Creating Abundance Through a Community of Value Creators

Ignite employee engagement, foster a culture of empowerment, and enhance employee meaning by relentlessly learning and improving to maximize value for all stakeholders

I. The Unmet Need

Purpose:?Peter Drucker famously said, "The purpose of a company is to create and keep a customer," highlighting that value creation is the primary function of an enterprise and a responsibility of all professionals, whether their customers are external or internal.

Value creation is a profoundly human activity. It requires empathy, creativity, and a deep understanding of human needs and desires. It also demands hard work, dedication, and the resilience to overcome imposing challenges and setbacks. To achieve this purpose, organizations must provide critical value-creation skills, processes, and support that foster value creation at every level.

Many organizations struggle to fully engage employees and create a culture where everyone feels empowered to contribute their best work. This leads to untapped potential, missed opportunities, and a lack of fulfillment and meaning for both individuals and the organization.

Value creation and innovation are best achieved when people are fully engaged and empowered. Engagement is the starting point for learning and wanting to improve—the core activity of value creation. Empowerment provides individuals with the autonomy, resources, skills, and support they need to contribute their unique talents and perspectives to the process.

Therefore, engaging and empowering all employees to achieve maximum innovative success is critical. ?This post establishes the framework for achieving this objective: a Community of ?Value Creators (CVC).? The Innovation for Impact (i4i) value creation methodology sets the framework for achieving CVC [1].

Performance:? Creating sustainable enterprises is a formidable challenge. No company lasts forever. Indeed, the ten-year survival rate of a typical company is less than 50%, as captured in Figure 1. For technical companies, it is only 29%.

Gallup studies have shown that roughly a third of employees are highly engaged, a third are engaged, and a third are actively disengaged [2]. Actively disengaged employees often work against the firm. ?A remarkable example is after Elon Musk bought Twitter, he reduced the staff by 80% and performance improved.?

In the many hundreds of i4i value-creation workshops we have held with global companies, typically, less than 25% of their initiatives have any value. These companies reach this conclusion; we give them the missing framework so they can decide which of their initiatives have value. University R&D and innovation programs are almost always worse. These poor results suggest rethinking how we form and manage value creation in our enterprises.

Technology:? We are in the Age of AI. Moore's iconic exponential curve of computer speed at the same cost continues. Since 1900, there has been a 1,000,000,000,000,000,000,000 times improvement in computation per dollar. Remarkably, as predicted by Ray Kurzweil, we are seeing an accelerating exponential [3]. Jenson Huang, CEO of Nvidia, believes computer performance will be improved by 2-3 times every year – a hyper Moore's Law as shown in Figure 2. To survive, companies must adapt faster.

Unlimited Opportunities:? We have daunting problems, but we also have unprecedented opportunities.? We are in a time of potential unprecedented abundance fueled by the pace of innovation, including the rapid advance of AI. Technological advancements are exponentially democratizing access to information, education, and new opportunities.

The Internet and mobile devices connect billions globally, fostering collaboration and knowledge sharing. Biotechnological breakthroughs are leading to novel treatments and increasing lifespans. Gene therapy is real.? Renewable energy technologies are becoming increasingly affordable, promising a cleaner and more sustainable future.

From artificial intelligence to personalized medicine, innovations are revolutionizing industries and creating solutions to global challenges. Modular nuclear reactors offer safer and more efficient energy production. 3D printing is transforming manufacturing, enabling customized and on-demand production. Precision agriculture and gene editing are improving crop yields and food security.

SpaceX and other private companies are driving space exploration and commercialization. Furthermore, advancements in robotics and automation are streamlining processes across industries, increasing productivity and efficiency. Soon we will have autonomous driving cars that "refuse to collide." These and countless other innovations offer the potential for a more abundant and equitable future for all.

The Challenge of Getting Started: Creating something truly innovative within a typical enterprise is often like navigating a complex maze. It's a journey sparked by curiosity, leading you down a winding path of information gathering and conversations. You talk to everyone, seeking diverse perspectives and insights, often starting with a potential problem and a desire for a better solution.

