Read excerpts from
Advanced Business: Exponentially Increase Stakeholder Value. The book was published on July 4, 2015 and shows ways to be much more successful. Copyright 2015 Donald W. Mitchell. All Rights Reserved.
The book is available in paperback and electronic form at all online bookstores.
You can read about the related book,
Business Basics, at
http://businessbasicsbook.com/
Excerpts follow:
Foreword
The
global economy is turbulent today. Money flowing from one country to another
country can be a powerful force facilitating economies or spreading a global
economic crisis. You can’t succeed by looking at the world from just one
location, one perspective, or one set of interests.
Trade is borderless. The market continually
shifts the links in the total supply chain between countries that produce raw
materials and the countries that manufacture and supply global customers and
end users. To stay ahead of the current complexities of today’s business
environment requires that business leaders have a deep understanding of how
their organizations connect now and should connect in the future to the total
value chain for the industry they serve. In doing so, today’s businesses touch
more lives and affect more interests than ever before, increasing the challenges
of adding value for all stakeholders.
Part One describes the better choices for
adding value to eleven classes of stakeholders, from end users to the
communities a firm serves. Part Two spells out how investors determine value.
Part Three identifies ten strategies that can add value for all stakeholders.
Part Four relates three operating methods for increasing value. Part Five has
four human-resources practices for enhancing value. Part Six addresses seven
financial techniques for boosting value. Part Seven contains seven
communications practices for value expansion. Part Eight pulls together in six
lessons how to develop and implement an optimal value-improvement program.
Advanced
Business
is the most excellent business management book that I have ever read. This book
covers the basics of how to be successful in the modern business world by
creating increased benefits and value for all stakeholders, rather than just
for the company’s owners. This book will benefit both business students and
leaders of organizations by guiding them in how to put Dr. Mitchell’s expert
business concepts into practice.
Dr. Donald Mitchell was an excellent advisor to
me when I worked on my Ph.D. program at Rushmore University, suggesting that I
develop the optimal order for expanding the value of an organization and its
stakeholders. Reading and applying the lessons in Advanced Business will enable you to gain from his expert advice,
as well.
I was pleased to see that some of the concepts
in Advanced Business have been
successfully practiced in our organization and in many large companies. For
example, 30 years ago I set up business as a small trading company distributing
DuPont’s products in Thailand. I learned how DuPont grew its business from a
gunpowder maker to become a leader in the chemical industry by increasing
stakeholders’ value. We and end users of DuPont’s products fully benefited from
its expanded offerings.
Currently, our business, Innovation Group, has
grown from being a distributor of DuPont products to being one of the leaders
in polymer technology. We have become a global company supplying rubber
compounds, parts, and technology services to major brands of car makers in many
countries. Innovation Group is one of the main suppliers of rubber products for
Japanese cars and has learned from the concepts of Japanese car manufacturers
in increasing technology value along the supply chain. They are becoming
technologically competitive and cost efficient by building cooperative,
long-term profitable relationships with business partners along the total
supply chain.
All these successful business concepts are
fully described in Dr. Mitchell’s book.
Advanced
Business
is an excellent book that I fully recommend you read and apply.
Dr.
Banja Junhasavasdikul, Ph.D.
Chairman
of the Board of Directors,
Innovation
Group, Thailand
Bangkok,
Thailand
February
2015
Introduction
Yes,
the LORD
will
give what
is good;
And
our land will yield its increase.
—
Psalm 85:12 (NKJV)
The information in Advanced Business: Exponentially Increase
Stakeholder Value has been selected from among The 400 Year Project’s most powerful,
easily appreciated, and readily applicable lessons accrued during the project’s
19 years of research and practice. Many of these lessons were initially
developed during 2010 and 2011 for The Billionaire Entrepreneurs’ Master Mind,
a consortium of entrepreneurs for learning and applying the latest generation
of The 400 Year Project’s best practices to achieve more than breakthrough
success. Versions of seven lessons in Advanced
Business also appear in the for-profit edition of Excellent Solutions (400 Year Project Press, 2014). All the lessons
also have deep roots in earlier research and testing done by Share Price Growth
100, a partnership of global leaders that Carol Coles and I directed in developing
many of the current best practices for expanding shareholder value. All fifty
lessons have been updated, expanded, and improved to increase their usefulness.
