Value creation is often an afterthought but is, in fact, the route to profit. Harvard Business School professor Felix Oberholzer-Gee says that what often surprises him about the business propositions his students develop in class is that they focus excessively on monetising ideas to the detriment of figuring out how to deliver value.
Willingness to pay sits at the top of the value stick and represents the most a customer would ever pay for a product or service. If companies find ways to improve their product, willingness to pay will increase. For everyone else that doesn’t have the above advantages, strategies that are built on trade-offs tend to survive the longest – companies that provide amazing customer value in one area but don’t in another, for example – tend to be more protective, he adds.
Oberholzer-Gee draws on his own experience to illustrate the point. When ordering flowers for a friend’s birthday, a florist asked him whether he wanted next-day delivery. The professor fessed up that he was a few days late already, having forgotten his friend’s birthday. The florist’s response caught him by surprise. “Should we take the blame for the late delivery?”
There’s a limit on how far this advantage can be leveraged and it is important to know where to draw the line. In 2018, the Huffington Post abandoned its policy of sourcing a large amount of its content for free from citizen journalists and aspiring journalists via its so-called contributor programme. Instead, it shifted its focus to new paid sections populated by professional journalists who would produce “smart, authentic, timely and rigorous op-eds”. Others in the industry followed suit.