value points long

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Matt H. Evans, CPA, CMA, CFMAlliance for Corporate Wealth 1

Identifying 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
http://www.corporatewealth.info/http://www.corporatewealth.info/


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Workshop Agenda

I. Introduction

II. Common Value Points

III. Emerging Value Points

IV. The LPI Model

V. Value Dynamics Framework Model

VI. Denison Cultural Model

VII. The Creativity Model

VIII. Closing Comments

IX. Additional Information


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Introduction

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


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Common

Value

Points


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Common Value PointsFour Good Sources

Value Based Finance

Balanced Scorecard Enablers

Human Resource Capital Scorecard

Strategic Business Analysis = CompetitiveIntelligence


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Value Based FinanceFrom Accounting to Real Finance

Traditional Accounting Value Added Finance

Historical, Looking Back

Oversight and Cop Like

Narrow understanding of thebusiness

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 thebusiness

Non Financial Performance linked toFinancial Performance

Customer / Long Term

Process Improvement

Advocates value

Manages and works to resolve

Integrate and Re-Design

Internal Consultant / Facilitates


7/56Matt H. Evans, CPA, CMA, CFMAlliance for Corporate Wealth 7

Benefits of Value Based Finance

By focusing on non-financial measurements, the financefunction pulls in other functional areas into the valuemanagement process.

Finance is the main proponent of value educating otherson 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



Scorecard EnablersApplying the Generic Drivers

Generic Models provide a good starting point forunderstanding 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 PostDelivery (After sale service)

- Organizational Value comes from employee results,

system results, and organizational culture.



Human 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 sourcesuntil 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 ResourceCapital.



HR Capital Scorecard FrameworkBuilt Around Four Basic HR Activities

ACQUIRE Hiringpractices, Recruitment,Fill Rates, Quality ofNew Hires, etc.

HR Strategic

Plan

MAINTAINCompensation, BenefitsAdministration, etc.

RETAIN Identify toptalent, retentionprograms, motivation,etc.

DEVELOP Coaching,Training, Supervision,Job Rotation, etc.

Source: The ROI of Human

Capital by Jac Fitz-enz

Traditional Financial

Metrics such as Cost per

Hire vs. Value Added

Metrics such as

Satisfaction with Hire



Strategic Business Analysis throughCompetitive Intelligence

Strategic Planning is dynamic through CompetitiveIntelligence (CI)

Competitive Intelligence is required to protect your

competitive advantages in the marketplace

Risk Management is too internal and CI brings an externaldimension to risk management

Senior Management is too inward in their thinking and you

need CI as a reality check



Emerging

Value

Points



Emerging Trends for UnderstandingValue Points Going Forward

The discipline of management will give way to the disciplineof 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 suchas Nano-Technology.



Leadership Practices

Inventory (LPI) Model



Measuring Leadership using the LPIModel

Leadership Practices Inventory (LPI) Model was developedby 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 toimprove leadership competencies.
http://www.directtextbook.com/editions/prices/0787967289



LPI Model Components

The LPI Model is built around five leadership practices and tenleadership commitments:

Model the Way

Find Your Voice

Set the Example

Inspire a Shared Vision

Envision the Future

Enlist Others

Challenge the Process

Enable Others to Act

Encourage the Heart

Search for Opportunities

Experiment and Take Risks

Foster Collaboration

Strengthen Others

Recognize Contributions

Celebrate the Values and

Victories



LPI Model Annual Survey fromObservers of Leaders

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.

Rating Scale: 1Almost Never | 2Rarely | 3Seldom | 4Once in a While | 5Occasionally | 6Sometimes

7Fairly Often | 8Usually | 9Very Frequently | 10Almost Always



Resources on the LPI Model

Very inexpensive and practical model - $ 65.00 forcomplete CD and SurveysFacilitators Guide:

Visit www.leadershipchallenge.com for more information.
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Value

Dynamics

Framework



Value Dynamics Framework Model

Based on a three-year study of 10,000 companies by ArthurAndersen.

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 incombination with one another.

Recognizes that assets are not fully controlled by thecorporation customers, suppliers, partners, etc.

Uses a much broader definition of assets (beyond theaccounting model) for creating value.



Basic Principle behind ValueDynamics Framework

Assets have inbound and outbound relationships;customer assets are outbound whereas employee assets areinbound (convert resources into products and services)

All assets have outputs Organizational assets (systems,information, etc.), Financial Assets (cash flow, etc.)

