Customer capitalism : the new business model of increasing returns in new market spaces

Blending the hot topics of new technology, market spaces, competitive strategy and customer behaviour, Customer Capitalism stands conventional wisdom on its head by introducing a new business model which shows how any business can generate increasing returns and gain a massive competitive advantage. Taking examples from companies as diverse as Amazon.com and Mondex, Microsoft and Monsanto, the author explains how businesses can escape the traps of a traditional mindset and originate for the customer rather than the product. These entreprises transform classic product/service categories, moving them away from market share into new "market spaces" where they find new ways of doing for customers. Customer Capitalism does what old capitalism could never do - it gives corporations a sustainable edge. Sandra Vandermerwe shows how to relate the ten principles of customer capitalism to your business and achieve the multiple and exponential rewards of increasing returns. Customer Capitalism generates growing customer value streams from ever-deepening and expanding relationships with individuals who lock-on to an organisation. These customers become an "installed customer base" who want the organisation as their dominant or sole choice on an ongoing basis. The new enterprise becomes the standard for these new ways of doing things by gathering market momentum. A growing number of individuals see and use the new way of doing things, making the enterprise ever more prevalent, and its brand increasingly infectious to others. Central to the concept of customer capitalism are six positive feedback loops which ensure customer lock-on and accelerating growth. Once the loops go into motion as one interlinking, reiterative system then the real forces of the new market and economic dynamics of customer capitalism come into play. Customers become the competitive barrier. Advantage leads to more advantage, success to more success, accumulating increasing returns in new market spaces. CONTENTS 6 ACKNOWLEDGMENTS 8 PROLOGUE CHANGING THE BUSINESS MODEL 11 CHAPTER 1 THE TEN PRINCIPLES OF CUSTOMER CAPITALISM 18 Overturning the theory 18 The promise of customer capitalism 20 The 10 principles of customer capitalism 22 1. The aim of the enterprise is to fundamentally transform itself 22 2. Leaders find `new ways of doing things' 24 3. Innovation means originating for and with customers rather than just inventing new technology 25 4. The primary object of the enterprise is to maximize the time value of customers 26 5. Dominating activities in `market spaces' achieves the time value of customers 27 6. The source of value is the linking of benefits in an integrated customer experience 28 7. Individuals form an installed customer base that becomes ever increasing, ever lucrative 30 8. The `enterprise space' becomes the new unit of competition with win-win the goal for all contributing players 30 9. The integrated customer experience is essentially achieved through intangible resources which are abundant by nature 31 10. Scores are based on whether an enterprise has accumulated a sustained advantage with customers and potential for growth 33 The six loops of customer capitalism 34 Loop 1: relationships loop 34 Loop 2: intangibles loop 34 Loop 3: networks loop 34 Loop 4: players loop 35 Loop 5: developers loop 35 Loop 6: costs loop 35 Success breeds success 35 The good news — and the bad 37 This book answers these questions 38 PART ONE NEW WAYS OF DOING THINGS 40 CHAPTER 2 PUNCTUATING THE EQUILIBRIUM 41 `Seeing' the new markets 43 CHAPTER 3 THE POWER TO REVOLUTIONIZE 45 CHAPTER 4 BECOMING THE STANDARD FOR NEW WAYS OF DOING THINGS 50 Beyond the core items 51 PART TWO THE TIME VALUE OF CUSTOMERS 57 CHAPTER 5 LEARNING TO CUSTOMER ORIGINATE 58 Product vs customer origination 59 Building in obsolescence 63 CHAPTER 6 CUSTOMERS AS LIFELONG INVESTMENTS 68 Building lifelong customer value 71 CHAPTER 7 GIVING MARGINS A BREAK 73 The ultimate value of customers 74 The theory goes into practice 78 PART THREE FROM MARKET SHARE TO MARKET SPACES 79 CHAPTER 8 ONE MORE TIME: WHAT'S WRONG WITH MARKET SHARE? 