Integrated Strategy Model for Value Creation
Originally published: 26/02/2020 11:16
Publication number: ELQ-24381-1
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Integrated Strategy Model for Value Creation

This framework centers around Total Shareholder Return (TSR) goals by assessing Business, Financial, & Investor Strategy

Due to a number of socioeconomic and technological changes, the traditional, serial Corporate Strategy process is no longer adequate in today’s business environment. The traditional process has 4 primary weaknesses:

1. Excessive Reliance on Incremental Changes
2. Sequential Planning
3. Siloed Decision Making
4. Weak connection to Value Creation

An improved model is the Integrated Strategy Model for Value Creation. This framework centers around Total Shareholder Return (TSR) goals by assessing Business Strategy, Financial Strategy, and Investor Strategy concurrently. Likewise, the 3 dimensions to this strategy model are:

1. Design business strategy - Improvements in fundamental value, represented by the discounted value of future cash flows of a company’s business based on its margins, asset productivity, growth, and cost of capital.

2. Formulate financial strategy - Improvements in a company’s valuation multiple, driven by investor expectations that shape how capital markets value a company’s fundamental performance at any point in time.

3. Develop investor strategy - Direct payments to investors or debt holders in the form of dividends, share repurchases, or pay-down of debt.

There is a pervasive disconnect at many companies between Corporate Strategy and Value Creation. Value Creation should be an integral part of the Corporate Strategy process. This presentation also discusses sources of strategy misalignment and how to align the organization beyond the corporate strategy.

This deck also includes templates for you to use in your own business presentations.

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