November 01, 2014

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Organizational Leadership: Three Waves to Creating Lasting Value

Value creation is one of those terms that every organization can visualize but is difficult to define. When do you create value? For whom is it valuable, and how do you measure value? In this article we introduce the Waves of Value.

Jeroen_geelhoed

By Jeroen Geelhoed

What Is Lasting Value?

Lasting value creation means your organization starts with a cycle that leads to success.

We speak of lasting value if value is created for all stakeholders:

  • Shareholder value – higher profit and a better price earnings ratio
  • Customer value – better service, greater customer satisfaction, better connection between the customer and the organization, higher profit per customer
  • Employee value – employees connecting better with themselves, with colleagues and the organization in relation to better performance
  • Social value – connecting better with society and making a contribution to society

Organizations with this approach to stakeholder value perform in the long run 10 times better than the average!

But, creating value for all stakeholders is not easy. On the contrary, it requires a great deal of work on various fronts. In our book Creating Lasting Value, we identify three waves that lead to creating lasting value.

The First Wave: Lead the Value

The first wave concerns the inside of an organization.

When you enter an organization that has incorporated this first Lead the Value wave, you can sense it immediately. You notice it when you speak to employees. You notice there is energy, a sense of urgency or a sense of excitement about getting down to work and doing things together. There is also a clear and inspiring vision and strategy that gives people meaning and direction.

As a result, the employees work with inspiration and passion and have their customers’ interests at heart. The leadership is characterized by ownership, charting the course and demonstrating solidarity with the organization.

Such organizations also have a well-designed business model and a clear target group. This target group has a clear offering and an intelligent revenue model Creating Lasting Value-leadproviding a basis for economic success.

Organizations that excel in Lead the Value have a healthy culture, which on the one hand provides unity but at the same time harnesses the power of complementarity and diversity.

It is logical that the first wave is at the center of the model. After all, it generates the other waves. Yet the first wave alone is completely insufficient to create sustainable value, because results must also be delivered.

Check your organization on the first wave, Lead the value. Is there:

  • Energy, a sense of urgency and excitement about creating value for all stakeholders?
  • An inspiring vision?
  • A clear strategy?
  • A sound business model?
  • A management team that takes ownership?

The Second Wave: Manage the Value

The second wave of value creation relates to “make it happen”: executing the strategy and demonstrating performance.

Organizations that are good at Manage the Value show results. They score highly customer satisfaction rankings. Customers recommend them and employees have high productivity. Such organizations make a profit, year after year. These organizations are also able to improve themselves and offer new products and services.

The second wave concerns an organization’s execution power. Manage the Value is about living the vision in day-to-day life. But also bringing in the voice of the customer, conducting performance dialogues and optimizing value streams.

And, last but not least, by empowering entrepreneurship within the organization. Check your organization on the second wave: Manage the value. How does your organization perform on:

  • Customer satisfaction or Net Promoter Score
  • Employee Engagement and productivity
  • Profitability
  • CO²
  • Having frequent performance dialogues with the teams on all levels of the organizations
  • Living the vision and values in daily practice
  • Bringing in the voice of the customer

The Third Wave: Market the Value

Market the Value is about showing and sharing the value you create and celebrating success. It is about inspiring others.

We make a distinction between two mainstreams: Showing yourself and Sharing your value.

Show yourself involves branding your track record, publicizing what you stand for, being open to others and participating in rankings. It is important that you show the world the progress you have made and celebrate it. The world must be able to see it and experience it! It will also inspire others to build a better future.

Zappos and Starbucks Know How to Share

The second Market the Value element is about sharing. How can an organization share more with others? This can be achieved by participating in networks, giving back to stakeholders, co-creating with the outside world and entering into partnerships in which co-creation occurs.

The motto is “Do well by doing good,” so share your wealth, knowledge and culture with the world and promote World sharing economyyour connections with people who wish to bind themselves to your organization. Think about movements around organizations like Zappos and Starbucks.

Organizations that are good at Market the Value enjoy the confidence of investors. Investors and analysts have positive expectations of such organizations and are prepared to invest in these companies. The same applies to customers and society.

Organizations that are effective in the Market the Value wave earn a good reputation and are attractive employers. People talk positively about such companies. The outside world has confidence in their leadership and expects the organization to be ready for the future market and to anticipate the relevant trends.

Check your organization on the second wave: Market the value. How does your organization perform on:

  • Company attractiveness
  • Number of ‘fans’ or people that can be defined as a movement around your organization
  • Stock price

Join In On the Value

Applying these three waves of value leads to value creation for all stakeholders. Most companies have their preferences. Some are Lead the Value oriented. Others (I think most) will be Manage the Value oriented.

But for lasting value we need all three. It will create the companies we need in these times. Join this movement of companies creating lasting value. Together we are building a brighter future.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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