Sustainability Value Methodology_Deloitte, 2007

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Deloitte Sustainability Value Methodology

Copenhagen, 28 June 2006 Preben Soerensen Sam Vaseghi

Seite 2 © 9/27/2005 Deloitte & Touche

Leading companies understand that there is not always a trade-off between Shareholder & Stakeholder value

Create Sustainable

Value

Create pure Economic Value At the expense of environmental and

social value

Destroy Value

Stakeholder Value:

Social & Environmental

Value

Positive

Negative

Shareholder Value: Economic Value Positive Negative

Source: Adapted from Sustainable Value Partners

Create pure Environmental &

Social Value

At the expense of economic value

Our approach aims at maximizing the benefits of converging value drivers in order to create sustainable value for both shareholders and stakeholders.


Strategic

Planning for

Sustainable

Development

Our Sustainability service offerings span across all Stakeholder and Shareholder Value Drivers

S T

A K

E H

O L

D E

R

V

A L

U E

S H A R E H O L D E R V A L U E

Revenue Growth

Asset Efficiency

Expectations

Reporting & Performance Measurement

Operating Margin

Enterprise Operational

Excellence

Environment, Health and

Safety

Human Capital Management &

Employee Productivity

Disability & Work

Attendance Management

Corporate Governance & Transparency

Mate

ria

l S

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Prod

ucti

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Our Sustainability service offerings span across all Stakeholder and Shareholder Value Drivers

S T

A K

E H

O L

D E

R

V

A L

U E


Revenue Growth

Asset Efficiency

Expectations

Operating Margin

Mate

ria

l S

ou

rcin

g

Prod

ucti

on

Eff

icie

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Op

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1. Map Stakeholders’ Values 4. Map Shareholder Value

2. Define Sustainability Issues 3. Design Business Case


The Sustainability Value Methodology


•Identify/reassess and characterize stakeholders • Proactively identify/reassess stakeholder expectations •…

2. Define Sustainability Issues

• Define/Refine key issues from stakeholder perspective • Translate definition of issues into shareholder perspective •…

3. Design Business Case

• Track via ValueMap • Assess Risks and Opportunities • Design appropriate business cases by ValueMap •…

• Apply ValueMap to map value from business cases • Apply ValuePrint to evaluate/assess business cases •…


First Step Map Stakeholders’ Values and Define Sustainabilty Issues

S T

A K

E H

O L

D E

R

V

A L

U E


Revenue Growth

Asset Efficiency

Expectations

Operating Margin

Mate

ria

l S

ou

rcin

g

Prod

ucti

on

Eff

icie

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Op

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&

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Deloitte Generic Catalogue of Sustainability Issues

Global trend:

1. Changing demographics and the emergence of new consumer and labour markets.

2. Boosting innovation for efficiency and reduced impact on environmental and climate systems.

3. Preserving the natural resource base.

4. Doing business in a globalized, interconnected economy.

5. Earning the license to operate.

6. Changing geopolitical risk landscapes.



Global trend:







Environmental Issues

New markets for environment-friendly and energy-efficient products in emerging economies

Social Issues

New markets for emerging consumer needs in emerging economies

Workplace health and safety*

Labour standards*

Human rights issues*

Corporate governance issues

Complying with local laws, while upholding global corporate governance and responsibility standards



Global trend:








Carbon constraints (climate change)

Environmental liabilities

Pollution prevention

Reducing emissions and resource use

New markets for environment-friendly and energy-efficient products



Global trend:








Product stewardship

Waste and toxic release management

Accident and spills management

Efforts to incorporate external costs in planning and accounting



Global trend:







Social Issues

HR management (including compensation, training, etc.)

Attracting and retaining employees

Workforce diversity and equal opportunities



Global trend:








Environmental governance and management systems

Accidents and spills management

Social Issues

Community and NGO relations

Government relations

Investor relations

Management of crisis situations*


Board structure and accountability

Accounting and disclosure practices

Audit committee structure and independence of auditors

Executive compensation

Management of corruption and bribery instances

Business ethics policies

Corporate citizenship engagement



Global trend:







Social Issues

Human rights, community and government relations in politically unstable countries/conflict zones


Policies and systems to manage risk in politically unstable countries/conflict zones


Aligned with the Strategic Planning for Sustainable Development

Example: Identifying together with you your relevant and material Sustainability Issues aligned with your corporate strategy


Environmental and safety management of production processes

Declining capacity of eco-systems to sustain intensive harvesting and production methods

Business in a carbon-constrained world

Social Issues

Changing consumer preferences, new needs in emerging markets

Management of global workforce

Labour practices and HR management

Community relations, corporate citizenship engagement

Corporate Governance Issues

Corporate governance framework

Transparency in relation to sourcing and production methods

Government relations, business ethics


Second Step Design Business Case and map shareholder Value

S T

A K

E H

O L

D E

R

V

A L

U E


Revenue Growth

Asset Efficiency

Expectations

Operating Margin

Mate

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ou

rcin

g

Prod

ucti

on

Eff

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Op

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€


4. Map Shareholder Value 3. Design Business Case

Proposed value framework for integration of key stakeholder issues

Issue

Issue

Issue

Issue

Issue

Issue

Strategy Policies

Management- Systems

Litigation and regulatory risks

Operational risks

Reputation and brands

Operational efficiency

Innovation

Access to new / Existing markets

Access to knowledge and skills

Access to ressources

Others

Risk premiums

Costs

Revenues

Other (tax, reinvestment

rates)

WACC

Free cash flows

Shareholder value

Stakeholder value


Optimize depreciationmethods/lives forproperty, plant andequipment

Optimize valuationand costing methodsfor inventories(LIFO, FIFO, uniformcapitalization, shrinkage,obsolescence, etc.)

Ensure full utilizationof tax carryforwards(credits, net operatinglosses, capital losses, etc.)

Consider tax implica-tions in the location/selection of facilities(distribution centers, servicecenters, branches, etc.)

Improve salesforecasting andcampaign executionprocesses and tools

Improverelationship/accountdevelopmentprocesses

Improve skills ofsales staff

Provide staff withbetter customerinformation(demographics, inquiryhistory, etc.)

