Values & Purpose - Strategys Core


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The link between Value Creation and Universal Values. The implications for sustainable strategies as key drivers

Values & Purpose - Strategys Core

  1. 1. Value, Values & Purpose Strategy's Core
  2. 2. <ul><li>Often people think that the values of an organization are something distinct from the value an organization delivers </li></ul>Copyright Stratagility 2003-2007
  3. 3. <ul><li>But our thesis is that value and values are inextricably linked </li></ul><ul><li>We see value as being directly derived from values </li></ul>Copyright Stratagility 2003-2007
  4. 4. <ul><li>Values are not something just glibly put down at the beginning of a strategy exercise </li></ul><ul><li>Values impact & define the very core strategy that defines value delivered </li></ul>Copyright Stratagility 2003-2007
  5. 5. Misconceptions <ul><li>Today many leaders consider “maximization of shareholders profits” as their ultimate goal </li></ul>Copyright Stratagility 2003-2007
  6. 6. <ul><li>Many see it as their “legal obligation” </li></ul>Copyright Stratagility 2003-2007
  7. 7. <ul><li>Many contend that it is ethically wrong for Boards and CEO’s to do anything that threatens profitability for shareholders </li></ul>Copyright Stratagility 2003-2007
  8. 8. <ul><li>But ethically, how can anyone justify economic advancement when it threatens our whole human existence? … whole in every aspect being </li></ul>Copyright Stratagility 2003-2007
  9. 9. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  10. 10. Rising Tide <ul><li>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. </li></ul>Copyright Stratagility 2003-2007
  11. 11. Values v’s Profits <ul><li>Often people assume that sustaining values and sustaining profits are mutually exclusive </li></ul>Copyright Stratagility 2003-2007
  12. 12. <ul><li>An assumption prevails that social and ecological issues may somehow defocus and impact negatively on the organizations goal to maximize shareholder value. </li></ul>Copyright Stratagility 2003-2007
  13. 13. Building a Sustainability Perspective <ul><li>Doug MacNamara has said: </li></ul><ul><li>&quot;... 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. </li></ul>Copyright Stratagility 2003-2007
  14. 14. Key Misconception 1 <ul><li>Profit is the ultimate objective above all other values. </li></ul>Copyright Stratagility 2003-2007
  15. 15. Key Misconception 2 <ul><li>values and profit are irreconcilable, so values become a drag on profits </li></ul>Copyright Stratagility 2003-2007
  16. 16. <ul><li>The quoted sentiments of Doug McNamara, are common among many </li></ul><ul><li>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 </li></ul><ul><li>And that is good…. However </li></ul>Copyright Stratagility 2003-2007
  17. 17. <ul><li>… it still bows to the 2 nd misconception that values will diminish profit </li></ul>Copyright Stratagility 2003-2007
  18. 18. Does sustainable imply less profit? <ul><li>Achieving sustainability of the whole (society and ecology) does not in fact need to equate to a diminished profitability. </li></ul>Copyright Stratagility 2003-2007
  19. 19. <ul><li>There are strong reasons to think that business may actually be more profitable when the core values (and value offering) are sustainable wholistic values </li></ul>Copyright Stratagility 2003-2007
  20. 20. <ul><li>Changing these false assumptions is imperative </li></ul><ul><li>Such a change is in fact in the best interests of leaders and the organizations and stakeholders or shareholders that they serve </li></ul>Copyright Stratagility 2003-2007
  21. 21. <ul><li>The belief that sustainability somehow diminishes or becomes a drag on the profit is based on flawed assumptions </li></ul><ul><li>The view is a dangerous fallacy that has been allowed to prosper without objection for too long </li></ul>Copyright Stratagility 2003-2007
  22. 22. Aligning profit with values <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  23. 23. <ul><li>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. </li></ul>Copyright Stratagility 2003-2007
  24. 24. regulations <ul><li>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. </li></ul>Copyright Stratagility 2003-2007
  25. 25. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  26. 26. <ul><li>Creating value should come before profit </li></ul><ul><li>Profit is a by-product of value creation </li></ul><ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  27. 27. <ul><li>The reverse is NOT true </li></ul>Copyright Stratagility 2003-2007
  28. 28. <ul><li>Focusing a business strategy on unsustainable profits does not necessarily require a company to deliver value </li></ul>Copyright Stratagility 2003-2007
  29. 29. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  30. 30. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  31. 31. <ul><li>Such strategies are not sustainable in any sense (profit or wholistic) in today’s rapidly changing and complex world </li></ul>Copyright Stratagility 2003-2007
