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Wednesday, September 08, 2010

See Direction as a Result of Process?


Value Creation and Sport

Over the last two decades, professional sport has grown to be one of the biggest and most influential industries in the world.

There is a great deal that managers and business leaders can learn from examining the unique role sport plays in the global economy – and specifically by analysing what makes certain franchises economically successful. And yet, there’s a real shortage of research on this topic. Few people are thinking and writing about it intelligently.

Enter Sandalio Gómez, Kimio Kase and Ignacio Urrutia. Their new book, Value Creation and Sport Management proposes an insightful and academically rigorous framework for understanding the growth of the sport industry over the last few decades. 

As they point out, “twenty years ago Real Madrid football team had a budget of less than €60 million; today, it is €400 million.” Something is going on here, and these three authors do a superb job of getting to the bottom of it.

Sport taps into the deepest emotional feelings of the world’s population, regardless of geography age or demographics. This is territory that today’s business leaders need to be deeply knowledgeable about, especially as it is in the arena of experiences (rather than products) where optimum value is being created. Emotional experiences like the ones provoked by sport that will be at the core of the successful businesses of tomorrow, which is why it is important to study the underlying forces that govern this vibrant, unique industry.

Gómez, Kase and Urrutia have hit upon an important and overlooked research project, and hopefully their work sparks a firestorm of academic investigation into the inner workings of sports franchises.


Creating Value from Values

In companies that are innovative, profitable, and responsible, widespread dialogue about the interpretation and application of values enhances accountability, collaboration, and initiative.

Here are ten essential ingredients that make values work to produce organisational value:

·         Values are a priority for leaders, invoked often in their messages and on the agenda for management discussions.
·         The entire work force can enter the conversation; employees are invited to discuss or interpret values and principles in conjunction with their peers, who help ensure alignment.
·         Principles are codified, made explicit, transmitted in writing in many media, and reviewed regularly to make sure people understand and remember them.
·         Statements about values and principles invoke a higher purpose, a purpose beyond current tasks that indicates service to society. This purpose can become part of the company's brand and a source of competitive differentiation.
·         The words become a basis for on-going dialogue that guides debate when there is controversy or initial disagreement. Decisions are supported by reference to particular values or principles.
·         Principles guide choices, in terms of business opportunities to pursue or reject, or in terms of investments with a longer time horizon that might seem uneconomic today.
·         As they become internalised by employees, values and principles can substitute for more impersonal or coercive rules. They can serve as a control system against violations, excesses, or veering off course.
·         Actions reflecting values and principles — especially difficult choices — become the basis for iconic stories that are easy to remember and retell, reinforcing to employees and the world what the company stands for.
·         Values are aspirational, signalling long-term intentions that guide thinking about the future.
·         Principles, purpose, and values are discussed with suppliers, distributors, and other business partners, to promote consistent high standards everywhere.

In short, it's not the words that make a difference; it's the conversation. Frequent discussion about organisational values can be engaging and empowering. The organisation becomes a community united by shared purpose, which reinforces teamwork and collaboration. People can be more readily relied on to do the right thing, and to guide their colleagues to do the same, once they buy into and internalise core principles. People can become more aware of the drivers and impact of their behaviour. Active consideration of core values and purpose can unlock creative potential.