Value definition

Business modeling

Plan-do-act cycle

The challenge

In a nutshell

Elements of the Mission and Vision Statements are often combined to arrive at a value definition of the company's purposes, goals and values. The Mission Statement defines the company's business, its objectives and its approach to achieving those objectives. A Vision Statement describes where the company hopes to be in future. The principle challenge in this phase is to establish common, clear, and focused guidelines that facilitate growth between the initiators.

Creating value necessitates knowing what a new venture is headed towards and what is driving it towards this destination. What is the organisation’s purpose? What are the issues it aims to address and where will its efforts generate added value? In business-as-usual innovation trajectories this stage is perceived as the “soft” part of business modelling. In integrated healthcare business models where the goal is to create shared value, the vision and mission of companies are what make up the foundation that drives a business model.

Shared value and creating boundaries

Shared value is a management strategy in which companies identify business opportunities to address social needs. This is why a precise definition and a consensus on what the challenge is are such fundamental elements of this strategy. At the same time, understanding the economic and profit-related objectives of those spearheading the initiative must also be kept in mind.

In this phase of the process, we provide you with insight in developing the value definition. A Mission Statement defines the company's business, its objectives and its approach towards achieving those objectives. A Vision Statement describes where a company hopes to be in the long term. Elements of Mission and Vision Statements are often combined to provide a value definition of the company's purposes, goals and values.

For organisations participating in a phase-gate process, the general assumption is that the initiators of the integrated business model initiative are key-executives and/or intrapreneurs in one or more organisations (company and or care organisation).

The principle challenge in this phase is to establish common, clear, and focused guidelines that facilitate growth between the initiators.

These guidelines also help prioritise the focus in subsequent steps and point out certain time-wasting pitfalls and bottlenecks to be avoided. Giving your business a strategic framework is only possible if the organisation’s senior management (or senior leadership at a divisional level or between organisations) has already established the boundaries for success at the outset.

A framework everyone can understand

Once these boundaries have been defined, the senior management’s next challenge is to create a simplified framework, so that everyone involved has a clear, common perception of what the challenges are. That will give working groups the space and tools they need to coordinate their activities and streamline their approach towards tackling these challenges. By establishing a solid, straight-forward framework, the senior management team sends a clear signal that the resources required for promising activities will be available.

Surprisingly, many companies are poor at articulating their strategies in a simple, straightforward manner that makes the requirements and trade-offs inherent to a strategy clear to all the parties involved.

From framework to roadmap

The overall objective of this method is to develop this framework and translate it into a roadmap with clear milestones for development, pilot testing, startup and economies of scale. A vital requirement for success is the development of buy-in within the management committees and boards of participating organisations. For this reason, it is crucial that the organisation’s leadership be involved in running a validation exercise with regard to the yielded results. At a minimum this ought to take place after each key phase of the process in order to successfully manage expectations as to the potential outcome of the subsequent phases.

In addition, experience shows that pro-actively involving the end-user facilitates acceptance within the organisations and adds to the authenticity and legitimacy of the innovation process. Finally, the involvement of a coach or broker, who coaches or guides the integrated business model process, facilitates successful outcomes for projects and processes in which multiple actors participate.

The process
The process
Step by step

The first step is to work with the initiators to co-create the initial core values of the company. This is followed by a second step in which the social need that the company seeks to alleviate is defined. The third step concerns substantiating whether the solution to the social challenge facilitates the creation of a future-oriented business opportunity. This provides us with insight on the vision of the company. Finally, in the fourth step the end-user-centric approach is adopted to develop a mission statement that immediately addresses and resonates with the end-user.

Creating the core values of your venture

The core values ​​of a company are the DNA or identity of an organisation. These values also determine an organisation’s ethics, principles, 'beliefs' and decision-making guidelines of an organisation. They must be explicitly stated because they are a good plumb line for identifying and selecting potential partners. Using this as a standard enables well-thought out strategic decision-making with respect to enabling you to create the business model, and ensures that the venture still conforms to the ethical framework embraced by the organisation.

Getting a good start

In many cases, this type of exercise is postponed until the organisation has kicked-off and has grown past its entrepreneurial stage. However, for integrated business models seeking to develop cross-disciplinary and cross-sectoral partnerships (industry, healthcare organisations, patient organisations, etc. ) this exercise is an essential part of getting a good start. This aspect is reinforced by the repeated observation that clients and key stakeholders are increasingly requesting additional information about what the underlying values of a venture in healthcare are before deciding to partner or become a client. Moreover, there is evidence that strong value-driven organisations are more resilient to changes of strategy and to external dynamics, such as competition, economic activity and social dynamics. We have identified two different methods that can be used when defining values.

