value and stakeholders 9-16[1]dspace.mit.edu/.../0/valueandstakeholders9_16.pdf · balance needs of...
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1 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Value and Enterprise Stakeholders
Prof. Deborah NightingaleSeptember 16, 2002
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2 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Learning Objectives
Value creation frameworkEnterprise stakeholdersStakeholder value metrics
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3 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Creating Value
Value Value PropositionProposition
Find Stakeholder
Value
Develop and Agree to the
Approach
Execute on the
Promise
Dynamic and
Iterative
Value Value IdentificationIdentification
Value Value DeliveryDelivery
* Source: Murman et al., Lean Enterprise Value, Palgrave 2002
“How various stakeholders find particular worth, utility, benefit, or reward in exchange for their respective contributions to the enterprise.”*
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4 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Find stakeholder value
Identifying Value
Identify stakeholdersWhat part of the program or process adds value for each stakeholder?
Determine each stakeholder value
What kinds of exchanges are required to provide this value?
Establish stakeholder expectations and contributions
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5 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Creating a Value Proposition
Develop and agree to the approach
Align stakeholders around the program value streamStructure the enterprise value stream
Each stakeholder will contribute their efforts or resources to the value stream in those ways from which they can derive value
Establish clear communication of balanced expectations with all stakeholders
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6 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Deliver Value to All Stakeholders
Add value at each step along the value steam in accordance with the value propositionExecute the value stream using lean principlesGather information and data to continue to improve enterprise processes
Execute on the promise
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7 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Value Creation is Dynamic and Iterative
Real world is not staticChanges in stakeholder valuesChanges in who are the stakeholders
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8 - D. Nightingale - © 2002 Massachusetts Institute of Technology
A Value Creation Framework
Value Identification
Value Proposition
Value Delivery
Value Phases
Program
Corporate Government
National International
EnterprisesMost lean principles and practices have been focused here
Opportunities
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9 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Corporate Leadership
Employees
Multi-Program
Enterprise
Business Unit
Customers/End Users
Shareholders
UnionsSociety
Partners
Suppliers
Enterprise Stakeholders
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10 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Customer View
Value as we define it is delivered in a timely fashion, even in anticipation of our needsOur satisfaction appears to be the focus of all our supplier’s activitiesWe are invited to get involved early in the design processOur supplier understands our need for low life-cycle cost and superb quality
OUTCOMES:More customersGreater market share
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11 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Workforce ViewI am proud to be an employee and feel my skills are valued as a resource for the companyI enjoy coming to work everyday and understand how my work adds value for customersContinuous and cross-functional training helps empower me to make decisions and create a leaner enterprise I can get the necessary information for decision making when I need it and how I need itI am rewarded both as an individual and as a team member for my contributions OUTCOMES:
Better worker retentionFewer sick/absent daysMore innovationGreater productivity
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12 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Senior Leadership ViewBalance needs of all stakeholders and encourage value creation throughout the enterpriseCreate a shared vision of the enterprise with value defined for all stakeholdersEstablish a process-based enterprise using integrated teams that are aligned with customer value streamsStrategic goals and enterprise metrics are created and understood by all levels of the organizationOrganizational learning is encouraged and best-practice/lessons learned information disseminated
OUTCOMES:Long-term corporate leadershipBetter executive compensation
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13 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Union ViewFeel like full strategic partners in the enterpriseUnderstand market forces can cause “tough” decisions, but want to be in on the decisions in shaping the futurePositive contributor to the enterprise by enabling work, NOT by withholding laborFeel a sense of pride in the work they help do and the products they help provideWork for long-run success of the enterprise, not simply short-term job quotas