• Challenging Your Assumptions: While ideas can come from anywhere, blindly trusting your initial thoughts is a common mistake. Always approach innovation with a beginner's mind, acknowledging that much of what you think you know might be wrong and almost always is. Unlearning those misconceptions while acquiring new knowledge is critical. Genuine innovation hinges on creating new knowledge – surprising knowledge that challenges the status quo.
• Navigating Internal Obstacles: The journey is filled with obstacles. Within the company, you likely face a chaotic mix of information, misperceptions, and ingrained mental models. Egos clash, organizational barriers impede progress, and information silos create confusion.
• Navigating External Obstacles: The challenges extend beyond the company walls. The external world presents its own maze of information and misinformation. Knowing where to look for valuable insights is crucial. Just as Silicon Valley was the epicenter of innovation during the dot-com bubble, it remains a vital hub for AI today. The density of valuable information there is unique in the world.
• Your Compass: Amidst these confusing challenges, you must act as a relentless detective. Your most crucial tool, a clearly defined value proposition, is essential – a concise hypothesis that guides your exploration like the NABC Action Plan from i4i. It is a framework for your proposed innovation that helps you articulate the unment Need, Approach (offering and business model), Benefits/costs (value), and Competition and alternatives. You test, challenge, and refine it through rapid, rigorous experimentation.
• Embracing the Challenge: This value creation process requires resilience and a willingness to "play in traffic," actively seeking out challenges and confronting uncomfortable truths. It's an iterative cycle of learning, testing, and improving, driven by a relentless pursuit of answers.
• Full Plan: Over time, as the value poposition is fleshed out and de-risked, other elemets are added until it becomes a full business plan including market positioning, offerings and service, sales, channels, partners, production, distribution, robust financia plans, and staffing.

Unfortunately, many people in large companies rarely venture outside their comfort zones to gather the required ideas and test them in the real world. Visionaries like the late Steve Jobs stand out because they actively engaged with the external world, constantly seeking new information and challenging conventional thinking. Today, Elon Musk is the most compelling example of this, pushing the boundaries of innovation across multiple industries.

The unmet need in most companies is mitigating the challenges that hinder this already challenging value-creation process. That is an objective of CVC.

Flow: In The Psychology of Optimal Experience,?Mihaly Csikszentmihalyi explored the concept of "flow," a state of deep engagement where time seems to dissolve and productivity soars. My colleagues Hunter Hasting and Mark Beliczky are writing a book on how flow can be a powerful mental model for improving how companies are designed and function [2].

Hasting and Beliczky envision a company where all employees and functions operate analogously to a person in flow. Each employee becomes fully motivated and engaged in end-user activities that provide the most significant new value. Consider, for example, ?a customer service representative proactively identifying and resolving a recurring issue that has been frustrating customers, even if it falls outside their typical responsibilities.

Fully engaged employees, unimpeded by barriers, demonstrate significantly enhanced performance. CVC embraces this aspirational goal.? Fostering a state of flow through CVC can unlock unprecedented levels of value creation for all stakeholders. This ambitious goal requires new methods and mental models, but the potential rewards are immense.

A Mental Model:?CVC?is a mindset and mental model that amplifies performance when understood and effectively practiced by all employees, In many ways, it can be viewed as including a more memorable and comprehensive mental model for Theory of Constraints (TOC), with other critical elements added, such as the requirement for a value proposition, as illustrated by the NABC Action Plan framework from i4i.

Not a Design:?CVC does not specify the design of an enterprise or its detailed management practices. Every enterprise addresses different opportunities and challenges in its market ecosystem.?Instead, it represents an enterprise committed to continuous value creation for its customers and stakeholders. CVC?provides a mental model to inspire managers and employees to embrace more productive human values, methods, processes, and behaviors. Regardless of how the many ingredients described here are assembled, the aspirational objective is to make the desired value creation results "inevitable."

Engagement, Empowerment, and Meaning:?Ultimately,?CVC?is about creating an adaptable and responsive organization that delivers the highest sustainable value to all stakeholders, first to end-users and then to employees, partners, and investors alike. It does this by engaging, empowering, and inspiring its employees to make a significant, positive impact. A contribution that provides meaning. Critically, CVC gives them the skills and supports the human values required for success.

By embracing the principles of?CVC and constantly seeking ways to create value, eliminate barriers, improve, and foster a culture that values the best human values, learning, and adaptation, companies and their employees can unlock their full potential and thrive in today's dynamic business landscape. A critical benefit is it provides employees with essential life skills in the Age of AI and with greater professional meaning.

