Values & Purpose - Strategys Core

Value, Values & Purpose Strategy's Core

Often people think that the values of an organization are something distinct from the value an organization delivers
Copyright Stratagility 2003-2007

But our thesis is that value and values are inextricably linked
We see value as being directly derived from values

Values are not something just glibly put down at the beginning of a strategy exercise
Values impact & define the very core strategy that defines value delivered

Misconceptions
Today many leaders consider “maximization of shareholders profits” as their ultimate goal

Many see it as their “legal obligation”

Many contend that it is ethically wrong for Boards and CEO’s to do anything that threatens profitability for shareholders

But ethically, how can anyone justify economic advancement when it threatens our whole human existence? … whole in every aspect being

Indeed the root of ethical leadership is ensuring the right balance between the achieving good for the few without impinging on the good for the many

Rising Tide
Today there is a rising tide of informed opinion that sees the sustainability of society and the global ecosystem as something that must be included in any equation of the purpose and goals of organizations.

Values v’s Profits
Often people assume that sustaining values and sustaining profits are mutually exclusive

An assumption prevails that social and ecological issues may somehow defocus and impact negatively on the organizations goal to maximize shareholder value.

Building a Sustainability Perspective
Doug MacNamara has said:
"... It takes super-ethical, and global-networked perspective of Board members to accomplish both sustainability of the whole (race/earth) with a sustained, but perhaps somewhat diminished profitability.

Key Misconception 1
Profit is the ultimate objective above all other values.

Key Misconception 2
values and profit are irreconcilable, so values become a drag on profits

The quoted sentiments of Doug McNamara, are common among many
It is addresses the 1 st misconception and puts sustainability of society and the global ecosystem as something that leaders should see as at least as important as profits
And that is good…. However

… it still bows to the 2 nd misconception that values will diminish profit

Does sustainable imply less profit?
Achieving sustainability of the whole (society and ecology) does not in fact need to equate to a diminished profitability.

There are strong reasons to think that business may actually be more profitable when the core values (and value offering) are sustainable wholistic values

Changing these false assumptions is imperative
Such a change is in fact in the best interests of leaders and the organizations and stakeholders or shareholders that they serve

The belief that sustainability somehow diminishes or becomes a drag on the profit is based on flawed assumptions
The view is a dangerous fallacy that has been allowed to prosper without objection for too long

Aligning profit with values
A strong strategic position is awaiting those organizations that can successfully align their strategies so that the sustainability of society and ecology – the whole - is achieved and in the process accomplishes sustainability for the organization

Early examples are renewable resources. Those companies (BP) & nations (Brazil) that are adapting now to demands for renewable energy sources, are in a prime position for serving large potential markets - very sustainable profits will likely emerge.

regulations
New positive regulations emerging are a result of pressure from people around the world , they represent a very real trend, just like any market trend, sustainability of the whole is a growing theme that makes good business sense to deliver value in.

Leaders, business people, ceo’s and boards of directors, governance bodies, shareholders and other stakeholders are severely failing to inform themselves so long as they don’t examine their common assumptions on this issue

Creating value should come before profit
Profit is a by-product of value creation
If leaders focus their strategy on creating value then as long as they do deliver value, profits - if that is what is needed - will follow

The reverse is NOT true

Focusing a business strategy on unsustainable profits does not necessarily require a company to deliver value

The upshot is that they will probably end up spending millions on marketing lower value to persuade markets that they should still want something of eroding value

Such company strategies descend into business games such as monopolies, opaque markets, and protectionism which have very little to do with delivering value, but everything to do with maintaining profits

Such strategies are not sustainable in any sense (profit or wholistic) in today’s rapidly changing and complex world

Such strategies backfire and prevent their authors from playing a constructive part in the real markets and societies of the future… and if they are not constructive they will become irrelevant

future markets and societies can only truly be engaged by organizations that identify and deliver real value

For businesses such value doesn’t need as much effort to sell, it is often very evident to customers when they see it

Profit as the paramount goal guarantees drift:
When companies put sustainable profits above all else, including sustainable value creation (which may or may not include sustainable social & ecological value creation) they are saying that they really have no vision beyond "greater and greater profit creation"

Such a vision is empty of real strategy, leaves the organization to the whims of changing leaders and certainly inspires very few

Most leaders today accept that in order to "lead" an organization to success, they need to build a vision that really drives their organizations strategy and direction
One that really captures the imagination and passion of their staff, customers and stakeholders.

Profit is just the means and not the ends, which are sustainability of the organization to deliver on its purpose

Values not just Value:
the higher Values we hold determine what we see as value

So when we put value creation before profit, we are also putting our values to the forefront, because our values are what determine that which we see as creating value

If we believe in a green world, then we see value creation as something to satisfy the needs of a greener world

Universal Values
Delivering Sustainable Whole Value in particular, is a key Competitive advantage
Values that are universal represent the future and ultimate keys to success

It should be clear that sustainable value creation comes first, and sustainable profits creation second

Moreover there is a specific niche of value creation that is focussed on delivering value in terms of sustainable whole (social/ecological) rather than just satisfying individual needs
Business models based creating value in terms of on universal values
Business that creates value that makes people, families, societies feel more whole

Aligning strategy with value creation, and specifically the kind that is in terms of universal values (sustainable whole - social/ecological - value), is the key to competitive advantage for many companies in the future

That’s where the greatest financial profit is ultimately to be found
That’s where the smarter strategies lead
Today this is largely unknown and ignored
But our way of business will be viewed by future generations to be just as misguided and wrong as feudalism is considered today

A strategy that delivers sustainable profit growth, through sustainable value creation, and in particular the kind of value creation that delivers whole (social/ecological) value rather than just delivering personal value

Value creation that is in touch with universal values is the height of achievement

This thinking is integral to thinking about strategy at Stratagility – in fact it is part of our own values that helps define what value we should deliver

Our purpose is to improve strategy & business practices through a new understanding of the real essence of values and value

And based on our values, we believe that we will ride a wave to the future. One that leads to greater demand for the value we deliver - helping others understand and leverage this thinking for their own success

A key goal is to address McNamara’s question:
".. How do we build the knowledge and understanding of Leaders, Governers, Board members, stakeholders, shareholders in order for them to absorb, appreciate and act upon such an important perspective?”

But not just in terms of the 1 st misconception
More importantly the 2 nd , that sustainable value creation is not being altruistic, but in fact where the most valuable value creation (and profit lies)

To understand and get to that realization, the key concept is the very direct connection between our values and value

Overturning Assumptions:
It is necessary for leaders to revisit and re-evaluate the very essence of what Strategy and success is all about
It means overturning some deeply ingrained assumptions

It means we need to get people to suspend their ingrained assumptions and examine the possibility that … sustainable profit growth for shareholders is in fact a result of business strategy that sets sustainable value creation - especially sustainable whole (social/ecological) value - as an ultimate driver

Sustainability of the organization requires that sustainability for society are core values
Those values determine the value creation being offered, and the resulting profits or income sources
Financial profits are merely one by-product on the road to success, but where value can be generated, profits soon follow

Value, Values & Purpose
Are you ready?
May 28, 2009 Copyright Stratagility 2003-2007

Mark Ranford www.stratagility.com [email_address] May 28, 2009 Copyright Stratagility 2003-2007

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Values & Purpose - Strategys Core

by Mark Ranford on Dec 07, 2007

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Values & Purpose - Strategys Core — Presentation Transcript