Advanced Business:
Exponentially Increase Stakeholder Value is different from many other
value-improvement books in that it pays attention to ways of benefiting all
stakeholders, rather than just the company’s owners. If you aren’t familiar
with the term “stakeholder,” let me explain what I mean. Anyone who is substantially
affected by an organization or a company has a stake in how its activities are conducted. The concept of an
individual or organization having a stake
has been used to describe such an individual or an organization by the word stakeholder. Such individuals and
organizations include all those who contribute to, benefit from, or are significantly
affected by a company’s existence and its actions, potentially including some
of the following: end users of offerings and benefits, customers, customers’
customers, distributors, dealers, agents, suppliers, suppliers’ suppliers,
employees, employees’ families, partners, shareholders, lenders, lessors,
neighbors, the communities in which the organization operates, and anyone else
who is substantially affected by the organization.
Some
might be tempted to dismiss such a broader focus on who should benefit from a
company as being some form of impractical idealism. While many of those who
advocate such a broadening of who should benefit from a company or organization
base their thinking solely in what increases their emotional comfort, Advanced Business: Exponentially Increase
Stakeholder Value takes its guidance differently. First, direction comes
from God’s Word, the Bible. Second, insights into how to apply the Bible’s
guidance have been gained from the Holy Spirit concerning the many practical
ways that providing more benefits to more stakeholders enhances the value of what
the stakeholders contribute to making the company more effective. Such
increased stakeholder contributions, in turn, can power virtuous cycles of
expanded stakeholder and company capabilities, resources, accomplishments, and
benefits for sharing.
To
demonstrate these perspectives concerning stakeholder value, each lesson
includes pertinent selections from the Bible and explains how they apply to
expanding value and improving stakeholders’ lives. The lessons also describe
ways that the interests and efforts of stakeholders and the company can be
aligned so closely that any improvements will automatically translate into much
more effectiveness and benefits for all.
Let
me also explain what I mean by “value.” When academics refer to shareholders,
this term has primarily come to mean having a higher current price for all of a
company’s shares. In ordinary speech, of course, value also suggests acquiring
something for less: a bargain. In contrast to the first two meanings, we often
think of a value as describing what we esteem for guiding our lives, regardless
of its current or potential financial worth. While this book often overtly
focuses on value in financial terms, either owning something that increases in economic
worth or acquiring offerings at less cost, the book also advances Biblical
values by basing the advice on the perspective of what God values. While we may
not know exactly how to measure value in God’s terms, we should certainly not
pay any less attention to advancing it.
For
instance, consider Jesus’ words in Matthew 6:24 (NKJV): “No one
can serve two masters; for either he will hate the one and love the other, or else
he will be loyal to the one and despise the other. You cannot serve God and
mammon.” (If you aren’t familiar with the word mammon, it refers in this context to worshiping riches, as though they were personified
as a god.) In relating ways to acquire more financial resources and pay less
for what is needed, we should always keep in mind that any such benefits should
be directed towards advancing God’s Kingdom, rather than some selfish purpose
of our own. Otherwise, we will simply be worshiping money rather than God, a great
sin. We should see using any money developed in this context as simply a means for
accomplishing that most important purpose, God’s will.
I mention this point now because I have seen variations of some
methods described in this book applied solely for selfish purposes. What’s the
lesson from such applications? I cannot recall seeing any lasting good come
from such misdirected uses. So I hope you will apply this information to demonstrate
God’s greatness to the world and to use the resources He supplies through these
methods to glorify Him while serving His purposes.
Other 400 Year Project books contain useful guidance for
ways to use increased resources for God’s purposes. If you aren’t yet familiar
with these books, I suggest that you read some or all of them before or while
you read and apply this book. A good starting point is 2,000 Percent Living (Salvation Press, 2010), which describes how
to be 20 times more fruitful for the Lord. If you want do delve deeper into the
subject of being fruitful, I also suggest Help
Wanted (2,000 Percent Living Press, 2011). For those who want to focus on
witnessing, I recommend Witnessing Made
Easy (Jubilee Worship Center Step by Step Press, 2010) and Ways You Can Witness (Salvation Press,
2010). For anyone who wants to help make a whole nation more fruitful for the
Lord, be sure to read and apply The 2,000
Percent Nation (400 Year Project Press, 2012).
As you read about the many ways to increase value for all
stakeholders, you may find it helpful to think about how the knowledge could
help with increasing and improving a community of believers. Such a reference
should increase your focus on making fruitful use of what God provides through
these amazing methods, reducing your temptation to use the resources in un-Godly
ways.
By
implementing the 50 lessons in Advanced
Business: Exponentially Increase Stakeholder Value in conjunction with the
50 lessons for expanding market growth, slashing costs, and eliminating
unnecessary investments in Business
Basics (400 Year Project Press, 2012), a company can increase total value
for its stakeholders by 160,000 or more times. Future volumes in the Advanced Business series will
demonstrate how to build stakeholder value from this level to 3,200,000 or more
times through encouraging competitors to copy your innovations, and then by
64,000,000 or more times through also profiting from serving important social
needs. Be sure to read and apply these two additional sets of value-expanding
lessons when they become available!