80 The problems with market share 82 Reframing the playing field 84 CHAPTER 9 MARKET SPACES AND CUSTOMER CAPITALISM 88 Expanding heads and horizons 89 Market spaces change corporate direction 89 Market spaces are dynamic and expansive 91 Market spaces link customer benefits 93 Seeing a market space first 94 CHAPTER 10 CONVERGING INDUSTRIES AND NEW MARKET SPACES 97 From trends to convergences 98 PART FOUR GETTING IN SOONER, STAYING IN LONGER 104 CHAPTER 11 OPPORTUNITY MANAGING IN THE CUSTOMER ACTIVITY CYCLE 105 The customer activity cycle tool 106 Eliminating value gaps 108 CHAPTER 12 ON HIGHER GROUND 116 Getting in earlier, staying in longer 117 Getting on to higher ground 122 CHAPTER 13 THE NEW ELECTRONIC GO-BETWEEN SERVICE PROVIDER 124 The magic of networks 124 Positive reinforcing loops at work 126 Abandoning the linear system 127 Key success drivers 129 Link benefits 129 Have access 130 Take non-value out 130 Offer competitive products 131 Concentrate on value-add service and services 131 Stretching the brand 133 PART FIVE CUSTOMERS AS COMPETITIVE BARRIERS 136 CHAPTER 14 MAKING INTENTION THE LEVER 137 Counting on an installed customer base 138 Changing the contours of marketing 142 Mirror, mirror on the wall 144 CHAPTER 15 GETTING PERSONAL 147 What personalization is (and isn't) 147 Personalization is not just choice 147 Personalization is about giving individual customers exactly what they need to suit their unique requirements 148 Multiple linking 149 Personalization is not just about the customization or mass customization of a product or service at a moment in time 150 Personalization is not about averages, it's about handling different customers differently 152 Acting on intelligence 153 The Internet as a one-on-one medium 155 CHAPTER 16 MOVING TO THE POINT OF ACCELERATION 158 Reversing old logic 159 Crossing a threshold 162 PART SIX NEW COMPETITIVE WHOLES 165 CHAPTER 17 THE ART OF CONNECTIVITY 166 Getting rid of industry silos 167 Working as one enterprise space 169 CHAPTER 18 LEADING TO WIN — WIN 173 The power to lead 175 The role of the lead company 177 CHAPTER 19 PRACTICING COMPLEMENTARITY 179 Piggy-backing is OK 180 At war and peace 183 Blueprint for complementarity 187 Reciprocity 187 Sharing 189 Compatibility and interoperability 190 PART SEVEN LOCKING ON AND ROLLING OUT 193 CHAPTER 20 FIRST PREVALENCE THEN PROFITS 194 Prevalence lost 196 Prevalence regained 198 Ubiquity is (not) all you need 199 CHAPTER 21 INVESTING UP FRONT FOR INCREASING RETURNS 201 Investment as a state of mind 202 CHAPTER 22 THE CRITICAL VALUE OF CRITICAL MASS 208 Building the market momentum 208 Success factors that are critical 210 It must be easy for customers to adopt a new offering or standard, take it on, use it and be successful at getting results 210 Sequential progressive pricing must be replaced by `ease of decision' pricing 212 PART EIGHT IT'S THE THOUGHT THAT COUNTS 216 CHAPTER 23 THE INCREDIBLE WEIGHT OF INTANGIBLES 217 Products and services: like body and soul 217 Changing the axis to intangibles 218 Obeying different laws 221 CHAPTER 24 THE ABUNDANCE FACTOR 223 Having your cake and eating it 224 Changing the arithmetic 225 CHAPTER 25 MOBILIZING MINDPOWER 229 Managing the stock and flow 229 Making mindpower productive 231 Putting loops into global action 233 Giving credit where debt is due 237 PART NINE ECONOMICS OF CUSTOMER CAPITALISM 240 CHAPTER 26 SPREADING THE COST OF LEARNING 241 The multiplier effect 241 Planned knowledge management 243 Mass customizing knowhow 245 CHAPTER 27 THE `FALLING COST PER UNIT' PHENOMENON 250 Marginalizing marginal costs 250 Costs fall because. . . 