I do struggle a little with my conscious. Yes, I’ve been called a pretty hard nose professor who pushes his students. I tell my students I have a low rating on empathy and mercy when it relates to missing my deadlines.
However, even the meanest Scrooge would have to have compassion for over 15 million unemployed in America. But—it becomes personal as you hear about your neighbors, co-workers, and family members who have been laid off.
Financial institutions and other businesses hold on to their record profits for the ultimate use of their money. Politicians call them job creators which is ironic since businesses primary motives are to make a profit, not give someone a job.
Companies chase emerging markets abroad. According to government estimates, an additional 1.2 million manufacturing jobs will disappear from America by 2018. If in the process a job is made, those are secondary considerations.
Only when business subscript to a business strategy that involves value creation can they hope to sustain profitability. In this paradigm workers are viewed as assets not liabilities.
Yet, many companies build their profitability on this simple equation. Companies seek to reduce their inputs (outsourcing labor, better technologies) to obtain ‘more profits.’ Yet, it’s pretty self-serving with little regard to customers and employees.
The definition of value depends on the individual. For this discussion, value is defined as the net bundle of benefits the customer derives from a product of service. Value is defined as the net bundle of benefits the customer derives from a product of service. Most companies compete on low cost or differentiation strategy to create this value.
In emerging countries where wages are low, it is very difficult for America businesses to compete. That is why many companies have opted to outsource some of their core functions abroad. Yet, America’s strength has always been its innovation and creativity. These attributes are key ingredients for an effective differentiation strategy.
John Gamble and Arthur Thompson, authors of Essentials of Strategic Management, further examined the concept of value as a strategic advantage: “The most appealing approaches to differentiation are those that are hard or expensive for rivals to duplicate.” Therefore, an effective value creation strategy can beat almost any competitor, globally and domestically.
This reality is due to the fact that the organization is keenly attuned to the needs of their customers. If individuals keep the concepts of value creation in their mindset, they will be able to overcome many of the disruptive changes to come.
How does value creation relate to sustainability for today’s leaders? Discuss your professional experience with value creation.
© 2012 by Daryl D. Green