Holistic Value Creation — Wait, “Holistic”?
The urgency of this time is on display all around us: Following the devastation and loss of 37 lives in North Carolina — and tellingly not-so-much-following the devastation and loss of 1234 lives in Indonesia. A battle in the Supreme Court confirmation hearing, displaying widespread support for male privilege alongside a protests from survivors of sexual harassment and allies. It’s not subtle. It’s a circus and on stage are the multitudes of challenges we are facing.
And it is on this very stage, with every aspect interconnected and interdependent, businesses operate.
This is why we need the perspective of holistic value creation — a framework to help owners and leaders to figure out how to navigate and meet the new expectations of this time, which is to create value to the entire stakeholder map, and do it while full-on circus.
Holistic — Wholes or Complete Systems
Holistic Value Creation is the term we use to describe just that. Businesses, organisations and institutions creating value to their entire stakeholder maps. Not just owners. Not just consumers. The entire map of diverse stakeholders.
The word “holistic” means relating to or concerned with wholes or with complete systems rather than with the analysis of, treatment of, or dissection into parts.
The field of sustainability has for a long time been plagued with dissection into parts. And in many ways it has been necessary, because going from believing that businesses can have only one purpose — value to the shareholder — it has been a long journey to understand the multitude of parts that is effected by or effects business.
But as many business leaders know all too well from being overwhelmed when trying to make decisions, many parts don’t necessarily make it possible to understand the whole.
Every Human, Everywhere and All the Time — Human Rights
My understanding of “holistic” is very much informed by working with a human rights perspective during the two first decades of this century, spanning over 70 countries and four continents. Moving across cultural contexts, economic classes and social backgrounds has taught me one thing more than anything else: there is a lot to the human experience and the only thing anyone can be sure of is that no one can have everything figured out.
Belden Field, of the University of Illinoi, argues in his 2003 book “Rethinking Human Rights for a New Millennium” that human rights should be “reconceptualized in a holistic way to combine philosophical, historical, and empirical-practical dimensions. Human rights are viewed not as a set of universal abstractions but rather as a set of past and ongoing social practices rooted in the claims and struggles of peoples against what they consider to be political, economic, or social domination. By aptly showing how a people’s fight for recognition is often closely tied to rights claims, Fields argues that these connections to identity can help bridge the gulf between universalistic and cultural relativistic arguments in the human rights debate.”
This view of human rights as an ongoing negotiation of practices, space and recognition illustrates a non-fixedness, a concept of evolving and learning needed to move towards universal respect for human rights.
This kind of reconceptualization is necessary also for business and of value creation, in order for us to move past the narrative of single issue or single stakeholder — to a place where we expect businesses to create value in all its relationships, that is holistic value creation.
The Interconnection and No Trade-off Principles
Edward Freeman, professor of Business Administration at Darden School of Business, talks of the Interconnection and No Trade-off Principles to describe shared value. They are not rocket science for sure, but still worth spelling out because they are surprisingly counter intuitive to the old narrative.
1. The Interconnection Principle: Because stakeholder interests go together over time, we need solutions to issues that satisfy multiple stakeholders simultaneously. Or win-win-win-win-win solutions.
2. The No Trade-off Principle: We try to never trade off the interest of one stakeholder versus the other continuously over time.
These seemingly simple principles are crucial for business leaders to grasp in order for taking steps away from viewing sustainability as a risk management exercise — towards a sustainable business model, acting strategically on opportunities and fulfilling its purpose. Here is the opportunity for using strengths like creativity, judgment, curiosity, love, courage to strengthen the business — and always be sure that the business has what it takes to take on new questions, challenges and meet new needs at any given time.
Holistic Value Moving in to Corporate Value
Being an explorer of holistic value creation of course includes meeting the more “new agey” uses of the word holistic. Teas and vitamins and treatments designed to take care of the entire human, body and mind, in her entire context on earth. No judgment here, I love my ginger teas and active meditations!
But the understanding of holistic perspectives also in relationship to business is slowly making its way also into more traditional providers of strategy. PwC for example has this year released a new strategy for product development called “Holistic value design”. It focuses on using the expertise of the entire company when designing a product, in a multidimensional and multifunctional approach.
Other business thinkers on holistic business strategy and holistic business models also talk about the entire company being involved. This is good, but not enough.
Based on our research, we propose the need of going one step further: Extending the understanding of holistic to the entire stakeholder map, not only the internal processes.
Yes, holistic
So the “holistic” in holistic value creation is:
- A growth mindset — it is not helpful if understood as something fixed
- The understanding that stakeholders are interconnected and the big win is the solutions that create value for all of them
- A leap needed for leaders who aim for their businesses to meet the needs of this world in a way that is positive, lasting and strong
I’m exploring holistic value creation as the Chair of Inter Business, and CEO of Srey group, striving to leverage creativity and judgment into the quest for new knowledge and the activation of our insights into business. Come say hello on LinkedIn.
