Value Management: Value-Led

“Value” is one of the most used terms in today’s business lexicon; it is also one of the least understood.

In most cases, the heart of the problem is that Value is usually seen as ultimately objective.

Value is then treated almost exclusively as a noun, rather than a verb – as static, rather than dynamic:

• Interchangeable with “cost”, and ultimately reduced to, and expressed in, monetary terms.
• Defined upfront, and then managed with KPIs and data.
• Created by the producer and delivered to the consumer, as revealed by the ubiquitous term “value creation”.

There is an element of truth in each of these things: money is part of Value, it is important to both plan ahead and measure, and entrepreneurs do generate new ideas.

However, this narrow concept of “value” – representing (as we will see below) the most basic level of up to six levels of how Value can be considered – misses out the full richness of what it really is.

What Value Really Is

Value is ultimately what matters to – or is “valued” by – our customers, our stakeholders, and us as organisations.

This means that Value is not primarily objective, but instead primarily subjective:

• Driven by underlying values (ethics, character and cultural traits, etc) and past events. 
• Defined, perceived and experienced by the customer; only facilitated by the producer.
• Mostly impossible to reduce to “cost” (hence the often huge discrepancies between book and market valuations).
• Variable between different contexts and over time.

Most of all, Value is therefore Complex – it emerges and changes, has rich interdependencies and can often be unpredictable – and whilst this brings huge challenges, it also presents a key opportunity.

Why Value Works

Precisely because Value is complex, it is at the heart of how organisations successfully navigate today’s Complex business environment.

At the most fundamental level, this is because Value balances the two potentially competing forces of flexibility and order:

• Flexibility: what is considered “valuable” varies infinitely between situations and over time (emerging from the unique and constantly changing interactions between those involved, and with the wider environment).
• Order: “value” is the universal guiding principle in all situations (as it is the one constant, or “attractor” of focus and activity, that can be referred to continuously – expressed as the Things That Matter, which provide sufficient order to guide activity and prevent chaos).

Value is also what engages people, motivates them and leads to change – clarifying priorities, driving decision-making and realising benefits.

In other words, Value not only reflects Complexity; it also gives shape to it, and lights the path through it.

Realising the Implications: Being Value-Led

Focusing on Value is therefore the only effective way to be in tune with, understand, and harness the elements and dynamics of complexity, rather than:

• Being a victim of Complexity, which leads to resignation or denial. 
• Futilely attempting to resist, sidestep or control complexity, whether by doubling down or pursuing quick fixes.

This means prioritising discovering what is truly valuable in the situation – the Things That Matter – and understanding the underlying structure and dynamics that drive what this is.

After all, the other “mistake” when it comes to Value – less serious than seeing it as wholly objective, but still very limiting – is treating Value as entirely idiosyncratic and mysterious, when it actually has knowable structure and dynamics, and up to six different perspectives from which it can be considered.

The “Structure” of Value

In terms of structure and dynamics, the profile of values that drives what is considered “valuable” is different – idiosyncratic – every time. However, this profile is still drawn from a knowable and fixed set of these values: 

• These foundational values are necessarily abstractions and generalisations that take particular form and expression in the detail of each situation, but they provide a “home” for every held “value”.
• They can also be organised in a way that maps adjacency and opposites, where adjacent values can be readily cultivated, whilst opposites are the sources of tension and indicate choices to be made.
• All values are tied to specific experiences that an entrepreneur is best-placed to pursue on the “production” side and that the consumer/customer will value on the “consumption” side.

The relevant values can therefore be clarified in a given situation, and congruence established, or differences understood and consciously managed.

This is the start of demystifying “value”.

Value Attitudes and Perspectives

This developing understanding is refined with an appreciation of the three successively more sophisticated and powerful attitudes towards Value:

• Cost-led / Data-aware: focussed on objective costs incurred on the “production” side.
• Exchange-led / Situation-aware: focused on quantifying the factors involved when the “production” side meets the “consumption” side.
• Value-led / Complexity-aware: appreciating Value in all its subjective richness, together with the dynamics that cause it to emerge and change.

The first attitude is what tends to mostly dominate, and the second attitude is widespread (albeit not as nuanced as we describe it here).

The third attitude, however – despite, as we are making a case for here, being the only “correct” one – is unfamiliar to most, whilst our contribution of Complexity-awareness within it is new: the missing piece of the Value “puzzle”.

These three attitudes in turn feature six perspectives from which Value can be considered (all of which influences the Perceptual Positions adopted when evaluating it):

Putting It All Together

Whilst the Value in any situation will always be idiosyncratic and fluid, there now exist the models and tools to surface what it is, perceive it, describe it, understand it and manage it.

This helps not only to more effectively surface and understand the Things That Matter – the true “currency” of Value – but then also to channel resources, catalyse creativity and action, and empower people to act.

The result?  Alignment, resilience and coherence around authentic Value – Value Management – that achieves engagement, motivation and change.