Everyone knows I love sharing information. I learned about a great website called Elance.com for freelancers and entrepreneurs. The website allows individuals and organizations to bid out work for the best price. Initially, I was amazed at the different people bidding from across the country.
Conventional wisdom would say that a guy bidding for work in India at $5 per hour versus a guy in New York at $60 per hour would be a no brainer. However, I have purchased services from Elance.com where the price was not the prime consideration. I looked at the individual’s experience and identified what it was worth for me to get it done. In a nutshell, I was aiming for the most value. Likewise, organizations that want to compete must understand value creation in relationship to globalization.
Business cannot hide from the impacts of globalization. According to Dr. James Canton’s The Extreme Future: The Top Trends that will Shape the World in the Next 20 Years, there will be a global war for Smart Talent. In fact, it will be the key driver for competitive advantage. As the world will witness, the most educated, skilled, and experienced employees will be in high demand.
Global competition and the shortage of workers have made diversity a center-point for most organizations. Globalization has forced many organizations to rethink their approaches. Friedman (2008) noted the progression of globalization. Globalization 1.0 was driven by the dynamic force of global integration; it was about countries globalizing.
Globalization 2.0 (roughly 1800 to 2000) was driven by global integration but with an emphasis on multinational companies; it was about companies globalizing. In Globalization 3.0, the force is driven by the power of individuals to collaborate and compete globally. In fact, Globalization 1 and 2 were primarily driven by European and American individuals and businesses. Globalization 3.0 will be driven by more diverse constituents. Therefore, understanding how to create value across the global will be vital for sustaining business success.
Twenty-first century organizations can no longer implement value creation in a vacuum. Value creation can be defined as an organization’s ability to convey worth of its product or service to customers. Therefore, it goes to value, which focuses on the relationship between the customer’s expectations of a product/service quality to the actual amount paid for it.
Many organizations fail in these global markets due to a lack of understanding their customers as well as their own organizations. Dr. Lynda Falkenstein, niche market expert, explains, “Understanding your customer’s perceptions of the world is an absolute must for one major reason; that is, no one buys something just because you want to sell it.”
C.K. Prahalad and Vemkatram Ramaswamy, authors of The Future of Competition, further argue that there is an arrogant management structure in place that cares little for the opinion of others. However, organizations that deal with postmodern workers must foster a different corporate culture. In fact, Prahalad and Ramaswamy reason that 21st century organizations must change their value creation system. They noted the new system as an individual-centered co-creation of value between consumers and organizations. Few executives take the time to explain their values.
Sustaining effective organizations will require a focus on value creation if they hope to be successful in the global market. However, this appears to be a critical weakness in modern organizations. Many organizations exist with value misalignment. Values are the core beliefs of an individual. Different people have different values. Henry Mencken, author of Prejudices, explained, “The difference between a moral man and a man of honor is that the latter regrets a discreditable act, even when it has worked and he has not been caught.”
Global leadership expert Timothy Stagich maintains that the basic values for a high collaborative organization include mutual respect, appreciation of diverse contributions, reciprocal benefit, and a shared understanding of the underlining corporate values. Many leaders forget about the importance of values in an organization. Few institutions take responsibility for value alignment. That reality will hurt them as they fight to survive in Globalization 3.0 and later.
How do organizations adapt to the global market and create value at the same time?