Leadership in the economy of value
The increasingly critical customer and the newest generation of employees demand a new economic model. Organizations are also increasingly confronted with complex issues that cannot be solved in one go. The economy of tomorrow will be about multiple value creation, in which economic, ecological and social values are in balance. This also requires a new form of leadership and a different way of working for organisations. Because it is no longer just one organisation that has to make the move, but the network of organisations. Performance through relationship is the adage for the future. This requires cooperation between organisations and people in which flexibility, creativity and autonomy are central.
The new normal: multiple value creation
The business models of the future will increasingly focus on multiple value creation. In multiple value creation, economic, ecological and social values are in balance. Short-term profit is no longer the holy grail and ecologically sound and socially just results will play a greater role. So no emphasis on just making money or excessive social arrangements, but a balance that does justice to all three factors. In order to create value in these three areas, it is not up to one organisation to be ‘exclusive’, but a network, the community, is needed.
The need for new business models becomes most apparent when an organization is facing a major challenge. Current examples of multiple value creation are often complex or ‘wicked problems’. A wicked problem is one that is so complex and diffuse that it is difficult to solve or may even seem unsolvable. To solve a wicked problem, collaboration is essential. Such problems require the solving capacity of a network of people and organisations. In a network, the creation of shared value is paramount, i.e. value for all stakeholders. In other words: value creation in the broadest sense of the word.
The 5S Syndrome: Wrinkle Rheumatism
Current theories on management and leadership do not yet sufficiently address the wicked issues that organizations face today. As existing theories simplify reality, complexity is completely flattened. Versimpeleritis is also called the 5S syndrome in the English literature. These five common mistakes are the symptom approach, silo thinking, superficiality, short-term solutions and solution mode. I will explain these errors one by one.
As the word suggests, symptom management is only about solving the symptoms of a problem. The underlying cause of the complex problem remains unaddressed. For really complex issues, this simple approach is therefore seriously flawed. Because if you only tackle the symptoms, the underlying cause of the problem will of course remain.
Silo thinking is also characteristic of the 5S syndrome. In other words, coming up with solutions within your own team, organisation and/or sector where the problem arises. This creates the proverbial tunnel vision and possible new ideas and opportunities outside the existing walls are often completely overlooked. To solve complex problems it is not enough to stay within one’s own small circle, a system approach with expertise from others is often necessary.
Look before you leap, as the saying goes. Especially when dealing with complex issues, this is important advice. Superficial refers to looking at a problem superficially and not closely. The risk is that the treated problem is not the real problem, so the solution is nothing but symptom control.
They would like to see a solution and result in the short term. Even before the situation has been properly analysed, solutions are already being thought up. This leads to pragmatism, a quick solution to a problem but no sustainable end result.
Many people have a tendency to want to solve problems as quickly as possible. Hands-on with a solution, without first delving into the real causes of a problem. If you immediately jump into solution mode, the danger is that the nature and extent of the problem are not clear. Or how the different problems are related. Who are all actually involved in the problem and what is their view of the problem? As a result, the objective nature and scale of the problem is not seen and the solution deployed will not be able to solve the problem.
How to solve really difficult issues with the Rainbow Model
To avoid falling into the pitfalls of 5S syndrome, organizations must adopt different strategies and work differently. Complex issues require cooperation between different stakeholders, a different kind of leadership, but also a thorough analysis. Multiple value creation requires a different way of thinking and working. Current business models do not sufficiently reflect this. The Rainbow Model is great for understanding the complexity and helps to make the right choices. The model depicts the characteristics and preconditions of value-creating leadership along with multiple value creation.
What does this mean for leadership?
Multiple value creation starts with value-creating leadership. This requires different and
more complex skills of a leader than in the old economic model. Leaders in the new economy look beyond their nose, beyond quarterly figures and profit maximisation. They give direction, are able to (re)define values and principles and create sustainable value. The interesting thing about this is that anyone can take on a leadership role. Value-creating leadership is not tied to a formal role or position.
The Rainbow Model makes it clear that this requires leadership at different levels. At the micro level, this involves personal characteristics such as competencies, motives and behavioural styles. At the meso level, it’s about the functioning of the team and the managerial situation. Finally, the macro level concerns the ability to lead social developments. Multiple value creation stands or falls with people; people who can work together in teams inside and outside their organization. To actually achieve multiple value creation, the right balance is needed between functional and normative interventions. This balance determines whether an approach is successful in practice.
How can you use the Rainbow Model for your organization?
A successful approach is by definition customised, because the right approach depends on the issue, the ambition and the sector in which the organisation or partnership is located. Multiple value creation and value creating leadership are complex goals and it can be difficult to keep track of where and how far you are and what the next steps are. The Rainbow Model helps you to (re)structure the process towards multiple value creation. Application of the model will encourage effective leadership and collaboration at the right stage and in the right place.
Are you ready?
Are you ready to take the next step towards multiple value creation? Or does your organization struggle with solving complex issues? Does your organization also suffer from versimpeliritis, pragmatitus or the 5S-syndrome? Are you wondering what the new leadership looks like? Download the free eBook so you too can be ready for the economy of value! Or
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