Driving value creation
Jo Hands writes all about driving value creation. Value creation is a word that’s used a lot, but what does it mean? Creating value - customer, consumer and financial. When a company buys a business, they focus on value creation. The business case assumes that there is value to create. This value can be created by pulling either strategic or operational levers.
Value creation is a word that’s used a lot, but what does it mean? Creating value - customer, consumer and financial. When a company buys a business, they focus on value creation. The business case assumes that there is value to create.
Value can be created by pulling either strategic or operational levers:
Mergers and Acquisitions: Buy-and-build deals are where a Private Equity firm buys a company and aims to enhances that platform through add-on acquisitions.
Strategic Pricing: Strategic pricing incorporates best pricing practices and ensures that your pricing strategies, analytics and processes complement your business strategy. A product’s price is based on the value to the customer, or on competitive strategy, rather than on the cost of production. By creating strategic pricing policies, analytics, and processes, you can directly capture customer value and translate to shareholder value.
Distribution Strategy: Distribution strategy is a plan to make a product or a service available to the target customers through its supply chain - to make sure the it can reach the maximum potential customers at minimal or optimal distribution costs. A good distribution strategy can maximise your revenue and profits.
Geographic Expansion: With access to new markets, a business has the potential to build a new customer base.
Product Strategy: A product strategy outlines the desired outcomes to be achieved by the product including the end-to-end vision, and how it supports the company’s strategic objectives. The product strategy is brought to life through the product road map and can be used to support any tactical decisions that the company needs to make.
Product Innovation: Product innovation represents a new way of solving a problem a high number of consumers have:
There are no products on the market that address the problem statement - unexplored market spaces could potentially generate high profits or;
There may be other products on the market that address the problem but in a different way to your innovative solution
Digital Transformation: Digital transformation is the use of technology — software enabled, connected, transactions, and interactions, across all areas of a business. The goal of digital transformation is disrupting existing business models, improving customer experience, and creating operational efficiency to drive economic value creation.
Customer Segmentation: the benefits of customer segmentation include focus, competitiveness, expansion, retention, communications effectiveness and profitability.
Aftermarket Service Strategy: The concept of aftermarket service is as important as sales, the saying “it takes years to build a reputation but just moments to ruin it” addresses the importance of keeping a customer happy and satisfied. Aftermarket service does not generate any revenue for the company, but it increases the goodwill in the market and amongst the customers.
Data Strategy: Data strategy is a central, integrated concept that articulates how data will enable and inspire business strategy.
Pricing Optimisation: Price optimisation is the practice of using data from customers and the market to find the most effective price point for a product or service that maximizes value for customers and sales or profit for the company.
Sales Force Effectiveness: Sales force effectiveness is driven by the decisions, processes, systems and programmes that sales leaders are accountable. By managing sales force effectiveness drivers, companies can build high-quality sales teams that better meet customer needs, increase productivity and successful conversion, and consequently result in improved turnover and EBITDA margins.
Procurement & Managing Suppliers: Smart procurement practices are fundamental for companies across all industries to optimise operational efficiencies and improving EBITDA margin.
Product Portfolio Optimisation: Product portfolio optimisation helps managers assess their products’ current level of success - it provides a centralized view of an entire suite of products against the prevailing marketplace for those products. Effective product portfolio optimisation highlights future opportunities for improved resource allocation, greater returns, growth and profit, and reveals products that are generating a negative contribution.
Operational Efficiencies: Operational efficiency refers to a company’s ability to reduce waste in time, effort and materials as much as possible, while still producing a high-quality service or product. Financially, operational efficiency is the ratio between the input required to keep the company going and the output it provides. When improving operational efficiency, the output to input ratio improves. The greater the operational efficiency, the more profitable a company becomes as it can generate greater income or returns for the same or lower cost.
Cost to Serve: Cost to Serve focuses on aggregate analyses around a blend of cost drivers. The analysis exposes the variation in customer demands for different activities and has a different cost profile. Without understanding the cost to serve a customer, a company is unable to determine the value that customer is contributing to their business.
The value levers are a great way of prioritising what's important.
