value co-creation

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The Rapidly Emerging Role of the Consumer in Value Creation Value Co-Creation May 2012 © The Clarion Group, Ltd., May 2012

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Page 1: Value Co-Creation

The Rapidly Emerging Role of the Consumer in Value Creation

Value Co-Creation

May 2012

© The Clarion Group, Ltd., May 2012

Presenter
Presentation Notes
Jon – Welcome Partners in a boutique firm Advisors to c-suite Across many industries and sizes
Page 2: Value Co-Creation

It Feels Chaotic!

Presenter
Presentation Notes
JON Ever higher volumes of information and variables to manage combined with unusually high and sustained levels of market and regulatory uncertainty have created a business environment that feels chaotic. The demands for growth from the capital markets are, as always, unrelenting. The U.S. economy appears stable with some modest encouraging signs, but few are relying on broader economic expansion to drive their growth; they can’t wait. The lingering prospect of a deepening European debt crisis, or whatever is next, is creating an underlying low level headache that won’t go away.
Page 3: Value Co-Creation

At a deep level, business leaders are feeling very unsettled.

Presenter
Presentation Notes
JON Dull headache that won’t go away
Page 4: Value Co-Creation

Explosion of internet enabled devices and engagement with social media

It’s not just a headache but an anxious headache as market activities are

moving at a rapidly accelerating rate.

Presenter
Presentation Notes
JON Meanwhile, there is an explosion of internet enabled devices and engagement with social media applications. So it’s not just a headache but an anxious headache as market activities are moving at a rapidly accelerating rate.
Page 5: Value Co-Creation

The challenge to successfully lead an organization to desired levels of growth has never, in our lifetime,

been more difficult.

Presenter
Presentation Notes
JON Energy and relevancy
Page 6: Value Co-Creation

The historic internal approaches to enhancing value and driving organic growth are insufficient.

Presenter
Presentation Notes
JON There is recognition that the historic internal approaches to enhancing value and driving organic growth are insufficient.
Page 7: Value Co-Creation

Finding better ways to explore market opportunities is on the minds of most leaders…

Presenter
Presentation Notes
JON Executives almost everywhere are hungry for growth and they realize their organizations must become more creative and develop better market experimentation discipline to accelerate the discovery of new value… Yes, there are instances of brilliant market insight and demand creation, but few companies have a Steve Jobs to figure out the next great thing. For most enterprises, the approach to innovation is multi-level and they recognize they must be in the network/social media game…the question is often “how”?
Page 8: Value Co-Creation

….and asking more of your

people has its limits.

Presenter
Presentation Notes
Employees have been the beast of burden
Page 9: Value Co-Creation

Innovation

Collaboration

...is the mantra.

AND

Presenter
Presentation Notes
JON Yes, but is this sufficient???
Page 10: Value Co-Creation

We have entered into a new era of

rapidly expanding complexity and opportunity that requires new leadership mindsets and execution

capabilities to enable growth.

Presenter
Presentation Notes
JON Our view is no, collaboration and innovation as it is typically thought of today is not sufficient
Page 11: Value Co-Creation

Looking Back

The Rear View Mirror

Presenter
Presentation Notes
WENDY
Page 12: Value Co-Creation

70’s and 80’s…mass consumption

“build it and they will come”

Presenter
Presentation Notes
WENDY The 70’s and 80’s was an era characterized by “build it and they will come.” The focus was on high volume, low cost and scale Mass consumption was expected. Large corporations dictated what was made, for whom Example: Music recording industry: Entertainment companies like MGM and Atlantic Records produced music on albums and cassettes. Technology changes influenced new formats for listening to music, but the company was still driving what the product would be.
Page 13: Value Co-Creation

An era of relative

Presenter
Presentation Notes
Wendy Market conditions were clear and relatively certain. The consumer was easy to define or at least throw into a group.
Page 14: Value Co-Creation

Low Moderate High and Epic

DEGREE OF UNCERTAINTY

Clear

Operations Level Innovation “TQM”

