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Friday, August 27, 2021

Can Non-Owner Stakeholders Select CEOs to Create Value? by Gautam Mahajan * [121]

I was in a conversation with an executive who had been head of Business Excellence and Chief Culture Officer and Chief Sustainability Officer in a large company. He reminded me of the importance of sustainability for our happiness and good health, and for creating a planet that could continue to sustain human beings. He said that he did not think that any CEO would drive his business strategy through sustainability. After all they are appointed by shareholders and their eye is on quarterly profits and profits. So, what the Business Roundtable is saying and what Davos has stated that the purpose of a company is to create value for all stakeholders is a far cry from ground reality. He also suggested that maybe a non-shareholder selected CEO could work better at making the stakeholder role more cogent.

It is the norm that the CEO is chosen by the shareholders and remains at their pleasure.

Should this really be the case?

If both Davos and the Business Roundtable have suggested that the purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large. The best way to understand and harmonize the divergent interests of all stakeholders is through a shared commitment to policies and decisions that strengthen the long-term prosperity of a company.

So, what is the role of sustainability leaders or customer leaders? Customer leaders have typically belonged to marketing and do become CEOs, but do sustainability leaders or community development leaders in a company or outside become CEOs. Why? And why not?

For that matter, few HR people become CEOs. Why?

Probably because they are functional in style and thinking and do not really create value.

Employees, of course become CEOs, but those who do from within the company, do they represent employees?

I think it is going to take time and serious thinking before any of the other stakeholders can become CEOs or select CEOs. This will require a serious effort to have a proper Purpose of the company.

Bold thinking purpose to improve the quality of life and happiness can bring great dividends. These improve the values of our company. We know from past work with power companies that over 60% of doing business with a company was their image and values. Values, we learnt from studies such as with Tata Power create value.

Since leaders can also be shareholders, should they look at creating happiness?

93% of 2000 leaders surveyed could not state why their company is in business. This means that many purpose statements do not have a proper sense of purpose. Are yours one of them?

As a leader you must have a purpose. What is a meaningful purpose you can express in terms of values, meaning ethics and morals etc. and in terms of what you want to achieve in life for yourself and your family? What will inspire those around you. Is it clean air, a happier environment, or a product with lowest costs and highest quality? The last is practical but it is your job to do so. Value Creation is going beyond your job and should be your purpose.

Do you know what your customers value, what your stakeholders value? How does your purpose reflect some of these aspirations and goals?

How can you inspire your people and family to create value and for whom and how? Granted it goes beyond the purpose but it can help you formulate and articulate purpose better.

At the very least your purpose should go beyond making money and increasing shareholder wealth.

This purpose will help you revise your vision and then your mission. Working on a strategy for each of your stakeholders will get you to a great business strategy, and re-inforce your purpose.

The purpose to create value for stakeholders makes you ally with employees, customers, society, environment and partners in learning from them and co-creating value with them. They become part of your succeeding.

Many of your employees prefer meaning to money. Should you too? Purpose improves employee participation and buy in. It creates value for employees by improving their well-being.

Helping employees with creating value for themselves and having a purpose engenders thinking about themselves and deciding what matters in life. It builds on the self, a sense of freedom and thinking about others.

Perhaps the selection process can be from a team consisting of all stakeholders, community leaders, suppliers/partners, employees, outside customers and environmentalists. This may help a polluting company change, or a company do more for the community and imbibe values in a better way, or become more customer and employee focused. Today it may not seem practical but it could become a norm in the future.

This selection process will lead to greater stakeholder participation in decision making and in choosing CEOs. This will make stakeholder strategy a reality, and change the business face around us from only making money to thinking of the future and creating happiness and a better place to live. This is Creating Value at its best.

* Gautam Mahajan is the President of the Customer Value Foundation and the Founder Editor of the Journal of Creating Value, jcv.sagepub.com. He may be reached at: mahajan@customervaluefoundation.com .  Article reprinted with permission of the author.




Thursday, August 26, 2021

The Joint Value Proposition as a Differentiator by Huba Rostonics * [120]



                                                     Photo by Suzy Hazelwood from Pexels

In today's complex business environment, there is almost no product or service that is made, or delivered, end-to-end by one single company. There is almost always an intricate network of supply chain elements and partnerships involved. With the exception of the few of us who are deeply wading in the waters of partner ecosystems, these complexities tend to be ignored.

Not even in some partner-friendly company settings is everyone adequately acquainted with their own delivery models. More than a few times, I have found myself briefing an executive about the differences between  their own Value Added Resellers and Agents.

Very often, these relationships are also  simplified, mentally classifying them like a "supplier" or even worse, "the middle man", as if for some inherited privilege they have earned the right to collect some type of tax that they don't really deserve.

The truth is that many companies rely on partnerships to deliver their products to the market, and their partners are an integral part of their Go-To-Market strategy. In today's world, it is a rare find a company that is capable to deliver their product or service all the way from the source, to the hands of the customer. Along this journey, several companies -or "partners"- may perform services, attach other products, etc. adding value to the final product that lands at the customer.  It is from this journey and the several steps of value-add that the concept of the value chain stems from, and the product or service that is delivered to the customer is experienced through its Joint Value Proposition.

While these concepts are omnipresent in the tech industry, they are all over our economy as well. Two of the most noticeable ones are the Distribution Channel, and the Service Delivery Partners. As for the first one, we see it everywhere, from the grocery store, the car dealership, or our trusted IT guy. For example, it is impossible -and not cost-effective- for car manufacturers to set up dealerships in every town, so they rely on entrepreneurs who are willing to enter in this business. In a similar way, growers and other foodstuff manufacturers cannot afford to go to every town to sell their goods, so they engage in the distribution network (channel!) that brings those goods to your local grocery store.

It is very important to recognize the value that each of these partners offers for the consumer. Yes, they take a piece of the profits to pay for their services, but they also add value to the product or service. For example, the local dealership makes it easy to get there, they offer financing (they basically bring together the automobile, and a financial product, the loan), and they can also service your car.

In the case of the grocery store, besides making it really convenient to buy, with extended business hours, refrigeration, and now even home delivery, they are also an "aggregator", allowing us to buy apples, milk and honey, without having to visit the orchard, the dairy farmer, and the beekeeper.

A Service Delivery Partner can be a key player in the value chain, especially if the product or service requires installation, servicing, or any form of customization. They can be as simple as the independent contractor that may install the carpets that you bought at the big home-improvement store, or as complex as Microsoft's partner network, where partners specialize in specific technologies. Think about the difference in value of the carpet just delivered to your house in a roll, vs. actually being able to step on it. How much more value does that have in terms of your ability to enjoy the product?

The way we experience a product or service is the result of all the value transactions that occur throughout the value chain, before they reach us. Some of these value transactions and the players involved, have evolved over time, filling a need. Others have been created intentionally, by design. This is where some companies have the opportunity to differentiate themselves from others by designing value chains that complement each other, delivering value to their customers.

In your journey, What would you build if you could do it all? What are you missing? What kind of partner do you need that complements the value that you create? What would be the differentiated joint value proposition?


* Huba Rostonics is a go to market, marketing and channel strategist that has helped companies in the cloud, virtualization, networking, IT security, and telecom verticals to build strong and resilient partner ecosystems, and attain ambitious sales objectives. Visit his website at http://www.channelmeister.com





 


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