Five Dimensions of Value
5-D Value starts with the simple but very powerful insight, that companies generate value for customers, personnel, suppliers, distributors and investors in five dimensions.
Four of the dimensions, shown to the right, are widespread and well-established in business.
The fifth, Deep-Connect: Meaning, emerged after the Financial Crisis in 2008/9 and is just beginning to establish itself.
These five dimensions of value are the basis for the managerial framework 5-D Value, which drives business success while addressing social challenges.
5-D Value Upgrades Value Management
Companies use 5-D Value to be more successful in managing value and thereby creating competitive advantages.
Global leading companies practice 5-D Value each in their own special way (Learn about leading practices), e.g.
Amazon Google Tesla
Apple IKEA Toyota
BMW Microsoft Volkswagen
Pioneering companies apply 5-D Value to makeover business and work in a new future-oriented way, generating value for communities and the environment (Read about business success which also transforms society).
All managers can use 5-D Value in their own individual way to bring out the best in their company’s value proposition (read below about the managerial benefits of 5-D Value).
5-D Value Addresses Social Challenges
5-D Value gives insights into the different ways that companies can address the biggest social challenges of our times: climate change, inequality and diversity.
Each dimension of value in 5-D Value refers to specific kinds of benefits that companies offer, as shown at the top of each blue box in the graphic. Accordingly, in a manner specific to each dimension, companies can potentially help the environment, reduce inequality and improve diversity, as shown in the graphic.
The four dimensions of value shown in the graph are widely spread in the economy, showing what is possible from the bulk of companies.
One Dimension, Deep-Connect, is Transformational
The fifth dimension of value is just emerging in a small number of companies. These companies give meaning to people by offering value in multiple personal, technological, social and natural settings. The offers fuse value elements from the other dimensions.
These companies are transforming society, and their positive impacts are built into the benefits they offer and the way they do business. The positive impacts shown in the graphic are not potential but embedded in the essence of the companies.
Five Managerial Benefits of 5-D Value
There are five benefits for managers applying 5-D Value to their internal and external value management. Learn more details about gaining each benefit below. The summary at the end presents 5-D Value as a kind of cookbook with which every manager can develop the company’s own recipe for success. Learn about consulting services to raise managerial success in applying 5-D Value.
1. Comprehensive Value Management with Five Types of Counterparties
5-D Value manages relations with five key groups of counterparties:
2. Personnel in the labor market;
3. Suppliers in the market for supplies;
4. Distributors in the market for distribution channels; and
5. Investors in the capital market.
Managers design the benefits in their value offers to motivate and steer the counterparties to input the value required by companies. The value inputs constitute the material and immaterial means for the companies to generate value.
2. Compete Successfully in Five Dimensions of Value
The phrase “value for the customer” is often used as an empty phrase without specific meaning. In 5-D Value managers design powerfully differentiated benefits for counterparties, distinguishable into five underlying dimensions. The five dimensions are defined in the graphic.
Value propositions from companies have different combinations of these dimensions.
3. Five Managerial Do-Well's in "Deep-Connect" to Makeover Business and Transform Society
A handful of companies, such as BMW, IKEA, Patagonia, Tesla, and the White Arena Group at the Laax ski resort in Switzerland, offer value in the new and emerging fifth dimension of value named “Deep-Connect”. These companies are pioneers in the future business paradigm in which meaning is generated for counterparties. The meaning for the counterparties comes from value for their communities and for the natural environment.
These companies generate value in Deep-Connect by practicing the five “managerial do-well’s” – things that companies need to do well – as in the graphic.
4. Optimal Alignment of Managerial Do-Well's in Five Dimensions of Value
To generate compelling value in a given dimension companies practice a set of aligned managerial do-well’s, as shown in the graphic. Managers generate their own special value propositions by prioritizing and combining the managerial practices in their own particular ways.
The five managerial do-well’s cover a very broad range of activities. There are 28 separate parameters of managerial practices within the five managerial do-well’s. Managers align these 28 parameters across the entire value chain, illustrating the complexity of management today.
Books present the practices in the 28 parameters at leading companies.
5. Manage for Success with Five Internal and Five External Success Factors
The parameters and individual practices in the managerial do-well’s are well known in business and until now have been examined as success factors in their own terms. 5-D Value shows that the decisive success factor is to align numerous parameters to one another in generating value in a particular dimension.
Each managerial do-well is an internal success factor which determines the performance of the company on one of five external success factors, as shown in the graphic.
Amazon is extraordinary in aligning practices to generate compelling value in three dimensions, whereas almost all companies have compelling value in only one dimension.
The Value of 5-D Value
5-D Value can be likened to a cookbook. The entries in the matrix are the ingredients, their combinations within a dimension of value are the recipes and the management, or indeed the entire personnel, are the cooks. The publications in 5-D Value – books and videos – apply the framework to reveal the recipes followed by very successful companies. Like any good cook, each very successful company has its own nuances and style in following the recipes. The readers of the books and the viewers of the videos will be animated to become better cooks in their own companies. From the publications they will learn the recipes and when implementing them in their own companies, they will discover how to follow the recipes in their own special way.