While
some might see these potential gains as either being impossible or not very probable,
keep in mind that the for-profit edition of Excellent
Solutions already provides two improvement processes that can be used to expand
stakeholder value by over ten trillion times. In addition, The 400 Year Project
has already produced such degrees of expanded benefits through the many people who
have applied its God-directed research.
Business Basics and Advanced Business: Exponentially Increase
Stakeholder Value can also be used as sources of helpful perspectives and
ideas for applying the astonishing value-expanding processes presented in Excellent Solutions. For instance,
lessons in Business Basics and the Advanced Business series can help identify
possible value elements to be included in an excellent solution that is developed
by using one of the two Excellent
Solutions processes.
Let
me explain other ways to use Business
Basics and Advanced Business:
Exponentially Increase Stakeholder Value to create the stakeholder benefits
of an excellent solution. If any of the six complementary improvements described
in Business Basics or the three books
in the Advanced Business books’ lessons is enhanced for a second time with
a new complementary 2,000 percent solution, total stakeholder value would
expand by 1.28 billion times. By sequentially improving any one of the six complementary
dimensions on four different occasions by 20 times each (or improving for a
second time any four of the combined six dimensions on one occasion by 20
times), total stakeholder value would then grow by 10 trillion times. By expanding
performance in these six complementary dimensions through the lessons supplied
in these books, most for-profit company leaders would be able to design and
implement such large value-improving solutions much more rapidly, with reduced
effort, and less expensively than by separately developing ten complementary 2,000
percent solutions to gain the same result.
As
I discuss in Adventures of an Optimist (Mitchell and Company Press, 2007), two other value dimensions that
are partially addressed in Business Basics, Advanced Business:
Exponentially Increase Stakeholder Value, and Excellent Solutions can also complement these six value dimensions:
1.
Lower the cost of capital by 96 percent.
2.
Engage many underutilized people (such as those who are unemployed or
underemployed) in highly productive activities.
You can find more
information about the first of these two dimensions in some of this book’s
lessons concerning how to increase equity value. As you think about these ways
of expanding value by lowering the cost of capital, I’m sure your imagination
will be stimulated to identify still other opportunities. Excellent
Solutions sufficiently discusses
topics similar to the second of these two added dimensions to eliminate the
need for additional lessons here.
Are
there any other complementary dimensions that a for-profit company can use as
performance enhancements for greatly expanding stakeholder value? Yes, I
believe that there are many more than just the two dimensions I’ve just
mentioned. I list here two more:
1.
Invest in upgrading the skills, knowledge, and resources of many underdeveloped
people, especially those with little education and experience, so they can make
maximum contributions to all stakeholders and then continue operating in partnership
with those who can, as a result, accomplish still more.
2.
Redirect the public’s agenda, attention, and resources into improving or
increasing highly valuable activities and resources at little cost.
Feel free to add any
other complementary performance dimensions that you prefer.
Let
me also note that this book is about for-profit businesses. However, aspects of
the discussions about increasing stakeholder value are equally, if not more,
applicable to nonprofit organizations.
If
you have questions or would like to discuss any of these dimensions, processes,
or methods, please send an e-mail to askdonmitchell@yahoo.com/.
To
make the lessons in this book easier to understand and use, they are divided
into eight parts, which concern the following subjects:
1.
What stakeholder benefits to provide
2.
How investors assess value
3.
Business strategies that add value
4.
Operating methods that increase value
5.
Human-resources practices for growing value
6.
Financial techniques for boosting value
7.
Communications procedures for value expansion
8.
Identifying the optimal value-improvement program
I encourage you to
direct your colleagues to those parts that will be most relevant to their
responsibilities. Doing so will make it easier to redirect your activities in
the most fruitful ways.
Let
me briefly explain the potential benefits of studying and applying each part.
Some readers will not be able to fully identify who a for-profit company’s
stakeholders are and what kinds of benefits are usually most available and
appropriate to provide and increase for each one. Reading the first part will
eliminate any of such knowledge gaps. With a broader perspective concerning who
is to gain value and of what sort, studying the subsequent lessons will be
enriched by appreciating more kinds of useful applications.
Improving
value for shareholders can be a key ingredient for expanding value for other
stakeholders, as well. In particular, for-profit companies can use stock-price expansion
to create financial resources other stakeholders can use to add value beyond
what the company can do directly. Paying attention to this subject has another
benefit: Many people have not been exposed to the most accurate information
about how investors decide whether to purchase, hold, or sell an equity security.
