In today's complex business landscape, organizations need to take a broader view of value creation, one that looks beyond solely financial returns. The TriValue Company (TVC) model provides a useful framework for economists to conduct multifaceted analyses of how companies can optimize value in a sustainable manner.
Developed as part of the Enterprise Agility approach, the TVC model recognizes three key types of value:
- Customer Value: This refers to the worth customers perceive in a company's products and services as measured through metrics like customer satisfaction, loyalty, willingness to pay premium prices, etc.
- Company Value: This captures the company's ability to remain profitable and continue operations into the future metrics include profitability, revenue growth, operational efficiency, etc.
- Workforce Wellbeing Value: This measures the experience and outcomes for employees, including compensation, benefits, training, work-life balance, health and safety, and overall job satisfaction.
Here are some key aspects of TVC from an economist's perspective:
- Three Types of Value: TVC considers three types of value—customer value, company value, and workforce wellbeing value. Economists can analyze and measure these different dimensions of value to gain a holistic view of organizational performance.
- Spot Indicators: TVC identifies specific metrics or indicators for each type of value. Economists can use these to assess economic impacts of activities on customer satisfaction, financial stability, well-being outcomes, etc.
- Economic Analysis: Economists can evaluate the cost-effectiveness of investments in customer experience, workforce wellbeing programs, and provide insights on optimizing resource allocation to maximize overall value creation.
- Sustainable Growth: TVC emphasizes sustainable economic growth, considering long-term profitability and societal impact (check Sustainability Zones for more information).
- Systems Thinking: TVC adopts a systems perspective, understanding how different elements interact to produce outcomes. Aligned with economic analysis examining holistic impacts.
- Recommendations: Economists can provide data-driven recommendations on business strategies and resource allocation to optimize the three value dimensions in a sustainable manner based on the Sustainability Zones.
Each value type has specific "spot indicators" or metrics to track performance. However, the three value dimensions do not operate independently. The TVC model emphasizes the interconnections and need to holistically analyze trade-offs and synergies.
This is where economists can provide vital insights by conducting cost-benefit analyses of business strategies using the TVC framework. Economists can evaluate the full spectrum of monetary and non-monetary costs and benefits related to each value dimension. For example, what is the economic impact of investments in customer service quality and workforce upskilling on customer retention rates and talent retention? How could a new production process enhance environmental sustainability while also reducing costs?
Economists can model the short and long-term economic implications of decisions using data on spot indicators for 0 to 12 months, and Futures for 12 months to 3 years. This allows economists to identify approaches that balance and optimize the three value types from a systems perspective.
Often, initiatives that strengthen one value dimension end up supporting the others as well. For instance, programs to improve employee wellbeing tend to also improve customer service and loyalty.
A core aspect of TVC is emphasizing sustainable value creation. The model pushes against thinking focused solely on short-term profits. Economists can project how current strategies will affect each value dimension months and years into the future. This long-term perspective highlights the need for responsible, ethical business practices that consider societal impacts.
Overall, the TriValue Company model gives economists a multidimensional framework perfectly suited for nuanced economic analysis grounded in real data. It moves beyond narrow financial metrics to provide a comprehensive view of how companies create holistic, sustainable value across three interconnected dimensions.
The TVC approach aligns well with the systems thinking and integrative modeling economists apply. By leveraging this model, economists can better inform business strategies that optimize value for customers, companies, and society.