Shifting the Business Mind Set from Asset Management to Customer Value (Part 1)
Author: Chris Stevens | Managing Partner
Airlines and other companies such as railways, airports and power utilities have, over decades, had to invest in and maintain large scale assets to operate their businesses. Despite the dramatic changes digitisation has brought about, the approach to creating value from large and often distributed assets used by these organisations is yet to fundamentally change. The digital era has made it possible for many larger asset businesses to use digital channels to connect and ultimately transact with customers. The money invested in asset lifecycle management out-numbers the money spent on digital channels by a considerable multiple. We are not saying that businesses should forget digital channels, but rather, suggest that there is significant opportunity to focus on leveraging more value from physical assets at the same time as investing in new digital value chains.
In a world where customers increasingly tangibly discern value, they can more easily seek out best value (with little effort thanks to the power of the internet). Simply put, those organisations not demonstrating best value will be overtaken by those who do. The use of software and information, pervasive networks and smart devices allows almost anyone to now create a value proposition for a consumer, on a larger scale than before.
What’s the predictable future if we don’t sufficiently address this?
In observing some larger organisations plan improvements to their business model, there are arguably levels of denial by some of the most senior leaders about the need to significantly refocus their business model for a different future. Perhaps it is an unconscious bias, (but sometimes it can be conscious too). The bias sounds something like “we continue to be successful as we have a large customer base, great brand, revenues are good and our strategy is well considered so where’s the burning platform”?
When we take this all too common picture into consideration and ask what is the predictable future if we do not embrace sufficient change, in many cases the answer can reflect an absence of vision in favour of the status quo.
Reassessing how you create value from your assets now becomes critical.
Customers use the business’s assets, yet we do not regularly and consciously link assets to ‘customer experience’ and ‘customer value’. Changing the way we look at customers’ needs through analysing how they use the assets can lead to adapting the use of assets to create new value for them.
Adopting a value chain approach to the way in which strategic directions for a business are set makes the business think differently from the traditional vertical asset view and shifts it to a horizontal view that looks across the business end to end and puts the customer at the centre.
NEXT: Part 2: What are the tensions between current constraints and the need to grow value?