Integrating Value & Innovation in the C-Suite
The world of business and economics change fast and is getting more complex every decade. Firms are faced with the choice to adapt, re-invent and differentiate themselves or die. Over the past few years, the nature and intensity of these changes in the business landscape have created organizational disruption and a realistic need to redesign organizational structure and leadership approaches. As a result, the nature and structure of the C-suite has also been changing to respond to these exogenous trends.
While traditionally C-level positions were focused on operations (Chief Operations Officer), on finance (Chief Financial Officer), on information systems (Chief Information Officer), and innovation (Chief Innovation Officer), we have witnessed the emergence of a flurry of new C-level titles emanating from new management theory (Chief Learning Officer, Chief Knowledge Officer), from increased business regulations (Chief Compliance Officer, Chief Ethics Officer, Chief Risk Officer) and from increased focused on markets and customers (Chief Customer Officer, Chief Growth Officer, Chief Commercial Officer, and Chief Marketing Officer).
Today more and more firms realize that they cannot cut their way to prosperity and that their growth potential has been severely reduced due to the continued recessionary trends. Business are looking at innovation in their business models and re-inventing their value propositions in order to generate customer excitement, boost value creation programs, and capture value through value-based pricing. This trend towards value begs the question of who is in charge of value management processes and programs in firms. Another interesting question to consider is the place of innovation within the value management concept. Where should innovation sit in the organization if you place value at the center of the innovation process?
Innovation as Part of the CVO Mandate
The Chief Marketing Officer (CMO) and Chief Commercial Officer (CCO) positions have been widely accepted over the past decade. About 200 CCOs have been appointed worldwide since the role emerged . Among Fortune 100 firms, 23 had a CMO as the head of marketing in 2008 . In many large firms, chances are that you will have a Chief Innovation Officer (CIO) in the C-suite or you will find innovation as a stand alone function reporting to R&D, technology or some type of centralized center of excellence. But not every firm can afford to have a CMO, a CIO and a CPO for example. So how do you combine the function and where do you place innovation? This is where it gets controversial.
With the emerging importance of value and innovation, I conjecture that both need to be managed together under the role of Chief Value Officer. The CMO, CPO, CCO and CVO roles are different but present some overlapping functions. While job descriptions might differ from firm to firm, I find that the CVO function best captures the systematic and holistic creation, assessment and capture of value and should include innovation, marketing, pricing and customer insight processes. The CVO role can be designed to be a process-oriented function or as an integrated group of functions all focused on value management excellence.
Value at the Organizational Level
I propose that value must be elevated to the organizational level. Firms must put business value at the center of their existence , make it part of their DNA and focus on creating sustainable value for stakeholders. To do this, they need to have the proper tools, systems and programs in place to manage value systematically and with clear intention. I also propose that innovation has to be embedded in the value management process to make sure that all innovation programs bring value to the business and deliver exciting opportunities for value creation.
By continuously creating, assessing, and capturing value, firms can reap the fruits of their holistic value management programs and can reinvest significant portions of their incremental profitability into innovation. Simply put, enterprises need to innovate for growth and price for profit. Profit being the price an enterprise pays to create the future; both innovation and profit depend on value creation.
So, who is in charge of value in your company?
image credit: maslansky.com & meeting room image from bigstock
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Stephan Liozu, PhD is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation and value management. He holds a PhD in Management at Case Western Reserve University and can be reached at firstname.lastname@example.org
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