The Case for Value Management: Part 2: the Extraordinary Opportunity

22 July, 2024

Part 1: the Extraordinary Need
Part 2: the Extraordinary Opportunity
Part 3: Making it Happen

Pretty much every organization says that Value is a big deal to them. But when you look at what that means in practice, it’s flimsy and disjointed to say the least. What is needed is a dedicated cross-functional Value Management function to put some substance behind the claims of a focus on Value and to deliver on them.

In the second part of this three part series, we’ll look at the huge opportunity there is for individuals and teams to take responsibility for – and ownership of – Value in their organizations, and we’ll see why something truly new is needed to make this happen.

Last time, we looked at how Value is what is most important to organizations (whether or not they say it is) but that it is also in a state of near complete organizational neglect.

We saw how this is due to the combination of the way organizations currently develop and the passing of time, a combination which creates distance from the original entrepreneurial vision – both temporally and in terms of organizational structure.

Exacerbating this is how Value is (mis-)conceived as a noun: static, objective, created by the organization and delivered to the customer (rather than correctly understood as a verb; a Complex phenomenon that is always changing, subjective, perceived by the customer and facilitated by the organization).

There is therefore a mix of:

“Passive” decline in the ability to sense and adapt to change.
“Active” pursuit of methods that attempt to “create” and “control” Value, without understanding and focusing on what Value actually is.

People assume that what is valuable is clear – and that everyone is aligned around Value – but this is demonstrably not the case.

We then concluded by reflecting on the dire consequences that follow – for starters: organizational fragmentation, employee disengagement, inefficiencies and waste, and customer and stakeholder dissatisfaction – but also by suggesting that this also leads to an extraordinary opportunity:

“…because – if it is possible to appropriately and effectively manage Value – there is scope to transform virtually all of the issues and challenges that organizations face.”

So how do organizations avail themselves of this opportunity to transform themselves (and with it, their competitive standing)?

It all begins by being motivated to transform – really grasping the scale of the opportunity for both organizations and individuals – and understanding why something genuinely new is necessary to do so.

Let’s look at each in turn.

The scale of the opportunity – for organizations

Change is difficult.

Our natural preference is to avoid it and to stick with the status quo if at all possible, and that preference usually persists even when the status quo is clearly not working.

A compelling vision of the future is therefore needed to motivate change.

And if we consider what an organization would look like it if it had clarity about what Value means to it – and maintained a relentless focus on that – it’s certainly compelling.

Essentially the inverse of the picture we saw last time, such an organization would enjoy:

Co-ordination and alignment: instead of fragmentation and internal competition, the organization would pull together in pursuit of a common purpose.
Motivation and engagement: instead of disenfranchised employees being told what to do from on high, the organization would demonstrate collective ownership, and bottom-up responsibility and passion, where everyone understands their contribution and staff turnover is minimized.
Proactivity over reactivity: instead of just reacting to problems, the organization would be able to significantly anticipate and prevent issues.
Revitalized innovation: the organization would stay fully in touch with changing Value preferences, prioritizing the ability to identify and implement both the incremental and more substantial adaptations needed to thrive in a changing environment.
Efficiency: resources would be utilized more effectively, eroding siloing, reducing waste and optimizing processes.
Effectiveness: efforts would be directed towards the most impactful activities, and decision-making streamlined and improved.
Sustainability: mitigation of short-termism and preventism, and the encouraging of more holistic approaches to increase long-term viability and resilience that radiate out from the organization to the wider stakeholder community.

In summary, a specific and relentless focus on Value would align the entire organization towards common goals, transform employee engagement and morale, enhance efficiency and effectiveness, and address challenges at their source, leading to sustainable success and growth.

The scale of the opportunity – for individuals

But, of course, organizations don’t “do” or “achieve” these things; no “organization” has ever “done” anything; it’s rather the people that make up those organizations that these things fall to.

And so the huge opportunity here is most immediately one for individuals (even if this in turn leads to opportunities for their organizations).

We talked last time in general terms about how a lack of concerted focus on Value leads to employee disengagement and disenfranchisement, but many individuals find themselves facing any or all of four further related challenges:

Radical change or even obsolescence in their role due to the advance of technology.
Being in a cross-functional role, where their contribution isn’t recognized – a familiar issue in contract management, alliancing, project management, change management, etc, where they’re often seen as “interfering” by vertical business units and there’s rarely board representation.
Being stuck in a “bullsh!t job“ – a job so divorced from any combination of 1. what the individual finds valuable, 2. what the organization’s purpose is or 3. wider contribution to society, that “even the employee cannot justify its existence“.
Living with constant and increasingly intense pressure to deliver results, but without the tools they need to do so (we’ll look at why these tools are missing in the next section, but this article looks at how executives are on a particular hiding to nothing, given the buck often stops with them).

(And note that this constant and increasing pressure can absolutely apply in a “bullsh!t job”; even if the targets set there are “meaningless”, the push to achieve them can still generate enormous stress.)

Our friends at WorldCC have reported that 40% of commercial and contracting professionals see themselves exiting the profession within the next 2 years, and this is far from atypical as these challenges bite.

Now, of course, advances in technology can’t be stemmed and not all roles are worth saving.

