Value Flow CVA, as our name suggests, has always been focused on 'value' and management's ability to create 'value' for the business.
Mobile Operators Mobile operators are today at a crossroads; caught between a future as a service provider and an access provider.
Japan's Global Engagement CVA has provided this area as a resource for those interested in Japanese business and its relationship to the rest of the world.
Sustainable Growth CVA understands that sustainability is not just a risk management issue, but also a potential source of value creation and strategic advantage.
By Paul-André Rabate Founding and Managing Partner, London
CVA, as our name suggests, has always been focused on 'value' and management's ability to create 'value' for the business.
In recent years, this is a theme that has been picked up by many commentators and a multitude of indicators have been introduced such as EVA (Economic Value Added), CVA (Cash Value Added) and TSR (Total Shareholder Return).
While we welcome this focus on 'Value' Based Management, we have some concerns with how it is being applied.
Firstly, we see that the practice is often reduced to the development of "indicators" and then the subsequent management of these parameters, rather than the management of the people that constitute the business. Secondly, we have observed that businesses have drifted away from delivering 'value' to all stakeholders to an almost obsessive focus on delivering 'value' to shareholders alone.
The fundamental principle of CVA's approach to Value Flow is that 'value' is created at the customer/ client level. To be effective and sustainable, however, that 'value' must reach all stakeholders of a business. This includes not only shareholders, but also the customer/ client, employees, partners (especially suppliers) and the community at large. Thus it is management's responsibility to direct this flow of 'value' and maintain the delicate balance between often competing interests of the various stakeholders. The ultimate aim being the commonwealth or general good, of all vested interests.
Maintaining this balance requires continuous and subtle trade-offs that distribute the 'value' between the various stakeholders. To do this effectively, management needs to understand the 'value' proposition the company is offering to each of those stakeholders. This encompasses the range of compelling reasons why the stakeholder would want to be connected with the company rather than with its competitors.
Why would the customer/ client buy from this company rather than its competitors?
Why would the shareholder choose to invest funds in this company rather than its competitors?
Why would the employee give their time and enthusiasm to this company rather than another?
Why would the wider community give their approval and support to this company rather than another?
Why would the partner/ supplier make more of an effort with this company rather than another?
The trick for management is to ensure these 'value' propositions are mutually compatible while appealing to each stakeholder. And they must stand the test of time. Management cannot simply be reduced to a tactical game between stakeholders. Rather, these 'value' propositions must set the course for the business and management must ensure that the gap between what is promised and what is delivered is minimal.
CVA has spent nearly 20 years working with our clients to develop, implement and manage these 'value' propositions for the various stakeholders. Whether it has been in our CCVE® work that focuses on segmenting the customer/ client base and developing offers that maximise 'value' created for the client while ensuring the business retains a "reasonable" share. Or, as part of our Group Optimisation work where we have helped organisations to develop a proposition for the shareholder that clearly states the opportunities, risks, specific volatility of returns, sector-based and technological competencies, ethical promises, etc so that they can target specific segments of shareholders. Or, in our Strategic Sourcing work where we focus on developing a proposition for the partner/ supplier that recognises the interdependency of the two businesses and the need to develop relationships that deliver 'value' to both parties - not just contracts.
Through all our work we have sought to address this most important issue of Value Flow and endeavoured to help our clients, like a conductor, draw all the competing voices together and create a harmonious team.
