From Value Leakage to VCP, and from VCP to Continuous Value Creation
By Antoine Maccioni
How I Approach Value Creation, and why I wrote this
This article is intended as a practical guide for executives who need to build, challenge or execute a Value Creation Plan.
It is not a theoretical framework.
It reflects the way I approach value creation in practice: diagnose where value is leaking, quantify the economic gap, set a credible target, select the few levers that matter, sequence them properly, assign ownership and track whether the economics are actually moving.
The objective is simple: make the approach useful enough to apply.
Whether you are a CEO, CFO, business-unit leader, operating partner or transformation leader, the framework that follows is designed to be used as a working reference when shaping or reviewing a VCP.
It is intentionally practical.
You will find:
the diagnostic lenses I use
the metrics and formulas I rely on
how I distinguish theoretical opportunity from realistic opportunity and committed target
the main value creation levers in retail
how I prioritize and sequence them
how I structure ownership and governance
how I monitor value delivery and avoid double counting
how I move from a temporary VCP to what I call CVC: Continuous Value Creation
You cannot create value before you know where you are losing it.
Diagnose the Value Gap
The first thing I avoid is starting with initiatives.
A VCP that begins with a long list of actions usually starts too late in the thinking process.
I start with the diagnosis.
The core question is: Where is the business becoming less economically productive?
The trigger is rarely one KPI in isolation. It is usually a pattern.
Revenue may still be growing while margin is weakening. Inventory may be rising faster than sales. Store productivity may be slipping. Working capital may be absorbing more cash. Digital growth may be adding complexity without improving economics. The organization may be getting heavier while decisions are getting slower.
Any one of these may be manageable.
When several begin moving in the wrong direction at the same time, I look much deeper.
I normally assess the business through five lenses.
1. Growth Quality
I want to understand where growth is actually coming from:
Price | Volume | Mix | Like-for-like | New space | Digital | Acquisition
Then I test the economics behind it.
Incremental EBITDA Margin = Change in EBITDA / Change in Revenue
Incremental ROIC = Incremental NOPAT / Incremental Invested Capital
Growth is not automatically value creation.
If each additional euro of revenue requires disproportionate inventory, labour, capex or complexity, the quality of that growth is deteriorating.
2. Margin Quality
I look beyond the headline gross margin.
I want to understand:
Pricing realization | Promotion intensity | Category mix | Supplier economics | Markdowns | Private label | Channel contribution
The question is not simply whether margin is improving.
It is whether the improvement is sustainable without weakening traffic, volume, customer perception or future growth.
3. Capital Productivity
This is often where hidden value leakage becomes visible.
I look at:
Inventory days | Inventory turns | Working capital | Cash conversion | Capex productivity | New-store returns | ROIC
The question I keep coming back to is:
How much capital do we need to generate each additional euro of earnings?
A business can look healthy on the P&L while becoming significantly more capital intensive underneath.
4. Operating Productivity
I look at the operating engine.
Sales per square metre | Sales per labour hour | Store contribution | Fulfilment cost | Availability | Shrink | Stock ageing
If revenue grows but labour, fulfilment and complexity grow faster, the business may be scaling without becoming more productive.
The key question is:
Is additional growth becoming easier or harder to serve?
5. Organizational Effectiveness
Complexity is often an invisible tax.
I look at:
Layers | Spans | Decision rights | Duplication | Approval steps | Time to decision | Overhead
A lean organization is not necessarily a fast organization.
The real question is whether the structure improves speed, accountability and execution.
The diagnosis should eventually become economic.
For example:
A retailer with €1bn revenue and €60m EBITDA operates at a 6.0% EBITDA margin.
If a credible target state is 6.5%, the theoretical gap is:
50 bps = €5m
The same logic applies to inventory.
If annual COGS is €750m and inventory days are 42, moving to 37 days represents roughly:
5 / 365 × €750m = €10.3m potential cash release
That changes the conversation.
Inventory is no longer just an operational KPI.
It becomes a quantified value pool.
At this stage, I separate three things very clearly:
Theoretical opportunity
What the benchmark suggests.
Realistic opportunity
What the business can actually capture.
Committed target
What management is prepared to own and deliver.
Confusing these three is one of the fastest ways to build an unrealistic VCP!
Build the VCP
Once the value gap is clear, I move from diagnosis to commitment.
A value gap is not yet a target.
The benchmark may show what is theoretically possible, but management still needs to decide what can realistically be captured, over what timeframe, with what investment, and without damaging the customer proposition or the long-term health of the business.
I normally frame the target around four questions:
How much can we capture?
By when?
What capability or investment is required?
What must be protected while doing it?
For example, a theoretical EBITDA gap of 50 bps may translate into a committed target of 35 bps within 18 months.
A theoretical inventory opportunity of 5 days may become a committed target of 3 days if availability needs to be protected.
That is not lowering ambition.
It is turning analysis into a credible management commitment.
Focus on the few value pools that matter
I do not believe in VCPs with twenty or thirty “critical” initiatives.
The objective is to identify the few levers that can materially move earnings, cash generation or capital productivity.
