The Customer-Centric Value Model
As our name suggests, our core differentiation has always been the way we think about “value”.
Value ultimately comes from the customer...
Most consulting firms view business as profit and asset maximisation; our view, proven through practice, is that businesses’ first “raison d’être” is to maximise value to their customers, then – and only then – to minimise the assets needed to deliver it.
Today many consultancies claim to have "customer-centric" approaches. By pioneering customer–centric value CVA has learnt through extensive experience that for this to work it has to be in everything a company does, hence ours isn’t an approach. We have embedded customer-centricity in all our methodologies.
Over the years, this has allowed us to build an intimate and profound knowledge of our clients’ customers’ underlying needs, attitudes and behaviours that goes well beyond the preferences that most customer–centric strategies are built on. These underlying traits are discernable in all customers, from Individuals to SMEs, Large Corporates and Institutions to Governments, and they provide the exceptionally valuable insight that delivers competitive advantage and sustainable value.
Driving customer-centric value, however, demands a deep understanding not only of the customer, but also of the quantified cost and economic implications of meeting those needs.
Value is only sustainable if it “flows” to all stakeholders…
The role of management is to capture value from the customer and channel it in a way that maintains a delicate balance between the competing interests of all stakeholders. Stakeholders include not only customers or shareholders, but also employees, regulators, governments, suppliers, strategic partners and society as a whole. The ultimate aim being the alignment of all particular interests.
Maintaining this alignment requires continual and subtle trade-offs. Management needs to define the “value proposition” the company can offer to each of stakeholder. These value propositions encompass the range of compelling reasons why the stakeholder would prefer to be connected with the company rather than with its competitors. The skill is to ensure all value propositions are mutually compatible while appealing to each stakeholder.
Value is forward looking rather than an extrapolation of the past…
The past is certain, the future is not. Uncertainty is a constant part of business. Major shocks can occur. Changes in client needs and behaviours, in technologies, in regulation and other key areas are difficult to predict a few years in advance let alone 10-20 years ahead. But most industries still have to make long term decisions for future investment.
Whilst perceived consulting wisdom is to design linear strategies that are extrapolated on the basis of a most probable “central” scenario, CVA recognises that the most effective way to manage uncertainty is to address it and value the options available. Therefore CVA’s “real options value” based approach to strategy doesn’t prioritise scenarios or favour one over another. Rather it seeks to understand what certainty exists and to develop options to manage the residual uncertainty.
To achieve this the method “retropolates” the different possible outcomes into a “cone of certainty”; this allows the “no regret moves” that should be undertaken as quickly as possible to be identified and isolated from the “bets” that should only be undertaken with an associated “stop option” in fact creating a “real option” . Our experience with clients shows that the “no regret moves” represent 70% of what needs to be done.
The benefits of this approach are significant: improved decision-making speed, strategic flexibility, and and optimised balance between value and risk.