Business Value Architecture

Understanding and objectivity start with a methodical approach. A structured diagnostic activity lifts the lid on the formal and informal mechanisms that businesses use in pursuit of business value creation, identifying practices that are effective and should be retained, and exposing other practices that create obstacles or dilute the value creation potential. The diagnostic activity is a short-format project that systematically reviews an organization’s current strategy and approaches to creating business value, including programs, projects, and initiatives intended to achieve priority outcomes. The diagnostic assesses focus, comprehensiveness, and efficacy of the organization’s strategy and activities, while also identifying gaps and recommending associated remedies.

• Have we comprehensively identified the set of core initiatives that our business uses to generate business value?
• Do all of our key initiatives truly reflect our highest priorities for the business?
• To what degree are non-priority and “shadow” initiatives diluting the focus of our teams, and what are the implications for our business agility and economics?
• How effective are we at generating tangible business value from our core initiatives, and are we underperforming vs. our true potential?
• What logical value creation opportunities have we neglected to consider?

The Business Value Architecture serves as a blueprint for value creation, but doesn’t substitute for focused, disciplined action to generate that value. Establishing a Center of Excellence (CoE) formalizes and operationalizes value creation efforts for the business, increasing the probability that these efforts will be successful. A CoE can help the business align organization-wide efforts around an agreed charter, execute defined activities at a rhythmic cadence, conduct activities in accordance with disciplined governance mechanisms, and measure progress and outcomes objectively.

• How can we most effectively manage our portfolio of value creation activities for maximum ROI? 
• What is the right balance to strike between driving consensus and encouraging debate, and how can we most effectively manage this dynamic? 
• What techniques can we apply to focus, streamline, and accelerate value creation activities across the business? 
• How can we create and maintain meaningful engagement from our key stakeholders as we shape and execute our value creation plans? 
• Are we capturing the full-potential value from our key initiatives, and if not, how can a CoE help us close the gap?

The leadership team has defined the strategy, validated it, and outlined a series of initiatives to generate business value based on it. At this point, the task at hand… and the challenge… is to effectively manage the work activities associated with each initiative. The success or failure of value creation initiatives often comes down to a combination of program management and change management. With the right information, training, and incentives, individuals and teams know what to do and how to do it effectively in support of the business’ value creation goals. But sometimes, change efforts expose variations in skill sets, incentive misalignment, communications challenges, conflicting political agendas, and other factors that create a gap between the strategy at the top and the execution across the organization.

• Does top-down messaging create behaviors consistent with the strategic intent of the value creation initiatives, or does the messaging become distorted, like a game of “telephone”? 
• Are organizational incentives properly aligned with targeted business outcomes? 
• Is our market-facing content (marketing, sales, customer service) consistent with our internal training content? 
• How can we structure and execute a communications strategy to maximize stakeholder understanding and adoption?

Quantifying the tangible value that strategies, initiatives, projects, investments, and key decisions generate for the business is essential for gauging the efficacy of those plans and activities. Linking strategic plans and organizational work activities to numerical measurements – such as ROI, ROIC, and EV – supports valuation activities, scenario modeling, and decision making. Whether for preliminary planning and forecasting, in-progress assessment and management, or after-the-fact analysis, assigning value to plans, work activities, and investments allows the business to proceed with confidence, know if it has achieved its objectives, and inform the path ahead. 

• How can we discern which specific initiatives – and specific work activities within them – drive the most and least value? 
• How can we use business value architecture approaches to logically prioritize resource allocation based on valuation impact?
• What does dynamic scenario modeling across our strategic initiatives imply for the future value of our business? 
• Does our current set of core business initiatives allow us to meet or exceed our cost of capital and achieve competitive returns vs. our industry peers? 
• How would not undertaking a prospective strategy or business initiative adversely impact our market capitalization?