Bringing outsiders in

Externally based process improvements create value for customers, shareholders
By George F. Brown Jr. and Atlee Valentine Pope

One of the most important lessons in business is that when you create value for your customers, you have the opportunity to capture value for your shareholders.

There are three ways a supplier can create value for its customers. A supplier can help its customers sell more. Sometimes this involves taking market share, and sometimes it involves bringing new customers into the market. A supplier can help its customers achieve premium prices. Sometimes this involves product improvements that help a firm move up along the good-better-best spectrum, and sometimes this involves developing product and service options that customers are willing to pay for. The third opportunity involves bringing ideas that take costs out of the system through various types of process, materials or other efficiencies. Firms that can identify and implement strategies that achieve any of these three contributions position themselves and their customers for profitable growth.