Value Creation 101: What’s your Value Creation Vector?

Over the years at enlight, we have had the great fortune of serving great clients.  While each client situation is unique, we’ve also noticed that clients typically seek one of a few things from their engagements with us:

1. grow the business

2. improve profitability

3. align teams to execute

4. solve a tough problem

5. transition the business to the next generation, private equity or new owners

 

The first three of the goals outlined above are closely related.  Typically, we consider all three when working with clients – it’s one of the ways we help clients maximize value creation.  Recently we’ve turned our attention to developing a new tool to allow clients to zero in on the levers that will have the most impact on value creation.  We call it the Value Creation Vector, and it assesses both the magnitude and direction of the first three aspects outlined above – growth, profitability and tenacity – to determine how to unleash the most value for the business.

Note:  Tenacity reflects more than simply aligning teams to execute.  It reflects management’s ability to perpetuate the business and maintain cohesion among employees despite changing market conditions, customer needs and business situations.

The graphic below highlights the levers of the Value Creation Vector.  For each lever, enlight has identified the most important indicators.  The tool enables enlight to assesses both the magnitude (to what extent does the company’s current performance impact its ability to create value) and direction (is the current impact on value creation positive or negative).  The tool is based on our experience with one hundred client engagements across a range of industries, sectors and business sizes.

VCV

While the levers that Create Near-term Value and Position for Long-term Value might be relatively commonly embraced, those that relate to Unlocking Hidden Value are typically less familiar.  Using the tool, we can collaborate with you to determine where to start – we recommend improving profitability before focusing on growth, and we are big proponents of capturing value sooner rather than later…but, the specifics should be informed by your individual business priorities.

The Value Creation Vector is designed to provide a quick assessment of a company’s current state and identify the areas that present the greatest opportunity to increase value.  Over the course of a couple of weeks we interview a sampling of employees, review existing company data and reports, conduct 1-2 working sessions with key business leaders and compile the score, insights and recommendations.

Contact us today if you’d like to learn more about how the Value Creation Vector can help you unleash the full potential of your business.

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