Value realisation
Chapter 4 - Corporate futuring
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Welcome to the Value realisation page
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What is Value realisation about?
For some, the famous question of who was first, the chicken or the egg, has no defined answer.
However, evolution theory can shed some light on this problem. Early tiny organisms created already duplicated organisms of themselves.
To enhance this this goal, evolution created a replicator (who can make more copies), which is, in the end, far easier than duplication (which produces one copy).
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| "The chicken is the strategy of an egg to create more eggs" (1). |
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The sole duplication of an egg into another egg is costly. An egg's replication (multiplication) by its chicken is less expensive. A chicken lays many eggs, while a duplication only produces one extra egg.
- Duplication occurs in an autonomous organism.
- Replication in natural, socially and culturally organised settings.
How long can this replication cycle of egg, chicken, eggs continue?
In nature, this question has a simple answer: as long as the environment supports the replication.
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Business value
The same applies in business, although to manage this simple process we need a future strategy, leadership and organisational development.
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| "The organisation is the strategy of resources to create more resources". |
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| Content source | |
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| (1) | Behave - Robert Sapolsky - Penguin Random House - 2017 |
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Deep dive
Value input
The initial step is the input of a value of any kind. This value is the basis of the organisation's development to create more value. Let us look at some examples.
- A micro organisation (one person).
- Usually, this person tries to keep the monetary contribution as limited as possible. However, they invest a lot of their personality in the company to build up their status in the environment..
- A cooperative organisation.
- The initial value is to balance earning an income with satisfaction in life and work. The aim is to guarantee payment and the pleasure of living and working for a more extended period. The solution is a working method in which collaboration is the main focus.
- A listed organisation.
- Large shareholders expect a greater return than inflation on their initially invested capital. As a result, the CEO is held accountable quarterly for increasing the market value of the money raised.
- The shift from shareholder value to stakeholder value.
- When an organisation claims to generate more stakeholder value, this is only possible if the shareholders bring valuable resources related to the stakeholders into the organisation at the front. This is often done by enforcing the ESG standards.
- Participatory entrepreneurship.
- Participatory entrepreneurship starts with more than financial participation. It begins with sustainably involving employees in the ins and outs of the company. In this manner, employees can partially fulfil their mission within the company context. The organisation has to allow that kind of match. The result is the emergence of lasting feelings of shared ownership..
You surely can think of other examples.
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The causal order of value realisation
Let's assume the market wants less white but more brown eggs from now on. What is your chance of success if you encourage your white hens (your organisation) to lay brown eggs? First, you will have to introduce brown eggs, which will produce brown chickens, which will produce a lot of brown eggs.
It's important to remember that chickens do not populate organisations but people. These individuals are the ones who can learn, evolve, and grow. However, even with these changes in individuals, you can only expect your organisation to deliver a different output by changing the input. The change in output begins with altering the input, not the organisation itself. The input can influence the organisation, which in turn can affect the output.
It's crucial to understand that the input is not just about tangible resources, but also intangible ones. For instance, if your organisation focuses on customer intimacy, you can't expect to achieve operational excellence as an output. The type of input you provide will directly influence your organisation's output.
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Moderation through business capabilities
Only at the very beginning, your enterprise is a blank slate. However, in normal circumstances, input resources and organisation are loosely coupled through the business capabilities.
| In a seminal article, Barney (1991) divides resources and capabilities into three broad categories: physical, human and organizational. Subsequent research has distinguished more finely between resources and capabilities (Amit and Schoemaker, 1993).
Core resources and capabilities
Complementary resources and capabilities
Specialized resources and capabilities
Generalized resources and capabilities
(2) |
This means that many resources are entangled in the organisation, and difficult to loosen them from the current situation in the organisation.
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Value replication
Within the organisation, value replication takes place. Replication is not duplication. As an example of duplication in economics, we refer to the barter journey. You start with an egg and try to exchange it for more value. By replication, we mean a set process that ensures that resources are continuously converted into value.
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Three questions appear:
- What (sort of) resources are involved here, capital, raw materials, knowledge, innovation, motivation, work, etc.?
- How can we organise so resources can replicate?
- How long can we keep this up?
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Replication has 'constraints', that, at the same time, will bring success:
- Firstly, relationship, you need a rooster and a hen for replication—a very healthy situation with so now and then a little hick-up.
- Secondly, adaptability to the environment.
- Thirthly, a sort of method to be able to decide.
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| Content source | |
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| (2) | The birth of capabilities: market entry and the importance of pre-history - Constance E. Helfat |
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