Improve staffincentives aroundsales efficiency

Improve processesfor generating,qualifying andassigning leads

Improvefield sales andtelesalesprocesses

Consolidate/realignsales territories

Improve terms withsales channels

Improve terms withservice providers(network services, airlines,information services, etc.)

Improve terms onleased sales assets(computers, vehicles, etc.)

Target newgeographies

Target new segmentswithin currentgeographies

Expand sales andadvertising channels

Acquire new productand service offerings

Pursue joint-venture,partnership and OEMarrangements

Increase focus onhigh-value/high-potential customers

Increase focus onmost profitableproducts and services

Increase focus onmost effective salesand advertisingchannels

Improve brandstrength and good will

Increase time spentselling

Improve quality andassignment of salesleads

Improve access toinformation andanalytical tools

Improve sales andmarketing skills ofstaff

Improve alignment ofstaff incentives withstrategic objectives

Improve effectivenessof marketing,advertising and salesprocesses

Tailor marketing andsales approaches tocustomer segments

Tailor products andservices to newcustomer segments

Evolve product andservice features,functionality and value

Improve totalcustomer experience(purchasing, fulfillment,usage, support, service,etc.)


Improveresponsiveness tocustomer complaints/feedback

Improveunderstanding ofcustomer needs

Proactively managetransition points(life events, ends ofcontracts and leases, etc.)

Tailor accountmanagementapproaches tocustomer segments

Maintain competitivefunctionality and value

Tailor cross-sell/up-sell offers to customerneeds

Implement pricing andaffinity programsbased on volume andbreadth

Offer value-addingproduct and servicebundles

Improve effectivenessof cross-sell/up-sellprocesses

Implement proactiveand reactive cross-sell and up-sellcampaigns

Improve staffincentives for cross-selling/up-selling

Improve identificationof cross-sell/up-sellopportunities


Increase focus onmost profitableproducts and services

Increase focus onmost effective salesand advertisingchannels

Improve retention andwin-back processes

Build customersatisfaction andretention into staffincentives

Improveunderstanding ofchurn/defectiondrivers

Improve identificationof churn/defectioncandidates

Increase focus onhigh-value /high-potential customers

Improvecompetitiveness ofproduct and serviceofferings

Shorten time-to-market

Improve brandawareness / Elevatebrand image

Increase emphasison supply chainmanagement(production, distribution andsales pipelines)

Obtain exclusiveagreements withpartners(licenses, distributorships,etc.)

Improve features andfunctionality ofproducts and services

Improve quality andreliability of productsand services

Improve product andservice lifecyclemanagement

Improvecommunication andcoordination withdistribution centers

Improvecommunication andcoordination withsales channels

Improve focus onhigher-valuesegments

Rationalize and/orrefocus channel/media usage

Rationalize and/orrefocus product andservice portfolios

Rationalize targetedcustomer segments

Improve campaigndesign andmanagementprocesses and tools

Improve skills ofmarketing staff

Improve staffincentives aroundmarketing efficiency

Provide staff withbetter market andcustomer information

Improve definition ofproduct and servicespecification

Improve product andservice launchprocesses

Provide staff withbetter competitiveinformation

Improve tailoring ofmarketing andadvertisingapproaches tocustomer segments

Improve terms withadvertising channels

Improve terms withservice providers(researchers, informationservices, advertisingchannels, etc.)

Improve emphasis onproduct quality andease of service

Design products forease-of-use / self-service

Route low-valuetransactions to lower-cost sales channels

Improve routing ofservice requests toappropriate staff

Increase use of lower-cost service andinformation channels(contact centers, automatedvoice response, web, etc.)

Improve workforceplanning and dispatchprocesses and tools

Improve capacity/demand planningprocesses, skills andtools

Improve service andsupport processes

Improve skills ofservice staff

Provide staff withbetter customerinformation(profiles, transactionhistories, etc.)

Improve incentivesaround serviceefficiency andeffectiveness

Improve terms withservice providers(network services,outsourced functions, etc.)

Improve terms onleased service assets(computers, vehicles, etc.)

Improve forecasting,planning andprioritization skills andtools

Improve creditanalysisprocesses

Improve skills of ordermanagement andbilling staff

Provide staff withbetter customer andorder information

Improve incentivesaround ordermanagementefficiency

Improve pick, packand ship processes

Improveprovisioning/installation processes

Improve invoicing/billing processes

Improve policies andprocesses aroundmerchandise returns

Improve terms withservice providers(delivery services,outsourced functions, etc.)

Improve terms onleased assets(computers, vehicles, etc.)

Consolidate and/orre-architect datastores

Increase utilization ofIT, telecom andnetwork resources(servers, routers, networkcapacity, etc.)

Improve design,development andtesting processes

Improve processes formanaging systemoperations, mainten-ance and changes

Improve end-usersupport andadministrationprocesses

Improve selection,acquisition andcontractingprocesses

Improve installation/deploymentprocesses

Improve technical andproject managementskills of staff

Improve dispatch,diagnostic, resolutionand replacementprocesses

Improve incentivesaround IT/networkefficiency

Improve terms withservice providers(contractors, networkservices, consultants, etc.)

Improve terms onpurchased and leasedassets (PCs, servers,network equipment, leasedlines, etc.)

Improve terms onpurchased and leasedreal estate, furnitureand fixtures

Increase utilization ofreal estate

Improve capacity/demand planningprocesses and tools

Improve real estatedesign and develop-ment processes

Improve operationalprocesses(administration, security,energy, HVAC andmaintenance)

Improve real estateselection, acquisitionand contractingprocesses

Improve real estateimprovement anddeploymentprocesses

Improve terms withservice providers(security, energy, etc.)

Improve terms onimprovements(HVAC, cabling, etc.)

Improve terms withthird-party productand service providers(payroll, benefits, training,etc)

Reduce salary andbenefits costs /Improve value ofemployee benefits

Improve capacity/demand planningprocesses and tools

Implement/improvecompany-wideprocesses and toolsfor assessing staffperformance

Improverecruitment andorientation processes

Improve skills of HRstaff

Provide staff withbetter HR informationand tools

Improvetrainingprocesses

Improve salary andbenefits administra-tion processes /Increase employeeself-service

Improvepayrollprocesses

Improveperformanceassessmentprocesses

Rationalize/consolidate vendorportfolio

Increase focus onhigher-value vendorpartnerships

Improve collaborationwith vendors

Increase use of lower-cost channels(self-service, etc.)

