Start With WHY But Don't Forget WHAT, WHO FOR and HOW

Regular readers of my writing will know that I talk a lot about value creation being the focus of management thinking and practice. That was after considering the implication of research by McKinsey & Co. They found only 22% of directors in a global survey believed the boards they sat on had a good understanding of how the firm created value. My further research suggests the real number is much lower.

Think about your own business or organisation. Do you think the directors and executives all know what value is being created? Do you know what value it creates? Then ask of them, and yourself, is there clarity about whom you are creating value for, and how that value is created?

The conversations I have had confirm these questions cannot be answered by the vast majority of directors or executives with clarity, even after they have been given considerable time to think about the answers. Most struggle to define the meaning of "value".

In this context, of what use can their mission, vision and values statements be? And is the ‘strategy’ even worth the paper it is written on? How can the performance of the organisation, any of the departments, or individuals be properly assessed?

Few people disagree with the idea, the purpose of any business or organisation is the creation of some form of value. So, knowing what value is, what value is created, for whom, and by what means are of fundament importance don’t you think?

Yesterday I spoke to someone who sells CRM solutions to large organisations. He sounded frustrated by the fact most prospective clients fail to see how much money they waste in the way they are doing things. I suggested the reason is probably that they have lost sight of what they want the system to do for them i.e. what value it is they are trying to create.

Yesterday I also read an article written by an HR professional, saying his profession has lost its sense of purpose. He argued it needs to put the human back into HR. I suggested it may be worth considering what value the profession is supposed to be creating, for who, and by what means.

The problem is this, the means become the ends. Or as Amazon’s CEO Jeff Bezos puts it, “the process becomes the thing”. Simon Sinek is famous for his book, “start with why”. That is good and important advice. But I want to argue that you must then ensure you do not forget "what", "who for", and "how”.

The "why" is determined by the choices made about what value to create and "who for". To know "how", map your Value Scheme – or design one if you are a start-up. And remember, value does not mean only financial value.

The Value Scheme is your value creation blueprint. It tells you what value you create, who for and how. It should also tell you far more. And it should be a living document that drives your strategic thinking and innovation system – that tells you what value you will create, who for and how…in the future. It should tell you what your strengths and weaknesses are, and what your opportunities and threats are. In doing so it will highlight the risks you need to manage.

In my view, this is an easy to understand and practical approach to strategic thinking and management. It will keep any business or organisation focused on the goal, and on the future, rather than just the processes. The same is true for a department, a function, a profession, or even a project.

Finally, any organisation of any type in any sector, is a system, or system-of-systems, for creating value. The whole is greater than the sum of the parts. And the whole is not a machine that can be controlled, but a social system of people that need to feel engaged, empowered and motivated to co-create and collaborate. And, with a full understanding of what value they create, for whom, and how.

Valueism is the name I have given to this approach. It includes the Value Scheme design process. It is a human-centred approach to value creation designed to ensure the long-term success of businesses and organisations.

The final point to note is that to ensure sustainable long-term success the business or organisation must recognise its social contract obligations, by contributing value to the society that grants it a license to operate. This is an ancient and well-understood requirement and should be in no way controversial. In fact, I would argue, it should be the central focus when making choices about what value to create.

Addressing societal needs is a great way to think about value creation choices. A business or organisation focused on meeting societal needs is much more likely to attract and retain top talent. It can offer meaningful and fulfilling careers that keep employees fully engaged and motivated. It is also a way to earn a great reputation.

For these reasons, I suggest the purpose of all businesses and organisations ought to be contributions to sustainable widely shared prosperity, measured in terms of human flourishing and wellbeing. It is also for this reason, I continue to develop the concept of Social Contract Accounting.

You can read more about these and other concepts on the Enlightened Enterprise Academy website. Or take a look at our publication on Medium.

We can also offer standard or bespoke workshops and courses that explain these concepts in greater depth. For details: [email protected]