Sustainable business success requires ongoing adaptation of your business model. In other words, the way you create value for customers and the way you capture this monetary value for shareholders, employees and future investments must be constantly adjusted to match our fast changing environment.
This finding is only becoming more pressing. Disruptive innovation in technology, business eco-systems and our social fabric are creating more volatility and complex interdependencies than ever. The half-life of knowledge decreases year-by-year and the average lifespan of companies decreases. Staying relevant for customers (and society) is, in the same vein, becoming harder and harder.
The necessity to find and set new directions is clear and urgent. So why, then, are so many leaders failing to move to ‘What’s Next’ in their value creation?
From ‘Reactive Followers’
Many leaders act as ‘reactive followers’. To counter the financial impact of reducing consumer relevance, they turn to and often get stuck in the “game” of cost-savings, restructuring and consolidation. The focus is often on value capturing while value creation for customers is eroded. The hard work of real reflection on What Is Next (W.I.N.) in value creation for customers is, therefore, left behind, leading to stagnant business and sometimes, closure.
To ‘Creative Movers’
Other leaders are ‘creative movers’. At ELP, our experience in realising breakthroughs in family businesses, big European and Fortune 500-corporations, private equity and fast growing niche players in a wide range of industries, as well as in academic research, has taught us that:
- Successful leaders realise their ‘Move to W.I.N. through simultaneous and holistic (as opposed to sequential and siloed) re-architecting, re-balancing and re-aligning:
- their value creation and value capturing strategies
- their supporting organisational and cultural disciplines/habits
- Their strategizing is constantly fed by deep consumer connections and market insight from all levels of the organisation. Their organizing work focuses on enabling agile responsiveness to serve customers while removing all non-value adding bureaucracy. Last, their leadership habits create a culture of learning by setting challenging goals and providing psychological safety to experiment and execute.
- They turn their organisations into purposeful communities that move together to create new, more and better value every day. They realise that aligning ‘me & we’ is a crucial building stone for lasting commitment, energy and success. They integrate business & purpose in all decision making.
- They focus the organisation on the Important Few Differentiating Priorities (Must Win Battles) and create a cadence and flywheel of execution, assessment, learning, adaptation.
- They set their organisation up for success, equip it with the tools that drive efficiency and effectiveness, and they invest in leadership, people and capabilities in line with the ‘must win battles’.
Starting your movement
Witnessing the growing need to kick-start or revitalise transformative movements to ‘What Is Next’, we created The ELP VC2 Indicator *. Together with our academic partners and building on our experience with realising breakthroughs, we developed a methodology that helps leaders apply the lessons of ‘creative movers’ in a structured and successful way.
The VC2 Indicator starts with facing and aligning on where you(r business) are today by asking questions regarding:
- The relevance of your value creation
- The strength of your value capturing
- The turbulence in your environment
- The status of your company’s capabilities – current strategic, organisational and leadership habits – to ‘Move to WIN’?
Without this clarity and alignment, it is impossible to co-create a transformative roadmap to renew your business.
Building your own VC2 Indicator
The VC2 Indicator helps to build a high quality roadmap and starts with assessing:
- The position and trend line of your value creation and your value capturing.
- The strength of your current business model, looking at the key drivers of your value creation and value capturing.
- Your organisational and leadership potential to discover, design and move to what is next in your business life cycle:
- The strategic habit of external connectedness,
- The structural habit of agility,
- The leadership habit of high performance through learning.
The VC2 approach is designed and executed as a co-creative and collaborative experience during which the ‘movement to what is next’ starts from the assessment phase. Creating awareness, understanding and engagement with the renewal from the beginning.
Each VC2 assessment follows the holistic structure and methodology of our approach while being tailored to the specific demands and situation of the company involved.
Execution is realised with the people and intelligence inside. This assures that the investment will be lasting and able to mobilise, motivate and educate internal leadership (talent) throughout the process.
The indicator also provides shared insight on the limited number of key interventions needed to move your organisation, creating focus and avoiding inefficiencies in time and investments. It kick-starts and energises the readiness to move to What Is Next in a structured, collaborative and tailored way.
The leader of the company acts (or should act) not only as ‘chief executive officer’ but also as ‘chief movement officer’, ‘chief complexity officer’ and ‘chief engagement officer’. Complexity and volatility are growing. Everybody in the company needs to act as a leader. Putting & keeping the pieces together requires agility, focus, cohesion and simplicity at the same time. The VC2 Indicator is a crucial tool for all leaders to mobilise and to move in the right direction.
* Note: The VC2 Indicator was developed building on the decades of experience of the senior business executives in the ELP Network in realising breakthroughs in value creation & value capturing as well as the long term and in depth research of ELP founders Paul Verdin (together with Gabriel Hawanini and Venkat Subramanian) and Nick Van Heck as well as Koen Tackx, Amy Edmondson and Nikolaos Dimitriadis at Harvard Business School, INSEAD, Solvay Business School, KU Leuven, Vlerick Business School, Sheffield University and Berlin School for Creative Leadership. For more information on the VC2 Indicator contact firstname.lastname@example.org.