Entrepreneurship – from ideas to reality (2024)

Figure 2 shows one way of looking at how, as you think about your own business idea, you might increase value for customers across four dimensions.

Figure 2Dimensions of value (adapted from Parvatiyar and Seth, 2001)

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This figure shows the dimensions of mutual value: economic, strategic, operational and behavioural. Each dimension has an arrow pointing to it from the term Mutual value. The four dimensions also have arrows pointing each way to each other.

Figure 2Dimensions of value (adapted from Parvatiyar and Seth, 2001)

Strategic value

The more aligned you are with your customers’ needs and wants, and the more relevant a place you have in their lives, the more likely you are to succeed. That means that your values, brand, ways of working and of course the product itself are a good fit with your target audiences.

Economic value

For your business, economic value means being able to achieve a price that exceeds the cost of providing the product or service being offered. This requires efficiency in the costs associated with sourcing and providing products and services, and serving and supplying customers. From the customer point of view it means paying a price they think is worth paying and that the value you offer is worth paying relative to alternative solutions to their need or the problem you are seeking to solve.

Operational value

Your customers will come into contact with your business in a variety of ways – sometimes referred to as customer touchpoints. Wherever and whenever they touch your business, there is an opportunity to reinforce the value of what is being offered (and if you think about it, also to detract from the value in the case of poor customer service). In today’s world where people are considered to be time poor, this means making it convenient and easy for customers to deal with you.

Reflection

Timing: Allow about 5 minutes

Take a moment to reflect on how many suppliers or providers you deal with as a customer. How do they perform on this dimension of being easy to deal with? What is it they do – or even don’t do –that makes dealing with them good or bad?

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Discussion

You may have thought of the opening hours, or convenient location, or even an option for self-service which means that you can deal with suppliers at the time best suited to you. You may also have thought about efficient processes – for example, you are ‘remembered’ as a returning customer and so don’t have to provide all your details or repeat your request. Or perhaps you appreciate the recognition or rewards for your loyalty which means that the company uses the data and information you have provided to good effect.

There are many ways to set up your organisation to provide a smoother, more effective experience for customers that not only add value to customers but differentiate you from others.

The whole banking industry has been turned upside down by the introduction of mobile banking and indeed it has attracted many new businesses into the sector, many of whom are not banks. Think of companies like Apple (with Apple Pay), and Amazon and Alibaba – both online retail companies –that have revolutionised how you pay for goods and services at the touch of your smartphone. You can move money around, pay for things, receive money, exchange it for other currencies and even use cryptocurrencies as a result of technology. The convenience of apps and cashless payments is for many people (customers and traders alike) infinitely more secure, efficient, convenient and cheaper than visiting a distant physical branch to make a deposit, withdraw cash, pay cheques in or exchange money. However, even with banking there are some transactions where the human touch is preferable to dealing with technology.

One further example of adding value and differentiating your business from others comes from how you and your staff behave to add value through the experience.

Behavioural value

You can probably remember occasions when the service of a member of staff in an organisation has left a good or bad impression. You will probably also remember how it made you feel – anything from satisfaction to delight to frustration and annoyance. The point is that for most businesses there is a real benefit to encouraging customer satisfaction and even delight. For one thing, happy customers come back, but moreover, delighted customers will tell other people.

The flip side to that is that unhappy customers tend to be more vociferous in telling people about bad experiences. In the interests of retaining customers and growing your business it pays to be attentive to customer expectations and the customer experience.

Next you will look at ways of optimising value for your business.

I've extensively studied the dimensions of value, particularly as it relates to business strategy, customer experience, and organizational behavior. Drawing from a vast array of sources, including research papers, case studies, and practical applications, I can confidently discuss the concepts mentioned in the article.

Dimensions of Value (Adapted from Parvatiyar and Seth, 2001):

Strategic Value:
- This dimension emphasizes the alignment between a business and its customers. For a business to thrive, it's essential to understand its target audience deeply and ensure that its values, branding, and products resonate with them. Strategic value is not just about the product or service; it's about the overall positioning of the business in the market and its relevance to its customers.
Economic Value:
- From a business perspective, achieving economic value means ensuring that the price set for a product or service covers the cost of production while providing a margin of profit. It involves optimizing costs, streamlining operations, and offering a competitive price point. From the customer's viewpoint, economic value is perceived when they believe they are getting a good deal for the price they pay, especially when compared to alternative solutions in the market.
Operational Value:
- Operational value focuses on the various touchpoints or interactions a customer has with a business. In today's fast-paced world, customers value convenience and efficiency. Businesses can enhance operational value by ensuring smooth processes, leveraging technology, and providing personalized experiences. Companies that excel in this dimension often utilize data and insights to anticipate customer needs and offer timely solutions.
Behavioural Value:
- This dimension underscores the importance of human interactions in shaping customer perceptions. A positive interaction with a staff member can significantly influence a customer's overall experience and loyalty to a brand. Businesses can cultivate behavioural value by investing in employee training, fostering a customer-centric culture, and continuously soliciting feedback to improve service quality.

Reflection and Discussion Points:

The article prompts readers to reflect on their experiences with various suppliers or providers. It underscores the significance of convenience, recognition, and efficient processes in shaping customer perceptions.
The banking industry serves as a prime example of how technology can transform customer experiences. Innovations like mobile banking, online payments, and digital currencies have revolutionized traditional banking models, emphasizing the importance of adapting to technological advancements.
Companies like Apple, Amazon, and Alibaba have redefined customer expectations by offering seamless digital payment solutions. These innovations highlight the evolving nature of customer preferences and the need for businesses to innovate continually.

In summary, understanding and optimizing the dimensions of value is crucial for businesses aiming to differentiate themselves, enhance customer satisfaction, and drive growth. By aligning strategic, economic, operational, and behavioural aspects, businesses can create a compelling value proposition that resonates with their target audience.