Shareholders expects returns to its business investments. The challenge is how do you define the returns terms. What are the ascpect that we can use to explain returns that businesses have created to shareholders. This is also related to how do you can generate performance metrics to provide a clear explanation about business operation result that supposed to create the returns.
To discuss this topic, two major consulting firm approach are quoted in this edition. Deloitte provide as what is called as Enterprise Value Map. This Value Map defines shareholders value into four VALUE DRIVERS cateories i.e. Revenue Growth, Operating Margin, Asset Efficiency and Expectations. This model then drill-down each value into a more detail to support the value drivers into these steps : - Level 1 : It show areas that you can do to improve each value.
- Level 2 : It triggers us to change what we have done - which looking at what we have provide, whom is the target, how do we compete, how we do our operations.
- Level 3 : It asks you to do better in each aspect by reviewing our business processes, aligning resources with strategies, improving control/reduce risk, collaborating more effectively
This model also have another dimension about where the improvement must be done in order to achieve higher business value. There are six key business process dimension in this model i.e :
- Business Strategy and Management
- Customer Strategy, Relationships and Interactions
- Product Strategy, Development and Production
- Human Capital Strategy and Management
- IT Strategy and Management
- Other shared services
By navigating the enterprise value map by Delloite, then we can also map how we want to go about for Shareholders Value Improvement.
