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Thiry: Strategic Value Management 2017

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Keynote presentation at the Canadian Value Symposium 2017, hosted by Value Analysis Canada, October 16 & 17 at the Château Vaudreuil near Montreal

Published in: Business

Thiry: Strategic Value Management 2017

  1. 1. Strategic Value Management Michel Thiry PhD, PMP, FAPM, PMI Fellow presents:
  2. 2. 2 © Michel Thiry, 2017 Presentation Outline 1. Why Strategic Value Management? 2. Deliver value consistently … in a dynamic environment 3. Examples of Strategic Value Management
  3. 3. 3 © Michel Thiry, 2017 1. Why Strategic Value Management?
  4. 4. 4 © Michel Thiry, 2017 From: Thiry, 1997 & 2004 + – Satisfaction of expected benefits Required resources (Capabilities) Expected Benefits Offered Benefits Required Capabilities Available Capabilities What is strategic value?
  5. 5. 5 © Michel Thiry, 2017 Visions of strategic value Financial Shareholder Value Organisational Stakeholder Value
  6. 6. 6 © Michel Thiry, 2017 Lost Value: The Conclusion “…what senior executives need is a more balanced approach to strategic decision making […] and value considerations.” Booz&Co, 2012: C. Dann, M. Le Merle, and C. Pencavel http://www.strategy-business.com/article/00146?pg=all
  7. 7. 7 © Michel Thiry, 2017 What drives the quality of decisions?  Conscious Judgment  Clarity on how much we are willing to sacrifice of one value in order to receive more of another  Sensible Evaluation  Based on alternatives, available information, & expressed value at the time of the decision  Viable Choice  Options developed from alternatives following analysis and consolidation of information  Not all alternatives can become viable options Adapted from Spradlin, 1997
  8. 8. 8 © Michel Thiry, 2017 Key Issues for SVM  Generate tangible value for the stakeholders  Achieve sustainability in doing so  Develop dynamic structures  Leverage collaborative relationships  Support business benefits delivery
  9. 9. 9 © Michel Thiry, 2017 2. Deliver value consistently … in a dynamic environment
  10. 10. 10 © Michel Thiry, 2017 The Evolution of Value Mgmt  “Hard” Value Management (VE/VA)  Quality/Cost Improvement  Development of better products  “Soft” Value Management (VM)  Focus on stakeholder needs/resources used  Development of better business solutions  Strategic Value Management (SVM)  Best use of resources to gain competitive advantage  Ongoing development of best portfolio of actions
  11. 11. 11 © Michel Thiry, 2017 Potential vs. Realized Value Run the Business Transform the Business Value Planning Value Creation Operate Integrate Deliver Formulate “Track benefits realization past the end of a project through operations to verify return on investment.”* * PMI Pulse of the ProfessionTM 2013
  12. 12. 12 © Michel Thiry, 2017 SVM Decision Management Cycle Thiry, 2002-2010 Ideation Elaboration Sensemaking Learning Cycle (Capture Expectations) Choice Strategic Objectives Execution Planning Control Performance Cycle (Deliver Results) Expected Benefits Expected Outcomes Proposed Actions Proposed Deliverables ValueMgmt StrategyExecution ProjectMgmt Delivered Outputs
  13. 13. 13 © Michel Thiry, 2017 Iterative Value Cycle Strategic Choice Choice of actions Development adjustments Implementation adjustments Benefits Evaluation Learning Loops Learning Loop Performance Loops Emergent Input Plan/Execute/ControlFormulate/Organize
  14. 14. 14 © Michel Thiry, 2017 Traditional VM Application (VA/VE)Strategic VM Application Strategic Value Mgmt in Context Realized Outcomes BUSINESS ‘Capability Cycle’ EXTERNAL OR INTERNAL Corporate Strategy Expected Benefits PROGRAM ‘Learning cycle’ Objectives/ Parameters PROJECTS ‘Performance cycle’ Planning & Execution Deliverable / Output Realised benefits Strategic Objectives Ongoing Value Appraisal Pressure to change
