Title: Identifying%20the%20Value%20Points%20within%20the%20Corporation
1Identifying the Value Pointswithin the
Corporation
- 1 Hour Workshop
- Alliance for Corporate Wealth Conference
- www.corporatewealth.info
- Presented by
- Matt H. Evans, CPA, CMA, CFM
- January 21, 2005
- Orlando, Florida
2Workshop Agenda
- Introduction
- Common Value Points
- Emerging Value Points
- The LPI Model
- Value Dynamics Framework Model
- Denison Cultural Model
- The Creativity Model
- Closing Comments
- Additional Information
3Introduction
- Purpose of this workshop
- - Outline some good focal points for creating
higher value - within the corporation
- - Provide some practical tools and techniques
that - everyone can start to use immediately
- - Help frame the knowledge base for the Alliance
for - Corporate Wealth
4 5Common Value Points Four Good Sources
- Value Based Finance
- Balanced Scorecard Enablers
- Human Resource Capital Scorecard
- Strategic Business Analysis Competitive
Intelligence
6Value Based Finance From Accounting to Real
Finance
Traditional Accounting
Value Added Finance
Historical, Looking Back
Oversight and Cop Like
Narrow understanding of the business
Financial performance only
Bottom Line / Short Term
Cost Control
Advocates profits
Transaction oriented / approvals
Backward checking
Enforces rules / compliance
Predictive Forecasting
Service oriented
Broad in-depth understanding of the business
Non Financial Performance linked to Financial Performance
Customer / Long Term
Process Improvement
Advocates value
Manages and works to resolve
Integrate and Re-Design
Internal Consultant / Facilitates
7Benefits of Value Based Finance
- By focusing on non-financial measurements, the
finance function pulls in other functional areas
into the value management process. - Finance is the main proponent of value
educating others on how value is created. - Finance adds value through major projects
- - Define Organizational Performance
- - Leads Initiatives on process improvement
- - Improve out-of-date systems
- - Value Chain Analysis
8Scorecard Enablers Applying the Generic
Drivers
- Generic Models provide a good starting point for
understanding what drives value - - Customer Value comes from certain value
drivers Quality, - Time, Pricing, Image, Reputation,
Innovative features, etc. - - Process Value comes from three phases in
process - delivery Pre Delivery (meet customer
demands in a pro- - active way), Delivery (Rapid turnaround
times), and Post - Delivery (After sale service)
- - Organizational Value comes from employee
results, - system results, and organizational
culture.
9Human Resource Capital Scorecard
- The value created by people is often intangible
knowledge, leadership, collaboration, etc. - Standard financial measurements are usually
inappropriate for measuring human resource
capital. - Sources of value other than people are potential
sources until human interaction takes place. - How people are managed has profound implications
on organizational performance and value. - The HR (Human Resource) Capital Scorecard
measures the management activities associated
with Human Resource Capital.
10HR Capital Scorecard Framework Built Around
Four Basic HR Activities
Traditional Financial Metrics such as Cost per
Hire vs. Value Added Metrics such as Satisfaction
with Hire
ACQUIRE Hiring practices, Recruitment, Fill
Rates, Quality of New Hires, etc.
MAINTAIN Compensation, Benefits Administration,
etc.
RETAIN Identify top talent, retention programs,
motivation, etc.
HR Strategic Plan
DEVELOP Coaching, Training, Supervision, Job
Rotation, etc.
Source The ROI of Human Capital by Jac Fitz-enz
11Strategic Business Analysis through Competitive
Intelligence
- Strategic Planning is dynamic through Competitive
Intelligence (CI) - Competitive Intelligence is required to protect
your competitive advantages in the marketplace - Risk Management is too internal and CI brings an
external dimension to risk management - Senior Management is too inward in their thinking
and you need CI as a reality check
12 13Emerging Trends for Understanding Value Points
Going Forward
- The discipline of management will give way to the
discipline of leadership - Complex adaptive systems will help advance the
concept of the Learning Organization - Organize around processes as opposed to
functional silos for increased flexibility and
innovation - Processes will become more simple, self serve,
and more collaborative. - Technology has and will continue to be an
important component of value especially
emerging technologies such as Nano-Technology.
14- Leadership Practices Inventory (LPI) Model
15Measuring Leadership using the LPI Model
- Leadership Practices Inventory (LPI) Model was
developed by James M. Kouzes and Barry Z. Posner.
