Value Cells

Value Cells vs Value Kernels

This piece has been triggered by article Organising for Value in The McKinsey Quarterly. They have enunciated the concept of Value Cells therein. The concept of value cells is not novel.

As a youngster at Tata International,India, shortly after my MBA, I was heading a “Value cell” for this trading organisation. The bank accounts and books of sixteen such “value cells” employing 1500 persons were separate; we had our own budgets, business plans, monthly review of Profit & Loss accounts and Balance Sheets, with a small summary, describing milestone events. The turnover of the company (Then called Tata Exports Ltd.) was USD 100 million. The smallest division was USD 100,000 strong. Iwas the sole signatory of my “Value Cell” bank account and have never understood why all other companies that I worked for could not follow this simple system. It was Perhaps the most satisfying experience of my life. The Tatas of India have a more sophisticated and advanced system which could be called “Nested Value Cells” than has so far been expounded by any of these articles. They thus easily control a conglomeration of more than 50 companies in diverse fields, present turnover exceeding USD 15 billion; something which would be unthinkable for proponents of focussed organisations ( I recall the papers in HBR several years ago on the subject).

I have no commercial interest in the subject at present, as I am a manufacturer entrepreneur who continues to take interest in academics as well. For years now I have been talking of “Value Kernels” and my first reaction upon reading the Mckinsey article was to forward it to friends with whom I had shared the concept. Those intersted in knowing more, could go through internet archives where I wrote a few pages using the term “Value Kernels”
I am willing to share details with academicians and other professionals who would like to join hands to develop the Laws Of Value. I see a great commercial potential as well for those in consulting and computing.

Only a deep and clear understanding of the concept of value, structure of value cells, quantisation of value can help us unravel the Laws of Management which should withstand the test of time and not change by the decade.

Yadav Chandna