In today’s fast-paced world, business dynamics constantly shift due to technological advancements, global competition, and evolving consumer tastes. This poses a significant challenge for product managers, entrepreneurs, CEOs, and business leaders as they grapple with formulating an effective organizational strategy to yield maximum profitability.
An organizational strategy allows your business to identify the right path – marketing, corporate, global, innovation, digital, or social strategy – and channel its resources accordingly. But with the myriad of options available, selecting the right course could become an enigmatic ordeal.
Luckily, there’s a straightforward route to unlocking the value your company seeks. The secret ingredient is value. To significantly increase profits, your company must strive to be valuable to your customers, employees, and suppliers. This could be achieved via a value-based strategy.
Implementing a Value-Based Organizational Strategy
A value-based strategy demands your business to generate substantial value for your customers, employees, and suppliers. This implies that all strategic initiatives should be geared towards attaining one or more of the following:
Creating Value for Customers
Prioritize enhancing your customers’ journey to establish a value-focused company. Innovating and improving your products or services to better serve your customers can bolster their trust and loyalty.
A sense of satisfaction post-purchase is a sign of a loyal customer. Utilizing your brand to evoke goodwill, loyalty, and customer enthusiasm heightens your company’s value.
Increasing your customer’s willingness to pay (WTP), i.e., the maximum price a customer is willing to spend on your products or services, is vital. Prioritizing customer happiness over sales growth can elevate your customers’ WTP.
Creating Value for Employees
As a business leader, you are responsible for making work appealing for your employees. Creating an environment that offers interesting and motivating roles would attract top talent to your company.
High-quality jobs not only create value but can also reduce the salary package needed to pull in skilled employees.
Corporations like Google understand the correlation between a happy worker and creativity, productivity, and dedication. Cultivating creative spaces and providing flexibility to employees boosts their satisfaction, well-being, and, in turn, your company’s productivity.
Creating Value for Suppliers
Just as building trust and loyalty is essential with customers and employees, the same applies to suppliers. Adding value for suppliers could mean helping them increase their productivity. Once productivity increases and costs decrease, the minimum acceptable price for their goods (willingness to sell) decreases.
Companies focusing on value creation for customers, employees, and suppliers, or a combination, gain a competitive advantage.
Take Zara’s fast-fashion model, for example, it reduces inventory by decreasing suppliers’ required working capital and enhancing their surplus, while simultaneously providing customers with the latest fashion trends. This approach allows Zara to sell more at a lower production cost, creating a win-win situation!
The Secret to Success…
The beauty of implementing a value-based strategy is that it prompts you to truly grasp the motivations of all parties involved – your company, suppliers, and customers. This understanding empowers you to make intelligent decisions about pricing your products or services, often leading to more favorable results.
By creating value for others, you invariably create value for yourself. We abide by that principle when offering our clients and employees win-win deals.
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