Naturally, those who normally don’t think about financial markets have even
less knowledge on this subject. The second part’s lessons in this regard are
simple enough to be helpful to such readers. In addition, the lessons address
common misunderstandings found among some of those who are literate, as well as
expert, concerning financial markets. Even if you have earned a finance degree
in business school, you may find some of this information expanding the ways
you can apply your knowledge.
Traditionally,
business strategy has emphasized outperforming competitors in profiting from
attracting and retaining customers. In doing so, potential effects on many
types of stakeholders have too often been ignored. For example, just think
about how discarded water bottles might eventually cover an ocean’s surface
from continent to continent if different approaches aren’t adopted. Consider,
too, how a better kind of bottle floating in those waters could conceivably be
designed to dissolve and supply helpful nutrients for making the oceans more bountiful.
As this example shows, examining business strategy in the context of expanding
value for all stakeholders often leads to applying quite different concepts and
means for implementing them. In the third part, you will find your perspective
on business strategy redirected into such broader and more fruitful directions.
Conventional
approaches to examining business operations have emphasized increasing
accounting profits, operating cash flows, returns on capital or equity, or similar
financial metrics discounted into the future. In seeking such financial goals,
many companies have actually reduced total stakeholder benefits, sometimes
intentionally and other times accidentally. Some leaders who intended to expand
shareholder value have been subsequently disappointed by their resulting stock
prices. In the fourth part, we look at business operating methods that many executives
do not realize can produce substantial benefits for all stakeholders, while
also increasing financial returns.
Human-resources
practices are usually aimed at achieving a narrow set of financial goals. In the
fifth part, we look more broadly at how stakeholder value can be expanded by
pursuing more appropriate goals, as well as how employees and employees’
families can be better served in ways that will also increase company
effectiveness.
While
many executives see the term value as
being synonymous with financial measures, most companies still ignore many powerful
financial opportunities that could have huge positive impacts on monetary value
for stakeholders. As an example of such a narrow focus, many companies for
which I have consulted once saw the role of the financial staff as merely to find
profit-expanding accounting methods and obtain low-cost loans. In the sixth
part, we demonstrate the much greater potential of finance to complement what
the rest of the organization and its stakeholders are accomplishing. While some
of this material will only seem appropriate for financial executives, I
encourage all readers to gain a conceptual understanding of the possibilities
from these lessons, so that they can advocate more appropriate roles for financial
executives in increasing stakeholder value.
Company
leaders have always been concerned about not disclosing sensitive information
beyond those with a need to know. In some cases, such concerns relate to
keeping competitors in the dark to gain or retain an advantage in the
marketplace. In other instances, the difficulties of correctly anticipating the
future make leaders reluctant to make public commitments that they might not be
able to keep. In still other circumstances, some have not appreciated the potential
value of communicating more fully, incorrectly seeing this activity as
relatively unimportant. In particular, almost all companies are ignorant of the
value-improvement potential of assembling the right group of shareholders. The
seventh part explains the critical roles for communications in expanding
stakeholder benefits. We also look at what kind of shareholders to seek and
encourage.
Having
read my brief comments about the lessons in the first seven parts, your head
may be filled with unanswered questions about how to implement what you will learn:
where to start, which directions to take, and the right order for your actions.
It’s natural to have such a reaction. You have an almost infinite number of
choices. Yet only a tiny fraction of 1 percent of these actions and the permutations
for sequencing them will lead to huge increases in value for all stakeholders.
In the eighth part of the book, I describe a proven, long-practiced method for
developing and applying the necessary information to make the optimal choices. Unlike
many other decision processes involving complicated choices, the one described
in the eighth part is quite easy to understand, learn, and apply. In fact, after
the necessary information is in place, most leaders will be able to develop and
evaluate high-value choices quite quickly and accurately without assistance
from anyone with special technical skills or experience.
By
the time you finish reading Advanced
Business: Exponentially Increase Stakeholder Value, your perspective for
what it means to “do business” will have permanently become more fruitful. You
will understand many new ways for stakeholders to make unique and important
contributions to your firm’s success and enhance value for all. In addition,
you’ll see how the task of effectively leading a company is made much easier by
doing more for stakeholders. Shifting to this approach will feel as if a large
number of people have suddenly started lifting their fair share of the heavy
weight you have been carrying alone: Your burden in increasing stakeholder
value will be much less, and you’ll be highly encouraged to have so many
helpers assisting with any new loads.