Improve assignmentof procurementtransactions toappropriate staff

Improve demandplanning processesand tools

Improve productprocurementprocesses(equipment, supplies, etc.)

Improve serviceprocurementprocesses(travel, contract labor, etc.)

Improve contractingand negotiation skillsof procurement staff

Provide staff withbetter product andservice information

Improve incentivesaround procurementefficiency

Improve terms onequipment andsupplies

Improve terms withservice providers(equipment maintenance,delivery, warehousing, etc.)

Improve terms withservice providers(information services,consultants, etc.)

Improvestrategic planningprocesses

Improve skills ofbusinessmanagement staff

Provide staff withbetter managerialinformation and tools

Improve incentivesaround businessplanning efficiency

Improveprogram planningprocesses

Improve capitalbudgetingprocesses

Improveprogrammanagementprocesses

Improveaccounting andmeasurementprocesses

Improve terms withfinancial servicesproviders

Improvecash/treasurymanagementpractices

Improve skills offinancial managementstaff

Improve incentivesaround financialmanagementefficiency

Improve debt andequity managementprocesses

Increase focus onmaterials-efficientproductionmechanisms

Rationalize and/orrefocus productportfolio

Increase emphasis ondesigning formaterials efficiency


Focus efforts onhigher-value vendorrelationships

Improve terms onmaterials purchases

Rationalize orderquantities and timing

Improve materialsperformancemanagementmethods and tools

Improve demandforecastingprocesses, skills andtools

Improve ordering andreceipt processes(raw materials, intermediatematerials, finishedcomponents, etc.)

Improve materialsefficiency ofproduction processes

Improve contractingand negotiation skillsof purchasing staff

Provide staff withbetter productinformation and tools

Design products touse cost-effectivematerials

Improve terms withservice providers(delivery, warehousing, etc.)


Improve focus onhigher-value products

Rationalize productionquantities and timing

Increase use of lower-cost productionchannels

Improve terms withservice providers(outsourced functions, etc.)

Improve termson equipmentpurchases

Improve productionperformancemanagementmethods and tools


Improve capacityplanning processes,skills and tools

Improveproduction schedulingand stagingprocesses

Improve utilization ofproduction channels /Reduce downtime

Improve skills ofproduction staff

Provide staff withbetter productioninformation and tools

Improve incentivesaround productionefficiency

Improve coordinationwith businesspartners

Improvemanufacturing andquality controlprocesses



Improve focus onhigher-value vendorrelationships

Improve terms onmerchandisepurchases

Rationalize orderquantities and timing

Improvemerchandisingperformancemanagementmethods and tools


Improve assignmentof transactions toappropriate staff

Improvemerchandiseordering and receiptprocesses

Improve skills ofmerchandising staff

Provide staff withbetter information andtools

Improve incentivesaround merchandisingefficiency

Improve coordinationwith vendors

Improve terms withservice providers(delivery, warehousing, etc.)


Increase emphasis ondesigning andpackagingfor distribution

Increase quality andconsistency ofmaterials


Rationalizemerchandise orderquantities and timing

Increase use of lower-cost logistics anddistribution channels

Improve inventoryreceipt and storageprocesses

Improve transport anddelivery processes/algorithms

Improve skills ofinventory anddistribution staff

Provide staff withbetter information andtools

Improve incentivesaround inventory/distribution efficiency

Improve logisticsperformancemanagementmethods and tools


Improve terms withservice providers(transport, warehousing,etc.)

Improve focus onhigher-value customersegments andproducts

Rationalize and/orrealign productdevelopmentefforts

Increase use of lower-cost productdevelopmentchannels

Improve productconception/initiationprocesses

Improve utilization ofproduct developmentchannels

Improve skills ofproduct developmentstaff

Improve definition ofproduct and servicespecifications

Improve incentivesaround productdevelopmentefficiency

Improveprototyping, pilotingand testing processes

Improvedesign anddevelopmentprocesses

Improve identificationand discontinuation ofunsuccessfulefforts

License or acquireproducts andintellectual property

Develop businessmodels with low realestate requirements

Reduce number ofdata centers, branchoffices, dealerships,retail outlets, etc.

