Value Creation for Transformational Growth of an Organization

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I am the Founder Editor of the Journal of Creating Value and mentor the Creating Value Alliance. I help CEOs create value. This article is about Creating Value and Transformation. We have 2 Value Schools in Japan, a Value research centre in Kyoto and a centre in Denmark and the USA. Our 5th Global Conference on Creating Value is in Japan in September 2-4 2022

Transformation is change and the process of changing. Value Creation helps you transform in the right way and by doing good. Leaders have to create value to transform effectively.

You have heard about the process from the previous speaker. I will not speak about the process but about your purpose, how to create value, how to get a value creation mind-set and how to create a truly lasting transformation.

Companies like people keep undergoing transformation routinely, and we notice some of it. McDonald’s making a vegetarian burger is transformation. Many during Covid have tried to become more nimble, agile and fast. Companies are learning that customer centricity is real and a need.
Many companies keep transforming themselves over the years. Many are transforming with technology and digital technology and data.

But some go through major transformations

Amazon as an online retailer of physical books in 1995 to selling for others in 2000. In 2006 cloud computing and one of the biggest in the world

American Express started in 1850 as an express mail delivery and transformed to credit cards 1950 or so.

Corning from glass bulbs, to specialty items, Pyrex and gorilla glass

IBM decided in 1993 to abandon hardware and moved into soft services

Netflix from renting DVD’s to streaming content and own content

YouTube a dating site in 2005, bought by Google in 2006 to become a video site

Apple from desktop to mobility when Steve Jobs returned.

Management must learn to transform effectively.

You can learn all about transformation from the net, and it is all process driven Steps include:

1. Evaluate your existing business situation
2. Get executive buy-in
3. Get employees’ buy-in
4. Engage all employees in daily conversations
5. Focus on your communication strategy
6. Build an efficient change management process
7. Set clear short and long-term goals
8. Foster a sense of urgency
9. Eliminate fear in the workplace
10. Enable cross-departmental collaboration
11. Choose carefully the communication channels you’re about to implement
12. Be agile and encourage new ideas
13. Close the skill gap at your organization
14. Measure your employees’ engagement

But that is why people fail and companies fail because they do not focus on mind-set

Value Creation and Leaders

Let me start with the definition of value. Value is a word used contextually and sometimes loosely. Value is not price; Value does not mean quality.

Then there is a bunch of people who say Price for Value meaning they are price conscious. But you also have heard people say Money for Value meaning they are conscious about quality.

To put an end to all this, the Journal of Creating Value has a definition which is in use now:

Creating Value is executing pro-active, conscious, inspired or imaginative and even normal actions that increase the overall good and well-being, and the worth of ideas, goods, services, people or institutions including society, and all stakeholders (like employees, customers, partners, shareholders and society), and value waiting to happen. and to do good. But this is soon overtaken by the goal of making a living, of being successful.

I will discuss Value waiting to happen later.

In a business sense, value is the worth or the value of your products that makes people buy. They buy your products over competitive ones if they perceive you create more value, more good, better worth.

And you are creating value when you improve the well-being of people. So, transformation must have an ultimate goal of improving the well-being of people, (employees and customers, partners and society, and of course shareholders).

We have to keep this definition of value in mind.

Today I am going to discuss 4 different areas of Creating Value and Leadership. I have already defined Creating Value for you as a backdrop.

In this talk, I will focus on four points for transformation:

  1. Phil Kotler on Value Creation and Marketing
  2. Primary role of a leader is to create value in Transformation
  3. Leaders must have Values
  4. Leaders of the future must transform through Value Creation

1. Phil Kotler on Value Creation and Marketing

Kotler wrote in the Journal of Creating Value that Marketing is Value Creation.

He says: Leading marketers see modern marketing to be all about value creation. Marketing aims to meet human needs by creating value.

He goes on to say: I do not know what you thought marketing was, but in my mind, marketing is intrinsically a value-creating discipline.

Outstanding marketing companies see marketing and transformation as intrinsically involved in value creation.

2. Primary role of a leader is to create value in transformation

Since this talk is about Creating Value and transformation, let me focus on this aspect. There are four areas I will touch on:

  1. Your role as a Leader and in transformation is to create value.
  2. Not taught to create value
  3. Getting a value creation mind-set
  4. Value helps you strategize and innovate better
  5. You start to look at value destruction and at
  • Value waiting to happen, includes innovation

Why do I mention this?

Because transformation is not a process, it is not just a change, it is not just functional. To be effective there must be a mind-set change, which impacts culture, change, and transformation. This mind-set change comes from creating vale

Leaders Create Value in Transformation

Let’s talk about leaders. People are leaders not because they meet their performance expectations, but because they create value, that is they go beyond the performance expectation. Notice all the leaders around you are there because they created value. Just meeting numbers and the performance expected is not good enough and especially not so in today’s world.

Let me give you two examples

Take the Covid crisis. Many companies hide behind the problems caused by the crisis. Some companies in India ignored the labour force in their factories because the factories were shut down due to lockdown. The company I am speaking of (Parijat Industries) focused on these workers, and the moment the lockdown was removed, they were ready and 100% of their work force returned. Consequently, for a time period they were the only manufacturers and captured a higher market share, and even their collections (debts) improved by 70%. This happened because, first they created value for their employees and second, they created value for their dealers because they were able to supply to the dealers and had transformed themselves successfully in Covid times.

The second example is of Bajaj Auto who 10 or 15 years ago started to feel that China might compete for motor cycles in the Indian market. They realised they had to start from scratch and hired fresh people to design, to transform to market world class bikes. They wanted a value creation mind-set. In a few years they had higher quality and higher technology bikes at reasonable prices. Result: Chinese bikes could not enter India.

