economic value add

Company growth & sharing
Company growth and sharing of wealth for all involved
Chapter 9 p.1
All of this stuff is very exciting! What about the business? Are there specific approaches or winning attitudes in your company’s business processes as well?
Absolutely! In the final analysis it is only worth doing if it will lead to success!
This section contains a discussion of what we learned about stages of growth in entrepreneurial teams and how we share the created wealth.
The Entrepreneurial company
Increasing your contribution
Understanding profit and Economic Value Add
Converting energy to equity
Agility and the entrepreneurial mindset
Stages of growt

Company growth and sharing of wealth for all involved

Chapter 9 p.1

w&t_question

I Ask

All of this stuff is very exciting! What about the business? Are there specific approaches or winning attitudes in your company’s business processes as well?

w&t_exclamation

I Answer

Absolutely! In the final analysis it is only worth doing if it will lead to success!

w&t_binoculars

I Explain

This section contains a discussion of what we learned about stages of growth in entrepreneurial teams and how we share the created wealth.

w&t_ch9_a_growth_and_sharing_wealth

The Entrepreneurial company

Purpose of the Career Development Guide
Chapter 1 p.3
What is the Walk & Talk process and what does it aim to achieve?
In our journey through life each of us seeks opportunities to take stock of who we are and where we are going.
The Walk & Talk process is a structured and coordinated process intended to lead the individual through a journey of discovery and personal development in the business and career environment.
Not only does this process assist you in the development of your knowledge, skills and self-awareness, but it should enable you to increase your contribution in the playing field called BUSINESS. It strives to grow your insight into what you can do differently as a team member, as an employee and for your customers in the quest to enhance your efficiency, effectiveness and value add.
Fundamentally, a business strives to build a successful company through successful team members with satisfied customers.
From that basic objective, it follows that there are THREE important role players in the business, each with different requirements whose interests need to be met and satisfied.
You, the individual
The company
Your customers
The company’s success will be measured in the final analysis by the financial returns which it delivers to all its stakeholders (including you).
This will depend on the degree of “overlap” of interests (also known as the Economic Value Add) which can be achieved amongst the three role players. The Walk & Talk process focuses on growing the individual in order to extend this overlap for maximum mutual benefit.
While keeping in mind to satisfy the differing needs of our three main role players…
Let the journey begin!

Chapter 1 p.3

w&t_question

I Ask

What is the Walk & Talk process and what does it aim to achieve?

w&t_exclamation

I Answer

In our journey through life each of us seeks opportunities to take stock of who we are and where we are going.

The Walk & Talk process is a structured and coordinated process intended to lead the individual through a journey of discovery and personal development in the business and career environment.

Not only does this process assist you in the development of your knowledge, skills and self-awareness, but it should enable you to increase your contribution in the playing field called BUSINESS. It strives to grow your insight into what you can do differently as a team member, as an employee and for your customers in the quest to enhance your efficiency, effectiveness and value add.

Fundamentally, a business strives to build a successful company through successful team members with satisfied customers.

From that basic objective, it follows that there are THREE important role players in the business, each with different requirements whose interests need to be met and satisfied.

w&t_ch1_a_three_circless

You, the individual

The company

Your customers

The company’s success will be measured in the final analysis by the financial returns which it delivers to all its stakeholders (including you).

This will depend on the degree of “overlap” of interests (also known as the Economic Value Add) which can be achieved amongst the three role players. The Walk & Talk process focuses on growing the individual in order to extend this overlap for maximum mutual benefit.

w&t_elephant

I Advise

While keeping in mind to satisfy the differing needs of our three main role players…

Let the journey begin!

