Cakes, taxes and value

Thoughts

I come from a small town in the Western part of Jutland and aside from red sausages (don’t ask) I was brought up on really good, traditional bakers bread (and it showed).

For the same reason, I have always found Lagkagehuset to be almost a profanity.

I mean: How can someone set up a chain of bakeries in the greater Copenhagen area (and later beyond) offering pretty poor bread at absolut premium prices – and be successful at it?

Lagkagehuset have since been sold to VC funds, moved to a tax haven and are now in the papers for reaching out to get financial aid from the Covid-19 help packages, even though they make their best efforts to not pay tax in Denmark.

As a result people are starting to revolt; not wanting to keep supporting a company who privatizes profit but socializes loses.

Ok.

But shouldn’t you have revolted in the first place due to substandard experiences from over priced products?

I mean: Evading taxes should not have been the real killer in the first place (and quite honestly, I don’t think it will be once the current controversy has died).

Lack of connection between value proposition, quality and price however should.

Lagkagehuset offers a opportunity to study what it really means to have a value proposition and fulfilling a job for the customer. What may be on the face value is not necessarily the real driver.

Obviously, the bread and the prices didn’t matter to customers. If they did, Lagkagehuset would never have become such a success. Maybe behaving responsible does matter? It makes for a funny business and Business Model Canvas, I’ll grant you that.

But maybe it will give some added perspective and perhaps even some pause to how we think about what really drives behaviour and what a great value proposition actually is. It’s clearly not what’s stated in the public Powerpoint deck or on that fancy poster in the shop.

It is both harder, more complex and more irrational than that. Understanding them takes real work.

NB: The cakes on the picture bears no resemblance to those served by Lagkagehuset.

(Photo: Pixabay.com)

Get value from values

Thoughts

What does it mean to have something of real economic value that customers want? Is it to have the best product within a category worth an extra charge, or is it to have a product that sits so well with the belief system of the customer that they are willing to pay a premium price for?

Luckily, it seems to be the latter. And it is great for a couple of reasons.

First of all, it vindicates those who strive for domination within a niche by building run-of-the-mill products that are just cheaper for customers to buy. Personally, I have never been a big fan of competiting on price because I don’t fance the end game; essentially free offerings. Second, I find it reassuring that despite everything else that is going on, customers are still looking to pay decent money for offerings that fits well with their personal belief system(s). This should be a welcome call-to-arms for everybody working on making customers better off.

(Photo: Pixabay.com)

Customer #1

Modelling

The other day I sat down with one of our investments to discuss their potential future direction. It was an interesting and productive session with some key questions arising during the conversation. One of those discussions was around who the customer actually is?

If you’re developing a B2B solution, is your customer the company, you want to sell to, or the person(s) actually making the buying decision? The answer has huge implications. Because it has a big bearing on how you frame your value proposition, how you go to market and what you need to do to close deals and show value after the purpose.

My general opinion is that the more you can focus on the one customer – the actual person – the better. The more you try to put a value proposition together for companies and teams, the more watered down it risk being because you have to fit too many different needs into just a single box. When you focus on just Customer #1, you can be really razor-sharp. And that is exactly what you need.

(Photo: Pixabay.com)