Contributor Matthew Klein is the director of business development for Clemson’s College of Business and Behavioral Science, Greenville. He teaches lean startup methodologies in the Clemson MBA in Entrepreneurship Program.
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The Competing Values Framework (CVF), developed by Jeff DeGraff and other professors at the University of Michigan, has been cited as one of the 50 most important models in the history of business by the Financial Times.
According to DeGraff, “Sometimes the most effective leadership decisions that enable innovation are more about stopping current practices than starting new ones.” The framework is about understanding how to appreciate conflicting values and integrate them successfully so that an organization is open to collaboration and growth.
The framework identifies four fundamental forces, or competing values: Create, Compete, Control and Collaborate. Companies utilize all of these forces to varying degrees and may emphasize different areas at different points in their development and growth, but they tend to progress through the four stages in a cyclical pattern.
Create:
This stage is characteristic of the startup as well as corporate research and development efforts. It is marked by breakthrough innovation and the creation of new products or services.
Compete:
Once the idea is developed and product/market fit is established, the company is ready to compete. This stage emphasizes measurable success via exponential growth, income generation and expansion of market share.
Control:
As the company becomes established it becomes necessary to add control mechanisms to rein in the sales force in order to maintain quality. As a product or service matures, incremental improvements to the original product can generate additional profits and help to extend the longevity.
Collaborate:
Eventually a product or service reaches a stage where the easiest way to squeeze profits is through operational cost-cutting, which is often accomplished by having individuals in different parts of the company collaborate.
At some point the cycle will end – the product or service has become a commodity in the eyes of the customer or even worse obsolete. Unfortunately for many companies, when it is time to begin the cycle anew with the Create stage, they have forgotten how. An entrepreneurial-focused business incorporates continuous innovation and encourages ongoing idea generation and development. This model is far more sustainable than a business that waits until the cycle is over before giving thought to what comes next.
Have you experienced these cyclical stages of growth in your own company? Where are you in the cycle now?
One of the key qualities for business success is the ability of a company to continually innovate. The late Harvard economist Joseph Schumpeter famously coined the term “creative destruction” to describe the innovation cycle, how old ways of doing things are inevitably replaced by new ways in an unending cycle of growth and decay. This economic cycle closely resembles how organizations grow from entrepreneurial concerns (Create) into socio-economic entities (Control and Collaborate) and finally into the mature enterprise (Control).
Does your company need to emphasize the Create value? In June, Clemson University is launching a part-time version of their successful MBA in Entrepreneurship and Innovation program specifically designed for individuals who want to innovate at work. The program is delivered through a unique combination of online classes and two weekends per semester of in-person classes, an ideal arrangement for working professionals. The curriculum emphasizes the Create value in order to develop product/market fit to enhance the performance of companies in the Upstate and beyond.
