If you want to create value, you must create new expectations. What you are delivering today is priced in. What you have done in the past is sunk cost. You hold the pen, what are you going to do with it? For almost any management team that is the critical question. Value creation flows from identifying your untapped potential and creating a path to unlock it. Having seen maybe 200+ management teams in the last decade I have one observation for you.
Management doesn’t spend anything like enough quality time on this critical issue. Boards barely engage in the topic at all. The reason is the predominant focus on performance (mainly rear-view mirror) and financial planning. Numbers, targets, KPIs abound. Linear thinking with incremental ambition.
Potential builds from your fundamentals. Your value is dependent on three connected dynamics. Your underlying business model and value proposition which creates enduring economics. The repeatability of this core model should generate constant improvements in efficiency and effectiveness. Second, your ability to position and adapt that model to be increasingly relevant in the future. This is also your best risk mitigation to changing market conditions and competition. Finally, your ability to expand that core to wider addressable markets while building equivalent or greater strength to the expanded model.
So, what gets in the way of what matters? Management teams change so often, tenure is a barrier. Board meetings are time pressed and there is always topical, urgent (and mostly tactical) business to be discussed. Forward plans are dominated by financial aggregates rather than specific activities. Strategy reviews generally focus on the deltas not the fundamentals and almost always sum to pre-agreed objectives. Business models are rarely discussed, and many P&L actions weaken them without long term consideration. Robust capability discussions to identify what is required to deliver the strategy are often absent.
Assessing your potential is a profound exercise. Revisit the repeatable model that established your business. Test it robustly today. What are the emerging weaknesses and the enduring strengths? Are we making it better or worse? Then look at the world through the consumer’s eyes. What is a broad view of our market, our competition and substitutes. What does the world really want and what is it going to want tomorrow? What are the still unmet needs and how are product and technology evolving to make new things possible?
Taking real time in a highly organized fashion to explore this is the magic. Engaging leadership with deeply curated stimulus. Predictive and foundational consumer research alongside market data analyzed rigorously and topically. Revisit all your current initiatives and resource allocation against these insights. This is where you find waste to redeploy to the more impactful ideas. Find the right balance between the bigger, enduring wins and the short-term tactics that all businesses need to include in their plans.
Every team I have seen do this, even in short cycles, has a significant refocus as a result. A return much more closely to the core and a much greater ambition for the same. Fewer, bigger bets on expansion. Each given much more time and resource than when they were originally planned tactically as part of a crowd of initiatives. A new clarity and renewed energy that unites the team and creates a roadmap for the organization that can last many years.
Opportunity surrounds us but accessing it needs deliberate, almost forensic focus. Find the bridge from the strengths of the past to the opportunities of the future. In reimagining and then refocusing, teams find the new value they were looking for.