Systemic performance excellence step 3 optimise value chain

SYSTEMIC PERFORMANCE EXCELLENCE -STEP 3

SYSTEMIC PERFORMANCE EXCELLENCE - OPTIMISE VALUE CHAIN Organisations are complex systems where many elements come together to enhance or inhibit performance.

At Gallus we have developed an approach to creating systemic performance excellence; a performance environment that everybody can believe in.

This is the fourth in a series of insights that examine the approach. The first of our series outlined the model; basic elements of the 7 STEPS TO PERFORMANCE EXCELLENCE and the 4 PERFORMANCE ENABLERS. In the second and third we looked at the critical factors required to CREATE A SENSE OF PURPOSE and CLARIFY THE BUSINESS MODEL. Over the coming months we will consider each step in detail and explore the practical steps you can take to move towards systemic performance excellence in your organisation. This insight focuses on how to OPTIMISE THE VALUE CHAIN‌..

A believe-able organisation....

Our approach is centred on creating a BELIEVE-ABLE ORGANISATION. In times of growth, change and challenge, belief is the fundamental factor that provides the resilience and tenacity to succeed. In good times, belief is what makes the difference –belief in the purpose, belief in the destination, belief in an approach, belief in the contribution that an individual feels they can make and belief in the ability to succeed..

Our 7 STEPS TO PERFORMANCE EXCELLENCE are designed to take the organisation through a process of co-creation that drives belief, facilitates a thinking and planning process, enables everyone in the organisation to perform to the best of their abilities, and ultimately drives the organisation and everyone in it to be the outcome they are aiming to achieve.

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GALLUS CONSULTING Knowledge is power....

The value chain of an organisation is its lifeline. It’s the SYSTEM THAT DELIVERS STAKEHOLDER VALUE, VIA PRODUCTS AND SERVICES, IN AN EFFECTIVE, EFFICIENT AND SUSTAINABLE WAY. It’s critical to revenue generation, brand promulgation and ultimately the future success of any organisation, but all too often people across the organisation find it difficult to explain exactly how value is created, revenue generated and profit achieved.

Understanding and paying attention to the value chain is the first step in commercial thinking and systemic continuous improvement. Realising exactly what end users of a product or service value drives better decisions; understanding the mindset of investors creates a greater focus on strategic goals and efficient operations; and appreciating the impact of decisions upon the chain enables focused innovation, capacity generation and margin growth.

Optimise the value chain…

Successful organisations make sure that everyone understands the sequence of activities and decisions that form the basis of value creation. They create dialogue around the INPUTS, OUTPUTS and OUTCOMES involved and create a focus upon EFFECTIVENESS (doing the right things) and EFFICIENCY (doing them well).

Michael Porter outlined the key components to consider and demonstrated how support functions and their activities combine to facilitate and enable primary activities in a generic value chain:

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TECHNOLOGICAL DEVELOPMENT

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PROCUREMENT

The ultimate aim is to build a strong and agile mechanism that consistently delivers value to the end user in a way that also creates value for the organisation.

5 steps to value...

Value chains, like organisations, are unique. Whilst some generic elements prevail, they each possess ACTIVITIES, PROCESSES, PROCEDURES and BEHAVIOURS driving INPUTS, OUTPUTS and OUTCOMES particular to the organisation.

Understanding the particular nuances of the value chain and identifying the most impactful LEVERS TO LEVERAGE and METRICS THAT MATTER can be the difference between success and failure.

Whilst it looks linear, the value chain is a complex system that demands sophisticated analysis and modelling to truly understand its workings. Multiple feedback loops create unexpected outcomes from the smallest of changes. Hypothesis generation and testing, scenario planning and sabotage analysis should all play their part. The path of least resistance might look attractive but beware its hidden long-term traps…

A disciplined approach involving representation from all stakeholders and creating continuous dialogue across the organisation provides an opportunity for PROCESS LEARNING and creates great HABITS for sustainable value creation.

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SYSTEMIC PERFORMANCE EXCELLENCE -STEP 3

Map It Capture the core activities that make up the value chain; the critical inputs, outputs and outcomes, the core processes and the policies that govern them. Identify causal relationships and the levers to leverage for value optimisation.