One method is to start with the personal values of the initiators:

  • Step 1: Ask a small group of key persons what their personal values ​​are. Emphasise that you are trying to identify the values ​​that define their identity, and that you would like to have a better understanding of how they interact with others.
  • Step 2: Use the answers you receive to identify shared values (Limit this list to ten or less)
  • Step 3: Test the provisional list of values. This can be tested by discussing the values with as many people as possible in the organisation, requesting feedback, additional details, etc. Ask them to think of employees who, according to them, best embody the organisation and to assess whether the list of values adequately describes the quality of that person.
  • Step 4: Share the results with the entire organisation. Assess these in light of the results in Step 2 and correct the list where necessary. Share the results with the entire organisation and request feedback
  • Step 5: Finalise the list based on the answers of the entire organisation. At this point, you should have a list comprising the organisation’s core.

A second method elicits values from a consensus building perspective

  • Step 1: Divide an organisation up into small teams that accurately represent this organisation. Give the teams 20-30 cards each with different values listed on them.
  • Step 2: Ask each team to select 8-10 values ​​which they think match the organisation’s ethos (both as it now stands and in the future)
  • Step 3: Compare the results by asking each team to present their list. Write the shared values on a separate sheet on a flip chart.
  • Step 4: Concompany the list and then invite the teams to reduce the list of values ​​to the essential core values. Try to arrive at ​​a consensus.

The outcome should allow the leadership to answer three questions, collectively:

  • On the start-up of a new organisation (cross-sectoral, activity, etc.) what are the core values ​​you would choose as the foundation of this new organisation?
  • What are the core values ​​that you would decide to maintain as non-negotiables, even should it result in a 'competitive' disadvantage for the organisation?
  • What are the core values ​​that you think have staying power or must be retained in the organisation for the next 100 years?
Core values
Defining the social need

A new mindset

One of the key challenges to developing an integrated value proposition is that it requires entrepreneurs to adopt a new mindset. This change of mindset is non-negotiable because integrated business models are not unidirectional, instead stemming from an ecosystem perspective. In many cases, entrepreneurs or intrapreneurs use their own internal resources and ideas as a launch point. This stands at odds, however, with the primary objective of integrated healthcare business models, which is to move beyond isolated impact to deliver cross-cutting, collective impact.

Isolated vs Collective impact

In healthcare, isolated impact is the limited control that a single organisation (either a company or a healthcare organisation) exercises over a healthcare outcome. Collective impact, in contrast, is the impact that the combined efforts of several different companies and healthcare organisations can have. These efforts include developing a collective vision and coordinating products and services to address the many factors that influence a person’s health along with developing a common quality and impact metric. A collective impact approach makes developing a one-stop-shop solution for an end-user or even a group of end users (specific target group or region) possible.

Isolated impact versus collective impact

Using a collective impact perspective to develop a value definition requires looking at all the elements involved as an ecosystem. The ecosystem is the stakeholder network with the potential to directly or indirectly have an impact on the social need you are seeking to meet or the social problem that you would explore more in depth.

ecosystems

A first step towards encapsulating this “ecosystem” concept is the definition of the social need or opportunity that an integrated business wishes to meet or capitalise on.

A need or problem in society is any condition or behaviour that has negative consequences on a broad segment of the population and which is generally recognised as a condition or behaviour that needs to be addressed. This definition has both an objective component and a subjective component.

The objective component: for a condition or behaviour to be considered a social problem, it must have negative consequences on a broad segment of the population.

The subjective component: to be considered a social problem, there has to be a perception that a condition or behaviour needs to be addressed. When defining a social need, substantiating these components with data gathered from academic researchers, government agencies, practitioners, end users, and other sources is a must.

3-step plan to a quick overview

  • Step 1: Substantiate the issue
    This step identifies the issue, or root of a problem that strongly points to extensive and serious consequences should the social need or problem not be addressed. What are the consequences (health, social, economic, etc.)?
  • Step 2: Identify the target group
    The purpose of this step is to establish which group(s) in society may be/are affected directly or indirectly.
  • Step 3: Define the urgency or burning platform
    This step involves identifying quantitative and qualitative indicators providing evidence that important groups (citizens, caregivers and caretakers, healthcare organisations, businesses, the public sector, etc.) perceive the social need as acute, significant and relevant.

