5-D Value Upgrades Value Management
Companies use 5-D Value to be more successful in managing value.
Global leading companies practice 5-D Value each in their own special way to gain their outstanding success (Learn about leading practices), e.g.
Amazon Google Tesla
Apple IKEA Toyota
BMW Microsoft Volkswagen
Many companies apply 5-D Value to makeover business and work in a new future-oriented way, generating value for communities and the environment (Read about business success which also transforms society).
All managers can use 5-D Value in their own individual way to bring out the best in their company’s value proposition. 5-D Value enables companies to optimize their internal and external success factors and raise their level of success (read below about the managerial benefits of 5-D Value).
2. Compete Successfully in Five Dimensions of Value
The phrase “value for the customer” is often used as an empty phrase without specific meaning. In 5-D Value managers design powerfully differentiated benefits for counterparties, distinguishable into five underlying dimensions.
Value propositions have different combinations of these dimensions. Companies typically compete in their value propositions as follows:
– primary value in one dimension: the dimension of value in which the company’s offer is most convincing/strongly differentiated and displays the greatest competitive advantage;
– secondary value in another dimension: the dimension of value in which the company’s offer is convincing/somewhat differentiated with some competitive advantage; and
– basic value in the remaining dimensions: the dimension(s) of value in which the company’s offer meets generalized expectations in order for the company to be accepted in the market.
3. Five Managerial Do-Well's in "Deep-Connect" to Makeover Business and Transform Society
A handful of companies, such as BMW, IKEA, Patagonia, Tesla, and the White Arena Group at the Laax ski resort in Switzerland, offer value in the new and emerging fifth dimension of value named “Deep-Connect”. These companies are pioneers in the future business paradigm in which meaning is generated for counterparties. The meaning for the counterparties comes from value for their communities and for the natural environment.
These companies generate value in Deep-Connect by practicing their own varieties of the five “managerial do-well’s” – things that companies need to do well – which are aligned to Deep-Connect value. The companies manage specific practices in
1. Cycle of value exchange between value offers and value inputs
2. External demand interfaces
3. Internal supply interfaces
4. Business model, and
5. Steering logic.
The managerial do-well’s for Deep-Connect are clearly distinguished from those in the other four conventional dimensions of value, as shown immediately below. Read more about companies practicing Deep-Connect value.
4. Optimal Alignment of Managerial Do-Well's in Five Dimensions of Value
Companies generate primary or secondary value in a given dimension by aligning their managerial do-well’s to the requirements of that dimension; as shown above for Deep-Connect. In business today there are five underlying sets of aligned managerial do-well’s. Managers generate their own special value propositions by prioritizing and combining the managerial practices in their own particular ways.
The five managerial do-well’s cover a very broad range of activities e.g. supplier relations, growth, teamwork, finance and the revenue generation mechanisms in the business model. In fact, there are 28 separate parameters of managerial practices within the five managerial do-well’s, illustrating the complexity of management today. Managers align these 28 parameters across the entire value chain to generate the benefits for counterparties in a given dimension of value. Books present the practices in the 28 parameters at leading companies: individual recipes for success.
5. Manage for Success with Five Internal and Five External Success Factors
The five managerial do-well’s shown above with the specific practices for Deep-Connect are key to value generation in each of the five value dimensions. The five managerial do-well’s, with specific practices for each dimension, are crucial because each internal practice contributes to a key aspect of the external success of the company on the market. That is, each managerial do-well is an internal success factor which determines the performance of the company on one of five external success factors.
Thus, the way in which companies successfully manage value can be thought of as a giant matrix with
– 28 rows: one for each parameter and structured into five managerial do-well’s
– 5 columns: one for each dimension of value
– 28 X 5 = 135 entries in the matrix: one for each possible underlying managerial practice.
The parameters and individual practices in the matrix are well known in business and until now have been examined as success factors in their own terms. 5-D Value shows that managers align the practices to one another across the entire value chain, structured into five overarching internal success factors (the managerial do-well’s) which support five overarching external success factors.
Thus companies are successful in value management not because of how they manage any one particular practice, but due to their ability to align numerous parameters to one another in generating value in particular dimensions. Amazon is extraordinary in aligning practices at the level of primary value in three dimensions, whereas almost all companies align practices at the level of primary value in only one dimension.
The Value of 5-D Value
5-D Value can be likened to a cookbook. The entries in the matrix are the ingredients, their combinations within a dimension of value are the recipes and the management, or indeed the entire personnel, are the cooks. The publications in 5-D Value – books and videos – apply the framework to reveal the recipes followed by very successful companies. Like any good cook, each very successful company has its own nuances and style in following the recipes. The readers of the books and the viewers of the videos will be animated to become better cooks in their own companies. From the publications they will learn the recipes and when implementing them in their own companies, they will discover how to follow the recipes in their own special way.