Value creation is the ultimate objective of every organization, every employee, and every leader. The only reason people are employed is when the benefits they produce exceed the cost of producing them. The degree to which any organization succeeds depends on the amount of value they produce. Producing more value than cost makes for a value creator.
Here’s the tricky part: Not everyone does, but everyone can, create value. Getting maximum value from each employee is a leader’s biggest challenge – because the extent to which value is created is the chief predictor of organizational success.
Traditional gauges of value have for years been defined in financial measures – profitability, revenue, or cost. While such numbers are still common forms of evaluation, experienced leaders know that value creation represents much more complexity than straightforwardly-measured financial indicators. Value takes many forms – new or better products and services, innovative ideas, meaningfulness in work, expanded opportunities, personal energy, interpersonal support, and so forth. Considering financial measurements is important, but not sufficient.
Any leader’s success in achieving organizational objectives depends on the degree he or she can influence the performance of people. Traditional business advantages – superior technology, abundant money, creative marketing, or brilliant strategy – may still be necessary and important, but these can no longer create a sustainable advantage. Any advantage provided is temporary, at best, because these factors are readily available in today’s marketplace. The only remaining competitive advantage possible is by using creativity to create new forms of value.
Unfortunately most breakthroughs are the result of managing intangible factors, like creativity, collaboration, passion, engagement, and commitment. Leaders know the importance of human potential, but most have only been trained to manage the tangible world of numbers, like efficiency and performance. When it comes to actually getting people to “step up,” they lack the power to rouse human hearts.
Leaders and managers must find ways to infuse even the most mundane business activities with deeper, soul-stirring ideals and to develop an authentically homegrown vocabulary for communicating their ambitions. How we talk reflects how we think (and how our organization works). If you want to inspire people to extraordinary accomplishment, the language of honor, truth, love, justice, and beauty can no longer be relegated to the fringes of management discourse and action.
Unfortunately this approach is entirely subjective, so this super-critical job of leading – maximizing human potential – is rarely, if ever, realized. In other words, virtually every organization is squandering its ability to create value.
With more than 70,000 books on leadership, most deal in some way with this monumental challenge – getting people to perform at their best potential. We’ve seen the research, most-notably by Robert Hartman, who just narrowly missed receiving the Nobel Prize for his work, declaring almost all employees put in only 60 percent of their true potential. When I tell this fact to business owners, it’s not unusual I hear, “if that.”
Until now, no meaningful way to distinguish and measure what it means to work at one’s best potential has existed.