The value realisation philosophy

QVARTZ PERSPECTIVE

Companies implementing new strategic initiatives often fall short when it comes to realising the full potential of the forecasted financial benefits. Closing this value gap is an on-going challenge for many business executives. Through our work helping numerous clients successfully grow and transform their businesses, we have developed a tried-and-true method for closing the value gap. Officially we call it the Value Realisation (VR) model, but its nickname around the office is the ‘CFO approach to change management’.

The value gap between intended and actual benefits from projects

Sources: Havard Business Review, McKinsey & Oxford

The need for large, successful and often rapid transformation is a given for most large corporations. Non-change isn’t an option, so something must be done. What we call Value Realisation is a proven method for closing this value gap

Michael Laursen, QVARTZ

Value realisation is…

... a shared aspiration

Value Realisation is a shared aspiration between us and our clients. It’s a commitment to do more than “get things done” and to hold each other accountable for delivering positive impact and the value which was promised.

... a mindset

Relentless focus on realising value creates a mindset of pragmatism and accountability. Don’t make promises (or business cases) you can’t keep. Think end-to-end – when and how will value gains be realised, and who is going to institutionalise the changes necessary to realise the value gains?

... a proven approach

Value Realisation isn’t a product of modern science. It’s not even breaking new ground. It’s a simple but disciplined approach that applies well-known concepts, deep understanding of the business, unbeatable enthusiasm and the ability to support the receiving organisation in driving its own transformation.

VR in action: Danske Bank case

Many great strategies fail in the execution phase. Hear Lars Sjögren, Head of Business Development and Strategy at Danske Bank, tell the story of how they chose a different approach for the Business Banking strategy across the Danske Bank group, considering implementation from day one and changing the way they work and act with their customers.

Where does the performance go?

The average performance loss implied by the importance ratings that managers gave to specific breakdowns in the planning and execution process in a study published by Harvard Business School.

  • AVERAGE REALIZED PERFORMANCE 63%
  • AVERAGE PERFORMANCE LOSS 37%

AVERAGE PERFOMANCE LOSS – BREAKDOWN (OF 37%)

  • INADEQUATE OR UNAVAILABLE RESOURCES 7.5%
  • POORLY COMMUNICATED STRATEGY 5.2%
  • ACTIONS REQUIRED TO EXECUTE NOT CLEARLY DEFINED 4.5%
  • UNCLEAR ACCOUNTABILITIES FOR EXECUTION 4.1%
  • ORGANISATIONAL SILOS AND CULTURE BLOCKING EXECUTION 3.7%
  • INADEQUATE PERFORMANCE MONITORING 3.0%
  • INADEQUATE CONSEQUENCES OR REWARDS FOR FAILURE OR SUCCESS 3.0%
  • POOR SENIOR LEADERSHIP 2.6%
  • UNCOMMITTED LEADERSHIP 1.9%
  • UNAPPROVED STRATEGY 0.7%
  • OTHER OBSTACLES (INCLUDING INADEQUATE SKILLS AND CAPABILITIES) 0.7%