The core theme of my presentation to the Thunderbird MBA Winterim in New York yesterday was that business success is a balancing act.
Specifically, sustainable business success is founded on achieving a balance between customer value and shareholder value. Until you create customer value, there is no opportunity to create shareholder value (except where you have monopoly or the ability to extract revenue through force). The goal of business is therefore to create strategies that allow you to deliver products and services for which customers are prepared to pay a price that exceeds your economic costs.
That simple maxim is actually very hard to achieve on a consistent basis. Companies are constantly veering too far in the direction of customer value or shareholder value. They are either continuing to delight their customers with high quality products and services but failing to earn enough to cover their economic costs (which include a charge for the capital they employ); or they are delighting their investors but leaving customers feeling fleeced.
The best advice I could give the participants in the Winterim (and clients for whom I work) is to develop the discipline of explicitly reviewing things from a marketing and a finance perspective. That is the best way that I know to ensure that businesses can maintain their franchise with their customers while simultaneously ensuring that they remain in business.
