A value based approach to management

TLDR

The paper proposes a three‑step approach that lets firms define, quantify, and deliver customer value better than competitors, thereby capturing a larger share of that value. The authors examine each of the three value‑creation steps and outline the tools and approaches used by leading firms to maximize shareholder wealth. A customer‑value based approach instills fact‑based decision making, promotes faster growth through differentiated investment, prioritizes high‑return initiatives, and positions firms for long‑term profitable growth by mastering the value cycle.

Abstract

Purpose The paper aims to present a three‐step approach that enables companies to define and quantify what customers value, systematically deploy their resources to deliver greater value than the competition, and capture a greater share of the value delivered to customers. Design/methodology/approach Each of the three the three steps in the value creation cycle is examined, and the tools and approaches that leading companies use to maximize shareholder wealth are outlined. Findings A customer‐value based approach to management can help companies instill a fact‐based decision‐making process in the enterprise. This promotes faster growth through differentiated customer investment. It ensures that the highest return initiatives are prioritized. Enterprises using this disciplined three‐step approach will be well positioned to better understand value potential, creating value, delivering value, and managing their market position to maximize the value they capture. Originality/value Mastering the value cycle enables enterprises to win in both the customer markets and the financial markets. In short, it leads them to long‐term profitable growth.