1. The output stakeholder value proposition (or output deliverables)

Answers the question of why an organisation exists and what its roles and deliverables are. It identifies the key output stakeholders of the organisation and describes what value the organisation is delivering to them. It is mainly derived from the analysis of the core purpose and the output stakeholder requirements.

2. The core activities

The vital few things an organisation has to excel at in order to deliver the above value proposition. The core activities essentially define what an organization has to focus on and what differentiates it from others. Core activities are directly linked to the organisational core competencies and therefore derive from the assessment of the core competencies as part of the internal analysis.

3. The enabling strategic elements (or value drivers)

The other strategic elements or objectives an organisation has to have in place or has to deliver in order to perform its core activities and meet its output stakeholder value proposition. These enabling elements or value drivers derive from the assessment of the resource architecture as well as the assessment of the input stakeholders and represent activities linked to an organization’s financial, physical, and intangible resources.

It is a bit like comparing your organisation to an apple tree – the apples (what you provide to your customers or stakeholders), the truck is what is holding the tree up (the core activities) and the roots are what is underpinning the success.

These three components are the placed in relationships with each other and visualized on one piece of paper to create a completely integrated and coherent picture of the forward strategy.

A value creation map is therefore a visual representation of an organisation’s unique strategy at a specific point in time and it has a limited life-span (usually 12 months, which is in line with the annual planning cycle of most organisations, but this can be shorter or longer depending on the dynamics in the external environment). As a consequence there should never be two value creation maps that are the same.

A value creation map establishes a shared understanding and facilitates communication of strategy. Such shared understanding of the organisational strategy can then form the starting point for assessing, implementing, and continuously refining the strategy.

Similar to a strategy map, for each of the objectives on a value creation map you would develop measures, targets and objectives. With the addition that a value creation map also contains key performance questions – that spell out the information needs before the development of KPIs.

Output stakeholder value proposition: The key elements that will inform the output stakeholder value proposition are the purpose and visionary goals, together with the analysis of the output stakeholder requirements as well as the micro and macro environment.

Reviewing this information should allow organisations to condense this into an output stakeholder value proposition. The stakeholder value proposition is usually in the format of a sentence or two.

Here are some illustrative examples from both commercial companies and government and not-for-profit organizations:

Belfast City Council

‘The Council takes a leading role in improving quality of life now and for future generations for the people of Belfast by making the city a better place to live in, work in, invest in and visit.’

Neurone Disease Association

‘The aim of the Motor Neurone Disease Association is to play a key role in ending the disease and until then, provide care and support for people affected by MND.’

Novo Nordisk (a leading pharmaceutical company)

‘Novo Nordisk is leading the fight against diabetes. Defeating diabetes is out passion and our business.’

DHL

'Delivering sustainable financial performance by making our customers successful through delivering high quality shipment solutions and superior customer service.'

A global insurance company

Provision of sustainable financial security through excellent and customized trusted insurance covers for the global transport industry, together with value added service.

The medical science department of a global pharmaceutical company

'To provide medical and scientific expertise into the drug development process in order to produce innovative, effective medicines that improve the health and quality of life of patients.’

The core activities can be extracted from the analysis of the strengths (and weaknesses) as well as the assessment of the organiational capabilities and core competencies. Core activities are linked to the core competencies.

Core competencies are usually formulated as statements of ability such as the ‘ability to build 200 to 600 Watt motors’, which is a core competence for Black and Decker.

A core activity takes these and translates them into actionable activities the organisation will focus on in the next 12 months or so. The core activities refer to the vital few things you have to excel at and that define your organisation and are instrumental to the delivery of the value proposition.

A good number of core activities (the same applies to core competencies) is between two and four. If you identify more then they are either not likely to be all ‘core’ or your strategy is not focused enough.

Examples of different core activities from commercial, public service and not-for-profit organisations:

The Royal Air Force

‘Maintain & Sustain Combat Ready Equipment’

A global insurance company

‘Handle claims effectively and efficiently’ 

DHL

‘Understand the changing client requirements’

A government agency

‘Effectively engage with our Stakeholders’

A global fast-moving-consumer good manufacturer

‘Retail Trade Management’

Belfast City Council

‘Meeting the needs of local people through the Effective Delivery of Quality and Customer-Centric Services’

The enabling strategic elements or value drivers are what is underpinning the entire strategy. They represent strategic objectives that are linked to the various resources (intangible, physical or financial) which need to be in place to deliver the strategy.

Another source is the input stakeholder analysis. If the input stakeholder analysis yields insights such as the contributions from employees, suppliers and partners then these need to be reflected here. They usually map onto the intangible resources.

However, instead of just listing the resources they have to be translated into actionable objectives the organisation will focus on in the next 12 months or so. Use verbs and adverbs to define the value driver objectives to make them practical and relevant.

As a rough guide, you should have between five and fifteen enabling strategic elements or value drivers. If you have any less, the depth of your strategic analysis is in question. If you have more (which is common) then you might need to work a little harder to consolidate them and distill them down. Too many strategic elements make the maps cluttered and your strategy less focused and more difficult to explain, communicate and implement.

Here are some examples of different value drivers from commercial, public service and not-for-profit organisations:

• Continuously improve and innovate our service delivery
• Optimise our supply-chain
• Develop new products and services
• Forecast demand
• Grow and retain high-value customers
• Develop better relationship with key customers
• Improve our corporate reputation
• Increase customer confidence
• Build a strong brand
• Communicate effectively (internally/externally)
• Attract best-in-class people
• Acquire new resources/businesses
• Recruit new volunteers
• Leverage out IT infrastructure
• Provide relevant material on our website
• Train and develop our staff in the area of X
• Recognise the contribution of our people
• Engage with our suppliers
• Manage financial budget efficiency and effectively
• Reduce costs of service delivery
• Create a performance driven culture
• Share and live our values

The ICAEW Library & Information Service provides access to leading business, finance and management journals, as well as eBooks.

Further reading related to value creation maps is available through the resources below.