There is no denying that profit is important for any commercial organisation. It is the oxygen of a company; it keeps the organisation alive and allows it to sustain and grow. But businesses around the world increasingly search for an alternative way to measure success. One option is to look at success from a value creation perspective – given that creating value is arguably the most important objective of any company, regardless of industry, cultural background or size. But value is also the hardest variable to define. How does a business create value? And, does the product or service it is offering create value in return, helping the organisation execute its strategy, realise its vision and eventually fulfil its mission?
One example of a corporation with a strong value generation focus is Taiwanese lighting specialist Lucidity. In the course of a global expansion strategy, the company from Taiwan attached great importance to cultivating a value creation process that would benefit every entity involved in the supply chain.
In that sense, Lucidity has adapted quite a contemporary perspective on success management, one that is approaching the value creation concept from a networking side, which is not necessarily based on market capitalisation, net present value of expected dividend streams or share price anymore.
According to Toby Hatch, Senior Principal, Performance Management Applications at IT giant Oracle, looking at value creation from a shareholder perspective may be the most tangible approach, but not necessarily the only one.
“But because something is easy to measure doesn’t mean that it is the right measure of success.”
According to Hatch, we should think of creating value as the role an organisation plays within a ‘performance network’. “For me, an organisation is a unique collaboration between stakeholders who realise that individual goals can only be reached by working together.”
Lucidity is a company that takes such collaboration into account – not just on a business-to-client level, but also on a business-to-business level, involving the entire supply chain along the way. “We consider value generation as a holistic challenge,” says Sales & Marketing Manager Benjamin Chu, referring to a quartet of core values including integrity, innovation, cooperation – and caring.
“Of course innovation is important to us as a technology company, but we believe there is more to creating value for the business, our people and our clientele. For example, we actively coach our suppliers to acquire ISO certification to ensure the partnership will have a positive outcome for both the supplier side and us. That’s why we give them advice in regard to tooling and setting up efficient manufacturing processes as well.”
According to Chu, Lucidity is aiming at becoming a ‘top three’ brand in the commercial vehicle lighting segment – not in Asia, but in the developed world, where demand for high-tech LED technology is high. In Asia, only China and Japan are possible export markets for the Taiwanese lighting brand, with China only just opening up to modern lighting technology. “We already export 99 per cent of our production and focus strongly on ‘traditional’ trucking markets in Europe and the US, as well as Australia. That’s also where our main competition comes from. As a result, we need to create value for everyone involved up and down the supply chain – especially the client.”
Chu is a strong advocate of “listening” – to the end-user out in the field, Lucidity’s supplier network, as well as regulating authorities all over the world. “I believe listening is the foundation of value creation. Value is not a static goal you can work towards, it’s a very fluid variable you need to focus on continually.”
To stay in touch with the market and listen to the somewhat uneven heartbeat of the industry, Lucidity’s management and engineering team is constantly traveling, attending trade show all around the world in order to “collect” news on technology trends, as Chu has it. “Most importantly, we are exchanging thoughts with the German TÜV authority on a regular basis.”
Given that a recent survey by McKinsey reported that, “It is surprising how many executives don’t know exactly how their business units create value,” Chu’s global search for insight and feedback is still somewhat of rarity – especially in a time of economic turmoil, where reducing financial damage is usually the most urgent action to take.
While the majority of businesses in the ‘old world’ are still focused on survival, standing still until better economic times return, Lucidity is moving forward at an unusually high speed. According to Chu, the idea is to strengthen the brand’s competitive presence in the marketplace by actively “collecting” feedback, enabling it to take advantage of the economic upturn when it occurs.
“Many companies tend to forget about ‘soft’ factors like value creation when survival is the first priority, but we believe value is exactly what will keep us alive,” he says, revealing that empathy is the secret to Lucidity’s value creation process.
“You may be a technology specialist or an astute strategist, but in the commercial vehicle component world, this will mean little if the client is not happy,” he adds. “Not only is developing a deep understanding of the client’s mind necessary from a marketing standpoint, but it also helps us to anticipate our clients’ needs and review our own performance so we can improve and grow our business.”
In Lucidity’s case, that attitude has lead to TS16949 certification in 2006, the implementation of a sophisticated SAP system in 2010, and the acquisition of new subsidiaries in the US and Australia in 2012. “We consider every success a direct result of our value creation process,” says Chu. “We listen, we learn, and we take the appropriate steps to make a change. People often miss out on that last step, so I think our ability to translate feedback into action is our real competitive advantage.”
The result of that proactive approach to creating value is already measurable: Lucidity managed to boost production to four million units a month last year and decided to invest some €30 million in facility upgrades.
“Lucidity has made a significant investment in R&D last year to ensure our growth target would be reached,” says Chu, referring to the recently presented GloTrac series. The new LED range is one of 60 new products that are meant to stir up the global market until the end of 2013, but by far the most significant in regard to innovativeness and growth potential – mainly because it could be seen as a course alteration for Lucidity on the engineering front.
For the past 30 years, the company has been following market trends and relied on the accumulated experience within the business itself. The GloTrac product, however, will see Lucidity move into uncharted waters, where the line between aesthetically advanced automotive design and pragmatic commercial vehicle design can become indistinct.
“Due to our vast experience in commercial vehicle lighting design we are usually pretty confident that a new design is what the market is expecting of us, but sometimes we have to take the pioneering role ourselves, which is the case with Glo-Trac, for instance,” says Chu, who has no doubt that LED is the right horse to bet on in the global technology race.
“With GloTrac we took a completely different approach to designing stop, tail and turn lights for the trailer industry. The system features a glowing ring around the central LED to give a unique look to the illuminated lamp,” says Chu. “From a visual perspective, nobody has done much to change illumination design for commercial vehicles over the past decade or so. GloTrac stands out and changes the way vehicle lighting looks, shifting trends and broadening lighting choices along the way.”
Using new diode technology and a new optic design, Lucidity has created a diffused outer ring to each light. The central LED array remains unlit until the driver activates stop and turn functions, giving others on the road a signal that the truck ahead is manoeuvring or slowing down – a design feature that has already been used in the automotive world for quite some time.
“It was our goal to open up that segment of the lighting market to the commercial vehicle industry,” says Chu. “Especially in the trailer segment, there is a lot of potential to improve on design.”
Throughout the design process, Lucidity’s engineering team was supported by US subsidiary Optronics – based in Tulsa, Oklahoma – and the new Australian branch based in Shepparton, a rural town 180km north-east of Melbourne. “Having a direct link to our target market is a key advantage, as we are now even closer to those who buy or product and use it every day,” says Chu – revealing that the development of the GloTrac series has been a very straightforward process.
The commitment to value creation through networking and partnering has caused a need for setting up local subsidiaries around the globe, creating somewhat of a feedback loop to the R&D team in Taiwan. The result is a bold new product that is taking a completely different approach to LED design, directly influenced by the target market itself and the end-users’ vision of a ‘valuable’ product – and so is the circle complete, with each individual stakeholder goal achieved through a complex system of global collaboration.
“We try to not lose focus of what is truly important to us,” says Chu. “Lucidity is a company that treasures our employees, suppliers, customers and the local community in many different aspects.”
It may sound like a marketing ploy, but Lucidity’s track record does support Chu’s statement. For instance, Lucidity recently funded a social welfare foundation to help local Taiwanese children in need, and acquired the OHSAS 18001 certificate, a British Standard for occupational health and safety management; as well as the ISO14001 certificate for environmental management. “We believe that we are taking a pioneering role in Taiwan with our commitment to the community and the environment,” says Chu. “That’s what we mean when we say ‘caring’ is a company value.”