Get obsessed with Value ! Part 7/7
How to best benefit from Value Intelligence?
First it is by providing executives (and aspiring to executive management, as well as anyone committed to Fast-Learning!) with practical solutions that make it simpler to manage value creation and focus on what matters most, therefore highly configurable solutions to your specific purpose and goals. It brings in more than an MBA knowledge (I went through it, but it targets more business executives than investment management professionals, and Private Equity knowledge is the best I know to manage value creation; nevertheless mastering business administration and operational value creation levers should go along with), and it is even more valuable because it is integrated and it has been built based on a varied professional experience in nearly all businesses functions with expertise in the key disciplines that contribute most to value creation.
Second it is HOW you will use it. And it’s been designed so that you will learn much faster, you will be able to integrate your own challenges whatever they are, and leverage everything that matters to value while getting on the one hand a direct connection and innovative management opportunities with the front-end (key) and back-end (front-end wired) of your business, and developing on the other hand forward-looking / market opportunities / value focused habits.
What about the key findings that show the potential of a highly integrated solution focused on Value?
One preliminary finding is that strategy and finance, that are key areas to manage value, are not spread enough — especially not accessible to small businesses, even more in my native country than in the US (US advisory market’s largest segment — 2015 market search data — is corporate strategy, that accounts for around 30% of the management and marketing consultancy domestic market, while in France operations management leads ahead with more than 60% and only 15% in corporate strategy, the latter being the worldwide average ratio) — and secondly the complexity and effort required by learning, understanding and building an integrated practical solution that would be relevant and adaptable to most businesses, is high enough to discourage the majority of those in the position to provide a credible solution to Value Creation Management.
Another finding is that lots of valuable stuff (I mean much valuable audit consulting and financial advisory services expertise) could be both fast-tracked and leveraged by customers with appropriate knowledge and tools: look at the due diligence process for example, unless a company is used to extensive M&A (in particular when implicated in implementing the promises of a deal), its primary objective is to serve a deal process and the company rarely benefits much from leveraging it to improve its own current practices and prepare the ‘after’, just because the gap is ‘huge’ and people are neither paid nor they are able to design it from scratch in the timeframe. It should be done (hu?) with time and help of experts or — if such a deal — with a Private Equity partner. So I felt an appropriate (relevant) Integrated Value Framework that would be actionable would help a lot and provide support to both:
- fast-track learning — especially in fast-growing businesses and high potential ventures — and
- efficient strategy implementation (by those who generally do not design the strategy but are assumed they have or they will!) as well as accelerating growth.
A third finding is when looking for an answer to the following question: why the hell wouldn’t it be possible to create greater value with a great solution that solves more problems than it brings in? In addition one whose benefits last forever? Aren’t you exhausted with ‘solutions’ that bring in (or out) the problems that of course they can solve for you at your expense? As a buyer, I am. As a seller, I don’t know :) but most sellers are happy with that usually! There is a change opportunity for the better lying in here, I think. In the end I believe the increased level of knowledge will help people make better choices, and definitely an integrated value framework is a great life-time investment to be leveraged.
Beyond those findings, the idea is to think of the best way to provide businesses with the best possible ‘autopilot’ or at least with a great copilot! And though everything moves fast and faster in our connected world, from Big Data, Data Analytics to Artificial Intelligence to Connected Objects or Blockchain Transactions, I feel that one key thing won’t change fast enough to be a barrier: I mean Financials (yes, I do not see in the short term a world without taxes to pay! :). So definitely the Framework structure must be articulated around Financials. By the way, have you ever noticed that lots of financial reports differ a lot from each other (in the form I mean, for what should be comparable)? Why the hell is that? Because people do their best with what they know and the examples they have? Of course, not because you are comparing a retailer business to a bank! Financials are financials. I agree to the argument I can hear from here: some regulated businesses show particularities but all other cases fit in a general frame. Of course why would you need to specify your tax-deductible or capitalized interest charges from non tax-deductible or cash interest, or declare zero stock-based compensation when you don’t even know it may exist: no problem, it won’t appear but at least (as when you fill-up your tax files I would say, but with something that is more useful for YOU) you know that it exists and eventually what impact it could lead to with your business or even provide you with clues to do some (major) improvements. That’s all for financials: the structure is common, everything that is accounting rules-based — like taxes — is configurable to fit with your business. Any adjustment is possible, but with little knowledge and few adjustments (just having played enough with Buy&Sell, Invest&Grow, and Create&Build :), any CEO will feel he can fire his CFO who is not focused on strategy design to implementation! Joke.
