Economic Value Created (EVC)
Most consulting approaches see the economic value framework in terms of operational profitability, capital rotation and the cost of capital. This seems like a sound equation until you examine the conventional underlying levers:
- Operational profitability: leveraged by activities and margins
- Capital rotation: leveraged by working capital, capital employed and fixed assets,
- Cost of capital: leveraged by cost of shareholder equity and cost of debt.
What’s wrong with this equation? “Equations don’t create value, people do.”
Our approach is to create a management process that will make this equation work. It must work for patients, employees, other internal and external stakeholders and for shareholders as well; that is, it must be sustainable.
We integrate economic value creation into the management process first by applying our Value Mapping methodology: this tells us where value can be found and waste eliminated.
Generating economic value requires creating a shared philosophy around value, the design of effective and efficient processes and new organizational and individual practices. It requires new competencies, especially commitment, and the ability to mobilize and track wide scale action over a broadly distributed Value Chain.
Finally, our approach includes a network-centric design methodology that places the patient and health outcomes at the center of the “order-to-cash” cycle and networks every significant value-producing process to that hub, creating and integrating economic value.