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How to Know Whether your Organization’s Business Model is Working For or Against Your Stakeholder Value Proposition

When strategy execution just isn’t working in your public sector organization as well as you’d like, one of the first things you should do is take a look at your stakeholder value proposition (SVP). Issues here could be the root of the problem.

In my experience, organizations with strategy execution challenges often suffer from one of three SVP-based problems: (1) little or no thought has gone into defining a SVP; (2) a primary or leading SVP hasn’t been identified; or (3) the business model and SVP are mis-aligned.

 

No Stakeholder Value Proposition

Many organizations are all about their “what” – so much so that little or no thought has gone into their “why”. One sure sign that this is your organization’s problem is silence when you ask the question “Why do our stakeholders value us?” Organizations that spend all their time talking about the great programs and services they provide but are unable to clearly say who they serve and the unique value they deliver to these stakeholders are missing a SVP. In the absence of a clearly articulated SVP employees fill the gap with their own thoughts on value and how to deliver it. Their actions and decisions reflect their individual choice and the result is almost always an inconsistent experience of value for your stakeholders.

To test whether this is your organization’s problem, ask a range of people the question “Why do our stakeholders value us?”. Blank stares = trouble.

 

No Leading SVP

Successful public sector organizations select only one of these three value propositions to accentuate and focus on:

Operational Excellence: The organization is focused primarily on maximizing cost efficiencies

Innovation (Product, Program or Service) Leadership: The organization is focused primarily on providing sector-leading products, programs and/or services

Stakeholder Intimacy: The organization is focused primarily on providing customized programs, services, and/or advice based on an understanding of individual stakeholder needs

Unfortunately, most organizations hesitate to, or actively avoid, selecting a single leading SVP.  Instead, they attempt to excel at all three SVP’s at the same time. This, unfortunately, is costly and risky because choosing not to choose produces operating efficiencies, costly decision-making and mistakes, organizational conflict, inconsistent or poor stakeholder service, and, ultimately, the delivery of stakeholder value that doesn’t measure up to stakeholder expectations. Why? Because each SVP option requires a certain type of organizational structure and business model if it’s going to be successful. Many of these required choices are incompatible from SVP to SVP.

The key to success is to select just one SVP to maximize while keeping the other two SVP’s on the radar with performance at threshold levels only. Determining your best SVP choice requires a good understanding of how your stakeholders define value.

To test whether this is your organization’s problem, ask a range of people the question “Why do our stakeholders value us?”. Inconsistent answers and guesses mean you don’t have a clear leading SVP and are, again, heading for difficulties.

 

Business Model – SVP Mis-alignment

Even when your organization has clearly selected a leading SVP, there’s still a strategy execution risk. The primary cause? A business model that is getting in the way of delivering value and fulfilling your organization’s SVP promise to your stakeholders. Your organization’s business model includes its purpose, strategic choices, and strategies/strategic objectives. It also includes the offerings, processes, policies, infrastructure, distribution networks, relationships, and other organizational must haves that are required to enable your strategy, deliver value, and achieve your purpose/mission.

Is your organization’s business model positioned to help or hurt its ability to deliver on your leading SVP? Walk through each of these steps to assess the fit between your primary SVP and the priorities expressed in your current business model.

HINT: Be on the lookout for cases where your current business model lines up with a SVP other than your leading SVP OR situations where the elements of your current business model show that you are mixing SVP’s on your business model design.

 

Step 1: Start by recording your organization’s leading SVP

 

Step 2 – Evaluate the “Fitness” of Your Foundation

The foundation of your business model is your organization’s culture. The right culture creates the right environment for the successful implementation and functioning of your business model.  Your organization’s core values outline the type of culture and environment you are trying to create so compare your organization’s current core values against the ones typically associated with each of the different SVP’s:

Operational Excellence Innovation Leadership Stakeholder Intimacy
  • Ensuring conformance to standards
  • Focusing on quality and repeatability
  • Relentlessly focusing on continuous improvement and lean/efficient operations

 

  • Innovative thinking and creative solution generation
  • Intelligent risk taking
  • Entrepreneurial thinking
  • Employee initiative

 

  • Stakeholder-focused, pro-active decision-making
  • Leveraging stakeholder knowledge at every stakeholder touch point
  • Employee empowerment

 

Which SVP do your current core values line up with best?

Are your core values mixed with elements from each SVP?

 

Step 3 – Review the Stakeholder Experience You Are Striving to Create

What type of experience are you ultimately trying to deliver to your stakeholders? What types of feelings are you trying to create? Compare your organization’s predominant stakeholder experience objectives and attributes against the ones typically associated with each of the different SVP’s:

Operational Excellence Innovation Leadership Stakeholder Intimacy
  • Lowest price with reasonable quality
  • Convenience
  • What I want is always available
  • Dependent, consistent, repeatable, and reliable

 

  • Hot off the shelf (and I got it first)
  • An adventure – excitement and thrill
  • A new experience
  • Surprise and delight every time

 

  • Have it exactly my way every time
  • A quality relationship
  • I feel understood and important
  • Exactly the right things I want/need before I even know I want/need it

 

Which SVP do your current stakeholder experience objectives line up with best?

