The world of business and economics change fast and is getting more complex every decade. Firms are faced with the choice to adapt, reinvent, and differentiate themselves or die. Over the past few years, the nature and intensity of these changes in the business landscape have created organizational disruption and a realistic need to redesign organizational structure and leadership approaches. As a result, the nature and structure of the C-suite has also been changing to respond to these exogenous trends. While traditionally C-level positions were focused on operations (Chief Operations Officer), on finance (Chief Financial Officer), on information systems (Chief Information Officer), and innovation (Chief Innovation Officer), we have witnessed the emergence of a flurry of new C-level titles emanating from new management theory (Chief Learning Officer, Chief Knowledge Officer), from increased business regulations (Chief Compliance Officer, Chief Ethics Officer, Chief Sustainability Officer, Chief Risk Officer) and from increased focused on markets and customers (Chief Customer Officer, Chief Experience Officer, Chief Growth Officer, Chief Commercial Officer, and Chief Marketing Officer).
Does Your Company Need a Chief Value Officer?JULY 24, 2012
Today, more and more firms realize that they cannot cut their way to prosperity and that their growth potential has been severely reduced due to the continued recessionary trends. Businesses are looking at their business models are reinventing their value propositions in order to generate customer excitement, boost value creation programs, and capture value through value-based pricing. This trend towards value begs the question of who is in charge of value management processes and programs in firms and how they design and implement comprehensive systematic long-term value initiatives. I recommend the creation and adoption of the CVO role and to elevate the value discussion to the C-suite. There has never been a better time to focus on the topic of business and customer value.
CVO Versus other Commercial-oriented C-Level Positions
My intention is to launch a conversation about the role of the CVO compared to other C-level positions that are related to market and customer activities. The Chief Marketing Officer (CMO) and Chief Commercial Officer (CCO) position have been more widely accepted over the past decade. While the role of CCO is relatively new, about 200 CCOs have been appointed worldwide since the role emerged. Similarly, the number and presence of CMOs is accelerating around the world. In 2006, Spencer Stuart identified more than 30 CMOs in FTSE top 50 companies. In the USA, among the Fortune 100 firms, 23 had a CMO as the head of marketing in 2008. The acceptance of the role of Chief Pricing Officer (CPO) and Chief Value Officer (CVO) have a long way to go. First of all, in most companies, the pricing and value management function receives limited attention. Data from the Professional Pricing Society, the world's largest organization dedicated to pricing, reveal that fewer than 5% of Fortune 500 companies have a full-time function exclusively dedicated to pricing. After an in-depth review in Google, only two or three firms have a clearly identified CVO.
Critical Functions of Commercially Related C-Level Positions
The CMO, CPO, CCO, and CVO roles are different but present some overlapping functions. While job descriptions might differ from firm to firm, I find that the CVO function best captures the systematic and holistic creation, assessment, and capture of value. Many CEOs believe that it is their role to manage value day in and day out. I take a different position and argue that CEOs cannot improvise and focus fully on comprehensive value management programs. They need a full time pool of resources that will make value leadership a priority project with intent to create, assess, and capture value. As Drucker proposed in his 1993 book Management: Tasks, Responsibilities, Practices , CEOs need to put business and customer value at the center of the firm existence and give that mission to value experts. CMOs, CPOs, and CCOs might be able to assist in the management of value but they will also suffer from the same issues of multi-tasking, attention misallocation, and lack of dedicated expertise.
Value at the Organizational Level
"Value" is probably one of the most frequently used words in business. Yet it is extremely difficult to define, to assess its drivers, and fully capture it from customers. Bottom line: there is a need for more research related not only to theory on value, but also to marketing tools for understanding, assessing, and delivering value in business markets.
I conjecture that value must be elevated to the organizational level. Firms must put business value at the center of their existence, make it part of their DNA, and focus on creating sustainable value for stakeholders. To do this, they need to have the proper tools, systems, and programs in place to manage value systematically and with clear intention. The LeveragePoint value-based pricing and value selling platform is an essential platform to get value embedded in business discussions and in the marketing conversation.
By continuously creating, assessing, and capturing value, firms can reap the fruits of their holistic value management programs and can reinvest significant portions of their incremental profitability into innovation. Simply put, enterprises need to innovate for growth and price for profit. Profit being the price an enterprise pays to create the future; both innovation and profit depend on value creation.
So, who is in charge of value in your company?
Stephan Liozu is President & CEO of Ardex Americas (www.ardex.com), an innovative and high-performance building-materials company located in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at email@example.com.