OUTCOMES:Better salaries for employeesLong-term job stabilityFewer union conflictsHR duties shared with union
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14 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Corporate / Stockholder ViewDelighted with increased profitability from enhanced operating margins and salesUnderstand that the delivery of value to the customer is the core business objectiveEnterprise integration enables globalization and market growthFinancial community values the increased operating efficiencies and the company shares these financial gains with the other stakeholdersResources freed up in the lean transformation are tasked with innovating and creating growth opportunities
OUTCOMES:Higher ROILong term growth
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15 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Supplier / Partner ViewFully integrated in design, development, and production of the productProductions schedules are aligned and open to all in the value chainSupplier is assisted by his customer to achieve Lean and is appraised of potential business opportunitiesDelivers products just in time to point of useOpenly share ideas on product and process improvement that will benefit the entire enterpriseEquitable sharing of profits throughout the enterprise
OUTCOMES:Greater salesLess overhead and stockReduced demand amplification
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16 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Societal View
Pleased to have this organization in their communityThe organization provides jobs and participates in the improvement of the communityThe environment is considered important to the organization The local society is willing to provide infrastructure support to sustain the organizationPartnership between organization and society makes the community a desirable place to live
OUTCOMES:Long term partnershipImproves local economyIncreased local societal well-being
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17 - D. Nightingale - © 2002 Massachusetts Institute of Technology
LeanEnterprise
SatisfiedStakeholders
Strategicoutcomes
Lean Enterprise Value For All Stakeholders Delivers Results
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18 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Stakeholder Values/Contributions
Corporation Sustainability of Growth in Growth in Expansion into Innovation in the Enterprise Market Share Profits New Markets Products
Shareholders Share Price in Growth in Financial Management of Information on Goodwill of the Market Profits Ratios Corporation Corporate Affairs Corporation
Employees Sustainability of Share in Job Sec- Quality of Work Information Good the Enterprise Profits urity Environment Sharing Management
Customers Responsiveness Quality in Value in Innovation in Quality in Overall On-Time to Concerns Products Products Products Service/Support Deliveries
Suppliers Sustainability of Growth in Fair Pri- On-Time Accts. Early Design Information the Enterprise Market Share cing Receivable Involvement Sharing
Society/Commu- Expansion in Em- Job Security Tax Pay- Quality of Work Externalities Corporate nity/Government ployment Opport. ments Environment Citizenship
STAKE HOLDERS' INTERESTS IN AN ENTERPRISE
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19 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Stakeholder Values/Contributions
Corporation Capital/ Direction Legal Management Inter-Functional Facilities and Strategy Entity Expertise Integration
Shareholders Financial Fore- Capital Feedbackcasting/Analysis on Value
Employees Labour/Service/ Ideas/ CorporateExpertise Innovations Culture
Customers Money Drive and Feedback Design Competition Specifications
Suppliers Products (Parts/ Design Ideas/ Brand Recogni-Raw Materials) Input Innovat. tion
Society/Commu- Manpower Quality of Services Policiesnity/Government Life
STAKE HOLDERS' CONTRIBUTIONS TO AN ENTERPRISE
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20 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Customer Value
CUSTOMER**SATISFACTION
Product /ServiceQuality
Relationshipwith
Corporation
Cost ofOwnership
CycleTime
Function to RequirementsReliabilityAvailability Product Performance
DefectsFailure Rate, MTBF
ResponsivenessEarly InvolvementQuality of SupportOpen CommunicationsTrustRisk SharingBenefit SharingViability of Enterprise
Product Development CostAcquisition CostOperating CostSupport CostRetirement CostRetention of Resale Value
Order Lead TimeProduct Development TimeMaintenance/Repair/Overhaul TimeOn-Time DeliveryJust in Time Capability
** Includes Acquisition Community, End User, and System Beneficiary
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21 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Shareholder ValueEarnings/ShareFinancial RatiosCorporate Profit ReturnShare PriceBond Interest Rate
Corporate DebtCorporate Equity RiskBond RatingShare Rating
Barriers to EntryMarket Share MarketCompetitors PositionSubstitutesBranding
R&D Investment Growth SHAREHOLDERNew Product Successes Potential SATISFACTION
Track RecordVision Expression ExecutiveRespect (internal and external) LeadershipPerception of Ability to Perform
Information AvailabilityGoodwill External Reputation RelationsRegulatory Compliance
