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This pervasive decoupling helped Pandora grow to 81 million monthly active users and earn more than $1.38 billion in 2016 revenues. 11 Not bad for a medium that many pronounced dying just a few years ago. Take a moment to notice an object in the room around you. Who acquired it-you, a family member, an acquaintance, a hotel or airplane employee? Take the time to empathize with this person, and you will appreciate all that he or she went through in order to buy the object: identifying a need, evaluating vendors, comparing options, deciding, purchasing, paying, receiving, installing (if necessary), and eventually disposing of it. Whether an offering is a physical product or a service, consumable or durable, all of these activities can be classified as either value creating, value capturing, or value eroding. The person who bought the object was implicitly or explicitly trying to get more of the first, reduce the second, and avoid the third altogether. That is all customers do. Ever! Can you envision a startup business mapping this chain of activities—the customer value chain—and choosing to deliver one (or a few) of these activities more advantageously than the original provider of the object? There could be dozens or even hundreds of entrepreneurs doing exactly this in an intuitive and unstructured manner. And guess what? They're doing it for the products and services that your company produces, too. If your customers discover an opportunity to accomplish any of the multiple activities in the customer value chain better with another incumbent or entrant, watch out. They just might take this opportunity. Paying attention to value from a customer's standpoint helps you understand what your customers really care about, and what they have to give up or part with in order to get it. But it also helps you do something else: understand the various ways that innovators in a market disrupt existing businesses.
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1 This pervasive decoupling helped Pandora grow to 81 million monthly active users and earn more than $1.38 billion in 2016 revenues. 2 11 Not bad for a medium that many pronounced dying just a few years ago. 3 Take a moment to notice an object in the room around you. 4 Who acquired it-you, a family member, an acquaintance, a hotel or airplane employee? 5 Take the time to empathize with this person, and you will appreciate all that he or she went through in order to buy the object: identifying a need, evaluating vendors, comparing options, deciding, purchasing, paying, receiving, installing (if necessary), and eventually disposing of it. 6 Whether an offering is a physical product or a service, consumable or durable, all of these activities can be classified as either value creating, value capturing, or value eroding. 7 The person who bought the object was implicitly or explicitly trying to get more of the first, reduce the second, and avoid the third altogether. 8 That is all customers do. 9 Ever! 10 Can you envision a startup business mapping this chain of activities—the customer value chain—and choosing to deliver one (or a few) of these activities more advantageously than the original provider of the object? 11 There could be dozens or even hundreds of entrepreneurs doing exactly this in an intuitive and unstructured manner. 12 And guess what? 13 They're doing it for the products and services that your company produces, too. 14 If your customers discover an opportunity to accomplish any of the multiple activities in the customer value chain better with another incumbent or entrant, watch out. 15 They just might take this opportunity. 16 Paying attention to value from a customer's standpoint helps you understand what your customers really care about, and what they have to give up or part with in order to get it. 17 But it also helps you do something else: understand the various ways that innovators in a market disrupt existing businesses.