Let's create value ! And the right kind . . .
Appeared in "Les Echos" in November 2000.
Today, the vast majority of businesspeople are uninhibitedly chanting the new litany of creating value. There is not an annual report, a press conference, a road show or financial advertisement in which this almost obsessive injunction does not appear. One would think that today's managers – although trained in the finest business schools and universities – have just discovered that the reason for a company's existence is primarily to create wealth.
While it is disturbing to observe how few of them or their employees even ask themselves the questions: Where do we come from? Who are we? Where are we going? Just keep moving buster, there's nothing to see! And for good reason…because very often, there is neither a visionary nor a vision. The company seems to come from nowhere. It has always been there and we imagine it still will be twenty years from now. While everyone knows – to paraphrase Paul Valery – that companies are mortal.
Identifying a company's reason for being.
Too many companies have forgotten their roots, the founding spark that gave birth to them, the value they incarnate in the minds of their customers. And the increasing pace of mergers/acquisitions is doing nothing to improve the situation. While a company is not created, does not develop and does not disappear by accident. It gathers and mobilises resources and talents to fulfil a function that others either do not or cannot fulfil, do not want to or know how to fulfil. Designing, manufacturing, distributing, connecting, constructing, repairing, maintaining…are all various ways of meeting society's needs. All of them are essential and useful missions that, under the pressure of the short-term, too many companies forget behind façades of financial, commercial, managerial or technological engineering. Take Apple or Adidas for instance, brands and companies that were once considered finished. It was not only their managements' ability to cut costs, optimise processes, increase equity or develop quality programs [all technical abilities] that explain their spectacular recoveries on the market. It is especially because they were able to touch base with the genius of their original visions and apply them to the contemporary world.
Are certain retailers still aware that the essence of their business is primarily to make possible and to facilitate contact between products and potential consumers, rather than juggling with cash flow or putting pressure on suppliers? How many business managers are capable of explaining in a few words why their company is still indispensable to the society in which it recruits its customers? Does the average civil servant still realize that he or she has been mandated by society – not by the administration, nor the trade unions – to accomplish tasks of general interest on its behalf?
To grasp the relevance of this demand, just ask yourselves the following question: "If my company disappeared, what would happen to my customers?". Few of us are able to answer it. Worse, many probably fear it.
Yet it is vital for every manager to take a step back and discern the fundamental and original reason that justifies his or her company's existence [In fact, this also applies to guilds, administrations or associations]. Neglecting, or even belittling this discipline is dangerous when it comes to defining corporate strategy, a product or service offer or brand policy.
Revisiting the fundamentals of a company or brand is a more difficult task than one would imagine. Reasoning is often lost in the rapid erosion of the corporate memory. It gets bogged down in a surplus of information and expertises. It gets sidetracked by the vacuity or conformism of managers' cultural references. It is biased by power games and partial claims to competence.
Whether true or false, expressed or not expressed, every company proceeds on the basis of a vision that is rooted in the past, justified by the present and projected into the future. This vision guides the mission or role the company intends to play on its market. And it is in fulfilling this that the company gathers under its banner the pool of resources and talents it needs to generate wealth. Yet, if there is a consensus on this logic, there is nonetheless confusion over the word "value". Taken solely in its financial meaning – as is often the case nowadays – provides a restricted view of the company.
Confusion over the notion of value.
A company cannot be summed up as a series of figures on an accounts ledger whose value is, ultimately, purely conventional. To do so would be confusing profit and finality. The shareholder – especially if he does not manage the firm himself – can rightfully hope for high yield. Customers, employees, managers, suppliers, citizens and public authorities cannot share this logic with the same intensity. Yet, all intervene in the wealth creation chain – although often its weakest link as the latest Coca-Cola, Boeing, Microsoft or Michelin disputes have proven – and each intends to turn this to its advantage.
The value that a company can share is not only tallied up in figures. It also involves pell-mell: pride in belonging, feeling of usefulness, the pleasure of inventing, energy to build, desire to progress, increased knowledge, peace of mind, access to new resources, pleasure of being together, recognition of talent, demonstration of solidarity. It is in fact the complex and fragile result of all of these dimensions that can be measured day after day on a company's books. From this standpoint, that kind of value deserves all of our attention.
Sharing for enrichment.
A stimulating paradox: by sharing to the maximum the wealth created by the company in all of its forms, we increase the company's capacity to create accounting and financial value. There are many directions for thought and all could lead to an innovative approach.
Each of us knows that real value is measured over time, in terms of the pride and enjoyment we feel in working, in creating, in building. All the rest is vain when, covered in honours and gold, one is alone and confronted with illness, the greed of new friends, the departure of a spouse, the indifference of one's children or the despising compunction of one's employees.
Resolution number one for the new millennium: it is urgent to create value, real value. New wealth that gives meaning back to the idea of progress. Exciting progress that will bring us more at the three inseparable levels of social and economic life: the person, the company and society.
At the risk of disappointing any sceptics, let us believe that it is possible, because prejudices, conventions, habits and inhibitions always give way to imagination, desire, daring and confidence. It is enough to look at the valuation [still disconnected from any immediate production of economic value] behind the stock market capitalisation of the "dot.com companies". Couldn't we say that the talent of these companies – among others – was to have successfully controlled imaginations and offered a new frontier to all of their publics: customers, employees, analysts, journalist, investors, politicians, business managers? So, in your sector, what is the added value that your company or you personally want to contribute to our little planet for the next one thousand years?
© Aubry Pierens* / We
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© Aubry Pierens, founding partner of We consultancy, is the co-author of "Les Clés pour Innover" (Editions Liaisons) and a professor at the M.I.P [Management Institute of Paris] |
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