Is value created through people any more?
In the last 10 years, I have been a strong advocate of the view that value is created by an organisation’s people. Yes, tangible assets appreciate in value and good financial management maximises profit. But in my former role as editor, then publishing director, of a human resources magazine, I have seen the impact good people leadership combined with a people strategy based around clarity, transparency, creating a safe environment, a strong purpose, a culture of learning, meaning, accountability, fairness and employee wellbeing can have on creating sustainable value.
After all, it’s your people who build the relationship with the customer and deliver great service. It’s your people who know what elements of your offer or process really annoy the customer – and where improvements can be made. It’s your people who come up with the innovations – big and small – that can cut costs, increase customer satisfaction or indeed even transform the company. Your people are the ones who produce the money.
During this time, the wider debate has been shifting from the creation of shareholder and financial value as the be all and end all to a more sustainable approach to value creation – what is often called creating shared value: value for shareholders, yes, but also employee value, consumer value and social value. Value is shifting from tangible drivers to intangible ones.
In this world of communication and relationships, co-creation and collaboration surely people must now sit right at the heart of value creation?
Underpinning much of this is the digitisation of business. The value proposition is changing in a world where the nature of the relationship between customers (consumers) and business has changed thanks to immediate information, feedback and sharing platforms; access to global information and companies; better transparency of business practices and a more informed, empowered and active consumer. Quality of experience, personalisation and direct interaction with the customer have become the keys to creating value.
Which brings us back to your people. In this world of communication and relationships, co-creation and collaboration surely people must now sit right at the heart of value creation? Well, a global study last year by advisory firm Korn Ferry found the workforce did not even make the top five when CEOs were asked to rank their organisations’ top assets in five years’ time. In fact, CEOs are still hung up on tangible assets, showing an obsession with technology (which occupies 40-60% of their priorities on strategic focus, financial investment and c-suite time) and property, such as offices and land.
Of the 800 business leaders in multi-million and multi-billion dollar global organisations that were surveyed, 67% said technology will create greater value in the future than people and 44% say the prevalence of robotics, automation and artificial intelligence (AI) will make people “largely irrelevant” in the future of work.
This “tangibility bias”, as Korn Ferry calls it, is myopic. There is no doubt that what World Economic Forum executive chairman Klaus Schwab has coined the fourth industrial revolution is blurring the lines, as digital networks and platforms create new forms of value creation. But let’s not forget that people sit behind this technology.
There is no doubt we are in uncertain times and that many jobs will be replaced by ‘robots’ in the future – though new jobs will appear. But we humans are creative and, while AI and robotics will be able to solve many complex problems, I can’t yet envisage paying to watch a Gareth Bale robot kick a ball, nor make decisions needing interpretation and social awareness. Will a robot deliver bad medical news in an empathetic way? Will a cyber hand on your shoulder reassure you when you are having a bad time?
Yes, AI and robots will open up huge new frontiers for humankind, tackling very complex mathematical and data-based issues while taking away the mundane tasks. But this will only serve to release people to do the more innovative, creative and social stuff. When all organisations have AI and robotics, where will the added-value come from? My money is still on your people.