II. Key Characteristics of CVC

Core values:

Meaning and Purpose

• Championing and Ownership: The concept of "Champions" empowers individuals to take ownership of projects and initiatives that resonate with their passions. This allows them to align their work with their personal purpose and drive meaningful change within the organization.
• Value Creation Focus and Achievement: By centering the entire organization around value creation and achievement, CVC inherently connects individual work to a larger purpose. Employees can see how their efforts contribute to something meaningful, whether it's solving customer problems, improving efficiency, or driving innovation. Rewards of all types are in proportion to the achievements made.
• Long-Term Vision: CVC's emphasis on continuous improvement and sustainable value creation fosters a long-term perspective. This provides a sense of purpose beyond short-term goals and connect individuals to the organization's overarching mission.

Human Values

• Respect for Others: CVC's collaborative and empowering culture fosters respect for others and their individual contributions and perspectives. The emphasis on knowledge sharing and open communication to help everyone learn and achieve more creates an environment where everyone feels valued and heard.
• Integrity: By promoting transparency and ethical decision-making, CVC cultivates a culture of integrity. This builds trust among employees and stakeholders, creating a sense of shared purpose and accountability.
• Personal Growth: CVC's investment in life skills training demonstrates a commitment to the holistic development of employees. This fosters a sense of purpose by recognizing that personal growth is intertwined with professional fulfillment.

Core practices:

Relentless Pursuit of Value:?This pursuit goes beyond mere intent. It's about embedding value creation into the very DNA of the organization, driving every decision, process, and action. It's a commitment to constantly seeking new and better ways to serve customers and stakeholders, relentlessly pushing the boundaries of what's possible. As noted, the mental model of CVC is to make the innovative results desired "inevitable."

• Example:?SRI’s i4i value creation methodology that included NABC value propositions for all initiatives and recurring team Value Creation Forums.

Top Down: Bottom Up: A CVC enterprise develops the most efficient and effective combination of top-down and bottom-up approaches to achieve its purpose by maximizing customer value.

• Example: W.L. Gore is known for its "lattice" organizational structure which avoids traditional hierarchies. Employees are "associates" with sponsors rather than bosses, encouraging self-direction and collaboration.

Minimal Friction:?This goes beyond simply removing obvious obstacles. It's about proactively identifying and eliminating any points of resistance in the value stream, whether physical, procedural, organizational, or cultural. This is also the main point of the Theory of Constraints (TOC).

• Example:?Toyota's relentless pursuit of "kaizen" (continuous improvement) involves identifying and eliminating even the smallest sources of waste in its production system.

Rapid Feedback Loops:?Fast feedback isn't just about speed; it's about quality and integration. It's about creating systems where feedback is gathered continuously, analyzed effectively, and used to drive immediate action.

• Example:?Amazon's use of A/B testing allows them to constantly experiment with different website designs and features, gathering real-time feedback to optimize the customer experience.

Ecosystem Understanding: Staying informed about competitor activities and industry trends allows organizations to anticipate potential disruptions and adapt their strategies accordingly to maintain or increase value creation. Market tnowledge is a constantly changing entity that fuels successful companies by enabling informed decisions, driving innovation, and fostering operational efficiency. Innovation is achieved through a mix of creative ideas, diverse perspectives, and a culture that encourages experimentation and risk-taking, all built upon a foundation of market knowledge. It empowers businesses to understand their customers, optimize processes, and adapt to change, ultimately leading to sustainable growth.

• Example:?Currently Elon Musk is demonstrating these practices to systematically create global, transformative innovations.

Continuous Improvement:?This is the engine powering CVC. It's a mindset of constant learning and adaptation, where every process, product, and interaction is seen as an opportunity for creating additional value, whether external or internal.

• Example:?Amazon's "two-pizza team" approach fosters smaller, more agile teams that can quickly iterate and innovate. By limiting team size to the number of people that can be fed with two pizzas, Amazon encourages decentralized decision-making and faster execution.

Risk Mitigation: CVC enterprises are aggressive risk mitigators; not reckless risk takers. Removing risk fast and early at lost cost increases value and avoids costly mistakes.

• Example: At Bridgewater, the founder Ray Dalio, wrote "Principles: Life and Work," where he outlines his approach to decision-making and management based on radical transparency and algorithmic decision-making.

Resource Allocation: This principle emphasizes empowerment and accountability by giving employees control over the resources they need to complete their tasks. This can reduce bureaucracy, improve engagement, and streamline decision-making, leading to improved value creation. This does not mean all actions are appropriate or allowed. There are serious expectations of performance and constraints.

