The word is used to refer to business policies, plans, future processes and desired outcomes; but it can occur as a result of deliberate actions, accidentally via market forces, or simply as a result of the daily activities in your firm.
No wonder people are confused.
Value-based strategy adds another dimension that the definers of that word haven’t even considered. It includes the pursuit of parity in the exchange of value between your business and your customers, and it transcends whatever your strategy turns out to be.
Regardless of whether strategy means planning, planning and implementation, processes, desired outcomes, or something else, the one overriding consideration is whether or not any of that brings about an equal exchange of value with your customers. If it doesn’t, then it’s not value-based.
Value-based strategy also contains an element that’s not found in the traditional definitions of strategy. I alluded to it at the beginning when I said that there’s no agreement on whether or not it works.
Companies get caught up in the romance of making strategy. Senior executives often lord it over the minions when they say that they’re off to [fill in the blank the name of a swanky hotel] for three days of strategy meetings. But, businesses never seem to look back. They don’t seem to get around to asking whether or not the strategy that was originally agreed did what it was intended to do. Instead, they just revise them over and over again when events don’t turn out the way the expected..
I’m not against creating or revising of plans; but I do think that some sort of retrospective evaluation is called for; some sort of accountability. Anyone can revise, and do so forever; but that’s no measure of the efficacy of what was done in the first place.
Value-based strategy includes a look at what the original strategy was compared to what actually occurred, because that is the only way to assess whether or not parity in the exchanges was achieved. When strategies are revised, there needs to be the same overriding question: How can we give more value? What would that value look like? How can we truly benefit more people?
About The Author:
Bruce Hoag is a Work Psychologist and Business Mentor. He has a PhD from the Manchester Business School, and he teaches MBA students part time for the University of Phoenix. Dr. Hoag has been a guest lecturer at Cambridge University, University of Westminster Business School (London), and the City University Business School (London), and has given numerous presentations to groups from the Chartered Institute of Personnel and Development throughout the United Kingdom.
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