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Brief videos viewable in 6 subsections of Concepts/Overview

In these brief Video Summaries, DPV Group founder Michael Lanning introduces some of the key DPV concepts.

Trapped in the Conventional Culture?

The DPV approach is meant to help organizations manage their businesses with a single-minded focus on achieving breakthrough profitable growth by deeply understanding current and potential customers, in their market context, and then profitably delivering clearly superior Value Propositions to them.

While not many managers would reject this deceptively simple idea, it does not actually describe the various conventional business cultures common today. Indeed, achieving a truly market-focused, value-delivery-driven organization is easier said than done, and for most organizations means deliberately changing the business-culture significantly. But from what? Where are most organizations today? Although a simplification, we believe that most of conventional business culture today can be divided into two broad types: the Internally-Driven and Customer-Compelled, both of which usually co-exist in various permutations within the same organization.

Below, you can read descriptions of these cultural mindsets, and variations on them, and consider whether your organization exhibits some of these same traits today. Following this section, you can assess the extent to which your organization, for one business you choose to review, does explore the market and develop strategy in ways close to the DPV approach.

Are we Internally-Driven?

Video: Internally Driven

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Overall

Managing a business in an Internally-Driven fashion results from the need of every enterprise to focus intently on its own internal processes for developing, producing and marketing its products or services. Such an organization can easily be so focused on these processes that it under-appreciates the importance and power of analytic, profound insight into customers’ real behavior, motivations and competing alternatives.

The priority of highly Internally-Driven organizations is to produce what utilizes their existing resources, and then to sell it to customers. Fundamentally rethinking an organization’s businesses, truly from the perspective of customers, is difficult for an Internally-Driven organization. Rationalizations abound for perpetuating this approach.

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Below are six descriptions of more specific “Internally-Driven” business cultures. Consider to what extent each depicts the business you are reviewing

Internally-Driven – A.: “Technology-Driven”

By this philosophy, products should be developed based on the technologies we have developed or which are being pursued by competition; then these products should be marketed and sold to the customers most needing them. Although product development, in this approach, may react to input from customers, it is not primarily driven by an understanding of and commitment to the resulting experiences customers want.

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Internally-Driven – B.: “Cost-Controlled “

By this philosophy, cost is controlled independently of value delivered to customers, beyond the indirect impact on price. The Cost-Controlled organization may commit to “not reducing our excellent quality or service,” while reducing cost; but beyond vague generalities, there is limited if any systematic measure or analysis of the impact of cost reductions on actual value delivered to customers. Short term and even long term costs may improve, but without serious regard to growth or long term profit.

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Internally-Driven – C.: “Supply-Chain-Yanked”

This special cultural form emerged in the 1990’s, much fueled by the mass dot com illusions. It often reflects a triumphant alliance between IT (usually harboring a strong Technology-Driven worldview), and the Procurement function. This culture disregards the research and experience of the past 30 years showing the value of close, supportive relationships with suppliers. Instead, in the name of supposed ‘Supply Chain Partnerships’ and using cutting edge technology where possible, this mentality focuses on reducing all issues, especially all relationships with suppliers, to the question of cost and price. Costs are cut, but often at the expense of suppliers’ abilities to help the business deliver value, and thus at the expense of the business’ long term profitability. (While easy to vilify the Procurement function for this syndrome, it is often the relentless corporate pressures for short term earnings that primarily drive this behavior.)

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Internally-Driven – D.: “Sales-Obsessed”

With this mentality, the Sales function does whatever it takes to convince customers to buy what we make, regardless of long term value actually delivered, and regardless of profitability. While easy to blame Sales, this approach usually reflects the priorities assigned to this function by senior management. Customers may be asked what they want and require, but mostly to facilitate answering objections and better positioning our product/service. The Selling function does not attempt to discover new experiences that customers would potentially value. If the customer ultimately does not get superior value, or if the business makes inadequate profit, these are not concerns of the Sales Obsessed.

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Internally-Driven – E.: “Marketing Muscle-Bound”

Here the Marketing function takes exclusive ownership for understanding customers. It takes great pride in its expertise in a wide range of established, often sophisticated, marketing methodologies (e.g., Conjoint Analysis, Multivariate Research and Segmentation, Focus Groups, psycho-graphics, concept testing, etc.). But the organization loses the forest for the trees – we proudly use scientific (or, scientific-sounding) techniques, specialized (sometimes pretentious) vocabulary, and treat the customer as Marketing’s turf, but often fail to discover actionable insights, or to really understand customers deeply. Winning Value Propositions are rarely the result.

