Create Value For All
Creating business value only happens when you create value for both customers and the business. This is achieved by focusing on two essential outcomes:
1. Product or service quality (process effectiveness), and
2. Process efficiency
“Providing the quality that the customer asks for as efficiently as possible, it stands to reason that value is created for all stakeholders. The secret lies in providing appropriate quality consistently” – Pietro Pazzi.
It should go without saying that the product and service quality requirements are set by the customer. To prosper, the business must provide products or services that meet these stated requirements.
“When inferior quality is provided, the customer will simply go away.”
Higher than appropriate quality and the customer is likely to keep buying. However, this means that the business is incurring unnecessary high-quality costs. That is, wasted effort leaves money on the table. The worst case is that too high-quality cost could result in the business becoming price uncompetitive, resulting in exactly the opposite of what the business intended.
Process efficiency is under the control of the business.
The basis of business is to determine and manage processes that create value for all.
Improving process efficiency is key to achieving process excellence.
While quality standards are set and periodically verified, process efficiency is about productivity and cost management and requires continuous improvement to remain competitive.
Where the gap is largest between the cost of quality and the price the customer is willing to pay (i.e. customer perceived value), is the “sweet spot” for generating maximum value for all stakeholders.
Creating business value thus means maximum value for the business and its customers.