A few weeks ago, I created a YouTube video to discuss the importance of an outside-in perspective to the value creation challenge. The key to a successful business is its ability to continuously evolve its value creation capabilities. Unfortunately, discussions about value creation often focus only on internal factors such as increasing sales, retaining customers, and improving profits. This inward approach limits an organization’s ability to look beyond its borders to take advantage of new opportunities to create new sources of customers, products, services, operations, and societal value.
The biggest challenge to the “let’s sell value” mandate is that everyone defines and measures “value” differently. Value is very much an individual proposition. Some buyers may prefer safety, others prefer innovation, others prefer reliability, while others buy based on price. But here’s the bottom line: customers make a “value determination” based upon various measures, which might be weighted differently based on the customers’ usage intentions and desired outcomes.
“If you want to change the game, change the frame.” – Bill Schmarzo
To “sell value,” you must change how you approach the conversation. Here are some key points that you will need to contemplate and master if you want to serve your customers, stakeholders (not necessarily just shareholders), and constituents.
Point #1: Value is Defined by the Customer
The value of any product or service is ultimately determined by the customer, not the organization providing it. This “outside-in” perspective necessitates a deep understanding of the customer’s intentions, objectives, desired outcomes, and how they will measure success.
Understanding how customers define requires organizations to engage directly with customers, map their journeys, and empathize with their needs, pain points, and goals. By doing so, organizations can uncover not just what customers are buying but why they are buying it, what outcomes they seek, and how they define and measure success.
For example, Cleveland Clinic has pioneered patient-centered care by integrating patient feedback into every aspect of its service delivery. It uses patient journey mapping to understand the patient experience, from scheduling appointments to post-discharge care. By focusing on what’s most important to the patients, Cleveland Clinic has improved patient satisfaction scores, increased patient retention, and established itself as a leader in quality healthcare.
Point #2: Value Creation is an Economic Conversation
The concept of value creation is an economic conversation that extends well beyond simple financial metrics. Customers determine value based on a spectrum of non-financial benefits, such as reliability, safety, quality, customer support, environmental impact, and ethical considerations. Understanding this broader perspective on value requires revisiting foundational economic theories, like those of Adam Smith, the Father of Economics, who distinguished between “value in exchange” and “value in use” as two different valuation methods in his seminal book “The Wealth of Nations”[1].
- Value in Possession (Finance/Accounting): This perspective of value is more static and transactional. It aligns with financial asset valuation methods that rely on market price or book value. This viewpoint reflects the worth of an asset if it were to be sold or exchanged, but it doesn’t fully capture its economic potential.
- Value in Use (Economics): This approach aligns more with economic thinking and strategic business models, where value is derived from holding an asset and deploying it effectively to generate future wealth, foster innovation, or create a competitive advantage.
The Economic Value Definition Wheel expands the dialogue beyond traditional financial returns to encompass multiple value dimensions—operational, customer, societal, and environmental. This holistic framework provides a more comprehensive view of value creation. For instance, a reliable and safe product may offer a customer more perceived value than a cheaper but less reliable alternative (Figure 1).
Figure 1: The Economic Value Definition Wheel
For example, Bayer Crop Science is a leading global agricultural provider that has enhanced its value proposition with digital farming solutions. Bayer’s Climate FieldView platform combines advanced seed genetics with precision farming technology to help farmers gather and analyze field data, make better planting decisions, and monitor crop health. By offering customized seed varieties optimized for local conditions and combining them with real-time insights, Bayer provides farmers with significant non-financial benefits, including improved crop resilience, sustainability, and resource optimization that strengthens customer relationships and loyalty.
Point #3: Design Thinking To Understand the Sources of Customer Value
Design Thinking is a human-centered approach to innovation that draws from a designer’s toolkit to integrate people’s needs, technology’s possibilities, and business success requirements. For example, customer journey maps visualize the entire customer experience from awareness to post-purchase, helping identify critical value moments. Using design thinking tools, organizations can better align their offerings with customer expectations and uncover new value-creation opportunities (Figure 2).
Figure 2: Customer Journey Map Template
For example, Capital One, a leading financial services organization, uses Design Thinking to identify, understand, and create customer value. Capital One used customer journey maps to understand the customer experience across products such as credit cards, loans, and savings accounts. Through this analysis, they identified pain points like complex online interfaces, unclear fees, and a need for personalized advice. In response, they introduced solutions like the “Eno” AI-powered virtual assistant for real-time spending insights with a more intuitive user experience.
Point #4: Defining a More Holistic AI Utility Function
The AI Utility Function is a mathematical framework that helps AI models make decisions to maximize desired outcomes based on specific criteria. Understanding how customers define value is essential to incorporate the most appropriate metrics into the AI utility function. This ensures that AI models deliver more meaningful, relevant, responsible, and ethical outcomes by aligning with the proper drivers of customer value. An AI model optimized with customer-centric metrics can prioritize decisions that enhance customer experience, reduce service delivery friction, and address potential ethical concerns, building trust and fostering long-term loyalty (Figure 3).
Figure 3: AI Utility Function
For example, Siemens, a global manufacturing and industrial automation leader, uses AI-driven predictive maintenance solutions to deliver value by embedding customer-defined metrics—such as equipment uptime, maintenance costs, energy efficiency, and safety standards—into its AI utility function. Siemens needs to tailor its solutions to specific customer needs, whether minimizing downtime, reducing maintenance costs, achieving sustainability goals, enhancing operational efficiency, safety, and customer satisfaction while fostering solid long-term partnerships in the manufacturing sector.
Value Creation Summary
By prioritizing customer-defined value, using Design Thinking to uncover customer needs, and integrating customer-focused metrics into decision-making, organizations can develop a customer-centric approach to creating value. This shift enables organizations to offer products and services that deeply resonate with customers, differentiate themselves in competitive markets, attract new customers, and foster long-term loyalty, driving long-term growth and competitive advantage.
[1] Adam Smith, “Wealth of Nations,” Book I, Chapter IV: Of the Origin and Use of Money, 1776 (a very good year)
