Business Value and the eye of the beholder.

Imagine a business running perfectly in a perfect world.
Wait; forget the perfect world part for now . . . no two people will imagine the same perfect world anyway.

Let’s concentrate on your perfectly running business. If guests from your real-world company stumbled into your imagination and saw what you created, what would they see?

As a good host, you show them around. Coming from the traditional not-so-perfect place, they’re quite amazed and want to know how you accomplished this fantastic feat.

* Who is responsible?
* Where’s the magic wand?
* How could this be?

There’s got to be a conflict somewhere. Are the conflict teams on vacation this week? Where’s the disruptions? How long can this last? Are all those people actually supporting each other? Who left the lines of communication open?

Who’s in charge? Doesn’t someone need to be micro-managing this place? Where are they? What’s going on over there?

Looks like a pretty important meeting! “Well yes, it is. That’s our transformation team . . . all the teams in the company are represented.”

OK, perfect timing . . . now we’ll see some fireworks. All those innovative ideas . . . sure, they look good on paper . . . wait ‘til they try to make some changes. I hope you’re prepared for the chaos!

A few conflicting processes here, a few integration disasters over there, some technical glitches spread all around . . . yeah, this place will feel just like home.

“Actually they are just celebrating a bit. All the process changes went very well and the entire integration project was completed ahead of schedule. There hasn’t been any slow downs; in fact, we expanded the business, went global, increased production, eliminated some wasteful practices and are running better than ever. We know it will have a very positive impact on the company’s bottom line this coming year. Our CFO is thrilled . . . might even use a personal day; that would be a first!” Whoa!

You’re kidding, right? This isn’t possible!

What did you guys do?

Did you somehow all magically agree to align to the same vision, or something?
“I guess we did. We all agreed that our business is important to us and that the mission of the business serves a vital purpose in the world. We’re glad to be part of it . . . we each know we are having a real impact.”

So, there was some magic, right?

“You can call it magic if you like, but we call it business value; we prioritize our initiatives and align all our activities, functions and processes to optimize our resources. As you can see, it works.”

“It can work for you, too . . . if you are serious about improving your business, I know just the folks to help you get started. All it takes is commitment to your business value and . . . a bit of imagination.”

Gary Mitchell, Co-Editor.

Cruise Control

Written by Gary Mitchell, www.businessvaluemanagement.blogspot.com.

I am not a fan of chain letters and refuse to pass them on, but occasionally one arrives that contains some interesting information that inspires a thought. This morning I received such a letter. It contained a story about a woman who learned the hard way that drivers should NEVER DRIVE IN THE RAIN WITH THE CRUISE CONTROL ON. In fact, NEVER USE THE CRUISE CONTROL WHEN THE PAVEMENT IS WET OR ICY. The highway patrolman at the scene of the accident explained that if the cruise control is on when your car begins to hydro-plane and your tires lose contact with the pavement, your car will accelerate to a higher rate of speed, making the car take off like an airplane. The driver loses control.

How does this apply to business? Is there a lesson here? How many businesses operate on cruise control? Each of them starts out with a vision of where they want to go and a mission to drive them there. Yet, somewhere along the road to success, leadership gets the bright idea that the business can operate on cruise control. They set the mechanics in motion, relax, and sit back to enjoy the ride, mistakenly thinking that they are still driving because they are holding a steering wheel. However, a steering wheel does not a driver make.

Now, I am not saying that cruise control is necessarily a bad thing. In fact, cruise control can be a wonderful feature to use when driving efficiency, but there are conditions. NEVER OPERATE YOUR BUSINESS WITH THE CRUISE CONTROL ON UNLESS THE CONDITIONS ARE RIGHT. If control is being turned over to other people, other functional areas, other processes, how do you know that the vision is just as clear to them as it was to you when you started? How do you know that their mission is in line with yours? How certain can you be about the course of your business? How certain can you be about reaching your desired destination if key values are out of place, out of sync, out of control? What if the business loses contact with the road, with the guiding principles that formed the foundation of your business in the first place? What if the vision has become distorted and the mission out of alignment?

