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The waves of value

The Waves of Value

The value creation cycle

ORGANISATIONS ARE USUALLY ENGAGED IN CREATING VALUE. SUCCESSFUL SUSTAINABLE ORGANISATIONS NOT ONLY FOCUS ON SHAREHOLDER OR FINANCIAL VALUE, BUT ALSO ON VALUE FOR EMPLOYEES, CUSTOMERS AND SOCIETY, AS ILLUSTRATED BY HESKETT AND SISODIA.

Seen from this perspective, creating value requires a lot of work! How do you create value for all these parties? The value creation cycle provides an overview of the links that are needed to create sustainable value. Ultimately, each link is needed to achieve sustainable value for an organisation. Six links can be distinguished. Together, they form a self-sustaining cycle that does not stop, but keeps on going (see Figure 1).

 5. The value creation cyclefigure 1:The value creation cycle

 

  • Mobilise energy: creating a sense of urgency or a sense of excitement to get things going
  • Take ownership: commitment from the top of theorganization, creating a leading coalition and determiningto what extent you want to involve people in developing the direction
  • Set direction: formulating the vision, the brand, the businesstransformation model and the strategy to achieve it
  • Make it happen and improve: achieving the vision and strategy by experiencing the vision and the brand, executingthe strategy and empowering entrepreneurship within the organization
  • Inspire others: carrying out, showing and sharing the resultsthat have been achieved
  • Change holistically: supporting and authenticating the change process to achieve the whole. Leadershipdevelopment, team development, managing the change and achieving breakthroughs in the culture and critical elements.

In this article we will briefly explain the various links in this Value Creation Cycle. There is much more to say on the subject than this article permits. The purpose of this article, however, is to provide insight. Subsequent articles will explain the various links from this cycle in greater depth.

Mobilise energy
Nothing moves without energy. Therefore, the chain generally starts by mobilising energy. Energy exists when a sense of urgency is created among people within the organisation. It is an unpleasant feeling that develops because you are forced to face the facts. In his book, ‘Good to Great’ 2, Jim Collins uses a beautiful term for this: brutal facts. And through these brutal facts you acquire ideas such as “If we do nothing, we won’t be around in five years “ or “We lag behind our customers” and “I am ashamed, now that I see how our customers feel about us”. Stimulating a Sense of urgency is an extremely effective way to mobilize energy. The only disadvantage is that it is negatively charged. Fortunately, there is a positive form as well, i.e. Sense of excitement. This exists when people start seeing new opportunities that correspond with their inner drive. A Sense of excitement is coupled with totally different thoughts such as, “We are very good at this, we should develop this further”, or “We can create a totally new market with this idea” and “It is our dream to…”. The story goes that in its early years, Nike was driven by the motto ‘Crush Adidas!’. Although it is a relatively aggressive motto, it is easy to imagine that it provided a lot of energy and excitement at Nike, which was still a relatively small company. Energy usually does not come about by preparing, analyzing and presenting thick reports, although they often contain enough information to scare you. Energy exists when you feel, witness and experience what is going on. See-feel-change methods are needed to create this. These are experiences that affect you. Examples include interviews with competitors, films from angry customers, cool trips to places where the latest trends can be seen, customer journeys, employee arenas, films, and listening in at the call centre.

Take ownership
Of course something has to be done with the energy that has been mobilised. It is highly useful if there is a sense of urgency or excitement, but at some point someone has to take responsibility. That is the core of the second link which, first and foremost, briefly indicates the need for the top of an organisation to show ownership. “This is my problem and I’m going to do something about it. I’m going to put all my energy into it and I’ll make sure that we take the proper steps. I am responsible for this and you can hold me accountable for it.” When such words are expressed with conviction by the person holding primary responsibility in the organization, the listener will have a greater realistic hope that something beautiful will happen. That is not to say that top management will take care of it alone. Certainly not. While ownership starts with commitment from the top, it has to be supported more broadly within the organisation. The creation of a leading coalition that also takes its responsibility and assists in creating value is a qualifying step. It involves people with formal and informal influence, who are well established in the organisation, but have sufficiently critical ability to step back in order to support the desired changes in a decisive manner. It is also advisable at an early stage to think about which people within the organization you would like to involve in defining the direction. In the study, which we conducted a couple of years ago, we saw that ideas should not be too limited. The study showed that involving people from various layers of the organization has a positive effect on the quality and distinction of the vision and strategy. And ultimately on the results.