251 Offerings increasingly high in intangibles have a low, if not trivial, marginal cost 251 No one is immune 252 Economics of the Internet 256 The use of interactive technology in offerings dramatically reduces costs 256 Factoring in customer input 258 CHAPTER 28 MORE WITH LESS 261 New economies for new economics 262 The infinite nature of smart 264 Cash is more important than profit 266 PART TEN SCORING TO WIN 267 CHAPTER 29 PRICING FOR TIME 268 Sharing the total value pool 268 To charge or not to charge 269 The total value equation 271 Charging for results 274 Shifting from `ownership' to `usership' 276 CHAPTER 30 VALUING FOR INCREASING RETURNS 280 Investors call a new tune 281 We need new valuers 282 The fetish with hard assets 284 Inside vs outside information 284 The orientation of the financial accounts 285 Being patently wrong 286 The problems with book value 286 Are you measuring performance? 287 New value reporting 290 Wanted: giving and getting customer value 291 Columbus in the new world 292 REFERENCES, NOTES AND POINTS OF DEPARTURE 294 Prologue 294 Chapter 1 294 Chapter 2 295 Chapter 3 295 Chapter 4 296 Chapter 5 296 Chapter 7 296 Chapter 8 297 Chapter 9 297 Chapter 10 298 Chapter 11 298 Chapter 12 298 Chapter 13 298 Chapter 14 299 Chapter 15 299 Chapter 16 299 Chapter 17 299 Chapter 18 300 Chapter 19 300 Chapter 20 301 Chapter 21 301 Chapter 22 301 Chapter 23 301 Chapter 24 302 Chapter 25 302 Chapter 26 303 Chapter 27 303 Chapter 28 304 Chapter 29 304 Chapter 30 304 INDEX 306 abundance 223 206-208 223 244 261 activity based accounting 267 284 Aegon and lifelong customer value 54 71 airline industry and revolution 95-7 112 alliances and customer lock-on 241 224 241 228 245 Amazon -1 and customer lock-on 42 25 42 American Express (AMEX) Travel 104 121 American Express -1 and lack of connectivity 158-9 175 and proprietary technology 162 179 and proprietary technology 162 179 Andersen Consulting -1 and collective intelligence 215-16 232 and collective intelligence 215-16 232 anticipating customer needs 24 7 24 22 39 42 59 137 154 Apple -1 and lack of interoperability and prevalence 37 20 37 Auto-by-Tel -1 and costs of production 240 257 and multi-branding 175 192 and new enterprise spaces 153 170 and pricing 64 81 and profits 264 281 as go-between service provider 127 110 127 automobile industry 47 30 47 63-4 80 73 90 236-7 253 247-8 264 258-9 275 Avis 133 150 balanced score card as internally focused tool 267 284 Banking 71 54-5 71 141-2 158 242 259 Baxter Renal -1 and brand stretch 167-8 184 and collective intelligence 209 226 and personalization 134-5 151 and value-add services 77 60 77 Bertelsmann 45 28 45 173 190 Bezos, Jeff x-xiii, 43 26 43 112 129 116 133 127 144 137 154 186 203 biotechnology and Monsanto 66 49 66 249 266 Bloomberg's value-add services 59 42 59 43 60 book retailing 44 27-9 44 48 65 171 188 260 277 269-70 286 Boston Consulting Group 82 65-6 82 226 243 BP -1 and knowledge, explicit and implicit 236 219 236 brand stretch -1 Amazon xiv, 42 25 42 Branson, Richard 112 95 112 186 203 274-5 291 British Airways 270 287 Browne, John 236 219 236 229 246 Canadian Imperial Bank of Commerce 271 288 Cisco 48 31-2 48 66 83 Citibank -1 and collective intelligence 218 235 and customer contact managing 145 162 and new account management rewards 144-5 161 and point of acceleration 144 161 globalizing 231 248 `model concept' branches 231 248 `model concept' branches 231 248 Citibank (cont.) -1 proprietary technology 173 190 relationship investment curve 146 163 relationship investment curve 146 163 collaboration 180 163-5 180 246 263 collective intelligence 230 213 230 competition as complementary 166-70 183 complementarity and collaboration 180 163-6 180 170 187 172 189 261-2 278 complementarity, critical success factors 