Be
sure to read the Appendix, as well, where I describe my Christian experiences
and testimony. Feel free to share this information with anyone you feel would
benefit from learning about how God has touched and improved my life.
We
now begin in Part One by looking at what stakeholder benefits to provide.
Contents
Acknowledgments
Foreword
Introduction
Part One: What
Stakeholder Benefits to Provide
Lesson One: Stakeholder Benefits for End Users
Lesson Two: Stakeholder Benefits for Customers and
Customers’ Customers
Lesson Three: Stakeholder Benefits for Distributors,
Dealers, and Agents
Lesson Four: Stakeholder Benefits for Suppliers and Their
Suppliers
Lesson Five: Stakeholder Benefits for Employees
Lesson Six: Stakeholder Benefits for Employees’ Families
Lesson Seven: Stakeholder
Benefits for Partners
Lesson Eight: Stakeholder
Benefits for Company Shareholders
Lesson Nine: Stakeholder
Benefits for Lenders and Lessors
Lesson Ten: Stakeholder
Benefits for Neighbors
Lesson Eleven: Stakeholder
Benefits for Communities
Part Two: How
Investors Assess Value
Lesson Twelve: Valuation
Methods
Lesson Thirteen: Factors
That Affect Valuations
Part Three: Business Strategies That Add Value
Lesson Fourteen: Diagnose
Value Sensitivities
Lesson Fifteen:
Accelerate Improvement
Lesson Sixteen: Establish a
Business Model That Is Expandable in Several Dimensions
Lesson Seventeen: Enter a New
Business with Significant Cost and Value Advantages
Lesson Eighteen: Merge with Strategically
Complementary Businesses to Overcome Weaknesses in Both
Lesson Nineteen: Focus on Businesses with
Offerings Stakeholders Regularly Experience and Like
Lesson Twenty: Reduce Risks That Make
Stakeholders Squirm
Lesson Twenty-One: Be a
Franchisor
Lesson Twenty-Two: Be a
Licensor
Lesson Twenty-Three: Be
Based Where Owners Will Pay the Most
Part Four: Operating Methods That Increase Value
Lesson Twenty-Four: How
2,000 Percent Solutions Affect Value
Lesson Twenty-Five: How
to Pick 2,000 Percent Solutions That Improve Value
Lesson Twenty-Six: Demonstrate
How to Overcome Apparent Growth and Profit Limitations
Part Five: Human-Resources Practices for Growing Value
Lesson Twenty-Seven: Change
Value Forms to Stimulate Management
Lesson Twenty-Eight:
Add Critical Skills and Knowledge before Competitors
Lesson Twenty-Nine: Quickly
Identify and Remedy Harmful Errors
Lesson Thirty: Put
Leaders in More Appropriate Roles
Part Six: Financial Techniques for Boosting Value
Lesson Thirty-One: Employ
Valuable Cross-Ownership among Stakeholders
Lesson Thirty-Two:
Finance Growth with Customer Advances
Lesson Thirty-Three:
Minimize Taxes for All Stakeholders
Lesson Thirty-Four:
Turn Volatility to Your Advantage
Lesson Thirty-Five: Use
Futures Contracts to Enhance Attractiveness
Lesson Thirty-Six:
Offer Convertible Securities
Lesson Thirty-Seven:
Pay Extraordinary Dividends in Low Interest-Rate Environments
Part Seven: Communications Procedures for Value Expansion
Lesson Thirty-Eight:
Create and Maintain a Perfect Balance of Investors
Lesson Thirty-Nine: Identify
and Attract Supportive Investors
Lesson Forty: Influence
Expectations
Lesson Forty-One: Inspire
Confidence
Lesson Forty-Two:
Continually Attract Investors to Special-Situation Opportunities
Lesson Forty-Three:
Clearly Signal What’s Coming
Lesson Forty-Four: Continually
Draw in New Stakeholders
Part Eight: Identifying the Optimal Value-Improvement
Program
Lesson Forty-Five: Plan
a Value-Improvement Program
Lesson Forty-Six: Start
Your Value-Improvement Program with Stakeholder Conversations
Lesson Forty-Seven:
Determine Your Valuation Correlations and Sensitive Actions
Lesson Forty-Eight:
Prepare and Analyze Relevant Case Histories for Sensitive Actions
Lesson Forty-Nine:
Analyze Stakeholder Conversations, Verified Correlations, and Case Histories to
Create a Value-Improvement Program
Lesson Fifty: Next
Steps for Implementing Your Value-Improvement Program
Appendix: Donald
Mitchell’s Testimony
Part
One
What
Stakeholder Benefits to Provide
You
have increased the nation, O LORD,
You
have increased the nation;
You
are glorified;
You
have expanded
all
the borders of the land.
