Values & Purpose

Values & Purpose - Strategy's Core

Misconceptions

Today many people at the helm consider that their ultimate goal is to
maximize shareholders profits. CEO's and their boards of Directors see it almost
as their legal obligation. Some of the most eminent management gurus contend that it is ethically
wrong for Boards and CEO''s to do anything that threatens profitability for
shareholders. But ethically, how can we justify economic advancement that
threatens our whole human existance? Indeed the root of ethical leadership is
correcting - the balance between the good for a few vs. good for the many.

Increasingly there is a rising tide of informed
opinion that sees the sustainability of society and the global ecosystem as
something that must be included in any equation of the purpose and goals of
organizations.

Often people assume that sustaining values and sustaining profits
are mutually exclusive, that concerning ones organization about social and
ecological issues may somehow defocus and impact negatively on the organizations
goal to maximize shareholder value.

 

 

The sentiments expressed by Doug macNamara, are common among many - one
that puts sustainability of society and the global ecosystem as
something that leaders should see as important - is good. However it
still bows to the misconception that values will diminish profit.

Achieving sustainability of
the whole (society and ecology) does not in fact need to equate to a diminished profitability.

The need to change these underlying assumptions as imperative. Such a
change is in fact in the best interests of leaders and the
organizations and stakeholders or shareholders that they serve. The
belief that sustainability somehow diminshes or becomes a drag on the
profit objectives is in fact based on flawed assumptions. The view is a
dangerous fallacy that has been allowed to prosper without objection
for too long.

Aligning profit with values

A strong organizational position is awaiting those organizations that can
successfully align their strategies so that the sustainability of society and ecology - the
whole - is achieved and in the process accomplishes sustainability for the
organization.

 

Early examples are renewable resources. Those companies (BP) /nations (Brazil)
that are adapting now to demands for renewable energy sources, are in a prime
position for serving large potential markets - very sustainable profits  will emerge.

New positive regulations emerging are a result of pressure from people
around the world , they represent a very real trend, just like any market trend,
sustainability of the whole is a growing theme that makes good business sense to
deliver value in.

 

Business people, ceo''s and boards of directors/governance bodies,
shareholders, stakeholders are severely failing to inform themselves so long as
they don’t examine their common assumptions on this issue.

Creating value should come before profit:

 

Creating value should come before profit. Profit is a byproduct of
value creation. If leaders focus their strategy on creating value then
as long as they do deliver value, profits - if that is what is needed -
will follow.

The reverse is not true. Focusing a business strategy on
sustainable profits does not necessarily require a company to deliver value, and
the upshot is that they will probably end up spending millions on marketing low
value to persuade markets that they should still want something of eroding
value. Such company strategies descend into business games such as monopolies,
opaque markets, and protectionism which have very little to do with delivering
value, but everything to do with maintaining profits.

Such strategies
are not sustainable in todays rapidly changing and complex world. Such
strategies backfire and prevent their authors from playing a part in
the real markets of the future, future markets are waiting to be created by
business that can identify and deliver new customer value. Such value doesn’t
need as much effort to sell, it is often very evident to customers when they see
it.

Profit as paramount goal guarantees drift:

 

When companies put sustainable profits above all else, including
sustainable value creation (which may or may not include sustainable
social & ecological value creation) they are saying that they
really have no vision beyond "greater and greater profit creation".
Such a vision is empty of real strategy, leaves the organization to the
whims of changing leaders and certainly inspires very few.

Most leaders today accept that in order to "lead" an organization to
success, they need to build a vision and a mission that really drives
their organizations strategy and direction, that really captures the
imagination and passion of their staff, customers and potential
shareholders.

 

Values not just Value:

the higher Values we hold determine what we see as value. So when we
put value creation before profit, we are also putting our values to the
forefront, because our values are what determine that which we see as
creating value. If we believe in a green world, then we see value
creation as something to satisfy the needs of a greener world.

Values the key to future success:

Delivering Sustainable Whole Value in particular,
may be a key Competitive advantage. Values that are universal represent the future.

It is quite clear that sustainable Value creation comes first,
sustainable profits creation second. Moreover there is a specific niche of value
creation that is focussed on delivering value in terms of sustainable whole
(social/ecological) rather than just satisfying individual needs. Aligning strategy
with value creation specifically the kind that is in terms of universal values - sustainable whole
(social/ecological) value, is the key
to competitive advantage for many companies in the future.

That’s where people
will make money, because they will have worked out a smarter strategy than
anyone else. A strategy that delivers sustainable profit growth, through
sustainable value creation, and in particular the kind of value creation that
delivers whole (social/ecological) value more so than just delivering personal
value. Value creation that is in touch with universal valuesis the height of achievement.

 

This concept in fact is at the heart of our organization, Stratagility, which
we hope can lead to improved business practices through a new understanding of
what the real essence of strategy should be. A key goal being to address the question:

".. How do we build the knowledge and
understanding of Leaders, Governers, Board members, stakeholders, shareholders
in order for them to absorb, appreciate and act upon such an important
perspective?"

 

Overturning Assumptions:

 

Our response is that it is necessary for leaders to revisit and re-evaluate the
very essence of what Strategy and success is all about.

It means - returning to
the first point - that we overturn some deeply ingrained assumptions.

It means
we need to get people to examine the possibility that sustainable profit gowth
for shareholders is in fact a result of business strategy that sets sustainable
value creation - especially sustainable whole (social/ecological) value - as the
paramount issue driving the business forward.

Sustainability of the organization requires sustainability for society
to be primary values. Those values determine the value creation being
offered, and the resulting profits or income sources. Profits merely
being a means and not an ends in the effort to sustain an organization.