- Based on 20 years of research and supported by
case studies with 10,000 leaders and 50,000
constituents. - Recognizes that leadership is a measurable
behavior that people can observe. - Uses assessment surveys from both the leader and
observers of leaders. Creates greater awareness
of how to improve leadership competencies.
16LPI Model Components
The LPI Model is built around five leadership
practices and ten leadership commitments
- Find Your Voice
- Set the Example
- Envision the Future
- Enlist Others
- Search for Opportunities
- Experiment and Take Risks
- Recognize Contributions
- Celebrate the Values and Victories
- Foster Collaboration
- Strengthen Others
17LPI Model Annual Survey from Observers of
Leaders
Rating Scale 1 Almost Never 2 Rarely
3 Seldom 4 Once in a While 5
Occasionally 6 Sometimes
7 Fairly Often 8 Usually 9 Very
Frequently 10 Almost Always
1. Sets a personal example of what he / she expects of others.
2. Develops cooperative relationships among the people he / she works with
3. Praises people for a job well done.
4. Actively listens to diverse points of view.
5. Appeals to others to share an exciting dream of the future.
6. Treats others with dignity and respect.
7. Supports the decisions that people make on their own
8. Talks about future trends that will influence how our work gets done.
18Resources on the LPI Model
- Very inexpensive and practical model - 65.00
for complete CD and Surveys Facilitators
Guide - Visit www.leadershipchallenge.com for more
information.
19 20Value Dynamics Framework Model
- Based on a three-year study of 10,000 companies
by Arthur Andersen. - Used to determine how well a corporation is
taking advantage of its asset capabilities. - Rates the contribution of assets and helps
corporations leverage all assets for driving
higher value. - Distinguishes the relationships of how assets add
value in combination with one another. - Recognizes that assets are not fully controlled
by the corporation customers, suppliers,
partners, etc. - Uses a much broader definition of assets (beyond
the accounting model) for creating value.
21Basic Principle behind Value Dynamics Framework
- Assets have inbound and outbound relationships
customer assets are outbound whereas employee
assets are inbound (convert resources into
products and services) - All assets have outputs Organizational assets
(systems, information, etc.), Financial Assets
(cash flow, etc.) -
By understanding these relationships, we crack
the value code
22Critical Concept From Tangible to Intangible
Assets
Increasingly, value points are coming from the
Intangibles, outside of the traditional
accounting model.
In the old manufacturing economy, Balance Sheet
assets in the accounting model were the critical
value points.
23Creating the Overall Model
- Identify and classify your assets into the five
categories. - Understand the relationship of assets and how
they are used within the business. - Front End Survey Work Determine qualified people
who can confirm how assets are used and what
value they contribute to the business. - Conduct Value Dynamics Survey for all five asset
categories. - Back End Survey Work Reach consensus on final
data through workshops, peer exchanges, and other
forums. - Align your business model around those assets
that add the most value. How should we use our
assets going forward?
24Survey Questions How well is your company using
employee assets?
Second Pass on Survey More precision
Best Very Above
Below Very
Worst Dont Practice Good Good
Average Average Average Poor Poor
Practice Know
For employee recruiting process?
For employee training program?
For employee satisfaction data?
First Pass on Survey Basic Feel for How Data is
Breaking
Needs Does the Best
Dont Work Job
Practices Know
For resources to improve employee quality of
life?
For information technology to leverage employee
knowledge?
If you are getting a lot of Dont Knows, then you
need to conduct some educational workshops with
survey candidates before you continue with the
survey and development of the Model
For collaborations or joint ventures to start new
businesses?
25Resources on the Value Dynamics Framework
The Value Dynamics Framework is completely
documented in the book Cracking the Value Code
by Richard E.S. Boulton, Barry D. Libert, and
Steve M. Samek.
Organizations are creating value in totally new
ways, using assets and combination of assets
heretofore unrecognized under traditional
accounting systems and certainly unmeasured. In
such a milieu, old methods of managing and
measuring are simply not up to the task. To
ignore the significance of the changes afoot in
business today is to ignore reality itself as the
page turns on a new millennium. And what
organization can thrive, or even survive, in a
world of illusion? None. - Cracking the Value
Code
26 27Denison Model - Introduction
- The culture of an organization, whether explicit
or implicit, is fundamental to the execution of
strategy and high performance. - The Denison Model was developed by Daniel Denison
and William S. Neale based on 15 years of
research with 1,000 companies. - The Denison Model describes organizational
culture around four traits consisting of twelve
management practices. - Very business oriented directly linked to the
bottom line.