What has been done to make sure conditions are right for optimizing the operation of a cruise control system, or any system for that matter? There will always be risks that are out of our control and may catch us by surprise. But, especially in business, the business drivers need to be aligned for top performance. Managing for top performance requires serious attention all the time.

Bottom Line: Heed the warnings. Assess the situation. Assess it again. Identify the present conditions. Check the alignment. Are all the drivers in line with the vision and mission ahead? Are all the activities, functions, and processes working efficiently together? Proceed with caution when setting any cruise control options. The well-being of your business is at stake.

Who, what, when, where, why, how?

I heard from a colleague who asked, “What if you cannot derive business value from a client because he is reluctant to talk about his issues openly?” The answer takes me back to my 5th grade class where Sr. Jean Marie taught us the following conversational secrets:

Who? Explain the profile of your existing client base. Talk about results and deliverables and how companies have benefited from your solution. Don’t lead the client down one path; instead, talk about the diversity of the value received. Don’t talk specifics about any one client; but speak about clients in general who have experienced broad impact on business results. If they ask what one of your clients is doing, say, “That is important, and if appropriate, at the right time we may be able to get you to speak to that client about the benefits he received from our company.” You don’t want to give the impression that, if they become a client, they will be used in some sales pitch.

What? What is the perceived value that you see for the client? It is important to do your homework. Listen to the last few quarterly earnings reports; tie your solution to the CEO’s vision, mission statement, guiding principles and business issues.

When? “When” is a tricky, but an important aspect of early conversation with a prospect. It can also set you apart from most other salespeople. Every salesperson I know prepares in detail for meetings with executives, but few talk about the work they put into preparation for the meeting. “When” can take the following tact, “When I was preparing for this call I learned a few things about your company.” Tell them a few points you learned in your preparation, “Margins are down”, “Inventory is up”; whatever the facts are, tell them what you know. They will appreciate the fact that your have done your homework.

Where? Explain in general terms where have you done it before; where in the business cycle can they expect to see results? Be careful that you do not tread on the unique value that you offer to other clients; just because their main competitor is your client does not mean that they need the same issue solved. Explain where you provided unique value that gave your client a unique benefit. They invited you to a meeting to hear what you can offer them, not what you delivered to another company. Your reputation or client base may have gotten you in the door; the unique business value you offer may get the dance.

How? Explain how results are articulated and how you have helped other companies with business issues. Explain the lifecycle of an implementation, how it impacts the business and how it can be rolled out to capture low hanging benefits first.

Why? Why did they accept this meeting? Why do they see a requirement? Why is your differentiator important to them? Why you, your product and your company? They saw or heard something that they think can be a benefit. It is important to discover why they accepted the meeting and why they think that your product or service can benefit them. Get them to talk about what they see as the solution and why they think you can add value to the process.


Bottom Line ; What we say and how we say it can make or break the relationship with our clients. Who, what, when, where, why and how questions get your client talking and you listening. Don’t open your mouth and pop in the spec sheet or product of the week. A good salesperson is a good listener. A great salesperson asks great questions and triangulates answers into a solution that ties unique value to business benefit for the client.

$110,000, Cessna's new Skycatcher!

Now the price within reach, are my 6 hour drives to New York a thing of the past with the new SkyCatcher, a single engine, 2 seat, 100 HP plane? Can it be anymore dangerous then riding a 1200CC motorcycle? Ignore the fact it is made in Shenyang, China and $71,000 less then it's US equivalent, the price has narrowed enough for me to consider the price/value quotient. Wait, we can't ingore that, that is the whole point of this Blog!