Customer

Customers

Distributors

Channels

Affiliates

Employees

Suppliers

Partners

Employee/Supplier

Cash

Receivables

Debt

Equity

Investments

Financial

Physical

Land

Buildings

Equipment

InventoryLeadership

Strategy Knowledge Values Brand

Organization

Innovation Systems

Process Culture

IP

By understanding theserelationships, we

crack the value code



Critical Concept From Tangible toIntangible Assets

PhysicalAssets

Employee& Supplier

Assets

CustomerAssets

FinancialAssets

Organization

Assets

Increasingly, value points are comingfrom the Intangibles, outside of thetraditional accounting model.

In the old manufacturing economy,Balance Sheet assets in theaccounting model were the criticalvalue points.



Creating the Overall Model

Identify and classify your assets into the five categories.

Understand the relationship of assets and how they areused within the business.

Front End Survey Work: Determine qualified people who canconfirm how assets are used and what value they contributeto the business.

Conduct Value Dynamics Survey for all five asset categories.

Back End Survey Work: Reach consensus on final datathrough workshops, peer exchanges, and other forums.

Align your business model around those assets that add themost value. How should we use our assets going forward?



Survey Questions How well is yourcompany using employee assets?

For employee recruitingprocess?

For employee training

program?

For employee satisfaction data?

For resources to improveemployee quality of life?

For information technology toleverage employee knowledge?

For collaborations or jointventures to start newbusinesses?

Best Very Above Below Very Worst Dont

Practice Good Good Average Average Average Poor Poor Practice Know

Needs Does the Best Dont

Work Job Practices Know

Second Pass on SurveyMore precision

First Pass on SurveyBasic Feel for How Data is Breaking

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


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Resources on the Value DynamicsFramework

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 systemsand

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 inbusiness 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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Denison

Cultural

Model


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Denison Model - Introduction

The culture of an organization, whether explicit or implicit, isfundamental to the execution of strategy and highperformance.

The Denison Model was developed by Daniel Denison andWilliam S. Neale based on 15 years of research with 1,000companies.

The Denison Model describes organizational culture aroundfour traits consisting of twelve management practices.

Very business oriented directly linked to the bottom line.


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Denison Model Framework

Degree to which theorganization is clear aboutits vision, goals, objectivesand strategic direction

Degree to which theorganization has values,systems, and processes thatsupport the vision, goals,objectives, and strategy

Degree to which theorganization clearlyunderstands the needs andrequirements of customers,responds and adjusts to

meet those needs

Degree to which everyoneis engaged and involved inhelping move theorganization forward


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Three Critical Management Practicesof the Consistency Trait

Coordination and Integration - Different functions andunits of the organization are able to work together wellto achieve common goals. Organizational boundaries do

not interfere with getting work done.Agreement - The organization is able to reach agreementon critical issues. This includes both the underlying levelof agreement and the ability to reconcile differences whenthey occur.

Core Values - Members of the organization share a setof values which create a sense of identity and a clear setof expectations.


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Survey Question ExamplesConsistency Trait


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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 thegaps?

Determine the risks of not taking action to close your culturalgaps.

Due Diligence - Compatibility issues prior to a merger.

Benchmark against other companies from the DenisonDatabase.


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High and Low PerformersDenison Model

High Performing Companies

Composite of companies

that had an ROI of 30%

Low Performing Companies

Composite of companies

that had an ROI of 9%


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Resources on Cultural Assessments

For more information, visit www.denisonculture.com

Facilitators Guide for Cultural Compass - $ 98.00. Visitwww.newtrainingideas.com
http://www.denisonculture.com/http://www.newtrainingideas.com/http://www.newtrainingideas.com/http://www.denisonculture.com/


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Creativity

Model


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Important Concepts behind theCreativity Model

Creativity Model is based on the highly respected researchof Carl Jung, Katherine Briggs, and Isabel Myers.

Breaks long-standing myths about creativity:

- Creativity is NOT about ideas, its about the range ofoutcomes that are available to the organization.

- Creativity is NOT about certain talents (art, music, etc.), it isabout using the eight creative talents that are found ineveryone.

- Creativity is NOT about being different, but more aboutarticulating results that no-one else recognizes.

