optimising value

Optimising value

Before we race out and start optimising performance, a thinking manager will stop and ask not just what am I optimising (e.g. my department, function or business unit), but what VALUE do I need to optimise?

 

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In this section we will cover:

  • 6 capital values (types of value)
  • Value drivers;
  • Value systems;
  • Theory of constraints

Types of value

In Module 3, we introduced you to 6 types of value otherwise known as the 6 Capitals (Financial, Human, Social, Natural, Manufactured and Intellectual) . Understanding the value we need to optimise is the first critical step in optimising operational performance. By understanding and identifying our role and the role your area plays in creating different types of value for Ok Tedi, PNG and the world, we begin to better understand our decisions in what to optimise and also what trade offs in value occur through our decisions and actions.

Activity 1: types of value

Let’s begin by refreshing ourselves on the 6 capitals (types of value).

Watch this short video and answer the questions by selecting start activity below.

Complete Activity 1 by selecting Start Activity below. Then continue scrolling down the page.

As you can see, it’s important to understand what value we create in our area and at Ok Tedi so that as we optimise performance, we know the type of value we enhance (which isn’t simply financial) and just as importantly, what trade offs in value (e.g natural capital erosion) come from our decisions and how to best mitigate any negative impacts.

On a company wide and country scale, when you step back and consider the 6 capital value Ok Tedi delivers, you will notice the importance in value delivered extends far beyond just the financial value of revenue, expenses, foreign exchange and dividends. As Ok Tedi’s leaders, we need to keep a firm eye on financial value along with a strong understanding of creating and delivering 6 capital value as we optimise operational performance.

Value Drivers

A value driver is an activity or capability that adds worth to a product, service or brand. More specifically to Ok Tedi, a value driver refers to those activities or capabilities that add profitability, reduce risk, and promote growth in accordance with the 2025 & 2030 Vision.

Activity 2 – Value drivers

Complete Activity 2 by selecting Start Activity below. Then continue scrolling down the page.  

Executive insights. (2017) Identifying and managing Key Value Drivers

value systems

Consider value systems as the marriage between value drivers and systems thinking. When you step back and look at Ok Tedi, think of 6 capital value like blood flowing through our veins. However, to breathe and pump blood around our body we need oxygen – which in any viable business is cash (cash flow). So to optimise operations, we need to know our numbers – both physicals and financials and manage the flow of value (financial and non financial) consistently through the end-to-end business.

While we could debate who is the heart (e.g. the mine), who is the lungs, who is the brain, legs etc of Ok Tedi – the point is as leaders you are entrusted by shareholders to manage value on their behalf – sustainably. To do so you need to understand how the decisions you make impact the health (value) of the whole system in both the short and long term. This is why in LDP2 we are building your understanding and capabilities to responsibly and sustainably lead and manage the value from Ok Tedi.

Activity 3: Value systems

Complete Activity 3 by selecting Start Activity below. Then continue scrolling down the page.

Later in Module 4 we will help connect the dots and value between all business units and departments.

Source: https://www.integratedreporting.org/

Activity 4: Theory of constraints

Please watch both videos below, in order of left to right, and read the article Theory of Constraints

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