India's yearly economic growth rate averaged over 8% in the last four years. That trend that will double their average income in 10 years. I think we will see a lot of SkyCatchers flying around over there soon. In 2005-2006, Asia accounted for 58% of the international enrollments at US Higher education institutions. India, leading the pack with approximately 76,000 students in the US.

In the US, third grade reading scores slipped to below 2001 levels. Falling to 3rd place world wide.

Bottom Line: At $110,000 the new Cessna is a buy, and it could be my cure for my fear of flying. I hope my kids read this, maybe even get a little envious on how the price/value quotient on a global basis has changed the ingenuity playing fields, after all where are those new SkyCatchers going to be sold?

What is valued?

Changing our thanksgiving tradition, I served Jane and my 4 kids, 15,17,19 & 21 chicken marsala and broccoli rabe for lunch and chicken curry for our dinner. The reaction was surprising as we as a pack descended on the meal. With two home from college, it was interesting to see how years change the person.

I read the paper and news to the point of an addictive behavior. I see the angst and turmoil in industry and business, typically a reaction to a quarter by quarter or month to month basis as oil nears $100 a barrel. Living here in VT, I am surrounded by a sense of security and sustainability as companies like NRG Systems and Green Mountain Coffee compete globally and Orvis manages to “offshore” some of the tightest fly rods around.


Bottom Line: I have questions today, what makes good good? What makes great not good enough. Being from sales it goes down individual performance. How do others in the organization feel as special projects pop up and they not understanding how they are measured or how they impact the business? For me, job statisfaction and productivity came to mind.

Thanksgiving and a situation assessment ------>

A good friend called yesterday and I asked him if business value is enough, he said "I don't think so." That sent me back, but since I woke up this morning, I am back to the fundamentals. POWER who can make the biggest impact on today and personal value, where can I apply, to make some one's vision or miss on closer to home for them? The value of time, the most important element, in particular the timing when I decided to join thg, or who would of thought six years ago that I would be living in bucolic Essex, VT?

With the Thanksgiving this week, it is time to reflect inwards, for me, towards my family, to see how our mission and vision is aligned as a unit. We will under take our own situation assessment and use it as a way to develop onto the same page.

This holiday please feel free to share a situation assessment with your family, it could make you laugh or make you cry, and it is worth the time.


Bottom line; I am thankful for all those people in my life that put me in and gave me the opportunity to share this with each of you. I hope you print off at least one copy and share it with someone you love.

Trusted advisor relationships are not product centric.

Increasingly, Global 2000 CIO's are moving into the position from a business background and not a technology one. All are moving away from technical mumbo-jumbo into business discussions and for the topic of this discussion all are receiving hundreds of calls a week from well intentioned salespeople about a product or service will solve one woe or another.

I worked for companies who pumped out product after product, the proverbial, spaghetti on the wall. Unfortunately they were field tested when a sales person stuck a spec sheet in front of the client, because of a briefly mentioned business or technology issue yet to be solved. I talk with many product managers, many never spent a day in the field. Product pumping often starts at the top, one CEO went as far as saying lead with service X, if that does not sell, switch to product Y and if that fails move to service B. This particular company had a very high turnover rate and had up to 3 or 4 salespeople covering the account in as many years. So much for a trusted advisor relationship.

As a father of four kids, I hope that we all learn from experience. Here is what I learned;

Listen first and ask questions. Find out what the business issue is, find out how that ties to the companies vision and mission. Ask the person what they think the solution is, pull out the nuggets where you can add unique value and articulate your value.

Have product marketing talk to users about what is lacking in the market and build relevant solutions around those issues.

Have specific messages for each executive. Generic messages are just that. Know the business problems you are going to solve and defend your unique value with rigor and passion.

Boutique firms need to establish clear and concise value propositions that need to be clearly differentiated against larger competitors.

Bottom Line: Competitive advantage does not come from generic messaging. Marketing and sales campaigns must be aligned to problems and not products or services.

Personal business value at the activity level.

