Posted on 07-11-2009 at 07:45
Value Management for Small and Medium Sized Businesses
It is widely accepted that Value Management is an exceptional business tool for large businesses and projects. But is Value Management suitable for smaller businesses?
Value management is a very powerful analytical tool and I believe its core components are ideally suited to medium sized businesses, but even small and micro businesses can benefit from its deceptively simple approach.
The core principles of value management are:
• It is strategic- All business need a strategy so to me it can easily be applied to any business in any industry.
• It is based around team work and is inclusive-Even micro organisations have teams. I don’t know of a single micro organisation that does not operate in a mutually supportive manner with others, in some way or another. These mutually supportive individuals are teams, not traditional but teams nonetheless!
• It puts the customer first and “values” the business activities from the customer perspective. All businesses have customers so this fits, it also forces you look at your business through the customer lens. Something too often overlooked.
• It takes a truly creative approach. Creativity = Innovation. All great companies innovate; you have to just to survive. Whether it is via process,(do things differently) systems (new accounting system?), customer,(new markets?) product, (quality/cost/features/benefits?) leadership (read Richard Semlers book- Maverick!: The Success Story Behind the World's Most Unusual Workplace)
• It follows a planned sequential and ordered process. All businesses need a plan!
• It’s about the long term- No comment required
• It focuses on what things do rather than what they are- All businesses have functions!!
All of the above approaches can be found in other business improvement methods. The difference is that value management can incorporate other business improvement methods and make them better. It is inclusive not exclusive, this makes it adaptable scalable and above all flexible.
Its flexibility means that value management can be applied to a range of business sizes and business types without losing any of its potency. In fact my experience is that the potency is amplified and made more powerful in a small business and the results are quicker.
Value Management is a structured team based approach to identify the functional requirements of projects/contracts to achieve Optimum Function for Minimum Cost. This means it can be , and is, applied to any organisational function. Sales, Marketing, Operations, HR, Processes, Systems, Finance all can be improved via value management.
A non exhaustive list of the types of techniques that Value Management use is given below. The list is taken from the website of the Institute of Value Management. (Because I was too lazy to type up my own!)
For further information on Value Management click here or here.
|
Tool |
Description |
Benefits |
|
Brainstorming or Mind Showering |
Idea generation that focuses on creation of ideas by volume (no judging) |
Allows a large volume of ideas to be generated in a short period of time. Also strives to ensure all parties are involved – no ideas are discounted initially (later evaluation and filtering undertaken) |
|
Cost Benefit Analysis |
Used to analyse the costs of implementing something compared to the benefits to be achieved. Assists business case submissions. |
Often used in VM on procedure or process type projects. Can be combined with other tools e.g. process mapping, option selection. |
|
Criteria Weighting Technique |
A tool used to assist in option selection. Uses functional drivers (or objectives) that are weighted for scoring options against. |
Enables option selection and alternatives to be reviewed in order to support decisions being made. |
|
Excursion/Metaphors |
A tool used to take delegates on an outward and return journey (possible excursion). Moves delegates away from a problem to somewhere where creativity flourishes. The return journey often releases such creativity and ideas that would not normally be evident. |
Very effective in bringing creativity to the forefront. Often used as a precursor to brainstorming or other idea generation tools. |
|
Function Analysis System Technique (FAST) |
Identification of functions (at the heart of Value Management) of products, processes, projects or services. Focussed on client needs and wants. |
Determines what functions are delivered i.e. what they do or must do, not what they are (avoiding solution mode). The FAST diagram works by asking how the functions (primary and secondary) relate to each other by ask How and Why questions to check the logic works. Later costs are added to functions to assist in identifying any VM mismatches or areas of over-engineering. |
|
Objectives Hierarchy |
Diagrammatic process for identifying objectives in a hierarchical manner. Often used in conjunction with functions. |
Assists in focussing input where the key objectives are as the diagram is constructed in descending order. |
|
Issues Generation and Analysis |
A way of eliciting many issues connected with a problem or opportunity. Team members write down their issues on post-it notes and they are displayed on the wall under appropriate categories or groupings. e.g. Requirements, Constraints, Problems, Opportunities, Assumptions, Uncertainties, Risks |
Voting of the top 10 important issues follows. Actions to address issued then explored. |
|
Pair Wise Comparison |
Enables ranking of items by means of comparisons between all possible pairs of items. |
Enables option selection and alternatives to be reviewed in order to support decisions being made. |
|
Pareto Analysis |
Often called the 20/80 rule. Aim to concentrate on the top 20% of items that often have biggest (often 80%) impact. |
Focuses on those items or activities that can achieve the optimum |
|
Process Mapping |
Uses flow charts to review steps in processes |
Identifies processes in a diagrammatic format in a step by step manner. Often used in manufacturing of system type processes. Used to identify omissions or superfluous items in the process for correction. |
|
Risk Analysis |
A structured approach to identifying risks that could affect project, product, process or service success. Risks are identified, evaluated (in terms of cost, time, other impact) and robust action planning applied. |
Often used in parallel with Value Management as there are genuine links. Assists decision making or option selection. |
|
SCAMPER |
Used as a checklist to develop ideas by applying separate verbs to chosen ideas singly or together with others. E.g. Combine, Amend, Modify, Put to other use, Expand, Reverse/Reduce |
This could help with moving an idea from a creative thought to a more practical use, expand on the concept behind ideas, find different ways of expressing the idea, provoke new ideas, etc. |
|
Stakeholder Analysis |
Identifies those key stakeholders (groups of individuals) with an influence or interest in a project, product, process or service. |
Can assist in focussing attention where the priorities are required i.e. satisfaction of key stakeholder interests. |
|
SWOT Analysis |
Identifies strengths, weaknesses, opportunities and threats. A tool used in many organisations to assist in focussing activities where required and minimise those items that can impact negatively. |
Assists in understanding strengths, weaknesses, opportunities and threats that can impact on an organisation, individual, product or process. |
|
Value Analysis |
Structured team based approach to identifying functional requirements of projects, products, processes or services. |
Optimisation and maximisation or value to the client or customer. Optimum balance between function and cost without detriment to quality. |
|
5 W's & H |
A technique for exploring problems which provokes further depth of questioning about the dimensions framing the problem or opportunity. |
Who - e.g. is responsible? |
Table taken from http://www.ivm.org.uk/techniques.php November 2009
