The Value Delivery System.

There is a leadership phenomenon that often goes by the name The Pilots Paradox. This refers to the fact that a fighter pilot must always keep a floodlight-like awareness of his total surroundings while at the same time maintaining a laser-like focus on the target. If the pilot only focuses on the target the result is target fixation and he drills the plane into the ground. If he takes his eye off the target to maintain an acute awareness of his surroundings, he often misses the target. The key is to balance both seemingly contradictory activities. In the current business climate the tendency has been to concentrate on the essential struggle for survival and making a profit, and we can easily lose our laser-like focus on the target. Our target must be to deliver value to our customers. As never before customers want products and services faster, with higher quality, cheaper and often in larger quantities. The organization that is continuously reducing time to delivery and removing any unnecessary costs, while keeping quality consistently high, can gain a strong competitive advantage. It takes the right disciplined people doing the right disciplined things.

I can use another analogy to make the point about why this is crucial to everyone in business today. I was only hunted once. It happened when I went with a friend (as a result of a dare I must admit) to a wildlife preserve to bow hunt for Arkansas razorback hogs. In my youthful ignorance I didn’t realize initially that this would be a two-way hunt. While I was stalking them hoping to strike, the nasty critters with their horrendous germ encrusted tusks were also stalking with the hope of striking us. My friend had fool heartedly refused the use of some old scarred up hounds that would have given us some advantage. Fortunately we were only treed twice by hogs charging from ambush, and happily my friend who was an expert shot with the bow, was finally able to get a shot off and kill a medium size tusker. I could laugh later that I didn’t know which sound was louder, my knees banging nervously against each other in fear or the arrow bouncing up and down on my bow because of my jitters. But I did know I was being hunted and did not like the feeling.

My point? Today in business you are either the predator or else the prey, the hunter or the hunted. As Wal-Mart likes to ask their managers: “Who is after your customers today?” Andy Grove, the highly successful former CEO of Intel entitled his best-selling management book “Only the paranoid survive.” If you have a successful business or model someone will soon be after you and your customers if they aren’t already. Too often in the past the ‘answer’ has been to downsize or change the numbers. However, you can’t change the business by just changing the numbers or eliminating positions. Numbers are the end result. You change the business by changing the behavior of your people. You change their behavior by rewarding them for focusing on the doing the right things, things that create value for customers.

The answer? Successful hunters in extraordinary organizations who take market share and profits from others know they must focus on the value delivery system. The value delivery system is composed of the people, processes and procedures you use to deliver value to your customers. An effective high performance value delivery system has four characteristics:

1. Process road maps that visually detail how you deliver value. Can the team agree on what it really looks like?


2. A list of process expectations. How does what the process delivers compare to what the customer needs & wants?


3. Core competencies. What bundle of skills do we need to deliver the value the customer expects?


4. A continuous learning and feedback system. Do we have the tools to receive fast and unfiltered performance feedback from our customers and the will and way to continuously improve our performance?

The extraordinarily effective hunter/predator organizations focus intensely on these factors. They are continuously innovatively adaptive, constantly developing new strategies and revising their value delivery systems to shake up the competition and win customers. They emphasize the need for fast and unfiltered performance feedback from customers and the challenge of setting and monitoring stretch goals to exceed customer expectations. While ordinary companies take weeks or months to react to customer feedback, the hunters develop and measure reaction times in minutes or hours. They know it is not the big that eat the small; it is the fast that eat the slow. Everything they do emphasizes faster response time and increased quality.

It should be noted that value delivery systems don’t exist in a vacuum. If your organizations culture does not create trust or commitment and you don’t have the talent on board to support and deliver the value you have promised you will fail no matter how elegant a value delivery system you can design. You must strive to be an authentic organization that builds and sustains loyalty. You must also know your core competencies and attract and keep talent that can deliver the value the customer wants.

Another factor closely linked to the success of the value delivery system is a clear statement of strategic vision. This should be stated in single, natural sounding sentence that describes what you deliver to your customer. Hopefully it also conveys a unique selling position for your organization as well as giving an idea of what your customer value proposition looks like. A great strategic vision injects people with enthusiasm for delivering value. Some examples of exemplary strategic vision statements:

Microsoft: “Empower people through great software, anytime, anyplace, on any device.”
BMW: “Relentless pursuit of perfection.”
Midwest express: “Best care in the air.”
Southwest Air: “Fun, fast no-frills service.”
Container Stores: “Better our customers lives by giving them more time and space.”

These companies have stuck to their strategic vision and delivered on it well enough to dominate their niche. They have 1) a passion for what they are offering, 2) a sense of pride that they can be best of class in their niche, and 3) they can deliver it profitably. They also 4) have the right people with the right core competencies to deliver the value. They are disciplined people doing disciplined things! In the book “Good to Great” by Collins it was reported that research by Stanford University found that the few companies that had such strategies dominated their field regardless of the type of market or economic conditions. They were able to sustain strong profitable growth over a period of decades.

