The Job of All Professionals Is Value Creation: Do Your Teams Know How?

"Value creation is not about failing fast; it is about learning fast to address problems that matter to others. To succeed we must use the best ideas for learning, creating, and improving."

The Problem

In our value creation workshops with over a thousand teams, we have started by asking participants if they are value creators???Typically, there is an unsure moment before a third raise their hands, a few say no, and the rest say they are unsure.??At universities, all those present sometimes doubt they are value creators.??

There are three main reasons for this confusion. First, most people do not have shared definitions for value creation and innovation.??Second, some feel value creation and innovation are the domains of people like Edison, Jobs, and Musk.??And third, many -- and all interdisciplinary teams -- use different words for core concepts. The lack of agreement on the language to use is especially apparent in academia.?

If we lack agreement on the basic terms for what is to be accomplished, progress will either slow or stop.??In a very real way, even though everyone is well intentioned, an interdisciplinary team is like a Tower of Babel until a common language, focused on the intended objectives and beneficiaries, is developed.??This Post addresses some of the core issues involved.??

You Are a Value Creator

The reality is that all professionals are value creators.??Why???Because they all solve problems for the benefit of others.??It doesn't matter whether the enterprise is a nonprofit, company, government agency, or university.??Nor does it matter whether the professional's position is as a researcher, recruiter, manager, or primary school teacher.??

Value creation – the solution of problems that matter to others – is the core, defining responsibility of all professionals.??

For 16 years, I was the CEO of SRI International in Silicon Valley.??It is a fascinating organization full of brilliant computer scientists, physicists, educators, and biologists.??With several thousand professionals, it performs basic research and creates products and services for global organizations. And, with its terrific partners, it forms world-changing innovations, such as HDTV, electronic banking, the computer mouse, Intuitive Surgical, Nuance Communications, Cornerstone Math, and Siri, which was bought from SRI by Steve Jobs.??

SRI hires outstanding Ph.D.'s from the world's leading universities, such as MIT, Stanford, and Oxford. However, as CEO, when they first came to SRI, none knew how to systematically create value for customers or society.??We had to add those missing skills.??

Do You Have Customers or End-Users?

Professionals solve problems that matter to others.??Yes, there are routine parts of every job, but being a professional means identifying and solving significant problems that will delight the people served, advance the enterprise, and meet the needs of all other stakeholders, including society.??

Customers or end-users are the primary focus of the enterprise.? At times the customer is the buyer of the offering and the end-user the beneficiary. Of course, most professionals also have "inside customers," where the objective is to help other professionals better address the needs of the outside ones.???The only justification for a position in the enterprise is to increase the value delivered to its customers and other stakeholders.

Consider, if you are a computer scientist at Google, you develop algorithms so customers can search the web faster.??If in manufacturing operations, you establish new process control methods to improve customer product quality.??If in finance, you organize financial performance data so senior management can better run the business. If a professor, you create new curricula to better prepare your students for life.??In every case, the professional’s responsibility is to address unmet customer problems and deliver solutions that are better than any alternative.???

Of course, in addition to specific groups of customers, professionals also work on long-term challenges of significance to all of society, like a new cancer drug or an improved understanding of the laws of physics.?

Value Creation's Core Concepts

As noted, many are unsure about the definitions for value-creation, innovation, and customer value.??If you ask people for the definition of innovation, they usually say things like, “It's something new or novel, or a new product or process, or give examples like the Segway.??These answers are not wrong; they are just incomplete.?

Consider, there are over 4,000 mousetrap patents, but only about twenty are sold and used.??What about those 3,980 other mousetraps???They are novel, can be built, and don't break the law, but no one wants them.??They are inventions.??Only the twenty bought and used are innovations. And, surprisingly, the best-selling ones are versions of the standard Victor design.??More generally:

Value creation is the:

• ?Identification of a significant unmet customer (end-user) and market (societal) need with the
• Development of a solution, or offering, that is better than any alternative and where the?
• Solution satisfies the needs of all stakeholders.

Innovation is the:

• Delivery of new customer value in the marketplace where?
• Customer value is the benefits/costs provided to them and the
• Solution or offering has a business model, or another means, to sustain and justify its investment.

We can replace these words with others that may better match your enterprise's purpose and position, but the basic meanings remain. For example, we can replace:

• Customers with the specific people or groups that obtain the offering and benefit from it.
• Stakeholders with those involved or impacted by the offering, such as customers, end-users, partners, funders, sponsors, buyers, enterprises, governments, and society.?
• Needs with the end-customer's problem or societal challenge that matters to people.
• Marketplace with were the offering is obtained, such as from a company, university, or government.?
• Business model with how the offering is sustained, such as through payments, tuition, volunteers, or government support.