Personal EVA is similar to business Economic Value Add
Chapter 10
p.1
I often hear people in referring to “EVA”. At first I thought they were speaking of some electrical component. Now I suspect it has something to do with business success. Can you explain it to me?
We widely refer to Economic Value Add. EVA for short, is the most effective way of measuring business success.
EVA is the final measure of business value. It is what investors will pay for the business. The market usually looks at two aspects:
Results: Profit measured in Rands and Cents.
Expectations and confidence:
The market’s expectations of the company’s ability to sustain, repeat and grow the profit stream. (Usually reflected in the P/E rate.)
Personal EVA is similar in that it is measured in terms of what you are worth to the company, your actual results and your economic value added to the business. Here you create space for sustainable personal income.
Are you telling me that the value of the company is related to the margins that I made on my last deal?
But how does it all hang together and how can I improve my performance?
The following diagram explains what the Economic Value Add (EVA) of our business is all about.
If your employment does not translate into more profit, why should your relationship with the company continue?
You will have noticed that this book contains several diagrams which explain key aspects of business and the company. It will be worth your while studying these carefully. For instance The Order Cycle, Areas of Growth.
Using the same diagram from the previous page, I will explain how your individual EVA ties in with the EVA of the company. By following these guidelines, you should definitely be able to improve your contribution.
Let’s say this diagram represents two moments in time relating to you:
In order to raise your
individual EVA and
contribute towards
growing the EVA of
the company, you
have to improve two
factors which in
effect create a:
a) Increase the
customer Net
Value Potential.
b) Increase the
Customer’s
Customer Value
Potential.
Raising profit by
increasing the price without a
corresponding lift of
factors and would hardly make good business sense. Profits can be raised by increasing sales and/or expanding the market. This reduce expenses and drives cost down.
Well, I am beginning to understand EVA. I guess if one improves all the elements listed above, you must be able to make a contribution to the wealth of the company.
But what else can I do?
Let me add five key truths about increasing EVA:
Understand cost and value.
Measure and communicate value.
Optimize cost.
Increase value.
Increase market.
Remember the following fundamental concept:
Wealth = Sustained profit over time + Growth

Personal EVA is similar to business Economic Value Add

Chapter 10 p.1

w&t_question

I Ask

I often hear people in referring to “EVA”. At first I thought they were speaking of some electrical component. Now I suspect it has something to do with business success. Can you explain it to me?

w&t_exclamation

I Answer

We widely refer to Economic Value Add. EVA for short, is the most effective way of measuring business success.

EVA is the final measure of business value. It is what investors will pay for the business. The market usually looks at two aspects:

1. Results: Profit measured in Rands and Cents.

2. Expectations and confidence: The market’s expectations of the company’s ability to sustain, repeat and grow the profit stream. (Usually reflected in the P/E rate.)

Personal EVA is similar in that it is measured in terms of what you are worth to the company, your actual results and your economic value added to the business. Here you create space for sustainable personal income.

w&t_question

I Ask

Are you telling me that the value of the company is related to the margins that I made on my last deal?

But how does it all hang together and how can I improve my performance?

w&t_binoculars

I Explain

The following diagram explains what the Economic Value Add (EVA) of our business is all about.

w&t_ch10_a_understanding_profit_and_economic_value_add

w&t_elephant

I Advise

If your employment does not translate into more profit, why should your relationship with the company continue?

You will have noticed that this book contains several diagrams which explain key aspects of business and the company. It will be worth your while studying these carefully. For instance The Order Cycle, Areas of Growth.

w&t_ch10_b_understanding_profit_and_economic_value_add

w&t_binoculars

I Explain

Using the same diagram from above, I will explain how your individual EVA ties in with the EVA of the company. By following these guidelines, you should definitely be able to improve your contribution.

Let’s say this diagram represents two moments in time relating to you:

In order to raise your individual EVA and contribute towards growing the EVA of the company, you have to improve two factors:

1. Increase the customer Net Value Potential.

2. Increase the Customer’s Customer Value Potential.

Raising profit by increasing the price without a corresponding lift of factors and would hardly make good business sense. Profits can be raised by increasing sales and/or expanding the market. This reduce expenses and drives cost down.

w&t_question

I Ask

Well, I am beginning to understand EVA. I guess if one improves all the elements listed above, you must be able to make a contribution to the wealth of the company.

But what else can I do?

w&t_exclamation

I Answer

Let me add five key truths about increasing EVA:

  1. Understand cost and value.
  2. Measure and communicate value.
  3. Optimize cost.
  4. Increase value.
  5. Increase market.
w&t_elephant

I Advise

Remember the following fundamental concept:

Wealth = Sustained profit over time + Growth

Growing suppliers and adding new customers
Chapter 9
p.3
Economic Value Add of your company
A visual representation of the link between Economic Value Add and the order cycle of your company.
The Process
Add Value to your customers and your partners
Marketing and Sales
Order Cycle
Continued improvement and higher value added to the client at lower resources to the company – in company processes as well as the processes of our suppliers.
Value added beyond principle
Attrition, Intellectual property / solutions
Manage your links
Through managing the links between your company and your customers as well as between your company and your suppliers; both suppliers and customers grow.

