Today. Tomorrow. Possibly, for several tomorrows. But almost never beyond an 18-24 month time horizon. The smug corporate bluffer who boasts that he has secured maximum value approach for all time fools no one, except perhaps himself. Today´s optimal value solution is soon displaced by something else, something better.

Speed of change dictates such displacement. The evidence is all around. Mused to be good for six months, two years ago. Today, fresh data becomes stale in just three months.

And the competitive decision marketplace is compressed so that only the surest and swiftest prevail. Just a year ago or so, ´Venerable Corporation´s´ decision crawl mean loss of ´only´ one major value opportunity. And even this was invisible as committee members concentrated on decisions made, rather than those which they missed.

But then the pace of change quickened, and even the most introspective committee members begin to realize that two, three, four major opportunities capable of substantially improving company shareholder value are missed. Not because of poor analytical techniques, but rather, because the underperforming committee´s pace is not up to the challenge.

Even ´threshold´ value developments in research, assembly and production are subject to being succeeded by the next best value answer. In Chapter 5 of VBM Consulting´s newest book, THE VALUE MANDATE: Maximizing Shareholder Value Across the Corporation, authors Neill and Clark describe how platform assembly changed the rules of the automotive industry value game.

But even that development is now being upstaged by its value successor. Volkswagen was one of the platform-value pioneers, gaining efficiencies by using the same platform for up to four different nameplates.

But some customers got smart and realized that they could get the same performance for cheaper price by choosing the least prestigious nameplate of the group. Great for buyers, but lousy for car makers, who see their margins narrowed.

As a consequence, ´platform´ is now being displaced by cross-line and cross-platform massive sharing of components. But in two years (at most) this too will give way to ITS value successor. And so it goes.

Note:

Corporate Value Improvement (CVI) was copyrighted by VBM Consulting Limited on December 12, 2000, all rights reserved.
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