creating value for your customers by becoming a knowledge organization
DESCRIPTION
This presentation is dedicated to the possibility that a organization can be run more effectively when it concentrates on developing into knowledge firm rather than a product or service firm. Creating such an organization is hard work and not for everyone as it requires leadership in the organization to think differently than they have in the past about what it is that they do.TRANSCRIPT
Creating Value for Your Customers by Becoming a Knowledge
Organization
Ed Kless
“The customer never buys a product. By definition the customer buys the satisfaction of a want. He buys value.”
-Peter F. Drucker
What is a Business Model?
How your company creates value for and capture value
from customers
“Disruptive threats come inherently not from new technology but from new business models.”
-Andrew Grove
Current Business Model
Revenue = Capacity + Efficiency + Cost-plus pricing
Current Business Model
Four Assertions
• Growth without profit is perilous. • Non rival assets are more leverageable
than rival assets.• Effectiveness is always and everywhere
more important than efficiency.• Value-led pricing is superior to cost-plus
pricing for capturing value.
The Knowledge Organization
Knowledge Organization Model
Profit = Capital X Effectiveness
X Value-led pricing
Two models
Revenue = Capacity + Efficiency + Cost-plus pricing
Current Business Model
Knowledge Organization Model
Profit = Capital x Effectiveness x Value-led pricing
↑ ↑ ↑ ↑
From Revenue to Profit
Cost
Price
Value
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
The Whale
From Capacity to Capital
Four Forms of Capital
• Financial• Structural• Intellectual• Social
Facts about Knowledge Workers
• They own the means of production.• Their organizations need them more than they
need the organization.• The office is their servant, not their master.• Effectiveness is far more important than efficiency.• Judgments are more important than
measurements.• Ultimately, they are volunteers.
From Efficiency to Effectiveness
Anti-efficiency
• Continuing education• Knowledge management/CKO• Total Quality Service (Ritz-Carlton)• Mentoring and coaching• Networking• Business development• Social media• Value-led pricing
What you can measure you can manage!
- Peter F. Drucker
From Cost Plus to Value-led Pricing
“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”
-Warren Buffet
The 1 Percent Effect
- Fixed Costs + Revenue - Variable costs
+ Price0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2.7%3.7%
7.3%
11.0%
1.5%2.5%
4.6%
7.1%
McKinsey AT Kearny
The One Percent Windfall
Revenue * .01 + Net Profit
Far Niente
Causation Chain
Product/Service Cost Price Value Customer➙ ➙ ➙ ➙
Customer Value Price Cost Product/Service➙ ➙ ➙ ➙
Behavioral Economics
Anchoring
Barron Joseph von Neinbach Model
WA HF PF
C
B
A
Sage Firm of the Future Symposia
• San Francisco, CA: November 18-19• Chicago, IL: May 13-14• New York, NY: August 12-13
http://na.sage.com/fotf