At level 4 of the Value Maturity Model, customer-driven, a balance is created between the position of the customer and the provider. The customer and the provider learn to determine together how the service is provided and how value is created for the customer. This is where the term ‘co-creation’ kicks in. The provider’s service manager (aka account manager, business relationship manager, or whatever profile you use for this) sets up agreements with the customer about the costs and benefits of the services, as he/she understands the customer’s business. This service manager can translate the needs of the customer into services and knows when to respond actively to the wishes of the customer. The service manager literally seeks out the customer and supports this customer by contributing expertise that improves the customer’s business results.
More important: they relate services to the business
The provider doesn’t express the services in terms of the continuous delivery of systems anymore; the service is expressed in terms of the business conditions or business effects.
Example. The car lease company with a service-driven proposition would say "We not only offer the best cars, but we also ensure that you can exchange them for another model at any time and we are more affordable than others". At level 4, the customer-driven car lease company would go further: “We’ll provide your staff with the optimum mobility they need for your business, we draw up a portfolio of suitable transportation means together with you, and we tailor the support of the fleet to the requirements of your business”. They might now include bicycles, train subscriptions, airline tickets, cab rides, private drivers, or any other product in their services, to optimize the mobility of their customers and contribute to their business success.
The strategy
The provider at level 4 shifts from a service-driven strategy to a customer-driven strategy. They no longer work inside-out; they shift to outside-in, focusing on specific lines of business, with customers in specific segments of economy, based on their understanding of that business.
They can't know everything of everything, so they focus on specific business types.
They invest in the understanding of their customer’s business, they can argue how their services create a better business case for their customers, and the customer recognizes their expertise.
They don’t use marketing slogans like “we have the best XYZ product” any more, but they connect to their customers in circles where ‘the business’ is discussed. There, they share their knowledge about how their services will underpin the customer’s success.
Their relationships with customers are long-lasting, as they get under the skin of that customer – they are becoming family: they move close to their customer.
They approach the development of their services in a proactive way, based on the business data the customer shares with them and based on market information, and they focus on the optimization of the effect of their services. They help create the conditions for the customers to succeed in achieving their mission.
They are no longer in a red ocean, as they penetrate into their customer’s business, and there is only room for a few in that role. They are invited to present ideas to the C-level of their customers.
And they already think about what is required to earn that seat at the table of the Board.
Agreements
The agreements are no longer filled with the technology details of the lower level’s service agreements. Instead, the agreements specify the conditions that are guaranteed by the provider, the business capabilities that are created as a result of the provider’s services, in terms of the things that are important for the customers to be more successful in their business.
There is no need to discuss the traditional technical details, as the provider has earned the customer's trust that the services, the systems, and the technology are controlled by the provider. An appendix to the service agreement may still specify some technology details, but the customer is actually no longer interested in the technology that is used by the provider: it is the business effect that counts.
The customer receives a periodic report on the services that have been provided, and the discussion now focuses on how that service has indeed supported the customer’s business. Ideas to further improve the business effect are discussed in regular meetings.
The agreements are now externally focused. They focus on the outcome of the provider’s contribution to the customer’s business.
Running example: WhiteBox Unlimited
The upgrade to level 4 changed a lot for WhiteBox Unlimited. They now discuss the effect of their heating systems, their cooling systems and their air conditioning systems on the work environment of their customer’s staff, and how that creates conditions to optimize the performance of that staff. Their agreement now contains clauses on ‘the comfort of the work environment’, and they differentiate that for office environments, for warehouses, and for various production environments. They specify how these conditions are varied with varying weather conditions during the year, so everyone experiences a comfortable environment. They poll their customer’s staff for their satisfaction with the comfort they experience, and refine the service conditions based on their response. They study the relationship between work conditions and performance of workers, and they come up with suggestions to improve the conditions, based on their deep knowledge of the systems that are required to deliver this. They may deliver all the required support themselves, but they may also use a network of specialized suppliers to deliver the work where it relates to systems and technology components.
Their contracts now run for at least 5 years, and they have optimized their own profitability, together with improving the business results of their customers.
They discuss the insourcing of one or more business units of the customer, to become part of the enterprise – so the customer can focus on their core business.
That would turn them into a level 5 provider.
In next week’s post, I’ll discuss the providers at level 5: Business-driven.
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