Business Performance Management & Growth Kamran on 30 Dec 2007 10:55 pm
Understanding Value Creation for Superior Performance
A crucial part of Strategic Planning for any organization is establishing a clear consensus on value creation — which is another way of deciding on the main focus of the company.
Simple as it may sound, there are quite a few business organizations which get sidetracked and lose focus of the main value creation process.
Strategic planners and top-level leadership have to provide clear cut answers to questions like
- “what specific kind of value are we generating and for whom?”,
- “how do our processes add value to existing goods and services?”,
- “what are our key value drivers as dictated by our strategic goals?”
For example, if a book retail chain is expanding its coffee house operations into in-store restaurants, is it keeping its focus on its main value-added activity of selling books or gradually shifting into restaurant or catering business?
And what would that mean for the whole organization in terms of the new processes that need to be integrated with the existing ones?
What kind of new measurements must be taken with which kind of new technologies to feed what type of new reports back to the strategic planning level?
A shift in business focus and the definition of “value creation” should be taken very seriously as it will trickle down and affect every process within an organization.