The value of contemporary business is multilateral.
Business values should be identified by the organization, be quantified by management and worked into the architecture of the system. The parameters that should be counted to calculate business value include such as: strategy alignment, potential for additional turnover, potential for competitive advantage, decline in value over time, potential for risk reduction, etc
Strategy alignment: Many traditional organizations work in silos, different subdivisions pull in the different directions, decelerate business speed. Strategic alignment is the process of creating subgoals at the departmental level from the main corporate goal, that all support the achievement of the main goal. To maximize value-generation, companies should enhance cross boundary collaboration, ensure the business as a whole is superior to the sum of pieces. Strategic alignment and synchronization can catalyze the flow of the right information to the right people timely to coordinate and execute strategy, tactics, and manage risks effectively.
Strategic alignment is about translating the business strategy into operational activities and aligning the organization to create business synergy; “keep an eye on the horizon, ”leverage quality information, look for and assess emerging technologies, and determine the business viability, ensuring all organization action is directed to achieving common strategic goals and objectives.
Potential for additional turnover: People are the most invaluable asset and investment of the organization to achieve business value. Thus, people turnover often impacts business performance significantly. From performance reviews to surveys of employees and management, taken together, these can help to define the healthy status of the organization. Perceived stress, engagement level, culture readiness and assessment, are hard indicators for employee turnover.
There are different reasons for turnover, there are different types of turnover. What constitutes high vs. low turnover is subject to opinion and must be compared to something - historical averages for the company, compared to the industry, market, national averages, etc. Turnover rate may be one method of assessing the health of an organization and calculating business value loss tangibly but only if the turnover is appropriately qualified. All measurements/evaluations/ information need to be benchmarked before any interpretation, to the purpose of isolating the "real" signal.
Potential for cost savings: Business value is often measured by optimization of cost and consumption of the organizational assets in support of the business solutions that are identified within the organization's revenue producing stream. Business cost can be categorized into operational cost, financials (budget, expenses, service costs, etc), people cost, vendor cost, etc. Some of the "long poles in the tent" tend to be labor; depreciation and new capital spending. The challenge for management is to have visibility and traceability between costs and the assets consuming those costs, as well as cost/performance ratio to improve business efficiency.
Companies that lacked the skills to manage cost effectively suffered compared with competitors with cost efficiency. You can only manage what you measure. When selecting the right set of metrics for cost optimization, the management needs to ask whether the metrics can reveal anything meaningful for the identified purpose. Cost efficiency leads to value generation; Value and people satisfaction is the cornerstone of sustaining the existence and prosperity of the enterprise.
Potential for competitive advantage: If competitive necessities keep the light on, competitive differentiators generate unique business value. In fact, strategic differentiation is the foundation on which brands are built. Sometimes it’s great to have a strategy to define business value when you have competing priorities. To keep improving performance and exceed business expectations, leaders should listen to a wide range of opinions, work across the business functions to plug revenue leakages, and increase multifaceted value generation.
Business differentiation is an effect accomplished by having a sustainable organizational competitive advantage to the market, making it difficult or even impossible for competitors to imitate. To demonstrate value, it is important to convince the shareholders of new initiatives with solid business justification by showing them the potential business benefits to meet the strategic goal of the company. While opportunity value propositions are often expressed in dollar convertible terms, other dimensions of strategic intent may improve positioning and strategic intent and produce usefully measured outcomes related to a business competitiveness, management predictability, process improvement, engineering trustworthiness, and operations dependability.
Decline in value over time: Not every business initiative can generate business value; not every investment can get high return. Some business changes could decline the value over time. When designing and developing business products or services, the business has to decide which features it believes will deliver value relative to other features in order to drive development. Only time can tell how much business value a product will deliver.
The business value plays a bigger role in determining which task needs to be addressed first by setting the right priority, or creating a business justification case. Forecast is important to identify potential value declines; seeing things from different perspectives helps to deepen understanding of strategic goals of the business. Making the effort at the portfolio level to qualify and quantify value in terms of both strategic value and tactical value; direct revenue and indirect (mission/vision/values) terms is the right step to crafting high-level strategic intents.
Potential for risk reduction: Every organization fluctuates between prioritizing business values based on revenue/cost versus risk. The most time-consuming part of a risk management is gathering, identifying, cleaning and then assessing data; determining the return on risk management programs that should enable the reduction in the "preliminary" risk work and an increase in actual risk management actions. Risk management, compliance, internal audit, business processes, continuous improvement and specific functions (quality, environment, safety...) are all the necessities to create business value directly or indirectly.
Every opportunity has risks in it, and every risk perhaps also has opportunities in it. Besides identifying risks, spotting opportunities as well. There are possibly different scenarios in which the identification of negative risks unearths an opportunity. This is all a matter of perspective. It requires the stakeholders to open their perspectives or framing on what they are observing, predicting, or intervening, with the goal to improve risk intelligence and increase business value proposition.
Organization has a set of capabilities that enable it to achieve successful outcomes, whether financial, brand, or double bottom line. The value of contemporary business is multilateral. The value-based management needs to be driven by concepts like multidimensional collaborative value or collective advantage and multi-layer ROIs. All these create business value, the key is agreement, in the end, goal and deliverable.
