Value is created one decision at a time

I have been thinking a lot recently about how value is created for any business or enterprise.  These thoughts were triggered as I was updating the decision patterns available in the Decision Driven® Solutions Framework (DDSF) and also discussing our value proposition (value promise) with various potential customers.

Within our Enterprise Strategy decision pattern, we have 3 decisions that summarize the value delivered by the enterprise.  For convenience, I named these 3 decisions differently to distinguish the branch of the decision pattern where they are located.

  • The Differentiation Strategy decision resides under the Value Chain Strategy and can be summarized as “How will we differentiate our value proposition from our competitors in this part of the value chain?”
  • The Positioning decision lives under the Target Markets decision and can be stated as “How will our products and services stand out in this market against both direct and indirect competitors?”
  • The Value Proposition decision resides under the Opportunities (to Pursue) decision and is framed as “What value proposition will we offer to these customers?”

We also have a Use Case Value Proposition decision within the Product Design decision pattern that is focuses on value creation by a specific product by asking, “How will the solution deliver value to the end users and customers of this use case?”

Despite their different contexts, these decisions all share similar types of alternatives, i.e. a value promise that summarizes the components of value (A + B + C) that we will offer to distinguish ourselves from other solution providers. The criteria for these decisions are very similar and are used to evaluate one or more of our value promise/equation alternatives against those of potential competitors.

Positioning-criteria

What I’ve realized is that the Value Proposition decision is the tip of the iceberg that exposes a more fundamental truth.  Value is created one decision at a time!  Restating this principle as an imperative:  Every decision should be a value-creation and innovation engine!

That brings me back to a picture I drew long ago.  I was grappling with a way to help students in my Decision Driven® Design and Decision Driven® Strategy courses to improve their skills at defining criteria.  Criteria express what the stakeholders of a specific a decision value, i.e. how they define success in a measurable way.  The quality of a decision hinges on the quality of the criteria and stakeholders often overlook important criteria when facing a decision for the first time.

To combat this problem, I created a pattern behind the pattern for brainstorming the criteria for any decision.  I used the mnemonic, C4SP to make it easier to recall:

  • Cost
  • Schedule
  • Performance
  • Compliance
  • Compatibility
  • Consistency

Depicted graphically, this turns a decision into a “transfer function” that transforms resource inputs (the cost criteria) into stakeholder value/benefits (the Performance criteria) delivered robustly (the Consistency criteria) and quickly (the Schedule criteria), as constrained by applicable laws/regulations/standards (the Compliance criteria) and the other people/systems affected (the Compatibility criteria) by the decision’s solution.

Evaluation Criteria Template

By focusing each decision on the value delivered to stakeholders, you can turn each decision you face into an innovation and value-creation opportunity that optimizes the Performance/Cost ratio, i.e. maximizes performance outputs (Value) while minimizing resource inputs (Costs).

The power of this technique is multiplied greatly when you apply it broadly to all the decisions associated with your business, project, product or life, i.e. use your Decision Breakdown Structure (DBS) as an innovation framework.

If you are ready to innovate everywhere to create new value with every decision that you face, I encourage you to start a free trial of the Decision Driven® Solutions Framework.  Please contact the Decision Driven® Solutions team at trial@decisiondriven.com or solutions@decisiondriven.com to begin your trial today.

About decisiondriven

Innovator in Decision Management, Systems Thinking and System Engineering methods and tools
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