value creation - Blog - Global Risk Community2024-03-28T16:13:27Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/value+creation3 Obstacles Hampering Organizational Agilityhttps://globalriskcommunity.com/profiles/blogs/3-obstacles-hampering-organizational-agility2021-09-28T04:40:00.000Z2021-09-28T04:40:00.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><img class="alignright size-medium wp-image-2198 align-right" src="http://powerpointing-templates.com/wp-content/uploads/2021/09/Obstacle-1-300x200.jpg" alt="Obstacle 1" width="300" height="200" />Agile is a robust approach to <a href="https://flevy.com/browse/stream/value-creation">value creation</a>. More and more organizations are adopting Agile Software Development approach.</p><p>Becoming Agile is imperative to meet and exceed customer expectations and emerging business trends. Implementing the <a href="https://flevy.com/browse/flevypro/five-beliefs-of-agile-development-2833">Agile approach</a> to Software Development leverages significant benefits, including:</p><ul><li>Rapid design and development of new product and service offerings</li><li><a href="https://flevy.com/browse/stream/process-improvement">Revolutionizing processes</a></li><li>Managing talent</li><li>Reforming organizations</li></ul><p>However, Agile alone is not enough. Agile Transformation can slip-up as Agile teams can stagger while working together and depending on others. In order to become an effective <a href="https://flevy.com/browse/flevypro/digital-organizational-design-3189">Digital organization</a>, companies have to steer clear of the obstacles that bog down the rapid progress of Agile software development. These <a href="https://flevy.com/browse/flevypro/organizational-obstacles-to-agile-5876">organizational obstacles</a> to Agile include:</p><ol><li><strong>Rigid Technology Architecture</strong></li><li><strong>Poor Talent Management</strong></li><li><strong>Lack of Product Mindset</strong></li></ol><p><a href="https://flevy.com/browse/flevypro/organizational-obstacles-to-agile-5876"><img src="https://flevy.com/blog/wp-content/uploads/2021/09/Agile-org-obstacles.png" alt="" width="595" height="450" /></a></p><p>Overcoming these barriers necessitates sincere harmonization, persistent effort, and commitment from the business and technology leadership. Anticipating and addressing these major organizational obstacles is integral to becoming Agile.</p><p>Let’s discuss these obstacles in detail.</p><h3><strong>Rigid Technology Architecture</strong></h3><p>Using and expanding the same old codes and plugging gaps with software patches renders the IT Architecture cumbersome and unyielding, at most organizations. Many organizations have outdated systems to manage operations and facilitate their customers. The integration of these outdated systems with modern applications and IT architecture isn’t easy, making them inflexible. Most of these systems and aps are inter-reliant and connected. A small change in a code has serious implications on other connected applications.</p><p>IT executives have to consider a number of factors before modernizing their IT architecture. These factors include potential value envisaged from the new architecture, requirement for new functionalities, risk of disruption, complications involved in the process, extent of fragmented data, and costs. Based on thorough evaluation of these factors, executives select one of these 4 common approaches to revolutionize their IT architecture:</p><ul><li>Inaction<strong> – </strong>The investment in overhauling certain applications is thought to be nonviable as their impact is considered insignificant in the overall architecture.</li><li>Integrate<strong> – </strong>Uncover the old system’s essential function / elements and connect them with modern systems using interfaces (APIs).</li><li>Overhaul<strong> – </strong>Modify the design of applications—e.g. dissecting the code into distinct, autonomous sections and eliminating any hard-coded values.</li><li>Replace<strong> – </strong>Design innovative applications and deploy latest architecture (e.g. micro-services).</li></ul><h3><strong>Poor Talent Management</strong></h3><p>Most leaders understand the importance of finding and staffing top talent in becoming Agile. However, outdated <a href="https://flevy.com/browse/stream/human-resources">HR Management</a> practices at some organizations become a major hurdle in attracting and retaining talented individuals. The issue with IT management at most technology firms in the recent past was their shortcoming in visualizing the problems through a business perspective. This led to the depletion of technical capabilities due to hiring of more and more people with strong business sense, but inadequate technological prowess.