Another Perspective on Value - Value Creation

The concept of value is multi-dimensional. Here’s another facet.

Last time the topic  was what is value through the lens of the customer. What counts from a customer perspective. Have we done a quality job? Have we helped the customer understand the choices available? Have we provided stellar service – on time, with no surprises? Have we kept the customer fully informed from start to finish of the job? Has the interaction with us been positive and efficient? Are we starting a relationship based on favorable interaction in every way the customer touches us?  This is the path to loyal customers and great word-of-mouth advocates.

Providing customer value is the front end of creating enterprise value. Enterprise value is the fancy term for creating shareholder value - improving the value of the business itself. What will someone else pay for it if and when it is sold or transferred, or what it is worth while the current shareholders own it. This is the other half of the equation and it deals with how good is our team,  have we provided them the right tools, and are they competent and motivated in the right direction. Have we been thoughtful about which assets we invest in, and are our processes capable – i.e. can they deliver the same result each time?   This is really a formulaic way of saying are we providing customer value with no waste. 

If we do that well we keep cost at a minimum, we only spend cash on the assets that we need to differentiate our quality and service; or that actually reduce cost over time, and we arrive at a formula that delivers customer value at the lowest cost to us and to them.  This allows us to make a profit and a return on our investment and to reap the benefit of a job well done for our customers.

I remember years ago a little arithmetic I was taught:   Customer Delight   +    Operations Excellence   =  Shareholder Value

It’s a great reminder that both ends of the business have to perform.  It’s also a long journey.

We started with an investment in our team. We understand what is important here and we are educating ourselves every day how to serve our customers better.
We are developing and maintaining quality processes through the full sales and cash cycle from initial quote to receivables collection. And we are constantly reviewing which assets deliver differentiable value to our customers, or lower our cost to serve them.

That said, the journey never ends.
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