Identifying the Value Points
within the Corporation
30-Minute Breakout Session
Alliance for Corporate Wealth Conference
www.corporatewealth.info
Presented by:
Matt H. Evans, CPA, CMA, CFM
January 21, 2005
Orlando, Florida
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Matt H. Evans, CPA, CMA, CFM
Agenda
I.
Introduction
II.
Common Value Points
III.
Formal Models
IV.
Closing Comments
V.
Additional Information
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Matt H. Evans, CPA, CMA, CFM
Introduction
• About me – what I do.
• Purpose of this session:
- Highlight some good focal points for creating higher value
within the corporation
- Briefly describe some models used to help drive value
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Matt H. Evans, CPA, CMA, CFM
Common
Value
Points
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Matt H. Evans, CPA, CMA, CFM
Common Value Points –
Three Good Sources
• Value Based Finance
• Balanced Scorecard Enablers
• Competitive Intelligence
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Matt H. Evans, CPA, CMA, CFM
Value Based Finance –
From Accounting to Real Finance
Traditional Accounting
Value Added Finance
Historical, Looking Back
Predictive Forecasting
Oversight and “Cop” Like
Service oriented
Narrow understanding of the
business
Broad in-depth understanding of the
business
Financial performance only
Non Financial Performance linked to
Financial Performance
Bottom Line / Short Term
Customer / Long Term
Cost Control
Process Improvement
Advocates profits
Advocates value
Transaction oriented / approvals
Manages and works to resolve
Backward checking
Integrate and Re-Design
Enforces rules / compliance
Internal Consultant / Facilitates
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Matt H. Evans, CPA, CMA, CFM
Benefits 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- Improve out-of-date systems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
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Matt H. Evans, CPA, CMA, CFM
Scorecard 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 proactive way), Delivery (Rapid turnaround times), and Post
Delivery (After sale service)
- Organizational Value comes from employee results,
system results, and organizational culture.
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Matt H. Evans, CPA, CMA, CFM
Strategic 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
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Matt H. Evans, CPA, CMA, CFM
Formal Models
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Matt H. Evans, CPA, CMA, CFM
Measuring 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.
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Matt H. Evans, CPA, CMA, CFM
LPI Model Components
The LPI Model is built around five leadership practices and ten
leadership commitments:
Model the Way
Inspire a Shared Vision
• Find Your Voice
• Set the Example
• Envision the Future
• Enlist Others
• Search for Opportunities
• Experiment and Take Risks
Encourage the Heart
Enable Others to Act
• Recognize Contributions
• Celebrate the Values and
Victories
• Foster Collaboration
• Strengthen Others
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Challenge the Process
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Matt H. Evans, CPA, CMA, CFM
Resources on the LPI Model
• Very inexpensive and practical model - $ 65.00 for
•
complete CD and Surveys – Facilitator’s Guide:
• Visit www.leadershipchallenge.com for more information.
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Matt H. Evans, CPA, CMA, CFM
Value 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.
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Matt H. Evans, CPA, CMA, CFM
Basic 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”
Physical
Customer
Land
Buildings
Equipment
Inventory
Customers
Distributors
Channels
Affiliates
Organization
Cash
Receivables
Debt
Equity
Investments
Financial
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Leadership
Strategy • Knowledge
• Values • Brand
Innovation • Systems
• Process • Culture •
IP
Employees
Suppliers
Partners
Employee/
Supplier
Matt H. Evans, CPA, CMA, CFM
Resources 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
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Matt H. Evans, CPA, CMA, CFM
Denison Cultural Model
• 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.
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Matt H. Evans, CPA, CMA, CFM
Denison 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 everyone
is engaged and involved in
helping move the
organization forward
Degree to which the
organization has values,
systems, and processes that
support the vision, goals,
objectives, and strategy
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Matt H. Evans, CPA, CMA, CFM
How 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.
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Matt H. Evans, CPA, CMA, CFM
Resources on Cultural Assessments
For more information, visit www.denisonculture.com
Facilitator’s Guide for Cultural Compass - $ 98.00. Visit
www.newtrainingideas.com
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Matt H. Evans, CPA, CMA, CFM
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, it’s 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.
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Matt H. Evans, CPA, CMA, CFM
Creativity 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, Grasp’s 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
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High Values, Tolerant, Quietly Curious, Supportive, Skilled Writer
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Matt H. Evans, CPA, CMA, CFM
Resources 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. It’s not
too trite to say that. These days, we’re all too easily caught up in the tactics of
competition. We can forget that sustainable advantage is ultimately a function of a
company’s 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
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Matt H. Evans, CPA, CMA, CFM
Overall Framework for applying these
tools and techniques (Big Picture)
Value Dynamics Framework
Dennison Cultural Survey
Identify Major Value Related Issues
Apply specific
techniques to close
the value gaps
within your
Organizational
Framework
Vision
Goals
Competencies
Strategies, planning,
and budgeting
Communication and
Management Systems
Determine how
these value related
issues align to
various layers
within your
Organizational
Framework
Products - Services - Processes
LPI Model
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Competitive Intelligence
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Creativity Model
Matt H. Evans, CPA, CMA, CFM
Closing 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.
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Matt H. Evans, CPA, CMA, CFM
Additional Information
Download presentation and reference files from:
www.exinfm.com/workshop.html
1.
Workshop Slides – Long Version (powerpoint)
2.
Building HR Capital
3.
Aligning Human Capital with Business Strategy
4.
Value Dynamics Presentation
5.
Five Ways to Develop Corporate Culture
6.
Organizational Cultures that Get Financial Results
7.
Applications of the Denison Cultural Model
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Matt H. Evans, CPA, CMA, CFM
Questions and Comments
Matt H. Evans, CPA, CMA, CFM
Email: matt@exinfm.com
Phone: 1-877-689-4097
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Matt H. Evans, CPA, CMA, CFM