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Internally-Driven – F.: “Short-Term Budget-Bound & Financially-Frustrated “

Here, we must produce certain short-term, largely financial, quantitative results expressed in our budget process, often at the expense of delivering or even measuring value to our customers. Sales volumes, costs, profit, asset levels and financial ratios (e.g.. ROA, ROE, etc.) are the dominant content of the documents that count, our Budgets. Our business must manipulate whatever variables necessary to produce those results over 1-year and shorter time frames. We may blame share holders or other forces, but making these numbers is equated with “management” and “leadership.” Understanding and pursuit of the drivers of these numbers, especially longer-term, are not of much importance in this philosophy.

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Are We Customer-Compelled?

Video: Customer-Compelled

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Overall

On the other hand, to escape the more obvious pitfalls of Internally-Driven thinking, many try the seemingly logical alternative: commit to everything customers request. The soothing advice: ‘Be close, listen to customers, promise total satisfaction, do as they say, meet – nay exceed – their expectations; then you must surely succeed.’

But this is no antidote for Internally-Driven – it cures one illness with another. Despite listening enthusiastically, the “Customer-Compelled” culture still usually fails to discover or deeply understand the specific experiences that customers would potentially most value, while encouraging fatally indecisive efforts to be all things to all people.

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Below are five descriptions of more specific “Customer-Compelled” business cultures. Consider to what extent each depicts the business you are reviewing

Customer-Compelled A: “Satisfaction-Facade”

In this mentality the ‘customer-facing’ functions promise customers a lot: promises of “total (or guaranteed) customer satisfaction,” “customer partnerships,” “delight the customer,” or “customer first,” abound. Yet, little attention has been given to identifying and prioritizing the specific resulting experiences that should be delivered, and what should not be delivered, to fulfill these vague commitments at all, let alone profitably. No real decisions or highly actionable, measurable commitments have been made. As a result, while feeling very ‘customer oriented,’ the organization falls back on Internally-Driven criteria to make real decisions.

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Customer-Compelled B: “Suggestion-Boxed”

Here, the customer-facing functions listen assiduously to customers, asking what actions and features are desired, then pass on these suggestions and requests to the operational functions. This approach elicits customer opinions about what we should do in our internal functions, without helping us understand the more important question – what resulting experiences those customer would potentially most value. While imagining that we are ‘listening to the voice of the customer,’ the operational functions, faced with an unfocused collection of suggestions, usually screen most of these out, and focus mostly on those which conform to Internally-Driven criteria.

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Customer-Compelled C.: “Distribution-Distracted”

Here, “the customer” is important (‘king,’ even), but rarely includes the actual users most crucial to our success. We concentrate mostly on the immediate customer entities, e.g. distribution channels and other intermediary entities, rarely making a sustained serious effort to establish dialogue and insightful understanding at the end-user part of our chain. This short-coming reflects a belief that actual users are too complex, unwieldy and numerous to understand, and can far better be understood by the immediate entity than by us. We then are perplexed to find that we seem able to compete only on a basis of price.

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Customer-Compelled D.: “Buyer-Bewitched”

Here, when we do interact with end-user entities, we stay mesmerized by the buying function (sometimes ‘Procurement,’ sometimes ‘Worldwide Supply Chain Management’). This reflects the unchallenged power of the gate keepers, and again a belief that actual users inside the end-user entity are too difficult to understand, and can best be interpreted by the buying function not us. We then are surprised to receive our invitation to the reverse auction, where we really learn the meaning of competitive price.

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Customer-Compelled E.: “Chaotically-Empowered-Reactive”

In this somewhat extreme, if well-intentioned, version of the Customer-Compelled organization, all functions, not just Sales/Marketing, are urged to ask customers what they want, then to try to give it to them. This process is not bounded by any choice of customers to target, or what specific resulting experiences to deliver to them (let alone what not to deliver to them). Thus, the organization is encouraged to give anything requested to any and all customers, resulting in unfocused chaos much more than profitable value delivery.

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