Creativity is critical to problem solving because of increasedcomplexity, the need for innovation, and increasedcompetition.
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Creativity Model FrameworkEight Creative Talents

Adventurer

Navigator

Explorer

Visionary

Pilot

Harmonizer

Inventor

Poet

Quick to Act, Self Expressive, Aggressive Problem Solver, Fun

Very Precise, Highly Focused, Analytical, Curious, Systematic

Social, Helpful, Good People Skills, Seeks Consensus, Flexible

High Values, Tolerant, Quietly Curious, Supportive, Skilled Writer

Great sense of Future, Big Picture, Comprehends Complexity

Organizing, Planning, Team Leader, Systems Thinker, Sets Goals

Very Open, Good Source of Ideas, Energetic, Pursues New Things

Deliberate, Observant, Thorough, Grasps Details, Helps Clarify


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Key Points about the Eight Creative Talents

All eight talents have equalvalue.

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 teamenvironment 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.


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Myers Briggs Types aligned aroundthe Eight Creative Talents

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.

Adventurer Navigator Explorer Visionary

Pilot HarmonizerInventor Poet

INTJ

INFJ

ISTJ

ISFJ

ESTP

ESFP

ENTP

ENFP

ISTP

INTP

ESTJ

ENTJ

ISFP

INFP

ESFJ

ENFJ


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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. Its nottoo 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, EditorFast Company Magazine, December 2004
http://www.lynnelevesque.com/http://www.lynnelevesque.com/


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Overall Framework for applying thesetools and techniques (Big Picture)

Value Dynamics Framework Dennison Cultural Survey

Identify Major Value Related Issues

Communication andManagement Systems

Strategies, planning,and budgeting

VisionGoals

Competencies

Products - Services - Processes

Determine how

these value related

issues align to

various layers

within your

OrganizationalFramework

LPI Model Competitive Intelligence Creativity Model

Apply specific

techniques to close

the value gaps

within your

OrganizationalFramework


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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 ofvalue that need further development.

Ironically, getting the plane off the runway seems to be thebiggest challenge . . . .

And if corporations would just start with a modestunderstanding of where value comes from (leadership,culture, etc.), the corporation could realize enormousincreases in value.


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Additional Information

Download presentation and reference files from:

www.exinfm.com/workshop.html

1. Workshop Slides (powerpoint)

2. Building HR Capital

3. Aligning Human Capital with Business Strategy

4. Value Dynamics Presentation

5. Five Ways to Develop Corporate Culture6. Organizational Cultures that Get Financial Results

7. Applications of the Denison Cultural Model
http://www.exinfm.com/workshop.htmlhttp://www.exinfm.com/workshop.html


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Questions and Comments

Matt H. Evans, CPA, CMA, CFMEmail: [email protected]

Phone: 1-877-689-4097
mailto:[email protected]:[email protected]


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Back Up

Slides

Value Dynamics Model


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Survey Questions How well is yourcompany using physical assets?

Real estate / land for productiveuse or investment?

Buildings and facilities?

Existing equipment or newlyacquired equipment?

Inventory management tominimize risk of not delivering?

Information technologyinfrastructure?

Supply chain management tooptimize the use of and needfor physical assets?





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Survey Questions How well is yourcompany using financial assets?

Cash reserves?

Receivables in minimizing thecash-conversion cycle?

Investment strategies in orderto increase profitability?

Debt strategy to manage oreliminate debt?

Equity to further businessexpansion?

Information technology toenable financial management?





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Survey Questions How well is yourcompany using customer assets?

Customer satisfactioninformation?

Current customer information

to expand customer base?

To develop customer loyalty?

Collaborative relationships tobetter serve customers?

Information technology toenable web-security?

Supply chain management toincrease customer satisfaction?





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Survey Questions How well is yourcompany using organizational assets?

Leadership to drive innovationand passion?

Business strategy ?

Structure to delegate theresponsibilities?

Processes to identify businessopportunities?

Culture to foster honesty and

respect?

Branding in the marketplace?

Knowledge in productdevelopment and marketing?

Intellectual property?





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Value Dynamics Survey Process

Level ofagreementacceptable?

Likely possibilitythat BUs have

independent assets?

Develop alternative modelfor Value Dynamicsdata representation

Facilitated Peer Exchange(Gartner Best Practice)

Reassess

Y YY

N N

Level ofawarenessacceptable?