Outsource businessfunctions

Increase use ofleased real estate

Improve termson property andfacilities

Reconfigure facilities /Increase utilization offacilities

Increase use offlexible facilities

Divest low-utilizationreal estate


Outsource businessfunctions

Increaseuse of leasedproduction equipment

Improve terms on ITsystems

Increase use offlexible/expandableproduction equipment

Increase emphasis ondesign formanufacturability andservice

Divest low-utilizationequipment

Improveeffectiveness of plantmaintenance

Improve termson infrastructure

Divest low-utilizationinfrastructure

Increaseuse of flexible andexpandableinfrastructure

Increase use ofleased infrastructure


Rationalize and/orrefocus customersegments anddistribution channels

Develop low-Inventorybusiness models

Increase emphasison build-to-order

Improve terms onmerchandise

Improvecollaboration withvendors/partners

Improvedemand forecasting

Consolidateinventory

Improve logistics/distribution efficiency

Divest low-demand/obsolete inventory


Shorten productioncycles

Rationalize rawmaterials

Increase use of just-in-time procurement

Improvedemand forecasting

Improve terms onmaterials

Divest obsoletematerials

Coordinatemanagement ofcredit/receivablesacross business units

Increase focus oncustomer segmentswith low credit/loanneeds

Tighten credit/loanterms

Improve assessmentand benchmarking ofcredit/receivablesperformance

Improve managementof delinquentaccounts

Coordinatemanagement ofpayables acrossbusiness units

Leverage credit ratingto lengthen paymentcycles and reduceinterest rates

Leverage breadth ofvendor relationshipsto lengthen paymentcycles

Improve managementof debt portfolio

Improve identificationand prediction ofindustry and markettrends

Improve identificationof opportunities andthreats

Improve strategydevelopment capa-bilities at corporateand business-unitlevels

Improve alignment ofbudgets and capitalprograms withstrategic priorities

Improve executivedevelopment,recruiting andsuccession planning

Improve identification,assessment andexecution ofM&A/divestitureopportunities

Improvecommunication ofstrategic directionsand priorities

Improve structuringand launch ofcohesive programportfolios

Improve coordinationand communicationacross programs andprojects

Improve program/project managementmethods and tools

Improve alignment ofprojects with programand businessobjectives

Improvemeasurement andreporting ofoperational andfinancial performance

Improve analysis ofmanagerialinformation

Improve focus onmost importantmanagerialinformation

Improvecommunicationaround improvementpriorities

Improve abilityto launchimprovement efforts

Improve quality andconsistency ofperformanceassessment methods

Improve careeroptions and paths

Align managementand staff incentiveswith companyperformance

Improve monetaryand non-monetaryrecognition of staffcontributions

Improve breadth,depth, quality andtimeliness of perform-ance information

Improve effectivenessof organizationalstructures andgovernance models

Increase emphasis onquality managementand benchmarking

Improveprocess innovationskills of staff

Improve depthand breadth of stafftechnical skills

Improve qualityand speed ofcommunication withpartners

Improve ability tointegrate mergedand acquiredorganizations

Improve ability toidentify and assesspartneringopportunities

Improvemanagement ofpartner relationships

Improve integration ofbusiness processesacross partnernetworks

Improve valuedelivered tocustomers

Improve valuedelivered to partners(vendors, channel partners,etc.)

Improve valuedelivered toemployees

Improve identificationof opportunities toincrease value tostakeholders

Improve understand-ing of stakeholderinterests (customers,shareholders, regulators,employees, suppliers,partners, alumni, etc.)

Improve conversion ofstrong relationshipsinto sources of com-petitive advantage

Improvecommunication withstakeholder groups

Improve agility andflexibility oforganizationalstructures

Improve agility andflexibility ofgovernance models

Improve flexibilityof businessprocesses

Improve versatility ofmanagers and staff

Improve flexibilityand versatility of ITsystems andplatforms

Rationalizecustomer portfolio

Improveresponsiveness tocustomer requestsand inquiries

Improve tracking ofcustomer interactions(purchases, supportrequests, etc.)

Improve identificationof valuable customerrelationships

Refocus and/or refineretention priorities andstrategies

Create barriers toswitching

Solicit and respond tocustomer feedback

Implement affinityprograms

Increase emphasison differentiatedproducts and services

Improve demandforecasting

Improveunderstanding ofcustomer, productand channelprofitability

Consolidate oroutsource service andsupport operations

Differentiate servicetreatment ofcustomers/segments

Provide staff withbetter product andservice information

Improve financialrisk managementprocesses

Increase use of lower-cost delivery/installation channels(self-service, partners, etc.)

Increase use of lower-cost billing channels(automated, self-service,etc.)

Differentiate treatmentof customers/segments

Improve emphasis ondesign for packing/shipping efficiency

Consolidate oroutsource orderfulfillment functions(pick, pack and ship,install, provision, etc.)

Consolidate oroutsource billingoperations

Consolidate oroutsource design,development anddeployment services

Consolidate oroutsource operationsand maintenanceservices

Consolidate oroutsource end-usersupport

Consolidate companyreal estate/facilities

Consolidate oroutsource design anddevelopmentfunctions

Rationalize ITapplication portfolio

Consolidate oroutsourceimprovement anddeployment

Consolidate oroutsource propertymanagementfunctions

Increase use of lower-cost real estate andfacilities / Relocatebusiness operations

Consolidate oroutsource benefitsadministrationfunctions

Consolidate oroutsource payrollfunctions

Consolidate oroutsource recruitmentfunctions

Refine vendorstrategies

Standardize productcatalogs(equipment, office supplies,promotional materials, etc.)

Consolidate oroutsourceprocurement functions

Consolidate and/oralign businessplanning,management andreporting functions

Improve alignment oforganization struc-tures and governancemodels with businessstrategies

Consolidate and/oralign financialplanning,management andreporting functions

Consolidate and/oralign financialaccounting andanalysis functions

Improve incentivesaround procurementefficiency

Increase emphasis ondesign for productionefficiency

Consolidate oroutsource productionfunctions

Refine/alignlogistics anddistribution strategies

Increase focus onhigher-value productsand partners

Consolidate/outsource logisticsand distributionfunctions


Consolidate oroutsource productdevelopmentfunctions

Increase emphasis onmodular, extensible,scalable designs

ConsolidateIT systems,production lines andservice mechanisms

Increase emphasis onhigh-turn products

Increase emphasis ondesigning formanufacturingefficiency

Improvecollaboration withvendors/partners

Increase emphasis ondesigning formaterials efficiency

Increase focus onvendors withfavorable paymentterms

Increase emphasison risk-informed,scenario-basedplanning

Increase emphasis onenterprise-wideprogram planning andcollaborative programdelivery

Increase emphasison continuous,proactive perform-ance management

Improvedetermination of keyperformance metricsand targets

Establish a culturecentered onoperationalexcellence

Increase focus onpartnership, mergerand acquisitionopportunities

Increase focus onstakeholderrelationships

Establish processimprovement andinnovation as keycompetencies

Establishmanagement of keystakeholderrelationships asorganizational priority

Increase focus onbusiness agility andflexibility

Establish agility andflexibility as keycompetencies

Increase integration ofbusiness processesacross organizationalboundaries

Improvepartnership andcollaboration skills ofstaff

Improve utilization ofsales staff

Improve utilization ofservice staff

Provide staff withbetter product, serviceand competitiveinformation

Implement integratedapplications acrossorganizationalboundaries

Consolidate IT,telecom and networkequipment andfacilities

Utilize moreefficient productionequipment

Improve quality andconsistency ofmanufacturingmaterials

© 2004. All rights reserved. Confidential. 0104

Improve value /Decrease prices

Improve assessmentand benchmarking ofbusiness processperformance

Improve sharing ofknowledge acrossorganizationalboundaries

Improve sharing ofknowledge acrossorganizationalboundaries

Improve businesscontinuity planningand disaster recoverycapabilities

Improve ability todevelop and spin-offnew businesses

Increase focus on riskmanagement andregulatory compliance

Improve focus onprice-insensitivecustomer segments

Increase emphasis ondifferentiated pricingacross customersegments

Improveunderstanding ofcustomer pricesensitivity

Align advertising withpricing strategies

Improve tailoring ofofferings to customerneeds

Increase use ofdifferential pricingmechanisms (based oncustomer value, risk, etc.)