</p><p>Another factor compounding the talent deficit is entrusting the hiring function to external contractors by scores of IT organizations. This practice, although, assists in staffing talent and gaining new capabilities promptly, but diverts much of the executives’ time in supervising the external contractors. This leaves little time for them to acquire new technical skills and gives the contractors too much control over <a href="https://flevy.com/browse/stream/innovation">innovation</a>. Outsourcing the software maintenance to 3<sup>rd</sup> parties is another factor that leads to poor accountability and <a href="https://flevy.com/browse/flevypro/6-pillars-of-talent-management-5271">Talent Management</a>.</p><p>To mitigate these issues, technology companies need to transform, strengthen their technical capabilities, eliminate dependencies on 3<sup>rd</sup> parties, and clearly define responsibilities.</p><p>Interested in learning more about the obstacles to becoming Agile? You can download <a href="https://flevy.com/browse/flevypro/organizational-obstacles-to-agile-5876">an editable PowerPoint on <strong>3 Organizational Obstacles to Agile</strong> here</a><span style="text-decoration:underline;"> </span>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</p><h3>Do You Find Value in This Framework?</h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</p><p>– Roderick Cameron, Founding Partner at SGFE Ltd</p></blockquote></div>Value Grid Model vs. Value Chain Analysishttps://globalriskcommunity.com/profiles/blogs/value-grid-model-vs-value-chain-analysis2021-06-01T15:53:49.000Z2021-06-01T15:53:49.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><a href="{{#staticFileLink}}9020351661,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}9020351661,RESIZE_400x{{/staticFileLink}}" alt="9020351661?profile=RESIZE_400x" width="350" /></a>A traditional <a href="https://flevy.com/browse/marketplace/value-chain-analysis-262">Value Chain</a> involves a linear sequence of activities—from conversion of raw materials into components which are assembled into products. The products are then distributed, marketed, sold, and serviced. Management plans and execute strategies and operations based on this sequence.</p><p>This set of activities worked well for organizations in the past. However, this linear progression does not encourage <a href="https://flevy.com/browse/stream/innovation">Innovation</a> and provides little protection from the risk of being outperformed by rivals in today’s disruptive markets. Such a competitive environment calls for implementing more robust ways of managing Customer Demand and <a href="https://flevy.com/browse/stream/value-creation">Value Creation</a>.</p><p>An effective approach to deal with this challenge is the <a href="https://flevy.com/browse/flevypro/value-grid-analysis-5661">Value Grid Analysis</a> Model. The Value Grid approach provides a perspective beyond traditional linear progression of activities, where organizations need to balance equilibrium between suppliers and manufacturers aside from concentrating only on reducing lead times. It outlines new opportunities and risks for organizations.</p><p>The Value Grid Analysis provides a number of routes to <a href="https://flevy.com/browse/stream/performance-management">improve Performance</a> and reduce risks. It encompasses the following 3 pathways—or dimensions:</p><ul><li>Vertical pathway – using traditional Value Chain, companies find opportunities upstream or downstream from adjacent tiers in the existing Value Chain.</li><li>Horizontal pathway – companies look for opportunities from similar tiers in multiple (parallel) Value Chains.</li><li>Diagonal pathway – explore opportunities to create value across multiple value chains and tiers.</li></ul><p>The Value Grid Framework necessitates diverting leadership attention towards 3 key opportunity areas to create Competitive Advantage:</p><ol><li><strong>Customer Demand</strong></li><li><strong>Information Access</strong></li><li><strong>Multi-tier Penetration</strong></li></ol><p><a href="https://flevy.com/browse/flevypro/value-grid-analysis-5661"><img class="aligncenter size-full wp-image-9221" src="https://flevy.com/blog/wp-content/uploads/2021/06/Value-Grid-Analysis.png" alt="" width="1002" height="752" /></a></p><p>Let’s dive deeper into the 3 opportunity areas.</p><h3><strong>Customer Demand</strong></h3><p>The first opportunity area to drive competitive advantage pertains to controlling internal and external customers’ demand. It warrants a company to manage customer demand upstream (suppliers and companies that supply to suppliers) as well as downstream (customers). By managing customer demand downstream, organizations control the decision makers responsible for the purchase decision. When companies are unable to control the decision makers, they look for levers across the Value Chain to influence decisions. These levers include direct advertisements to the end users, focusing on distributors, or incentivizing retailers to recommend a product. Organizations also try to influence upstream, e.g., their R&D units, to create products which can be used in conjunction with the existing product range to boost their efficacy and benefits for the end-users, ultimately influencing consumers’ decisions downstream.