• Example: At Matt-Black Systems, each employee has almost complete responsibility for executing their work. That includes control over the resources required for success [4]. This is based on a core principle, you must control the resources needed to be fully empowered.

III. Business Models

A Framework for Success:?A company's business model is the blueprint for how it creates, delivers, and captures end-user and stakeholder value. It fundamentally shapes the enterprie's potential for?value creation.

Companies aspire to deliver superior products through their design, quality, prestige, service, cost, and convenience. They simultaneously want to have superior business models, as illustrated in Figure 3 The “star” in the figure is the ideal goal.?

Value-compounding business models are often exemplars of CVC. They offer superior products and, with their direct customer relationships, exponential network effects, and data-driven optimization, companies like Amazon, Google, and Apple exemplify high-value creation models. These companies create powerful systems for both creating, capturing, and building value, leading to compounding returns and market dominance. AI will make them even more valuable because it will amplying their ability to interact in real time with their customers.?

However, achieving true?CVC?requires more than just an effective business model. Internal operations must be aligned to support the seamless creation and delivery of value. Because the market ecosystem constantly changes, the end-user needs, specific tasks, and the networks formed with employees, partners, and end-users to address specific tasks, must also continuously change. SRI International's Value Creation Forums, where multiple teams presented their NABC Action Plans every few weeks, are a great example of how to facilitate this near real-time adaptability to ensure continuous alignment.

To effectively navigate change within such a dynamic environment, an effective balance must be made in your value propositions for end-users and stakeholders. Recognize that perfection is elusive, and instead leverage the 80/20 Pareto Principle to quickly identify the 20% of efforts that generate 80% of the desired results. Focus on these high-impact actions to achieve effective compromises and drive significant progress.

Low-Value Creation Models: These business models often struggle to generate sustainable profits, lack pricing power, and are vulnerable to disruption. They involve:

• Dependence: A software company that develops a niche plugin exclusively for Adobe Photoshop. Reliant on Adobe's success and decisions.
• Commodities: A company mining coal in Australia. Faces price competition in the global coal market.
• Complexity: A large bank with a multi-step process for loan approvals, requiring numerous forms and lengthy waiting periods. Customer frustration and inefficiency.
• No Direct Access: A company that sells thier product through Amazon. Lack of customer insight.
• Manufacturing: A furniture manufacturer using traditional woodworking techniques instead of modern machines. Slower and potentially more expensive production.
• Transactional: A street vendor selling souvenirs to tourists. Focus on immediate sales, not repeat customers.
• Intermediaries: An author who publishes their book through a traditional publishing house. Limited control over marketing and distribution.

High-Value Creation Models: These models are designed to maximize sustainable value creation and delivery. They often involve:

• Direct Customer Relationships: Establishing direct lines of communication and engagement with customers. E.g., through social media or personalized email campaigns, enables a deep understanding of their needs, preferences, and pain points, leading to better products, services, and increased loyalty.
• Network Effects: Creating platforms or ecosystems where the value increases as more users join. E.g., social networks or online marketplaces, allows for data accumulation, providing more value to end-users and the enterprise.
• Data-Driven Optimization: Leveraging data to personalize experiences, optimize processes, and drive innovation. E.g., using customer purchase history to recommend products or analyzing website traffic to improve user experience, allows for continuous improvement, increased efficiency, and the ability to tailor offerings to individual customer needs.
• Compelling Value Propositions: Offering products or services that are truly differentiated and provide significant value to customers. E.g., innovative technology or luxury goods with a strong brand reputation, creates strong customer demand and higher pricing power.

Companies that have high-value business models include:

• Apple: Their ecosystem of devices and services (iPhones, Macs, App Store, Apple Music) creates a network effect that locks in customers and generates recurring revenue.
• Netflix:?Their subscription model creates recurring revenue, while their recommendation engine personalizes the user experience and drives engagement.
• Salesforce:?Their cloud-based CRM platform allows businesses to manage customer interactions and data, improving efficiency and customer relationships.
• Airbnb:?Their platform connects travelers with hosts, creating a network effect where the value of the service increases as more users are added.
• Google:?Their search engine and advertising platform benefit from network effects, as more users and advertisers attract even more participants, creating a powerful cycle of growth and value creation.

Examples: While a strong business model is essential, internal operations must be aligned to support?value creation.