Defining the need sets the venture’s compass in the right direction

The focus of the venture gains clear direction once the social need (social issue, target group, urgency) has been defined. In the process of arriving at the need’s definition, workshops may be held in which the initiators brainstorm about potential social needs, to be followed up by a second workshop (after substantiating the social needs with facts) in which a sort of materiality audit is carried out to assess and prioritise the social need with the highest potentiality in relation to the development of an adequate solution.

Sometimes initiators opt to keep two or three social needs in the running, only making a decision on the final choice after the next stage. The input of key stakeholders in the ecosystem (see next step) can play a supporting role in making a well-founded, final decision on the social need that will be addressed.

Substantiate the opportunity

Reactive, adaptors, shapers

There are three ways to act on a social need:

  1. "Reactive strategy:" organisations ignore future trends and respond negatively to them. They are characterised by only responding after the fact in order to maintain relevance vis-a-vis future developments. In brief, it is a status quo mentality.

  2. "Adaptors" try to be as flexible as possible where the future is concerned and prioritise agility and proactivity.

  3. "Shapers" are incredibly proactive, seeking to personally shape future developments. They aim to occupy the lead by creating new markets based on innovative concepts.

Our objective is to develop future-oriented organisations and ventures that adopt integrated business models. This means they should be positioned in Category 2 (adaptors) and/or Category 3 (shapers). Substantiation of a valid social and economic opportunity for addressing a social need requires understanding how relevant and interested parties currently perceive and evaluate this need and how they see this need evolving in the future.

Stakeholder analysis

A stakeholder analysis is a key tool on which an overall analysis can be made. The advantage of a stakeholder analysis is that it incorporates a variety of perspectives and each of the sectors and factors that make up an ecosystem. This results in a clearer picture of the context and potential pitfalls and assets.

stakeholder analysis

Other stakeholder analysis advantages at this stage are that they build social capital and buy-in from actors with a vested-interest in your future key-market:

  • It puts more ideas on the table than would be the case if the development and implementation of the effort were confined to a single organisation or to a small group of like-minded people.
  • It gains buy-in and support for the effort from all stakeholders by including them as an integral part of its development, planning, implementation, and evaluation.  It becomes their effort, which gives them a sense of ownership, and spurs them on to do their level best to make the venture work.
  • It’s participatory. All stakeholders have a say in the development of an effort that may have a radical impact on their lives and livelihoods.
  • It keeps you from being blindsided by concerns you weren’t aware of. If everyone has a seat at the table, concerns can be aired and resolved before they become stumbling blocks.  Even where they can’t be resolved immediately, they won’t crop up as unpleasant surprises that derail the effort just when you thought everything was going well.

However, at this stage the main aim of the stakeholder analysis is to capture the critical risks related to failure and success. Based on this analysis we can develop future scenarios on how the underlying trends of the social needs will evolve, and we’ll also be better placed to assess the market and the social opportunity the need represents.

Scenarios can’t predict the future. What they can do though is provide a more comprehensive understanding of how stakeholders might adapt to future trends. It’s an excellent means of exploring potential future developments. What’s more, the quantitative and qualitative factors brought to the fore in this exercise help substantiate the opportunity and develop a shared future-oriented vision and approach.

Step 0: Identify your stakeholders

Make a mind map of your potential stakeholders. One way to do this is to ask the following questions:

  • Who has the potential to impact what I am doing?

  • Who has influence or exercises control over my efforts?

  • Who has a vested interest in the success or failure of my activities.

Turn your mind map into a list that is as broadly inclusive as possible. Cluster stakeholders into sub-categories, such as companies, social actors, care actors, government, etc.

Step 1: Prioritise your stakeholder

Identify your primary stakeholders (i.e., actors that benefit directly from efforts to address a social need). Determine who the direct beneficiaries are.

Step 2: Categorise and assess primary stakeholder risks related to success or failure

Take each primary stakeholder category and assess the risks related to success or failure. These are those factors that can obstruct your efforts to develop an economic activity that appropriately addresses a social need.

Step 3: Market analysis

A market analysis is a quantitative and qualitative assessment of the market segments representing your primary stakeholders. Try to describe these markets (drawing on as much quantitative data as possible) and attempt to assess what their general willingness to pay might be to resolve the social need.

Step 4: Identify influential secondary or key stakeholders

There are stakeholders who stand the chance of influencing primary stakeholders. Secondary stakeholders may directly influence a primary stakeholder’s decisions when addressing a social need. Key stakeholders are those that have a general or indirect influence on the primary stakeholder or on the social challenge at large (e.g., public authority regulations, tax arrangements, etc.).

