18 November 2011

Create Value, Don't Trade Value

"The problem society faces is that the best way to become rich is to trade value, not create value."  

--Roger Martin, Dean of The Rotman School and author of Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL, in interview with Steven Goldbach of Monitor Group

What is it about this statement that pisses me off? I mean no disrespect to Dean Martin (sorry, I couldn't resist), he's just the messenger, and I know he bemoans the truth of his statement as much as I do. But the fact that he's correct makes it even more troublesome.

We have completely forgotten what value is as a society. Winning is great in sports and in business, but it isn't great if it is at the expense of values and creating values.

Take Penn State as an example. 

Officials at Penn State may have covered up the hateful and abhorrent crimes allegedly purported by one of its coaches over a decade because acknowledging and doing something about it might harm the mega-million dollar cash cow of its football program. 

That's trading value not creating value.

Trading value creates harm because its driver is greed and its time horizon is temporary.

Creating value creates something lasting and beneficial, not just for stakeholders and stockholders, but for customers and all of society.

Apple creates value. 

Mortgage-backed securities traded value.

We need more people creating value, lasting value, if we want our economy and our lives to thrive.

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