Creating a customer requires employees
During the early 1970s, Peter Drucker’s work was in direct conflict with Friedman’s shareholder value concepts whereby Drucker focused on the power of the customer. He counseled that the customer should be the primary focus and that the creation of a customer defines the business and keeps the business in existence.
I agree with Welch’s point that the main constituencies of a company are its employees, customers and products – in that order. Employees are the primer that activates the assets of a company, enhances the dynamic of a company product and delights the customer. Companies that solve the equation for optimizing employee experience, health and wellness have a better chance at optimizing customer value, which has a corresponding positive impact on company performance. Arianna Huffington amplified the importance of the employee, and human livingness, in her profound leadership book, Thrive, where she portends human success through a prism of well-being, wisdom and wonder.
In her book, Arianna states, “we see an increasing recognition of the effects workplace stress can have on the well-being of employees – and on a company’s bottom line… There is growing evidence that the long-term health of a company’s bottom line and the health of its employees are, in fact, very much aligned, and that when we treat them as separate, we pay a heavy price…”
While I also agree with Drucker regarding the importance of customer, there is a strong correlation between enhanced employee experience to enhanced customer experience. Happy employees usually create happy customers, which leads to enhanced company brand and performance. Unleashing the power of the human to accomplish the extraordinary is an important key to unlocking long-term value and inclusive growth.
This is evident from the rumblings that began after the 2008 financial crisis; a deafening roar emerged around the world in 2016 when millions of people declared — through votes at the polls and feet on the street — that they no longer believed companies or governments cared about their interests.
New metrics for a new decade
As societal trust devolved to new lows, companies voiced the need for inclusive growth and long-term value creation that looked beyond shareholders. Talking the talk was a good start. But to walk the talk, the business world needed a standard means by which to more comprehensively measure value.
In 2017 The EY Organization joined forces with the Coalition for Inclusive Capitalism to create the Embankment Project for Inclusive Capitalism (EPIC). EPIC brought leaders from across business, government and civil society together to help make capitalism more sustainable and inclusive. Their overarching goal was to develop new, more holistic metrics to measure long-term value to financial markets.
What has emerged from this project, among many outcomes, is a long-term value framework that businesses can use to measure and demonstrate their long-term performance. Specifically, the framework breaks value down into four categories: financial, consumer, human and societal.
What excites me as EY Global People Advisory Leader is that three of these four categories focus on people – and if you get the human, consumer and societal equation right, the financial outcome usually follows suit and is optimized accordingly. What excites me more is the new global EY strategy — NextWave — based on EPIC’s long-term value framework, for creating and demonstrating EY long-term value as a trusted and distinctive professional services organization.