Step 5: Categorise and assess secondary and key stakeholder risks related to success or failure

Identify risks related to success and failure for each secondary and key stakeholder category. Determine which of these factors might stand in the way of developing an economic activity to successfully address the social need. Where relevant, carry out a small market study of your secondary stakeholders and assess their willingness to pay.

Step 6: Identify the primary stakeholders’ key challenges

Carefully consider each primary stakeholder category and identify key challenges that each stakeholder represents with regard to successfully addressing the social need identified. Assess the specific challenge the stakeholder faces (steer clear of generalities). Work towards equating the challenge with a specific timeline, i.e., within 5 or 10 years the following will have taken place.

Step 7: Develop future scenarios

This step involves developing future scenarios that draw on the driving forces identified (= risk factors related to success and failure). The objective is to hit upon methods that can successfully address challenges faced by these stakeholders.

Step 8: Rank scenarios based on key factors of success and failure

Rank scenarios based on key risk factors related to success and failure. You should end up with a list of 3 to 5 individual, interrelated factors.

Step 9: Select a scenario

Select a scenario in which economic and social potential turns this scenario into the most likely candidate for capitalising on this potential. This scenario should also be one that addresses a major social challenge. Use the selected scenario to define strategic lessons to be learned that will facilitate transforming the social need into a social and economic opportunity.

The deliverable is a shared vision and smart approach to transforming the social need into an economic and impactful market opportunity.

The business’s target economic outcome

Developing a first projection for the business’s target economic outcome

By nature, integrated ventures are incredibly complex. That’s why this type of venture must be harmonised with the venture’s overall objectives. By aligning their perspective on the intended economic results with the overarching objectives of the venture itself, strategic decision making becomes possible. This process rules out options that don’t match the objectives and prioritise those that facilitate the venture’s success. This applies to value creation, value capture and value delivery.

Step 1: Identify current industry standards for your sector

Without knowledge of the industry standards, it isn’t possible to paint a realistic picture of what the business needs to look like for it to be competitive. Each industry has its own unique set of demands and constraints, and these determine what their normal rates of return are, along with what the standard measures of performance are, such as: asset-to-sales ratios, industry profit margins, plant operations, and so on. These industry standards assist in making informed assumptions on the potential economic outlook of the newly formed company.

Step 2: Map the team’s various goals and aspirations

Have an open discussion on what the venture’s economic objective ought to be. An important aspect of this discussion is that everyone involved agrees on what the purpose of any profit is. Disagreements in this area could cause significant problems later on down the road. The last part of this step is to map where the team’s goals and aspirations harmonise and where they diverge.

Step 3: Teamwork: create a reverse income statement

Rather than taking revenue estimates as a starting point and working down the income statement to see where profit can be had, we start with required profits. From this perspective, we then work our way up profit and loss to determine how much revenue is required to deliver the profit needed. From that point it is possible to determine what the venture’s allowable expenses are. The underlying philosophy is that by imposing revenue and cost management measures profitability is embedded in the plan from the outset: the required profits are equal to the revenue required, minus the allowable costs. This is an initial rough exercise that forces the subsequent stages to take the initial economic objectives into account.

Goals and aspirations

Assess your goals and aspirations by involving the end user.

The purpose of the user-centred approach is to arrive at a robust understanding of the end user’s needs, wants and limitations. The end-user approach makes it possible to maintain a connection with the beneficiaries’ day-to-day lives. Similarly, it also helps underscore what the key issues holding end users back from identifying a solution to their own (social) needs might be. The relationship is two-directional, with users expecting to derive benefits from your approach, while you expect the approach’s results (product sales) to yield benefits for the venture. The user-centred approach is a bottom-up one that brings the end user’s needs into full view. The advantage is that it facilitates identifying key areas of focus, so that the socio-economic opportunity can be strategically addressed to the highest extent possible, and so that the product/service aligns with the needs of the customer.

Who is the end user?

End-user innovation encompasses a broad range of methods intended to elicit information from end users:

  • Focus groups, in this context, are made up of potential beneficiaries (end users), the main objective of which is to listen to and discuss the perspectives they bring to the table in relation to the following: the social need, vision, and the approach in relation to how the challenge can be addressed.

  • In-depth interviews are usually interviews with end users by phone, face-to-face or online.
  • Ethnography is the observation and analysis of behaviour, culture and habits of the selected end user.
  • Participatory methods are helpful, such as:
    - panel groups
    - brainstorming groups
  • The Delphi method helps gather information from end users anonymously that can be assessed by the initiators in their efforts to see the big picture.

