Copyright Lark Ritchie 1995. 1996.
Today’s business organization requires a more precise definition of words; a new language to describe and understand functional value within the organization.
Why? Because much of what we label as work, process and activity within organizations is non-value added. This is a result of advancements in technology and better ways to do particular jobs.
If we are to meet the challenges of the global marketplace, and compete on the basis of product value in exchange for profit, then our products and services must be chosen by consumers at globally competitive rates. In other words, we must provide better value.
In economic terms, value is a measure of relative worth. Some examples illustrate: Ford’s automobile, Edison’s light bulb, and Bell’s telephone are products that supplied new solutions to old problems. They offered alternatives in relative worth.
Product relative worth was quickly recognized; the light bulb offered more convenience and safety as compared to candle or gas light; the automobile gave us a mechanical advantage over the horse, and the telephone provided better, more immediate and accessible facilities for communication than offered by mail systems or the telegraph.
Value is a fundamental concept. Economies and business is predicated on it. In recent decades we have entered a different economy. In the past, as we moved through the industrial revolution; from invention to product delivery, business grew by capitalizing in terms of small ‘m’ monopoly. There were limited suppliers of light bulbs, automobiles, and telephones.
In essence it was a monopolistic market. And in that small ‘m’ monopoly, business flourished; inventors provided relative worth alternatives in terms of new machines and devices; businesses profited based on supplying market demand, and the consumer acquired valuable alternative solutions to common problems. It was fun.
Nowadays, consumers can select most solutions/products from a variety of sources, both locally and internationally. The distinguishing factor in consumer selection again fall to the basics; relative worth.
No longer can an enterprise consider itself a single source supplier; the nature of economy has changed. Nowadays, unless in a small ‘m’ market, enterprises must provide relative worth (value) more in terms of cost than in terms of function. We must operate in a truly competitive market economy.
In the past, demand exceeded supply, and enterprise profited in the flurry of transactions. So much so, that an organization’s surplus cash could be diverted towards internal operations without much question to efficiency. To be fair, and in hindsight, there was little choice; we had not invented worthy alternatives to these costly operations; therefore the market for organizational operations itself was a small ‘m’ monopoly held by skilled and knowledgeable workers. To be fair once again, skill and knowledge in production process, technique, organizational communication and management is still is a limited resource. But things are changing.
Today, to compete, we must make the most of facilities that provide such relative worth. Not only in terms of the actual product, but in terms of how we create and deliver that product through our organizations.
We must take advantage of technologies and methods that either do things better, less costly, or more timely. We must distinguish and implement best alternatives, and by doing so, provide products and services that are obvious choices in terms of value. In most cases, in a multi-supply market, this renders down to product quality and cost.
In terms of raw materials for products, commodities are globally and competitively priced. Commodity quality is becoming standardized. Whether the commodity is grain, metal, or fuel, alternate source prices are almost equivalent. Material cost is becoming an insignificant factor in a relative worth comparison. To be successful, we need a leap to a new commodity alternative, and so we hire researchers. In terms of invention, we must recognize a need, and supply to that need; thus we employ development and marketing experts. Together these skilled and knowledgeable people define and create the next products for a small ‘m’ economy, and, predictably, those who are positioned to supply will, no doubt, flourish.
For the rest of us, for those in the true competitive market enterprises, we must solve the problems of organizational effectiveness; of supplying products and services with highest relative worth in terms of lower cost as a function of lower internal cost.
We must be more efficient internally; in how we do things. To solve this problem, we must have a culture and a language that allows distinctions in value when assessing organizational activity.
Why a culture and a language? Traditionally, our concept of organizational work has been influenced by the value systems we hold and define ourselves. These are the fundamentals of culture and consequently, of behaviour.
As a culture, for example, we value a concept denoted, in our language, by the word ‘power’; the ability to do. In the cultures of older technologies and organizations, a person’s relative worth was assessed in terms of the amount of human labour he or she controlled or deployed to do things; in a nutshell, power.
This narrow organizational concept of power was derived when human labour, skill, and knowledge held the organization in a small ‘m’ monopoly.
Those delivering large skilled and knowledgeable labour forces were in effect more powerful, and in the terms of personal rank and status, more important in relative worth to an individual or organization.
Large armies were usually successful over small armies; bucket brigades put out more house fires than one person and his bucket; more scribes produced more books than fewer scribes. Organizations and the people who could employ more people usually were in a position to compete on the basis of production volume alone; on human power.
Nowadays, military technology implemented by smaller armies can defeat massive, less equipped armies; bucket brigades have given way to hydrants, pumps and ladder trucks, and electronic publishing has replaced the technology of the scribe. Under analysis, a high quantity of human labour is no longer a true measure of effectiveness and worth.
Power, in the organizational sense, is no longer associated with many workers. Large labour forces now represent a limitation to an organization both in terms of effectiveness and cost. Yet because of a lingering value and understanding, many of us limit our organizational and personal effectiveness by attempting to maintain a cultural status based on power in terms of human labour. We measure ourselves using antiquated values, and in doing so, we resist the change required by the new environment and hence limit relative worth in ultimate product.
To recognize this confusion in cultural value is a first step to organizational effectiveness. To move towards a more valuable product or service in terms of relative worth is a little more difficult. Understanding what we do in organizations in terms of relative worth requires that we understand our activities and label them with words that are meaningful in terms of true competitive market value.
Our language and words hide inefficiency in our organizations; they slide by us, overlooked because of values and origins from older technologies, and because we are imprecise in how we use language. They hide in our department names, process descriptions, procedures, and job titles. They are words like ‘production’, ‘sales’, ‘marketing’, ‘manage’, ‘approve’, ‘review’, ‘accept’, ‘send’, ‘discuss’, ‘analyst’, and ‘specialist’.
Each of these words seems appropriate to describe operations in organizations. Yet, under analysis, each leaves us perplexed when we try to explain what we mean in terms of relative worth.
To compete successfully, we need to assess what we do using a
new language that denotes and distinguishes organizational value.
Otherwise do we really know what we mean when we say we are going
to improve, reengineer or reinvent the organization?
© 1996 Lark Ritchie. Contact me at this address..