It will be interesting to see what happens in the next few weeks as France's key public infrastructure systematically goes on strike. It's more concerning to see what is happening in the Middle East, as Pakistan looms on civil war, but this is not a political blog. It does show the importance of contingency planning and tying personal value to workers activities. Companies need to map job related activities to the importance and alignment to a companies mission and vision statements. I can't say it will prevent a country wide strike or civil war, it will create good will and increase worker productivity. It will go along way in building a stronger foundation if each activity is directly mapped to success.

In France, the waves that are planned on Nov. 13, 14, and 20th, are in the transport, energy and even the civil servants are planning a work stoppage.

The fundamental reason for this is worker angst, there is no personal value match to activities and worker discontent sits in. The affects could be as small as worker productivity for a few idle minutes, or it could be company or country widespread as in the case of France. The ability to measure, requires a plan at the activity level.

Bottom Line: Define at the activity level success factors. Articulate where and how that activity aligns to company mission and vision. Reward behavior that drives unproductive means out from every employee and activity they do.

Simple as ABC, if you dont compete you can't win!

Activity-Based Costing (ABC) is used to identify functional process activities, describe that process in regards to where it fits into the overall business objectives and it’s alignment to goals, mission and company vision. It is a more accurate management system than traditional cost accounting. Although hard to attain because of a lack of standards and metrics, ABC is more valuable because it identifies opportunities to improve business process effectiveness and efficiency by determining the "true" cost of a product or service. The key differentiation and silver bullet is that it must be mapped to corporate performance goals and be used as an initiative generator to fuel top line savings and bottom line growth.

Bottom line; You can’t cost if you don’t measure. If you don’t measure you can’t change. If you don’t change you can’t compete.

Getting more with more. The IT funding quagmire.

According to recent research, it is clear that World Class Companies spend more on IT than their peers. To build the case for an increase in IT funding, CIO's need to focus on developing their organization's key strengths . There are six key areas that should be considered:

Product Innovation
Project prioritization
Operational excellence
Brand mastery
Customer intimacy
Business strategy alignment
Aggressively outsource non-core functions.

IT investments should align to one of those disciplines. CIO's need to stop and inventory current practices to avoid wasting money on maintaining functions that are not core competencies. An increasing number of companies are asking third parties to take on tasks such as finance, human resources or indirect purchasing. I don't think there is anyone that can say that the accounts payable function delivers a competitive advantage. Taking out non-productive projects, programs and activities will enable self-funding improvements in the future.

Articulating the business value of IT.

With the plethora of messaging hitting functional process leads from outside the organization, internal providers of IT must develop a strategy to articulate their benefits to their organization. Many of the principles and ideas used in marketing and advertising are adaptable to build a enterprise brand for IT.

Brand development takes into consideration 3 key factors, differentiation, relevancy and consistency. Differentiation allows you to separate, distinguish and defend your services against messaging that is coming into your organization from outside service providers. Relevancy keeps you attuned to what users want and need and at the same time keeps you aware of market trends, and Consistency will give your constituents the guarantee or service level that your offering is competitive, at the very least, superior ideally, in addressing and aligning to their business goals. Today your brand is established by past encounters and service features that have already been delivered. In most cases, some re-branding work needs to be accomplished and should be re-evaluated continually. This is not a bookshelf exercise and should be a living and breathing document that should be evaluated in real time.

The first step in building your brand is an identification of key stakeholders with the intent of getting the understanding of their perception on how they think IT as a service is delivered. Do they see IT as a strategic partner who continually creates new benefits or a roadblock that continues down the same old way without alignment to business strategy? Branding of IT must be aligned to the corporate strategy and corporate goals. It must also reach down into the SG&A functionality and be tied to the activity level if individual contributors with in each department. Every person in every department must have an understanding of how IT adds value to their daily activity. An IT brand will build strength over time, consciously or unconsciously your constituents are branding you. A formal branding approach will put IT in the drivers seat.

