The definition of success for an enterprising entity, be it a for-profit company or a not-for-profit organization, has been the subject of hundreds of academic and professional books, articles, conferences and symposia and has been the object of research for many outstanding minds.
Despite the volume of grey matter, energy and time devoted to this fundamental issue, there has been no unanimous answer until now, either in theoretical or in practical terms.
However, applying the basic rule of scientific research, the truth can be revealed through the study of “successful” companies and organizations - successful in the sense of creating and delivering wealth in a sustainable way, as judged by the affected stakeholders.
All research evidence points to the fact that business success means the creation and delivery of value to all stakeholders: shareholders/owners, employees, suppliers/partners, investors, customers and the community where the company operates.
Defining value is also controversial. It must be seen through the eye of the beholder. For the owners/shareholders, it would mean competitive dividend and/or increasing market value. For the employees, it would mean fair emoluments, stable employment, comfortable pension and so on. For the customers, it would mean satisfying their needs: full functionality, high quality, durability, value for money, etc. For the supplier, it would mean stable orders, prompt payments and so on. For the community, it would mean well-paid jobs, protection of the environment, etc. Value evolves and differs from company to company and from individual to individual.
For company leaders, the main questions remain:
1. To what should they primarily devote their energy:
- Formulating the company’s value proposition and delivery, in the context of its Mission?
or - Formulating strategy, in the context of its Vision?
Most recent, extensive, international research carried out by our associate, Prof. Dr Andrew Kakabadse(1), shows that defining the value delivery should precede strategy. Of equally vital importance is how the value delivery at first and the strategy then, are formulated.
The successful leaders at first create and nurture a culture
which enhances the engagement and alignment of all company stakeholders in both formulating the value proposition and delivery and only then formulate the strategy and plan how to implement the strategy and deliver value. They continually interrogate and test the assumptions of both the value proposition and delivery and the strategy by collecting real data and discussing them in a free spirit with representative stakeholders.
Unfortunately, many leaders follow the path of perceived value! They formulate at first their strategy and then ‘manipulate’ ‘their’ value proposition so as to ‘fit’ the strategy. They usually deny opposition arguments by their ‘subordinates’ and push for a strategy which is detached from reality. The result is obvious: by the time they recognize that both their value proposition and their strategy are faulty, it is too late to change them! Their company and they, themselves, are doomed!
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(1) The Successful Formula – How Smart Leaders Deliver Outstanding value, Andrew Kakabadse, ISBN: 978-1-4729-1684-6
18.9.2015