Interview with Prof. Robert Kaplan(1)
The business competition in China now becomes more intense than ever. Chinese companies are eager to learn the advanced experience from western world. Recently Xing Zong, a Chinese graduate student at Duke University, took an exclusive interview with Prof. Robert Kaplan.About Prof. Robert KaplanProfessor Robert S. Kaplan is Baker Foundation Professor at the Harvard Business School. Kaplan joined the HBS faculty in 1984 after spending 16 years on the faculty of the business school at Carnegie-Mellon University, where he served as Dean from 1977 to 1983. Kaplan received a B.S. and M.S. in Electrical Engineering from M.I.T., and a Ph.D. in Operations Research from Cornell University. He has received honorary doctorates from the University of Stuttgart and University of Lodz.
In 2006, Kaplan was elected to the Accounting Hall of Fame, and received the Lifetime Contribution Award from the Management Accounting Section of the American Accounting Association (AAA). In December 2004, he received the Telecom Italia "Prize for Leadership on Business and Economic Thinking." The Financial Times included him in its 2005 list of Top 25 Business Thinkers. The Accenture Institute for Strategic Change named him, in 2002 and 2003, among the Top 50 Thinkers and Writers on Management Topics. Kaplan received the Outstanding Accounting Educator Award in 1988 from the AAA, the 1994 CIMA Award from the Chartered Institute of Management Accountants (UK) for "Outstanding Contributions to the Accountancy Profession," and the 2001 Distinguished Service Award from the Institute of Management Accountants (IMA) for contributions to the practice and academic community.
Xing Zong: Ensuring high-quality service is fundamental to customer retention. Prof. Kaplan, what is the best way to deliver great service and establish meaningful relationships with your customers?Kaplan: This depends on the market segment the company chooses to compete in, and what the expectations are for the customers in that segment. A strategy typically identifies specific customer segments that the company has identified as its target audience for growth and profitability. For example, Wal-Mart appeals to price-sensitive customers who value the retailer’s low prices. Neiman-Marcus, on the other hand, targets customers with high disposable incomes who are willing to pay more for high-end merchandise. Price-sensitive customers with low disposable income are not likely to be satisfied with the shopping experience at a Neiman-Marcus store, while wealthy individuals will be disappointed with the fashion, fabric and style of clothing offered at Wal-Mart as well as the amenities and salesperson attention they receive at this discounted retail outlet. Therefore, Wal-Mart should measure customer satisfaction, loyalty, and market share only with its price-sensitive customers, while Neiman-Marcus would apply these same measures only to segments that feature customers with high disposable incomes.
Xing Zong: “Value proposition” is a concept you stated many times in your articles. How do you relate that to the holistic strategy that company takes?Kaplan: A company must also identify the objectives and measures for the value proposition it offers its customers. The value proposition is the unique mix of product, price, service, relationship, and image that a company offers its targeted group of customers. The value proposition, the core of a company’s strategy, should communicate what it will deliver to its customers better or differently from its competitors.
For example, companies as diverse as Southwest Airlines, Dell Computers, Wal-Mart, McDonald’s, and Toyota have been extremely successful by offering their customers the “best buy” or lowest total cost in their category. The measurable objectives for a low total-cost value proposition should emphasize attractive prices – relative to competitors, excellent and consistent quality for the product attributes offered, good selection, short lead times, and ease of purchase.