Conduct Workshops Reassess

Y

N

Develop standardValue Dynamics

data representation

Surveys Received



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Run survey data through qualitycontrol matrix for refining the data

Level

ofagreement

Level of awareness (% of respondents answering Dont Know)High

Low

Low number of Dont Knows&

High level of agreement

High number of Dont Knows&

Low level of agreement

Low number of Dont Knows&

Low level of agreement

High number of Dont Knows&

High level of agreement


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Value Dynamic RecommendationsWithin the Business Model

Vision& Goals

Competencies

Communication &Management Systems

Strategies, Planning& Budgeting

Action Items

Develop a competency modeland performance management

system.

Benefits

A competency model willoutline the necessary

knowledge, skills and abilitiesfor each position, allowingemployees to understand howtheir jobs fit into the goals andvalues of the organization.

A performance management

system will ensure employeesand functional areas areevaluated using standardizedperformance metrics.

ISSUE: Management does not believe they have the competencies necessary to meetcustomers needs, nor do they feel empowered to use the competencies they do have.

Denison Cultural Model


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Three Critical Management Practicesof the Adaptability Trait

Creating Change - The organization is able to createadaptive ways to meet changing needs. It is able toread the business environment, quickly react to currenttrends, and anticipate future changes.

Customer Focus - The organization understands andreacts to their customer, and anticipates their futureneeds. It reflects the degree to which the organizationis driven by a concern to satisfy their customer.

Organizational Learning - The organization receives,translates, and interprets signals from the environmentinto opportunities for encouraging innovation, gainingknowledge and developing capabilities.



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Three Critical Management Practicesof the Mission Trait

Strategic Direction and Intent - Clear strategicintentions convey the organization's purpose, make itclear how everyone can contribute and "make theirmark" in the industry.

Goals and Objectives - A clear set of goals and objectivescan 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 desiredfuture state. It embodies core values and captures thehearts and minds of the organization's people, while

providing guidance and direction.



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Three Critical Management Practicesof the Involvement Trait

Capability Development - The organizationcontinually invests in the development of employees'

skills in order to stay competitive and meet ongoingbusiness needs.

Team Orientation - Value is placed on workingcooperatively toward common goals for which allemployees feel mutually accountable. The organizationrelies on team effort to get work done.

Empowerment- Individuals have the authority,initiative and ability to manage their own work. Thiscreates a sense of ownership and responsibility towardthe organization.



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Example of Action Plan -Denison Cultural Model

Give the future the attention itdeserves

Develop a philosophy that long andshort-term interests can be

reconciled

Make everyone in the organizationfamiliar with your vision, mission,and goals

Hold strategy articulation sessions to planfor the future. Communicate these plans(Vision, Mission, Goals) to employees, andensure they know how their jobs fit into thecompanys goals

Create a list of criteria that projects mustmeet before they are accepted. Make sure

short term and long term goals andinterests are considered when creatingcriteria

Determine the best communication vehicleto cascade the vision, mission, and goalsto all levels of the organization

Recommendations Action Plan Benefits

If employees understand and canpositively identify with theCompanys vision, mission, and

goals, there should be a positiveimpact on profitability, sales /revenue growth, market share,perceived quality, and employeesatisfaction.

ISSUE: Need to better articulate the companys vision, mission and goals. This will

translate into increased revenue growth, quality, and employee satisfaction.

Value Dynamics and Denison Cultural Model


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Combining the Results ValueDynamics and Denison Cultural

E = Enabler

B = Barrier

CreatingChange

CustomerFocus

Organiz-ational

Learning

StrategicDirection &

Intent

Goals &Objectives

VisionCoordination& Integration

Agreement Core ValuesCapability

DevelopmentTeam

OrientationEmpower-

ment

PhysicalAssets

B B B

FinancialAssets

E B B B B B E3

Customer

AssetsE

2 E B B B B B B B

Employee/

Supplier Assets

E E B B B B B B E3 B B

Organization

AssetsE E B B B B B B B E

3 B B

Involvement

DENISON

V

A

L

U

E

D

Y

N

A

M

IC

S

Adaptability Mission1 Consistency

This chart was developed by comparing Denison survey results to Value Dynamics concepts.

Major Cultural Issue impacting value

value points long

Documents