A Customer Intimate Strategy Can Leverage A Co-Creation Process

12 04 2007

What does it take to innovate not simply once but often? Part of the answer lies in your approach to your overall organization’s strategy.

In 1997, Michael Treacy and Fred Wiersema’s book “The Discipline of Market Leaders: Choose Your Customers Narrow Your Focus, Dominate Your Market” presents three models: operational excellence (compete on price and low cost production – e.g. WalMart), product leadership (invest in innovative product development that leads the market where products sell at a higher prices- e.g. Intel), and customer intimacy (delivering a product or service experience that meets a customer’s specific needs with a price point in between- e.g. Nordstrom).

Each of these organizational strategy models emphasize different requirements for delivering customer value through internal “value creating” processes (e.g. operations, customer management, innovation management), human and IT management (e.g. human, information and organizational capital).

In a world where there are many direct and indirect competitors selling products or services to your members and customers, pursuit of a “low price leader” strategy will be hard to maintain for many associations. A “product leader” strategy has become increasingly impossible to sustain as the Internet has created competitors who can innovate faster with better accessibility to financial capital and more streamline production methods for maintaining their leadership position.

That leaves “customer intimate” or a member intimate approach. What’s required to leverage this strategy to meet financial growth and productivity gains?

Using David Norton’s Strategy Map approach we can visually show the interconnections behind customer intimacy and what an association management team needs to make it work.

Under this model the focus of customer value is driven by:

  • Your Product and Service Attributes: ability to scale, degree they can be personalized, and integrated
  • Relationships You Can Create with Your Customers: being seen as a solutions provider and an objective source
  • Image You Project: cultivating a brand you can trust

Internal processes to improve cost of delivery, increase revenue, and deploying new desirable products and services are how the value is created and includes:

  • Operations Management: infrastructure improvements and their interoperability
  • Customer Management: broadening participation of current members, acquisition of new customers and members, elimination of unprofitable products
  • Innovation Management: customer-focused product development, product or service co-creation process

Programs and projects across business units (conferences, publishing, educations, etc) are initiatives that require management of both tangible (e.g technology you use to deliver value) and intangible (e.g. project management skills or market/customer driven product management focus) assets.

The process of Product or Service Co-Creation can help you design and sustain customer intimacy across each business unit and within each product and service. It can develop an “innovation pipeline” because you are involving end user participation across the entire process of product and service management (as we discussed in our previous two part post on the content co-creation model).

This will require some new competencies for managers to develop:

  • Ongoing market knowledge of your product or service differentiation among its consumers
  • Product development skills that are similar across business units
  • Facilitation skills (face-to-face and virtual) to work not only with volunteer committees but also with customer volunteers you invite into your product co-creation process
  • Team building and leadership skills to better work across business units to create integrated product experiences

Becoming known as a trusted brand among your members and customers for delivering the right product at the right time will establish strong differentiation to help you stand out. And through product co-creation as a process for developing better “results-oriented” experiences for end users, you create “evangelists” for your organization and its products or services because they helped to shape the very experience itself.

 

 

 

 

 

 

 

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