Why joint value creation is needed for an organization?
The purpose of a business is to serve value to its customers, employees and owners and hence gain success by doing so. Collaboration is critical for today’s consumer products distributors, retailers and suppliers. Companies with well-defined value creation strategies processes and policies are co-developing innovative business models and plans that are creating extraordinary growth and competitive advantage. For example – The Partnering Group was founded on the mission of serving clients seeking superior consumer value through collaborative planning. As a result, TPG is the most commonly endorsed consultancy, among leading consumer products companies and associations, for their best practices in joint value creation. TPG continues to develop innovative techniques and methods that will harness the power and resources of the retail-supplier relationship.
New evolving processes for joint value creation
1. Create Value: Identify & agree on the value
- Leverage each other’s Capabilities
- Drive Joint Business plans co-owned by top customer management and company.
- Respect each party’s competencies and ability to deliver.
- Make use of all available supply and demand capabilities.
- Execute with excellence in-store and in the system.
2. Capture Value: Quantify the value systematically
- Put in place a joint scorecard with common goals and objectives co-owned with the retailer.
- Quantify both the supply and demand value against the retailer’s financial measures and shopper metrics.
- Reinforce the benefits of a long-term creation strategy.
3. Commercialize Value: Sell and manage the value exchange
- Establish the right process for value reinvestment behind key business drivers.
- Understand how all the parts fit together.
- Provide the necessary enablers to ensure mutual benefit.
What is joint value creation and how is an organization benefitted from it?
It’s an exchange of capabilities and assets between two companies where both achieve what neither could do on its own. It focuses on growing or creating new value together, not capturing larger share of fixed value.
1.Better products based on customer desires – Every aim to invest in co-creation is to make something new. The consumer’s demand is always top priority as per which the products are made. Bringing new product in the market reflects the way customers think.
2. Better financial performance – Customer co-creation helps to bring your community closer to the business and builds stronger ties with fans and buyers which in turn improves the financial performance.
3. New and unexpected ideas – One of the goals is to keep creating new and exciting goods to bring into the market so that customers are encouraged to buy that company’s products. Co-creation brings new voices and ideas into the fold.
4. Making the consumer part of the creation process – The whole point of creating something new is for the consumer because the consumer by way of demand and purchase decides whether the product or service will survive in the market or not. The process is also a key way to increase customer loyalty. A user who sees their ideas taken seriously and even pursued through to development is now part of the decision-making force.
5. Removing barriers between industries – Working with co-creators brings brand new skills into the company. You may not even realize how a supply chain expert or mechanical engineer could help you design the next great handbag, tea bag, or sleeping bag. The beauty is, you have access to these skills with no risk. And if their ideas are no good, you simply move on to the next one.
Joint value creation is empowered by customer value creation
Whenever businesses provide superior value to their customers, they make a profit, and this strengthens their market position. Customer value creation focuses on enhancing the end user’s experience and satisfaction, while joint value creation furthers that idea by fostering collaboration between businesses and stakeholders.
By creating alignment between joint value creation and customer value creation, businesses will be better at:
- Fostering customer engagement and converting customers into the retention stage
- Product and service development in accordance with customer expectations
- Fostering innovation by incorporating real-life customer feedback into the development process
- Enhancing operational efficiency through multi-partner leverage.
Real examples of joint value creation
1. Retailer collaboration with suppliers
Retailers and suppliers often collaborate to develop joint business plans. Sharing market information and sales data gives both an opportunity to align their business decisions with the expectation that the right products get into the hands of customers at the right time: less waste, healthier inventory, happier customers.
2. Collaboration among technology partners
There is a lot of cross-collaboration among companies in the technology sector to integrate services. A real-world example is when smartphone hardware groups partner with software companies to create better user experiences. Collaboratively, they design more convenient ecosystems that offer customers better functionality.
3. Sustainability efforts
Joint value creation is also influencing change in the sustainability sector. Companies from different industries are working together to provide green solutions such as recycling for packaging and energy-efficient manufacturing processes. Not only are such initiatives good for Mother Nature, but they also contribute to brand equity and customer loyalty.
Challenges in joint value creation
Although there are many positive aspects of joint value creation, companies need to mitigate some other important challenges if they are to make joint value creation successful:
- Goal Alignment: It is important to ensure consensus on common goals among interested parties, as this factor will determine success in the long run.
- Data Sharing and Transparency: Collaborative efforts should be based on effective communication and data-sharing initiatives.
- Cultural Differences: Work styles and priorities may differ between two companies with different backgrounds, and such differences must be resolved.
- Measurement and Evaluation: Omitting a means through which the success of joint value creation can be measured is undermining valid evidence of success
Conclusion
The joint value creation of the future will be in economies of creativity: mass customization and the higher value of new product or service improvements in the market; finding a new solution to a nagging customer problem; or even how a new product or service is sold and delivered. Partner organizations that adopt joint value creation as a core strategy will gain a competitive edge through innovation in their services, improved customer satisfaction, and continuous growth.
Customer and joint value creation will help organizations seize new opportunities, reduce time-wasting processes, and achieve sustainable success in an increasingly competitive marketplace.
Unlock the power of joint value creation!
We think collaborative business models that create value for customers supported by sustainability will drive the future at Gazelle. It will always be joint value creation—supplier, retailer, or distributor—that will prove itself in terms of competitive advantage. Ready to change the face of your business? Discover cutting-edge ideas and solutions. Visit Gazelle now to take your business to the top!