Are your stakeholder experience objectives mixed with elements from each SVP?

 

Step 4 – Evaluate Your Decisions About What You Need to Excel At and How

What types of business processes must your organization absolutely excel at to deliver the desired stakeholder experience and how must they perform to allow your organization to fulfill its stakeholder promise? Compare your organization’s prevailing process priorities and performance requirements, objectives, and attributes against the ones typically associated with each of the different SVP’s:

Operational Excellence Innovation Leadership Stakeholder Intimacy
  • Streamline and optimize the supply chain
  • Product and service creation and delivery – quick, efficient, convenient, and cost-effective
  • Minimize risk to maximize performance reliability
  • Continuous quality improvement as a business process

 

  • Excel at identifying new opportunities including product and service trends in the external environment
  • Understand current and future stakeholder needs
  • Combine both capabilities above to create new and exciting offerings
  • Speed in product or service development and launch capabilities

 

  • Stakeholder-centric processes
  • Attracting stakeholders and building deep relationships – stakeholder relationship management
  • Stakeholder service excellence through customization
  • Pro-active creation and delivery of new stakeholder based products and services

 

Which SVP do your current process priorities line up with best?

Are your process priorities and process performance objectives mixed with elements from each SVP?

 

Step 5 – Assess Whether You Have the Right Supporting Organization in Place

What kind of people, skills, capabilities, and culture does your organization have in place to achieve the required process performance, deliver the desired stakeholder experience, and fulfill its stakeholder promise? What kinds of tools and technologies must be in place to unleash and maximize the impact of your organization’s capabilities? Compare your organization’s current capability profile against the attributes typically associated with each of the different SVP’s:

Operational Excellence Innovation Leadership Stakeholder Intimacy
  • Cultivate a relentless focus on quality and continuous improvement
  • Implement technologies that enable efficient business operations (e.g. electronic transaction processing)
  • Leverage technology to identify opportunities for improvement and increased business efficiency

 

  • Invest in multi-disciplinary skills that maximize creativity and innovation
  • Create an environment that enables opportunities for and rewards innovative thinking
  • Invest in tools and technologies that help employees explore the marketplace, integrate information, and speed new products and services from creation to delivery

 

  • Cultivation of stakeholder-focused talent
  • High stakeholder management skills, knowledge, and decision-making authorities with front-line employees
  • Technology and applications that capture and share stakeholder intelligence and insights

 

Which SVP does your current organizational attributes profile line up with best?

Is your profile mixed with representation from attributes from each SVP?

 

Step 6 – Evaluate Your Approach to Money and Resource Management

Does your organization manage its financial and non-financial resources in a way that enables the execution of the items outlined in steps 3 -5 and aligns with your leading SVP? Compare your organization’s prevailing money and resource management priorities against those typically associated with each of the different SVP’s:

Operational Excellence Innovation Leadership Stakeholder Intimacy
  • Minimize waste and improve cost structures inside and outside the organization (i.e. the supply chain) – ensure efficiencies are achieved at all levels of the organization
  • Manage with everything treated as an individual expense item
  • Maximize resource and asset utilization

 

  • Manage costs from a product/program life cycle perspective
  • Grow revenues by offering new products and services to stakeholders
  • Allocate resources in research/innovation and development activities

 

 

  • Manage with the life-time value of the stakeholder in mind
  • Allocate resources to maximize stakeholder service responsiveness and customization
  • Invest in building capabilities that have a high stakeholder value ROI

 

Which SVP do your current money and resource management priorities line up with best?

Are your money and resource management priorities mixed with elements from each SVP?

 

Making Sense of Your Assessment

What did your assessment and your answers to the questions at each step in the evaluation process reveal about the level of alignment between your current business model and your leading stakeholder value proposition?

Scenario 1: Did you discover that your current business model lines up pretty well under one SVP category? Is that category the same as your leading SVP?

If so then you can be assured that your business model is well positioned to support the delivery of your primary SVP. Any strategy execution problems you may be experiencing are probably due to another challenge in your business.

If, however, your current business model aligns with a SVP other than your leading SVP, you need to decide whether you need to switch your primary SVP OR (the more likely option) renovate and re-align your business model and strategic priorities.

Scenario 2: Did you find that your current business model contains a mix of elements from all three SVP’s?

If so, your business model isn’t optimally designed to fully support your leading SVP. The best course of action is to renovate your business model so that your leading SVP is more clearly emphasized and the other two SVP’s are taking a sub-ordinate position in the elements of your business model.

 

Aligning your organization’s business model with your leading stakeholder value proposition is one of the most important business management activities any organization can undertake. While it requires some difficult choices and trade-offs, the payoff of SVP-business model alignment is the more effective and efficient execution of your strategy, better business performance results, the consistent delivery of your stakeholder promise and value proposition, and, ultimately, the achievement of better business and stakeholder outcomes.