Traditional management practices of profit-seeking, hierarchical control and rigid processes simply can’t keep up with customer value, networks of competence and adaptive mindsets
The value creation revolution that is today replacing traditional management, isn’t confined to a few tech firms in Silicon Valley—the so-called “Magnificent Seven.”: Alphabet , Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.
The reality is that the value creation revolution is reshaping business globally in every sector. The following regions and countries have multiple firms with 10-year total shareholder returns greater than the global benchmark of the current S&P500 average of 230% operating in diverse sectors. in consumer goods are making extraordinary gains. along with firms in materials and equipment Thus, the practice of traditional management is being replaced by the principles of value creation, with value for customers as the primary operational principle ahead of short-term profits, along with prioritizing networks over hierarchy, and adaptive mindsets over rigid processes, extraordinary gains are being made. There is now strong evidence that firms focused primarily on creating value for customers are creating more value and making much more money than the profit-seeking cost-cutting firms. There is thus no longer any rational business reason to pursue cost cutting and profit seeking as the primary goal of a business. True, many public firms today still have mindsets, policies, processes, methods, systems, and structures in place that are built on the notion that the goal of the firm is profit-seeking or cost-cutting. Changing all that isn’t quick or easy, even when there is agreement on the need to change.Nevertheless, the change is happening inexorably, as the stock market systematically eliminates poor performing public firms that have below average long-term returns. Thus, firm-wide value creation doesn't have to be invented. It is already happening. As Peter Drucker suggested, all we need to do is to “look out the window and note what is visible but not yet widely seen.”
Principles Profits Hierarchy Networks Mindsets Processes
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