Gabriel’s scarcity rent – it’s management stupid!

Giving value to the customer… really?

3 September, 2007 at 1:00 pm 3 comments

I’m tired of reading everywhere about businesses worrying about the customers. But, do they really worry about them or they simply say so? The expression “customer needs” is always ready, and everywhere. But how many business are really focusing customer needs and doing everything in their hands to address them?

Sometimes I tend to think that most business just use the concept of “customer needs” to justify their already-taken decisions. How convenient to have some unknown customer originating a certain need. This undefined customer can’t be blamed, and neither ourselves for our misaligned decisions.

Don’t you feel that customers sometimes are just excuses to dilute responsibilities? This is a question that every company should ask itself.

Long ago, customers wanted price. And then quality. But it’s not like that any more. Customers have become more and more complex, more diverse, more demanding, more unpredictable. How many companies do seriously engage their needs?

There’s a good way to spot this kind of companies. They have measured themselves up against customers expectations and, in doing so, they have changed the expectations themselves. That way they have assured themselves a leadership position and they have undermined their competitors position.

Ikea is a good example of that. By giving more to its customers they have strained the whole supply chain and their market segment. And their competitors have perceived that strain. You can easily see how they have changed customers expectations. Don’t you change your way of buying furniture when you get to know Ikea? And not only you, the customer, but their whole sector has changed.

Another good example is Nike. They appeared in a well established sector leaded by Adidas and changed it completely. They even changed what the customers wanted, raising expectations. Then Adidas found themselves trailing, trying to cope with a new winning product: Nike Air.

What did those companies do? Just some marketing? Not quite. They redesigned their processes completely to be able to cope with new requirements. That was not an incremental change but a radical one instead. A new approach to customers, even breaking some previous rules. This kind of things that can be easily dismissed. This kind of things that so often new entrants do better than incumbents.

I bet someone said something like “this will never work here”. But then you see millions of customers all over the world just carrying this:

And far from feeling alienated, customers keep coming back for more. They get used to more value, less price, and don’t care about becoming themselves part of the operation, doing the picking and the unpacking. It just works.

Scared of changing your delivery system? Think of Dell: that’s how he outsmarted Compaq or IBM. How many companies dare to do so?

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