Unveiling the AAA Value-Creating Organization.
There’s quite a lot of angst and doubt about the modern business corporation. Some observers view corporations as extractive, exploiting customers and markets and competition for their own narrow purposes that don’t serve the greater good of the economy. Through these eyes, business corporations are viewed as dominating or imposing their systems on their customers. This view labels the resulting corporate profits as the evidence of extraction, especially when profits are disproportionately distributed to an elitist group of financial institutions, shareholders, and top management.
That’s because profit is divisive. It’s good for a few but not for most. It’s a cultural and ideological symbol of the separation between the haves and have-nots. Rightly or wrongly, the perception sticks.
Value, on the other hand, is not divisive. Value is a feeling of well-being, that things are getting better, that one’s preferences are recognized and one’s needs met by economics working in one’s favor. When customers experience value, it’s a feeling that the choice they’ve made, whether it’s to buy software or hardware, or to subscribe to a service, to pick a fashion item or a restaurant, is making their life better. The “after” is better than the “before”. And if this repeats and continues over time, it’s progress. The output of the economy is more well-being. The output of an individual firm in the economy is value. Everybody wants it. No-one’s against it.
The customer is the primary beneficiary of value. In this economic primacy role, customers select the companies to whom they’ll grant the status of value facilitators. The value-creating organization lets this selection process play out and adapts and adjusts so it works in their favor – so that they are chosen above alternative providers. This system is not so much one of competition, but rivalry to achieve the value recognition conferred by grateful customers. It’s a humble role.
Employees, too, feel value. Working for the value-creating organization, they are engaged in meaningful roles, with the opportunity for autonomy, creativity and specialization inspired by their own individual skills and interests. Value is multi-directional and multi-dimensional.
Are we moving in the direction of value-creating organizations? There are good signs that indicate that we are. Famed management guru Steve Denning tells us how creating value for others has become the key to business success.
He cites the new interest in corporations in the language of culture, empathy, mindset, and principles – abstract notions of the sources of value creation, rather than the language of management, strategy, planning, accounting and human resources. This new value creation approach is the opposite of the business administration taught in business schools, which focuses on controlling people and outcomes through management, rather than unleashing creativity through entrepreneurial leadership.
Value creation is a complex system constrained by these new notions. If they’re woven together in the right combination, the corporation becomes a self-organizing system for value: autonomous, adaptive and anticipatory. AAA. Autonomous in that it doesn’t need “management” – selection by customers replaces that function. Adaptive in that it can adjust based on feedback, responding freely and flexibly to customers’ changing needs and preferences. And anticipatory, in that one of its functions is to imagine even better futures for customers, and to harness technology and service design to bring that imagined future into existence.
The AAA value-creating organization replaces the conventional management hierarchy of authority with a design that enables the flow of value from the customer experience to the firm and back again as a continuous, unimpeded loop. The concepts of tightly engineered structure and process are discarded, and the energy of removal takes over – removal of all barriers that stand in the way of value flow.
Value-creating organizations take us to a new era where there’s no need for angst and doubt and suspicion about the motives of our corporations, because the successful ones are creating value for us – customers, employees, investors and spectators. There’s a lot of traditional business management to unlearn, and it’s exciting to see that a young generation of value creators is leading the way in helping to rescue the old guard from the grip of the exhausted traditional paradigm.
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You can participate in and actively contribute to the evolution of the value-creating organization at MS25, the management summit for value creation in Lisbon in September 23-24 in Lisbon. Register here.