The Value Network: Integrating the Five Critical Processes That Create Customer Satisfaction.

Did you ever read something that made such complete and compelling sense that you said to yourself, "I sure wish I had written this!" or "This seems so inarguably correct, why doesn't everybody already know and practice it?" That's the way I reacted to Louis DeRose's book, The Value Network.

According to DeRose, what's wrong with American companies today is that too many managers have become "faddists," seduced by the promise of quick and easy answers and embracing "new" management theories helter skelter. Also, some managers have been misled by "feel-goodism" into paying more attention to "corporate bonding," "consciousness raising," and the "psychodynamics" of the corporate culture, than to tried-and-true, basic management theory and practice. Others have wrongfully renounced "management" in favor of "leadership" by stressing the interpersonal, psychological, and behavioral facets of leadership over the analytical, results-oriented, systematic, and customer-driven characteristics of management.

What is needed, says DeRose, is a return to basics. He believes the correct path to that goal is recognizing "value" and the part it plays in satisfying customer requirements reliably, consistently, and cost-effectively. And I must say, he makes a compelling argument.

DeRose, former professor and chair of the business management department at Fordham University, and currently president of DeRose and Associates, management and training consultants in Carlsbad, California, sees value as "the satisfaction of customer requirements at the least total cost of acquisition, ownership, and use." Further, he views the five key commercial processes - (1) marketing, (2) engineering, (3) acquisition, (4) manufacturing, and (5) customer service - as each having strong value dimensions that contribute to the overall value of a company's product. His premise: It's a mistake to ignore the value contributions of these key processes or to manage them separately. Instead, they must be viewed as a network and their management must be integrated and focused on the common goal of customer satisfaction.

By way of gaining a historical perspective on this notion, it can be observed that, as purchasers, we are all familiar with value analysis, which is an organized approach to the study of purchasing products, materials, or services in terms of needed or intended functions. Its aim is to achieve that function at the lowest cost - certainly a sensible concept.

When it was recognized, however, that it was equally sensible to apply the same concept to manufacturing, value analysis developed into value engineering. Later, as it was further recognized that focusing only on procurement and manufacturing ignored other essential commercial functions, the concept was expanded and value systems came into being.

Addition to this amalgam of the marketing concept, which said that it is our customers who ultimately place a worth on what we supply, refocused the value concept from internal to external, and defined the activities to which value concepts should be applied as the broad sequence of functions and processes Michael Porter called the value chain.