What after Financials? Then connect Strategy and Operations (at least through managerial accounting and cross-impact value drivers, better with managing your strategic plan initiatives implementation and risks, and operations through the integrated Value Framework). What else? That’s all, at least to start with. And it is great: ‘it’s true’ :). It’s a true painkiller.
All you have to do to start with is to connect (or import) your historical accounting data and business plan financials (or type it in), then you know instantly everything and will manage your business as a Private Equity professional would based on his/her deep knowledge and experience (though without a standard operational solution to spread the investees with). And if you struggle with your business plan financials modeling, get used to modeling and care for your margins right at the start: there is a great link not to miss between this and your managerial accounting model.
What about Personal Value management ?
I would say it first depends on your purpose. But common metrics apply — for what is measured from cash flows — whether you are an employee, a freelancer, a business owner, or an investor. All apply in an individual perspective, think about it. If you are passionate about something that does have a social impact (or potentially does) and you spend already a lot of time and money into it, even though you are employed, just create your company or non-profit organization to manage your passion-related things! There’s a great chance you’ll find the learning experience and admin additional work worth the savings on value-added tax to start with in most cases. And when you are ready to make money on your own, you’ll have accumulated losses that you will deduct from your earnings before tax and eventually pay no income tax (at start, then tax is good to pay when you earn a lot! choose a good place though). If you do something innovative, start it either: when you earn your first revenues (depending on your country’s laws, you might pay no income tax for a certain period starting with the company birth date), or when you start having huge expenses (you may be eligible to credit taxes).
Back to personal value management: if you are in a manager position, or even an executive, it’s always good to know more in the business place. The operational solutions I’ve designed fit to a business unit level as well as the company level, or group level: whatever your situation, you’ll learn and benefit from your practice. Again, the advantage is you will always have with you everything you need, or you’ll discover that what you thought you needed was a non-sense. May you have to plan a project, build a business plan, assess your current company’s financials to know when it’s time to leave for a better place, suggest (negotiate!) relevant initiatives to create additional value within your company or best driving yours, etc. Imagination is the limit. You’ll find a use for it, and you’ll be grateful most of the time after the learning period, I guarantee you! And it will help you dream big, because while you use it, you are framing a path that you can follow next. You will always have a valuable reference to assess, decide, and control whatever an advisor or team member (even your CFO) will tell you (or he uses the same as you do!). You may even make a direct profit (cash) from using it — in addition to the outcome, hopefully 10x or more, of your using it for you or your clients — especially if you are a freelancer or an advisor, because you’ll be able to add a digital, integrated dynamic solution that you can integrate in your own value proposition! (edXirr licence allows you to sell the use of the solution, embed it in your site or even your clients’, and more…).
Think of it as more than an MBA: we shall build a great community, hopefully it will be the best aware community; we will be like partners that chose each other with the purpose to change the rules to Value, and we can do it; you will not pay between $50,000 and $150,000 your MBA, you will pay between $1000 and $5000 a year for an individual to get always updated, additional information, tips & news, access to professionals, with coaching included, and the opportunity to contribute more and be fairly rewarded; my promise is you’ll have all the MBA knowledge in 1 year and you’ll have more and more with your engagement alongside — may you join and show your commitment, you’ll be treated like an investor in the project — you’ll know what it takes to reach 10x value creation, you’ll have purposeful opportunities arising… If you look for excellence in Value Creation or an opportunity to have more Impact, you’ll be at the right place for both your personal and professional development and achievements!
I hope you enjoyed your reading, and may you wish, like it or add a comment! You’re always welcome to share your thought, whatever. All the best :)
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About the author: Olivier Rochet, IRRQuest® founder