Business Value through selective sourcing.

In the not too distant past, there were only two sourcing delivery options; in source or outsource. To meet the changing needs and reduce risk, service providers and enterprises have developed an array of choices that better suit the requirements of corporations. In hind site, we have also seen that single-source sourcing is more expensive as solutions are developed that move into niche markets and are aligned to vertical industry functions. This deep expertise offers innovation as part of their service level agreement and delivers increases in efficiency and effectiveness improvements that drives the spirit of the relationship.

Today, I have seen first hand that companies are unwilling to completely dismantle operations and move their people, process and technology offshore with out considering of multiple sourcing choices. Picking, in some cases, multiple delivery options to meet their requirements and business goals. It is also clear that once a process is moved outside the walls, subject matter expertise is required in-house to effectively manage the process and relationship. Governance of multi-sourced relationship is a critical in toady's climate. A strategy, business case and associated action plan must be developed that aligns each choice to how it meets your business requirements and return on investment criteria. Successfully done, these choices will deliver a return on investment and can be used as a growth strategy that delivers to the bottom line.

Innovation, speculation and globalization

Richard Arkwright, a British inventor changed the face of the world. In 1767 he developed a spinning frame, a machine for spinning thread in preparation for weaving. This invention replaced a hand-operated device that required a person skilled in the process to operate. By 1768 his first horse powered mill was in operation. With this new automation, each worker in Arkwright's mill could do the work of fifty hand spinners. England's industrial revolution modernized textile manufacturing, so inexpensive were English textiles they began to export them to India, decimating India's traditional weaving trade.

There are many examples of this type of activity through out the ages, in 1859 China ruled the supply of tea, but by 1899 India outpaced China in tea exports which had a devastating impact on China's tea farmers.

In the 1600's and the early 1700's Arabian coffee ruled the world, by the middle of the 1700's the Dutch took the lead. Years before they exported coffee plants to their colonies in South America. With these plants now mature and producing Arabian coffee found it difficult to compete.

The list goes on and on, from the earliest times, sourcing and globalization has been documented and utilized and "market disruptors" have always been introduced from around the globe. Today as information technology further flattens the world, it remains clear that a distinct business value must be identified at the individual level, their process, their company and their region. Better, faster and cheaper ways will always be introduced as marketers look for the next big thing. Be prepared by weighing options and analyzing your risk, engage and challenge yourselves in sourcing options and be proactive in defining your personal and business value and understand where it fits into your companies enterprise strategy. If you don't know, ask if you dont have one get one.

2008- the intersection of business process and IT.

I was looking for a way to articulate the benefit of Business Value Management. In my career in account management, a common theme that rises to the top at my clients is there has always been islands of information and stand alone processes. It amazes me that CFO's are marching down one route, looking at processes, while CIO's staff are always looking for the next great piece of software or hardware that delivers some unique business value. With enterprise ERP provider's now offering, though acquisition, "full suite" applications, it is time for CIO's and CFO's to sit at the table to uncover and define one version of the truth. A common vision, goal, taxonomy and methodology must be agreed upon before the journey begins. Lean/Six Sigma, Agile, TCO etc. will only "polish the apple. If the core is broken, those processes must be identified and road mapped for remediation.

My career in market research with my clients being both the CFO's office, at Hackett and the CIO and his staff, at Gartner tells me that they are on a journey with two distinct talk tracks in regards to how they define of business value. The good news is, the unification of business and technology has begun, and it is the IT providers who now talk about the business value of their services and products.

2008 will be the intersection of IT and business process at the function level and will we will start to see a emphasis defining business value at the process and activity level.

Business Value Management

The latest in industry buzzwords complete with a three letter acronym. My challenge is how to come up with sustainable benefits and information on how Business Value is changing the way companies operate in a global economy. 2008 will be the year of the individual and how their functions and activities can be measured in terms of value to the business.