Value Disciplines

A strategic framework developed by Michael Treacy and Fred Wiersema identifying three distinct approaches to market leadership: operational excellence (lowest cost and inconvenience), customer intimacy (tailored solutions for specific customer segments), and product leadership (continuous innovation). The authors argued that organizations should excel in one discipline while maintaining threshold capabilities in the others. In RBPM, the chosen value discipline influences both strategic objectives and appropriate risk appetite levels across different business activities.

Value Drivers

The factors that increase the value of a business or project. Value drivers can be operational (such as sales growth, operating margins, or capital efficiency) or strategic (such as competitive position, innovation capabilities, or brand strength). In RBPM, understanding value drivers is essential for defining both strategic objectives and risk appetite, as these drivers represent the most critical areas for performance improvement and risk management focus. Value driver analysis helps prioritize management attention and resource allocation.

Value

The worth, importance, or usefulness of something to stakeholders. In commercial organizations, value typically refers to shareholder returns, while in public sector organizations, it encompasses benefits to citizens, communities, and society. In RBPM, sustainable value creation requires balancing short-term performance with long-term viability through appropriate risk-taking. Value is created not just by avoiding risks but by deliberately taking risks where the potential returns justify the exposure, all within defined appetite boundaries.