  15. 15. 15 © Michel Thiry, 2017 3. Examples of Strategic Value Management
  16. 16. 16 © Michel Thiry, 2017 VM as a Structured Decision Process  Sensemaking  Clarify needs & expectations of stakeholders (expected benefits / functions).  Determine & prioritize Critical Success Factors (CSF)  Ideation  Seek alternative means of achieving CSFs  Elaboration  Develop alternatives into viable options. Focus on benefits  Decision/recommendation  Define optimal combination/phasing/pacing of options  Mastering  Ensure benefits delivery & effective response to emergent inputs
  17. 17. 17 © Michel Thiry, 2017 Initial Needs Analysis ECM Initial Benefits Map HOW? (MEANS) WHY? (END) From multiple stakeholder needs and expectations To initial consolidation and breakdown of needs
  18. 18. 18 © Michel Thiry, 2017 Operations Program Benefits Map (BBS) HOW? (MEANS) WHY? (END) Operational ImprovementBusiness Value Vision Strategic Objective Benefit Outcome Output Capability Strategy Grouping into Projects
  19. 19. 19 © Michel Thiry, 2017 Example of BBS: Entr. Data Mgmt
  20. 20. 20 © Michel Thiry, 2017 BBS helps determine Vision and CSFs Optimize the contribution of enterprise content to Co. success Maintain Business Continuity (20%) Provide capability for business growth (10%) Improve compliance (15%) Mission Guarantee content integrity and consistency (25%) Empower employees to perform (15%) Enable organizational performance optimization (15%) Enable business continuity & growth Objectives Vision: The right information to the right people at the right time
  21. 21. 21 © Michel Thiry, 2017 Evaluating Expected Benefits: Prioritize CSFs: Paired Comparison  Develop program specific criteria (weighted CSFs)  Compare CSFs in pairs sharing 5 points between them  Calculate total score and adjust on scale of 100 A B C D.1 D.2 D.3 Score Weight A-Empower employees to perform 2 1 3 2 3 11 15 B-Enable optimization of organizational performance 3 1 2 2 3 11 15 C-Guarantee content integrity and consistency 4 4 4 3 4 19 25 D.1-Improve compliance 2 3 1 2 3 11 15 D.2-Maintain business continuity 3 3 2 3 4 15 20 D.3-Provide capability for business growth 2 2 1 2 1 8 10 75 100
  22. 22. 22 © Michel Thiry, 2017 Ideation Empower employees to perform (15%) Increase CM skillset Increase content availability Improve information access Facilitate content management Enable optimization of organizational performance (15%) Optimize CM solution architecture Improve content processing efficiency Guarantee content integrity and consistency (25%) Ensure content integrity Improve content consistency Enablebusiness stabilityandgrowth Improve compliance (15%) Improve content classification Comply with content management policies Maintain business continuity (20%) Improve conformity Improve internal collaboration Support business processes Provide capability for business growth (10% Enable change Facilitate access to information Enable external collaboration
  23. 23. 23 © Michel Thiry, 2017 Example of KPIs  Based on weighted CSFs  Typically report on 1-3 KPIs/CSF  Measures can be qualitative (approval, agreement, alignment, etc.) or quantitative (%, #, $/£/€) Critical Success Factor Key Performance Indicator Measure Enable optimization of organizational performance 5 Increased # of automated processes % Increase 6 Reduction of data processing time Automated rec. Guarantee content integrity and consistency 7 Increase in level of maturity in EDM # Training 8 Increased number of new templates % Increase Improve compliance 9 Reduced # of non-compliant docs. # non-compl. Maintain business continuity 10 Increased number of docs shared % Shared 11 Improvement in data integration with other business applications # Increase Provide capability for business growth 12 Increased data exchange with exter. parties % Increase
