by Philip Boxer
In a recent interview, the chief executive of GE pointed out that in order to create propositions that their customers would value more than their competitors’ propositions, GE had to know more than their competitors about their customers’ needs. Suppliers can no longer just compete by providing the best product or best solution to a defined requirement. They must enter the customer’s world, and understand it as a context-of-use that conditions the nature of the demands that the customer makes.
Suppliers are used to managing the risks associated with satisfying the forms of customer demand that they can predict. And suppliers expect their customers to define their requirements before committing to underwriting the risks they will carry in satisfying those requirements. In this way suppliers can maintain a symmetrical relationship between their capabilities and their clients’ demands.
But now we are seeing the emergence of business situations where demand has to be acknowledged as asymmetric; this means that the customer is always wanting ‘more’ than the supplier can provide. This ‘more’ constitutes a value deficit that companies such as GE cannot afford to ignore.
How much of this value deficit is going to be addressed by the supplier? This question has to involve balancing the risks and rewards on both sides of the relationship. How, then, to find this balance?
To answer this question, new kinds of risk have to be considered on the demand-side in addition to those on the supply-side, and a wider understanding of the supply-demand relationship has to be established.