Increase emphasison preventiveequipmentmaintenance

Defer/change timingof capital investments

Increase utilization ofproduction equipment

Increase focus onmanagerial, forward-looking information

Improveunderstanding ofproduct/service valueto customers

Increase focus onpricing effectiveness/price optimization

Increase focus onR&D, productinnovation, andproduct leadership

Broaden product andservice offerings

Improve product/service R&Dand deploymentcapabilities

Adapt currentproducts and servicesfor new segments/channels

Improve product- andservice-innovationskills of staff

Increase emphasis onservice prevention /Reduce need forservice

Increase emphasis ondesigning for serviceefficiency and self-service

Route low-valuetransactions to lower-cost sales channels

Improve routing ofservice requests toappropriate servicechannels

Increase use ofcheaper servicechannels

Improve serviceperformancemanagementmethods and tools

Improve workforceplanning, dispatchand assignmentprocessesand tools

Improve capacity/demand planningprocesses, skills andtools

Improve service andsupport processes

Improve skills ofservice staff

Provide staff withbetter customerinformation(profiles, transactionhistories, etc.)

Improve staffincentives aroundservice efficiency

Improve terms withservice providers(outsourced services,network services,information services, etc.)

Improve terms onleased service assets(computers, vehicles, etc.)

Consolidate oroutsource serviceoperations

Differentiate treatmentof customers/segments

Provide staff withbetter product, serviceand contractinformation

Rationalize and/orrefocus servicesoffered

Improve utilization ofservice staff

Improve focus onhigher-value customerrelationships

Convert free servicesto fee-based services

Align product andservice prices withvalue to customers

Establish product,service and processinnovation as keycompetencies

Improve productinnovation processes

Improve product,service and processinnovation skills ofstaff

Improve assignmentof accountability andauthority

Improve effectivenessof organizationalstructures

Dynamically cancel orredirect ineffective/obsolete programsand projects

Improve tracking andcommunication ofprogram/projectprogress

Improve assignmentof resources toprojects

Improve program/project managementskills of staff

Improve managementof vendors/serviceproviders

Establish program/project delivery as akey competency

Improve alignment ofcustomer, product,advertising, sales,service, support, andfulfillment strategies

Develop, spin-off andsell new businesses

Improve investmentreturns on cash/treasury funds

License or sellintellectual capital toother enterprises



Sell appreciatedassets

Increase emphasis ongenerating revenuefrom company assets

Increase focus ondeveloping andprotecting intellectualcapital

Increase focus oncreditworthy customersegments

Improve collectionsprocesses

Improve andstandardize creditassessmentprocesses

Differentiate credittreatment ofcustomers/segments

Improveunderstanding ofcustomer needs

Increase focus onexpansion ofcustomerrelationships

Improve product andservice withdrawaland retirementprocesses

Acquire competitors

Improveestablishment of andadherence to service-level targets

Increase use ofdistance/on-linelearning

Establish customercommunities

Improve cross-selland up-sellapproaches/models

Apply brand to newand unbrandedproducts

Develop and leveragestrong/unique partnerrelationships

Develop and leveragestrong brand

Develop strongcustomerrelationships andcommunities

Develop and utilizeunique physicalresources(facilities, land, etc.)

Develop and utilizeunique humanresources(thought leaders, managers,subject matter experts, etc.)

Develop and leverageintellectual capital(copyrights, patents,trademarks, etc.)

Increase focus onstrategic assets

Improve assetdevelopment skills ofmanagement andstaff

Improve incentivesaround assetdevelopment

Establishdevelopment ofstrategic assets as akey competency

Increase emphasis onleveraging strategicassets

Shorten productioncycles

Improve developmentand analysis ofbusiness cases

Improve security ofapplications, systemsand data

Improve costaccounting andallocation of shared/overhead costs

Improve recruitingeffectiveness

Improve relationshipmanagementstrategies for keystakeholder groups

Improve valuedelivered toshareholders



Improve physicalsecurity of people

Improvecommunication andknowledge transferacross organizationalboundaries

Consolidate oroutsource learningand developmentfunctions

Increase emphasison people/talentdevelopment

Improve talentmanagement modelsand programs

Improve identificationof stakeholder groupsand establishment ofpriorities

Improve valuedelivered to otherstakeholders(public, alumni, analysts,etc.)

Shorten order-to-delivery cycle time /Improve product andservice availability

Increase emphasison design forconfigurability/customization

Improve platform andportfolio strategies forproducts and services

Increase emphasis ontime-to-market andtime-to-production-volume

Increase number andquality of product andservice launches

Increase utilization ofmodular, reusabledesigns

Improve collaborationwith design,development andproduction partners

Improve reuse ofproduct and servicecomponents

Improve managementof product lifecycles(launch through retirement)

Increase emphasis onaccount/relationshipdevelopment

Improve accountmanagement skills ofstaff

Improve incentives forproduct developmentand innovation

Improve incentives foraccount/relationshipdevelopment

Improve accountmanagementstrategies

Shorten order-to-delivery cycle time /Improve product andservice availability

Improve totalcustomer experience(purchasing, fulfillment,usage, support, service,etc.)

Improve execution ofmarket- and supply-driven promotions

Improve structuringand pricing ofpromotions

Improve coordinationwith suppliers andsales channels

Improve use ofsupply- and capacity-driven promotions

Increase use ofpromotions


Improve focus onsegments with loweraverage cost-to-serve

Improve collaborationwith partners andcustomers

Increase use ofvendor-managed/vendor-warehousedinventory

Improve due-datereliability

Manage procurementon a national/globalbasis

Utilize national/globalpurchasing power

Increase focus oncomponent reuse

Reduce procurementcycle times

Improve collaborationwith vendors

Improve design/structure ofdistribution networks

Align production andmerchandise orderingschedules withdistribution schedules

Improve retrievalprocesses

Manage purchasingon a national/globalbasis

Refine and/or alignmerchandisingstrategies(central vs. localmerchandising, etc.)

