So far, we’ve been talking about how you can boost the value of your company simply by breaking yourself of a few nasty old habits and replacing them with certain value-enhancing habits. We’ve also talked a bit about how these value habits might help you deal with some typical issues. For example, figuring out how to compensate the sales team. And, that’s great when you’re dealing with typical issues. But let’s face it: you don’t have the luxury of dealing only with typical issues. You run up against fresh challenges every day. Each situation generates perplexing new obstacles to value creation. Most come down to one thing – misalignment. You’re headed one way; but some parts of your company are pulling in other directions—creating tension, draining resources, and making it more difficult to get where you want to go. And, the lack of consistency in how these issues are addressed make it almost impossible to make decisions that are aligned to your overall goal. How do you use value to solve these problems on your own? Where do you begin? Once you do begin, how can you tell if the solutions you and your people are developing really span across your entire company and are resolved in a consistent way? That’s what you really need to know, isn’t it? Well, that’s exactly what you’ll learn in the upcoming issues of this newsletter. Using a simple tool called the Enterprise Value Map™ (EVM) you’ll learn how to put the value concepts to work and tackle tough problems. To set the stage, in this issue we provide some background on the EVM. Why use the EVM?
The EVM can help make it easy to see how everything you do either enhances the value of your company, or undermines it. The EVM can help you see the big picture—from your highest goals down to specific processes and possible improvements. It provides a simple framework for identifying, tracking, and solving alignment issues simultaneously across all business process groups. It can help you focus on the right things so you can actually address them, with practical paths paved with specific projects, not just fine intentions or vague resolutions, for increasing shareholder value. And because it’s based on a clear cause-and-effect framework, the EVM can help make it easier for you to communicate and collaborate with your people, as well as with other stakeholders. What if more people understood what your priorities were and how their actions fit in? How much better would your company perform if their decisions and efforts aligned? Powerful. For a larger view, select the image Enterprise Value Map. 
How the EVM is structured
Take a look at the EVM. The red boxes on top show the broad drivers of enterprise value: revenue growth, operating margins, asset efficiency, and expectations. The large white boxes show the key elements that influence each of those drivers, such as sales processes, inventory levels, and business management capabilities. The smaller, vertically-arranged text items show what you can do to enhance each element, either by improving your strategy, such as what you offer or where you offer it(top band), or by adopting specific tactics, such as improving product quality or reducing risk (bottom band.) We’ve color-coded them so you can see which tactics are most pertinent to each business process, from business strategy, product development, and customer management through human resources and information technology. With this structure in mind you can use the EVM in two fundamental ways. Work top-down
Assume you’re looking for ways to increase your enterprise value. Starting from the top and working your way down, at each step ask yourself: How will we improve this? Doing that will help you choose the tactics that really do support your objectives. Work bottom-up
On the other hand, you can also use the EVM to assess a specific process or initiative to see if and how well it serves your enterprise value. In that case, you start from the bottom and work up, asking yourself: Why are we doing this, or considering it? Where does it fit on the EVM? How exactly does it enhance one or more of the factors that drive our enterprise value? Either way, be sure to consider the corresponding costs. A focus on customer retention, for example, may increase sales costs. You need to plot them on the EVM, too, so you can evaluate whether the game is worth the cost. In future newsletters, we’ll dig deeper into key issues, such as how the IT, HR and Finance functions create value across the company, and how we can help you use the EVM framework to assess these questions in your company. Stick around. Related Content: The Value Habit Newsletter Archive
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