Everyone knows that succeeding in the long run requires companies to create value for all their stakeholders--their customers, employees, communities, capital providers, and the environment.
The good news is that more organizations are becoming methodical and consistent in how they balance tradeoffs to make sure they create value in ways that are sustainable for the long term.
What can business leaders do to get their companies focused on creating
value for all their stakeholders--and avoid a "zero-sum" game?
Answering this question is the goal of Deloitte's Sustainable Value Map™
and related essays and presentations.
Below are articles written with Deloitte colleagues on the subject of "Multi-Stakeholder Value Creation." The Sustainable Value Map™ (SVM) is the core framework referenced in each one.
A New Value System
Why a multi-stakeholder view of value creation can lead to sustainable, long-term value for everyone
Businesses today are operating in a complex landscape. As performance is increasingly influenced by important shifts taking place across economies, societies, and the natural environment, leaders are recognizing this interdependence and responding in kind. Public statements from the US Business Roundtable and CSR Europe show a growing number disavowing a purely shareholder value-focused view of the role of corporations in society.
The challenge now is turning those intentions into action. We believe a key component can be the adoption of a multi-stakeholder view that considers what value creation means for a broader set of stakeholders. Deloitte’s new Sustainable Value Map™ (SVM) was developed to accelerate this effort. It provides sample value frameworks for multiple stakeholder groups to help reveal a bigger picture of how businesses impact and are reliant upon essential resources, like habitable climates, stable societies, and public infrastructure. Armed with this perspective, business leaders can make better, more confident decisions that create long-term value for all their stakeholders.
Rethinking the Value Equation
How CFOs can catalyze value creation for a broader group of stakeholders
Key regulators, leading investors, and influential customer groups have begun calling for more extensive reporting on broader stakeholder considerations. In response, some executives have begun making commitments to focus their organizations on creating value not just for shareholders, but also for a broader range of stakeholders, including employees; customers and the public; and even the environment itself.
CFOs now face the challenge of driving long-term value creation within a multi-stakeholder context. This means not only understanding the value equation for each stakeholder group, but also managing interdependencies and tradeoffs in ways that result in adequate, equitable, and sustainable returns for each stakeholder group.
In this issue of CFO Insights, we seek to facilitate CFOs’ efforts by providing an updated view of value creation from multiple stakeholders’ perspectives. Deloitte’s original Enterprise Value Map™ (EVM), developed in the early 2000s, presented a playbook for CFOs to consider key levers for increasing shareholder value. The new Sustainable Value Map™ (SVM) widens the aperture to extend to a broader set of stakeholders. This article will demonstrate how it can be applied in catalyzing important changes through capital budgeting and performance management.
Sustainable Value Map™ (SVM)
A multi-stakeholder view that helps build sustainable long-term value for everyone
We know the actions of business have a profound impact on the world’s economic, social, and environmental outcomes.
We also know business has contributed to where the world currently stands on each of these fronts, and that the choices we make going forward will substantially determine the trajectory of the world for generations to come.
There is now an unprecedented opportunity and need for business to help lead the world toward a better and more sustainable future. And the good news is that business leaders are beginning to commit to a broader view of enterprise value and the creation of long-term value for stakeholders beyond shareholders. But what does this mean in practical terms?
Deloitte’s Sustainable Value Map (SVM) provides a starting point for examining what “value” means to different stakeholder groups. And it depicts the ways each group is reliant upon inputs and outputs from the others.
This map builds on Deloitte's original Enterprise Value Map (below) to address value creation for not only shareholders, but also for employees, customers/communities, and the natural environment.
Below are value maps focusing specifically on the creation of Shareholder Value. The core framework for this section is the Enterprise Value Map™ (EVM), which is a zoom-in on the shareholder section of the Sustainable Value Map™ (SVM) referenced above.
Enterprise Value Map™ - Operations View (EVM)
Practical paths to increase shareholder value
It is easy to say shareholder value is important, but not so easy to make it influence the decisions that are made across the enterprise every day: where to spend time and resources, how best to get things done, and, ultimately, how to win in the competitive marketplace.
This value map is designed to accelerate the connection between actions you can take and shareholder value. It is not rocket science and it is not complete, but it can jump-start the process of focusing on the things that matter most and choosing practical ways to get them done.
This map focuses specifically on the way operations drive shareholder value. The Shareholder Value Map (SHVM) below is a more comprehensive view that incorporates not only Operations, but also Financing, Investment and Valuation.
Chronic Misalignment
Why calls for better alignment don't work, and how a shared language can remove common barriers
Everyone knows that strategies are essentially useless if they don’t influence what actually happens across the company on a daily basis. Leaders increasingly expect that people throughout their organizations will “think like owners,” aligning their actions more directly with the strategies and priorities of the company.
This has worked for some organizations, but for many more it has not. Why have some been able to create alignment, and why haven't the others?
This article explains how organizations can use value maps to help their broader organizations understand how value is created, focus on key improvement need, align investments and people with key priorities, and get value from their actions and projects.