Improve use ofnational/globalpurchasing power




Improve product andservice introduction/launch processes

Rationalizeproduction facilities


Rationalizemerchandise orderquantities and timing



Increase emphasis onuse of commoncomponents

Increase utilizationof standardizedcomponents

Manage materialssourcing on anational/global basis


Increase emphasis oncustomer retention

Proactively managetransition points(life events, ends ofcontracts and leases, etc.)

Offer value-addingproduct and servicebundles

Improve focus onemployee retention

Improve employeeretention programs

Utilize more efficientIT systems

Utilize moreflexible/expandable ITsystems

Improve maintenanceof IT systems

Increase utilization ofIT systems

Divest low-utilizationIT systems

Improve terms onproduction equipment

Improve focus ofcompany resourceson high-priorityinitiatives

Increase emphasis oncross-business-unitand cross-companycollaboration

Increase proactivepursuit ofpartnerships, mergersand acquisitions

Increase emphasis oncustomer satisfaction

Improve qualityassurance programs

Sell or lease excesscapacity to otherenterprises(production capacity, servicecapacity, etc.)

Coordinate pricing ofcomplementaryproducts and services(razors v. blades / product v.shipping charges, etc.)

Improve price/marginknowledge of staff

Build productmargins/profitabilityinto sales incentives

Rationalize portfolio offinancial servicesproviders

Improve audit andcompliancemanagementprocesses

Improve businesscase developmentand analysisprocesses

Improve breadth,depth and quality offinancial information(asset, budget, price/cost,treasury, debtor/creditor,performance, tax, risk, etc.)

Improve budgetingand forecastingcapabilities

Improve financialreporting efficiency

Improve assetmanagementprocesses(fixed and variable assets)

Improve integration ofIT systems acrosspartner networks

Increase emphasis onoperational integrationwith partners

Remove barriers toswitching

Improve contractmanagementprocesses(negotiation, execution andcompliance)

Refine vendor/supplier strategies

Consolidate oroutsourcemerchandisingfunctions

Establishcross-companycollaboration as a keycompetency

Improve performanceand reliability of ITsystems/platforms(applications, equipment,networks, etc.)

Improve breadth,depth, quality andtimeliness of businessinformation

Improve access toand distribution ofbusiness information

Develop and utilizeunique IT resources(applications, networks, etc.)

Improveunderstanding ofcurrent customersatisfaction

Improve visibility ofcustomerrelationships andinteractions across allchannels

Improve adherence tocontracts andagreements

Increase focus onhigher-value productsand services

Improve focus onhigher-valueadvertising channels/media

Focus sales efforts onhigher-marginproducts and services

Increase use of lower-cost sales channels(telesales, outlets, self-service, etc.)

Improve focus onhigher-valuecustomers/segments


Bypass currentchannels / Selldirectly to customers

Rationalize targetedmarkets and customersegments

Improve analyticalprocesses and tools

Improve channelmanagementprocesses and tools

Outsource propertytax administrationactivities(compliance, assessment,negotiations, etc.)

Improve businessperformance reportingprocesses

Improve alignment ofHR and technologystrategies withbusiness strategies

Improve manage-ment of regulatorycompliance

Develop and leveragepolitical relationshipsand alliances

Develop and cultivategood will

Improve anticipationand understanding ofcurrent and potentialregulations/legislation

Improve effectivenessof legislative/lobbyingefforts

Acquire companies intargeted geographies

Acquire companieswith relationships intargeted customersegments

Improve methods andtools for managingsales and marketingperformance

Acquire companiesaligned with productstrategies

Improve methods andtools for managinginnovationperformance

Increase focus ondivestiture andreinvestment

Divest non-performingand non-strategicbusiness units

Align M&A strategieswith businessobjectives

Improve/standardizeM&A processes

Improveunderstanding ofinternal value andmarket value ofbusiness units

Increase considera-tion of M&A anddivestiture options

Improve accountmanagementmethods and tools

Improve salesperformancemanagementmethods and tools

Improve retentionperformancemanagementmethods and tools

Improve managerialmethods and tools

Improve methods andtools for managingdemand/supplyperformance

Improve methods andtools for managingpricing performance

Improve marketingand advertisingperformancemanagementmethods and tools

Improve salesperformancemanagementmethods and tools

Improve service andsupport performancemanagementmethods and tools

Improve ordermanagementmethods and tools

Improve procurementperformancemanagementmethods and tools

Improve real estateperformancemanagementmethods and tools

Improve HRperformancemanagementmethods and tools

Improve/consolidateIT performancemanagementmethods and tools(utilization, performance,capacity planning, etc.)

Improve productdevelopmentperformancemanagementmethods and tools

Improveunderstanding ofbusiness unitperformance andmarket values

Consolidate devicemanagementinformation and tools

Improve alignment ofcapital budgets andprogram plans withbusiness priorities

Improve alignment ofbusiness unitstrategies withenterprise strategies

Improve alignment offinancial strategieswith corporatestrategies

Strengthenenterprise-widefinancial reportingstandards

Increase focus onbusiness insight andforward-lookinginformation

Improve integration ofshort- and long-termbusiness planning

Improve leadershipand managementskills of executives

Increase emphasis oncontinuous, proactivemanagement ofinvestment portfolios

Improve vendormanagement skills ofstaff

Improve involvementof operational staff inproject delivery

Improveaccountability/authority of programand project resources

Improve effectivenessof program/projectgovernance models

Increase focus on keyperformance metrics

Increase focus onbusiness continuityplanning

Increase focus onproject quality andrisk management

Increase focus onrealization of targetedbusiness benefits

Improve identificationand management ofprogram/project risks

Continuously trackand manage therealization of projectbenefits

Structure programs/projects to deliverbenefits progressively

Improve access toand distribution ofperformanceinformation

Improveunderstanding ofpartner strengths,weaknesses andinterests

Improve ability tostructure andimplement durable,mutually beneficialpartnerships

Improve agility andflexibility of partnerorganizations andnetworks

Develop and utilizeunique productionresources(methods, equipment,facilities, etc.)


