In this blog we talk about six key things to keep in mind when you build a value management culture.
Before we get started, we need to backtrack a bit and ask a not so clear question – what is business value?
Because, before we can think about a business value culture and how and why to build one, we need to know the meaning of business value. Business value providers will all have their own idea of what business value means —but basically, all the easily measurable and not so easily measurable benefits of a business get added up, and they give you the business value. It is the total of all the quantitative and qualitative parts (including monetary assets) that a business gets value from. This total value used to be thought of as the profit: how much the benefits of a business are worth to stakeholders. But business value today is much more of a trade-off between the goals and wants of an organisation’s stakeholders and the organisation having the resources to meet them.
So, next we can ask – what is value management?
Value management has become more and more popular in recent years. It is based on a company’s actions, activities, processes and behaviours that carry sustainable value. Value management is about knowing what carries value and using this to support working practice. It is about improving these values and sustainability. And it’s not just about how these benefit the company but society too. It is about weighing up the goals of stakeholders with the abilities of the business to meet them. Great value management results in a successful and lasting value management culture.
Why do you need to build a value management culture?
In recent years, digital transformation has put technology on the podium for strategic corporate investments. We talked about this in our earlier post “5 ways to grow your average deal size with value management”. When business value used to be thought of as the profit for shareholders, the role of employees was to push themselves to their highest abilities to get the highest rewards.1 Sometimes this was a lot of output for not great results.
In the last few years, more and more companies have been adopting a change management approach to develop a value management culture. Why? – because with a value management culture greater levels of team efficiency are achieved when employees are fully engaged in company processes. And in this world of digital transformation, our efficiency is everything!
Businesses are now finding value when they take action to boost employees’ skills and productivity. With a value management culture employees’ values are in line with the core business values and goals. Employees can work in more relevant roles and projects, where they can develop natural skill. This means team output can increase because individual employee output is not completely drained.
So, a value management culture not only increases efficiency, but it also provides the environment to grow employee skills, reliability, satisfaction and knowledge. And with efficient employees company performance is better and customer satisfaction is increased.
So, what does building a value management culture require?
Companies’ activities are mainly based on their relationships with third parties: customers, partners and citizens. It is the business value impact on these third parties that is the core of your value culture.
A value culture gives you control of the value in third parties. But to get control of this you need to get to know your customers, partners and citizens. Your interactions with third parties need to be effective and understanding. And today, you also need to be omnichannel.
Building a value management culture means making some changes. Some of these will be easier than others but there are a few factors or “axes” here to think about:
- People change management
- Performance measurement and improvement
- Environment management
- Technology capabilities
Here’s an illustration to show these axes in a bit more detail, but we will talk about them again later too.
Developing a value management culture will also bring brand new challenges:
Which approach is most effective for you to take?
How do you know which processes are most relevant?
Should your employees be involved in any decision-making processes? And which ones?
Here are six key pointers that helped us to create our successful value management culture at TVST:
1. Make sure that you have great management and support
How involved are your company leaders?
A companies’ leaders need to support the idea of a value management culture, to create successful practice. Swapping from a more traditional management approach isn’t always easy. With this more sustainable management approach, where the goal is to realise the value of people, processes, environment and technology in a holistic way, executive leadership and guidance should be the top priority. If your company leaders are confident in the change to a business value approach and are able to guide the way, everyone else will follow. The involvement needs to come from the top down to successfully base the company culture on business value
2. Find the right people and identify your value team
The first question to think about here is – do you have the best people in the roles that are right for them and for your business? Your sales team need to enjoy business value. You need promoters who know the real power of value measures and value improvements.
– People change management
Thinking about bringing a value culture into an organisation can be scary. But when its broken down into actions it becomes much simpler. The big step here is change management. Get the backing of your people – your stakeholders. Literally, people change management. You need to make sure that all managers are promoters of the value management culture, from sales to recruitment and talent. Companywide, your people need business value skills and knowledge. With change management and skilled people in charge of onboarding and training you can make sure of that.
When it comes from the top-down, the value culture will filter through the whole company. But it is also the core of employees’ onboarding, training and development. Your employees must know how value is found in different business processes to sell the value benefits. Then they can show your stakeholders how relevant value management is, how efficient your methodology is and how it will improve the company performance, as well as employees’ involvement and customer satisfaction. And they can apply this value selling to customers too. All your people must be able to sell your products to customers based on the value it can bring them.
Look out for more on this in our next post!
