What is Value?
In today’s IT and business landscape, ‘value’ is a term that’s frequently used but often overloaded with different meanings. Understanding the specific type of value we aim to deliver is crucial, as it helps in determining the appropriateness and timing of our focus. Delivering value is important, but it’s equally important to ensure that the value delivered aligns with the current needs and strategic goals of the organization.
Different Types of Value Explained
Let’s explore various forms of value and their implications:
Customer Value: This is the value created for those using your product or service. Focusing on customer value is typically a primary goal for organizations. However, labeling an activity as not contributing to customer value, and thus deeming it non-priority, can sometimes be detrimental. The challenge lies in balancing the pursuit of customer value without neglecting other vital aspects of the business.
Employee Value: Often overlooked and rarely measured objectively, the value provided to employees has far-reaching impacts. Employee value is closely tied to the employee experience – how they interact with their work environment and systems. For example, dealing with inefficient processes or poorly integrated systems can lead to significant productivity losses. Leaders who underestimate the importance of streamlined processes and a positive work environment risk diminishing employee focus and morale, inadvertently leaving substantial value unexplored.
Shareholder Value: A pivotal aspect of value creation, shareholder value, especially in legal terms, is paramount. However, in the context of startups, this concept often extends beyond immediate financial returns. In early stages, shareholder value might be more closely linked to user growth or engagement. An interesting dynamic occurs when the growth in customer engagement and company revenue shifts shareholder expectations towards more tangible returns or demands for operational optimizations to enhance profitability. It’s crucial for leaders to effectively communicate and balance long-term strategies with shareholder expectations.
The Broader Impact of Value Recognition
Recognizing value as a comprehensive, cross-functional stream is essential for organizational success. When departments focus solely on localized value creation without considering its impact on the organization’s overall objectives, the result can be counterproductive. For instance, implementing an intricate ERP system during a period of rapid growth might offer departmental benefits but could divert essential resources from critical business functions like sales and product delivery. Decision-makers must weigh the benefits of such initiatives against potential disruptions, especially during crucial growth phases.
The Founder’s Perspective on Value
For founders and leaders of growing businesses, quickly identifying and focusing on critical organizational components is vital. Leveraging fractional executive services, such as a fractional CTO or CIO, can be instrumental in ensuring strategic decisions align with the organization’s value creation objectives. These leaders play a crucial role in steering the company towards effective value generation across all fronts.
