Measuring a Company’s Value by its “Footprints”
Rafael Andreu, IESE Professor of Strategic Management and Information Systems / Photo: Roger Rovira
How do we measure a company’s value? In economic terms alone? What about that company’s impact on its sector, on society or its employees?
Business leave a mark. Whatever the activity, they generate footprints that can be measured in terms of their impact on people, organizations or their working environment. As these prints accumulate, they have the potential to significantly influence a company’s future outlook.
A new book by IESE Prof. Rafael Andreu sets out a framework for assessing these footprints. Using examples, Andreu demonstrates that this is not only good practice; it can also lead to a medium-term improvement in the company’s earnings.
How Executives Generate Positive Footprints
Executives have a fundamental role in generating footprints across the different levels of their organization. Prints in turn generate learnings which can be positive or negative. For this reason executives need to attend closely to the full range of interactions happening within their organization.
Preconceptions about others can hamper teamwork, so it is important to prioritize positive relations and emotions that encourage positive learning and leave positive footprints, which in turn can feed off each other. Andreu argues that achieving a consistent combination of positive emotion and learning outcomes hinges on executives taking on the role of mentor.
He also urges executives to be mindful of the fact that footprints affect the full spectrum of stakeholders; from employees, clients to shareholders and other groups. For this reason, he says, it is essential that the internal and external “mission” of a company be coherent.
Everyone has a Role to Play
Executives are not the only ones with responsible for prints generated by a company or in society. We all play a role. Responsibility for building non-economic value spans:
Companies. A company should generate acceptable earnings while staying true to an internal mission that respects an established red line -- generating positive footprints or at least trying to limit negative ones.
Owners and investors. A purely economic outlook leads to largely negative footprints.
Employees. Employees should be encouraged to identify and debate footprints with supervisors within the context of the company's mission.
Headhunters. Headhunters should do more to include footprints in job specifications or candidate profiles. They should also look into the kind of footprints each candidate has left over the course of a professional career.
Business schools. Training programs always leave footprints on participants, regardless of the operations and techniques they teach. Training processes improve if they explicitly take print formation and emotions into account to create a coherent framework.
Academics in management. Academic researchers tend to ignore the footprints that the application of their findings can generate. Being mindful of potential footprints can mean subjecting business management to rules – which is something that many academics are unwilling to accept. But the alternative means taking responsibility for the consequences of the prints they generate.
News media. There is a frequent lack of in-depth analysis when covering research results, and few meaningful questions about the kind of prints that the application of research might have.
Politicians and leaders. Political leaders leave prints in several ways. The design of programs and political activities should be mindful of the prints they generate.
Citizens. We should all strive to raise the bar in terms of what we demand from ourselves, the prints we leave, and the types of interactions we have.
More information in IESE Insight