The Value Chain

The first step in creating value and playing a major role in your organisation is to understand the results you wish to achieve. As Stephen Covey wrote in "Seven Habits of Highly Successful People", "we start with the end in mind". In other words, we need to ask, what is our marketplace goal - what will change as a result of our actions? For instance, do we want new customers? Do we want to gain more profitable customers? Do we want to attract customers away from competitors? Are we designing new products and services to help our customers run their own businesses more efficiently and, thereby, become more profitable? Whatever our end goal, it must be clear.

Now, let's bring this principle back to STM. Our objective here is to manage the causes and effects that link our strategy to our talent. To do this, we must start with our business objective and work back towards the talented people who execute strategy. These people will use our value chain to produce the high-quality products and services that your organisation - and more importantly - your customers desire. For each stage of this process, you must be able to describe the process and to measure effectiveness and efficiency. Therefore, to manage everything, we need a methodology. One of the best known methodologies is the Balanced Scorecard (BSC) approach. To keep things simple, a one page visual tool called a Strategy Map, (see diagram) details the strategy clearly, taking thematic ideas and converting them into concrete terms, actions, and plans. This helps everyone see the strategy and understand their individual role in fulfilling that strategy.

Introducing Strategy Maps

- Consumer Banking Case

I realise this may sound a little complex and theoretical. So, let me give you an example that may shed light on the process. Let's look at a case involving a growing consumer banking organisation. By first producing strategy maps, the bank was better able to identify strategic initiatives and programs/projects. This, in turn, helped to identify strategic job families that would bear the major responsibility for achieving their strategy. This meant that rather than merely having large all-encompassing organisational goals, it was able to identify job-families and key competencies it would need to achieve those goals. This, of course, put it in the perfect position to provide value to its customers and to succeed on an organisational level.

Now, I would like to illustrate the value chain process and to explain how the bank's strategy cascaded down this process. Let's start at the top of the cascade. The bank began by dividing its strategy into two parts: revenue growth and productivity. It aimed to increase its revenue in two ways. First, by developing a broader line of products and second, by emphasising a creative blend of established and new products. It sought to increase productivity by focusing on greater operational efficiency.

Next, the bank needed to take these goals and turn them into direct actions. Using the Balanced Scorecard approach, it realised that these strategies needed to be viewed from the customer's perspective. The bank needed to address the image it would create with its customers. It concluded that to create the right image, it needed to (a) increase customer confidence, and (b) increase customer satisfaction.

Having already established what it needed to do, the bank was then able to get an internal perspective that helped it to do understand how it needed to do it. This enabled the bank show its customers its competencies and why doing business with it would provide them with a valuable advantage. For example, by introducing strategic programs designed to ‘understand customer segments and to develop new products,' the bank showed that it would do a better job of designing the right products for the type of customers the bank wanted to attract. By giving them what they wanted, the bank created increased confidence amongst its customers. As these customers developed greater confidence in the bank and grew to trust its advice, they became more open to accepting new products and ideas. This way the bank was able to increase its revenue.

It was at the next stage that HR began to have its greatest effect. After the bank highlighted the right programs, it then needed to identify the job families and key positions that would have a direct impact upon those programs. From there it needed to identify and describe specific strategic capabilities required for those key positions. One of the bank's strategic programs revolved around creating a better understanding of their customers. To do this, the bank asked a simple question, "‘what does this position need to be good at in order to fulfill the requirements of the program/project?"They discovered that the key positions were related to consumer marketing.

At this point, the bank then asked, "What does the consumer marketing function need to be good at?" The answer, the consumer marketing function needs to be good at market research, market communications, and cross-business practices. By answering this question, the bank was able to design individual key positions that could support their strategic needs.

Success Profiles

Hopefully, this example demonstrates the power of STM. However, let me provide a final word of caution. When identifying and developing key positional capabilities, you are not trying to write a typical job description; rather you are describing a position success profile. Success profiles describe 1) how the position contributes to strategy success (to be tracked and measured in a Balanced Scorecard), and 2) the behaviour and knowledge that creates superior results. This last point is particularly important in recruiting and selection, as you will be seeking candidates who possess the same behaviour and knowledge.

By following the cascade, as detailed on a strategic map, through all the levels and across the horizontal processes, your organisation can link its strategic objectives with its talent requirements. This will make you, as a HR professional, far more useful to your organisation in creating value and will, as I discussed last issue, help you claim your seat at the top table.