Improve coordinationof payments acrossbusiness units

Improve assessmentand benchmarking ofA/P performance

Refine days-outstanding strategy

Improve alignment ofA/P systems andprocesses with days-outstanding strategy

Refine credit/days-receivable strategy

Improve managementof credit risk acrossbusiness units

Improve managementof credit/loan portfolio

How Value is Created(Value Drivers)

What You Can Do(Improvement Levers: Business Processes,

Assets and Organizational Capabilities)

Other Shared / Corporate Services(Real Estate, Procurement and Other)

Human Capital Strategy and Management(Recruitment, Development, Administration and

Performance Management)

IT Strategy and Management(Design, Development, Deployment, Operations and

Performance Management)

Business Strategy and Management(Business and Financial Strategy, Mergers and Acquisitions, Tax

Management, Risk Management, Compliance Management, Program

Management and Performance Management)

Customer Strategy, Relationships and Interactions(Marketing, Sales, Delivery/Provisioning, Billing and Service)

Product Strategy, Development and Production(Innovation and Design, Supply Chain Management, Production

Operations and Logistics)

BUSINESS PROCESS GROUPINGS

All Process Groupings(Action may apply to all processes)

Change What You Do

- What you provide

- Whom you target and serve

- How you compete

- Where you deploy resources

- Which operations you outsource

Do What You Do Better

- Strengthen governance approaches

- Align resources with strategies

- Improve business processes

- Hone strategic capabilities

- Manage tax impacts and opportunities

- Improve control / reduce risk

- Collaborate more effectively

- Satisfy customers, employees and

other stakeholders

Note: Many actions could logically be associated with

other or multiple process groupings. For example,

many customer and product actions are likely to have

heavy IT and HR components.

Acquire New CustomersRetain and Grow Current

CustomersLeverage Income-Generating Assets

Strengthen PricingImprove

Customer InteractionEfficiency

Improve

Corporate/Shared ServicesEfficiency

Improve

Development & ProductionEfficiency

Improve

Logistics & ServiceProvisionEfficiency

Improve

PP&EEfficiency

Improve

InventoryEfficiency

Improve

Receivables & PayablesEfficiency

Improve

Management & GovernanceEffectiveness

Improve

Execution Capabilities

Marketing &Sales

AccountManagement

Cross-Sell/Up-Sell

RetentionDemand &

SupplyManagement

PriceOptimization

Marketing &Advertising

SalesCustomerService &Support

OrderFulfillment &

Billing

IT, Telecom &Networking

Real EstateHuman

Resources

Procurement(Excluding Production

Materials &Merchandise)

BusinessManagement

FinancialManagement

Materials Production MerchandisingLogistics &Distribution

ProductDevelopment

Real Estate &Infrastructure

Equipment &Systems

FinishedGoods

Work inProcess &

Raw Materials

Accounts,Notes &Interest

Receivable

Accounts,Notes &InterestPayable

BusinessPlanning

ProgramDelivery

BusinessPerformanceManagement

OperationalExcellence

Partnership &Collaboration

RelationshipStrength

Agility &Flexibility

Product &Service

Innovation

ServiceDelivery

Cash/AssetManagement

StrategicAssets

Volume Price RealizationSelling, General &

Administrative(SG&A)

Cost of Goods Sold(COGS)

Property, Plant &Equipment

(PP&E)Inventory Receivables

& Payables Company Strengths External Factors

Revenue Growth Operating Margin(after taxes)

Asset Efficiency Expectations

S h a r e h o l d e r V a l u e

Improve customerincentives foraccelerated/on-timepayment

Improve cross-selling/up-sellingskills of staff

Improve customerservice and retentionskills of staff

Increase focus onproduct innovation

Improve managementof trade/indirect taxes(sales/use, VAT, GST, etc.)

Improve tax collectionand remittanceprocesses

Improve managementof international staffcosts(immigration, payroll, staffsupport, international equity,etc.)

Utilize availablefederal, state andlocal employment/training incentives

Improve technologyand data riskmanagementprocesses

Improve compliancemanagementprocesses

Improve tax manage-ment processes(direct and indirect taxmanagement)

Optimize tax benefitsassociated with self-constructed assets(plant, facilities, internally-used software, etc.)

Improve managementof transfer pricing

Improve managementof trade and indirecttaxes (sales/use , VAT,GST, etc.)


Improve incorporationof risk analysis inbusiness planning(internal and external risk)

Integrate tax oppor-tunities and issuesinto business planningprocesses

Improve identificationand mitigation ofoperational risk(people, process, tech-nology, data, etc.)

Improve quality ofinformation providedto stakeholders(accuracy, timeliness,transparency &predictability)

Develop and utilizeunique informationresources (customer,product, market, etc.)

Improve managementof organizationalchange in support ofinitiatives

Improve operationalrisk managementprocesses

Improve considerationof tax implications inthe acquisition anddisposition of assets

Maximize tax benefitsassociated with majorbusiness decisions(M&A, consolidation, out-sourcing, site selection, etc.)

Increase emphasis onpermanently loweringthe company'seffective tax rate

Improve accuracy andtimeliness of taxprovision and cashoutflow forecasts

Improve focus of taxfunction/departmenton proactive taxplanning

Integrate tax oppor-tunities and issuesinto business planningprocesses

Optimize accountingmethods and selec-tion of accountingperiods

Migrate income tolow-tax jurisdictions

Utilize internationalfinancing opportuni-ties to minimize after-tax borrowing costs

Optimize expense vs.capitalization of costs(M&A costs, R&D costs,etc.)

Improve identificationand application ofR&D tax incentives

Improve ability toutilize offshore cash/assets and movebetween geographies




Ensure propervaluation of propertyfor tax purposes

Build tax opportunitiesinto real estatetransactions(income deferral, locationcredits and incentives,leasing terms, etc.)

Improve tax benefitsof compensation andbenefit programs(deferred and equity-basedcomp; retirement andhealthcare benefits, etc.)

Manage payroll taximpacts of businessinitiatives(M&A, consolidation,

restructuring, relocation etc.)

Optimize utilization ofavailable sales/usetax exemptions

Improve managementof indirect taxes(sales/use, VAT, customsduties, etc.)

Ensure adequatedocumentation ofsignificant taxpositions(earnings & profits, transferpricing, tax opinions, etc.)

