“A satisfied customer is the best business strategy of all.”
-Michael LeBoeuf, business professor
The opposite of falling short of expectations is not “meeting expectations” – it is exceeding expectations.
The trade-off you face when you’re considering an using an intermediary is that you won’t have to do as much work and your sales can actually increase, but you’ll have less control over the Value Delivery process and you face Counterparty Risk – the chance that the intermediary will screw up at the expense of your reputation.
The shoe company Zappos often surprises its customers by having the shoes arrive at their customer’s houses days ahead of schedule. They could advertise the fact that they do free expedited shipping, but they don’t – they think the surprise is more valuable.
“A customer’s perception of quality relies on two criteria: expectations and performance. You can characterize this relationship in the form of a quasi-equation, which I call the Expectation Effect: Quality = Performance – Expectations.
“Customer expectations have to be high enough for a customer to purchase from you in the first place. After the purchase is made, however, the performance of the offering must surpass the customer’s expectations in order for them to be satisfied…If performance is lower than expectations, the perception of quality will be low – no matter how good the offer is in absolute terms.” (137)
That being said, you need to provide the baseline essentials that you promise in a Predictable manner.
The three primary factors that contribute to a Predictable experience:
-Uniformity (delivering the same characteristics every time)
-Consistency (integrity across your entire product line, not doing contradictory projects that violate expectations – ie: New Coke)
-Reliability (being able to count on the delivery of the value without error or delay)
Throughput is the rate at which a system achieves its desired goal (calculated by Rate/Time). Three types of Throughput are:
-Dollar Throughput (how quickly it takes your business to make a dollar of profit)
-Unit Throughput (how much time it takes to create an additional unit for sale)
-Satisfaction Throughput (how much time it takes to create a happy, satisfied customer)
“If you don’t know your Throughput, make it a priority to find out – measuring Throughput is the first step towards improving it.” (141)
The problems of this world are only truly solved in two ways: by extinction or duplication.
-Susan Sontag, author and political activist
“Scale is the ability to reliably duplicate or multiply a process as volume increases. Scalability determines your maximum potential volume.” (143)
“As a general rule, the less human involvement required to create and deliver value, the more scalable the business.” (144)
Sometimes when I consider what tremendous consequences come from little things, I am tempted to think: there are no little things.
-Bruce Barton, advertising executive best known for creating the Betty Crocker brand
“Toyota’s approach [to manufacturing] is based on the Japanese concept of Kaizen, which emphasizes the continual improvement of a system by eliminating muda (waste) via a lot of very small changes.” (145)
“Small changes to your Value Delivery process can save you a ton of time and effort in the long run.”
“Scalable systems amplify the results of small changes. Small changes to scalable systems produce massive results.” (146)
Perfecting your Value Delivery system is the key to 4-Hour Work Week-style automation.
The primary benefit of creating a system is that you can examine the process and make improvements.
If you can’t describe what you are doing as a process, you don’t know what you’re doing.
-W. Edwards Deming, production management expert and pioneer of statistical process control