</p><h3><strong>Information Access</strong></h3><p>The 2<sup>nd</sup> opportunity area involves linking information sharing to influence decision making. A few manufacturers prefer to partner with those suppliers who openly disclose the information (capabilities, flexibility, and pricing structures) of their 2<sup>nd</sup>-tier suppliers with them. This assist them in planning and helping the suppliers manage materials and prices better.</p><p>For instance, with increased tariff on imported steel and price of steel continuously going up, car manufacturers like Honda purchase steel in bulk and sell it to their suppliers at a reduced rate. This helps them keep the prices of their cars down and compete better.</p><h3><strong>Multi-tier Penetration</strong></h3><p>Nonlinear thinking (Value Grid Model) enables the organizations to determine innovative solutions beyond the scope of traditional Value Chains. To manage excess demand organizations take on multiple Value Chain tiers to control demand and buyers’ power.</p><p>Leading manufacturers evaluate multiple value chain points for their participation in order to scale. They sell not only to Original Equipment Manufacturers but also in the aftermarket. Supplying to more than one Value Chain tier allows organizations to withstand pressure from OEMs to reduce costs, demand shifts, and offers attractive margins.</p><p>Interested in learning more about the 3 opportunity areas of the Value Grid Analysis Framework? You can download <a href="https://flevy.com/browse/flevypro/value-grid-analysis-5661">an editable PowerPoint on <strong>Value Grid Analysis</strong> here</a><u> </u>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</p><h3>Do You Find Value in This Framework?</h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”</p><p>– Michael Duff, Managing Director at Change Strategy (UK)</p></blockquote></div>Return on Training Investment (ROTI) Calculationshttps://globalriskcommunity.com/profiles/blogs/return-on-training-investment-roti-calculations2021-04-08T06:00:00.000Z2021-04-08T06:00:00.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><div class="entry"><p><a href="{{#staticFileLink}}8760904287,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}8760904287,RESIZE_400x{{/staticFileLink}}" alt="8760904287?profile=RESIZE_400x" width="264" height="396" /></a><span style="font-size:12pt;"><a href="https://flevy.com/business-toolkit/return-on-investment">The concept of Return on Investment (ROI)</a> was formed as part of the concept of Value Creation. The origins of ROI were in the Manufacturing sector, where it’s simple to measure time and output. Next, to adopt the concept was the Banking industry where intense competition necessitated Innovation Management and with that the need to calculate ROI. ROI calculation is now a common feature in every industry and business function.</span></p><p><span style="font-size:12pt;"><a href="https://flevy.com/business-toolkit/employee-training">Employee Training</a> is part and parcel of workforce development. It necessitates spending a lot of effort and resources. Deliberating if the Training Program is going to be worth all the costs is a valid concern.</span></p><p><span style="font-size:12pt;">Return on Training Investment (ROTI) is the comparison between financial benefits obtained from a training program and the total cost of running that training program. The objective of ROTI analysis is to see whether the benefits outweigh the costs i.e., to establish if the investment was worthwhile.</span></p><p><span style="font-size:12pt;">ROTI calculation and analysis is significant when:</span></p><ul><li><span style="font-size:10pt;">Investment in a training program is viewed as a substantial outlay.</span></li><li><span style="font-size:10pt;">Attainment of explicit strategic or operational objectives is associated with the training program.</span></li><li><span style="font-size:10pt;">Financial benefits and their amount from the training program is ambiguous.</span></li></ul><p><span style="font-size:12pt;">ROTI can be calculated dependably so long as:</span></p><ul><li><span style="font-size:10pt;">Measurement data on changes in business performance, pertinent to training, is reliable or can be rationally estimated by those who matter.</span></li><li><span style="font-size:10pt;">Financial values can be assigned to the applicable performance measures.</span></li><li><span style="font-size:10pt;">Cost related to developing, delivering, and handling the training program can be classified.</span></li></ul><p><span style="font-size:12pt;">ROTI calculation involves selecting performance measures, gathering data on those measures as well as data on costs—both direct and indirect—related to training, and lastly calculating the Return On Training Investments.</span></p><p><span style="font-size:12pt;">Key steps in the ROTI calculation are:</span></p><ol><li><span style="font-size:10pt;">Choose the performance measures to use.