Complex Adaptive Systems

Vast and Growing

Many

Few

VARI

ABL

ES TO

CO

NSI

DER

Presenter
Presentation Notes
WENDY Explain framework: A way to capture what is going on over time; 2 axis: Variable and Uncertainty The variables to manage were limited. Degree of uncertainty was low. Focus on operations level innovation – how can we make more, for less, with fewer mistakes and so on Total Quality Mgmt and process re-engineering were key strategies for adapting to market changes and competition. These approaches to improvement are still at the foundation of day-to-day improvements at many organizations especially in large scale, low cost areas of execution. Traditional functional organizations prevailed.
Page 15: Value Co-Creation

Mid to late 90’s and into the first

decade of the 21st century, businesses

became more

complicated and leaders began to think

more holistically across the value chain, looking for

growth and efficiency.

Presenter
Presentation Notes
WENDY In the 90’s and into the first decade of the 21st century, there are more variables to manage and higher degrees of uncertainty as new technologies, including the Internet as we know it, unleashed higher levels of creativity and information; CDs were first introduced in the 90s. By early 2000, cassettes made up only 4% of all music sold. In 1999, an 18 year old freshman figured out how to share music files over the internet – the big companies fought Napster to stop the sharing (they won the battle but not the war) In the last decade, we are downloading individual songs on our mobile devices, and of course this has extended to books, magazines and newspapers. Massive new markets for products, production capabilities and talent opened up full throttle in China, India and other emerging markets.
Page 16: Value Co-Creation

Low Moderate High and Epic

DEGREE OF UNCERTAINTY

Vast and Growing

Many

Few

VARI

ABL

ES TO

CO

NSI

DER

Complex Adaptive Systems

Clear

Operations Level Innovation “TQM”

Organization Innovation

“Transformation”

Presenter
Presentation Notes
WENDY With higher degrees of uncertainty and more variables to consider, Businesses became more complicated and leaders began to think more holistically across their businesses and how to create value, looking for growth as well as efficiency. “Business Transformation” became the strategy to redesign and reassemble organizations to stimulate growth across global markets. The focus was still inwards looking outwards, now with some degree of customization for population segments, and the organization still dictating what was made for whom Complicated matrix organization structures became the norm.
Page 17: Value Co-Creation

Clear and Complicated characterized by

Presenter
Presentation Notes
WENDY (Refer to Slide) In this clear and complicated world… Known factors coupled with strong linear-thinking and an orientation to problem solving. Organizations are Highly structured, slow-to-change. Where the customer is the recipient of products and services brought to market by the manufacturers and distributors Global markets were to be exploited Annual planning cycles made sense
Page 18: Value Co-Creation

The Windshield View

Looking Forward

Presenter
Presentation Notes
JON So now put yourself in the driver’s seat and look down the road
Page 19: Value Co-Creation

Mobile Global

Our society has changed….we are:

Highly interconnected

Willing to share information

Independent

Technically capable

Presenter
Presentation Notes
JON Our society is changing. We are becoming more: Willing to share information Highly interconnected Technically capable Mobile Independent Global, with historical boundaries of time and distance evaporating.
Page 20: Value Co-Creation

Mass customization comes to the consumer experience.

The tectonic forces have shifted the ground underneath our feet.

Presenter
Presentation Notes
JON Think from Dell to Facebook The 90’s saw mass customization capabilities in product manufacturing, e.g., Dell Computer’s ability to customize your PC order over the phone, build it and ship it within 24 hours. We are now in the early stages of mass customization of the consumer experience.
Page 21: Value Co-Creation

A new era of rapid, market-led value creation

…think nature, evolution, mutation

Presenter
Presentation Notes
JON The study of Complex Adaptive Systems (CAS) suggests rapid adaptation occurs when central control gives way to decentralized innovation…think nature. The point-of-view is businesses, as entities in highly complex environments, will more successfully adapt if they enable a different kind of relationship with their agents for innovation (consumers and partners) – where value creation becomes not the domain of just the company but shared with the consumer. Early evidence suggests digital technology advances have set the stage for the new shared innovation-based relationship and resultant new types of organizations.
Page 22: Value Co-Creation

The intersection of digitally educated people and advanced technology has

created the opportunity for a unique experience with each consumer

…access to products and services

when, where and how they want it.