28Denison Model Framework
Degree to which the organization clearly
understands the needs and requirements of
customers, responds and adjusts to meet those
needs
Degree to which the organization is clear about
its vision, goals, objectives and strategic
direction
Degree to which the organization has values,
systems, and processes that support the vision,
goals, objectives, and strategy
Degree to which everyone is engaged and involved
in helping move the organization forward
29Three Critical Management Practices of the
Consistency Trait
Coordination and Integration - Different
functions and units of the organization are able
to work together well to achieve common goals.
Organizational boundaries do not interfere with
getting work done.
Agreement - The organization is able to reach
agreement on critical issues. This includes both
the underlying level of agreement and the ability
to reconcile differences when they occur.
Core Values - Members of the organization share a
set of values which create a sense of identity
and a clear set of expectations.
30Survey Question Examples Consistency Trait
31How to use the Denison Model
- Do you have cultural issues?
- Propose solutions to address your issues.
- Set targets and take action steps to change your
culture. - Understand the benefits How do the action steps
close the gaps? - Determine the risks of not taking action to close
your cultural gaps. - Due Diligence - Compatibility issues prior to a
merger. - Benchmark against other companies from the
Denison Database.
32High and Low Performers Denison Model
High Performing Companies
Low Performing Companies
Composite of companies that had an ROI of 9
Composite of companies that had an ROI of 30
33Resources on Cultural Assessments
For more information, visit www.denisonculture.com
Facilitators Guide for Cultural Compass -
98.00. Visit www.newtrainingideas.com
34 35Important Concepts behind the Creativity Model
- Creativity Model is based on the highly respected
research of Carl Jung, Katherine Briggs, and
Isabel Myers. - Breaks long-standing myths about creativity
- - Creativity is NOT about ideas, its about the
range of outcomes that are available to the
organization. - - Creativity is NOT about certain talents (art,
music, etc.), it is about using the eight
creative talents that are found in everyone. - - Creativity is NOT about being different, but
more about articulating results that no-one else
recognizes. - Creativity is critical to problem solving because
of increased complexity, the need for innovation,
and increased competition.
36Creativity Model Framework Eight Creative
Talents
Adventurer
Quick to Act, Self Expressive, Aggressive Problem
Solver, Fun
Navigator
Very Open, Good Source of Ideas, Energetic,
Pursues New Things
Explorer
Deliberate, Observant, Thorough, Grasps Details,
Helps Clarify
Visionary
Great sense of Future, Big Picture, Comprehends
Complexity
Pilot
Organizing, Planning, Team Leader, Systems
Thinker, Sets Goals
Inventor
Very Precise, Highly Focused, Analytical,
Curious, Systematic
Harmonizer
Social, Helpful, Good People Skills, Seeks
Consensus, Flexible
Poet
High Values, Tolerant, Quietly Curious,
Supportive, Skilled Writer
37Key Points about the Eight Creative Talents
- All eight talents have equal value.
- All eight talents work differently.
- You need access to all eight talents for creating
different results cover all the bases. - Since people have different creative talents, a
team environment helps leverage all eight
creative talents. - If you can consistently apply all eight creative
talents, then your organization will have more
control over its destiny. - Understanding and using the Myers-Briggs Type
Indicator will help explain how you can apply all
eight creative talents.
38Myers Briggs Types aligned around the Eight
Creative Talents
Adventurer
Navigator
Explorer
Visionary
Pilot
Harmonizer
Inventor
Poet
Extroverts Sociable, people oriented, works
well in groups, interacts, engaging. Introverts
Intense, works through ideas, reflects, reserved,
few relationships. Sensing Practical,
responsive, realistic, factual, accurate, detail
oriented. Intuitive Insightful, innovative,
forward thinking, strategic, learning,
inspires. Thinking Logical, objective,
reasoning, consistent, analytical, information
user. Feeling Personal, cooperative, values,
relates to others, persuades, humane. Judging
Decision maker, planning, goal oriented, fast to
act, hard working. Perceiving Flexible,
adaptive, casual, goes with the flow, improvise.