170-75 187 conventional accounting and the need for new value reporting 273 290 convergences and new market spaces 81-5 98 core items 18 1-2 18 5 22 38 55 120 137 costs -1 and customer input 241-3 258 and intangibles 246 263 and software 235-8 252 and software 235-8 252 costs loop 35 18 35 110 127 217 234 234 251 Cox, Jeff 68 51-2 68 75 92 162 179 critical mass 208 191 208 193-8 210 customer activity cycle 105 88-9 105 customer contact managing 145-7 162 customer input 144 127 144 234 251 242-3 259 customer lock-on -1 and positive reinforcing loops 19 36 and sustained competitiveness 21-2 38 definition 4 21 exponential growth and increasing returns 21 38 exponential growth and increasing returns 21 38 customer loyalty versus lifelong customer value 124 141 customer origination 59 42 59 45 62 204 221 274 291 customer retention versus lifelong customer value 123-4 140 customer satisfaction 122 139 customer spend 28 11 28 72 89 98 115 102-105 119 125 142 customer virtual communities 127-9 144 customers as investment 26 9 26 51-3 68 customers as producers 242-3 259 De Mello, Tim 53 36 53 139 156 developers loop 127 110 127 Direct Line 53 36-7 53 41 58 135-6 152 154-5 171 241 258 DiRomualdo, Bob 29 46 Drucker, Peter 267-8 284 Dyson, Esther 129 146 economic value added (EVA) 284 267 284 271-2 288 economies -1 of scale 32 15 32 Edvinsson, Leif 241 224-5 241 269-70 286 Encyclopaedia Britannica 47 30-31 47 196 213 235 252 enterprise spaces 31 14 31 152-61 169 247 264 Expedia 121 104 121 117-18 134 188 205 farming 68 51-3 68 256 273 258 275 Federal Express (Fedex) 88 71 88 185 202 Financial Times 133 116 133 132 149 153 170 165 182 261-2 278 Fujitsu 238 221 238 237 254 GE 129 112 129 203 220 Gerstner, Louis 89 72 89 94 111 159 176 213 230 getting in sooner, staying in longer and customer lock-on 118 101-105 118 168 185 Global Music Network (GMN) 150 133 150 172 189 262 279 go-between service providers 117 100 117 Grove, Andrew 64 47 64 152 169 161 178 276 293 Hayek, Nicholas 45 62 healthcare 29 12 29 25 42 57-8 74 74-7 91 85-6 102 102-104 119 150 167 242 259 257 274 Higgins, Graham 25 8 25 33-4 50 44 61 high-quality cash streams, maximizing 26 9 26 15 32 high-quality value streams 266 249 266 251 268 273 290 Hock, Dee 159 176 Holmes, Ed 157 140 157 145-6 162 IBM -1 and customer activity cycle 29 12 29 Imperial College Department of Biology and Medical Systems, University of London 77 94 infrastructural assets 266 249 266 272 289 innovation -1 and Auto-by-Tel 64 81 and insurance industry 54 71 auto industry and software 236-7 253 and developers loop 178 195 in new enterprise spaces 161 178 lack of and patents 269 286 lack of and patents 269 286 installed customer base 30 13 30 120-1 137 129 146 insurance industry 53 36 53 54 71 intangible assets and new performance criteria 33 16 33 270-71 287 intangible versus tangible assets and market value 270-72 287 intangibles -1 and customer lock-on 204 221 and disproportionate gains 211 228 and exponential characteristics 32 15 32 intangibles loop 34 17 34 109 126 209 226 211 228 217 234 integrated customer experience 28 11-12 28 95-7 112 102-105 119 111 128 126 143 151 168 238 255 252-3 269 integrity, influencing customers with 126 143 Intel -1 and building in obsolescence 47-8 64 and new performance criteria 270 287 and new performance criteria 270 287 intellectual assets -1 and customer lock-on 249 266 examples 212-13 229 IBM 229 246 IBM 229 246 interactive technologies -1 and costs 239-43 256 and economies of sweep 245 262 and human factor 132 115 132 interactivity 132-3 149 internal go-between service provider 111-12 128 Internet -1 and abundance 206 223 and cost savings 242-4 259 and customer intimacy 240-41 257 and dedicated networks 239 256 and disintermediation 107 124 and intangibles 206 223 and personalization 138-40 155 as one-on-one medium 138 155 costs, time and customers 239-40 