Getting Serious About Value Capture? It's About Time...

April 1, 2021

Key Takeaways

While there is often significant emphasis on determining the scale of value capture the timing is often left as a secondary consideration.  However, the timing of benefits can significantly impact the total value of your transformation.  We propose three steps to help you define and maximize the impact of timing on your value captured:

  1. Set time-bound, cumulative targets in addition to traditional run-rate goals.
  2. Aggressively seek opportunities to accelerate value realization.
  3. Link value capture profiles with critical tasks and risks.


Recently I completed one of my most annoying yet predictable tasks: calling my cable and internet provider to get the latest “promotional” rate after my previous one expired.  I am not certain whether this applies globally, but readers in the United States probably know the drill: receive a cable bill that has shot up by about 50 – 100%, call the cable company and say you want to cancel service, refuse the first offer, get escalated to a supervisor, and after about 20 minutes agree upon a price that keeps you as a customer for the next year.  Occasionally you need to be prepared to follow through on your threat to switch, but generally both sides know of and engage in the dance. I bring this up not as a critique of enterprises who force me to engage in this exercise, but rather to demonstrate the cost of delay.  Since this is an unpleasant task it is at risk of being deferred and filed to the chore list.  However, what motivates me is that the delay is costing me money – about $70 for each month of procrastination based on my last bill.  If it sits in the pile for three months, then I lose $210 for delaying 20 minutes of work.  Add two more months and we’re up to $350!  In this case time really is money – the longer I defer the value of a lower cable bill the less money I will save overall.

We’re not talking about theoretical physics – time does exist in value capture

With many transformation programs there is significant effort that goes into maximizing the potential run-rate of benefits.  Justifications for a managerial span of control target of 7.5 instead of 7, indisputable benchmarks that show you can build 15 widgets per minute instead of 14, airtight evidence for sales targets of 20 deals per sales resource instead of 18, etc.  Portfolio optimization exercises then seek to identify the set of initiatives that deliver the optimal ROI.  However, what often gets lost is the impact of time – how two months of delay in delivering a $12M annual recurring benefit costs $2M.  Six months of delay is $6M.  When aggregated across multiple initiatives it is easy to see that delays can contribute to significant value loss. Teams can address this by placing similar emphasis on the timing of value capture as they do the scale.  To that end, we recommend the following:

  1. Set time-bound, cumulative targets in addition to traditional run-rate goals.
  2. Aggressively seek opportunities to accelerate value realization.
  3. Link value capture profiles with critical tasks and risks.

1. Set time-bound, cumulative targets

Frequently we hear value realization targets defined as “hit $XM in annual operational savings by FY 23,” or something similar.  It is less often that we hear “save $YM cumulatively by FY 23.”  Both are important, but only the cumulative goal will keep you on track for timely value capture.  It is not a case of targeting either run-rate or cumulative goals – rather we recommend using both.  In instances where there may be a conflict between the goals (e.g., quick realization of value vs. higher ongoing savings) it gives you the opportunity to perform a balanced assessment.

Figure 1. Defining cumulative goals in Amplify

2. Aggressively seek opportunities to accelerate value capture

In turnaround and recovery programs we often see a strong emphasis on rapid value capture, primarily driven by the dire state of the business’s finances.  If companies are challenged to keep the lights on and meet payroll obligations then there is significant focus on quickly freeing up cash.  In longer-term transformations, though, there is generally less urgency for rapid delivery.  There may be some talk of “quick wins,” or running a program that “pays for itself,” but generally these concerns are secondary and the emphasis is on hitting an ambitious run-rate target at some point in the mid- to distant future.

Figure 2. Portfolio optimization in Amplify

As we have already seen delaying value delivery has a real impact on total benefits.  We recommend three steps to help get the most out of rapid value capture during the early planning stages:

  • Assess the timing of value capture along with scale when prioritizing initiatives – ideally fulfilling the time-bound cumulative goals discussed earlier.
  • Develop a “fast track” approval process for selecting, defining and executing quick wins.
  • Split / decouple initiatives that have protracted timelines due to their size / scale (e.g., number of business units or process impacted).

Of course, there are limitations to the last point, as it will need to be balanced with the potential interruptions to the business (e.g., it is generally inadvisable to have frequent waves of headcount reductions).

3. Link value capture profiles with critical tasks and risks

Once we have selected and defined the initiatives that will help us capture value quickly it is time to execute.  Frequently this is where the value capture timeline begins to slip.  What causes these delays?  Usually it is not a delay with the benefit by itself – rather, the issue is with the initiatives and tasks that need to be completed to realize the value.  Roadblocks, bottlenecks, delayed predecessors, and numerous other impediments conspire against timely delivery. Understanding the impact of these delays can be a challenge without the appropriate toolset.  Only by linking the value capture profiles with their predecessor tasks can we understand the true impact of delays.

Figure 3. Dependency between task and value capture in Amplify

In the figure above, we can see that there is a dependency between the task “Remove duplicate payroll systems” and the benefit profile “Decrease in payroll administration costs.”  There is a delay in the task, which has flagged a violation in the benefits realization profile. The next figure highlights the impact of this delay:

Figure 4. Impact of delayed value capture, as captured in Amplify

Here we see that the benefit has been delayed by five months, resulting in a benefits shortfall of $1M!  This is the power of being able to link value capture to tasks – although we have not begun to realize the value we can already see that we are forecasted to fall short of our plan due to the delay. This is where Amplify excels against tools that neglect to integrate value capture with task delivery, or only represent projected benefits as a single entry.  Being able to accurately project the impact of delays allows teams to better assess mitigation actions – if we know that this delay will cost us $1M won’t there be a bit more urgency around addressing the root cause? The same concept applies to risk items.  Although in many tools there may be the ability to set a “risk exposure” field to understand the potential financial impact, more sophisticated tools such as Amplify allow users to link risk items to benefits.  This enables rapid identification of benefits that may be at risk for timely realization.

Amplify can help

If this all seems overwhelming the good news is that Amplify can help.  Our tool is built around value capture and benefits realization, with a focus on enabling teams to deliver transformations that achieve their business goals.

Figure 5. Screenshot of Amplify-embedded Power BI dashboard

Specifically, Amplify supports the following:

  • Defining Goals, both run-rate and cumulative, that can guide teams to focus on rapid value capture.
  • Optimizing initiative portfolios that enable teams to achieve their goals, helping identify and prioritize quick-wins and other opportunities for accelerated value delivery.
  • Linking benefit profiles with predecessor tasks to quantify the full impact of delivery delays.
  • Linking benefit profiles with risk items to highlight potential exposure.
  • Program-level reporting to help identify issues at the top and drill-down to the root cause.

Our team is happy to get you started on your value capture journey.  Reach out to our team today – don’t delay because as you have learned, time is money!

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