[MUSIC] Welcome to session two. In this session, we will focus on the value part of the VCAP framework for operations strategy. And we'll address two questions. How does the operational business model create value, and how does an operations leader communicate this? Towards that end we will look at operations from the view of an investor or shareholder. We will focus on linking operations to value creation expressing financial terms relevant to internal and external stakeholders. Having established this link, we can identify the operational parameters that have the greatest impact and value. And finally, we can prepare and communicate a detailed plan that specifies which parameters and associated capabilities can be improved with corresponding milestones of value creation. How does the current operational business model create value? And, what improvements can be made? These questions naturally arise when managing the interface between operations and internal leadership as well as external parties, such as investors, stakeholders, or capital markets. One of the key challenges operations managers face when dealing with both audiences is demonstrating and communicating the value created by the operations. >> Let's take an outside in view, if I am about to invest in or acquire this firm, what exactly would I improve and how much value would this improvement create? This usually translates to the so-called investment hypothesis, which is a term we will use repeatedly in this session. We can also take an inside out view. If I am a manager, how do I communicate my operational improvements and their value to internal leadership and an external audience, such as shareholders and stakeholders? As we will see, both views agree in the sense that every manager must continuously engage in this type of analysis, even if there are no specific investors to whom this information needs to be communicated. As we highlighted in session one, the goal of operations is to create value. Examining the operating system through this lens generates an unambiguous metric of its success and a path to ensure future improvements. In this session we will focus on establishing the link between value and operations. This approach will automatically identify and rank Key Performance Indicators, KPIs. Armed with this link, we can identify an improvement plan that specifies exactly how to improve which operational KPIs, by how much, and link this to milestones and value creation. The latter is useful for regular strategic planning, as well as for investors, or even turnarounds. When one of the main challenges is demonstrating to investors and creditors that there is a path to turn the firm around. [MUSIC]