Alistair Davidson, partner at Eclicktick Corporation describes some conclusions from his work as a CEO, consulting with clients and from monitoring the current best practice in value creation through the leading writers and thinkers published in Strategy and Leadership magazine, where he is also a contributing editor.

Business cases justifying new investments are no longer enough. The next generation of sales, will, for many companies requires jointly creating or co-creating new ways of creating value with customers and prospects.

The task is difficult. It does not happen easily. And managing multiple co-creation projects requires dedicate management.

But in a world of greater transparency - where the quality of your service and value - is more visible, new business models are needed.

Today, smart companies are moving beyond measuring the business cases that describe their products and services. Up until now, business cases have fallen into 6 major categories:

The general business case used for determining pricing models in order maximize the speed and volume of sales.

Relationship profitability models that allow organizations to understand the overall profitability of relationships.

Sales models for helping marketing and sales staff do a quick analysis of prospects.

Detailed product specific business cases that take a supplier perspective.

Customer centric models that analyze the business case from the customer's perspective.

Enterprise models that allow a customer to look at the implications of adding a product or service to a portfolio of projects or infrastructure.

Today's environment demands a new perspective. Underlying this new perspective is the idea that managing the process of value creation jointly requires a different kind of relationship, different staffing and different measurement.

In this new relationship where customers and suppliers cooperate to create value for both parties, organizations are likely to fail without a conscious attempt to manage the process formally. Key steps in the process involve:

Identifying opportunities in the product and customer portfolio for joint value creation.

Creating an organizational structure with accountabilities for creating value with specific customers.

Creating a new role in the organization, a VP of Customer Value Creation, who can coordinate, manage and look for synergies in the processes and deliverables created for individual customers. The jointly created collection of value creating activities needs to be planned, just as much as products need product managers, or key account need account managers.

This new role, VP Customer Value Creation is likely to be a controversial and significant role in organizations requiring exceptional skills in planning and persuasion.

Development of business cases for justifying purchases by prospects and clients. Business cases are general and not typically client specific. Business cases tend to be supplier centric and product- or service-focused.

Business case modeling becomes recognized function in the company. Specialist staff create semi-custom models to supporting marketing and large bids.

Increased involvement with customers leads to early attempts to sell partnering, but clients are typically not 100% convinced of the partnership value.

More investment is made in client-specific models, but clients are reluctant to disclose everything.

Early outsourcing relationships prove unsatisfactory and negotiations occur between the client and the supplier to change the incentive structure towards incentive payments and risk sharing.

“Marriage”: supplier and customer determine that their survival must be predicated upon a transparent, measured, share risk relationship. Innovation in processes, measurement, planning, and organizational structure are pursued.

Successes lead to increased visibility for relationships with key customers. Innovations resulting from joint creation of value start to influence the product management process elsewhere in the organization.

Creating a new initiative to make sure that your organization is pursuing new ways of creating value with customers is neither easy nor guaranteed. It requires a mix of knowledge and management ability, new measurement processes, and training. Some typical timelines and task requirements (some of which can be done in parallel) might include:

Documenting opportunities in order to propose new relationships based on similar ideas to new prospects or customers

Failures need to be documented to identify pitfalls and comeback strategies to recreate relationships with customers who no longer prize the relationships

Some failures are harder to over come than others, so prioritizing the opportunities makes sense.

Identification of low effort, high pay off projects to give both parties confidence in proceeding to larger steps

Communication of new strategy and reference projects to prospects, customers, internal staff and sales forces

Transformation of business processes, staffing strategies and remuneration strategies on a larger scale

For assistance in developing and managing joint value creation projects with customers, please contact