—
Isaiah 26:15 (NKJV)
Let me remind you that
in referring to stakeholders I mean to include all those who substantially contribute to, benefit from, or are
affected by a company and its actions: end users, customers, customers’
customers, distributors, dealers, agents, suppliers, suppliers’ suppliers,
employees, employees’ families, partners, shareholders, lenders, lessors,
neighbors, the communities in which the firm operates, and anyone else who is
significantly impacted by what the company does. Although most of these
stakeholders have no ownership in the company, be sure to consider how
encouraging and facilitating such ownership could be an effective way to expand
stakeholder value for many more people.
Here
are a few of the possible stakeholder-value improvements to help you begin to appreciate
what benefits could be provided:
•
End users can gain knowledge and practical advantages that expand the types,
quantities, and usefulness of the benefits they receive from the company’s offerings.
Readers who successfully apply the lessons in Advanced Business: Exponentially Increase Stakeholder Value will have received one kind of substantial value improvement
from this book.
•
Similar effects can also occur for your customers and their customers, often in
terms of their obtaining greater numbers of and more profitable customers for
their own organizations, along with knowledge and practical advantages that can
be used to increase the value of what your customers provide to their own customers
and end users.
•
Distributors, dealers, and agents can gain from having more appealing offerings
that add much increased value for those they distribute to, deal with, and sell
to, as well as for their own organizations.
•
Suppliers and their suppliers can benefit from becoming vastly more effective,
often gaining market share by selling more to your company, as well as to your
competitors.
•
Employees can see their lives improve through sharing in some of the company’s
success while enjoying better, more satisfying working conditions, career opportunities,
and personal lives.
•
Employees’ families can experience better lives through any increased time they
can spend with the employee, a better working environment for employees that
facilitates improved family relationships, any company-provided
family-enhancing benefits, and whatever increased income and wealth the employee
obtains that is used for the family’s benefit.
•
Partners can gain wealth and knowledge to apply in their own businesses through
ownership and participation in joint ventures, as well as through investments
in and with your company.
•
Shareholders can be directly enriched through the expanded value of their
equity ownership. The value growth from an initial investment of $10,000 in an advanced-business
company can be sufficient to support many future generations of the equity
owner’s family.
•
Lenders will have less risk of not being repaid, as well as an opportunity to
share in the expanded ownership value of your company whenever your company borrows
money through debt instruments that are convertible into equity.
•
Lessors can enjoy similar benefits to those gained by lenders, while also
gaining the opportunity to do more business with your organization.
•
Neighbors and the communities you serve can benefit from your company
eliminating any problems it causes while these stakeholders can also receive new
benefits designed to make it more attractive for the company, its employees,
and neighbors to spend time in the vicinity of the company’s activities.
•
Anyone else substantially affected by your company can gain from any negative
effects being eliminated, receiving more of any existing benefits, and gaining
access to any new benefits.
As
I mention in the Introduction, please note that effectively adding such
stakeholder benefits can be done in ways that greatly expand profits, cash
flow, and ownership value for your company. Such consequences follow because these
sorts of stakeholder benefits also increase stakeholders’ interest in, types of
activities for, and effectiveness in usefully contributing to your company’s
success. Keep these connections in mind as you look for such ways to add to
stakeholder value.
In
Lesson One, we look at enhancing the economic value of benefits received by end
users of a company’s offerings. End users are those who actually employ what
your company offers, rather than either selling or providing the offering to
someone else. Ways to increase such value include adding more helpful features
and qualities to an offering, making it easier or less costly to gain benefits from
using the offering, and enhancing the ability of end users to gain full
advantage from using the offering. Consequently, your company will benefit from
their expanded usage.
In
Lesson Two, we consider what can be done to increase value for customers and
their customers so that they will greatly expand their purchases. We study
transferring knowledge, as well as at supplying offerings so valuable that they
almost automatically enhance value for customers.
During
Lesson Three, we examine improving relationships with distributors, dealers,
and agents. Instead of the company and these stakeholders taking a
self-centered, short-term focus, such relationships should take a long-term
perspective on becoming more mutually rewarding. Doing so means finding
important values that distributors, dealers, and agents can provide to enhance benefits
for customers and end users. Upgrading the effectiveness of such organizations
can also be done less expensively by allowing them to obtain stock options in
your company tied to their excellent performance.
