Business Value Creation

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All for profit companies share a handful of things in common. None of those is more important and more unifying that the quest by CEO’s to deliver sustained value creation over the long-term. Bain&Company1998to2008As revealed in a recent study (covering from 1998 to 2008) by Bain & Co, out of a sample population of over 2000 companies with revenues >$500 Million USD,  a paltry 12% delivered sustained value creation. Their qualification criteria was those companies that grew revenues by greater than 5.5% per yr, as well as grew profit by 5.5% per yr while delivering a return that was greater than their cost of capital.

Our contention is that there is a shortage of great leaders that can perform at this level. With market environments and growth opportunities continuing to be difficult, we believe it is fair to say that the conditions are going to continue to be challenging. It is time for people to begin to dig a little deeper to uncover what it is that is involved in the Value Creation process. It gets complicated but at the core, in order to create value in any established business, it is primarily a function of both Growth AND Productivity. There are probably countless other underlying elements also such as : Strategy, Structure, Culture, Change, People, Systems, Processes, Stakeholder Analysis, Centralization VS De-Centralization decisions and Systems Thinking to name but a few. We call these Value Creation Fundamentals. Having the higher order orientation of growth AND productivity informs a different way of thinking and leads to a more integrated and whole set of solutions. Any CEO will tell you that success is NEVER down to one thing, so understanding how to get these fundamentals explained and addressed coherently, is part of where the magic is. This site is dedicated to providing supporting materials and ideas all targeted at helping those leaders that are committed to getting a better grasp on these value creation fundamentals and what it really takes to be successful in the Value Creation quest.

Value Creation Fundamentals

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Strategy,Structure and Systems are foundational in nature

Strategy

Strategy is a plan of action or chosen set of policies to help you achieve some desired aim or goal. Using Value Creation language is key.

Structure

Organizational Structure and design covers hierarchies, networks, governance and decision rights ++. It is foundational in nature.

Systems

Management systems must be intelligently designed, match the needs of the business and support the effective and efficient execution of a value creating strategy.

All work done is through people working together in a process. How they learn to work with each other delivers culture.

People

No body works alone. We must create the right conditions for people to more effectively, collaboratively and innovatively work with others.

Process

All work is done in a process. Productivity and value flow improvements, always involves working on the processes where the work get done.

Culture

Culture is the integrated set of LEARNED behaviors that are the result of the combination of:

  • Defining moments during the formative years of the company.
  • What gets rewarded or punished.

Business model relies on value and trust flowing freely

Business Model

Companies must comprehensively understand their business model and anticipate threats and opportunities in order to have a chance at delivering sustained value creation.

Value

Understanding the principles of Marketplace, Exchange and Fairness is vital in delivering sustained value creation.

Trust

Trust is an intangible and extremely valuable currency. People exchange it with each other when they are working and in relationships with others.

What in centrally managed and how the organization can change and learn strongly influences its ability to grow and adapt.

Centralization

Large companies face the inevitable stage of having to centralize for some levels of co-ordination and control to get the whole working better. This drives lots of change.

Change

There can be no Growth or Productivity improvements without change. Change can not be effectively managed merely by following a process or a methodology. Change mastery goes much deeper.

Learning

Growth and Productivity increases in any organization are strongly correlated to the growth and development of the people (learning NOT training). It is important to know the difference.

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