Fortinet Partner Best Practices - Value Creation Strategy
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Total Profit Solutions for IT Companies™
OML Trait: Value Creation Strategy
This is the key Operational Maturity Level Trait. The vision of the shareholders for creating value in
return for their investment of time and resources governs everything else about how the firm is
constructed and operated.
A Value Creation Strategy appears simple but is in fact complex. There is no "best practice" as to which
Value Creation Strategy the shareholders should choose. The only best practice is that they intentionally
and explicitly choose one and, if possible, give it the time and resources to reasonably prove itself out.
That said, shareholder requirements or goals can change at any time for business or non-business-
Examples of valid value creation strategies include:
• Build the firm to X value and sell it to employees or family by this time,
• Build the firm to X value and sell it to someone else by this time,
• Build the firm to X value and let distributions drive the return I need, and worry about
succession or ultimate value extraction later.
Typically, a Value Creation Strategy of "provide myself a job and see what happens," does not lead to
top quartile performance. This is because a key part of the Value Creation Strategy is "how much value."
Without this, it is difficult to establish what level of investment is merited and in what timeframe.
Developing a Value Creation Strategy is the first and most important step that must be accomplished in
the logical sequence of business planning, because it establishes:
• The return the shareholders want, and the time period they want it in,
• The size and number of customers that are needed,
• The offerings being sold to them, and
• The marketing, sales and delivery operations investment needed to win and serve them.
All other decisions in building and running an IT Solution Provider business are derived from these four
Without a Value Creation Strategy, it’s unlikely that firms will have the fortitude, support, patience,
proper course and sufficient funding to successfully develop the business to a meaningful result.
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Low-performing Solution Providers, on the other hand, tend to not have a clear value creation goal or
timetable. This makes it more difficult to build an execution plan and manage to it.
Top-performing firms have a clear Value Creation Strategy, which enables them to harness all planning
and execution to that goal. They have determined: 1) the amount of value they want to create, 2) the
time-frame in which they want to create it and, 3) the method by which they will realize that value.
As a result, their decisions - especially the most important ones - can be made with a very good idea of
the planning horizon and they can clearly and quickly answer the question, "How much will this
contribute to achieving their long-term goals?"
This has resulted in decision-making - whether strategic or tactical - while not easy, considerably easier
than it would otherwise have been, which in turn greatly increases their chances of successfully meeting
their value creation goals.
There are two basic steps in creating a Value Creation Strategy: Step one is to determine the amount of
value to be created, in what time, and how to extract it. Step two is to determine the size of customer,
offerings, number of customers and sales funnel needed to accomplish the value creation goal defined
in step one. Best practices for step two to achieve the fastest growth with the highest quality and profit
at the lowest risk is to:
• Pick a narrow customer size segment,
• Pick a single set of IT products (hardware and software) to meet all of the customers’ needs,
• Greatly reduce the cost of delivering service while greatly increasing the odds of delivering
service quality (i.e. greatly improve maximize efficiencies),
• Differentiate in the marketplace and to win and keep the sales team’s confidence and
enthusiasm for Managed Services,
• Defend and leverage the traditional customer base most quickly with the least sales cost and the
soonest and highest return.
While it is possible to disregard these rules, and attain top quartile financial performance (growth and
profit), in practical fact, it rarely occurs. Following these rules more likely results in the return to the