Every business strives to add value. They desire to serve their customers better. They also want to cater to their shareholders, who want their stakes to appreciate in value. Unfortunately, most businesses also lack a clear business philosophy on exactly how to go about it.
Confused thinking about value creation results in random value generation. A company, for instance, may try to generate value by becoming more productive or going the extra mile to satisfy a frustrated customer. While there is nothing wrong with these efforts, they are tactics, not strategies. Tactics generate value at random. Strategies, by comparison,generate long-term results.
The way to set about value creation is by thinking through the processes. Thinking--creative thinking--is asking questions and answering them.
Since the best way to come up with better ideas is to ask better questions, here are two question prompts that will spark creative ideas on how a business can increase its value.
What Does Our Customer Need From Us?
What do the most valuable companies in the United States over the past 100 years have in common? They know what their customers, whether they are B2B or B2C, need from them. They are in the business of fulfilling unmet customer needs, and they do it better than their competitors.
Leading businesses know that uncovering unmet needs and then fulfilling them is one of the best ways to create more value for their customers. They don’t make assumptions or educated guesses about what customers might need. Instead, they research the question, ”what does our customer need from us?”
Top companies fully appreciate the fact that the more important and urgent a customer’s need and the quicker and more satisfactory their business can meet it, the greater the opportunity for unparalleled value creation. Ask your customers what they need from you through customer surveys. After carefully reviewing responses, you will have a plethora of ideas on how to create more value for your customers.
How Can We Develop a New Product?
If your business only sells merchandise from manufacturers, consider adding your own product line, too.
Product development companies have an edge over companies that simply retail merchandise from diverse manufacturers. They build their brand because they know how to stay relevant when it comes to fulfilling consumer needs. By researching the problems their customers face and solving them, they can continuously create new revenue streams.
After coming up with a new product idea, document it, research similar ideas to refine your original concept, make a prototype, file a patent, and, finally, market your new product.
Asking what products you can develop for your existing customer base will motivate your business to develop more of its own products and improve business profitability.
Shift From a Red Ocean to a Blue Ocean Strategy
Asking and answering these two simple questions will generate insights about value creation. They will also shift your business model from one of unintentionally pursuing a red ocean strategy to one of intentionally developing a blue ocean strategy.
Many businesses do not realize that they are swimming in a red ocean strategy. They have been swimming in red waters for so long that they aren’t even aware that blue oceans exist. Businesses that pursue a red ocean strategy, compete in the populated market space, strive to outwit or outmatch the competition and work hard to exploit any perceived customer demand.
However, some businesses, especially innovative businesses in emerging markets, stumble upon the open blue ocean. Rather than swimming in shark-infested waters agitated by a feeding frenzy, they can joyfully splash around in a tranquil blue ocean. Businesses that pursue a blue ocean strategy compete in an uncontested market space, consider the competition utterly irrelevant and work hard to create new customer demand.
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