256 customer input and costs 242-3 259 economics of 239 256 economics of 239 256 interoperability -1 and Amazon 174 191 and integrated customer experience 173-4 190 and Mondex 186 169 186 invention -1 versus creating a standard 35 52 versus customer origination 43 60 versus customer origination 43 60 investment, long term -1 and Amazon 186 203 and customer origination 274 291 and Expedia 188 205 and Federal Express 185 202 and Lego 186 203 and Lego 186 203 investment, long term (cont.) -1 and Microsoft 185 202 and Mondex 187 204 and no or low profits 185-6 202 and RAC 187 204 and time horizons 186 203 and Virgin 186 203 as a state of mind 185-6 202 as a state of mind 185-6 202 investments -1 amortized through prevalence 246 263 and economies of spread 245 262 in installed customer base 188 205 in installed customer base 188 205 investors -1 and new time horizons 33 16 33 Janes, Michael 239 256 Jobs, Steve 20 37 Johnson, Neil 90 73 90 99 116 Jones, Tim 25 8 25 33-4 50 192 209 Kelly, Kevin 177 160 177 247 264 knowhow -1 finding what is replicable 228-31 245 finding what is replicable 228-31 245 knowledge -1 and corporate memory banks 214-16 231 and economies of skill 245 262 and inverted costs 247 230 247 knowledge-intensive companies and performance criteria, new 271 288 KPMG Peat Marwick brains trust 215 232 Kristiansen, Kjeld 98 81 98 83 100 labor -1 and traditional capitalism, definition 227 244 and traditional capitalism, definition 227 244 leaders and innovation in new enterprise spaces 161 178 leaders' role in new enterprise spaces 160 177 learning alliances and Skandia 228 245 learning -1 and changing the economics 232 249 and converting into customer value 226-8 243 and customer lock-on 228 245 and exponential growth 227 244 and traditional capitalism 226 243 as intellectual asset and IBM 229 246 as invisible production process 228 245 building generic models 230 247 curve 226 243 for planned knowledge 227 244 for planned knowledge 227 244 Lego 97 80-4 97 128 145 186 203 262 279 Leyland, Peter 152 135 152 167 184 lifelong customer value -1 and customer lock-on 124 141 and quantifying present cash value of future customer revenues 273 290 and software 236-8 253 versus customer retention 123-4 140 versus customer retention 123-4 140 linear chains -1 and ownership passing hands 110 127 and product approach 80 63 80 linked customer benefits -1 Auto-by-Tel 112 129 customer activity cycle 89 106 go-between service providers 112 129 integrated customer experience 126 143 market spaces 76 93 sharing resources and inverted costs 234 251 sharing resources and inverted costs 234 251 Lotus Notes 95 78 95 194 211 243 260 Malm, Goran 202 219 marginal costs -1 and falling cost per unit phenomenon 233-8 250 and funding value gaps 253 270 and Internet 239-41 256 and service enterprises 237-8 254 and service enterprises 237-8 254 market creation -1 and Monsanto 51-2 68 and new performance criteria 265 282 versus invention 43 60 versus invention 43 60 market growth -1 and Amazon 171 188 and auto industry 63 80 and healthcare 76 93 and intangibles 209 226 and integrated customer experience 174 191 and interoperability 174 191 and knowledge 204 221 and market spaces 72 89 and RAC 99 116 and relational, intellectual and infrastructural assets 249 266 and relational, intellectual and infrastructural assets 249 266 market share -1 and lack of innovation 65 82 and letting new entrants in 66 83 and narrowing competitive perspective 67 84 and product approach 65 82 and profit assumptions 65 82 and supply economies 67 84 problems of 27 10 27 market space -1 and Citibank 78 95 articulation of 27 10-11 27 market spaces -1 and convergences 81 98 and corporate direction 72 89 and customer results 28 11 28 market value and customer value 273 290 McDonald's 65 48 65 182-3 199 Mercedes 90 73 90 133-4 150 Microsoft -1 and brand stretch 120 137 