As we all know just having a sizzling strategy written down does not guarantee success no matter how differentiated it might be. You have to be able to effectively execute the strategy. This is the second key element directly supporting the value delivery system, the execution or operational practices of the organization. This is how we deliver the real results. What processes or products do we use? How do we measure what we are doing to be sure we are really delivering what the customer wants? Outlining the core value delivery processes in what are called process road maps really helps because it assists in identifying key leverage points where we can focus our activities and measures to maximize our results. We want to establish key performance indicators at these critical leverage points as far ‘upstream’ from the customer as we can so we catch problems early and prevent them from reaching the customer. We then create a balanced scorecard or dashboard of these key performance indicators so we can relentlessly monitor them on a systematic basis to ensure continuous performance improvement. The objective of an effective execution or operational practice must be the relentless, systematic pursuit of reality. How are we really doing? Unless we can get fast, unfiltered performance feedback from customers we won’t be able to react fast enough to keep them when faster more hungry hunters come around.

How do we start analyzing our current value delivery system? By outlining process roadmaps of key processes critical to delivering value to the customer. Hopefully you have identified what your real customer expectations are for your product and service, and checked them with your customers to be sure this is what they are really buying and more importantly want to buy! Constantly keeping these expectations in mind outline the workflow and processes from the first contact to actual delivery of the product or service. Using standard process charting software like Microsoft Visio, keep it simple using a box for each process or operation and directional arrows for flow. Use diamonds for key decision points and hexagons for key reports. Get your whole team involved. The people who work the process should outline it (with the help of an outside pair of objective eyes). Why? Have you ever known anyone who washed or waxed a rented car? People are more likely to get enthusiastically engaged with, and be more likely to support, what they help create. It will also help them be more enthusiastic about making any transformational changes that may be needed. They need to feel ownership of the process road map and indeed the process itself. The best success comes when the people who work and manage the value delivery system design it, with the customer’s expectations constantly in mind. As former GE CEO Jack Welch has said: “We now know where productivity—real and limitless productivity comes from…it comes from engaging every mind in the organization.”

Once you have the key processes for how you deliver value mapped have the total group come together and each team describe their part of the value delivery system. As a team discuss where the bottlenecks, disconnects (fumbles), unnecessary handoffs, re-dos or redundancies, or quality problems are coming in. Is there any ‘valueless’ time, ‘valueless’ activity, ‘valueless’ variability that can add unnecessary time and cost to the process? Now review the whole value delivery system. What are the customer’s expectations or service requirements and how do they match up with the processes actual output or intent and/or what we said we would deliver? What does the customer really want as far as response time, higher and consistent quality, lower costs, reduced delivery time? Not just what do they expect, but what do they really want? Does the process deliver the value they really want? There is one safe assumption. Any time you can reduce your response time from first contact to delivery of a product, or from order to delivery, as long as you maintain quality, you produce value. Time is money at least to you if not the customer too!

Radical reformation of value delivery systems has shaken up major markets before. As a matter of fact extensive research by Christiansen in “The Innovators Solution” and others leads one to conclude the real money is more in creating innovation in the value delivery systems than in creating new products. Look at Dell with its revolutionary ‘cash first before production, disdain for inventory, customer designing, home delivery of computers’ system and what it has done to the competition. ( See “The Dell Way”, by Michael Dell) Or how Wal-Mart has captured the huge retail market with its ‘tight inventory control value delivery system’ and ‘low cost but good quality strategy’ it describes as: “Giving ordinary people the chance to buy the same things as rich people.” The critical question is who is redesigning your business model again right now to take your business away? If you aren’t, somebody else is! Hunter/predators constantly redesign their value delivery systems, sometimes abruptly and radically disrupting the market, creatively destroying them before competitors can, to provide their customers and themselves increased value and competitive advantage. Be the hunter or else be hunted!

Next come some other tough questions. Do you have the core competencies to deliver the value your customer expects? Core competencies can be defined as: “Integrated bundles of skills that enable the company to deliver value.” The greatest companies have been able to define their core competencies in simple sentences or words that conveyed volumes of meaning. Sony, famous for miniaturizing everything coined the term “pocketability” for its key core competency. Disney, who for years dazzled the public with productions that combined tremendous creativity with marketing pizzazz and engineering, called it “imagineering.” Others such as 3M are known for their innovation, chose to describe their core competencies more broadly: “Solving problems and creating solutions with adhesives.” What are your core competencies and can you summarize them in a few words or less? Do you have the right talent in the right place to use their core competencies to deliver a competitive advantage for you?

The last piece of the value delivery system puzzle should be a mechanism(s) for getting fast, unfiltered customer feedback. Does your process roadmap include that? How do we know if we are delivering the value our customers expect? Do we have ‘voice of the customer’ feedback tools built into our system? Are they effective? Unless you have fast, unfiltered, accurate feedback mechanisms you are vulnerable to faster acting hunters. Remember again, it is not the big that eat the small; it is the fast that eat the slow.

So what must you do? To paraphrase Warren Bennis leadership is the ability to translate vision into reality. Begin the relentless systematic pursuit of reality now by doing the following:

1. Make sure you have the right people in the right place.


2. Shatter complacency by letting people know it is a competitive jungle out there and the tigers are stalking. Do they want to be predator or prey?


3. Describe and get agreement on what your value delivery system really looks like. “Know what business you are in.”


4. Become a fanatic about getting fast, unfiltered feedback from key customers and use it to improve the value delivery system.


5. Get your team injected with a vision of what your organization can become.

The result of this process road mapping, customer expectation and core competency identification exercise should be a value delivery system that produces real value for your customers. It also forms the basis for an excellent training tool for any new talent joining your organization. It is all about disciplined people doing disciplined things. If you can engage the right people doing the right things, you will be successful. It is about being the predator not the prey, the hunter not the hunted!

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