Value is at the center of the preoccupations of analysts and observers of company life. Questions are asked about Sanofi Synthelabo's ability to create the promised value after the buyout of Aventis just as much as Daimler's ability to stop destroying value by investing in Mitsubishi or in Chrysler. Over the last few years the concept has been monopolized by the financial sphere, to the point where speaking of value today is an immediate reference to the financial markets. However, the concept is not new. Remember the value analysis methods which preceded the movement towards total quality. And added value remains a widely used book balance (particularly because it is taxed!).

How can value be created? It is simple, the financiers will say: you just have to make a profit greater than the cost of capital! Admittedly, but if l'Oréal's value has been multiplied sixfold in ten years, it is perhaps also due to the quality of its products and management!

Therefore, we must get back to basics: the company creates value because it has succeeded in offering its customers products or services for which the customers are ready to pay more than the cost price.

The starting point is therefore the value the customers place on the company's offer. If we deduct the cost of what is bought externally we obtain the value created by the company. There are then two possible ways of increasing the created value: increasing customer value or reducing supplier costs. The first way gives priority to innovation, the second to a power struggle. It is obvious that the latter is the more widely used. (How do hypermarkets create value?).

But we must be careful, value is too often confused with price. The value is captured at the time of the price negotiation but the creation itself appears when the offer is made.

Here is an example: A tyre company develops a new product with which you can drive for a long distance on a flat tyre at a reasonable speed. It therefore eliminates the need for a spare wheel, thus reducing the original equipment market by 20%! What should the offer price of this new product be? An initial, simplistic approach would consist of calculating the cost price and of adding a reasonable margin. But can this new product be sold for more than the traditional product? If yes, how much more? To answer this question, it is necessary to understand and evaluate the value the customer places on this new offer, that is to say the maximum price he is prepared to pay. Two points of view must then be considered: Can the automobile manufacturer use the newly available spare wheel space to increase the value of his product? How much is the final customer ready to pay to eliminate the inconveniences of a flat tyre? The available consumer behaviour analysis techniques must be able to answer this second question. But answering the first requires an additional measure of creativity. Once these answers have been given, an initial sharing of the created value will take place through the price negotiation. Of course, this price must be less than the maximum price imagined by the customer. But if the company has effectively created value by this innovation, it will be able to capture a more or less significant portion at the time of the business negotiation. It is this value created, then captured by the company which will then be shared between the different stakeholders. 

It is therefore the value of the offer for the customer which is the basis of value creation. And a correct analysis of this value will enable the company to capture the value it has created.

Two lines of study must be explored to understand and estimate the value of the offer for the customer:
1- My offer will allow the customer to make savings (by increasing his productivity for example). In this case the value of the offer for the customer corresponds to the level of savings made.
2- My offer allows the customer to increase his revenues, to improve his own offer, and to reach customers he did not reach until now… In this case the value of the offer for the customer corresponds to the potential additional margin.

Therefore in principle, setting the price should take account of the value of the offer for the customer, but also allow this value to be equitably shared, that is to say reserve part of the created value for the customer. This sharing is of course greatly influenced by the competitive situation.

Companies frequently put innovations on the market and let the customers capture most of the value created. The apparent reason is their weakness in the negotiations (when a medium-size company deals with a large group for example). But the real underlying reason is that the true value of the offer for the customer is not analyzed and therefore not understood.

These analysis errors are very frequent. The most famous of them is certainly that committed by Apple in the 80s, when the company chose to close its operating system. All Apple users will tell you that the value of this computer lies in its easy-to-use operating system and its user-friendly interface, in other words in the software, not in the hardware. If Steve Jobs had made this analysis and opened up his operating system to other hardware manufacturers, Microsoft would perhaps not have been created!

All winning strategies must therefore take two concerns into account:
• Construct an offer which creates a maximum of value
• Organize the system to capture a good proportion of the value created : retain the tasks which generate most value and outsource or subcontract the others.