39Resources on the Creativity Model
- The Creativity Model is completely documented in
the - book Breakthrough Creativity by Lynne C.
Levesque. - For more information, visit www.lynnelevesque.com
Creativity drives growth, and creative people
drive every great enterprise. Its not too trite
to say that. These days, were all too easily
caught up in the tactics of competition. We can
forget that sustainable advantage is ultimately a
function of a companys ability to consistently
generate, develop, and sell valuable ideas. Which
is to say, creativity is at the heart of work and
business. - John A. Byrne, Editor Fast Company
Magazine, December 2004
40Overall Framework for applying these tools and
techniques (Big Picture)
Value Dynamics Framework
Dennison Cultural Survey
Identify Major Value Related Issues
Determine how these value related issues align to
various layers within your Organizational
Framework
Apply specific techniques to close the value gaps
within your Organizational Framework
Vision Goals
Organization Framework (IBM Model)
Competencies
Strategies, planning, and budgeting
Communication and Management Systems
Products - Services - Processes
LPI Model
Competitive Intelligence
Creativity Model
41Closing Comments
- Most value points are easy to recognize and
conceptually, they are easy to comprehend. - However, getting management value-focused is
not easy and therefore, most corporations have
significant points of value that need further
development. - Ironically, getting the plane off the runway
seems to be the biggest challenge . . . . - And if corporations would just start with a
modest understanding of where value comes from
(leadership, culture, etc.), the corporation
could realize enormous increases in value.
42Additional Information
- Download presentation and reference files from
- www.exinfm.com/workshop.html
- Workshop Slides (powerpoint)
- Building HR Capital
- Aligning Human Capital with Business Strategy
- Value Dynamics Presentation
- Five Ways to Develop Corporate Culture
- Organizational Cultures that Get Financial
Results - Applications of the Denison Cultural Model
43Questions and Comments
- Matt H. Evans, CPA, CMA, CFM
- Email matt_at_exinfm.com
- Phone 1-877-689-4097
44 45Survey Questions How well is your company using
physical assets?
Value Dynamics Model
Best Very Above
Below Very
Worst Dont Practice Good Good
Average Average Average Poor Poor
Practice Know
Real estate / land for productive use or
investment?
Buildings and facilities?
Existing equipment or newly acquired equipment?
Inventory management to minimize risk of not
delivering?
Information technology infrastructure?
Supply chain management to optimize the use of
and need for physical assets?
46Survey Questions How well is your company using
financial assets?
Value Dynamics Model
Best Very Above
Below Very
Worst Dont Practice Good Good
Average Average Average Poor Poor
Practice Know
Cash reserves?
Receivables in minimizing the cash-conversion
cycle?
Investment strategies in order to increase
profitability?
Debt strategy to manage or eliminate debt?
Equity to further business expansion?
Information technology to enable financial
management?
47Survey Questions How well is your company using
customer assets?
Value Dynamics Model
Best Very Above
Below Very
Worst Dont Practice Good Good
Average Average Average Poor Poor
Practice Know
Customer satisfaction information?
Current customer information to expand customer
base?
To develop customer loyalty?
Collaborative relationships to better serve
customers?
Information technology to enable web-security?
Supply chain management to increase customer
satisfaction?
48Survey Questions How well is your company using
organizational assets?
Value Dynamics Model
Best Very Above
Below Very
Worst Dont Practice Good Good
Average Average Average Poor Poor
Practice Know
Leadership to drive innovation and passion?
Business strategy ?
Structure to delegate the responsibilities?
Processes to identify business opportunities?
Culture to foster honesty and respect?
Branding in the marketplace?
Knowledge in product development and marketing?
Intellectual property?
49Value Dynamics Survey Process
Value Dynamics Model
Surveys Received
Level of awareness acceptable?
Conduct Workshops
Reassess
N
Y
Level of agreement acceptable?
Likely possibility that BUs have independent
assets?
