Yours or Mine?

Say I was to put a $20 bill (or a £20 note for my UK friends) on the table and offer the highest bidder the chance to win it on the flip of a coin. How much would you be willing to wager on the chance?

Views on gambling aside, logic would suggest a reasonable answer would be somewhere in the neighborhood of 20 dollars as that evens the odds of you taking my 20 while keeping yours at 50/50.

But say all you had was $20 to carry you to your next paycheck and you needed that money to buy milk for the kids. Would you still make the bet?

Conversely, say you want to buy theater tickets that cost $40, but only have $25 in your pocket. The show runs tonight only and there is no other way for you to get the extra $15. Might you consider bidding a little higher for a chance at not missing the show?

My point is this: It’s not really the price or cost of things that drives consumer behavior, but rather the value they place on those things. Yet driven no doubt by the economic downturn, it would seem both companies and consumers alike are totally obsessed with cost cutting and have completely lost sight of the total value proposition.

While I appreciate that eliminating unnecessary spending often makes sense, becoming obsessed with cost cutting, be that on the provider or consumer side, can only lead to a reduction in quality, and therefore the value of goods and services available.

Inevitably, this decline in value will further stall our economic recovery, increased pressure on our fragile environment and in the end, actually drive up real costs. In other words, it will cause a world of long term pain and little if any short term gain.

By my way of thinking, the sooner we curb our obsession with cutting costs and get back to focusing on value, the more of it we will create and the better off we’ll all be.

I’d love to hear your thoughts on this one!

For more on this topic, see my colleague, Ade McCormack's blog on Money Verses Value then return to this site by clicking on the back button.

To comment, or read the comments on this blog click on 'comments' beside the little envelope below. To read previous articles (this is #29), see the Blog Archive (lower right) and to become a Wavemaker Blogs follower, click on 'Follow' (just above Archive).

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If you would like to know more about how Wavemaker Consulting can help your company improve the customer experience you provide, visit our Website, or email us at wmconsulting@live.com

Turn Around

Do you know what the problem is with most big companies?

They've somehow got the whole reporting thing totally 'bass ackwards!'

Think about it. In big businesses everyone except the CEO reports not to the stakeholder who matters most - the one who pays the way and has ultimate say over whether or not the company stays in business, but rather to some other employee in the same company... who in turn reports to yet another. Even the CEO, by reporting to the board/shareholders, has got it terribly wrong!

Most would agree this structure is fraught with problems, but the biggest by far is that everyone is looking in the wrong direction - face to the boss, back to the customer!

Now imagine for a moment a company where everyone reported directly to the customer. Impossible you say? Well in small businesses it happens all the time.

Take my business as an example. At Wavemaker, I report only to my customers. They and they alone provide me with direction and feedback, write my performance appraisals and determine my pay level. Furthermore, they do all this for not a penny of payment, let alone expectations of executive stock options or bonuses; and I dare say, they are a damn sight better at it than any corporate executive I've ever come across!

I'll admit, it is probably easier to organize this way if you are a sole proprietor, or in a small partnership, but who says that bigger companies couldn't do the same thing? Taking on more associates and fewer employees would seem to be a step in right direction, as would making sure everyone had some serious skin in the game (a meaningful investment in the company and compensation tied directly to results).

Taken far enough, my bet is productivity would soar and there would no longer be the need for all of those cumbersome and expensive employee evaluation, compensation, engagement and retention programs, let alone for all the managers and supervisors required to administer them.

And, in answer to the question "but what would we do with all of those good folk?" while numerous possibilities come to mind, maybe we should start by having them all turn around... and face the customer.

To comment, or read the comments on this blog click on 'comments' beside the little envelope below. To read previous articles (this is #20), see the Blog Archive (lower right) and to become a Wavemaker Blogs follower, click on 'Follow' (just above Archive).

If you would like to be notified whenever a new Wavemaker blog topic is posted, just drop us an email at wmconsulting@live.com with "Blog Me" in the subject bar. We promise never to provide your contact details to anyone else and you can unsubscribe from this service at any time.

If you would like to know more about how Wavemaker Consulting can help your company improve the customer experience you provide, visit our Website, or email us at wmconsulting@live.com

In Good Times and Bad

To be productive, there are only two things you can do in business:

1-add value

2-save costs

Now then - which are you doing right now?

The above words of wisdom were sent to me by a good friend and X boss. While I love the simplicity and see no need to mess with them, I would like to suggest there is something to be said for the order in which they are presented, especially given the times.

While all for running a tight ship, I am more than a little concerned for those companies focusing first and foremost on cutting costs, but giving little or no thought to adding value.

Particularly disconcerting is the all to common practice of cutting programs aimed at improving the skills and knowledge of long standing employees, or worse yet cutting the people themselves.

I suspect most, if not all of these these companies are going to find themselves behind the eight ball when the markets turns, if not before. And, when it comes to time to staff back up, the cost of regaining, or retraining the skills and knowledge lost may be more than many can bare.

So if your response to the question posed above is simply "I'm cutting costs" and you haven't already developed and implemented a plan for adding value, you might want to rethink your approach.

What is the best, and likely the least expensive way to add value, regardless of the times?

We would suggest the answer lies in retaining and further developing your best people so your company can deliver a superior customer experience that differentiates you from your competitors, both today and in the future - a logical strategy for both good times and bad!

To comment on this blog click on 'comments' below. To read previous articles, see the Blog Archive (lower right) and to become a Wavemaker Blogs follower, click on 'Follow' (just above Archive).

If you would like to know more about how Wavemaker Consulting can help your company improve the customer experience you provide, visit our Website, or email us at wmconsulting@live.com