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22 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Supplier Value
Training/Assistance with Process ImprovementMarket Information Supplier Certification RelationshipDemand Information Early Involvement (design, development, production) withDesign Information Information Sharing CorporationProduction Information Technology SharingProduct/Process Improvement Viability of Enterprise
Long Term RelationshipCorporation's Market Reputation SUPPLIER
SATISFACTION
Fair PricingRisk SharingEquitable Benefit Sharing FinancialOn-Time Accounts ReceivableGrowth in Market Share
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23 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Employee Value
SalaryBenefits Compensation
Individual BonusTeam
Skills are valuedLost Time Incident Rate Safety
Environment/OSHA WorkErgonomics Environment
Employee Empowerment Good Management RelationsTimely CommunicationsTwo-way Communications"Cool" place to work
EMPLOYEEJob Security SATISFACTIONTraining CareerPotential for Career AdvancementEmployability
Community Relations External Company Reputation/Personal Pride FactorsQuality of Life
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24 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Societal Value
Corporate Tax on ProfitsProperty TaxIncome Tax of Employees Tax Revenue FinancialLocal Sales Tax Charitable Contributions
SuppliersSupporting Commerce Secondary and Tertiary Industry Economic
Job Potential Attractiveness SOCIETALJob Security of Industry SATISFACTION
Reduction of Emissions Voluntary EffortsWaste Reduction Environmentally Friendly Practices Corporate
Quality of Work Environment CitizenshipAdherence to Regulations
Universities Affiliated Professional Societies OrganizationsIndustry Associations
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Union Value
Headcount ProtectionPosition Protection Job Security
CompensationBenefitsSafety EmploymentJob ClassificationsSeniority Rights
Sharing in Decision MakingContribution to Long-term Corporate Success UNIONInstill Sense of Pride in Workforce Influence SATISFACTIONStrike Threat CapabilityEncourage Involvement in InnovationUnion Teaming with Corporate Leadership
Political Action
Committees
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26 - D. Nightingale - © 2002 Massachusetts Institute of Technology
Corporate ValueRevenueExpenses Profits
Growth in profitsOther financial ratios FinancialCash flow
Stock rating Ability to raise capitalBond rating
Market ShareBarriers to EntryCompetition Market PositionSubstitutesBranding
New Product Development Growth Potential SustainabilityNew Market Development
Continuous Improvement
Knowledge Management
Contribution to InnovationProductivityTurnoverCost (Salaries & Benefits) Employees CORPORATESafety SATISFACTIONSick/Absent daysLoyalty
Customer satisfactionLoyalty CustomersSalesTimely Accounts Receivable
High Quality StakeholderLow Cost SuppliersTimely Delivery
Fewer Conflicts Unions
Infrastructure Support SocietyLong Term Partnership
Political/Public
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High
CurrentPerformance
LowLow High
Relative Importance
Stakeholder: ____________
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High
CurrentPerformance
LowLow High
Relative Importance
Stakeholder: CustomerMajor Factors Contributing to Customer Value:
•Product/Service Quality•Relationship with Corporation
•Cost of Ownership•Cycle Time
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29 - D. Nightingale - © 2002 Massachusetts Institute of Technology
High
CurrentPerformance
LowLow High
Relative Importance
Cost Of Ownership
Product /ServiceQuality
Relationship with Corp.
Cycle Time
Stakeholder: CustomerMajor Factors Contributing to Customer Value:
•Product/Service Quality•Relationship with Corporation
•Cost of Ownership•Cycle Time
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High
CurrentPerformance
LowLow High
Relative Importance
Stakeholder: ShareholderMajor Factors Contributing to Shareholder Value:
•Return •Risk•Market Position
•Growth Potential•Executive Leadership•External Relations
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High
CurrentPerformance
LowLow High
Relative Importance
External Relations
Risk
Executive Leadership
Market Position
Stakeholder: ShareholderMajor Factors Contributing to Shareholder Value:
•Return •Risk•Market Position
•Growth Potential•Executive Leadership•External Relations
Return
Growth Potential
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High
CurrentPerformance
LowLow High
Relative Importance
Stakeholder: SupplierMajor Factors Contributing to Supplier Value:
•Relationship with Corporation•Financial
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33 - D. Nightingale - © 2002 Massachusetts Institute of Technology
High
CurrentPerformance
LowLow High
Relative Importance
Relationship with Corp.
Financial
Stakeholder: SupplierMajor Factors Contributing to Supplier Value:
•Relationship with Corporation•Financial
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High
CurrentPerformance
LowLow High
Relative Importance
Stakeholder: UnionMajor Factors Contributing to Union Value:
•Employment•Power
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High
CurrentPerformance
LowLow High
Relative Importance
Employment
Power
Stakeholder: UnionMajor Factors Contributing to Union Value:
•Employment•Power