Do CEOs Value Investors more than Employees?

Who Comes First?

A company is operated by its employees, run by a CEO, financed by investors, and so on. In this matrix of varying types of stakeholders, we thought that it would be stimulating to find out who was considered to be the most important in the eyes of the different individuals.

To understand what perceptions people had, ValueStrat Consulting and Customer Value Foundation conducted a survey on corporate executives and asked 4 basic questions as follows:

1.       Who comes first in your view?

2.       Who comes second, in your view?

3.       According to you, who does your CEO consider comes first?

4.       According to you, who does your CEO think comes second?

All questions are to get the views of only the executive. In the first two they give their view and in the 3^rd & 4^th they give what they think their CEO’s view was.

The results of the survey are as follows:

 Executives’ view of who comes first and second

We found that 71% or nearly three-quarters of those surveyed felt that according to them, the Customer comes FIRST while about a fifth (21%) felt that the Employee comes First.

Just over half (54%) executives felt that the Employee came second while a quarter (24%) felt that the Customer comes second.

This is a very interesting point because it means that a staggering 95% or almost all of them respondents felt that the Customer comes first or second in their scheme of things. Also, according to 75% of the executives, employees were in the top two important entities.

Conclusion: In the view of the respondents, the Customer is on top, followed by the Employees

Now let us look at what the executives thought their CEO’s view was. We did this by asking how they thought their CEO would answer the same 2 questions, and here are their answers:

What Executives thought their CEO’s view of who comes first and second

45% of the executives felt that their CEO would think that the Investor comes first while 42% would put the customer first. Only 9% put the employees first.

Bottom Line: Surprisingly (or not), we can discern a distinct disparity between what executive felt about who is important and what they thought their CEO considered important. And they clearly felt that their CEO thought nothing much of their employees. That they cared more for their investors than their employees!

The results are startling in that the executives did not share the views they felt their CEOs had. This is a huge disconnect between executive thinking and their perception of CEO thinking! This being the case, it is imperative that the company takes measures to remove this perception-gap and align the processes for better efficiency and profitability.

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies, create value and deliver profitability. ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more

Customer Value Foundation (CVF) helps companies to Create Value for the employees, business partners, customers and society and thereby for shareholders. Visit www.customervaluefoundation.com to know how to help your company Create Value.

The Question of Value

Let us start by trying to define Value, and by this I don’t mean value as in ethics. So, if you put your mind to work, even without trying too hard, you might come up with Value as:

·         The worth of something

·         The fee or price for something

·         Something of importance or significance, etc.

These are not entirely incorrect and there might be these plus many more different descriptions that you could come up with if you tried a little harder to define Value. You won’t be far off the mark, but if you look close enough at these statements, you will find that there are two implicit factors that are common across the set:

1.       The explanations are as perceived by the recipient of the item or service; and

2.       The degree of value is proportional to the quantum of perceived or experienced benefit

Therefore, combining the two descriptions, we could perhaps come up with a simple yet powerful definition of value, as below:

“Value is the amount of benefit received”

“Not so fast” you might say and add, “why not simply say ‘Value is the amount of benefit’ and leave it at that because, surely the amount of benefit received is the same as the amount of benefit delivered?”! The counter to that is that the amount of benefit received turning out to being the same as the amount of benefit delivered is not true always, except when you tailor the delivery of value to exactly to the expectation of the recipient. Otherwise, even if you think that you are delivering more value, if the receiver doesn’t think so, then there is not net value created.

The implicit but very important factor here is that the beneficiary almost always determines whether value has been created or delivered, and, by the same token, whether value has been destroyed or under-delivered. For example, if a person receives a simple birthday greeting text message from a friend on the birthday, they might value that more than a box of chocolates sent a week or so later. Of course, in personal relationships one could always talk and sort things out, but in business, it is a little more complicated because it is a commercial transaction between remote parties.

So, now that we know that “Value is the amount of benefit received” and that since the beneficiary sets the benchmark, is it not imperative that when, as a business, you want to create and deliver value to your customers, you should find out exactly what the customer wants? Also, it seems pretty straightforward that if you ask the customer and deliver to their expectations, you should be on track. Perhaps, but the only hitch is that consumer behavior is not linear and therefore complex to understand and the expectations of a customer can be dynamic and manifold based on a multitude of factors. 

Therefore, given this scenario, it is vital for businesses to have a continuous “conversation” with the target beneficiaries to understand their current state of expectations and be one step ahead in delivering to those expectations. This is a reliable way to create & deliver value and be profitable.

Let’s go, create and deliver value!

ps: Stay tuned for my next piece on the type of “conversations” businesses can have that would give a more dependable idea of what customers expect.

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies, create value and deliver profitability.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more

The Question of Control v Disruption

Everything we do, whether in business or in personal life, can be broken down to two simple categories – those that are in our control and those that are not. This could apply to people, market situations, business processes, economic factors, social dynamics, or anything at all.

Two questions emerge from this approach:

1.       Should we only focus on things within our control just because we are sure? And,

2.       Should we disregard the rest as falling within ABC (Areas Beyond Control)?

Quite often, we get into a state of “let’s focus on things that we can control, rather than waste time and resources on those we cannot” because we have been made to believe or even taught to do so.

Instead, what if we were to look at things we regard as ABC with a view of “uncharted territory that must be explored”, would that help us understand things better and perhaps even move it to our basket of controllable items? A great example of something not in our control is Consumer Behavior.  It is something that even big companies with their big money on big data analytics haven’t quite nailed it.

So I am going to try mashing concepts from Zen, Michael Porter and McKinsey to provoke thought on how we could better understand things that are ABC to get them into the controllable category and optimize them to possible success.

There is a Zen philosophy called the “Zen of Not Knowing”, specifically the Zen notion of “Not always so.” that can be applied to consumer behavior, of which no one can claim to have complete knowledge or control. Why adopt this attitude? Because when we are certain that we don’t know, by embracing the idea of “Not always so”, we get an opportunity to look things again more carefully and see what other possibilities there might be in the situation. This kind of thinking would also help us develop alternative thinking and newer perspectives combined with better utilization of technologies that could lead to disruptive and path-breaking strategies.

McKinsey, in this report - Why your marketing Planning Process is Broken … say that marketing executives often fail to clearly distinguish between things they can control and things they can’t. They also raise the very pertinent questions, “How can we maximize the impact of things we can control and reduce the impact of those we cannot? And, how can we improve the interaction between the two?” Their take is that Business Analytics must do more than just tell you what happened; it must also tell you why, so that you can then develop a perspective or model that might help quantify and analytically link consumer behaviors with drivers of growth.

So, to summarize:

1.   Define what is in your control and optimize the processes within

2.   Don’t disregard things outside your control. Study them to see what disruptive opportunities can be developed

3.   Don’t look for ways to relate consumer behavior with drivers for growth, but define growth drivers to link with customer behavior and customer expectations. After all as Michael Porter said, “The essence of strategy is choosing what not to do”.

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies and clear inefficiencies.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more.