At Emerson Nash, we’ve collectively spent around 60 years finding value-creating opportunities in a wide range of businesses from corporates to start-ups. Delivering against these value creating opportunities has delivered £’millions in benefits to these businesses.
So, how do YOU identify value creating opportunities in your own business?
WHAT ARE VALUE CREATING OPPORTUNITIES?
Value opportunities often exist in the gap between intention and reality: when management thinks X is happening, but really Y is happening instead.
Getting to the bottom of what is actually happening on the ground, and why, can hold real value for your business.
Some examples of value gaps:
|Management thinks / is told||Actual reality||So what?|
|All of our products are profitable||A detailed product profitability analysis shows that only 77% of the products are profitable||23% of products make a loss. Do you want to continue making and selling them?|
|We get the best price from our key suppliers for the quality, MOQ, service level etc||We haven't challenged our suppliers since the original agreement began||By asking the right questions, planning our purchases more carefully and communicating those plans regularly to our suppliers, the price drops by 15%|
|We need more staff||Our teams are losing time duplicating tasks and correcting errors, due to outdated processes or systems||Revamping processes to create efficiencies frees up your staff time AND boosts morale. You may not need to hire more heads after all|
You might be thinking “that doesn’t happen in my company”.
Chances are it does. It happens in all companies – nothing stands still, there is always scope for improvement.
The only really important point is how much the missed opportunities are costing you – pence, pounds, thousands or millions.
HOW TO FIND THE VALUE OPPORTUNITIES
- To find value creating opportunities you need to have the right mindset. You need to be curious. Challenging the status quo should be perceived as expected, supported or celebrated.
- As a manager, you will need to look through data with your team members as well as listen to their views and ideas.
Examining what you are told by staff and what the data is telling you, will help you to find value creating opportunities. This requires having:
- Investment in gathering and collating data.
- Availability of the right data, relevant to the key drivers of your business.
- Investment in the ability to extract and analyse data to a detailed level.
- Good team members who know their areas.
- Even better is to create a culture in which your staff members are actively looking for opportunities themselves, where it’s not only management who are empowered to make changes.
When opportunities are found, the management team should support taking action as well as celebrating the person or team who found the opportunity, and do this consistently.
Easily said, not so easily done. Yet creating this culture is one of the most valuable things you can do.
Key steps to realising value creating opportunities
Finding the opportunity is just the beginning. You now need to convert it to add value to your business.
- Recruit the most suitable staff members based on skills and experience to undertake the changes to allow the company to realise the value opportunity. Change involves people, and therefore people skills in those leading or managing the changes are very important. The most senior person may not be the most appropriate for the project.
- Make sure the project is resourced to enable it to succeed, both in capacity terms and capability terms. Many great ideas flounder because staff cannot find the time or do not have the skills required.
- There should be a management team member sponsoring the project, who is regularly checking up on progress and mobilising support as needed.
- Create visibility of the project and monitor the progress. Include milestones and celebrate the wins publicly in the business.
- Keep focused on the project until is it completed. Don’t get distracted by new opportunities until the project is finished.
This is an ongoing project
Your business keeps changing. Even if you did a full review of value opportunities last year, there will still be more, new, opportunities available to you now.
Keep revisiting the possibilities and improvements open to you. Reward and encourage those staff who actively help you in this process and establish that open culture to boost your business’ value.