Value Creation over Value Extraction

When you see an organization as a social value network (as I do) then you inevitably come to the conclusion that all stakeholders participate in this network in order to derive value from it. Customers, shareholders, employees, suppliers, banks, communities, business partners, governments, and everyone who is economically involved, try to get some value out of the organization. Or else they would not contribute to that collaborative project that we call a business.

But new value can only be created when that which is already valuable remains intact. When you delight customers while screwing suppliers, you’re not creating value, you’re just moving it from one stakeholder to the other. When you increase productivity while cutting corners in quality, you’re also not creating value, you’re just stealing it from the future. And when you think you create shareholder value by depleting natural resources, you’re again not creating value. You’re just transforming part of an ecosystem into an economy.

True value creation happens when you respect the things that are already valuable to some stakeholders. This means taking into account the values of people, at all levels of the hierarchy, and in all corners of the network.

Rather than viewing organizational processes as ways of extracting more economic value, great companies create frameworks that use societal value and human values as decision-making criteria.

– Rosabeth Moss Kanter,
“How Great Companies Think Differently”

“But”, I hear you think, “What is valuable to stakeholders? Which values should we respect and uphold? Because I want to be a true value creator!” Well, it seems you’re showing signs of curiosity, enthusiasm, and determination. Great! That means you’re already on your way to know the answer.

This text is part of Value Story, a Management 3.0 Workout article. Read more here.

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