Video Script.

Hello again from Lionel.

In the last nest, #5, I showed you an example of how building a value map generated an AHA! that really made a so-so performing company into a star.

In this one, I’m going to suggest a process that will help you build a VM for your business and increase your chances of generating some insights, and perhaps even a killer AHA!

The first step is to decide who should participate in its construction. You could do it by yourself.   But unless you have no alternatives, that’s really not the best arrangement because you should be looking for some fresh thinking that complements your own brilliance.

 If you are running a fair-sized business, we have found what’s most productive is to assemble a small team of people who can bring to the table different perspectives on the business, experiences, knowledge, and even biases that may stem from their personalities. I think you’ll find it’s all good fodder.

 And one more suggestion.   Consider including someone from the outside who may have little knowledge of your business but has extensive experience in other businesses and industries.  This person can bring an especially fresh perspective to the party which should give you the best chance of generating insights. And, to be a little self-serving, the person could be a consultant like me or one of my partners or associates.  It might cost you something, but if you get the right person, you should get a value back that is many multiples of its cost.

Having decided on your team, the next step is to carve out some time and a quiet place to do this.  Especially useful is one that comes with a large white board and colored markers because you will be drawing, and erasing, many parts of the ValueMap that will be associated with the business model options you’ll be considering.  But if the potential presence of a pandemic does not permit the group’s physical assembly, or for any other reason, it can also be done using one of the many web conferencing platforms, like Zoom or Webex.

So once you’ve decided on your team and the means for its assembly, how should you proceed?  There are many ways you can do this, depending on your business and personal preferences.  But I’ll share one with you that has worked well for us.

The first step is to ask the team members to come to the meeting having done a little preparation.

They should first review the concept of values and value flows.  An easy way to do this is by reviewing Nests #3 and #4.  And then, based on their knowledge and experience, make a list of what they think are the key customer needs and values.

At the meeting, after you’ve made an appropriate introduction, start it off by having your team answer 10 questions.

  1. What values do you think we are creating?
    1. Draw your stage (show)
    2. Make a list on your board (show) 
  • Who are our customers?
    • Define and draw your market (show)
  • How large is it?  Is it growing or shrinking? And if so, by how much in the next few years?
  • Do your customers have customers? Or, in the MBA lingo, are you a B2B business?  If so, you might want to leave room on the board and continue the VM “downstream” until you reach the end-user, as we described in our last Nest #4 with the Intel example. (Show)
  • And if you are a B2B business, make a list of your downstream customer values, like you did for yours.
  • How do your values reach your customer?
    • Directly?
    • Through distribution?  If so show it on the VM (Show).  And if it has several steps, show each step.
  • How does the customer get to know about the potential values he/she can get from your business? (Show)
  • Now comes a particularly important one.  What are your customers’ values (show). Collect the responses from each team member and make a list on your board that consolidates the answers.  Try to crawl into the mind of your typical customer, and look at your product or service from their point of view.  You might think of an approach that Jeff Bezos is famous for using:  think of your customer as guests to a party of which you and your business is the host.  To what extent are they enjoying the party?  Here are some subquestions to consider:
  1. What are the customer needs that you are trying to satisfy?
    1. What values do your customers have that are associated with those needs–in any way?
    2. How do they match up with the values you are creating?
    3. How do they compare with what a competitor can provide?
  • What does the customer have to do to get your values?  Detail the customer experience.
    • How and why does the customer decide?
    • How do they pay?  (Show)
    • What’s the customer experience when they receive your values?  If it is not simple, detail it on your board.  Go as far as you can, including how the customer makes use of your values.
  • Now let’s look at your significant suppliers, if you have any. (Show)
    • What values do they provide to you?
    • How much and how do you pay for them?
    • And these days, you may want to think particularly hard about this: what risk do you have that they might fail you in some way, or at some time, and what can you do to mitigate that risk?
  • Finally let’s think about how you go about creating the values you are delivering.  What are the key steps that your organization takes to create the values?  I’m sure you have thought about this a great deal.  You might want to draw a separate picture of this, perhaps using a framework that you may be familiar with such as a value chain—a concept introduced by Mike Porter many years ago (Show). Or you may have another way of sketching your value generation process.
  • Now focus on any reverse value flows that we talked about last time—the values that flow from your market back to your business and that add value to what you provide, such as feedback or information about the nature of your market. What are the reverse value flows? Draw them and detail them (Show).
  • Now think hard because you and your team may not be sensitive to this one.  What negative value flows are there—the ones that detract in any way from the values you are delivering. (Show)? Draw them and also detail them.
  1. OK.  Now comes the fun part, because it is also the most creative part.  I want you to take that ValueMap and shake it. (Show) [I want to see you do that on a white board!] There is no step-by-step process that I know of for doing this, other than looking hard at every part of it.  But here are some questions you may want to consider to get you started, such as:
  1. Are there any value flows that could be improved, such as:
    1. More values delivered?
    2. Enhanced reverse values?
    3. Reduced negative values?…..and so on.
    4. How well do the values you create match your customer’s needs and values?
  • Do these break down into segments or cohorts so that you could be thinking about a somewhat different package of values for different parts of your market?
  •  Are there any values they have that you are not satisfying?  If so, could you satisfy them in some way, perhaps by engaging a partner?  This is sometimes referred to as cross-selling.
  • Could you employ a modified strategy where you provide some portion of your value package at low cost, or perhaps even free, so as to encourage them to make use of your entire package for more money?  This is sometimes called up-selling.
  • If you have a large potential for growth, what could you do to power your scaling process
  • What changes in the architecture of your VM might be possible and advantageous?  Remember the RV example in our last Nest #5 where Smalley found a value by-pass.  That was a change in the architecture or structure of his VM.
  • Does your competitor’s map look different? If so, you might want to sketch it on a different part of the whiteboard. What advantages and disadvantages does that have relative to yours?
  1. What new technology could affect your business and what, if anything, should you do about it?
  • If you are a market leader, could a start-up offer your customers certain values on your valuemap that are new, different, or exciting?
  1. Finally, as a good executive, compile all the changes you’ve considered and conclude with a listing of Actions Required (AR’s as we called them at Intel)—whether it’s getting more information, testing an idea that came up, or putting into effect one of the obvious changes that are needed– along with who is responsible for carrying them out.
  2. And one last thing.  If you do all this, including taking the necessary actions, at some time in the future, convene a follow-up meeting to check your progress and see if any further changes on your VM are needed.

To review, here is a list of the key questions and steps we just went over.  If you want to make a note of them, just freeze the video. (Show)  Pause.

  1. What values are we creating?
  2. Who are our customers?
  3. How do your values reach your customers?
  4. How does the customer learn about your offering?
  5. What are your customer’s values?
  6. Who are your key suppliers?
  7. How do you create the values you deliver?
  8. Any reverse value flows?
  9. Any negative value flows?
  10. Shake the ValueMap!
  11. Compile your AR’s (Action Required)
  12. Follow-up meeting
Value Mapping Process–Questions and Steps  
What values are we creating?Who are our customers?How do your values reach your customers?How does the customer learn about your offering?What are your customer’s values?Who are your key suppliers?How do you create the values you deliver?Any reverse value flows?Any negative value flows?Shake the ValueMap!Compile your AR’s (Action Required)Follow-up meeting  
www.valuemap.com © 2017 Lionel L. Fray Associates, Inc.  5  

So good luck with your VM process. I hope you get some insights or some real AHA!’s from it.

 I would welcome getting some reverse value flows from you about what your experience was like in developing your VM and how useful you found it to be.  Just drop me a note at lfray@valuemap.com.