In the words of Warren Buffett, arguably the most successful investor of our times— "Price is what you pay, value is what you get." Simply put, from a C-Level executive perspective, this means continuously working to enhance Total Shareholder Value (TSV). While market fluctuations may temporarily influence a company's stock price, sustainable growth in TSV eventually dictates the long-term performance of an organization and reflects on its strategic success.
Total Shareholder Value: Overview, Purpose, and Impact
Total Shareholder Value is the summation of dividends and capital appreciation delivered by a firm to its stakeholders. It includes returns gained via consistent dividends, share buybacks, and any increase in the stock price. A mission every C-Level executive strives for—delivering meaningful and persistent growth in Total Shareholder Value—ultimately serves as the hallmark for corporate success.
The purpose of assessing TSV is to ensure that a company's strategic decisions ultimately translate into financial wellbeing, thereby driving investor confidence. A hike in Total Shareholder Value signals to the current as well as prospective shareholders that the organization is profitable and is likely to continue on the same trajectory. This instills faith in the minds of investors and can draw more investment to the organization, creating a positive snowball effect.
Strategic Tools to Drive Total Shareholder Value
1. Strategic Planning:
Strategic Planning plays a vital role in mapping the trajectory of Total Shareholder Value growth. A comprehensive strategy includes expanding market share, identifying opportunities for diversification, tightening the cost structure, and leveraging technology to enhance productivity and revenue.
2. Performance Management:
Performance Management, rightly used, can be a potent driver for the growth of Total Shareholder Value. It ensures that the strategy taken up by the executive team translates seamlessly into reality. By setting appropriate key performance indicators that align with TSV-centric goals, organizations can deliver sustained growth.
3. Risk Management:
Risk Management is one aspect that often gets sidelined in the pursuit of aggressive growth strategies. However, when adequately factored in, effective risk management can greatly contribute to the protection and the growth of Total Shareholder Value. It helps prevent calamitous incidents that can wipe out a significant portion of the shareholder value.
4. Operational Excellence:
Operational Excellence, which refers to the ongoing efforts to achieve sustainable improvement in an organization, is a significant driver of Total Shareholder Value. It involves enhancing processes, implementing innovations, reducing waste, and focusing on quality management.
5. Digital Transformation:
Digital Transformation has become a crucial aspect of the modern economy. By implementing digital technologies and strategies, companies can streamline operations, reduce costs, analyze customer behavior, enhance product/service offerings, and thus, contribute to the growth of Total Shareholder Value.
Establishing a Culture of Total Shareholder Value
Leaks in the value chain often go unnoticed. A vigilant eye from the leadership can drive a culture that prioritizes the creation and protection of Total Shareholder Value. It's not enough to merely employ the tools; creating an organizational culture that respects and promotes the growth of Total Shareholder Value can make all the difference.
Encouraging open dialogue, reinforcing the practice of keeping TSV in perspective during decision making, incentivizing the achievement of TSV-related goals are some ways to foster such a culture.
Driving Total Shareholder Value is a strategic imperative for any CEO or CFO in any industry. It requires relentless focus, strategic foresight, and excellent execution capabilities. Besides having a robust strategy, it's equally important to create a culture that respects and fosters value creation. It is these insightful measures that will differentiate a truly successful organization from the pack and ultimately deliver sustained Total Shareholder Value to its shareholders.
For more information, have a look at these management topics:
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"One of the great discoveries that I have made for my business is the Flevy library of training materials.
As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy usually has just what I need to make my point.
It is well worth the money to purchase these presentations. Sure, I have the knowledge and information to make my point. It is another thing to create a presentation that captures what I want to say. Flevy has saved me countless hours of preparation time that is much better spent with implementation that will actually save money for my clients."
– Ed Kemmerling, Senior Lean Transformation Expert at PMG
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world."
– Roberto Pelliccia, Senior Executive in International Hospitality
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead."
– Roderick Cameron, Founding Partner at SGFE Ltd
SELECT CUSTOMERS
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes across the world—in over 130 countries.
Below is just a very small sample of our customer base.
Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.