</span></li><li><span style="font-size:10pt;">Gather data on changes.</span></li><li><span style="font-size:10pt;">Gather data on costs.</span></li><li><span style="font-size:10pt;">Calculate ROTI.</span></li></ol><p><span style="font-size:12pt;">There are 3 types of calculations that are relevant in ROTI analysis.</span></p><ol><li><span style="font-size:10pt;"><strong>ROTI as a percentage</strong></span></li><li><span style="font-size:10pt;"><strong>Benefit to Cost Ratio (BCR)</strong></span></li><li><span style="font-size:10pt;"><strong>Payback Period</strong></span></li></ol><p><span style="font-size:12pt;"><a href="https://flevy.com/browse/flevypro/return-on-training-investment-roti-5565"><img class="aligncenter size-full wp-image-8980" src="https://flevy.com/blog/wp-content/uploads/2021/03/Slide-Deck-image-ROTI.png" alt="" width="731" height="549" /></a></span></p><p><span style="font-size:12pt;">Let us delve a little deeper into the calculation methods.</span></p><h3><span style="font-size:12pt;"><strong>1. ROTI as a percentage</strong></span></h3><p><span style="font-size:12pt;">This calculation shows Net Training Benefits as a percentage of Training Cost. An outcome of 100% or more denotes that the Program has a Net Benefit after accounting for all the costs connected with running the program.</span></p><h3><span style="font-size:12pt;"><strong>2. Benefit : Cost Ratio (BCR)</strong></span></h3><p><span style="font-size:12pt;">This ratio divides Total Training Benefits by Total Training Costs. When BCR is greater than 1, the benefits exceed the costs and the program is judged a success. When BCR is less than 1, the costs surpass the benefits and signify that enhancements or alterations are needed to warrant the continuation of the program.</span></p><h3><span style="font-size:12pt;"><strong>3. Payback Period</strong></span></h3><p><span style="font-size:12pt;">This calculation exhibits the time in which the Training Investment will be paid back i.e., when the costs equal the benefits. The calculation is usually done in terms of months.</span></p><p><span style="font-size:12pt;">Monthly Training Benefits are calculated by dividing Total Training Benefits over 12 months.</span></p><p><span style="font-size:12pt;">It is pertinent to note that although ROTI analysis is important in evaluating a training program, merely a ROTI calculation will not typically be adequate to make the business case for a Training Program or influence top management to act. Sometimes we have to consider non-monetary benefits of training, such as a change in attitude. When monetary and non-monetary benefits are combined, these supplement Performance Management resulting in benefits such as reduced absenteeism, lower turnover rates, and more promotions from within.</span></p><p><span style="font-size:12pt;">Interested in learning more about <a href="https://flevy.com/browse/flevypro/return-on-training-investment-roti-5565">Return on Training Investment</a>? You can download <a href="https://flevy.com/browse/flevypro/return-on-training-investment-roti-5565">an editable PowerPoint on <strong>Return On Training Investment</strong> <strong>(ROTI)</strong> here</a><u> </u>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</span></p><h3><span style="font-size:12pt;"><strong>Want to Achieve Excellence in Human Resource Management (HRM)?</strong></span></h3><p><span style="font-size:12pt;">Gain the knowledge and develop the expertise to become an expert in Human Resource Management (HRM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. <a href="https://flevy.com/browse/stream/human-resources">Click here for full details.</a></span></p><p><span style="font-size:12pt;">The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively. </span></p><p><span style="font-size:12pt;">This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization's Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage. </span></p><p><span style="font-size:12pt;">This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.</span></p><p><span style="font-size:12pt;"><a href="https://flevy.com/browse/stream/human-resources">Learn about our <strong>Human Resource Management (HRM) Best Practice Frameworks</strong> here.</a></span></p><h3><span style="font-size:12pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p><span style="font-size:12pt;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</span></p><blockquote><p><span style="font-size:12pt;">“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</span></p><p><span style="font-size:12pt;">– Bill Branson, Founder at Strategic Business Architects</span></p></blockquote><blockquote><p><span style="font-size:12pt;">“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</span></p><p><span style="font-size:12pt;">– David Coloma, Consulting Area Manager at Cynertia Consulting</span></p></blockquote><blockquote><p><span style="font-size:12pt;">“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</span></p><p><span style="font-size:12pt;">– Roderick Cameron, Founding Partner at SGFE Ltd</span></p></blockquote></div></div>Successful Business Transformation—5 Critical Success Factorshttps://globalriskcommunity.com/profiles/blogs/successful-business-transformation-5-critical-success-factors2021-04-02T08:30:00.000Z2021-04-02T08:30:00.