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To be successful in business, leaders need to focus on value creation

by | May 29, 2020 | Coronavirus Lockdown, Finance, People, Sales & Marketing, Strategy | 0 comments

Value creation should be the focus and starting point for all organisations (Jorgenson, 2015). The idea is simple, people do not buy ideas, they buy value. The question in the minds of the consumers is, “Does this product or service benefit me?” and most importantly, “Is the company I’m purchasing from providing me with good value?”. As an organisation, to ensure success, sustainability and of course maintaining relevance in volatile and uncertain environments, the ability to keep providing value to your customers, will warrant loyalty and ultimately keep you in business.

The definition of what value means can vary greatly from organisation to organisation, but essentially it all comes down to one core element; offer a product/service which solves a need and is uniquely distinct from competitors (Jorgenson, 2015). In the future, value will be based on creativity and customisation and less on mechanical production (Hughes, 2013). In my opinion, I believe value can be measured by total revenue. The price a customer is willing to pay is the exchange value he/she has decided is worth for the use of that product/service (Fabozzi & Grant, 2000).

As a management consultant, when I am asked to help a struggling organisation improve which, was previously successful 30 years ago, it is often because they have noticed a decline in their revenue. Why, after years of success is turnover declining? One of the attributable reasons is the lack of value, and that lost customers feel they are not getting it. Oftentimes, leaders of these organisations get comfortable in their dominant logic and refuse to explore the unknown. They lack the courage and curiosity and sadly only realise they are no longer relevant when revenue starts dropping and they start experiencing a cash flow crisis.

In order to win in these rapidly changing environments, leaders need to focus on value creation and embrace the fact that machines are the future. Leaders should use new technologies to unlock more time to be creative about the business and understanding value from their customers perspective (Hughes, 2013). It is also important to make value creation and innovation part of company culture. Define what value means to the organisation and how it will be measured, then create new ways to enhance customer perceived value as well as producing products and services that enhance their lives. The world is in desperate need of leveraging modern technology to develop innovative solutions, appreciated today and relevant in the future while providing value to all stakeholders as its core purpose.


Fabozzi, F. J., & Grant, J. L. (2000). Value-Based Metrics: Foundations and Practice. Bridgewater: John Wiley & Sons.

Govindarajan, V. (2016). The Three-Box Solution: A Strategy for Leading Innovation. Boston: Harvard Business Review Press.

Hughes, J. (2013, May 17). What Value Creation Will Look Like in the Future. Retrieved from Harvard Business Review: https://hbr.org/2013/05/what-value-creation-will-look-like-in-the-future

Jorgenson, E. (2015, September 14). Why Value Creation is the Foundation of Business: How to define it, measure it, and manage it. Retrieved from Medium – Evergreen Business Weekly: https://medium.com/evergreen-business-weekly/why-value-creation-is-the-foundation-of-business-how-to-define-it-measure-it-and-manage-it-147c92b87aca

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