Set direction
With the sense of urgency and with the right people, the direction is then set. We are talking about developing the organizational vision, in which the higher goal, the audacious goal, the core values and the core qualities are formulated. This is a fundamental process that simultaneously defines the core of an organization and its course for the coming years. This vision is then completed with a rock-solid business transformation model, a strategy that is so clear that you know what you have to do tomorrow, as well as an authentic brand that can connect and inspire the outside world. If you summarise these various parts metaphorically, you could say that the vision is your destination. Your strategy map is your road map. The brand is how you invite your fellow travellers to join you. And the business transformation model is the engine of your car. The importance of a good business transformation model has been increasingly recognised over the past years. First and foremost, a good business transformation model provides insight into which customers are actually your primary target group, and who does not belong to your primary target group. An important decision, with many consequences! You then define what you want to offer these customers, also called value proposition or offer, and determine how you will be organizing it all in order to deliver your value proposition to your primary customer, also referred to as your operations. Finally, you define the channels through which you will be serving your customers, also referred to as delivery.

Make it happen and improve
No one can deny that achieving your ideas and plans is more important than the ideas and plans themselves, unless you want to continue to dream and continue to write… Therefore, the Make it happen and improve link is an indispensible link for inspired and disciplined action. And it has major implications! In the first place, that the vision of the organization is fulfilled anew every day. Visionary organizations stake everything on fulfilling the vision. This takes place, for example, by stopping to reflect on the organizational vision and what it means during the introduction programme for new people. Vision films are shown and discussed. The vision can be found in employee assessments, in the art that hangs on the walls, in the design of the buildings, in the business card you give to your customers, in the training courses that employees continue to take and so on. It is an extra effort to keep the vision in people’s heads, hearts and feelings. But it will lead to a lot of inspiration. Discipline is also needed, however, to emphasize the consistent implementation of the strategy in daily practice and within all layers of the organization. It takes place by putting the customer first, thereby continuously introducing the voice of the customer. It is linked to solid performance management. In a short cyclical rhythm weekly discussions are held within each team on where it stands on the various objectives, what the bottlenecks of the coming week are, what kind of help is needed and what was learned and improved on during the past week. Processes are then continuously improved on the basis of the principles, instruments and tools that Lean has to offer. Lean gives extremely useful tools and insights, provided they are not used exclusively as a cost savings programme. Lean was originally designed to create added value for the customer, for employees and to improve financially. By using Lean in this way, it is useful as leverage in realizing the vision and strategy and developing people. In order to be able to do all this, development and empowerment of the right people is an important precondition. This takes place by providing them with the necessary tools and teaching them the required skills to serve the customer well. And by having people develop a personal vision and strategy, people will discover their dream within the organization. That is the way to empower people within the organization to entrepreneurship, in which the foundation is set for further improvement and innovation of the organization as a whole.

Inspire others
What is achieved must be shared! Although the term ‘succeed and talk about it’ is sometimes considered arrogant or ‘somewhat 1980’, sharing success can only be good. The outside world deserves to know what is working well. Others will be better off and you will be better off yourself. Just consider what you will learn when others look with you and provide feedback. And what about the sense of pride and satisfaction within the organization when people come from far and wide to look at how your organization developed from good to great. Lorry manufacturer Scania, for example, opens its factory up for guided tours. Visitors are driven through the entire factory in a train especially designed for this purpose. They are given a professional explanation about the unique and extremely efficient Scania Production System that is based on an inspiring vision and logical strategy. Many a competitor has already driven around in the train, but many companies from other branches have also been able to learn a lot and improve their own services in this way. The ‘sharing’ we are talking about not only has to refer to sharing communication, but can also be practical sharing. By making your unique knowledge and expertise available to others who do not have access to it that easily, you also fulfill your social responsibility as an organization.

Change holistically
Although it appears we have now come full circle, an essential element is still missing. There is still something that has to do with all the preceding steps. Something that transcends these links but also has to support them. We are referring to the development of leadership and team effectiveness. A change process focused on value creation demands a lot from the leaders and the teams. And every phase and every step provides new challenges for the leadership and the various teams. Determining the course requires different skills from managers than the behavior needed to fulfill the vision and strategy, for example. On the other hand, we are talking about managing the change process. Although the links may come across as a multi-phase plan of separate, isolated steps, that is not the case. All the links should be interconnected. Proper and consistent management of such change is a sport in itself, requiring a great deal of thought on when you do what. Throughout, everything will be done to enrich the organizational culture and even create cultural breakthrough. Thus, external stimuli are brought into an internally oriented culture. Or the human factor is highlighted in an ‘effective do-culture’, for example. Now that we have briefly explained the various links from the chain, it is good to emphasize that none of these links can be missed out in creating sustainable value. There is a good reason why these links are placed in a circle (see Figure 1). The links cannot be considered as a ‘checklist’ from which you tick off the various steps in succession and utter the word ‘done’ with a sense of satisfaction. We are talking about a cycle that is never-ending. And let’s be honest, building a healthy and valuable organization is a never-ending process. Every entrepreneur would agree. Because we are constantly building. Together we build a brighter future.

 

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