Page 46 - Global Focus, Issue 2, 2018

EFMD Global Focus_Iss.2 Vol.12
www.globalfocusmagazine.com

Greater understanding of value, together with today’s big data
analytics, gives companies the potential to put value creation
at the core of their business. By Peter Stokes, Gautam Mahajan,
Gerardus JM Lucas and Paul Hughes

Creating value

Value co-creation

and value destruction

istorically, value has been understood largely expressions “value” and “value creation” drawing
Hin economic terms centred on, for example, on varying and competing definitions. For
notions of price, cost, profits and shareholder example, the processes and co-creation of value
wealth. However, contemporary understandings considered in the field of Service-Dominant Logic
of value also point at value being created through (SDL) has been an ongoing debate. A key tenet of
and around products and, above all, services, SDL is that value co-creation is a responsibility of
experiences and relationships involved in all stakeholders. In value co-creation, value grows
creating good, or improving the well-being beyond its prima facie economic meanings to
of people and situations which are considered encompass value-adding or value-(co)creating
valuable by various stakeholders. This means outcomes such as “satisfaction”, “pleasure”,
that value is surrounded by subjectivities. “contentment”, “sense of security” and so forth. In
Furthermore, value is created by self-identity. this regard, the word “adding” signals incremental
For example, some people may see great value in and innovation whereas “creating” underlines
saving the world’s rainforests but people who rely original development or invention of value.
on logging of those forests for their livelihood may Of course, such outcomes are recognised
not place the same value on them. Thus, a “value” as reinforcing or feeding back into customer
is grounded in a particular belief that is related to satisfaction and loyalty as well as creating
the worth of an idea, behaviour or mutual evaluation company competitive advantage. Thus, SDL,
of a relationship. Also, “price” is often perceived rather than viewing products as the basis for
by many people as a key marker of “value” but exchange, views service as the essential object
curiously, all too often price is quickly forgotten with goods and products functioning merely as
once a commitment to purchase is made and other a vessel of such processes rather than the key
emotions and factors begin to be foremost in the focal point.
purchaser’s mind. In SDL, everyone (including organisations and
Considering value against this larger backdrop institutions) is involved in value co-creation and
extends the potential understandings of value to hence it is a highly relational process.
that of “values” and issues of behaviours or Value creation thus becomes a collaborative,
attitudes. Moreover, the advent of the internet contextual, experiential and cyclical process
and social media has heightened the intensity in which various stakeholder interactions
and speed of interaction by stakeholders and dynamics are imperative. If the customer
connected to value – allowing them to report senses that he or she has derived more benefit
rapidly both satisfaction and dissatisfaction. then the combined price and non-price (ie
Given the emergent nature of the discussion service) then value is deemed to be created
on value, scholars and practitioners use the for the customer.
44