Home' Trinidad and Tobago Guardian : December 24th 2015 Contents BG10 VERBATIM
BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 24 • 2015
Lately, we ve been hearing our
clients talk more and more about
value differentiation. Often,
these discussions are theoretical
or abstract, and we re committed
to making this idea of value dif-
ferentiation accessible and applicable.
The simplest definition of the word "value"
is relative worth or importance. Differentiation
is about contrast, or how something is distinct
from something else. When businesses look
at value differentiation, they tend to look at
it in a number of distinct ways. One way is
to differentiate the value of their product or
service in terms of safety, speed, durability,
reliability, consistency, etc.
Another is to look at purely financial metrics,
leading or lagging indicators like return on
total or invested capital, or profitability indi-
cators like capital employed. Most organisations
use a combination of both operational and
financial metrics. However, all of these beg
the question: how is value actually being gen-
The problem with focusing on differentiating
the product or service itself, or focusing on
measuring or monitoring value, is that it does
not leave business leaders with a way to gen-
erate value in a sustainable way. That s because
these methods focus on the answer, and while
we re addicted to answers, value creation lives
in the questions.
Let s take a closer look at what it takes to
generate value in a meaningful way.
We worked with a senior executive of a
multinational engineering services firm who
took on a branch of the business that had
been failing continuously for eight years. The
firm was planning to shut down the branch
if there wasn t a turnaround in performance.
When the executive took on the job and looked
at indicators---profit and business pipeline---
things did not look good.
Although he did do all the things a good
manager does, such as restructuring the busi-
ness to set up more efficient ways to deliver
services, the commitment he focused on was
not just efficient service. He shared with his
team that what he was really committed to
building was a hub of engineering excellence
for that part of the world.
Over the next two years, the organisation
saw a more-than-300 per cent increase in
growth, going from eight straight years of
losses to 15 per cent bottom-line increase year
on year, and that growth continued through
the following six years.
What s the moral of the story?
Although he did address some of the
"answers", like processes, structure, metrics,
etc, his real focus was on creating a context
that differentiated the value of the service that
his organisation provided to its customers. In
essence, value differentiation is a context or
a place to come from, a matter of leadership
versus a product or service.
Let s look at another example, this time in
the area of product value differentiation.
A client operated a plant that had been
failing to deliver budgeted performance for
several years. Production efficiency was in the
70-80th percentile, there were high levels of
LTIs, and employee engagement was at an
When the leaders discovered that the context
for the people at their plant was "we ll never
get it right", and "this is just business as usual",
they set about altering that context. They
replaced it with a conversation about creating
a sustainable future by providing fertiliser for
people to grow produce for that region and
for the world. When they got to see that they
were working not just on some metrics, but
on creating a sustainable future and enhancing
people s quality of life, the value they were
contributing through their work completely
altered. That shift in context led to three con-
secutive years of 98th percentile production
efficiency, no LTIs, and a 23 per cent improve-
ment in employee engagement. These metrics
were all expressions of people being up to
something bigger than themselves.
In our view, differentiating value is, in some
ways, about calling forth the greatness in the
people delivering a product or service; the
metrics are simply indicators of that greatness
or purpose being fulfilled.
If we can give up our addiction to having
the answers for a moment, we can start to
engage in the question of how to create a busi-
ness, division, or team that continually gen-
erates value. At the end of the day, what enables
value to be created, what creates that context,
The simple truth is there s no inherent worth
or importance to anything, because value is
relative. The source of that relativity is the
interpretation or perception that people bring
to the product or service.
In and of themselves, value indicators like
profit, TRIF, ROTC, etc are just numbers.
What do they actually mean for the people
who are engaged in and contributing to deliv-
Particularly when financial indicators show
that value isn t being met, leaders tendency
is to stare harder at the scoreboard. Whether
you re a player or a fan, you know that staring
at the scoreboard is not the way to make the
score go up; it s really easy to lose focus on
the possibility of what you re contributing to
if all you re looking at is the score. The only
way to actually impact the score is to play the
game, or put another way, to get your "eyes
on the ball".
The ball, in the case of business, is the con-
versations that you and your people generate.
That conversation, that bigger context, is what
really brings the "score" to life.
We re not saying that you can t have
answers, ideas for technical solutions, etc;
that s part of your job as business leaders. But
are you willing to have those answers and
solutions be a platform to ask questions to
generate new possibilities?
Can they be the start of a conversation,
rather than the endpoint? Giving up knowing
the answer, or even trying to find "the" answer,
can be tough. But the truth is, there really is
no answer, because there s nothing definitive
If you re looking for more than just business
as usual, or a better or different version of
what you ve seen before, you have to give up
knowing what is possible and engage people
in a conversation that allows something bigger
to emerge. That is the access to differentiating
value, and ultimately, to generating higher
Premod Varghese is a senior consultant
with JMW Consultants Inc and can be
reached at firstname.lastname@example.org
Elyse Maltin, PhD is a consultant with
JMW Consultants Inc and can be reached
The value in
A business leader's challenge
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