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><span style="font-size:10pt;"><a href="https://flevy.com/browse/flevypro/business-transformation-success-factors-5561"><img class="alignright size-medium wp-image-1846 align-right" src="http://powerpointing-templates.com/wp-content/uploads/2021/03/Stock-Image-2-Business-Transfromation-CSFs-200x300.jpg" alt="Stock Image 2 - Business Transfromation CSFs" width="200" height="300" /></a>Business Transformations have become a necessity in the fast-changing technological and competitive business environment. Transformation is characterized by significant and risk-laden <a href="https://flevy.com/business-toolkit/restructuring">Restructuring</a> of a company, with the objective of accomplishing Operational Excellence and changing its future course.</span></p><p><span style="font-size:10pt;">Business Transformation is a priority for many top executives but it is usually a reaction to challenging circumstances rather than being a preemptive measure.</span></p><p><span style="font-size:10pt;">Business Transformation is prompted by a combination of 2 situations:</span></p><ul><li><span style="font-size:10pt;">Need to address inherent problems causing organizational drag—these problems may be internal and/or external.</span></li><li><span style="font-size:10pt;">Aspiration by the top management and other senior stakeholders to seize the occasion of addressing these problems, in ways that deeply alter the Business Model of the organization including Value Creation.</span></li></ul><p><span style="font-size:10pt;">Business Transformation entails not just making incremental changes but fundamentally changing all or some of the following:</span></p><ul><li><span style="font-size:10pt;">Organizational Structure</span></li><li><span style="font-size:10pt;">Core Product or Service Portfolio</span></li><li><span style="font-size:10pt;">Systems</span></li><li><span style="font-size:10pt;">Processes</span></li><li><span style="font-size:10pt;">People—the way employees work</span></li><li><span style="font-size:10pt;">Technology</span></li></ul><p><span style="font-size:10pt;">Undertaking such arduous effort requires approaching the task in a structured way. Research shows that quite a few of such undertakings are based on anecdotal beliefs instead of being based on empirical data.</span></p><p><span style="font-size:10pt;">Countering this trend, the Boston Consulting Group conducted an empirical study of financial and non-financial data-set comprising 300 U.S. public companies. The data spanned a period of 12 years from 2004 to 2016. Selection was based on the following criteria:</span></p><ul><li><span style="font-size:10pt;">Companies that had a $10 billion or more market capitalization between 2004 and 2016.</span></li><li><span style="font-size:10pt;">Of these, companies with an annualized deterioration in <a href="https://flevy.com/business-toolkit/total-shareholder-value">Total Share-holder Return (TSR)</a> of 10% or more relative to their industry average (2 years running or more) were identified.</span></li></ul><p><span style="font-size:10pt;">Based on extensive analysis—that included use of methodologies like trained proprietary algorithms, prediction models, and Multivariate Regression Analysis—a pattern pertaining to Business Transformation emerged. The pattern depicted the following themes:</span></p><ol><li><span style="font-size:10pt;">Frequency of Failure</span></li><li><span style="font-size:10pt;">Impact of Digital Disruption</span></li><li><span style="font-size:10pt;">Impact of Downturn</span></li><li><span style="font-size:10pt;">Competitive Volatility</span></li></ol><p><span style="font-size:10pt;">The study also suggested the following 5 evidence-based <a href="https://flevy.com/business-toolkit/critical-success-factors">Critical Success Factors (CSFs)</a> for achieving Transformation Success.</span></p><ol><li><span style="font-size:10pt;">Cost Management (drives short-term success)</span></li><li><span style="font-size:10pt;">Revenue Growth (drives long-term success)</span></li><li><span style="font-size:10pt;">Long-term Strategy and R&D Investment</span></li><li><span style="font-size:10pt;">New, External Leadership</span></li><li><span style="font-size:10pt;">Holistic Transformation Programs</span></li></ol><p style="text-align:center;"><span style="font-size:10pt;"><a href="https://flevy.com/browse/flevypro/business-transformation-success-factors-5561"><img class="aligncenter" src="https://flevy.com/blog/wp-content/uploads/2021/03/Slide-deck-image-Business-Transformation-CSFs.png" alt="" width="678" height="561" /></a></span></p><p><span style="font-size:10pt;">Let us examine in a bit more detail some of the CSFs.