Strategy alignment: Many traditional organizations work in silos, different subdivisions pull in the different directions, decelerate business speed. Strategic alignment is the process of creating subgoals at the departmental level from the main corporate goal, that all support the achievement of the main goal. To maximize value-generation, companies should enhance cross boundary collaboration, ensure the business as a whole is superior to the sum of pieces. Strategic alignment and synchronization can catalyze the flow of the right information to the right people timely to coordinate and execute strategy, tactics, and manage risks effectively.
Strategic alignment is about translating the business strategy into operational activities and aligning the organization to create business synergy; “keep an eye on the horizon, ”leverage quality information, look for and assess emerging technologies, and determine the business viability, ensuring all organization action is directed to achieving common strategic goals and objectives.
Potential for additional turnover: People are the most invaluable asset and investment of the organization to achieve business value. Thus, people turnover often impacts business performance significantly. From performance reviews to surveys of employees and management, taken together, these can help to define the healthy status of the organization. Perceived stress, engagement level, culture readiness and assessment, are hard indicators for employee turnover.
There are different reasons for turnover, there are different types of turnover. What constitutes high vs. low turnover is subject to opinion and must be compared to something - historical averages for the company, compared to the industry, market, national averages, etc. Turnover rate may be one method of assessing the health of an organization and calculating business value loss tangibly but only if the turnover is appropriately qualified. All measurements/evaluations/ information need to be benchmarked before any interpretation, to the purpose of isolating the "real" signal.
Potential for cost savings: Business value is often measured by optimization of cost and consumption of the organizational assets in support of the business solutions that are identified within the organization's revenue producing stream. Business cost can be categorized into operational cost, financials (budget, expenses, service costs, etc), people cost, vendor cost, etc. Some of the "long poles in the tent" tend to be labor; depreciation and new capital spending. The challenge for management is to have visibility and traceability between costs and the assets consuming those costs, as well as cost/performance ratio to improve business efficiency.
Companies that lacked the skills to manage cost effectively suffered compared with competitors with cost efficiency. You can only manage what you measure. When selecting the right set of metrics for cost optimization, the management needs to ask whether the metrics can reveal anything meaningful for the identified purpose. Cost efficiency leads to value generation; Value and people satisfaction is the cornerstone of sustaining the existence and prosperity of the enterprise.
Potential for competitive advantage: If competitive necessities keep the light on, competitive differentiators generate unique business value. In fact, strategic differentiation is the foundation on which brands are built. Sometimes it’s great to have a strategy to define business value when you have competing priorities. To keep improving performance and exceed business expectations, leaders should listen to a wide range of opinions, work across the business functions to plug revenue leakages, and increase multifaceted value generation.
Business differentiation is an effect accomplished by having a sustainable organizational competitive advantage to the market, making it difficult or even impossible for competitors to imitate. To demonstrate value, it is important to convince the shareholders of new initiatives with solid business justification by showing them the potential business benefits to meet the strategic goal of the company. While opportunity value propositions are often expressed in dollar convertible terms, other dimensions of strategic intent may improve positioning and strategic intent and produce usefully measured outcomes related to a business competitiveness, management predictability, process improvement, engineering trustworthiness, and operations dependability.
Decline in value over time: Not every business initiative can generate business value; not every investment can get high return. Some business changes could decline the value over time. When designing and developing business products or services, the business has to decide which features it believes will deliver value relative to other features in order to drive development. Only time can tell how much business value a product will deliver.
The business value plays a bigger role in determining which task needs to be addressed first by setting the right priority, or creating a business justification case. Forecast is important to identify potential value declines; seeing things from different perspectives helps to deepen understanding of strategic goals of the business. Making the effort at the portfolio level to qualify and quantify value in terms of both strategic value and tactical value; direct revenue and indirect (mission/vision/values) terms is the right step to crafting high-level strategic intents.
Potential for risk reduction: Every organization fluctuates between prioritizing business values based on revenue/cost versus risk. The most time-consuming part of a risk management is gathering, identifying, cleaning and then assessing data; determining the return on risk management programs that should enable the reduction in the "preliminary" risk work and an increase in actual risk management actions. Risk management, compliance, internal audit, business processes, continuous improvement and specific functions (quality, environment, safety...) are all the necessities to create business value directly or indirectly.
Every opportunity has risks in it, and every risk perhaps also has opportunities in it. Besides identifying risks, spotting opportunities as well. There are possibly different scenarios in which the identification of negative risks unearths an opportunity. This is all a matter of perspective. It requires the stakeholders to open their perspectives or framing on what they are observing, predicting, or intervening, with the goal to improve risk intelligence and increase business value proposition.
Organization has a set of capabilities that enable it to achieve successful outcomes, whether financial, brand, or double bottom line. The value of contemporary business is multilateral. The value-based management needs to be driven by concepts like multidimensional collaborative value or collective advantage and multi-layer ROIs. All these create business value, the key is agreement, in the end, goal and deliverable.
0 comments:
Post a Comment