Bajaj took these bikes into Africa, where China dominated. They took over the market leaving the very high end to Japanese, and the very low end to the Chinese.

Leaders not taught to create value

People who reach the top do so by creating value…No one has taught them how to do this. They do it because it is in their nature to do so

Thus, they create value unconsciously and can also destroy value unconsciously.

And so, we have to teach them how to create value in a more effective manner while transforming.

Getting a value creation mind-set

Value Creation for leaders is about you. You as a person and not just a leader.

You can only create functional value for yourself, like learning something, education, training, practice, exercising.

But the most amount of value you create is when you create value for others…so when you start to create value for your people, your employees, your customers, your partners, society, they will come back and create value for you.

And they in turn create value for you…they recognise you as a value creator. This is the most important transformation you can cause.

Value helps you strategize and innovate better

We have to have a purpose, and the purpose is what we stand for, why we are in business. What is our purpose? It is just not to make money which is a result but to achieve some good.

Here we will look at:

  • You start to look at value destruction and at
  • Value waiting to happen, includes innovation

You start to look at value destruction

So, your transformation should create value and not destroy value. First, gone are the days that the business strategy was all you needed to do.

While doing your strategy or while looking at projects you MUST start to look at value destruction. What is the value destruction potential of what we are doing? For an electric autonomous car there is value destruction for professional drivers, existing manufacturers and repair shops, insurance, and for taxes.

Another example is smart cities. We all agree this is a transformational effort. Everyone will vote for smart lighting. I want you to look at the value destruction potential: Street lights even smart ones require poles. Poles like other infrastructure are used for less than 20% of the time, which is value destroying. They are expensive, they take up land space. If we accept these to be value destroying, we are forced to look at alternatives. And what are these? You could use drones to light the street on an as need basis. Or better still, our phones could be replaced by flying phones or drone phones and light the path for us as we walk. Elegant, simple solution. No poles.

Value Creation leaders have to look at the entire range and spectrum of stakeholders.

Value waiting to happen, includes innovation

Value waiting to happen is innovation potential all around us, that we do not notice. The autonomous car is an example all of us could have guessed but failed to do or even think about. A few people did notice and created value from value waiting to happen.

So, transformation must take into account Value waiting to happen

3. Leaders must have Values

Values are an important part of Creating Value. Values (Value with an ‘s’). Value and Values are distinct. Values form an important part of Value creation and are our essential beliefs, our ethics and morals. Too many leaders and companies mistake corporate traits with values.

Traits include ambition, competency, individuality, equality,
service, responsibility, accuracy, respect, dedication, diversity,
improvement, enjoyment/fun, loyalty, innovativeness, excellence etc.

Items that fit into Values are integrity and honesty. So, leadership
training does not focus that highly on Values.

But the culture must reflect basic Values. Transformation must be based on
values.

4. Leaders of the future must transform through Value Creation

More than ever before, our basic beliefs will be shaken, and our fears of lack of control as technology takes over will require Business leaders who can create value and avoid value destruction during transformation. They will choose transformation that pollute the least that does not lead to losing control to technology, be it bio technology or AI. This requires changing the entire old way of thinking that Value Creation means creating profit.

In August 2019, the 300 CEOs of the largest US companies signed off on The Business Roundtable new purpose of a company, to create value for all stakeholders: Employees, Customers, Suppliers/Partners, Community/Society, Environment and Shareholders.

Davos in 2020, stated the same thing. So, there is to be a supposed seriousness of purpose to create value. But the problem is our training and MBA schools have taught us to create shareholder wealth, and even well-meaning leaders do not know where to start.

So, to start, you have to look at your Purpose. Ask:

What is your purpose and for your family or your friends? A study has found people with purpose live 15% longer.

Is my Business purpose, to make money for stakeholders or to leave a happier world?

Since leaders can also be shareholders, should they look at creating happiness.

93% of 2000 leaders surveyed could not state why their company is in business. This means that many purpose statements do not have a proper sense of purpose. Are yours one of them? But they want to transform!

At the very least your purpose should go beyond making money and increasing shareholder wealth.

This purpose will help you revise your vision and then your mission. And help you transform keeping your purpose in mind.

The purpose of the transformation should relate to the organisational purpose and make it more effective, otherwise transformation will be at odds with the purpose of the company.

Purpose to create value for stakeholders makes you ally with employees, customers and partners in learning from them and co-creating value with them. They become part of your succeeding.

Many of your employees prefer meaning to money. Should you too? Purpose improves employee participation and buy in. It creates value for employees by improving their well-being.

Helping employees with creating value for themselves and having a purpose. It engenders thinking about themselves and decide what matters in life. It builds on the self, a sense of freedom and thinking about others.

Today, I have defined Value Creation. It is about doing good. I spoke about Phil Kotler’s views on Marketing being Value Creation; You have learnt that the role of a leader is to create value. You are not taught to create value, and if you are doing this unconsciously, you could be destroying value unconsciously. Once you learn about value creation you can get to a value creation mindset, which will help you strategize and innovate better, and you will start to look at value waiting to happen and learn to look at value destruction potential to create even more value. Your business purpose is to create value for all stakeholders.

We need value creating leaders for the future. Create more Value.

Transformation must have an ultimate goal of improving the well-being of people, (employees and customers, partners and society).

How to transform

Start with purpose
Mindset change
Avoid Value destruction
Culture. Transformation must contain values
Value
No one formula
Generically create value

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