Facilitated Peer Exchange (Gartner Best Practice)
Reassess
N
N
Y
Y
Y
Develop standard Value Dynamics data
representation
Develop alternative model for Value Dynamics
data representation
50Run survey data through quality control matrix
for refining the data
Value Dynamics Model
Low
High number of Dont Knows Low level of
agreement
Low number of Dont Knows Low level of
agreement
Level of agreement
Low number of Dont Knows High level of
agreement
High number of Dont Knows High level of
agreement
High
Level of awareness ( of respondents answering
Dont Know)
51Value Dynamic Recommendations Within the
Business Model
ISSUE Management does not believe they have the
competencies necessary to meet customers needs,
nor do they feel empowered to use the
competencies they do have.
- Action Items
- Develop a competency model and performance
management system.
- Benefits
- A competency model will outline the necessary
knowledge, skills and abilities for each
position, allowing employees to understand how
their jobs fit into the goals and values of the
organization. - A performance management system will ensure
employees and functional areas are evaluated
using standardized performance metrics.
Vision Goals
Competencies
Strategies, Planning Budgeting
Communication Management Systems
52Three Critical Management Practices of the
Adaptability Trait
Denison Cultural Model
Creating Change - The organization is able to
create adaptive ways to meet changing needs. It
is able to read the business environment, quickly
react to current trends, and anticipate future
changes.
Customer Focus - The organization understands and
reacts to their customer, and anticipates their
future needs. It reflects the degree to which the
organization is driven by a concern to satisfy
their customer.
Organizational Learning - The organization
receives, translates, and interprets signals from
the environment into opportunities for
encouraging innovation, gaining knowledge and
developing capabilities.
53Three Critical Management Practices of the
Mission Trait
Denison Cultural Model
Strategic Direction and Intent - Clear strategic
intentions convey the organization's purpose,
make it clear how everyone can contribute and
"make their mark" in the industry.
Goals and Objectives - A clear set of goals and
objectives can be linked to the mission, vision,
and strategy, and provide everyone with a clear
direction in their work.
Vision - The organization has a shared view of a
desired future state. It embodies core values and
captures the hearts and minds of the
organization's people, while providing guidance
and direction.
54Three Critical Management Practices of the
Involvement Trait
Denison Cultural Model
Capability Development - The organization
continually invests in the development of
employees' skills in order to stay competitive
and meet ongoing business needs.
Team Orientation - Value is placed on working
cooperatively toward common goals for which all
employees feel mutually accountable. The
organization relies on team effort to get work
done.
Empowerment - Individuals have the authority,
initiative and ability to manage their own work.
This creates a sense of ownership and
responsibility toward the organization.
55Example of Action Plan - Denison Cultural Model
Denison Cultural Model
ISSUE Need to better articulate the companys
vision, mission and goals. This will translate
into increased revenue growth, quality, and
employee satisfaction.
Recommendations
Action Plan
Benefits
- If employees understand and can positively
identify with the Companys vision, mission, and
goals, there should be a positive impact on
profitability, sales / revenue growth, market
share, perceived quality, and employee
satisfaction.
- Hold strategy articulation sessions to plan for
the future. Communicate these plans (Vision,
Mission, Goals) to employees, and ensure they
know how their jobs fit into the companys goals - Create a list of criteria that projects must meet
before they are accepted. Make sure short term
and long term goals and interests are considered
when creating criteria - Determine the best communication vehicle to
cascade the vision, mission, and goals to all
levels of the organization
- Give the future the attention it deserves
- Develop a philosophy that long and short-term
interests can be reconciled - Make everyone in the organization familiar with
your vision, mission, and goals
56Combining the Results Value Dynamics and
Denison Cultural
Value Dynamics and Denison Cultural Model
DENISON
This chart was developed by comparing Denison
survey results to Value Dynamics concepts.
1
Involvement
Adaptability
Consistency
Mission
Organiz-
Strategic
Creating
Customer
Goals
Coordination
Capability
Team
Empower-
ational
Direction
Vision
Agreement
Core Values
Change
Focus
Objectives
Integration
Development
Orientation
ment
Learning
Intent
Physical
B
B
B
Assets
V
A
L
Financial
E
B
B
B
B
B
3
E
U
Assets
E
Customer
D
2
E
B
B
B
B
B
B
B
E
Assets
Y
N
A
Employee/
M
E
E
B
B
B
B
B
B
3
B
B
E
Supplier Assets
I
C
S
Organization
E
E
B
B
B
B
B
B
B
3
B
B
E
Assets
E Enabler B Barrier
Major Cultural Issue impacting value