Types of Value Communication: Themes and Statements

You need two communication formats when communicating value. The first format is the financial value theme. The second is the financial value statement. Both are based on your hard work to identify, position, deliver, and measure your value. Each format is useful in different situations. Figure 12-1 displays the components of value themes and value statements.

Figure 12-1: Building your value communication.

For those of you who are tempted to skip ahead, it will be helpful to read this chapter on value themes first, before proceeding to the next chapter on value statements. Some of the basic concepts for building your value themes also apply to creating value statements. Reading this chapter will make the next easier to follow.

The Difference Between Value Themes and Value Statements

Your value theme is the starting point for your value communication. Your theme is a high-level generalization of the value you bring to the organization. The basic layout for your themes is shown under the number 1 in figure 12-1.

Your value statements are specific descriptions of how much performance improvement you ‚ ve enabled (number 2 in figure 12-1), how much financial value the performance improvement has created (3), why sharing this information is relevant to the urgent and important of today (4), and what you need from your audience to create even more value in the future (5). Both formats are concise , yet each is a necessary part of your repertoire .

The Basis for Value Themes and Value Statements

Value themes and value statements are based on the financial value chains you have been using throughout this book. First, a quick review: financial value chains describe the four levels of your audience (Senior, Mid, 1st/Ops, and Individual). In a financial value chain, the broad financial measures of the Senior level are broken down into more specific measures for each audience until those measures become the detailed performance measures of the Individual.

In addition to the measures for each level of your audience, financial value chains also help you identify the relative timeframes that each level of your audience is responsible for in delivering value. Senior management is often responsible for creating value over a three- to five-year timeframe. Individual measures often vary from one week to one quarter. Figure 12-2 shows the sample financial value chain that you first read about in chapter 2.

Figure 12-2: A sample financial value chain.

The CPM is what is left over from the initial revenue after all of the costs to produce the goods to be sold and all of the costs to make sales have been subtracted from the revenue. Revenue, COGS, and other sales-driven expenses are all items that go into the CPM and are typical measures that are assigned to Mid-level managers in an organization. In figure 12-2, profit performance needs to be improved and a link is made from CPM to COGS, with COGS being indicated as a key focus for improvement. Materials, labor, and overhead are components of COGS and, in this case, materials costs are linked as an important measure for improvement at the 1st/Ops level. Finally, a link is made from materials to rework rates at the Individual level as being an important performance measure in improving financial value.