Throughout my career, I’ve lived by the simple idea that everything you do either creates or destroys value.  There is no such thing as a steady-state until, of course, you are in the ultimate steady-state.  This is an idea that I have tried to impress upon the important people in my life, my family, the people I work with, and the community members I encounter.

Value creation can be classically economic; I get an education, find a job, and make money, or it can be personal; I learn a language or new skill that I find stimulating.  The opposite analogies can be applied to value destruction, don’t take advantage of education opportunities, spend my time drinking or doing drugs versus developing new skills.   

Today, every business should be thinking about being in a state of constant transformation – value creation.  This was reinforced over the past few weeks with two simple examples; one of a business that has been in a perpetual state of transformation and value creation and one that has been less than transformational. 

If there ever was a business in need of a transformation strategy, it is ExxonMobil.  The petroleum industry may be the “Captain Obvious” candidate for the need for transformation (see “global warming” if you need context).  Despite the obvious, urgent, and essential need to invest in new energy, ExxonMobil has failed in near biblical terms to make any progress over the past ten years.  Their return on invested capital has dropped from over 36% in 2008 to – 10.4% last year.  It has gotten so bad that activist investor Engine No. 1 has taken control of two board seats and may control a third when all the votes are counted.

The opposite can be seen with Amazon, where innovation and transformation have progressed rapidly for over 25 years.  Jeff Bezos said it well in his last shareholder letter when he said:

 “If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn't create value for those it touches, even if it appears successful on the surface, isn't long for this world. It's on the way out.”

If you are wondering what the impact of continuous focus on innovation looks like, here is some perspective, from January 2010 through June 3, 2021, ExxonMobil’s market cap went from $322b to $258b, while Amazon’s went from $59b to $1.6t!

Some will say that what we see is the impact of digital vs. physical business models or industry dynamics; they are entirely wrong.  The difference is leaderships’ focus on value creation through innovation.