The levers that drive the biggest value result in an improved performance that leads to greater valuation.
If you are:
1. Getting your business ready for sale
Executing initiatives that drive value and can be in the run rate results will result in a higher sale price
2. Buying a business.
Your investment case is critical to drive the appropriate acquisition price. This will also drive what transformation program looks like once the business has been bought to ensure the business case is achieved/exceeded
3. Running your own business.
Driving value is what you do everyday but sometimes it's easy to miss the levers to pull to achieve the greatest success.
At any point of a business lifecycle it's imperative that driving value is something you focus on to drive consistent and stable earnings with a positive trend.
Article by Jo Hands, Co-Founder Whiteark
Looking for more support? Download our Private Equity Playbook for the ultimate guide to value creation.
Looking to create value in your organisation? Let us help.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business.
Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Simplicity
Jo Hands is talking about simplicity. It's a theme for 2021... Companies want to drive simplicity, and many CEOs we are talking to consider this to be a key area of focus. As companies grow, shrink and change, they find themselves more complex. But where does it come from? Ultimately complexity is driven by core business functions: process, policy, systems, operating models, and is fuelled further by unclear decision-making.
It's a theme for 2021. Companies want to drive simplicity, and many CEOs we are talking to consider this to be a key area of focus. Let’s explore why…
As companies grow, shrink and change, they find themselves more complex. But where does it come from? Ultimately complexity is driven by core business functions: process, policy, systems, operating models, and is fuelled further by unclear decision-making.
Complexity costs companies’ both money and time – and probably more than you would think. On average, complexity costs companies 23% of their cost base.
So, given its impact, it makes sense that a key area of focus is to reduce complexity. But how do companies do this successfully?
“Simplicity (noun) is defined as “the quality or condition of being easy to understand or do.” And “the quality or condition of being plain or uncomplicated in form or design.””
The five key steps to reduce complexity in your business:
Ask senior leaders to write a list of roadblocks in the organisation
Ask staff to ask it they could change one process in the company what would it be
Identity themes (4-5) that would reduce complexity
Identify measures of complexity for 4-5 items and targets to drive simplicity
Start a program of work endorsed by the CEO around driving changes in 4/5 items and celebrate success
It helps to put things in context, so here are some key areas where we have seen improved simplicity that has directly created a financial benefit:
Remove unprofitable customers - reprice or remove
Remove Unprofitable products - stop selling
Remove number products in offering (do we neatly need 214 staplers?)
Clear delegations driving improved and timely decision making
Bill / billing process
Simplicity is an overused term and not many companies do this well. Ask yourself, is it time to spring clean the cupboards in your business? To remove the clutter, simplify the way you work and operate in order to drive a better customer experience and improved financial outcomes…
Remember the secret is to take a non-emotive view of things - no sacred cows!!
At Whiteark we love helping companies simplify through the 5 Step approach. The impact is beneficial for customers, employees and shareholders alike.
Download our free guide below to help you analyse your business processes and get started…
James Ciuffetelli and Jo Hands have practical experience in helping companies implement change around simplification, and we have seen the benefits this provided first hand. Get in touch for a no obligation conversation about how you can strategically simplify your business.
Browse more articles about change and transformation.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
Measure what matters
Jo Hands explains why you need to measure what matters. So much data, so many reports means we’re not sure what we should measure; inactivity of red metrics… Metrics not measured against targets. Targets are soft. There are all issues that we hear from our clients.
So much data, so many reports means we’re not sure what we should measure; inactivity of red metrics… Metrics not measured against targets. Targets are soft. There are all issues that we hear from our clients.
It sounds simple - and it is - but measure what matters.
Be clear on strategy, priorities and key lead indicators for the business. One report with key metrics versus targets and an agreed plan where metrics are not on track.
Here’s how I work out key metrics:
Start with a driver tree of what key elements drive value
Pick top metrics - no more than 15 than it off work impact the results
Ensure there is clear accountabilities of metrics - which executive is responsible?
The report should go out each week with key call outs, and - if over a 4 week period - the metrics are off base, then a remediation plan is required to resolve and rectify issues.
