INTRODUCTION

In the mid-1980s, AT&T was confronted by a paradox: on the one hand, customer satisfaction levels were running at about 95 percent; on the other hand, they lost 6 percent market share, where 1 percent was worth $600,000,000. For the first time in corporate history, AT&T laid people off – 25,000 worldwide from an overall staff of 300,000 – including managers recently rewarded for the apparently outstanding customer satisfaction performance.

An AT&T trouble-shooting team discovered that one of the critical factors explaining the paradox was the way in which customer satisfaction was being measured: AT&T’s overall focus was not concentrated on their customers’ perceptions of Value. And it turned out to be Value that had a connection to business results.

The concept of creating and adding Value for stakeholders is at the core of our approach to performance measurement.

What does Value mean to them?

And as we’ve seen in Chapter 3, just asking this simple question leads immediately to issues of market segmentation, regardless of the type of stakeholder.

The word “Value” obviously connotes some sort of exchange or trade: you get something you want, you give something in return.