Value Based Management

 

another project by thinkmasters - helping professionals create value

 

 

 

 

This article is part of the series on Value Based Management.  It is targeted at companies seeking to enhance their business models through repositioning of value proposition, seeking revenue growth, improving ROIC₁, enhancing MVA₂ ratio ( optimising job/task matching and increasing human capital value ), extending competitive advantage period.

Stage 3 -  Measure and Manage

Once we have completed Stage 2, we are in a position to measure and manage the resources allocated. We can proceed to analyse whether the value creation process is  sustainable. 

Following on the earlier example where the management had put in place a VBM₃ system, In its periodic review of the Performance Scorecard, it noted that for Outcome #1 : Fulfill all our customers' needs and exceeding their expectations. Treat feedback from customer with sincerity to gain their trust , the following ratings were observed:

1. a rating of 5 has been awarded for u :

   the program to train the sales force was behind schedule, and the planned task was 60% completed, and the remaining 40% will be completed within the next 4 weeks. 

2. a rating of 5 has been awarded for v :

   it was observed that the sales force lacked certain attributes, and this could be due to recruitment criteria not profiling prospective employees adequately.  

3. a rating of 3 has been awarded for w :

   the sales force was relatively young, and  took to IT quite readily.

4. a rating of 3 has been awarded for x :

   service excellence initiatives were undertaken with good results. Of the 4 projects initiated, 3 were completed, and the remaining  1 to be completed shortly.   

5. a rating of 5 has been awarded for y :

   the supervisors experienced difficulties in conveying the concept to the frontline. Most were young, and impetuous. They needed the time to develop their EQs₄ and learn to empathise in order to appreciate the customers' aspirations.  

6. a rating of 4 has been awarded for z :

   the  CRM system was robust but more could be achieved. Strong leadership from the supervisor was required to motivate the frontline to use this tool faithfully.

7. a rating of 6 has been awarded for { :

   lacking of leadership to develop this program, and remained a concern in effort to gain mindshare. Roles of connectors, mavens, and salesmen were not optimised.

8. a rating of 4 has been awarded for | :

   feedback was collated, but frontline supervisors lacked the analytical skills to provide creative solutions. Frontline remained shy in making decisions when placed in a tight spot. 

9. a rating of 5 has been awarded for } :

   sales per store stagnated, and customer satisfaction cannot be taken for granted.

10. an overall  rating of 4- has been awarded for FIN/EP.   

 

Rating Score: 1 Excellent, 2 Very Good, 3 Good, 4 Adequate, 5 Below Satisfactory 6 Poor 

As you would notice, majority of the metrics focus on the inputs, linking all the way to the outputs. Measuring inputs serve to provide meaningful signals for the management of critical and scarce resources. Additionally, visualisation is an important element of the scorecard template. Key elements include a RAG system ( Red, Amber, Green color coding ) and charts. Charts must be able to slice and dice metrics from different perspectives for benchmarking purposes. The scorecard must be highly maneuverable, allowing power users to perform meaningful cause-and-effect analysis. For the efforts taken so far, user guide providing a clear and concise definition of metrics and well as hyper linking to in-depth studies  will go a long way to ensure buy-in.

After completing the review of the Performance Scorecard, management took note of the challenge in recruiting and moulding the salesforce  with the right attitude. The goal of turning customers on was easier said than done. The recommendations for improvement did not appear spectacular, and it did not want to rush into a solution until all available options have been explored.

It decided to take a step back to see the big picture. It felt there was a need to understand how the sales force perceive the ratings and whether a buy-in could be achieved. It decided to bring the sale force together for a week-end retreat for brainstorming and  consensus building session.

If the above sentiments resonant, let our experts at Thinkmasters lead you through this process to measure and manage the KPIs.

 

Challenges

The following table  serves to illustrate some of the relevant issues that require consideration.

Issues	Attributes
Stagnating Revenue	customer-centric, market access
Eroding Market Share	customer needs / satisfaction, product innovation
Poor ROIC	value proposition
Short Competitive Advantage Period	entry barrier
Low MVA Ratio	skills, teamwork (job/task matching)
Low number of new product roll-out	skills, teamwork (job/task matching)
Product specs not up to speed	skills, teamwork (job/task matching)

 

Soft skills

Management needs to be mindful when it attempts to bring the best out of its intellectual capital and attributes that have to be nurtured include empathy, respect, wisdom, creativity, teamwork and selflessness. The need to build a brand equity cannot be over emphasized as it is this intangible that will give the business model its uniqueness.

Go-to-market Strategy

Our team of experts will be able to lead  you through the value creation processes in a holistic manner, through our customised templates covering:

• Strategy Roadmap,

• Performance Scorecard (Part1), (Part2),

• Financial Modeling,

• Customer Relationship Management,

• Job/Task Matching - MAP, and

• Health & Wellness.

Recognising the importance of buy-in, we have developed a series of  interactive e-tools that will allow us to effectively communicate with key process owners, understand their needs, seek their feedback, and map out a roadmap accordingly.  From our experience, this affordable approach is an effective way in creating a conducive environment for change management, as opposed to embarking on a standard boiler-plate ERP₅ project that maybe too unwieldy to effect and manage change. 

Feedback  - In order to serve you better, we would like to have your feedback. You can view the results after completing the survey E-Mail Address   Organisation Type Financial Institution Corporate Other Are You  Interested In This Program? Yes     No  No Answer Project Name Project Strategy Roadmap Project ABC Project BCD Project CDE Market Conditions Choose Rising Interest Rates Volatile Oil Prices Weak Dollars Others Dow Jones Industrial Average Choose Up Down Neutral Do you think your organisation has what it takes in the following areas:   Setting vision, articulating value proposition and  building brand equity   Yes   No No Answer Customer-centric, clear revenue growth strategy, strong product innovation capability, generate a strong ROIC  Yes    No  No Answer Able to understand and articulate the concept of competitive advantage period and value creation, make efforts to embed these concepts into its daily routine / processes  Yes    No  No Answer Corporate culture where teamwork is encouraged, group payout is optimized and reward system is equitable  Yes    No  No Answer Effective in communicating  and motivating its workforce, responsive to feedback from stakeholders  Yes    No  No Answer Has been able to create sustainable shareholder value  Yes    No  No Answer Would you recommend this webpage to your friend?  Yes    No  No Answer Other Topic of Interest   Choose Performance Scorecard Cause-and-Effect Anlaysis Customer Relationship Management Financial Strategy Human Capital Valuation Job/Task Matching Comments

1. ROIC denotes Return on Invested Capital. Measures after tax EBIT return. ROCE ( Return on Capital Employed )  

measures pre-tax return.

2. MVA denotes Market Value Added.

3 VBM denotes Value Based Management.

4.EQs denotes Emotional Quotients

5. ERP denotes Enterprise Resource Planning.

 

Think Masters & Associates Pte Ltd

896 Dunearn Road #03-01B Singapore 589472

Contact Details: Russell Lee/ 63348976

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