However, many exceptional people are caught in the headlights of these challenges – especially those in cross-functional roles – and they have enormous and invaluable experience, knowledge and internal organizational connections; it’s just that the existing opportunities for putting these assets to use in a rewarding way are becoming more and more constrained.

At which point enter Value Management: an opportunity – even a lifeboat – for such individuals to be winched out of the whirlpool of deteriorating or vanishing roles (or, more accurately, to winch themselves out), and use their accumulated experience, knowledge and connections to take ownership of what their organizations consider valuable.

A contracting professional, for example, is intimately involved in the end-to-end process by which an organization supposedly establishes, communicates, formalizes, manages and delivers on what matters most…

…and so whilst the role is under “threat” from technology that can assist with (or significantly largely take over) the drafting and negotiation of contracts, the management of contractual commitments and the administration of the contract itself, there is an enormous opportunity to redefine that role as being where Value for the organization is “kept” – not just within individual relationships but across the board.

In turn, this would make such individuals incredibly valuable – even indispensable – and give them the clout to override and cut through the organizational silos and barriers that so often currently frustrate them: who could stand in the way of someone that can say “you may have a piece of the picture, but I’m responsible for the whole picture”?

Whilst – as we’ll see next time – changes to the hierarchical ways in which we run our organizations are long overdue, such change is going to take time; in the meantime, Value Managers could not only spearhead this change, but also naturally command seats at the executive table.

On all counts, then, Value Management – even in the guise of an existing role – would be the complete opposite of a “bullsh!t job”; indeed, it’s a “franchise” opportunity to become indispensable and at the heart of everything the organization does.

So, organizationally and individually, Value Management presents a compelling vision of the future, indeed…

…and one that – if it helps to have it externally validated – can be seen in leading-edge companies like Tesla (which, whilst far from perfect, go a long way to realizing this vision)…

…but to achieve this vision, it next needs to be established that there is no alternative but to do something new.

Why something new is needed

Given the disruption (and frequently the discomfort) of change, it is entirely reasonable and rational to begin by seeking to use what’s already available.

However, when it comes to existing methods, not only do existing results speak for themselves, but we can also see why these methods don’t work – and can’t work – and that’s the next step in embracing the need for something new.

This understanding begins with realizing and acknowledging that our world is fundamentally Complex – where technology accelerates and pours rocket fuel over its flames – and then seeing how our ways of working are totally at odds with this:

Most organizations work top-down – often called “command and control” – when, in practice, Complexity means that things are increasingly happening bottom-up.
Anything top-down usually ends-up bolted-on – not collectively-owned and baked-in – so it doesn’t “stick”, which is then part of a more general disconnect between leadership and the front line.
We try to pin down and control things when they’re constantly changing and unpredictable.
Contracts, standards, etc are either too prescriptive – treating unique situations in much the same way – or (and sometimes also) too exhaustive, trying to make sure that nothing gets missed, when it’s of course impossible to do that…
…and such methods – tend by their nature to either remain static or to be slow to change, so there’s a real challenge to agility, resilience and adaptability.

Our existing methods are trying (and, Canute-like, inevitably failing) to work against reality.

Whilst people may not realize that this is what’s happening, many at least experience the effects, and therefore sense that something new is needed.

At which point there is lots on offer out there that seems to be new, either promising to transform everything or where people assume that this is what will happen.

“Something new” approaches are approaches are seductive but are generally only partially right:

They recognize that directly repeating what’s always been done isn’t working.
They usually alight on something that really is involved in Complexity and thus in effectively responding to it (witness (“it’s all about people” or “we need to radically embrace technology“) .

But ultimately, these “something new” approaches fall short in one or all of three ways.

Firstly, and most immediately, they fixate on the one aspect of Complexity they’ve focused on, neglecting the others, and a partial approach can never be effective.

Secondly, such approaches – typically with technology, but not exclusively so – are presented as leading to inevitable success, but without much detail or clarity as to how.

For example, AI is supposed to free up time for Value-adding activities, but these activities remain unspecified; the assumption being that more time means that Value must surely follow.

But thirdly, and most profoundly, behind the veneer of novelty, there’s the linear assumption that challenges are problems that can be understood, controlled and “solved”, but this time with the ‘new’ tools – ultimately, we’re back to existing approaches.

Ultimately, then, as one report put it:

“Viewing technology deployment as a quick fix to long-standing neglect can put a project on a path to nowhere”.

And, as MIT Sloan has observed, the results of ill-thought-through investments here have been unsurprisingly disappointing:

“As digital disruption has become a major force across industries, organizations have responded with significant investments in digital transformation. Unfortunately, recent research suggests that most of these efforts fail to meet or exceed expectations.”

Conclusion

We’ve seen the clear opportunity for organizations and for individuals, and we’ve seen that existing methods (including when disguised as something new) aren’t working or able to work.

But all this is academic unless there’s a viable alternative, and far too often analysts and consultants have been able to assert that what’s currently being done isn’t working…

…only to present “new” solutions, which are in practice no different to existing approaches…

…or to stop at general principles, but without proposing anything concrete, actionable or systematic.

Value Management is genuinely new – paradoxically by returning to first principles of reality and working with what’s already in place – and it’s fully worked-through in detail.

So what does true Value Management look like? And how do organizations get to this point from where they currently are?

That’s what we’ll be looking at next time.