Companies often mistake profit for value and assume that the proof of profit within our capitalist society automatically indicates that value has been achieved. However the capitalist system is under siege. Companies are widely perceived to be prospering at the expense of their communities. A big part of the current problem is the stakeholders’ and boards adopt a limited approach to value creation and the perception of value by potential customers. Focused on short-term financials, companies overlook the broader influences that will sustain their long-term success. The microscope that has been brought to bear by the economic environment brings with it a far more discretionary customer who is focused on what they get in total for their buck. Clever companies could bring business and society back together if they redefined their purpose as creating “shared value”—generating economic value in a way that also produces value for society by addressing some of its challenges; the old win win rather than zero sum argument.
What is value? Value is an individual perception. It comes from an individual’s expectations which are founded in their own experience and beliefs. Value put simply is the positive difference between someone’s’ expectation and reality. Just as a lack of value is the negative difference between expectation and reality. So value comes in all sorts of shapes and sizes and it is here that companies need to get cleverer in their delivery of something. Value will last as long as the item is around it is not just about shiny and new products.
Value needs to be measured through the life of a product. It needs to be measured in all sorts of ways to match the expectations of the audience that is trying to assess it. Long Term Value is no longer about initial cost but it is also about through life costs and disposal costs, it is also about the environmental impact, local economy impact, societal impact etc etc.
Clever companies are starting to focus their marketing on the other aspects of value that society considers important and those that don’t reflect the new principles of non-monetary value will soon find their market dwindling as they look only towards their own profit. Clever companies provide and measure the same value to their employees, after all how good is it to work for a company your proud of!