Model It Play 'what if?'. Experiment with changes to the system; identify the likely benefits, risks and unintended consequences (frequency and magnitude) of adjustments. Investigate how to optimise the chain; how to increase capacity, reduce waste, minimise cost and maximise value.

Measure It Focus on metrics that matter - the ones that can signal problems or predict value creating behaviours and outcomes. Know the criteria for success and focus on them. Make the most of proven methodologies and measurement criteria; the likes of six sigma and lean principles.

Master It Identify the capabilities required and develop these to increase capacity, deliver quality and certainty, and minimise waste and risk. Unshackle positive deviants in your midst so that they can make a real difference!

Make It Happen Leadership alignment drives commercial focus and commitment to continuous improvement, focused innovation , dynamic decisions and brand led behaviours. Align values, beliefs and behaviours for maximum impact and create governance systems.

Enabling future value....

4 PERFORMANCE ENABLERS work together to drive VALUE CREATION and to create a SYSTEMIC HIGH PERFORMANCE ENVIRONMENT‌.

ENTERPRISE MINDSET ensures that actions are taken and choices are made with the broader organisational impact in mind.

GAME-CHANGING LEADERSHIP models the way in terms of commitment, consistency, capability, collaboration, courage and alignment; drives future value and protects against value erosion and brand collapse. Identification of LEVERS TO LEVERAGE and METRICS THAT MATTER form the basis of experimentation, innovation and a robust guidance system that can propel value creation beyond expectations.

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ENTERPRISE MINDSET • Create an integrated,

•

GAME-CHANGING LEADERSHIP • Define Game-changing

leadership in the context cohesive and collaboof the organisation and rative organisation that considers every situation ensure that leaders are Committed, Capable, with the bigger picture Aligned, Consistent and in mind.

Courageous.

Enterprise Mindset The capability of existing • ensures that architecleaders, coupled with the ture, systems, processes ability to identify, attract, and leaders consider the retain and develop the ambitions, needs and leaders that are needed capabilities of the entire for the future is vital. organisation and constantly maximise the synergies available to accelerate the achievement of results.

LEVERS TO LEVERAGE • Identify, optimise and

leverage the most effective levers for performance excellence across the system every time.

• By pinpointing the levers for change in an organisation, efforts can be aligned and amplified more effectively. Identifying and aligning the most impactful levers towards the desired outcome creates a clarity of focus and minimises distractions and counter productive messages.

METRICS THAT MATTER • Targeted metrics and

•

analytics that focus on the things that make the difference.

Create a performance guidance system that enables dynamic decisions and provides the rigour for strategic loops.

OPTIMISING THE VALUE CHAIN demands a structured approach with sophisticated analysis and modelling at its core. The ability to view complex systems from multiple perspectives and take courageous decisions that may reduce short-term revenue in service of longer-term value creation and brand protection are fundamental to its success. The analysis process presents cross-organisational learning in and of itself that cannot be replicated through traditional training and communication programmes.

Done well, what starts life as a relatively isolated ‘point in time’ review process, evolves into a continuous improvement methodology and ethos that pervades the organisation. Mutual understanding and respect between functional boundaries becomes the norm and people learn to work together to ensure that the chain flows seamlessly.

How well do your people know the VALUE CHAIN operating in your organisation – how many can describe the INPUTS it makes use of and the OUTPUTS and OUTCOMES that it creates? How accurately can they describe the rationale that PROCESSES and POLICIES are based upon, and the CRITICAL CAPABILITIES, ACTIVITIES and DECISIONS that cut across the chain every day? How comfortable are they to be COURAGEOUS; to suggest potentially powerful INNOVATIONS and raise issues that pose threats to future value?

Teamed with a CLEAR BUSINESS MODEL (step one) and a SHARED SENSE OF PURPOSE (step two), a VALUE CHAIN FOCUS can work miracles on the journey towards SYSTEMIC PERFORMANCE EXCELLENCE!

Gallus build sustainable, high performance environments that everybody can believe in. With particular expertise in leadership capability and alignment, organisation design, business transformation and enterprise risk management, Gallus challenge assumptions, cultivate belief and drive positive change by making performance excellence systemic.

An established business with Headquarters in Northampton, UK and offices in London, Manchester and Aberdeen, Gallus work with ambitious organisations across the world from a wide range of sectors.

Find us at www.gallusconsulting.com or call +44(0)20 3751 6345.

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Gallus Consulting Ltd