At Whiteark we love helping our clients set up their reporting through:
Building our driver tree
Identifying key metrics
Identifying targets and profiles
Building robust reporting framework
Measuring what matters sounds simple but not many companies do well.
Do you?
Want to know more…? Read other articles in this series - click here.
Browse more articles about change and transformation.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
Simplification
Jo Hands talks about the importance of simplification and where to start when trying to simplify in your own business. Companies create complexity as they grow, and action is required to change. You don't want to shave around edges, so instead create a set of criteria - and be very clear on what must change. Then build a program of work around this.
Simplification... it's the buzz word. But it’s not to be eye rolled, because when done effectively, it can have brilliant (and profitable) outcomes.
The power of simplifying your organisation can:
Drive improved employee experience
Drive improved customer experience
Drive efficiency and better commercial benefits
Improved governance
Improved simplification
…and more
Companies create complexity as they grow, and action is required to change. You don't want to shave around edges, so instead create a set of criteria - and be very clear on what must change. Then build a program of work around this.
Ask yourself, does your company have:
Too many products
Too many price points
A complex labour module
A complex IT / technology set up
Governance processes
Decision processes
It's the time to take a hard line on simplifying your business in order to drive improvement. Download our free guide below to help you analyse your business processes and get started…
James Ciuffetelli and Jo Hands have practical experience in helping companies implement change around simplification, and we have seen the benefits this provided. Get in touch for a no obligation conversation about how you can strategically simplify your business.
Browse more articles about change and transformation.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
Perspective...
Jo Hands is talking perspective. She explains “There are things in life that result in an increase in perspective. It's normally something unpleasant. So it takes some unpleasant to happen to you or someone you love to create perspective. The perspective needs to be strong enough to drive a change in behaviour. The perspective needs to be consistent / enduring enough to make long term sustainable change.”
There are certain things in life that result in an increase in perspective. It's normally something unpleasant.
So does it take something unpleasant to happen to you or someone you love in order to create perspective? Perhaps.
The reality is, your newfound perspective needs to be strong enough to drive a change in behaviour. And this newfound behaviour must be consistent and enduring in order to make long term sustainable change.
Ask yourself:
What things in your life have given you perspective?
Has it resulted in a behaviour change, and if yes, for how long?
Our recent shared experience of Covid19 has given everyone perspective (in differing degrees) which has resulted in behavioural changes throughout society.
These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧
Let’s explore some emerging thoughts as a result of altered perspectives:
People are considering career changes
People are thinking differently about work - and what flexibility means to them
People are reconsidering overseas trips and business trips
People are considering where they live
People are considering how they spend there money
These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧
This disruption has triggered major changes in the way people think and operate, and has resulted in a number of trends:
A push for flexibility or people are changing jobs
Remote working: Living regionally, working CBD
People changing jobs with a major challenge around War On Talent
These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧
So, what does this mean for organisations and leaders?
Acquiring and retaining talent is more difficult
Policies around flexibility are critical
Building connection with team members will result in better retention
Leaders need to tweak their style as a result of hybrid working and find something that works for teams and organisation
Executives need to proactively manage their people - creating a great place to work, with flexibility and opportunity and ensure attract and retain top talent . Having a clear people plan and communications will be critical
Building a way to measure productive work is really important that moves from hours to time to be productive
Leaders need to pivot to be relevant, right now. How are you pivoting your style to be relevant?
Need some inspiration? Reach out to us for a no obligation conversation today.
Browse more articles about change and transformation.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
How to effectively navigate change...
Jo Hands explains how to effectively navigate change. When it comes down to it, change isn't easy. Most people resist it. Most people find a way or an excuse not to change. It's human nature. But change is inevitable and for high performing companies a must. So as a leader you need to determine, how to navigate change?
Change isn't easy. Most people resist it. Most people find a way or an excuse not to change. It's human nature.
But change is inevitable and for high performing companies a must. So as a leader you need to determine how to navigate change…
Five key tips:
Make a case for change - the 'why'
Get Executive buy-in / sponsorship
Build a champion network to drive change
Set goals and measure success
Communicate, communicate, communicate
When you start change program, you will have naysayers - people who say it's not going to work, we have tried this before, it's not worth the effort. You need to push through and show them all you can make change - showing activity and outcome is critical.
