Creating and Maintaining Value
The Value Creating Strategic Matrix

The following are thoughts and ideas on creating value.  Together they form a "Value Creating Strategic Matrix"

1.  There must exist a balance between customer value and shareholder value.

The offering must meet or exceed the expectations of the customers, but must not bankrupt the firm in the meantime.

The level of the product/ service offering is set by the customer.  It is the job of the business to meet or exceed that expectation in a productive way that creates the return expected by the shareholder.

2.  If a firm can set a new standard of product/ service and deliver it for the price the marketplace is willing to pay, it will win.  It will set the bar higher and raise the customer expectation above the level that the competition can operate.  (Unfair Advantage) The firm will have added value by creating a new level of performance for the same or less cost.

3.  If the firm can invent a new product/ service that fills a perceived need that the customer has at a price it is willing to pay, then the firm will have won. (Consumer Franchise)  The firm will have added value because it will have created something new of value that did not exist prior to it's insight.  The firm will have gained an advantage over all competitors who cannot offer the same product/ service.

4.  If the firm can solve a customer problem by expanding/ enhancing it's product/ service at a price the customer is willing to pay, it will have won the day. (Unique Selling Proposition)  The firm will have created a unique advantage for itself that adds value to the transaction with its customers.

5.  External Value Creating Strategies can be described as those that create one of the three types of aforementioned situations.  They are Unfair Advantage (UA), Consumer Franchise (CF) and Unique Selling Proposition (USP).

6.  The life spans of value creating strategies vary by type and period.  Therefore value creating strategies have to be constantly invented, implemented and enhanced.  Changes in market conditions, technology, look-a-like products or services can all serve to contain the life-span of a particular strategy.  The firm should always estimate strategy life-spans and use DCF methods to predict performance.

7.  Internal Value Creating Strategies are directly linked to productivity.  Productivity and value are directly proportional.  The more productive a firm, the more value it adds to its products.  Therefore any firm seeking to increase its value internally needs to consider all issues related to productivity.  It is the internal strategies that make the external strategies possible.  Internally the firm needs to be productive enough to be able to execute the external strategies at a market price that is within the Customer Acceptance Range (CAR).  There are three specific IVCS's.  They are Technology, Organization, and Knowledge.

8.  The firm that increases its productivity by applying technology in unique and more productive ways will win the cost/ price game.  It will be able to produce at a price that falls within the CAR (Technology Advantage).

9.  The firm that increases its productivity by organizing differently and in a unique manner will win the cost/ price game.  It will be able to produce at costs below the competition.  (Organizational Advantage)

10.  The firm that increases its productivity by having (or training) more knowledgeable employees in a unique manner will win at the cost/ price game.  It will be able to produce at costs below the market.  (Knowledge Advantage) Note:  this is not only technical knowledge but refers to knowledge regarding the best practices to accomplish work of any type.

The Value Creating Strategy Matrix created by any firm is represented by at least one internal and one external strategy.  The strategies work in concert with one another to create an overall strategic advantage for the firm.  The combination of the strategies into the strategic advantage has emergent properties (sum is worth more than the parts) that each internal and external strategy alone cannot create.  It is these emergent properties that create the overall advantage for the firm.