Abstract
This article aims to help the reader to understand the key factor determining business’ mission. What is the key driver or motivation for the organisation to exist? There is obviously personal motivation as well, that is driving an individual to start up his / her own business, which is often clearly identified. On the other hand the organisation’s key aspect or principle is often wrongly understood or not fully identified, which might act as hindering factor to achieve the success. The strategic purpose expressed in mission, vision, and objectives should be determined and driven by Value. The following text will briefly explain what should be meant by a key word – VALUE.
The magic approach
According to own practice, research and observation the word value is often either wrongly understood or ignored by business practitioners and managers. Upon asking some of them the word value is often mixed with or understood as financial reward – profit. The higher the value the better the condition of the company is, they say. That might be some sort of a true. However by looking at this, there is a challenge where profitability is not a guarantee of how the business performs and that is not a great indicator for future’s projections and sustainable competitive advantage. To clarify, there is no criticism around financial indicators, they are obviously important, and yes the higher the profit the better. So what’s the matter? This key word Value, should always stand on the top of developing, planning and executing the company’s future – The Strategy. The company’s purpose should always be determined and driven by value. The value in this example is always perceived from the targeted customer’s point of view. That means, value is not what the business owners see as benefits for them, but what customers perceive as something that they have an interest in. The value must reflect customer’s needs. This needs must be discovered, identified and then all the rest like plans, tactics, processes, resources aligned to value which is road map for the business. Even the best companies, operating in most excellent way might disappear from the market if the element of customer’s value is missed. It is also important to note that once value is identified it is never static. It is constantly changing, hence review and research on value creation and constant adjustments of customers’ needs must follow. Once the question is fully answered on what are the targeted customers’ needs and what do they perceive as value, only then the organisation must decide on how to achieve it? How to meet those needs in a better way than competition? Once these factors are met then the financial outcome will come as a reward for delivering value. Agreed, the discussion in the text is quite simplified but this is critical to understand and to be aware of value creation. All activities must match and be value adding. There are number of functions, roles and departments within the organisation that work together to deliver value and to meet customers’ needs. It is critical to know that each activity must be dictated by customer’s perceived value. Business cycle always starts and ends with the customer!!!
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