All operational activity essentially is the effort to generate organizational value. Value originates with core expertise (although brands can originate through an innovation or a fresh idea, they ultimately coalesce around expertise).

In turn, operational fluency extracts the value inherent in core expertise to produce a viable commercial asset. Just as important, the nature of core expertise dictates the skills that overrepresent in the organization and, by extension, the sort of society that will emerge as a recognizable culture.

Just as headwaters represent the furthest point upstream of the river’s union with another body of water, expertise is the furthest point upstream of all institutional endeavors. Though modest and often overlooked in comparison to many larger or more celebrated downstream organizational pursuits, the headwaters of expertise establish the direction and flow of the organization that is to become, including the value it creates.

It follows that the organization’s brand ultimately emanates from expertise, competencies, and know-how. Whether through deliberate design or accidental discovery, foundational proficiencies become the source code for organizational culture, strategy, and operations.

This brand DNA of core expertise applies to nonprofits, government agencies, religious institutions, small businesses, and multinational corporations. Still, organizations may evolve to the point where their foundational expertise no longer suffices for changing market conditions or customer preferences. However they may respond, any new course or direction an organization might pursue will be grounded in expertise, whether related to their original brand headwaters or established de novo.

Expertise determines the nature of the organization’s value proposition. Whether for customers, members, constituents, parishioners, communities, etc., value is the basis for any organized productive effort, from the local garden club to a corporate mammoth. Value, however defined, is the fundamental purpose around which all the organization’s physical and mental energies should orient. There is no reason for an organization to exist unless to offer something of value (tangible or intangible).

Fundamentally, organizational value derives from core expertise that’s cultivated efficiently.

Creating and delivering value requires channeling the organization’s core expertise into some manner of productive output, as oriented by strategy and through operational execution, in the form of products and services. Of course, this understates the complexity of employees, technologies, systems, machinery, materials, suppliers, and a host of inputs and handoffs that need to be well choreographed and executed, sometimes down to the second.

If expertise is the source code of brand, value is the prerequisite for brand. And if value is what people require from their connection with your organization, it stands to reason that the organization’s sources and methods to create and deliver value deserve considerable attention. Further, if the organization cares about growth and sustaining competitive advantages, understanding the pathway to scale both expertise and value becomes acutely important.

Mapping this value path poses a challenge for brand-conscious leaders: How do we authentically represent the promised value of our organization’s productive efforts against the constraints of organizational capacity (i.e., operational readiness). In other words, can the organization’s operations back up the brand’s big talk? The answer begins with an assessment of the organization central value premise (CVP).

Uncovering Organizational Value

The foundational component of the brand system is the organization’s central value premise (CVP). Similar to the Hedgehog Concept (Collins, Good to Great), the CVP encapsulates what your organization does best (i.e., expertise, capability and competence), what it’s passionate about, and what underpins its value proposition. In turn, the CVP informs all the organization’s strategic, operational, and cultural imperatives.

For some organizations, their CVP is readily apparent. A non-profit, for example, likely has a clear mission that reflects the organization’s passionate interests; the nature of its expertise; its value proposition; and, what it’s best at in providing services and support.

More complex organizations may struggle to articulate their CVP; however, even the most diversified business usually can identify a common denominator that applies to the universe of its businesses and activities. A holding company would likely articulate its expertise in managing a business portfolio. A diversified industrial may allude to its enterprise-wide operational proficiency. A consumer-packaged goods company might home in on its brand marketing prowess.

The key point in landing on your organization’s CVP is to focus on the essential competence that serves as the wellspring for all the value that is being, or will be, created. It is not an articulation of purpose; instead, it asserts the organization’s fundamental source of value.

At my last port of call, with Herc Rentals Inc., a leading North American equipment rental company, I was part of the management team that planned and accomplished the business’ 2016 separation from Hertz Global (its car-rental parent company). Like any spin-off, it was an opportunity to reassess the business’ strategic path as well as its CVP and go-forward culture.

At the time of the spin-off, the business had a 50+ year history, with the distinction of having established many of the core processes and operational and financial metrics that are now fundamental to the equipment rental industry. However, by the early 2000s, Herc Rentals’ industry leadership had been overtaken by more aggressive and innovative competitors. It didn’t help that the parent company habitually underfunded the business.

Still, the business had tremendous assets, including a relatively large fleet of rental equipment and a strong branch network. But its greatest asset was its people, many of whom had contributed to the business’ best days and who were eager to bring Herc Rentals back to the top of the mountain. These operators knew how to evaluate equipment and negotiate fleet procurement; service and maintain the equipment; position the fleet where it was needed across the network; deliver and retrieve rentals as part of the everyday operational choreography; and, eventually, dispose of the fleet through used equipment sales.

The efficient execution of fleet lifecycle management and logistics is central to the mission of equipment rental. Of all the operational activities involved in equipment rental, doing these backbone fleet management activities poorly or ineffectively would significantly jeopardize the business’ ability to compete, let alone succeed. Doing these well, and better than anyone else, leads to customer satisfaction, better profit margins, more capital for growth investments, and increasing value for the business. That’s the essence of a CVP — nothing sustainable can be achieved without a unique, exceptional, or high-barrier area of expertise.

So, for Herc Rentals, the CVP was relatively simple to discern: “Fleet Management and Logistics.” Everything builds from this cornerstone: the strategic priorities, the operational imperatives, the necessary people skills and capabilities, the enabling culture, the operating system, and the brand itself. Certainly, this CVP is somewhat generic and easily applicable to a host of equipment rental operations; however, it establishes the predicate for inimitable differentiation.

Organizations that originate with a founder’s vision and passion inherently reflect their CVP from the outset. Whether or not they explicitly express it, the CVP shapes most everything that is to become of business and the brand. Indeed, the power of Founder-Culture brands like Apple, Disney, and Walmart emanated from a unique, exceptional, or high-barrier area of expertise (i.e., respectively: imaginative innovation; magical creativity; supply-chain logistics).

Ultimately, however the CVP emerges, it will exist only as an organizational artifact unless tethered to a commercial value proposition. That’s the virtue of a “value map,” which extends the CVP toward a purposefully molded culture, a pacesetting strategy, fiercely pursued operational priorities, and an organization-wide understanding of mission. All of which supports the development and cultivation of the brand.

CVP Inquiry Funnel

For organizations beginning to formulate their long-term path, answers to the following questions will help clarify their CVP. For organizations already on their path— including those well into their journey — a brief bit of introspection may be useful to reassess the brand/value nexus, the nature of which may have become obscure over time.

There’s no pass/fail implied in exploring these questions. Nor is it suggested that a healthy or competent organization should rearrange their business strategy to align with a CVP that may emerge from this self-examination. Just keep in mind that the reputational brand is a vessel of tangible or perceived value, which makes understanding the source and nature of value critically important.

1. What primary expertise do we offer? What do we do best or better than anyone else? If that’s hard to pin down, another way to approach this is, “What capabilities of ours allow us to achieve baseline competitiveness?” That should identify the foundational competencies of value creation.

2. What is the principal way we create value? Better products or services? Better solutions? Operational efficiencies that lower costs? Easier (customer friendly) processes and systems? White-glove experiences? Answers here are likely to also extrapolate to competitive differentiation and brand positioning.

3. What must we scale to enable sustainable, long-term value creation? What skills, talents and knowledge drive the business, without which expertise would diminish our ability to create value?  Given our core expertise, what customer, market, operational, and technological avenues should we pursue as value multipliers? This should help clarify that your organization’s core expertise truly is exceptional, extensible, and scalable.