There is a more fundamental method for assuring that any organization grows and develops, outperforming the competitors, designing the future as they go. I call this fundamental method Value Creation. In addition to my career in executive management, I took on a personal challenge to write a book about the hundreds of miles of hiking trails in the Lake Tahoe Basin where I live. I would like to illustrate the value creation concept using an analogy from my hiking experiences.

There are three kinds of people who use the trails: The value consumer abuses the trails and trail markers and leaves a mess. The trail maintainer is a concerned citizen and works to keep the trail system as accessible as possible, always looking to make the experience rewarding for everyone who uses the trails. The pathfinder, or explorer, is looking to open up new territory, to explore new horizons, and to map uncharted ground. Everyone looks to the value creator, the one who is going to pioneer new vistas, to guide them through to a more rewarding journey. We need the maintainers and we want to dispose of the consumers; the creators are the ones we look to for leadership and guidance.

Creation might entail building a new trail system like the Tahoe Rim Trail, a trail that integrates a number of trails into a magnificent 150-plus trail that encircles the entire Tahoe Basin. There were the visionaries who saw the possibilities. There were the planners who made the connections and developed the strategies to get the missing links built. There were the volunteers who used hand tools to carve the trail into the mountainsides and built the bridges to cross the streams. Each of these value creators has contributed to the development of something special. Such value creation will transcend generations and provide a meaningful nature experience for the thousands of hikers who will benefit from that fundamental value creation.

Other value creators are using high technology tools such as GPS navigators to map unmarked trails that have been hard to find and kept secret by nature for decades. Such maps or guides allow hikers to have an interesting and rewarding wilderness experience without concern of being lost or missing some spectacular vistas.

Some trails need to be uninvented; that is, returned to their natural states. Many of the 1000 miles of trails in the Tahoe Basin are old logging roads that were good for hauling logs out 50 years ago. Today these logging roads only tend to be a maintenance problem and have little value to users. These roads need to be returned to the natural state to allow nature to rebuild and renew. This is also a form of value creation because the natural state will have a more intrinsic value to humans as well as the other creatures who depend on the forest habitat.

When we look at these kinds of examples, they provide a vivid picture of the differences between value consumption, maintenance, and creation. In today's organizations the same kind of distinction applies; however, it's often more difficult to distinguish among the three activities. Most people would never consume value on purpose; yet, when visions get foggy and strategies become confused, people can get off the mark and may consume value even when they perceive that they are being productive and committed. Helping these consumers get back on the right track is a primary function of leadership. Most people, when they realize what is occurring, will change their behavior to either value maintenance or value creation, depending on their capacity to execute.

Vision, focus, and alignment are the tools of leadership to reduce consumption and improve productivity. For the most part conventional management and leadership wisdom aims to reduce or eliminate consumption and convert the energies into more useful tasks. For organizations in today's highly competitive environments, the elimination or consumption is only the beginning. What leaders need is to endorse a more important concept; that is, to increase the value creation in their organizations. Said differently, leaders need to change the mindset from one of value maintenance to one of value creation.

Much of today's business literature is oriented toward trying to figure out what is the right formula for success. Some say it is to emulate the Japanese, while others suggest that reengineering or total quality will make the difference. In my research and experience I have noticed that something more basic, more fundamental, is at the root of these ideas and concepts. The prescriptions for success have merit and may, in fact, be good for many situations. However, I have found that when leaders move their organizations to increase value creation, decrease value maintenance, and eliminate value consumption, they can outperform competitors by orders of magnitude. They build in the capacity to reinvent themselves, to adapt to the changing environment, to be more flexible and innovative, and to grow in a more healthy manner.

You say this is too simple, too simplistic; and I respond that what executives need today is more simplicity and less complexity.

Being creative is something that most people would love to do, but the barriers to creativity are something with which we must learn to live, understand, and overcome. It is a concept that has a compounding effect. Once people feel the energy from creating value, they want to be more creative and to be more productive. Conversely, when people become regimented to value maintenance, the individuals' growth is suppressed. The results are bureaucratic organizations and crippled leadership.

One of my mentors and the chair of my dissertation committee, Professor Bela Gold, and I had many discussions around his observation that firms usually begin with an entrepreneur who is very creative and innovative. The organization grows and builds. At some point the leadership and management skills of the founder give way to new management and leadership that may or may not have the creative skills that the founders had.

Often the firm has problems with making the kind of profits that shareholders expect from the industry or sector. They address this by appointing leaders with specific technical skill in the problem area, such as finance or production or distribution. These executives are skilled in solving the specific problems and often do so quite efficiently. Often the leader with such technical skills moves into the value maintenance mode. The leader's effort to maintain dominates what he perceives as essential to the stability of the organization.

Unfortunately, the maintainer fails to recognize that the world outside the organization is changing. The external competitive environment makes value maintenance a risky strategy. Furthermore, without a value creation mind- and skill-set, leadership manages the business into a rut or what I refer to as a ditch. Once in the ditch, the exit barriers grow and the organization begins the process of entropy.

