How can value be recreated?

Le 27 November 2014

At a time when ethics, in general, and corporate social responsibility, in particular, are especially popular and acclaimed values, the principal of the value chain, developed by Michael Porter* in the 1980’s, could well be emulated.

A negotiation method that destroys value

It is clear that at a time when productivity, profitability and price wars regulate the markets, the negotiating approach has gradually changed to become a destructive force against value. The consumer is never taken into consideration in this and none of the stakeholders really find their niche either. In such circumstances, more and more economists, strategic consultants and business leaders across the Atlantic and in Europe too, consider the “value chain” approach to be the only solution to help capitalism regain its strength and value.

From the value chain to shared value

As the originator of the value chain concept, the founder of the Monitor Group consultancy firm and Professor in Corporate Strategy at Harvard, Michael Porter, has since supplemented his thoughts with the idea of “shared value”. The principle is relatively simple in theory. It is about rethinking the entire value chain, by connecting know-how with the aim of satisfying all the stakeholders.

In this new approach to negotiating, the consumer is repositioned at the centre of a strategy for mutual gain. These subsequently become the pillar of a “win-win-win” contract in the same way as for the producer and supplier. Even better, it is the element that must bring the producer and supplier into line.

Once the consumer’s needs have been identified, all those involved must behave like trusted partners, sharing their expertise to work towards the same goal, i.e. satisfying the needs of the consumer. To reach this goal, which will produce three winning parties, creative solutions must then be dreamt up. Reorganising production, imagining new operating methods, introducing new ways of organising one’s income, altering the packaging or in-shop presentation, finding innovative transport solutions and even raising prices are all considerations to stand out from the competition and generate a triple gain without relinquishing profits.

From Michael Porter to Triple Win via Harvard

The mutual gain strategy theorised by the University of Harvard, starts from the principle that a negotiation must create value. In an article entitled, “Creating Shared Value”, co-written with Mark R. Kramer in early 2011 and published in the Harvard Business Review, Michael Porter explains that the concept of “shared value” has already been understood, integrated and taken up by large international groups. He subsequently quotes Franck Riboud, CEO of Danone who said in 2008, “A company’s raison d’être is its social usefulness. That means serving society – men and women – in their everyday lives, through products, services, work or the dividends it pays.”

According to Porter, there are three ways of generating shared value. The first is to redesign markets, the second is to redefine productivity on the value chain and the third is to create multidisciplinary ecosystems.

Triple Win negotiators share this vision and strive to offer each of their clients creative solutions to achieve a systematic triple gain. It seems essential to us that each industrial sector can create its own value chain and to generalise the closer connection between economic value and social value.

Frédéric TRAINAUD, President of Triple Win

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