  24. 24. 24 © Michel Thiry, 2017 Elaboration: Assess alignment of program components with strategy Weighted Matrix  Qualitative assessment  Score each component project against each CSF  Multiply score by CSF weight  Calculate total weighted score for each Option  Use for decision-making 0 Useless 6 Important 2 Desirable 8 Necessary 4 Useful 10 Essential Expected Benefits =OfferedBenefits CSFA CSFB CSFC CSFD CSFE Total Weight Option 40 30 15 10 5 100 4 4 6 3 8 160 120 90 30 40 440 7 4 2 5 8 280 120 30 50 40 520 6 7 3 5 1 240 210 45 50 5 550 4 4 3 9 2 160 120 45 90 10 425 2 7 4 6 9 80 210 60 60 45 455 Comp. 5 Comp. 1 Comp. 2 Comp. 3 Comp. 4
  25. 25. 25 © Michel Thiry, 2017 Elaboration: Assess achievability (Outline Level) Achievability Assessment Factors High/10 Medium/5 Low/2 Score A. Financial Factors 1 Project cost /total Portfolio budget* ≤ 5% 5-20% ≥ 20% 5 10 2 Expected Return/Benefits Very short-term Short-term Medium-term 2 5 3 Funding (Financial Authority) Internal to BU Other business unit Outside Org. 5 5 B. Parameters & Constraints 1 Resource Availability (FTE Capacity) ≥ 2:1 (200%) 2:1-1:1 (200-100%) ≤ 1:1 (100%) 5 10 2 Type of project (Authority) BU initiated Org. initiated External/Regulatory 5 2 3 Schedule Acceptable/estimated Tight/negotiated Inadequate/imposed 10 2 C. Human Resources and People Factors 1 Spread of Resources All internal Internal + External PM + External 5 5 2 Dedicated workforce (Fulltime) All most Few 2 10 3 Staff Expertise/ experience  Requirements Sufficient  Requirements 5 5 D. Complexity Factors 1 Type of Work/Innovativeness Known New Breakthrough 10 10 2 Interdependency of projects Negligible Significant Essential 2 2 3 Objectives & Scope Well Defined Unclear Undefined 10 10 Score Total /120 66 76 Achievability Score (Total score/120x1000) 550 633 A1 Budget includes actual and committed (pipeline) B1 Available resources/required resources for program/project in regards of the workload (actual and committed) C2 Multi tasking generally leads to a lower achievability
  26. 26. 26 © Michel Thiry, 2017 Elaboration: Alignment/Achievability Matrix Adapted from Thiry, 2003 Set thresholds HIGH PRIORITY > 0.25 Implement LOW PRIORITY < 0.075 Reject MODERATE PRIORITY Improve and reassess 0.075 - 0.25 VHI 0.90 801-1000 HI 0.70 601-800 MED 0.50 401-600 LO 0.30 201-400 VLO 0.10 001-200 0.03 001-100 VLO 0.16 101-250 LO 0.35 251-450 MED 0.59 451-700 HI 0.85 701-1000 VHI ACHIEVABILITY ALIGNMENT (CSFs) Weighted Matrix Scores Achievability Matrix Scores 0.03 0.02 0.016 0.050.01 0.060.040.016 0.53 0.770.320.15 0.41 0.600.250.12 0.29 0.430.180.08 0.18 0.260.11 0.090.003
  27. 27. 27 © Michel Thiry, 2017 Alignment/Achievability Example 2 options: Size represents cost Choice between 2 or more mutually exclusive options Prioritisation of initiatives in portfolio or program
  28. 28. 28 © Michel Thiry, 2017 Develop responsive value-based decision management process  VM is an ongoing, iterative process  Look for opportunities to improve value  Regularly reexamine business context and stakeholders' needs and expectations  Define ‘gates’ or ‘gateways’ for assessment of delivery of benefits (use benefits register)  Ensure any changes address ‘real’ issues and are based on value criteria  Focus of VM evolves throughout process
  29. 29. 29 © Michel Thiry, 2017 Strategic Value Management as a Governance System Formulate Strategy Projects & transition activities Gather Data Reformulate Strategy Strategic Management Optimise Effort Clarify Actions Collate & Analyse Governance SystemStructureandcommit Portfolio Management Deliver Results Current governance processes mostly focus on bottom of process Success ensured by process integration Program Management Define the vision SVM Activities
  30. 30. 30 © Michel Thiry, 2017 Michel Thiry, PhD, FAPM, PMI Fellow michel.thiry@valense.com http://uk.linkedin.com/in/michelthiry www.amazon.com/author/michelthiry http://www.youtube.com/user/valensepartners? feature=results_main New York London Bahrain Pune Sydney GenevaVancouver

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