All businesses face challenges in knowing what the secret sauce for success is. But for every successful business the secret sauce is often different. Businesses need simple models that they can use to understand the drivers of success and which they can adopt for their own business developemnt. An example of such a model is Treacy & Wiersema’s Value Disciplines model (operational excellence, customer intimacy and product leadership).
But in these times of almost mandatory customer-orientation, this model doesn’t go far enough in explaining business success. Today’s model has to include all three of T&W’s value disciplines plus other factors.
One model that I find useful is the C3EB model.
The first C is Customer outcomes. Outcomes are the next evolutionary stage beyond needs, wants & expectations. Unless you know what valuable outcomes customers are looking to achieve through using your or competitor’s products, you aren’t going to be in business for long. Valuable outcomes are ones that customers are willing to pay to achieve.
The second C is business Capabilities. Capabilities are combinations of business processes, systems & technologies, information flows, working procedures, organisational structures, etc, which together allow the business to deliver customer outcomes. Unless you know what you can do through your own or through partner capabilities, you have little chance of delivering valuable customer outcomes.
The third C is Cashflow. It is the net result of your capabilities delivering valuable outcomes for customers. It recognises implicitly that value is ONLY created at the intersection of customers and your company (‘s capabilities), everything else is basically cost or risk (which is just a proxy for cost).
The E is the customer Experience. Actually, the customer experience is composed of all the individual touchpoints between customers and your company (‘s capabilities). It is the point where value is created (or destroyed). The customer experience is the sum total of all the touchpoints that you have with customers.
The B is the real Brand. The real brand only exists in the minds of customers. It is the result of many individual iterations of parts or all of the customer experience. It is not always what Marketing communicates to the market.
Although it is tempting to think of C3EB as consisting of lots of individual views, the reality is that they are all dynamically related to each other, that they change over time as markets change and as the individual components evolve.
The C3EB model helps understand how business has evolved over time. In the mass marketing era of yesterday, the dominant model was one of Capabilities, Cashflow and the communicated Brand. Customers bought everything you could make and the Experience was not even a concept. Innovation happened through R&D and could be considered as an internal Capability.
In the targeted marketing era we find ourselves in today, the dominant model is still one of Capabilities, Cashflow and the communicated Brand. However customers have most things they need and have many more choices for the other things in life. Customers are actively considered (but only by the CRM capabilities of marketing, sales and service) but are still a poor relation. The Experience is being promoted as a competitive differentiator by some companies, but is running up against limited delivery Capabilities and an unrealistic communicated Brand. Innovation is still happening through R&D, although partners (and others) are increasingly involved in open innovation.
What I see gradually happening now is a more balanced alignment of the C3EB components, plus a combination of internal Innovation (an internal capability) and customer-driven Innovation(C3EBI?). This is where outcome-driven thinking comes in, but balanced by the other components so that the company doesn’t get ahead of itself. What I also see is that customers are coming into the company more and getting involved in the delivery capabilities and all the other components.
Benkler’s work on networks of production offers an interesting glimpse into the future where value creation may move from inside the company and from within markets (through the exchange mechanism) to networks of co-production. Customers are likely to play a much more decisive role in this than they do in markets today.
Interesting times indeed.
What do you think? What models do you use for understanding your company’s business? What should be in a business model for today’s business world?
Post a comment and get the conversation going.