William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management, McGill University, and President of AMAXIS, an international business and operational development services firm. The Competing to Win blog series can be found here.
Price is what you pay. Value is what you get.
- Warren Buffet, CEO, Berkshire Hathaway
In the world of business, there are a few words that stand out among the rest in the minds and hearts of owners, entrepreneurs and managers. One of these words is value.
In strategy, we talk about value proposition and value chains; in marketing, customer value; in finance, shareholder value, net present value, and value investing; in operations, value engineering. The list goes on.
At its core, and as reflected in the Oracle of Omaha's quotation, value in the market economy is 100 per cent tied to the buyer. The you is the customer or client, and if you aren't satisfied with what a business, supplier, vendor, service provider etc. is offering you, you have this habit of taking your business elsewhere.
Customer reaction to Research In Motion's recent service disruption is case in point. In the era of immediacy, users of the BlackBerry had little patience for the reasons behind the outage. They wanted access to their e-mails and browser functions -- and now! And the fact that RIM couldn't deliver as expected - even it was a matter of days - provided various RIM customers around the world with sufficient reason to jump the BlackBerry ship (not just today, but also as it pertains to their future smartphone purchasing decisions) and head into the open and welcoming arms of competing producers such as Apple (USA), Samsung (South Korea), Motorola (USA), HTC (Taiwan), Nokia (Finland), or Sony Ericsson (Japan/Sweden). Welcome to the world of global competition!
To mitigate the market damage, and to "restore the confidence of its customers" - as stated by RIM Co-CEO Mike Lazardis in a company press release issued on Monday - RIM will be offering, free of charge, "a selection of premium apps worth a total value of more that $100 (U.S.) to its subscribers as an expression of appreciation for their patience during the service disruptions." The company wanted to clearly demonstrate that it "truly appreciates and values the relationship it has with its customers."
Ultimately, the market - a combination of business/commercial and consumer buyers - will let RIM know if its actions were enough. This is the nature of business.
In his recently published book, Cold Hard Truth, Kevin O'Leary makes an interesting point that is tied to this dynamic. ". . . money may go to bad people, but it never goes to bad ideas." In the context of our increasingly competitive and integrated global economy, we need to take this concept a step further. Not only does money avoid bad ideas, but it ultimately flows to where it can realize or generate the greatest value. It doesn't play favourites. This is the path to sustainable and profitable sales.
In my next blog, I will build on my discussion on value, but as it pertains specifically to international trade and global value chains. In the mean time, I'm going to take advantage of RIM's offer and upload some of those premium apps. I can't speak for its 70 million or so other customers, but I appreciate good value when I see it.