Once the financial stability of a firm has been established, buyers look for a number of other key critical success factors. Prime among these is the ability of the firm to create value, which—in theory—is the underlying reason for profitability. In other words, if true value is created for customers, then they will be more likely to continue purchasing the products and services offered.
There is no specific formula for creating value from one industry to the next. In fact, similar value creation formulas within an industry aren’t necessarily the same. The key is to decide what value a firm’s products and services bring to the customer, and then executing on that value with unbridled passion.
To accomplish this, firms can follow advice laid out by Todd Zenger in his June 2013 Harvard Business Review article, “What Is the Theory of Your Firm?” Zenger writes that talent management firms need:
- foresight about an industry’s future
- insight into which internal capabilities can optimize that future
- cross-sight into which assets can be configured to create value.
Nowhere was this more illustrative than with the value that Steve Jobs felt Apple could bring to its customers. Zenger writes that Jobs felt “consumers would pay a premium for ease of use, reliability, and elegance in computing and other digital devices and that the best means for delivering these was relatively closed systems, significant vertical integration, and tight control over design.”
The ability to create sustainable value is part and parcel to growth and growth potential because it is likely to not only attract, but continue to retain, customers.
For instance, in the talent management industry, a number of companies have created integrated talent management technology suites that address many of the requisite HR elements, including job descriptions, competency assessment inventories, online learning curriculum, performance management tools, and succession management techniques. By integrating these into one platform, designed in an open architecture system that incorporates external modules, firms add value as a one-stop-shop for all an organization’s talent management needs.
Meanwhile, other firms rely on offering unique content that can’t be obtained elsewhere—although these firms must truly understand whether their content does indeed create value for their customers. (See previous blog, “Is Content King?”) Still others create value by focusing on providing an unmatched customer/end-user experience.
All of these approaches can work. Indeed, sometimes the more approaches a talent management takes, the better. But will they create the type of value for customers that yield long-term sustainable growth?
To determine that, talent management firms need to address a few critical questions:
- What value creation strategies does it have in place to not only grow the firm but significantly differentiate itself in your marketplace?
- What can a talent management firm do that it isn’t doing now to further create and sustain value?