How Creating Value For Others Has Become The Key To Business Success

Figure 1: Logos of firms creating value faster. in the U.S. Europe and China
Stephen Denning
Creating value for others has long been a staple of morality, Who has not heard, “Love your neighbor as yourself"? Today, paradoxically, creating value for others has become the key to business success.
The Mirage Of Scientific Management
This is quite recent. For more than a century, businesses often lost sight of the importance of creating value for others. Many firms pursued the idea of scientific management, i.e. imposing a system of inert processes, methods, structure, and systems on staff in order to make money. Scientific management took off with Frederick Taylor’s book, The Principles of Scientific Management, who predicted: “In the past the man has been first; in the future the system must be first.”
In the 1950s, the Carnegie Foundation insisted on scientific management in its funding of business schools. In the 1970s and beyond, the Nobel prize-winning economist Milton Friedman and his colleagues persuaded businesses to pursue maximizing shareholder value (MSV) as the sole goal of business. In 1997, the Business Round Table endorsed MSV the valid goal for all businesses. As recently as 2023, management guru Gary Hamel defined management as “simply the tools, the methods, process and structures that we use as human beings to do together what we couldn't do alone.“
This concept of management led to great gains in the 20th century, even as staff engagement was steadily lower and business returns gradually declined. Eventually, in 2019, the Business Round Table realized that business based totally on the self-interest of short-term profits was untenable and officially renounced it.
The New Goal Of Business Management Emerges
Meanwhile, over the last quarter century, firms had already begun implementing the converse of Taylor’s dictum. As they found ways to have human concerns modify and drive the processes, practices, and methods, they were able to grow much faster and generate exponentially more value. They began with the customer and worked backwards, while also giving thought to all the stakeholders. In so doing, they began to live a new destiny for business management: creating value for others.