• LVMH: ?The most valuable company in Europe, LVMH is a luxury goods conglomerate owning over 75 prestigious brands, including Louis Vuitton, Christian Dior, Givenchy, and Fendi. Beyond its renowned brands and commitment to quality, LVMH controls critical aspects of its value chain, from raw material sourcing and production to distribution and retail. This vertical integration allows them to maintain quality control, optimize efficiency, and achieve a strong competitive advantage.
• Google:?While Google's business model may be among the strongest of any company, there is increasing scrutiny on its internal operations and whether they are optimized for maximum value creation. With a research budget of almost $50 billion a year and a brilliant staff, is the world seeing a proportionate flow of innovations?
• Morning Star and SRI: Morning Star, a tomato processing company, and SRI International, a technical services and innovation company, exemplify how a focus on fundamental CVC principles can drive significant value creation and success. While their business models do not allow the explosive growth of tech giants like Google, their consistent excellence and commitment to core values created enviable results. They both found ways to eliminate significant barriers that inhibit superior performance in their competition.

Morning Star: Morning Star's distinguishing feature is establishing a strong understanding between all partners—including employees, suppliers, and customers—regarding the building blocks and behaviors for creating and delivering on trusted contracts. This eliminates a major barrier to efficiency caused by frequent changes in partner and supplier contracts.

SRI International: SRI's distinguishing feature implemented under CEO Curtis Carlson (1998-2014) is its highly efficient and effective value creation process, "i4i." Grounded in the scientific method, the i4i process emphasizes continuous learning and improvement based on the best learning science findings. This approach profoundly reduced the time and cost of value creation, enabling SRI to achieve breakthroughs with its partners with innovations such as HDTV, Intuitive Surgical, Nuance Communications, and Siri, now on the iPhone.

Nvidia and Tesla: Both Nvidia and Tesla are pushing the boundaries of technology with compelling offerings, but their long-term success hinges on building sustainable, exponentially more valuable ecosystems around their core products.

• Nvidia: Nvidia may transcend its role as a chipmaker and become a central platform for the AI ecosystem. By creating a connected space where developers access optimized tools, researchers collaborate on advancements, and users discover and deploy AI applications, Nvidia could fuel a virtuous cycle of innovation. This platform strategy, leveraging network effects to attract more users and developers, could solidify Nvidia's dominance in AI and potentially propel it to become the world's most valuable company.
• Tesla: Tesla is seen as more than an electric vehicle manufacturer, but rather the architecture of an integrated sustainable energy ecosystem. By connecting solar generation, battery storage, electric vehicles, charging infrastructure, and autonomous driving technology, Tesla aspires to create a compelling network effect. This interconnected system could accelerate the adoption of sustainable energy solutions.

IV. Evaluating Value

Knowledge:?An important?value creation?metric is the quality of knowledge that moves throughout the company. It is knowledge that successfully supports ongoing functions and provides the feedstock for the development of new impactful innovations. Having employees understand and focus on actionable knowledge helps to identify more valuable missing knowledge while simultaneously eliminating noise and misinformation.

Knowledge is dynamic. It is subjective and always changing within its specific context. Some knowledge lasts indefinitely (e.g., Newton's laws), and other knowledge, at least in the original context, is transitory (e.g., pet rocks). Major innovations almost always create surprising, sustainable new knowledge.

CVC transcends mere efficiency. It's about creating a motivating, dynamic, responsive enterprise system where value creation moves seamlessly from concept to customer, like a river carrying resources effortlessly to the ocean while adapting to its surroundings.

A CVC enterprise focused on?value creation?operates with agility, constantly learning and adapting to deliver increasing value. These results involve streamlining processes, fostering rapid feedback loops, and cultivating a culture of continuous improvement. The goal is to optimize the creation of valuable knowledge within the enterprise, eliminating noise, misinformation, and barriers that impede progress.

Evaluating:? In a?CVC?enterprise, knowledge is a living asset that needs to be nurtured and leveraged. Because of the constantly changing market ecosystem, knowledge is a dynamic, subjective, constantly changing entity depending on the context. These factors require a system for evaluating and prioritizing knowledge based on its potential to create value.