Adding
value for suppliers and their suppliers is the topic of Lesson Four. Many times
your organization will not be able to add much more value for stakeholders
unless suppliers provide you with goods and services that allow you to effectively
enhance your capabilities and choices. In this lesson, we reverse the focus
from Lesson Two on how to add value to customers to look, instead, into the
supply chain to see what can be done there by your organization that will
ultimately improve benefits for your customers and end users.
Lesson Five considers
ways to better compensate employees in ways that will increase the firm’s value.
In addition, we look at how to overcome the most common causes of employee
complaints: lack of respect from supervisors, inadequate preparation and
insufficient resources to do a good job, overly demanding work environments,
unrealistic expectations for the employee’s performance, and unpleasant
relations with peers.
In
Lesson Six, we discuss improving the impact of the employees’ work on their
families. This lesson describes ways that a company can make it possible for
families to enhance their lives in all dimensions, from the spiritual to dealing
with worldly problems.
Using
partnerships to add more value is Lesson Seven’s topic. Adding complementary
skills, knowledge, and resources can lead to huge value improvements. However,
such partnerships too often focus on outperforming the competition at the
expense of adding more value for other stakeholders. We look at the importance
of changing the focus of partnerships in this lesson.
For
Lesson Eight, we explore the effects on shareholders of accomplishing the
stock-price-value improvement goal of the fourth complementary 2,000 percent
solution. This lesson also discusses the need for owners to understand the
importance of adding stakeholder value for one and all.
Benefits
for lenders and lessors is the topic of Lesson Nine. Creating a more
financially sound organization with much enhanced access to low-cost capital
decreases risk for lenders and lessors. By allowing these stakeholders to
participate in your expansion of shareholder value, you can enrich their
organizations while also expanding how much profitable business you provide to your
lenders and lessors.
Lesson
Ten considers neighbors and how they can benefit from your company seeking to
add value for them. Opportunities exist to reduce negative impacts, increase
the value of real estate they own, and provide other noneconomic benefits, such
as more desirable choices of residences and neighborhoods. Companies benefit by
having fewer restrictions placed on them and being able to enter new
neighborhoods more easily and less expensively.
In
Lesson Eleven, we complete this part by looking at ideas and examples of what
companies and their leaders can do to enhance value for the communities in
which the firms conduct business.
Lesson
One
Stakeholder
Benefits for
End
Users
“Give, and it will be
given to you:
good measure, pressed
down, shaken together,
and running over will
be put into your bosom.
For with the same
measure that you use,
it will be measured
back to you.”
—
Luke 6:38 (NKJV)
End users of offerings
can be individuals, families, small groups, nonprofit organizations, and governments,
as well as for-profit companies. How might end users gain immense increases in
the value of their benefits? While there are many potential value-improvement
triggers for end users, including customers and other stakeholders teaching end
users how to increase all forms of stakeholder value, value increases more
typically occur due to your company or the end user’s supplier providing
offerings that automatically deliver either all or most of the value improvement.
Let
me supply an example related to 2,000 percent solutions (ways of accomplishing
20 times more with the same or less time, effort, and resources, as described
in The 2,000 Percent Solution,
AMACOM, 1999). If I write a book that tells end users how to make 160,000 times
more profits (as The 2,000 Percent
Squared Solution does by directing that the lessons in the book be repeated
for expanding revenues by 20 times and reducing costs by 20 times), end users
who buy, read, successfully apply, and keep effectively reapplying the lessons
of that book can eventually enjoy 160,000 times more profits. In the process,
the economic values of their businesses would typically increase by about
160,000 times, as well.
Now,
let’s now consider working on expanding cash flow by 64,000,000 times, such as
by repeatedly applying the lessons in Business
Basics. When done correctly, cash flow will increase by that amount, as
will the economic values of the businesses to which the lessons were applied.
The
offering doesn’t have to be a product to cause large value increases. The
offering can be a service. Let’s consider The Billionaire Entrepreneurs’ Master
Mind. After learning how to expand the market and revenues by 20 times and to reduce
costs by 96 percent for each offering, end users of this service who apply the
lessons can gain 400 times more profits. If end users then also learn and apply
how to reduce investment intensity by 96 percent, their cash flow also
increases by 8,000 times (a 20-fold increase over just applying the first two
complementary 2,000 percent solutions). Putting in place a third such
improvement will equate to adding another 20 times increase in economic value
for end users over the two complementary solutions. If end users then
successfully reapply each of the three lessons twice, their cash flow expands
by another 511,999,992,000 times. And the master mind doesn’t charge
511,999,992,000 times more … so the value for members of The Billionaire
Entrepreneurs’ Master Mind compared to the cost in time, effort, and money just
keeps getting better and better as they apply more of what they learn.