The fundamental way to avoid this condition is to shift the ratio of value creation to value maintenance while eliminating value consumption. This process may occur anywhere in an organization; however, the leadership at the top is the best place to initiate value creation. The senior executive first needs to recognize and embrace the concept and then to develop strategies to overcome the value maintenance inertia.

Two key waypoints are critical to making this journey a success:

1) Recognition of current reality; being able to look at the current situation from multiple perspectives and to be brutally frank about what that situation is. It requires seeking clarity in understanding both the internal and external pressures and forces that shape the current reality.

2) Articulation of a vision of the future; building a vision toward which the organization can set goals, build plans, and develop effective strategies.

The wise leader will enlist his team to build a bridge between the two points and encourage creativity and innovation in building that bridge.

Another way to look at this concept is to look at what value maintenance fundamentally represents. Value maintenance is managing the means while allowing the ends--the current reality and desired destination--to be loosely or ill defined. In my Tahoe trails analogy, the trail maintainer is concerned with the integrity of the specific segment he or she uses. The maintainer in unconcerned about whether the trail leads to a desirable location or, in the case of the Rim Trail, encircles the crown jewel, Lake Tahoe. Value maintenance is managing activities and tasks without a clear destination in mind, since the creation of the destination is in itself a value creation task.

Can value creation be taught, or is it something that some people have and others don't? Like other art forms, value creation in and around organizations can be learned and taught. Individuals can modify their strategies, behaviors, and goals to build a path between reality and the vision by aligning and integrating their activities and tasks to make that bridge or path the smoothest and most logical possible. This is the path of least resistance and, as such, is the "natural path."

John Kao thinks so: "Like jazz, creativity has its vocabulary and conventions. As in jazz, too, its paradoxes create tensions. It demands free expressiveness and disciplined self-control, solitude in a crowded room, acceptance and defiance, serendipity and direction. And, like jazz, creativity is a process, not a thing; and therefore you can observe, analyze, understand, replicate, teach, and, yes, even manage it." (Jamming, 1996)

Some examples of how value creation can be learned include doing more with less--ephemeralization; integration and alignment; time-to-achievement compression; something from nothing; creating customers, products, and markets; organization alignment and team building; and leadership selection and development.

Doing More with Less - Ephemeralization
Finding ways to take existing resources and use them in different ways. Being creative with resources, looking at things from a different perspective. Buckminster Fuller coined the term ephemeralization, which means doing more with less. (Synergetics 2, 1979)

Integration and Synergy
Putting disparate organizations, businesses, projects, or programs together in a synergistic manner may create tremendous value. Such thinking requires getting out of current structural constraints and "thinking outside the box." Whether the entities are local (part of the current structures) or global (relationships with new entities) the opportunity to create value with integration and synergy is available to leaders.

Time-to-Achievement Compression/Expansion
Time is a very important element in today's dynamic market place. Finding ways to do more in less time is value creation. Time compression overwhelms the competition. Organizations that are able to do compress and expand add value by subtracting time, and they add value by increasing the "half life."

Something from Nothing
Creating something from nothing - inventing - may create long-term value. Invention often requires long time lines to generate a sustainable source of value.

Creating - Customers, Products, Markets
Creating customers, products, and markets is an excellent way to produce value. Creating customers means pioneering new territory and finding new users, new channels, or new relationships. Creating new products to current markets and customers produces new sources of value. Creating new markets that leverage core competencies builds new "franchises."

Organization Alignment and Team Building
Organizational alignment and team building create value by allowing people to do things in new ways and to leverage "human capital" in organizations.

Leadership Selection and Development
Selecting the right leadership for an assignment is one of the most powerful value creators. Conversely, the wrong selection is often a value consumer. As a result, leadership selection is a very important value creation area. Once the right selection and appointment have been made, then value is created when the leadership development investment provides support in employing one or more of the above value creation mechanisms.

While hiking the many miles of trails around Lake Tahoe, I often observe nature and make connections between the way nature behaves and the way our organizations behave. When it rains and causes streams to form, the path the water takes from the mountaintops to the lake is the path with the fewest obstacles. This results in rearranging rocks and trees to provide the most effective path.

Leaders can help their organizations attain this same kind of effectiveness by first recognizing the barriers and obstacles, then removing them or guiding their teams around or over them. These are alignment skills that come from making team members aware of the obstacles and providing options for overcoming it.

Clarity and focus provide the opportunity for creative solutions to bridging the strategy gap with insight and foresight. When current reality or the vision is foggy or lacks clarity, then the value creation skills improve the focus. Often I find that a large part of the problem in being unable to articulate these end points is some form of denial or an inability to perceive and understand the current realities of internal and external pressures that form the barriers and obstacles. An additional problem lies in insufficient quantity or quality of opportunities or destinations. In either case, the skills for value creation exist in the ability to build mutual trust and understanding around the realities and in being able to integrate or synthesize a vision from the available information.

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