The culture of an organisation will determine how hard it is to drive change - and therefore doing some change around culture is critical.
There are so many things you can do to drive culture improvement but the most important is to have the right leaders. If you don't have the right leadership team, you will likely fail - and so your job is to get the right people in your team to run and manage the teams.
Change is required - having a team that proactively manages change will give you the best outcome.
Be bold, ignore the naysayers and make change.
Browse more articles about change and transformation.
Need support in your organisation? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
Article by Jo Hands, Co-Founder Whiteark
The Importance of Continuous Improvement
Jo Hands, Whiteark’s Co-founder & Director, writes about the importance of continuous improvement. Continuous improvement refers to the process of defining, analyzing, and improving business processes to increase overall quality, while removing as many waste activities as possible.
Continuous improvement refers to the process of defining, analyzing, and improving business processes to increase overall quality, while removing as many waste activities as possible.
“Article by Jo Hands, Whiteark Co-Founder & Director”
There are three types of waste in Lean:
1. Muda
The major process wastes including, transport, inventory, motion, waiting, overproduction, over-processing and defects.
2. Mura
The waste of unevenness or inconsistency in your process. It stops your tasks from flowing smoothly across your work process and therefore gets in your way of reaching continuous flow.
3. Muri
The waste of overburden, when you assign too much work to your team, you place unnecessary stress on both your team and process.
If you want continuous improvement to become part of your culture, you need to focus on getting rid of the unevenness/inconsistency wastes (Mura) and overburden wastes (Muri) first. Eliminating all major process wastes (Muda) is almost impossible but focusing on reducing their adverse impacts on your work is key for implementing continuous improvement.
Companies should consider having a funding model for Continuous Improvement initiatives - making changes to processes to increase their profit, improve employee satisfaction, and accelerate productivity and efficiencies. Most often, business budgets do not include an allocation for continuous improvement – and a large amount of money is not required to make a substantial impact. Organisations should create a continuous improvement culture and encourage their people to look for opportunities to improve processes across the business and where the identified opportunities,
Align to the company’s strategic priorities/strategic direction and;
Size up to have biggest impact
There should be a funding model to support these initiatives. To execute on a continuous improvement process, benefits should be associated.
Below is a simple, common model that is used for Continuous Improvement, referred to as the Deming Circle – Plan-Do-Check-Act (PDCA). This model is a never-ending cycle that aims to help companies improve further based on achieved results.
Phase1 – Plan:
Define the objectives and processes required to achieve the desired goal. Setting output expectations is critical to achieving continuous improvement, as the precision of the goals and their completeness is a fundamental component of the process of improving.
Phase2 – Do:
Apply all that has been considered in the Planning phase. Expect that unpredicted problems may occur, which is why, if it is possible, you should test your plan on a small scale and in a controlled environment. Standardisation will assist with applying the plan smoothly – clear roles and responsibilities are essential.
Phase3 – Check:
Audit your plan’s execution “Do” phase and assess if your objectives and processes and goals from the “Plan” phase worked. To avoid recurring mistakes or if the team identified problems with the process that need to be eliminated in the future you need to undertake a root-cause analysis.
Phase4 – Act:
You developed, applied, and assessed your plan, now you need to act. If everything in “Do” worked well and you were able to achieve the original goals, then you can proceed and apply your initial plan. Your PDCA model will become the new baseline.
The benefits of the PDCAs model, includes: helping your team identify and test solutions and improve them through a waste-reducing cycle, stimulates continuous improvement culture (people and processes), allows your team to test possible solutions on a small scale and in a controlled environment, and prevents the work process from recurring mistakes.
Companies are looking for ways to increase their quality and reduce their costs which is why process improvement has become so important in today’s operating environment for the following reasons: customers have higher quality expectations, strong competition within the market and an unpredictable economic environment.
Whiteark has the expertise to help you with your continuous improvement needs, if this is something your business would like to explore, please reach out to Whiteark for a no obligation consultation.