Presenter
Presentation Notes
JON Think Zuboff – Psychological Sovereignty It is the intersection of digitally educated people and advanced technology that creates the opportunity for a unique experience with each consumer…access to products and services when, where and how they want it. More than attentive service, it allows the customer to have one hand on the steering wheel – a scary thought for organizations built for replication, linear acquisition processes and control so efficiencies could be gained through scale. This dynamic and unchartered relationship between the consumer and the company can be labeled Value Co-Creation. Value Co-Creation means innovation and growth will come not from just asking or anticipating consumer wants and needs, but by enabling consumers to more fully participate in the product or service creation process.
Page 23: Value Co-Creation

The Shifting Balance towards Value Co-Creation

Balance of Power

Market Enabled Innovation

“Value Co-Creation”

Low Moderate High and Epic

DEGREE OF UNCERTAINTY

Vast and Growing

Many

Few

VARI

ABL

ES TO

CO

NSI

DER

Clear

Operations Level

Innovation “TQM”

Organization Innovation

“Transformation”

Presenter
Presentation Notes
JON The consumer is no longer the recipient of value but a participant in the Value Creation process. Enabled by the ubiquitous network and social media behaviors, the balance of power between businesses and their consumers is shifting. As One…a consumer approached for commerce through the digital channel is positioned for immediate access to greater information and choices shifting the balance of power. As Many…when consumers begin to create “communities” to procure, they may bypass current sales/distribution systems and negotiate in mass dramatically shifting the balance of power.
Page 24: Value Co-Creation
Presenter
Presentation Notes
WENDY Value Co-Creation represents a dramatic shift from….to….(see slide)
Page 25: Value Co-Creation

Common Interest Who

Needs An Insurance

Agent?

Medicine The Way It Should Be

Examples

Consumer Buying Power

New Product Development

Presenter
Presentation Notes
WENDY – Examples 1: Consumer Buying Power, 3: New Product Development JON – Examples 2, 4, 5
Page 26: Value Co-Creation

The Consequence of shift in these tectonic forces

…is a dramatic rethinking of

organizations and how they function

to create value and get work done.

Presenter
Presentation Notes
WENDY The examples we shared introduce a new fundamental truth: a dramatic…..
Page 27: Value Co-Creation

Rapidly forming networked “communities”

Presenter
Presentation Notes
WENDY What we are seeing is an emerging organizational trend away from: hierarchy, control and centralization towards flexibility and rapidly forming “communities” to create value outside the walls of the enterprise. (Wikipedia, Arab Spring, FarmBelt ) This does not mean anarchy – these communities follow norms and are guided by a shared purpose. Innovation is now at the edge, open and distributed. In other words, the stage is set for consumer markets to mutate more like nature than the highly structured industrial complex that emerged in the early 20th century.
Page 28: Value Co-Creation

Business leaders must learn to share control – “the steering wheel” – with consumers.

Presenter
Presentation Notes
WENDY The question is will companies fight for control (20th century model) or share control and enable consumer participation in the innovation/value creation process…will the boundaries of the enterprise become permeable or completely re-defined?
Page 29: Value Co-Creation

Where to Begin?

Do you have “Gen-Net™” leadership who think this way and can guide your

organization through this dramatic change?

Presenter
Presentation Notes
JON
Page 30: Value Co-Creation

Some Guiding Principles • Don’t fight it: embrace complexity, the network and the rapidly

developing consumer behaviors.

• Think of your organization structure as inclusive of the messy external network of person-to-person consumers and communities.

• Anticipate and reward a culture of exploration. You’ll be more effective at attracting and retaining Gen-Net leaders.

• Begin to shift your mindset about leadership from “top down” to “bottom up” to support the innovation on the edge of your organization.

• Quickly prepare for and start to take greater market risks than you are comfortable with because your business is likely at greater risk than you realize.

Presenter
Presentation Notes
JON
Page 31: Value Co-Creation

Ready, or Not?

www.theclariongroup.com

Presenter
Presentation Notes
JON