Creating value - the corporate phrase-du-jour
11 Aug 2021 by Mike Tisdall
‘Creating value’. ‘Value Creation’. ‘How we create value’.
Have you noticed one of these terms cropping up in corporate and NFP conversation lately? It’s usually in relation to how your business model delivers. More specifically, it’s usually in the context of delivering more than just financial value.
So why, all of a sudden? Where did it spring from?
Well, it’s the core principle of integrated reporting, but it seems now to have escaped the <IR> confines somewhat. But its origins and the context of integrated reporting give the phrase its most rewarding meaning.
At its heart is integrated reporting’s multi-capital and multi-stakeholder frame of reference – that is, how your organisation creates value for all its stakeholders and how your activities enhance or diminish all the various capitals or resources you utilise: natural, human, social, intellectual, manufactured, as well as financial. And how adding value to one resource may well deplete another, potentially creating less visible but potentially existential or damaging risk to your business model over the long term.
The trade-offs unearthed by this holistic lens on your business model are where the insights are revealed; issues you may never have considered before. That’s where its power lies. And that’s why boards are starting to see real value.
The mere fact that it has become such a ubiquitous term is testament to just how rapidly the philosophy of integrated reporting is becoming the accepted global standard for corporate accountability.
To learn more about the value creation philosophy, this should help.