• A Story:?A compelling narrative or “hook” to make knowledge memorable and shareable. It's about connecting information to meaning, motivation, and purpose.
• Clear Need:?Knowledge should address a real unmet end-user, enterprise, and market opportunity. It should be relevant to the organization's goals and stakeholder needs.
• Effective Approach:?The knowledge should be actionable and lead to tangible outcomes. It should be clear how the knowledge can be applied to create value.
• Sustainable Business Model:?The knowledge should contribute to a business model that generates long-term value. It should be aligned with the organization's strategic direction.
• Superior Benefits over Costs:?The value proposition of the knowledge should be clear and compelling. It should demonstrate how the benefits outweigh the costs. These can be both quantitative and subjective.
• Competitive Advantage:?The knowledge should provide a unique advantage in the marketplace. It should differentiate the organization from its competitors.
• Actionable Insights:?The evaluation should result in concrete actions. It should be clear how the knowledge will be used to drive innovation, improve performance, or create new value.

Having a concise, memorable framework such as this is one of the most critical elements required for achieving?CVC. If you can’t measure the primary output for success, you literally can’t systematically know what you are doing.

The NABC Action Plan framework shown above, effectively illustrates a core feature of CVC enterprises. It strikes a balance between completeness and conciseness, providing the essential elements for informed decision-making without excessive complexity.

A shorter description would omit crucial factors, while a longer one could hinder agility due to an overabundance of interacting elements. This version emphasizes the importance of the NABC framework in the context of CVC and highlights the balance it achieves between providing sufficient detail and maintaining usability.

V. Tools and Methods

AI:? AI is a powerful tool for amplifying enterprise performance. It will be a fundamental element of the design and operation of?CVC?enterprises. It will reconfigure a CVC enterprise’s value creation networks in near real-time. It will be especially effective for today's dominant companies with exponential, networked business models. AI systems will become "trusted partners" with end-users, adjusting to their needs and suggesting new offerings.

Methods:? Here's how specific tools and methodologies can enhance?value creation:

• Morningstar's Investment Process:?This emphasizes a long-term, research-driven approach to investment analysis by forming trusted business contracts. By focusing on fundamental value and avoiding short-term market fluctuations, Morningstar creates a more stable and predictable return for its clients, thus enhancing long-term value creation for investors.
• Agile Methodologies:?Agile’s iterative approach allows for rapid adaptation and continuous learning. By breaking down projects into small, manageable chunks and incorporating frequent feedback, Agile helps organizations maintain momentum and adapt to changes, essential for consistent value creation.
• Theory of Constraints (TOC):?TOC provides a systematic framework for identifying and addressing a system's core bottlenecks (constraints) By focusing on the constraint, organizations can maximize overall throughput and thus optimize value creation.
• Systems Thinking:?Systems thinking helps organizations understand the interconnectedness of different parts of the system and identify patterns and feedback loops that can enhance or impede value creation. This holistic perspective is essential for making informed decisions and avoiding unintended consequences.
• Behavioral Science:?By understanding human behavior and cognitive biases, organizations can design processes and systems that are more intuitive and user-friendly. This can improve efficiency, reduce errors, and enhance the overall effectiveness of value-creation efforts.
• Active Learning:?Active learning encourages employees to apply knowledge and skills in real-world situations, leading to deeper understanding and faster skill development. This helps organizations adapt to change and strengthens their ability to create value in dynamic environments. It provides the learning framework for eliminating unhelpful mental models and developing new productive ones.
• SRI's Innovation for Impact (i4i) Model:?SRI's focus on deep client engagement and collaborative problem-solving fosters a strong exchange of knowledge and ideas between the organization and its clients. This approach leads to more effective solutions and stronger relationships, ultimately driving greater value creation. It has created a family of multi-billion dollar market capitalization innovations.

Of the methods mentioned, only i4i has a robust and practical framework for the value proposition. That, in addition to its 3-Laws for value creation, sets a foundation for systematic success. If any of the 3-Laws is missing, systematic success rapidly declines and can go to zero. They are:

1. Important Needs:?Identifying important needs ensures that innovation efforts are focused on solving problems that truly matter to customers and have a significant impact. This leads to the development of solutions that address real market gaps and provide genuine value.
2. Shared Value Creation Concepts:?Shared value creation concepts, like the NABC framework, provide a common language and structure for understanding and communicating value propositions. This shared understanding fosters collaboration, alignment, and effective decision-making across the enterprise.
3. Recurring Team Value Creation Forums:?Regular Forums provide a dedicated space for ongoing discussion, refinement, and evaluation of the value proposition. These Forums promote continuous improvement, knowledge sharing, and a proactive approach to problem-solving, ensuring the innovation process stays on track and adapts to new information. They allow the enterprise to synthesize valuable solutions faster than the competition.