and Expedia 104 121 and investment, long term 185 202 and Microsoft Network (MSN) 37 54 and new performance criteria 270 287 and shareholders 265 282 customer activity cycle 88 105 getting in sooner in toys 97 80 97 mindpower 229 212 229 214-16 231 mobile communications 75 92 mobile phones 98 81-2 98 153 170 248 265 Mondex -1 and bank restructuring 41 58 and customer origination 44 61 and interoperability 186 169 186 monopoly -1 and core items 120 137 and old industry/product-bounded definitions 14 31 and old industry/product-bounded definitions 14 31 monovation, monopoly and dangers of 160 177 Monsanto -1 and balance sheet changes reflect new revenue-generating assets 274 291 and knowledge teams 219-20 236 and multiple traits 248 265 and new performance criteria 270 287 and personalization 137-8 154 and product approach 49 66 and software definition 235-6 252 and software definition 235-6 252 multibranding 175 192 multiple traits -1 and pricing 258-9 275 and pricing 258-9 275 multiplier effect and intangibles 224-5 241 NatWest 186 169 186 221 238 Netscape 54 37 54 174 191 network effects and externalities xii, 107 124 networking effects and size of firm 247 264 networks loop 34 17-18 34 25 42 107 124 109 126 217 234 networks, definition 108 125 new economics -1 and customer input 241-3 258 and customer lock-on 245-6 262 and customer lock-on 245-6 262 new ways of doing things, examples -1 new global way of paying for small-ticket items 25 8 25 newspaper industry 54 37-8 54 116 133 131-2 148 260-61 277 Nokia 70 87 Nord, Karl 112 129 obsolescence, building -1 and customer origination 47 64 and Intel 64 47-8 64 ownership versus usership and price 259-62 276 ownership, pricing and traditional capitalism 257 274 patents 269 286 pay-as-you-lend 259 276 pay-as-you-grow 258 275 pay-as-you-use 260 277 pay-per-drive 258 275 pay-per-view 259 276 Peapod 47 30 47 36 53 139 156 255-56 272 Penske Logistics Europe 203 220 performance criteria -1 new and accumulating relational, infrastructural and intellectual assets 33 16 33 personalization -1 and Amazon xi-xiv, 136 153 and Baxter Renal 134-5 151 and constant adaptation of offerings 138 155 and customer dialogue 137-40 154 and Direct Line 135-6 152 and Global Music Network (GMN) 133 150 and Internet, 138-40 155 and Mercedes 132-4 149 and Monsanto 137-8 154 and Peapod 139 156 and RAC 134 151 and Streamline 139 156 beyond segmentation 130-36 147 Financial Times and pricing 261 278 interactive technologies and economies of sweep 245 262 interactive technologies and economies of sweep 245 262 Pick & Pay (South Africa) and customer activity cycle 92 109 piggybacking and collaboration 163-5 180 planned knowledge -1 and exponential growth 227 244 and learning 227 244 and learning 227 244 players loop 152 169 and collective intelligence globally 217 234 and disproportionate gains 152-4 169 and go-between service provider 109 126 and go-between service provider 109 126 point of acceleration 159 142 159 positive reinforcing loops -1 and Amazon 42 25 42 positive reinforcing loops (cont.) -1 and getting customer lock-on 17-20 34 and go-between service provider 126 109-10 126 prevalence -1 and amortizing investment 246 263 and becoming the standard 177 194 and costs as investments for becoming the standard 184 201 and customer lock-on 194 177-8 194 price no longer competitive weapon 126 143 Pricewaterhouse Coopers 226 209 226 217-18 234 pricing -1 and critical mass 195-8 212 and Global Music Network 262 279 and Mondex 189 206 and newspapers 277 260 277 principles of customer capitalism 18 1 Aim 5 18 product lifecycle -1 and maximizing investment upfront 142 159 and traditional capitalism 142 159 curve, prevalence and covering initial investments 184 201 curve, prevalence and covering initial investments 184 201 product lock-in 4 21 profitability and lifelong customer value 252 269 punctuated equilibrium 