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‘Value’ is not ‘Money’

Over the past few days, I have been in long animated discussions with business owners and directors with a wide variety of objectives for their firms. Some wanted their firms to challenge the status quo, others wanted to become customer centric and innovative and yet others desperately looking for a path to commercial sustenance.

As I reflect on the diverse needs spanning industries covering fertilizers and chemicals at one end to luxury jewellery and hotels on the other, there is a common denominator. When the complexities of the stated problems are reduced to their bare essence, the fundamental question they were asking themselves and me was simple; ‘Are we creating enduring value or chasing illusory monetary valuation?’

Sounds simple but a rather demanding change in perspective which has tied up even well meaning leaders in knots. When one steps back and looks at this in a broader context it is easy to empathize with them. There can be no doubt that we have a cognitive Rubik’s cube  to solve before management has the clarity required to separate ‘value sustenance’ from ‘money chasing’ strategies, decisions and assumptions. This was not due to a heavy fog which drifted into the boardroom. Instead this myopia is self-induced through blinders which prevents us from seeing the what we ought to see! Those tinted lenses come in various colours, shibboleths we have inherited from the industrial age and they have a vice like grip on collective imagination and its borders. I am listing some of them here in the descending order of their stealthy nature:

I. The reductionist and fragmented conception of business – when we break a problem into smaller pieces and details we can ‘solve’ it

II. Ego driven top-down structures – My designation is a reflection of my ‘wisdom’

III. Linear Finance systems -A belief system based on excel sheets business plan/projections for ‘monetary valuation’ divorced of meaning & purpose

IV. ImageBrand – illusory projections (of another kind) with no connection to the truth within business model and with no incentive to close the gap between that truth and the image

V. Shareholder Value Maximization – many short-terms will make up a long-term (alternate version – in the long-term we are all dead)

By the way, these fossilized worldviews have a capacity to mutually reinforce each other in myriad ways across businesses/industries. They harden into calcified superstructures of thought creating a mental model of the firm and defining its culture. With in that distorted structure of thought, value cannot thrive, not even with the most prescient leader at the helm. In other words, when collective consciousness of management is distorted, future cash flows tend to follow suit sooner than later. Is that all that difficult to estimate and see it coming? No market capitalization or valuation estimate can change that value creation outcome.

Piercing this veil of mass illusion inside organizations is the first step to gain the clarity of mind to separate ‘value’ from ‘monetary valuation’. Only then, the status quo can be overturned allowing customer centricity, trust and innovation to take root. There is no better time to start this internal cleansing process and give it our very best shot. Sorry, there are no performance guarantees and profit share models. This is a journey for those who see the writing on the wall and who dare to go beyond conventional best practices.

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Last modified: April 2, 2020
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