  32. 32. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  33. 33. <ul><li>future markets and societies can only truly be engaged by organizations that identify and deliver real value </li></ul>Copyright Stratagility 2003-2007
  34. 34. <ul><li>For businesses such value doesn’t need as much effort to sell, it is often very evident to customers when they see it </li></ul>Copyright Stratagility 2003-2007
  35. 35. <ul><li>Profit as the paramount goal guarantees drift: </li></ul><ul><li>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 &quot;greater and greater profit creation&quot; </li></ul>Copyright Stratagility 2003-2007
  36. 36. <ul><li>Such a vision is empty of real strategy, leaves the organization to the whims of changing leaders and certainly inspires very few </li></ul>Copyright Stratagility 2003-2007
  37. 37. <ul><li>Most leaders today accept that in order to &quot;lead&quot; an organization to success, they need to build a vision that really drives their organizations strategy and direction </li></ul><ul><li>One that really captures the imagination and passion of their staff, customers and stakeholders. </li></ul>Copyright Stratagility 2003-2007
  38. 38. <ul><li>Profit is just the means and not the ends, which are sustainability of the organization to deliver on its purpose </li></ul>Copyright Stratagility 2003-2007
  39. 39. Values not just Value: <ul><li>the higher Values we hold determine what we see as value </li></ul>Copyright Stratagility 2003-2007
  40. 40. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  41. 41. <ul><li>If we believe in a green world, then we see value creation as something to satisfy the needs of a greener world </li></ul>Copyright Stratagility 2003-2007
  42. 42. Universal Values <ul><li>Delivering Sustainable Whole Value in particular, is a key Competitive advantage </li></ul><ul><li>Values that are universal represent the future and ultimate keys to success </li></ul>Copyright Stratagility 2003-2007
  43. 43. <ul><li>It should be clear that sustainable value creation comes first, and sustainable profits creation second </li></ul>Copyright Stratagility 2003-2007
  44. 44. <ul><li>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 </li></ul><ul><li>Business models based creating value in terms of on universal values </li></ul><ul><li>Business that creates value that makes people, families, societies feel more whole </li></ul>Copyright Stratagility 2003-2007
  45. 45. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  46. 46. <ul><li>That’s where the greatest financial profit is ultimately to be found </li></ul><ul><li>That’s where the smarter strategies lead </li></ul><ul><li>Today this is largely unknown and ignored </li></ul><ul><li>But our way of business will be viewed by future generations to be just as misguided and wrong as feudalism is considered today </li></ul>Copyright Stratagility 2003-2007
  47. 47. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  48. 48. <ul><li>Value creation that is in touch with universal values is the height of achievement   </li></ul>Copyright Stratagility 2003-2007
  49. 49. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  50. 50. <ul><li>Our purpose is to improve strategy & business practices through a new understanding of the real essence of values and value </li></ul>Copyright Stratagility 2003-2007
  51. 51. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  52. 52. <ul><li>A key goal is to address McNamara’s question: </li></ul><ul><li>&quot;.. 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?” </li></ul>Copyright Stratagility 2003-2007
  53. 53. <ul><li>But not just in terms of the 1 st misconception </li></ul><ul><li>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) </li></ul>Copyright Stratagility 2003-2007
  54. 54. <ul><li>To understand and get to that realization, the key concept is the very direct connection between our values and value </li></ul>Copyright Stratagility 2003-2007
  55. 55. Overturning Assumptions: <ul><li>It is necessary for leaders to revisit and re-evaluate the very essence of what Strategy and success is all about </li></ul><ul><li>It means overturning some deeply ingrained assumptions </li></ul>Copyright Stratagility 2003-2007
  56. 56. <ul><li>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 </li></ul>Copyright Stratagility 2003-2007
  57. 57. <ul><li>Sustainability of the organization requires that sustainability for society are core values </li></ul><ul><li>Those values determine the value creation being offered, and the resulting profits or income sources </li></ul><ul><li>Financial profits are merely one by-product on the road to success, but where value can be generated, profits soon follow </li></ul>Copyright Stratagility 2003-2007
  58. 58. <ul><li>Value, Values & Purpose </li></ul><ul><li>Are you ready? </li></ul>May 28, 2009 Copyright Stratagility 2003-2007
  59. 59. Mark Ranford [email_address] May 28, 2009 Copyright Stratagility 2003-2007