aka moving the dot = the ultimate aim
This has been termed the ‘Growth and Profitability Framework’, the ‘move the dot’ methodology is designed: to manage performance for shareholder value by concentrating on opportunities for growth and profitability
Businesses and managers can literally plot their performance as a ‘dot’ on a graph. The aim is then to move the dot as far up into the top right segment as possible – to reflect high growth and high profitability.
The main pros and cons of the framework and chart are:
- helps focus on the ££££ objectives of the bottom line
- can be used to track progress, as it shows current performance, which can be
- compared with target performance
- shows what still needs to be done
- but does not show where the performance gaps are
- does not show how to boost performance
- does not show which activities or initiatives will boost performance most the ‘how’
Enter ‘value drivers’, the parts of your business unit which literally drive growth and profitability, ie generate the value. In short, the core processes/results which must be achieved in order to improve on the performance in the ‘dot plot’.
Key descriptions of a value driver:
- must be measurable: you must be able to quantify any shortfall or improvements required
- are classed as 3 main types
1) corporate value drivers:
2) asset value drivers:
3) process value drivers:
- show a ‘cause and effect’ link
ie the link between actual performance and the bottom line (growth/profitability)
- may overly focus on systems and processes
when asked to identify which aspects of their business most affect the bottom line, the temptation for many business managers may be to go straight to the ‘hard’ systems and process side of the business; but performance also relies on ‘soft’ factors such as attitude and skills
- the self-test
So how growth/profitability-focused is your business?
Can you name four aspects of your business which drive your performance?
How are you using existing assets and resources to achieve growth and profitability?
What (internal & external) growth opportunities exist for your business?
Where is your ‘dot’ in the ‘move the dot’ plot?
How are you going to close the gap between your current growth performance and your target?
What resource constraints could hold you back?
What are your top 3-5 priorities for growth improvement?
And finally, when was the last time the dot moved, and did it move in the right direction?