26 43 Rand Merchant Bank Holdings 54 71 Reed, John 78-9 95 relational assets -1 and customer lock-on 249 266 and customer lock-on 249 266 relationship investment curve 160 143 160 146 163 relationships loop 95 112 and collective intelligence globally 217 234 and go-between service provider 109 126 definition 17 34 definition 17 34 resource allocation and market spaces 72 89 resource sharing and overheads 246 263 resources -1 abundance 206-209 223 use of new and exponential returns 225-6 242 use of new and exponential returns 225-6 242 retention of customers 123-5 140 revenue streams -1 and customer lock-on 249 266 and scoring 273 290 and value pools 251-2 268 cash generation and customer activity cycle 251 268 cash generation and customer activity cycle 251 268 Romer, Paul 31 14-15 31 200 217 206 223 RAC -1 and competitors as complementary 168-9 185 and customer lock-on 101 118 and intangibles 209 226 and Internet 91 74 91 scoring 271-3 288 Shapiro, Bob 65 48-9 65 248-9 265 259 276 274 291 Skandia 242 225 242 228 245 270 287 274 291 SKF 201-202 218 software -1 and inverted costs 235-8 252 and lifelong customer value 235-8 252 definition and Monsanto 235-6 252 definition of 235-8 252 definition of 235-8 252 standard, becoming a -1 and Amazon 25 8 25 Streamline 47 30 47 36 53 139 156 tangible resources and traditional capitalism 211 228 tangible versus intangible assets and market value 270-72 287 Tavares, Jorge 247 230 247 232 249 technical standards versus customer lock-on 50 67 technologies, proprietary and traditional capitalism 163-4 180 technology and prevalence 180 197 technology sharing -1 and American Express 172 189 and Apple 172 189 and Citibank 173 190 and complementarity 172 189 and Global Music Network (GMN) 172 189 and IBM 172 189 and Microsoft 172 189 and Mondex 169 186 and Netscape 172 189 and overheads 246 263 and overheads 246 263 time as scarce resource 35 52 time horizons and exponential rewards 33 16 33 186-7 203 time value of customer -1 and Auto-by-Tel 64-5 81 and Baxter Renal 57-60 74 and customer lock-on 55-6 72 and customer spend increase 125 142 and economies of stretch 253 270 and high-quality cash streams 9 26 and net present value 273 290 and profitability 252-7 269 and RAC 99-100 116 and RAC 99-100 116 Tobin's Q book value versus market value 269-70 286 total costs and gains over customer activity cycle 255-7 272 total customer knowledge 136-9 153 total value and customer activity cycle 254-7 271 total value equation 254-5 271 Toyota 128 111 128 236-7 253 259 276 travel industry 120 103-104 120 117-18 134 149 166 166 183 170 187 ubiquity 182-3 199 value gaps -1 and charging 253 270 and customer activity cycle 91-2 108 and Lego 92 109 and Mercedes Smart Car 93 110 and Virgin in airlines 92 109 funding and Baxter 253 270 funding and customer lock-on 253-4 270 funding and customer lock-on 253-4 270 value pool 268 251-2 268 272 289 value shifting and the customer activity cycle 117 100-106 117 155 172 value-add services -1 and Amazon xi-xiv, 125 108 125 Virgin -1 and brand stretch 114 97 114 Visa 159 176 wealth creation and intangibles 209 226 Wolrath, Bjorn 224 241 Xerox 83 66 83 72 89 101-102 118 CyberNet "Taking examples from companies as diverse as Amazon.com and Mondex, Microsoft and Monsanto the author explains how businesses can escape the traps of a traditional mindset and originate for the customer rather than the product. These enterprises transform classic product/service categories, moving them away from market share into new 'market spaces' where they find new ways of doing things for customers." "Customer capitalism does what old capitalism could never do - it gives corporations a sustainable edge. Sandra Vandermerwe shows how to relate the ten principles of customer capitalism to your business and achieve the multiple and exponential rewards of increasing returns."--Jacket.