XPX advisors bring a focus on short- and long-term value creation for their clients. The go-to metric of value is often the financial valuation. It’s true that a valuation is an important outcome of all the work a company does to create value. But it’s tied very heavily to backward-facing financial metrics. To drive change and improvement, we as advisors need to help our clients think forward, help our clients preserve and grow value in the future.
The Value Creation Formula
No matter your specialty, here’s a simple value creation formula that can help you guide planning and operational conversations with your clients:
How can the company create value for its customers in a way
that also creates value for its organization and its external stakeholders?
This formula reflects the fact that companies are a form of living system. The system is only as strong as its weakest point. There are a lot of moving parts in this system. You may influence just one part. But it’s in your interest and your clients’ to ensure that all the components of the system work in balance. This balanced approach is the best way to scale and create realizable value in their business.
Unpacking the Formula
Let’s unpack the formula to add some meat to each of the three value categories:
- Customer Value: Every company exists to solve a customer problem. This is actually true regardless of the organizational form (public, private, for profit or not). For a business, the customer is usually also the source of the revenue that is its lifeblood.
- Organizational Value: To create lasting value, a company has to create a scalable infrastructure that can do its value creation work. This means that it must build and maintain the strategic, financial, knowledge and physical infrastructure to support its work day after day and year after year.
- Stakeholder Value: And, of course, no company does its work alone. Companies rely on employees, suppliers, communities and environmental resources. So ensuring the strength and continuity of these relationships is also critical to the company’s future.
Each of these elements is necessary to creating a valuable, scalable company. Understanding and executing against this formula will result in growth, improved financial performance and, ultimately, a higher valuation of the company.
Helping Your Clients Deliver on the Formula
As a trusted advisor, you help your clients solve one or more elements of the value creation formula. But the success of your work increases when you are able to help them see the impacts your work will have on their overall success and value. And, as a member of XPX, you have an ecosystem of trusted advisors with deep expertise in many aspects of this formula. The formula will help you create a formidable team for your clients to deliver on their value creation goals.
About Insights7: We help companies unify strategy execution data and decision making. Advisors use our unique platform to win more work with less effort. Using our system as a delivery vehicle for your advisory work helps you move to trusted advisor status faster, get noticed by company leaders, and brings new projects directly to you.