Accelerate or deferincome/expenses

Clarify governanceroles and responsi-bilities (delegation ofauthority, segregation ofduties, etc.)

Implement/enhanceanonymous employeereporting and feed-back mechanisms

Align compensationand incentive systemswith strategies, valuesand ethics

Improve under-standing of regulatoryrequirements

Strengthen corporategovernance structures(composition, selection,

roles, etc.)

Strengthen training/education of boardand audit committees

Strengthen andcommunicate mission,vision, values andethics

Improve focus oninternal controls andregulatory compliance

Build values andethics into corporateculture

Increase emphasis onrisk identification andmanagement

Improve risk planning,mitigation and controlapproaches

Improve monitoringand management ofregulatory compliance

Improve company-wide monitoring andmanagement of risks

Improve identificationand assessment ofrisk (strategic, operational,investment, financial, com-pliance, data/privacy, etc.)

Improve monitoringand management ofrisk and compliance(strategic, operational andfinancial risks; regulatoryand tax compliance)

D e l o i t t e E n t e r p r i s e V a l u e M a p T M

(Practical paths to increase shareholder value)

It’s easy to say shareholder value is important.Not so easy to make it influence the decisionsthat are made every day: where to spend timeand resources, how best to get things done, and,ultimately, how to win in the competitivemarketplace.

This Map is designed to accelerate theconnection between actions you can take andshareholder value. It is not rocket science and itis not complete, but it can jump-start theprocess of focusing on the things that mattermost and then choosing practical ways to getthem done.

Here are two simple ways to use it:

Start at the top. Working your way down,

at each step ask yourself, How will we

improve this? This will help ensure that your

tactics support your objectives.

Start at the bottom. Working your way up,

at each step ask yourself, Why are we doing

this? This will help ensure that every tactic

leads to shareholder value.

Improve breadth,depth, quality andtimeliness of manag-erial information

Improve/implementinternal controlframeworks andpolicies

Strengthen andcommunicategovernance policiesand procedures

Align internal auditpractices withbusiness and riskobjectives

Improve communi-cation between theboard, management,shareholders and thepublic

Improve mechanismsfor collecting andimplementingemployee ideas

Build innovation andimprovement intorewards andincentives

Improve mechanismsfor soliciting andaddressingstakeholder feedback

Develop/integrateglobal HR practices(internal/external, onshore/offshore, etc.)

Income Taxes

Improve

Income TaxEfficiency

Income TaxManagement

Governance

Improve utilization oftelecom tax incentives(credits, exemptions, etc.)

Improve profitability ofR&D efforts throughutilization of tax andeconomic develop-ment incentives

Improve profitability ofR&D efforts throughutilization of tax andeconomic develop-ment incentives

Improve tracking andrecovery of indirecttaxes (sales/use, VAT,GST, etc.)

Ensure tax planningactivities and taxfilings comply withregulatory environ-ment

Increase account-ability of businessunit leaders for taximpact of decisions

Improve coordinationof operational, invest-ment, financial, M&A,and tax strategiesacross business units

Utilize tax-effectivecorporate structuresfor ownership/licens-ing of intangibleassets (patents, tradenames, IP, etc.)

Improve benchmark-ing of global effectivetax rate againstindustry peer group

Utilize tax opportuni-ties around risk man-agement activities(hedging transactions,commodities trading, etc.)

Defer and reducefederal, state andlocal quarterly esti-mated tax payments

Consider taxincentives in locationand selection offacilities

Increase focus onpost-merger synergyand cost reductionprograms

Improve breadth,depth, quality andtimeliness of businessplanning information

Utilize tax-effectivecorporate structuresfor ownership/licens-ing of intangibleassets (patents, tradenames, IP, etc.)

Develop and utilizeunique tax expertise

How to address Economic, Social and Environmental imperatives all together

Improve materials efficiency of production processes

• Design products that allow in-creased use of recycled materials: use procurement deals and partnerships to assure the quality and supply

• Return wastes to process for recycling, reuse or remanufacturing reducing the quantity of materials purchased and the cost of disposal

Improve Production Efficiency

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How to address Economic, Social and Environmental Imperatives all together to create Shareholder Value


Shareholder Value Tracking of Sustainability Issues

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Design Business Case

The ValuePrint Approach focuses on how to develop a business case using ValuePrint. In the broader context of Deloitte’s commitment to provide professional services that deliver measurable business value, the Path to Value method represents an approach to managing the engagement life cycle to target, identify, and deliver value-creating opportunities for our clients. The ValuePrint Approach is included in the Path to Value method

The ValuePrint Approach

Assess Client

Strategies and

Issues**

Develop Business

Case Scope

Statement

Conduct Business

Case Financial

Analysis

Develop Business

Case Workplan

Prepare Business

Case Executive

Report

Monitor Result

1 2 3 4

Initiation

Monitoring

€


Components of The Value Methodology

Enterprise Value Map: provides a simple conceptual framework that relates client issues and activities to shareholder value; a powerful visual interface for discussing how actions and strategies align against value drivers.

ValueAnalytics: provides user friendly but rigorous financial analysis, both over time and compared to client competitors, across key value drivers.

ValueLink: is an on-line portal which provides access to firm thought leadership and intellectual property using the Enterprise Value Map framework as the primary navigation approach; helps match Deloitte capabilities to client issues

ValuePrint: is a business case development tool which aligns to the Enterprise Value Map structure; financial impact templates (FIT’s) reside in ValueLink and are assembled into consolidated project business case

MapIt (part of Portfolio Landscape): is a simple tool that provides a quick portfolio view of projects (ours or others) and illustrates how they align against client issues and strategy as they are mapped onto the Enterprise Value Map.

Portfolio Landscape: is a service offering and approach that provides a rigorous portfolio view of a companies programs/projects, relating them back to the Enterprise Value Map, showing how they align against company strategy, needs and priorities.

The Value Initiative e-Learning CDROM: is a multi-media learning program which provides more detailed awareness and learning related to the use of The Value Initiative enablers

Value Based Billing: is a means of establishing a value-based pricing and deal structure on selected projects

Value Tracking: is a means of identifying, tracking and communicating value delivered to the client


The Path to Value