</span></p><h3><span style="font-size:12pt;"><strong>Cost Management</strong></span></h3><p><span style="font-size:10pt;">In order to launch the Transformation effort on the correct footing, <a href="https://flevy.com/business-toolkit/cost-management">Cost Management</a> is key, in the short term especially. Predictably, empirical analysis suggests that the leading driver for organizations recovering from severe TSR deterioration is a determined Cost-cutting effort during the 1st year of Turnaround. By year 3, Cost Reduction is accountable for the major share of TSR growth as companies divert their portfolios and make available funding for growth investments.</span></p><h3><span style="font-size:12pt;"><strong>Revenue Growth</strong></span></h3><p><span style="font-size:10pt;">Merely short-term operational improvements do not augur well for a sustainable Transformation. There has to be a long-term <a href="https://flevy.com/business-toolkit/growth-strategy-growth">Growth Strategy</a> put in place. For this to happen, leaders have to challenge the foundations of the company’s Business Model.</span></p><p><span style="font-size:10pt;">Research divulges that Revenue Growth progressively becomes the driver for TSR recovery after year 1 in all the successful Transformation efforts. Revenue Growth overshadows, by far, all the initial drivers for TSR recovery by year 5 of all successful Turnaround efforts.</span></p><h3><span style="font-size:12pt;"><strong>Long-term Strategy and R&D Investment</strong></span></h3><p><span style="font-size:10pt;">Turbulent competitive environments, particularly, require long-term Strategic Planning and investment in Research and Development for fruitful Business Transformations. Empirical research and analysis demonstrates:</span></p><ul><li><span style="font-size:10pt;">A 4.8% difference between Transforming companies showing above-average long-term strategic direction compared to companies with a below-average orientation.</span></li><li><span style="font-size:10pt;">More pronounced findings in transforming companies operating in turbulent competitive environments—long-term orientation linked with a TSR increase of 7%.</span></li><li><span style="font-size:10pt;">Companies with above-average R&D investments had upwards of 5.1% TSR impact in contrast to those with below-average spending.</span></li></ul><p><span style="font-size:10pt;">These CSFs strengthen the odds of success in Business Transformation individually. When used together, most of them produce an impact that is larger than the totality of their individual parts.</span></p><p><span style="font-size:10pt;">Interested in learning more about the <a href="https://flevy.com/browse/flevypro/business-transformation-success-factors-5561">5 Critical Success Factors for Successful Business Transformation</a>? You can download <a href="https://flevy.com/browse/flevypro/business-transformation-success-factors-5561">an editable PowerPoint on 5 Critical Success Factors for Successful Business Transformation here </a>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</span></p><h3><span style="font-size:12pt;"><strong>Want to Achieve Excellence in Business Transformation?</strong></span></h3><p><span style="font-size:10pt;">Gain the knowledge and develop the expertise to become an expert in Business Transformation. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. <a href="https://flevy.com/browse/stream/transformation">Click here for full details.</a></span></p><p><span style="font-size:10pt;">"If you don't transform your company, you're stuck." - Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox</span></p><p><span style="font-size:10pt;">Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.</span></p><p><span style="font-size:10pt;">Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.</span></p><p><span style="font-size:10pt;">Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing "Transformation Traps."</span></p><p><span style="font-size:10pt;"><a href="https://flevy.com/browse/stream/transformation">Learn about our <strong>Business Transformation Best Practice Frameworks</strong> here.</a></span></p><h3><span style="font-size:12pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p><span style="font-size:10pt;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</span></p><blockquote><p><span style="font-size:10pt;">“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</span></p><p><span style="font-size:10pt;">– Bill Branson, Founder at Strategic Business Architects</span></p></blockquote><blockquote><p><span style="font-size:10pt;">“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</span></p><p><span style="font-size:10pt;">– David Coloma, Consulting Area Manager at Cynertia Consulting</span></p></blockquote><blockquote><p><span style="font-size:10pt;">“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</span></p><p><span style="font-size:10pt;">– Roderick Cameron, Founding Partner at SGFE Ltd</span></p></blockquote></div>5 Focus Areas of Purposehttps://globalriskcommunity.com/profiles/blogs/5-focus-areas-of-purpose2021-01-16T07:53:39.000Z2021-01-16T07:53:39.