Value has two synergistic sides, the value of something being offered (i.e. what do customers gain) and the return value (i.e. what does the company get back) (O’Cass and Ngo 2011). O’Cass and Ngo suggest that value offering is a critical piece of creating competitive advantage and that it is obtained through continual research, assessment, and adjustment. They also argue that a company should first look to its own values, which will naturally lead to products or services that a customer will hold valuable (p.667-89). With this in mind, the next step is to determine what drives this value creation and what role leadership plays in it.
Valuable insight into the role leadership plays can be found in a Forbes roundtable of CEOs from top companies exploring the assertion that there is a direct link between value creation and the success of an organization and that culture is the primary force behind value creation. Despite coming from different industries and cultures, some core concepts can be found throughout; namely that culture drives value, culture needs to be a conscious decision, and that leadership drives this culture (Reiss, 2012). Culture is a big umbrella, but one can parse out three important pillars that shape it: a leader’s personal values, strategies for innovation, and approach to risk management.
The CEOs in the roundtable impress that the role of leader in culture creation is more than just authority based on title; it stems from a leader modeling that culture while staying true to their own personal values (Reiss, 2012). Lanier (2013) supports O’Cass and Ngo in suggesting that innovation is a key part of value creation and driver of success. Simply put, for a company to be innovative, thus creating value, requires leaders who are not just innovative themselves, but also encourage innovation in others. Risk management is perhaps the most synergistic of the three in that views on risk management will shape the culture, but the culture can also influence those views. For example, in the Forbes’ roundtable, the CEO of Fireman’s Fund discussed how the company was founded on a commitment to firefighters. In the aftermath of a particularly devastating hurricane season, the company made a decision to eliminate different tiers of deductibles in favor of a single deductible for everyone. He described it as a potentially risky decision that might have been out of line with traditional business practice, but was the only decision based on the core values of the company, as well as the personal values of those who founded it (Reiss, 2012). While leadership is certainly not the only component of culture, this exploration should make it apparent that leaders are both impetus and role-model when it comes to framing the culture, thus the value creation process, of any company.
- Lanier, J.A. (2013). Value creation options and their leadership implications. Journal of Strategic Leadership, 4/2, 35-51. Retrieved from http://www.regent.edu/acad/global/publications/jsl/vol4iss2/5jsl_vol4iss2_lanier.pdf
- O’Cass, A., & Ngo, L.V. (2011). Examining the firm’s value creation process: A managerial perspective of the firm’s value offering strategy and performance. British Journal of Management,. 22, 646–671. DOI: 10.1111/j.1467-8551.2010.00694.x
- Reiss, R. (2012, Oct 10). For top CEOs, culture drives value creation. Forbes. Retrieved from http://www.forbes.com/sites/robertreiss/2012/10/10/for-top-ceos-culture-drives-value-creation/#5d5d5f632cc1