The 3-Laws, as part of the i4i methodology, are not the only way to incorporate these essential elements for innovation. However, if these elements are not present in some form, innovative success will likely be episodic or non-existent.

VI. Quantifying Value Creation

Measuring?value creation?requires identifying metrics that reflect the efficiency and effectiveness of the value stream. Examples include:

• Market Value:?Ultimately, only end-users and the market determine the value created and delivered by a company. Other financial data also provide important feedback about impact, such as profit and growth rate.
• Lead Time:?This measures the time it takes to deliver value to the customer, from initial request to final delivery. Reducing lead time is a key objective for improving?value creation.
• Cycle Time:?This measures the time it takes to complete a specific task or process within the organization. Optimizing cycle times can significantly improve overall?value creation.
• WIP:?Work in Progress (WIP) refers to the number of tasks or projects currently in progress. High WIP can indicate bottlenecks and impede?value creation.
• Value Creation Efficiency:?This measures the ratio of value-added time to total time spent on a task or process. Increasing value creation efficiency means minimizing waste and focusing on activities that directly contribute to value creation.
• Customer Satisfaction:?Happy customers are a strong indicator of successful?value creation. Metrics like Net Promoter Score (NPS) can provide valuable insights into the customer experience and identify areas for improvement.

VI. Barriers to Value Creation

Obstacles to?value creation?can arise from various sources. Examples include:

• Management:?Experience indicates that few managers have all the skills and human values to lead, mentor, and facilitate a?CVC?enterprise. Success depends on the selection of a person who embraces the potential and elements of the?value creation?concept.
• Employees:?Not every person will want to be successful in a?CVC?company. The skills, mindsets, and mental models of employees must amplify the concepts of?value creation.
• Skills:?Value Creation?requires deep value creation skills that are constantly changing with the market ecosystem. If the company lacks a way to provide those skills on an ongoing basis,?value creation?is nearly impossible.
• Bureaucracy:?Cumbersome processes, excessive bureaucracy, and slow decision-making can stifle agility and hinder productivity, impeding?value creation.
• Faux Innovation:?Ideas or initiatives that appear innovative on the surface but lack true value or impact.
• Silos:?Departments working in isolation can create communication breakdowns, handoff delays, and a lack of shared understanding, hindering?value creation.
• Bottlenecks:?Constraints in any part of the process can create a ripple effect, slowing down the entire system and impeding?value creation.
• Handoffs:?Too many handoffs between individuals or teams can increase complexity, create opportunities for error, and slow down work, hindering?value creation.
• Standardization:?Inconsistent processes and procedures can lead to confusion, errors, and rework, hindering?value creation.
• Communication:?Ineffective communication can lead to misunderstandings, delays, and missed opportunities, hindering?value creation. This requires training and a shared language for the enterprise's core mental models, including the discipline of value creation.

VII. Company Culture

Culture:?An enterprise's "culture" is the sum of its mindsets, mental models, purpose, human values, societal norms, and practices. A company culture that encourages collaboration, empowerment, learning, trust, and integrity is essential for fostering a?CVC?enterprise.

A CVC enterprise provides purpose and meaning to employee's professional life in part through the commitment to real achievement, a fundamental human need. The attributes and values required don't happen by chance or a CEO telling everyone to collaborate better without providing the skills and support needed to assure it happens.

A CVC?enterprise delivers on its promises and commitments. It does this by embracing fundamental learnings from team science, systems thinking, behavioral science, active learning, Theory of Constraints (TOC), and Innovation for Impact (i4i) to achieve these objectives. They are all based on core human values.

A CVC company culture includes.

• Vision, Mission, Strategy, and Plan:?These fundamentals are compelling, motivating, and understood by all employees.
• Mindsets:?CVC enterprises cultivate a growth mindset, where challenges are seen as opportunities for learning and improvement, is crucial for maintaining?value creation.
• Mental Models:?The required mental models are encouraged and developed that prioritize adaptability, experimentation, and customer-centricity, which are the basis for achieving?CVC. Mental models are effectively developed by repeatedly doing the task.
• Impact: A commitment to excellence and making meaningful contributions to others.

