Building Value
| Category: Marketing Strategy | Date: 2002-09-02 |
Organizations are continually in a quest for Value: a seemingly simple destination, but one that remains illusive for many executives, business owners, community leaders and not for profit directors today. The definition of value gets redefined by "gurus" offering the "next, great management tool". The bar that represents desirable results keeps rising higher. What is value, where can leaders find it and how can we create it?
What is value?
In the U.S. economy, value is most frequently measured financially. The statistics used may vary. Frequently we measure cash flow discounted over forecast to value businesses. Often we use return on investment to decide among competing investments and initiatives. Sometimes earnings per share or varied sales statistics are used to define an organizations position within a particular industry or market segment. Regardless of the measure, the desire is to improve profitability for shareholders or business owners; to increase opportunities to support beneficiaries or community members in not for profit and community organizations, respectively.
How is value created?
The definition and contribution of value creation also differs based on the visual range of leadership. It can be strategic (a new vision of the future), dominant (an increase in resources and opportunities) or controlling (an immediate compliance). To achieve the highest value, effective leaders focus on creating a strategic vision in their organizations.
Regardless of popular opinion, the stock market is not as short term focused as some may believe. The discounted methods of financial measurement used by most analysts require the evaluation of future opportunities and financial projections. The source of the short term nature of management decisions actually lies more in the incentive measures that are defined which direct people regarding what to focus on achieving and what is truly important to the organizations leadership. Therefore, as leaders, we can control these incentives and should create ones that look at value that is created beyond the next monthly budget. This is how to create a longer view of decision-making among managers and employees.
How do we tap the sources of value?
Creating value does not always require investing more funds or doing more activities. It requires building intelligence within your organization in order to find and release the value that is there -- and to create more by using existing resources more effectively and innovatively.
Untapped value lies everywhere in every organization. Cash management can be improved, production and supply chain efficiency can be accelerated to improve cash flow, customer relationships can be expanded and energized through increased services, solutions and reliability. Talented -- and empowered -- people will find and release value whenever they have compelling cause to pursue. Creating purpose and setting objective that excite people, whether employees, customers or suppliers, creates personal rewards on its own. For instance, directing employees to create growth and then requiring support for growth from your organization in order to become more efficient to satisfy that growth, provides new growth opportunities for everyone. However, directing employees to reduce cost and improve profitability by becoming more efficient provokes to increase profitability rarely produces the organizations best possible results. The most effective purposes and objectives for creating value are personal to everyone engaged in their achievement.
Building value is therefore about building people, building excellence, building capabilities. This requires creating a work environment that allows people to live their work life with purpose and meaning. Organizational leaders need to find ways and define incentives for employees that take the longer and personal view.
About the Author
Lynn M. Engel helps companies create strategic results and release untapped value through the effective management and analysis of business change. For more information contact aperias.com
By Lynn M. Engel
Copyright, Aperias Management Services (This article may be reprinted as long as the authors name is listed and our simple attribution requirements are followed.)
info@aperias.com
http://www.aperias.com
What is value?
In the U.S. economy, value is most frequently measured financially. The statistics used may vary. Frequently we measure cash flow discounted over forecast to value businesses. Often we use return on investment to decide among competing investments and initiatives. Sometimes earnings per share or varied sales statistics are used to define an organizations position within a particular industry or market segment. Regardless of the measure, the desire is to improve profitability for shareholders or business owners; to increase opportunities to support beneficiaries or community members in not for profit and community organizations, respectively.
How is value created?
The definition and contribution of value creation also differs based on the visual range of leadership. It can be strategic (a new vision of the future), dominant (an increase in resources and opportunities) or controlling (an immediate compliance). To achieve the highest value, effective leaders focus on creating a strategic vision in their organizations.
Regardless of popular opinion, the stock market is not as short term focused as some may believe. The discounted methods of financial measurement used by most analysts require the evaluation of future opportunities and financial projections. The source of the short term nature of management decisions actually lies more in the incentive measures that are defined which direct people regarding what to focus on achieving and what is truly important to the organizations leadership. Therefore, as leaders, we can control these incentives and should create ones that look at value that is created beyond the next monthly budget. This is how to create a longer view of decision-making among managers and employees.
How do we tap the sources of value?
Creating value does not always require investing more funds or doing more activities. It requires building intelligence within your organization in order to find and release the value that is there -- and to create more by using existing resources more effectively and innovatively.
Untapped value lies everywhere in every organization. Cash management can be improved, production and supply chain efficiency can be accelerated to improve cash flow, customer relationships can be expanded and energized through increased services, solutions and reliability. Talented -- and empowered -- people will find and release value whenever they have compelling cause to pursue. Creating purpose and setting objective that excite people, whether employees, customers or suppliers, creates personal rewards on its own. For instance, directing employees to create growth and then requiring support for growth from your organization in order to become more efficient to satisfy that growth, provides new growth opportunities for everyone. However, directing employees to reduce cost and improve profitability by becoming more efficient provokes to increase profitability rarely produces the organizations best possible results. The most effective purposes and objectives for creating value are personal to everyone engaged in their achievement.
Building value is therefore about building people, building excellence, building capabilities. This requires creating a work environment that allows people to live their work life with purpose and meaning. Organizational leaders need to find ways and define incentives for employees that take the longer and personal view.
About the Author
Lynn M. Engel helps companies create strategic results and release untapped value through the effective management and analysis of business change. For more information contact aperias.com
By Lynn M. Engel
Copyright, Aperias Management Services (This article may be reprinted as long as the authors name is listed and our simple attribution requirements are followed.)
info@aperias.com
http://www.aperias.com
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