  • Quantitative methodology describes a social reality by analysing selected variables, in this case the end user perspectives. The target group must first be identified to establish a clear concept of what information the research should produce. This, in turn will make it possible design an appropriate questionnaire taking relevant variables into account.

Active participants

What remains essential when adopting any of the aforementioned methods is that end users are never perceived as passive actors in the integrated model. They are not solely “beneficiaries”. Engaging them as active participants is crucial to ensuring the venture’s success and its sustainability. It’s for this reason that setting up an end-user group is recommended to validate and enrich the outcomes of the integrated business model.

The objective in the value identification stage is to gain a comprehensive understanding of end-user needs to determine whether their needs resonate with the venture’s purpose. A relevant tool for accomplishing this is customer personas. They can assist initiators of integrated business models to:

End user
  • develop a deeper understanding of customer needs and how to address them
  • guide the product/service innovation process by identifying features that facilitate addressing the social need and capturing the full potential
  • identify priority focal points of the innovation
  • harmonise the innovation team, so that it purposefully rallies around a customer-centric vision
value identification

To develop the end-user personas, the following steps can be taken:

Step 1: Classify your potential end users (=primary stakeholders).
Understand who your ideal end users are, what they have in common and where they differ. Determine your end user based on the following criteria: geography, demography, psychography, behaviour, etc.

Step 2: Research the end-user.
Collect data. Collect as much information about the users as possible. Perform high-quality user research on real users who belong to your target group. The research phase is the first phase that takes place in Design Thinking, also known as the empathy phase.

design thinking

Step 3: Form a hypothesis.
Your initial research creates the basis for forming an overall picture of the various users within the project’s scope. This includes how users differ from each other. For instance, Affinity Diagrams and Empathy Maps can be healthy here.

empathy map

Step 4: Achieve consensus on the hypothesis.
The objective of this exercise is to support or reject the initial hypothesis on user differences. One way of doing this is to present project participants with the hypothesis and compare their responses with the data that’s been gathered.

Step 5: Select the end-user groups that best represent the needs you wish to address.
It’s only logical that the outcome of this process should lead to a decision on the final number of personas. In most cases, creating more than one persona for each product or service is recommended; however, whatever the circumstances are, there should be a single persona that represents the key object of your focus.

Step 6: Describe the personas.
The purpose of working with personas is the development of solutions, products and services based on the users’ needs and aspirations. When describing personas, make sure to express a sufficient amount of understanding and empathy in reference to the users.

  • Include details about the user’s education, lifestyle, interests, values, goals, needs, limitations, desires, attitudes, and patterns of behaviour.
  • Add a few fictional personal details to make the persona a realistic character.
  • Give each of your personas a name.
  • Create 1–2-pages of descriptions for each persona.
Potential situations and scenarios

Come up with potential situations and scenarios that your personas might find themselves in. 

This interactive persona method focuses on creating scenarios that describe solutions. To this end, describe several specific situations that could trigger use of the product or service being designed. In other words, situations create the basis of a particular scenario. You can bring each of your personas to life by creating scenarios that feature them in the role of a user. Scenarios usually start by placing the persona in a specific context where they have a problem that they are seeking to or urgently need to solve.

scenario's
Obtain acceptance from the organisation

A participatory approach is the common thread binding all seven steps. The involvement and commitment of the project’s participants is what this method aims to achieve. As such, development of the personas ought to involve the participation of as many team members as possible. In relation to this, obtaining the end-user working group’s consensus on and recognition of the various steps is important. To achieve this, there are two relevant strategies:

  1. You can ask the end user for their opinion.
  2. You can allow them to actively participate in the process.

The most important outcome of this exercise is to arrive at a shared understanding of the end-user needs and common criteria characterising the business opportunity that has been identified.

Deliverables

The outcome of the value identification is an accurate description of the company’s current business, objectives and approach and its desired future position. It also states the company’s purposes, goals and values.

The outcome of the value identification phase is the development of a corporate statement. A Mission Statement defines the company’s business, its objectives and its approach to attaining those objectives. A Vision Statement describes where the company wants to be in future. Elements of the Mission and Vision Statements are often combined to provide a statement on the company’s purposes, goals and values.

The corporate statement leads to the development of key-screening statements. Key-screening statements make it crystal clear as to which opportunities are desirable and which aren’t. Once these are formulated, ideas emerging in subsequent phases can be weighed against the same set of criteria. The next challenge is determining how value can be created in relation to the social need that’s been identified. In other words, how can this social need be transformed into an integrated growth opportunity that’s true to life.