Growing suppliers and adding new customers

Chapter 9 p.3

Economic Value Add of your company

A visual representation of the link between Economic Value Add and the order cycle of your company.

w&t_ch9_c_the_economic_value_add_link

The Process

  • Add Value to your customers and your partners
  • Marketing and Sales
  • Order Cycle
  • Continued improvement and higher value added to the client at lower resources to the company – in company processes as well as the processes of our suppliers.

Value added beyond principle

  • Attrition, Intellectual property / solutions

Manage your links

  • Through managing the links between your company and your customers as well as between your company and your suppliers; both suppliers and customers grow.
Maximize your value contribution to the customer
Chapter 3
p.2
The idea of an “overlap” of interests has been mentioned several times. What does it all mean, and where do I fit into this concept?
At the heart of any business there is a tri-partite alliance between the individual, the company and the customer. The contribution you make lies in the area of overlap – Contribution Zone – of interests of the three role players. Your contribution is known as your Economic Value Added (EVA , for short).
I will explain this step-by-step. Let’s start by illustrating this concept in a diagram.
Let’s explore the concept of “Growing Contribution” and capacity which is the key to understanding the VENN diagram above.
As you grow your skills by following the Walk & Talk process, you are able to contribute to the effectiveness of the company as well as the manner in which the company addresses its customers’ needs.
As your experience, skills and knowledge grow, so do the areas of overlap (the Contribution Zone) between yourself and the company on the one hand; and between yourself and the customer on the other. Growth in contribution is directly linked to the growth in the added value the customer receives from doing business with the company, and is known as Economic Value Added (EVA).
In other words, as the area of overlap (EVA) grows, the“alignment” between yourself, the company and the customer increases.
This progression in alignment results in growth of the company through increased products and services as well as effective business processes which optimally address the needs and expectations of the customer. The progression of alignment depends exclusively on the growth of the individuals within the company, and the contribution they make to the company’s ability to effectively address the needs and expectations of the customer.
By understanding your customer well, you will be able to identify opportunities to develop new areas of customer needs and to increase the value the customer receives.
This will enable you to determine the growth of the company within your chosen customer base, and to increase the value-added to the company, which in turn, results in wealth for the customer the company and the individual.
Align yourself with your company and customer needs in order to maximize your contribution and create wealth for yourself, the customer and the company.

Maximize your value contribution to the customer

Chapter 3 p.2

w&t_question

I Ask

The idea of an “overlap” of interests has been mentioned several times. What does it all mean, and where do I fit into this concept?

w&t_exclamation

I Answer

At the heart of any business there is a tri-partite alliance between the individual, the company and the customer. The contribution you make lies in the area of overlap – Contribution Zone – of interests of the three role players. Your contribution is known as your Economic Value Add (EVA , for short).

I will explain this step-by-step. Let’s start by illustrating this concept in a diagram.

w&t_ch3_b_venn

Let’s explore the concept of “Growing Contribution” and capacity which is the key to understanding the VENN diagram above.

As you grow your skills by following the Walk & Talk process, you are able to contribute to the effectiveness of the company as well as the manner in which the company addresses its customers’ needs.

As your experience, skills and knowledge grow, so do the areas of overlap (the Contribution Zone) between yourself and the company on the one hand; and between yourself and the customer on the other. Growth in contribution is directly linked to the growth in the added value the customer receives from doing business with the company, and is known as Economic Value Add (EVA).

In other words, as the area of overlap (EVA) grows, the“alignment” between yourself, the company and the customer increases.

w&t_binoculars

I Explain

This progression in alignment results in growth of the company through increased products and services as well as effective business processes which optimally address the needs and expectations of the customer. The progression of alignment depends exclusively on the growth of the individuals within the company and the contribution they make to the company’s ability to effectively address the needs and expectations of the customer.

By understanding your customer well, you will be able to identify opportunities to develop new areas of customer needs and to increase the value the customer receives.

This will enable you to determine the growth of the company within your chosen customer base and to increase the value-added to the company, which in turn, results in wealth for the customer, the company and the individual.

w&t_elephant

I Advise

Align yourself with your company and customer needs in order to maximize your contribution and create wealth for yourself, the customer and the company.