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><a href="{{#staticFileLink}}8428721669,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}8428721669,RESIZE_400x{{/staticFileLink}}" alt="8428721669?profile=RESIZE_400x" width="291" height="191" /></a>Most of us have experienced a uniqueness in some organizations.<strong> </strong>These organizations stand out, exude fervor and zeal. Their customers are pleased with the Customer Centric Design of the company, <a href="https://flevy.com/business-toolkit/employee-engagement">Employee Engagement</a> is high, and investors and shareholders take pride in being part of it. It is not their exceptional product or service that is the base of Value Creation rather the <a href="https://flevy.com/business-toolkit/purpose">Purpose</a> that makes organizations unique—their reason for existence and the resulting impact it makes on the world.</p><p>Stakeholders identify with organizations that genuinely follow their Purpose. Leadership allocates resources in-line with the Purpose. Employees keep the Purpose front and center while making decisions for the company. On the other hand, in-genuine Purpose may harm the reputation of the company by turning away the stakeholders.</p><p>In order to be genuine, Purpose has to be embedded in the company’s DNA, which is no mean task. The “5 Ps of Purpose Framework” shows how this can be successfully achieved. The 5 Ps Framework identifies 5 areas of focus:</p><ol><li><strong>Product Portfolio Strategy</strong></li><li><strong>People & Culture</strong></li><li><strong>Processes & Systems</strong></li><li><strong>Performance Metrics</strong></li><li><strong>Positions & Engagement</strong></li></ol><p><a href="https://flevy.com/browse/flevypro/5-ps-of-purpose-5454"><img class="aligncenter size-full wp-image-8396" src="https://flevy.com/blog/wp-content/uploads/2021/01/Slidedeck-image-5-Ps-of-Purpose.png" alt="" width="686" height="515" /></a></p><p>There are numerous benefits to transforming into a Purpose-driven Organization. The 5 Ps Framework contributes to unlocking the sources of value for the company and detect points of weakness. Purpose can pay lots of dividends, but it has to be authentic and imbued in the organization’s business model.</p><p>Let us delve a little deeper into the first P of the 5 Ps of Purpose.</p><h3><span style="font-size:12pt;"><strong>Product Portfolio Strategy</strong></span></h3><p>An organization’s Product / Service offerings and the associated modalities of market and position planning that best cater to the target market ought to imbibe the Purpose of the company in order to appeal to the stakeholders.</p><p>The 1<sup>st</sup> step for achieving this objective has to be the alignment of business portfolio with the company’s Purpose–i.e. we need to integrate Purpose with our <a href="https://flevy.com/business-toolkit/portfolio-strategy">Portfolio Strategy</a>. Companies already in existence may not be able to start afresh but they can surely reshape their business mix in a dynamic and resolute manner.</p><p>In step 2, the business portfolios are filled out with Products or Services that match the Purpose, and the ones that do not are rooted out. Certain key actions are needed to embed Purpose into the Product or Service offering, they include:</p><ul><li>Rethinking product portfolio — for example pulling out certain products, launching new products.</li><li>Modifying pricing in line with Purpose.</li><li>Re-evaluating portfolio and testing rationale of individual assets in light of common criteria.</li></ul><p>A case example is an energy company in the extractive industries, founded 85 years ago, which has proved successfully that Purpose can be reinvented. Being in the extractive business for such a long time has not restricted the company from reexploring what an energy company may look like in the transforming environment of the future.</p><p>The company has significantly transformed its Purpose — “reimagining energy for people and planet.” In line with its Purpose, the company has divested from its petrochemicals businesses and plans to reduce its legacy oil and gas business by 40% by the year 2030. The company will instead augment its low-carbon energy businesses such as bioenergy, hydrogen, electric vehicle charging businesses, and aims to be a net-zero carbon emitter by the year 2050.</p><p>Interested in learning more about <a href="https://flevy.com/browse/flevypro/5-ps-of-purpose-5454">5 Ps of Purpose Framework</a>? You can download <a href="https://flevy.com/browse/flevypro/5-ps-of-purpose-5454">an editable PowerPoint on <strong>5 Ps of Purpose</strong> here </a>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</p><h3><span style="font-size:12pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</p><p>– Roderick Cameron, Founding Partner at SGFE Ltd</p></blockquote></div>