3. Begin the “selling” process
As we just mentioned, it is key to have a team that can show your customers and stakeholders how and why value management is so important. Can your value selling team show how value management can improve deal conversion rate, deal size, or reduce sales cycle time? Your sales team really need to know and believe in value selling. And to fully convince your customers your sales team must be able to show the actual value (numerical data) for any of the chosen KPIs. Here is where the training gets put into practice.
It is a company’s goals that will help you to sell value. What does the company you are selling to want to achieve? Companies worldwide will all have some financial and some nonfinancial goals. Some examples of financial goals are return of investment or sales. For nonfinancial goals companies could measure their customer and employee satisfaction, product innovation or providers’ involvement. These goals will provide business value measures and guide the value selling process. The rewards will come easily when you can show your stakeholders and customers all the great benefits of applying value management across their businesses. When you have the best value measures for people, processes, technology and the environment, they will be really easy to explain.
Here’s some examples of value measures: “improve customer care and attention”, by reducing “handling call time”, or “increase sales” by increasing the “number of sales per salespeople”. These measures can apply across many business areas.
To start the selling process successfully, your sales team need to build a great rapport with customers, by really understanding their business needs. Customers also want omnichannel services. For you to be there in a single view – accessible through whichever channel they prefer. Omnichannel services will grow your engagement.
4. Know the core processes and key business KPIs
When you create a value culture you realise it’s all about following clear processes, measuring those processes and evaluating the impacts they have on the business indicators, using business KPIs. The key thing here is to find the core KPIs. The core KPIs will match with the company’s strategic business targets or the stakeholders’ goals. For finding the core KPIs a top-down methodology is best. There are several methods that you can use to gain the knowledge you need from customers and stakeholders.3
At the heart of business value management is value. Without the right measures to evaluate business value it is impossible to work it out. Business value KPIs measure the impacts of business processes. These KPIs are centred on operational performance, and they give measures on which to base continuous improvements. With these measures you can easily identify what is getting better or worse. And then, you can see where to improve to reach your performance goals. (Read more about KPIs and benchmarks in our earlier posts if you missed them!
5. Ensure continuous improvement
With performance measurements it is easy to keep getting better. Comparing business value KPIs with standard KPIs, gives a measure of how well you are doing. For company goals and in relation to competitors/industry. Knowing how well you are doing, brings many obvious advantages but without the right measures it is difficult to know where you could improve.
To set out exactly how you are going to measure your progress, you’ll need aclear plan.
Business value KPIs are worked out based on measurable indicators. Every progress review, you need to take new measurements of these KPIs. When you compare new measurements to earlier ones you will be able to see if the change is positive, or if adjustments are needed. With this method you can measure ongoing improvements. It is important to make sure that continuous improvements are based on the core value measurements, and to do this the business KPIs need to be identified and applied across all axes right from the beginning.
In last week’s post, we discussed the importance of proof. By measuring improvements all through the process, you will have the proof you need to see that your strategies are working. Having great value measures makes it easy to better your performance and results.
6. Consider all the axes: people, processes, the environment and technology
We mentioned already the importance of people and processes. When you can inspire and involve your employees you will get positive business results. By listening to the great ideas coming from employees, you will offer more work satisfaction and organisational efficiency improvements.4 It is however important for these ideas to be measurable and for them to positively affect your business value KPIs.
Industry rules and environmental impacts are so important when you are working out your business value and building a value management culture. Because, flouting any of these rules, like bad application of GDPR, risk of data breach, legal issues with contracts and normative, etc., could lead you to big penalties.
Also, the value impacts of environmental factors are really important. Here, it is necessary to think about how to proceed with factors like market competition, governments and legal compliance.
Your connections with these factors will direct the KPIs you select. Making improvements for environmental factors can quickly increase revenue: through cost reductions and less tangible but important risk minimisations and long-term stakeholder satisfaction and attachment, for example.5
-Technology with technology capabilities
The impacts of technology across all areas of the business needs to be assessed, before and after introducing it. Technology is a huge part of value management culture. It is the glue. The magic of digital transformation is possible through technology. But technology by itself, is just the tool. You need to ensure digital capabilities in your people, processes and the environment, and then IT technologies will bond all your organisational parts together. You need the best resources and skills matched with the right technology. The right technology will support you to empower and retain the perfect people and measure business performance. It will also enable a dynamic, compliant, and accurate relationship with the environment.
To conclude, to be successful business value needs to be sustainable. Technology brings many advantages paired with great capabilities and a business value approach. Great technologies and talented people make digital transformation happen. And the key factors of an effective digital transformation are people, processes, technology and the environment.
Thank you! If you enjoyed our post, feel free to share on your social networks – and if you have any comments or questions please get in touch: www.valuesearchteam.com.