Both new and established investors and operators struggle to decide which strategic investments will deliver the greatest value and ROI. A focused value creation plan (VCP) provides the map needed to identify those strategic initiatives that will rapidly and sustainably generate value.
Investing the time and commitment to determine the value focus of your organization not only provides a purpose – it’s a way to drive accountability and results. Leaders who focus on organizational value and purpose report enhanced innovation and improved change delivery, as well as positive impacts on financial performance.
Ankura experts have helped organizations across multiple industries create, measure, and deliver value. Our VCP approach is comprehensive and engages all organizational leaders in a collaborative identification of the most critical initiatives that drive impact and value. Below are key success factors based on our decades of experience.
1. Use a Structured Process
Value creation success requires a consistent focus on identifying and executing the most critical initiatives for the business. It also builds a discipline in the rapid determination of those initiatives that will not yield positively to value creation. While that seems straightforward, the path to get there is critical to ensuring that key opportunities are not missed. The process steps Ankura has found to be key in developing a robust value creation plan include:
- Defining the strategic questions that need answers to define the path forward
- Developing a market study to help answer those strategic questions
- Defining an overarching set of strategic and financial objectives
- Interviewing the management team, board members, investors, and strategic advisors to source perspectives on strategic moves the company should make
- Planning and executing workshops across a broad stakeholder group that further identify and clarify the initiatives that will help achieve growth targets
- Refining initiative goals, timing, owners, and KPIs using small group working sessions
- Implementing tracking and monitoring tools and processes to review and report progress
- Developing a recurring process to refresh and update the VCP
2. Clearly Link the Plan to Exit Assumptions
The Ankura team begins with the end in mind by situating the investors’ exit plan front and center with the management team while developing the value creation plan. Sharing the growth targets that will produce a successful multiple on invested capital (MOIC) will enable management to monitor KPIs that align with investor objectives. The VCP also focuses management on the capabilities that will make the business most attractive to potential buyers upon exit (products, services, tech platforms, talent, impact considerations such as ESG, etc.). These desired capabilities will inform which initiatives and investments should be prioritized as part of the VCP.
3. Insist on Collaboration
Ensuring collaboration across stakeholder groups minimizes the risk of missing opportunities and making poor investment decisions. The Ankura methodology ensures the management team understands the investment team’s perspective on the industry, deal thesis, and growth expectations. One way we drive this level of collaboration is to include board members and additional advisors in the value creation plan development process. This helps to ensure board and advisory expertise are provided to management in advance of the plan being finalized.
4. Clearly Align Actions to Outcomes
When developed, the plan includes the most critical, strategic initiatives and the key components of an actionable plan (owners, timelines, risks, dependencies, and process for tracking & monitoring). Final plans also link a set of performance metrics to the plan to show how the strategic initiatives are impacting the business. These metrics drive focus at an executive and board level and increase clarity around prioritization. Metrics also include leading indicators that link plan execution to measurable outcomes.
5. Focus on Delivering Impact
Taking a plan on paper and successfully executing is a challenge if teams are not prepared for and supportive of the desired changes. Ensuring the management team and the right stakeholders were involved in VCP development process and additional resource needs were thoughtfully considered is key to successful execution. Employees account for a majority of a company’s value, which is why it is crucial to get their buy-in on the plan for driving value. For example, VCP implementation that includes organizational changes can be less disruptive to operations with strategic and transparent communications.
A properly structured plan linked to measurable goals with realistic timelines helps ensure the organization is executing initiatives that will deliver impact. Ensuring clear management ownership of initiatives is critical to driving accountability. A resource that will manage the VCP such as a PMO leader should also be involved while the plan is being developed so there is an understanding of what key decisions helped form the plan.
VCPs should be living documents that are regularly assessed, especially in today’s continually evolving marketplace. Re-evaluating the plan on a recurring basis will ensure that initiatives remain relevant and allow your team to measure and report on progress.
Pinpointing the Perfect VCP
The Ankura tools and expertise help investors and companies build and execute a plan quickly, collaboratively, and with confidence, minimizing the administrative burden of creating a plan and increasing the effectiveness of its implementation. We provide objective expertise and experience, and our value creation playbook library accelerates the creation of plans to build value through data-driven, deliberate decision-making. Contact our value creation planning team to learn more about how we can help your business.
© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.