Value flows within and across markets that are dynamic and competitive. Companies need a well-defined strategy for value exploration. Developing such a strategy requires an understanding of the relationships and interactions among three spaces:
- The customerâ€™s cognitive space;
- The companyâ€™s competence space;
- The collaboratorâ€™s resource space.
The customerâ€™s cognitive space reflects existing and latent needs and includes dimensions such as the need for participation, stability, freedom, and change. The companyâ€™s competency space can be described in terms of breadthâ€”broad versus focused scope of business; and depthâ€”physical versus knowledge based capabilities. The collaboratorâ€™s resource space involves horizontal partnerships, where companies choose partners based on their ability to exploit related market opportunities, and vertical partnerships, where companies choose partners based on their ability to serve their value creation.
To exploit a value opportunity, the company needs value-creation skills. Marketers need to identify new customer benefits from the customerâ€™s view, utilize core competencies from its business domain and select and manage business partners from its collaborative networks. marketers must understand what the customer thinks about and wants to craft new customer benefits,. Marketers must also observe who the customer admires, who they interact with and who influences them.
Business realignment may be necessary to maximize core competencies. It involves three steps:
- Defining the business concept
- Shaping the business scope
- Positioning the companyâ€™s brand identity
This is what Kodak is doing as sales from its traditional core businesses of film, camera, paper, and photo development have sagged, and consumers have abandoned film cameras for increasingly cheaper digital equipment, products, and services. Chairman and Chief Executive of Kodak stood in front of shareholders about 2 years ago and unveiled the companyâ€™s new strategy. He announced that Kodak was â€œdetermined to win in these new digital markets.â€? In order to do that the company plans to expand its line of digital cameras, printers, and other equipment for consumers, who are now using the Internet to transmit and display their digital images. Kodak also is stepping up efforts to deliver on-demand, color printing products for business and wants to increase its market share of the lucrative medical images and information services businesses.
Delivery value often means substantial investment in infrastructure and capabilities. The company must become proficient at customer relationship management, internal resources management, and business partnership management. Customer relationship management allows the company to discover who its customers are, how they behave, and what they need or want. It also enables the company to respond appropriately, coherently, and quickly to different customer opportunities. To respond effectively, the company requires internal resources management to integrate major business processes like order processing, general ledger, payroll, and production within a single family of software modules. Finally, business partnership management allows the company to handle complex relationships with all its business associates.