delivery format from “dots to lines”.
The strategy story by that time was as follows.
By establishing a system to provide customized content based on self-developed content, we were able to stably provide customized content that met the needs of each customer, even in large-scale operations (e.g., 10 classes held per day), which became a customer value.
In the midst of this situation, I received information that there was a possibility of taking over the business of an e-learning platform called etudes. In fact, it was my friend O-kun from junior high school and high school who very graciously informed me about it.
At that time, the most important thing I thought about was, “Does an e-learning platform connect with our concept of focusing on training outcomes?” This was the question we had to answer.
In general, in projects such as business acquisitions, we consider the profitability and financial condition of the business. The idea is that the value of the business and the value from synergies should be greater than the acquisition price.
Of course, we did make these considerations in the end. However, the most important thing we considered was whether it would strengthen the connection to the concept.
If there are connections to the concept, it will naturally lead to customer value and competitive advantage. On the other hand, if there is no connection to the concept, it is difficult to connect to customer value and competitive advantage, and there is little meaning in operating the business by us.
The result of that consideration was YES.
In the most essential sense, this means that we can be even more focused on training outcomes by providing a line-based service instead of a point-based service. Until then, we only had face-to-face training services, so most of the solutions we provided were one- or two-day training programs.
However, by having our own e-learning platform, we can provide not only one or two days of training, but also e-learning before and after the training. In addition to imparting knowledge in the form of e-learning, it is also possible to have participants submit reports on their practical application of the learning content, so that they can link what they have learned to what they are doing.
The new strategy story we came up with in this way as of 2019 was as follows
With the acquisition of etudes’ business, the elements listed in red have been added and consolidated in the strategy story.
On the other hand, there is a gap between the design of such a strategy story and its actual delivery as customer value. There are many things that need to be done, such as strengthening the connection between the newly added value elements in the above diagram and the existing value elements, developing the business processes and work flow, and making sure that customers and employees understand and feel the new value.
In this sense, the acquisition of etudes’ business is just the addition of a new element of value, and in terms of the overall strategy story above, it is only the first station. From that point on, we have a long process to connect the new value with the existing value and make it fit in, and I feel that we are still at the 40%-50% stage.
Always consider the multiplication of customer value and the expansion of target customers
Now that I have talked about “consolidation and story making” using examples, I would like to talk about another point that is important in this process.
That is, when a new customer value is added, think about the expansion of the target customer base.
The addition of a new customer value may expand our target customer base. Let’s say that up until now we have been providing services to the customer segment of persona A with the combination of value X and value Y. If value Z is added, we may be able to provide services to the new customer segment of persona B.
Finding new customer segments is an effort to further expand the concept of our company and our own business, and it can also lead to new growth opportunities for our business.
Finding new customer segments can be an approach to further promote the concept of your company and your business, and it can also lead to new growth opportunities for your business.
In the case of our company that I mentioned earlier, new customer value has enabled us to identify new customer segments. It is small and medium-sized companies.
For small and midsize companies, the value of our ability to operate on a large scale is not very important. On the other hand, a service that focuses on training results from dots to lines can be perceived as valuable by small and medium-sized companies that are serious about training.
In addition, the fact that services like e-learning do not have the restriction that 20 people have to gather at once like group training, is one of the points that makes it easier for small and medium-sized companies to accept.
Target so far: Large companies
▼Value X: Operational stability and scalability for large-scale delivery
▼Value Y: Training solutions that match the context and situation
▼ (New Value Z): Services that focus on training results from dots to lines
New target candidates: Small and medium-sized companies
▼ (New Value Z): Services that focus on training results from dots to lines
▼Value Y: Training solutions that match the context and situation
▼ Value W: …
However, we do not believe that we will be able to target small and midsize companies anytime soon. This is because although we are confident from our prototyping that the above value Z and value Y will be of value to small and medium-sized companies, there may still be some value that is missing.
“What are the value elements needed to provide services to small and midsize businesses that are focused on training outcomes?”
This would be the question to get the “intuition of the strategy story (value creation process 1)” in the next evolution of the strategy story.
In this way, when a new customer value is created, it is important to think about whether there are new target customers, as well as what is lacking in terms of necessary and sufficient value for those targets, and to imagine how this can lead to the evolution of a new strategy story.
This time, I talked about the fourth process of value creation, “Connecting and Story making,” with examples. Next time, I would like to talk about the last part of the value creation process, “Co-creation of Strategy.”
Here are the quests of the day. (If you’d like, please share your thoughts in the comments.)
・How would you describe in words the customer value in the business you are involved in? What are the elements of strategic positioning (SP) and organizational capabilities (OC) that create that customer value?
・In the businesses and services you have experienced (provided or purchased), how, if at all, has the overall strategy story evolved as a result of new value being created and consolidated/storied?
Bunshiro Ochiai
