TranscriptDon Mishory: So when you and I’ve had a chance to work together in the past, you’ve always been someone that asks the question, why? Why do this transformation? Why? Why? Why?
Is there a framework that you think about when you talk about defining value to answer that “why” question?
Jim MacLennan: Sure, it’s an important question because a lot of people always start with the technology. It drives me crazy. Don’t start with the technology or the ‘what’, start with the ‘why’, because the folks that are making the decisions are the ones that want to hear that and you need to speak in their language. And so, what I use to frame up this idea of value is, as you say, a simple framework of how to define value creation in a way that the decision makers will understand.
In most companies there’s three different ways to create value. You have to make this decision between two different things: are you trying to create a great company or are you trying to create a great stock?
If you’re trying to create a great stock those are the financials, that’s value per shareholder. Those are the classic financial metrics: earnings growth, capital utilization and also the magical earnings or multiple expansion- what the market will pay for your company.
The ways to create value though when you’re trying to create a great company, that’s when you’re focusing on value for the customer and value for the employees. And the third one, unfortunately, that’s the one that most people don’t put enough stress on. But people do like to work for a company, that if you have a high level of employee engagement, you’re going to get better value or better results I mean.
So using that simple framework of value for shareholders, value for employees and value for customers, we’ve got a set of, a number of different, very simple, very familiar metrics in each of those areas and given the first conversation is always, using that simple framework, where does your company define the most value?