Understanding Value Creation

On Friday, Mr. N came to Beijing and we had a long chat at the open bar below the World Trade Center. Although we hadn't seen each other for a long time, we had a really nice conversation.

What struck me the most was a little bit of **** about "value"; Mr. N works as an assistant to the chairman of a large insurance company. The work of the assistant is actually very simple: the leader's schedule, record of meetings, and organization of work content. However, behind the seemingly simple work, it is actually very complicated. For example, to arrange a meeting with the client's leadership, it is necessary to at least: 1, time: to understand the client's schedule, to determine the time of the meeting 2, to understand the main content and purpose of the meeting, the boss and the client's preferences, and to choose the appropriate location. 3, to arrange the work of all the relevant personnel, and to ensure that the results are achieved. Why is this matter complicated? Because in order to achieve these three process purposes, in the middle of the need to overcome a lot of difficulties: for example, the negotiation content of the meeting may require the support of professional content, and professional content and the need for professional support, such as writing a piece of material, then let the professionals for my use, the need to solve the problem of the other party's will: why should I help you? Then the answer can be: there is enough commission, there is a better clientele, there is an opportunity to exercise their professional ability ...... To answer this question, you need to have a sufficient understanding of the needs of the other party, such as the other party's preferences, the other party's difficulties, the other party's values. So it seems to be in order to complete a meeting arranged matters, in fact, may first have to deal with this person - dig his needs, to meet it, and then for my use.

The final presentation in front of the boss may just be: the customer has been arranged, the meeting is scheduled for Wednesday morning at 9:00 am Hilton Hotel's conference hall, but only the elder brother knows how much work needs to be done behind the scenes in order to achieve this simple result. It's like an iceberg, we see the peak, but what keeps it afloat is the part underwater that we can't see.

So today I'd like to talk about my understanding of the concept of "value": the essence of value is the fulfillment of needs. I remember a famous professor saying that the essence of economics is supply and demand. In fact, it's the same thing. Economics talks about value, and value is the supply of demand.

Today, I read an article by Prof. Chen Chunhua analyzing the logical change of the modern value chain:

Traditional Value Chain: Core Assets and Capabilities→Inputs→Products/Services→Sales Channels→Customers;

Modern Value Chain: Customers→Sales Channels→Products/Services→Inputs→Core Assets and Capabilities;

In fact, it is not difficult to understand this change. This change is not difficult to understand, and it is true, because the essence of the change is from "production-centered, to customer-centered". Starting from the customer's needs, to determine the sales channel (where to buy, when to buy), to determine the product / service (what to buy), to determine the inputs (in order to achieve these purposes, need to match what kind of resources), and finally to determine the core assets and capabilities (why I can do it, other people can not do).

So naturally, the following question arises: how to create value? My answer is: find a need and fulfill it.

How to fulfill a need is essentially the same as solving a problem. The following process has been talked about in all kinds of business methodology books, just follow the following steps: clarify the problem domain and solution area → collect information → put forward hypothesis → verify the hypothesis → put forward the solution → implement the solution. I won't go into detail here.

I think it is more important to find out how to demand it this problem. See this problem, may be the first time may think of a variety of demand analysis tools, such as research questionnaire design, sampling methods and techniques, the design of the interview outline and so on. But then again, if the discovery of needs is equated with these tools, some of the cart before the horse - because the essence of the discovery of needs does not lie in the use of tools, but in the understanding of the customer.

The lesson I've learned about this is that if you're not customer-centric, you're worthless. Here I want to start by reflecting on myself. Although it has been a year since I came to the H program, I recently realized that I am still often self-centered in my communication with clients. For example, last week I was visiting the community department and had dinner with the newly appointed marketing manager, who was unfamiliar with us and asked a question to test my depth: What do you think is the biggest problem with H dealerships right now? I was very nervous, because I was worried that if the answer is not good, it will affect me and our entire team in the customer's professionalism here, but time is running out, I have not thought about this issue, so I returned a: dealers face the biggest problem is that the product is too slow to move the sales too slowly, too slow to move the sales is because of the product does not have a competitive advantage, the brand does not have visibility. Words have not finished, he interrupted me, said you are not right, the customer's biggest problem is that there is no business thinking, always the same as before, think a shot for a place, operating a year to make some money is enough. I was very nervous, and did not argue, but inexplicably have a feeling: my answer may not be good enough. When I came back and told this to my project team leader, he said, your answer is indeed too low, only up to the level of the dealer, because you only see the dealer cares about the problem. And only saw the surface of the problem. To be honest, this incident has been haunting me for a long time, the reason is that once again, I felt questioned by customers and felt humiliated. But why? Then I thought carefully, the customer and the team leader criticized the right, such a result is from my understanding of the customer's problem is not enough: first of all, the starting point is not complete: the customer is a manufacturer, and my answer is to stand in the dealer's point of view to think, and manufacturers care about the problem and the dealer cares about the problem is not always the same, the manufacturer hopes that the whole industry chain can be stable and benign operation, the dealer may not be! Like the customer said, many dealers are holding the attitude of earning a little to do business, do not dare to invest, but also not stable. Secondly, my answer is not in-depth enough: dealers encountered the product does not sell the essence of the reason behind the problem is what? Product price, visibility are right, but are not deep enough, behind these must be the company's overall strategy out of the question, and my current judgment is that the company's strategic center of gravity is wrong: because the company is always the first to ensure that the interests of the factory, and then ensure that the interests of dealers and consumers, and sometimes for the sake of the factory's interests, at the expense of the interests of dealers and consumers. So then again, while usually coming up with program after program, there is not enough time to really think in the customer's position. Why? In the end, may still not really understand the value of the consulting industry: "customer-centric".