How to Attract Customers from Big Players #shorts

Key Concepts

• Decoupling: The process of separating a value-creating activity from value-eroding activities within a customer value chain.
• Customer Value Chain: The sequence of activities a customer undertakes to obtain and benefit from a product or service.
• Value Creating Activity: An activity that directly contributes to the customer's desired outcome or benefit.
• Value Capturing Activity: An activity where the provider extracts economic value from the customer (e.g., payment).
• Value Eroding Activity: An activity that customers must perform but do not derive direct satisfaction or benefit from; often seen as a necessary evil.
• Weak Link: A value-eroding activity that is particularly frustrating or difficult for customers.
• Incumbents: Established companies or players in a market.

The Five Steps of Decoupling

This section outlines a five-step methodology for decoupling processes, illustrated with the case of Pillpack.

Step 1: Mapping the Customer Value Chain

The first step involves meticulously detailing all the activities a customer goes through to achieve their desired outcome.

• Example: Pillpack's Customer Value Chain for Medication Management
  • Initial State: Customer needs to manage multiple daily medications.
  • Activities:
    1. Go to the doctor.
    2. Get tested.
    3. Receive a prescription.
    4. Go to the pharmacy.
    5. Pay for the medication.
    6. Figure out a plan to remember medication times.
    7. Take the medication.
  • Desired Outcome: Feel better, solve health problem.

Step 2: Classifying Activities in the Value Chain

Each stage identified in Step 1 is then categorized as either value creating, value capturing, or value eroding.

• Pillpack Example Classification:
  • Value Creating: Taking the medication (directly leads to health improvement).
  • Value Capturing: Paying for the doctor's visit, paying for the medication.
  • Value Eroding:
    • Going to the doctor.
    • Getting a prescription.
    • Going to the pharmacy.
    • Filling out (forms, etc.).
    • Remembering when to take which pill.
    • Organizing pills.
  • Explanation: Value eroding activities are those that customers must do to get the benefit, but they don't inherently add satisfaction or value in themselves.

Step 3: Identifying the Weak Link

The next step is to pinpoint the "weak link" – a value-eroding activity that customers find particularly inconvenient, frustrating, or difficult.

• Pillpack Example: The Weak Link
  • The primary weak link identified was the organization and adherence scheme for taking multiple pills daily.
  • This was especially challenging for elderly individuals who consume many pills, requiring them to create complex systems to manage timing, avoid contraindications, and remember to take them.

Step 4: Breaking Apart the Value Chain and Stealing the Activity

This crucial step involves decoupling the identified weak link by taking over that activity on behalf of the customer, thereby removing it from their burden.

• Pillpack's Solution:
  • Pillpack created a subscription service that performed the organization and adherence activity for the customer.
  • Process:
    1. Doctor sends prescription directly to Pillpack.
    2. Pillpack purchases the medications.
    3. Pillpack packages pills into individual sachets (small plastic containers).
    4. These sachets are formed into a roll.
    5. Each day, the customer pulls out the next sachet, which contains the pills for that specific time.
    6. The customer takes the medication and discards the used sachet.
  • Impact: This eliminated the customer's need to manage pill organization and adherence.

Step 5: Understanding and Preempting Incumbent Responses

The final step acknowledges that established players (incumbents) will likely react to this decoupling. The strategy is to anticipate these responses and prepare for them.

• Nature of Incumbent Responses: Responses from established companies (medication makers, pharmacies) to decoupling are often predictable.
• Action: The fifth step is about understanding these likely reactions and proactively developing strategies to mitigate their impact.

Synthesis and Conclusion

The recipe for decoupling, as presented, is a structured five-step process designed to identify and eliminate customer pain points within a value chain. By mapping the customer journey, classifying activities, pinpointing the most frustrating "weak links," and then taking over those burdensome activities, new business models can emerge. The case of Pillpack exemplifies this by transforming the complex task of daily medication management into a simple, subscription-based service, thereby removing significant value-eroding activities from the customer's experience. The final step emphasizes the strategic importance of anticipating and preparing for the predictable responses of incumbent market players.