Innovation:?The methods used and understood must include:

• Metrics:?Employees must understand the enterprise's vision and strategy and be able to identify opportunities that are valuable to customers, shareholders, the market, partners, and the company.
• Shared Concepts:?The enterprise must foster a shared understanding of CVC through a common language and framework, including the definition of the value proposition.
• Processes:?The enterprise must establish recurring structured processes for identifying and addressing important unmet customer needs.

The i4i and Amazon methods provide successful examples.

• Champions: Each employee must be empowered to perform their role. A rule: no champion, no project, no exception.
• Transparency:?Organizational transparency is fundamental to?CVC; otherwise, the knowledge cannot be efficiently used.
• Collaboration:?A collaborative culture breaks down silos, encourages knowledge sharing, and promotes a sense of shared purpose, all of which contribute to effective CVC.
• Empowerment:?Empowered employees are more likely to take initiative, solve problems, and contribute to continuous improvement, driving CVC.
• Employee Development:?Investing in employee development programs that foster critical thinking, CVC skills, problem-solving, and communication skills equips individuals to contribute to a?CVC?state.
• Learning and Growth:?A culture that values learning and development encourages employees to acquire new skills and adapt to change, supporting ongoing value creation.
• Trust and Transparency:?Open communication and trust between management and employees create a more fluid and responsive environment for CVC.

Teams to Enterprise:?A CVC enterprise?can start with and be achieved in individual teams. Indeed, when first being introduced, it is often best to start with early adopters who demonstrate superior performance so as to then attract more followers.

However, the most profound performance improvements occur when?CVC?is achieved across the enterprise. The alignment of a few core but critical concepts can be a huge amplifier of performance. For example, when Carlson was CEO at SRI, everyone understood and used NABC Action Plan value propositions for all activities. Everyone, from the security guards to the CEOs of SRI's new companies, knew that all presentations for others started with the end-user's unmet needs. SRI was likely the only company where that was true. That one concept was transformative and allowed SRI, with its other i4i practices, to systematically create multiple billion-dollar companies.

VIII. CVC: Peak Performance Through Optimized Value Creation

In today's rapidly evolving business landscape, characterized by profound technological advancements and the rise of AI, companies face immense pressure to innovate and adapt. Traditional approaches to innovation often fall short, with many initiatives failing to deliver lasting end-user and market value.

CVC?in a business context involves creating a dynamic and responsive system where value moves seamlessly from concept to customer, driven by engaged employees and fueled by actionable knowledge. This requires minimizing friction, fostering rapid feedback loops, and cultivating a culture of continuous improvement.

Strong business models, like those of Amazon, Google, and Apple, serve as engines of?value creation?by facilitating direct customer relationships, leveraging network effects, and utilizing data-driven optimization. However, achieving true?CVC?necessitates aligning internal operations with the business model. This involves fostering a collaborative and empowering culture that embraces systems thinking, behavioral science, and active learning.

Tools like Agile, Theory of Constraints (TOC), and SRI's Innovation for Impact (i4i) model can further enhance?CVC?by streamlining processes, identifying bottlenecks, and promoting a shared understanding of CVC and how to evaluate it. These tools must be adapted to the specific purpose of the enterprise.

Ultimately,?CVC?is about creating an adaptable and responsive organization that delivers the highest sustainable value to all stakeholders. By fostering a culture that values learning, innovation, and customer-centricity, companies can unlock their full potential and thrive in the dynamic marketplace.

This requires a commitment to continuous improvement, the elimination of barriers to?CVC, and the cultivation of a shared understanding of CVC throughout the organization. By embracing the principles of?CVC, companies can navigate the complexities of the modern business environment and achieve sustainable success.

References

1. Curt Carlson, Harvard Business Review, “Innovation for Impact”
2. Ji Harter, U.S. Engagement Hits 11-Year Low, Gallup, 2025
3. Mark Beliczky and Hunter Hastings: The New Organizational Model That Is Needed For The 21st Century, Linkedin, 2024.
4. Joost Minnaar, How Self-Management Boosted The Performance Of A British Aerospace Manufacturer, Corporate Rebels, 2017

Appreciation

Thanks to these folks for all the great ideas and suggestions:

Mark Béliczky, Hunter Hastings, Stephen Denning, Darrell Rigby, Annika Steiber, Michael Lurie, Andrew Holm, Doug Kirkpatrick, Joey Spooner, Heidi Musser, Hugo Lourenco, Hendrik Esser, Carlota Perez, Stephen Forte, Rita McGrath.