ITIL 4 – from creating value to co-creating value in organizations

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The concept of value creation in business – according to this Forbes article – goes back to management guru Peter Drucker in 1954.

His view of why a business exists was more about creating a customer and value rather than necessarily making money as its primary goal.

More than half a century later, ITIL® 4 is taking this idea further: value isn’t solely created but co-created; created not for, but with the customer and other stakeholders, which makes all the difference. But why is ITIL 4 making this case?

Previously (in ITIL v3) the relationship between a service provider and consumer was a uni-directional delivery of value. This idea persists today in organizations where they have a difficult time defining value. If IT doesn’t partner with consumers it defines value in isolation, leading to misalignment and even dysfunctionality.

Conversely, ITIL 4 sees value created collaboratively and in alignment with consumers. For example, with the ITIL 4 Specialist: High-velocity IT module the line between business and IT narrows, with the latter using the language of business to speak to its stakeholders. Ultimately, the line should vanish as convergence is created between the business and IT.

What makes value co-creation critical now?

Today, there are start-ups that aren’t just competing for market share but disrupting entire industries. Value co-creation is critical in this highly competitive environment.

There are so many options for consumers and they’re also more discerning. As well as wanting value immediately, they are thinking about how providers can support their needs as more sustainable, global citizens.

Technology is enabling much higher velocity operating models to meet faster gratification consumption – just think of the smart phone, for example.

But turning demand into value successfully has a prevailing need: culture. This appears in ITIL 4’s four dimensions of service management, continual improvement and within its practices as a way to facilitate and maintain the close partnership with customers.

Creating frictionless, interconnected value

Now, businesses are tasked with creating, maintaining and keeping their customers in a more accelerated way than ever before.

This, according to Steve Denning in his Forbes article, requires a "firm-wide commitment to accomplishing...frictionless, interconnected value.”

In ITIL 4, this is done by taking demand/opportunity for digital services through value streams to enable value in real time. And this “firm-wide commitment” is where culture and collaboration are essential.

Both High-velocity IT and the ITIL 4 Specialist: Create, Deliver and Support module demonstrate the human component in doing this well. Working in a High-velocity IT fashion can take a toll on people, therefore organizations need to develop a safety culture to avoid burn-out.

Organizations moving to ITIL 4 have to widen their gaze; think more holistically and comprehensively, working both at a micro level on the detail but also at the bigger picture macro level. It forces service management professionals to ask the key question, “why are we doing this?” and remember that value co-creation is the reason to get out of bed in the morning.

Answering the “most important question for 21st Century firms”

Denning’s view of so-called “customer capitalism” is “human beings creating more value for other human beings”. And he suggests the most important question for companies this century is "how does this activity, function or proposal add value to external customers?"

As an answer to that, ITIL 4 says that while you should co-create services effectively and efficiently, you should also think about the customer experience: not just asking whether a service provides value but how does it make them feel?

Understanding the customer’s journey to satisfaction and loyalty is the game-changing element; not just for the company’s return on investment but the wider impact of what it does.

This is only one example of why it is important to adopt and adapt ITIL 4 within your organization.

Discover how you can future-proof your organization with ITIL 4 >>>  

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