These
product and service examples relate to knowledge transfer for end uses. Benefit
transfers through offerings that add stakeholder value can be more direct than
that.
Here’s
a product example. The Amazon.com Kindle reader and the company’s support
systems for producing and distributing written materials have revolutionized
the potential for someone to learn. On a Kindle reader, hundreds of books can
be stored and easily accessed for comparing one source to another. The type
size can be adjusted to make reading easier. Each book costs less because it is
in a digital version. Because a whole library is now portable, study can be
done in more environments, including while traveling or during breaks at work.
If we include the value of the space-saving feature of substituting for
physical books to reduce how much office or living space someone needs, the
economic benefits are undoubtedly much greater than 20 times the cost of a
Kindle for anyone engaged in a learning project, such as writing a thesis or
dissertation. And to gain the benefit, a learner just has to buy and use the
product and related books in this form.
Let’s
look at a service example of direct increases in the value of benefits. Imagine
that an end user’s supplier has valuable rights that the end user is allowed to
exercise. Such rights might involve being able to share valuable information with
other people in a network, perhaps something like an individual controlling a Facebook-like
page on an access-controlled network that provides large numbers of people with
extremely easy ways to share highly useful information. Another analogy might
be a Web site on an Internet-like network accessible by specialized search
engines capable of always taking you to exactly where you need to go. In such
cases, the supplier’s network is made more valuable by having more end users who
share greater amounts of helpful information. The same value-multiplying effect
on benefits also applies to the supplier’s ownership value.
A
practical example of this service concept would be a highly efficient branded
cooperative that made small companies more effective. The cooperative might do
almost everything for the small companies except actually deal with their
customers. As a result, each end-user company would gain the same low-cost benefits
as everyone else in the cooperative, while also benefiting from owning part of
the cooperative. The value of each end user’s company could then expand even
more if the cooperative could legally assign territories so that the number of end-user
companies was held at the optimum level relative to the number of their
customers and prospects. In a country that lacked enough qualified providers of
a certain essential type (such as plumbers, for instance), such a cooperative might
also be able to advocate more appropriate standards for government licensing and
gain a virtual monopoly over training providers. If done properly, the
cooperative might help a youth with no skills become the successful owner of a
highly profitable and rapidly growing business.
You
can see from many of these examples that gaining a 20-times value enhancement
for end users will not always be automatic. There may be some learning,
thinking, and working involved for the end users. In many cases, it may well be
that the supplier’s supplier (and so on) will have to play an important role in
creating the step-up value for the end user before the large increase in
economic value will occur.
Think
of the potential. If an end user can gain 20 times more economic value from an
offering, the value of the end user’s activities related to the offering are
often going to go up by more than 20 times the combination of the offering’s
value, plus the time, money, and effort involved in using it. When that’s the
case, what are end users going to do? Well, they are probably going to find a
way to buy and use more offerings from the supplier. When that happens, the end
user’s economic value will continue to soar in exponential ways. It’s like
having the ability to turn lead into gold at little or no cost.
What
can end users do with that potential? They can cut costs of what they do by 20
times. They can work 96 percent less. They can increase their incomes by 20
times. They can invest 20 times more. And so on. The choice is the end user’s. Such
flexibility should make a person feel more peaceful before going to sleep each
night.
You
may be wondering how all of this potential applies to those who have no
enterprise to benefit from using offering enhancements. In such cases, freed-up
time can be used to engage in other personally or economically valuable
activities. Or for someone who feels he or she has enough personal value in
hand, the time can be solely applied to being more fruitful for the Lord.
Naturally, the potential value increase will not always be realized unless end
users are provided with information and encouragement to make constructive use
of whatever value they obtain.
What’s the key lesson? By increasing personal or economic value for end users by 20 times as
part of the fourth complementary 2,000 percent solution, an end user can gain by
applying the benefits to enhance many other dimensions of value. In addition, end users can apply the
economic benefits to gain even more benefits by purchasing more offerings, absorbing
and applying more transferred knowledge, or selectively reinvesting in valuable
activities.
Your Lesson One Assignments
1. How can your
organization’s offerings be improved in ways that will increase the economic or
personal value of your end users or their activities by 20 times?
2. How can your
organization transfer knowledge to raise end users’ economic or personal value
by 20 times?
3. How can your
organization provide exclusive arrangements to end users that will increase
their economic or personal value by 20 times?
4. How can you teach
end users to increase their value by 20 times, independent of any increased
value of offerings, any operational knowledge transfers, or any exclusive
arrangements?
5. How can these end-user
benefits be transformed into improved relationships that will make it easier
for your company to increase by 20 times its economic value and ability to
provide for other stakeholders?