When solving an unmet need, the solution is to be sustainable, at least until a better solution comes along, and allow recouping its investment.??Sustainability in the marketplace is what distinguishes inventions from innovations.???

One more point of potential confusion.??Entrepreneurs are those who often take risks to assemble all the resources needed to introduce an innovation in the marketplace.??Although only a fraction of professionals will be successful entrepreneurs, all professionals can be successful value creators.?

New Knowledge as Innovations

Innovations create new knowledge.??They come with a name, a definition, and a story that describes them. *?

For example:

• Name: Smartphone
• Description: Smartphones are small, mobile communications devices with a full computer operating system and a touch screen display.??
• Story: Smartphones allow access to unending services and functions on global networks, allowing billions of people to communicate and provide services to each other, regardless of geography.

At universities, an often-asked question is whether research results can be innovations???From the definition -- the creation and delivery of sustainable new knowledge of value to society -- knowledge can also be an innovation.??For example, Einstein's general theory of relativity is one of the world's most notable innovations, both in its significance and sustainability. Thus, if you are a researcher, the metric of success is not publications. Instead, it is whether the new knowledge created produces a sustainable positive impact on society for an extended period.

More generally, we can measure the importance of an innovation by the number of people positively impacted (significance) and for how long it lasts (sustainability).??In short:?

??????????????????????????Innovative impact = Significance x Sustainability

This equation explains why a novel clothing design can influence millions but, because of its short lifespan, not be considered a significant innovation.??But Shakespeare, Beethoven, and Picasso in the arts; Newton, Galileo, and Currie in the sciences; and Edison, Bell, and Tesla in commercial enterprises are all giants in terms of significance and sustainability.

Incremental Versus Transformational Innovation

In most organizations, there is a function that develops incremental innovations for ongoing operations, and a research function that develops significant new innovations to either grow the business or prevent it from failing.??These two different functions can be organized in many ways, but in all cases, an efficient starting point for all initiatives is with an NABC value proposition.??After it is fleshed out, the frameworks and processes used will depend on the initiative's objectives. For example, if the aim is a new venture, it will be a business plan and if a new university course, an approved syllabus.??

Since NABC value propositions applly to all professional positions, their broad use creates a customer-focused enterprise with profoundly improved efficiency and effectiveness. In a fundamental way, the enterprise ceases to be a Tower of Babel.

Academic Perspectives

Educators often object to the idea that students are "customers," because they have a "special" relationship with them and because students can't "know" what courses are needed.??It is true that teachers provide value to students in many important ways beyond the classroom, so there is a special relationship.??But these conditions with customers are shared by many others, such as medical doctors.??

Although parents usually pay for a student's education, the students are ultimately the beneficiaries or end-users.??In addition, as we have described in previous posts, it is usually true that customers or end-users do not know what they need.??They can't because they rarely know what is possible.??Students might say they "want" an excellent education, but it is impossible for them to fully understand what is required to achieve that -- their real "need."??The professor's responsibility is to find out their student's actual needs and deliver the education desired.?

NABC Value Propositions

As noted, the starting point is to always answer the four questions captured in an NABC value proposition.??They are the basic questions to be addressed in all problem-solving activities where the goal is to deliver value to others.??

In broad academic terms, NABC value propositions can be framed as: the Need (the societal challenge to be addressed), the Approach (the scientific or technical research that will address the need), the Benefit/costs (how the expected research outcomes will improve society), and the Competition (how the proposed approach is better than other current or proposed possibilities).?Most faculty are comfortable and deeply engaged in articulating their approach, but few spend sufficient time and effort articulating the other aspects of the value proposition.??In addition, for a value proposition to be of most effective, it needs to be much more specific and quantitative than the one just given. **?

As an example, here is a short NABC for a hypothetical university with a project-based curriculum, where all students perform a team project in another part of the world.??The university has decided to give their graduates additional lifetime value-creation skills that will allow them to better thrive in our global innovation economy.

Conclusions

All professionals solve problems that have meaning to others.??In short, the key concepts to be understood by professionals in all disciplines include:

• Value creation -- the process of addressing important unmet customer and stakeholder problems better than any alternative.
• Innovation -- value creation with sustainable impact.
• Value -- benefits/costs as perceived by customers and stakeholders.
• Stakeholders -- customers, end-users, investors, partners, enterprises, and society.

Mastering value creation allows professionals to have meaningful lifetime careers.??People with these skills are sought out by others; work with the best professionals; and have the fun of achievement that comes from doing things that matter to others.

* From David Nordfors ** After Dawn Tilbury

See: Curt Carlson, Harvard Business Review,?“Innovation for Impact”