In retail, those value pools usually sit in a limited number of areas:
Commercial and Pricing
Pricing | Promotions | Mix | Supplier terms | Markdown | Private label
Inventory and Working Capital
Forecasting | Replenishment | Slow movers | Safety stock | Supplier lead times | Assortment complexity
Store and Labour Productivity
Scheduling | Task simplification | Sales per labour hour | Store contribution | Opening hours
Network and Portfolio
Closures | Relocations | Format economics | Rent | New-store returns
Digital and Omnichannel
Fulfilment | Picking productivity | Returns | Basket size | Contribution margin | Customer acquisition cost
Organization and Overhead
Layers | Duplication | Shared services | Decision rights | Accountability
Capital Allocation
Capex priorities | Investment hurdle rates | Organic vs inorganic growth | Non-core assets
Strategic Portfolio Actions
M&A | Divestments | Carve-outs | Partnerships | Strategic exits
The important point is not to activate all of them.
It is to identify the two, three or four value pools that can genuinely close the committed gap.
Prioritize and sequence
Once the levers are identified, I assess them against four dimensions:
Economic impact
How much EBITDA, cash or capital productivity can this initiative create?
Speed to impact
How quickly can the benefit materialize?
Execution complexity
How difficult is the initiative to implement?
Strategic and operational risk
What could be damaged if it is executed too aggressively or in the wrong sequence?
That usually creates three categories:
Quick Wins
Fast impact, manageable complexity.
Structural Levers
More sustainable impact, but longer execution.
Strategic Bets
Potentially transformative, but more uncertain and capital intensive.
Sequence matters.
Reducing inventory before fixing forecasting can damage availability.
Automating a bad process can simply automate complexity.
Removing layers before clarifying accountability can slow decisions further.
Scaling a format before proving its unit economics can scale the problem.
This is why I see sequencing as part of value creation itself.
Not just project management.
And there is one more discipline I consider essential: deciding what not to do.
Some initiatives should stop.
Some capital should be reallocated.
Some complexity should simply disappear.
A strong VCP creates focus not only through what it starts, but also through what it stops.
Govern and Measure the VCP
A VCP fails quickly when ownership is unclear.
I do not believe value creation should sit permanently inside strategy, finance or a PMO while the operating business continues unchanged.
The operating business has to own delivery.
Define ownership clearly
I normally think about governance through five roles.
CEO
Sets the ambition, defines the trade-offs and keeps the organization focused on the few priorities that matter.
CFO
Validates the baseline, challenges the economics, confirms benefit realization and prevents double counting.
Business Owners
Own the outcome, not simply the workstream.
If inventory is a major value pool, accountability has to sit with the leaders who actually control buying, forecasting, replenishment and supply chain.
VCP Leader or Value Creation Office
Connects economic targets to operating initiatives, challenges progress, escalates blockers and keeps sequencing coherent.
In some situations, particularly ownership change, restructuring, strategic exit or a major portfolio decision, the initial VCP work may need to operate on a restricted or confidential basis.
That can be necessary.
But confidentiality should protect timing and decision quality, not disconnect the plan from the people who will eventually have to deliver it.
Board or Shareholder
Challenges ambition, pace and capital allocation.
But management must retain ownership.
A VCP becomes weaker when it feels like something being done to the business rather than something being led by the business.
Measure value, not activity
I monitor a VCP at three levels.
1. Enterprise Value Metrics
Revenue growth | LFL | EBITDA margin | Free cash flow | Working capital | ROIC | Cash conversion
These show whether the economics of the business are improving.
But they move late.
2. Value-Lever Metrics
Inventory days | Pricing realization | Store contribution | Labour productivity | Fulfilment cost | Supplier terms | Digital contribution margin
These show whether the specific value pools are moving.
3. Leading Indicators
Availability | Forecast accuracy | Stock ageing | Conversion | Traffic | Picking productivity | Decision lead time
These show whether the operating model is changing before the full financial impact appears.
Use counter-metrics
I rarely want one KPI optimized in isolation.
So I pair them.
Inventory days + Availability
Labour productivity + Service level
Gross margin + Traffic or market share
Digital growth + Contribution margin
Cost reduction + Customer impact
This matters because a VCP can look successful on one metric while quietly destroying value somewhere else.
Build a value bridge
A value bridge is one of the simplest ways to force transparency.
For example:
Baseline EBITDA: €60m
Pricing and mix: +€2.0m
Supplier terms: +€1.5m
Labour productivity: +€1.8m
Overhead: +€1.2m
Digital economics: +€0.8m
Network actions: +€1.7m
Execution and reinvestment: -€1.5m
Target EBITDA: €67.5m
The same logic should be applied separately to cash.
Every initiative should appear somewhere in the bridge.
And I want finance to validate the benefits independently.
Otherwise, optimism and double counting appear very quickly.
The purpose of monitoring is not to create another reporting layer.
It is to give management enough visibility to intervene early, reallocate resources and keep the plan focused on measurable value delivery.
From VCP to CVC: Continuous Value Creation
For me, the VCP is not the end point.
It is an accelerator.
A strategic VCP can define the major enterprise priorities, quantify the value pools and create the governance required to close them.
But sustainable value creation only happens when the discipline moves beyond the central plan and becomes embedded in the way the organization operates.
That means every function and every level should understand its own contribution to the overall economics of the business.
Commercial teams contribute through pricing, assortment, mix and supplier economics.
Operations contribute through productivity, service and cost-to-serve.
Supply chain contributes through inventory, forecasting, working capital and fulfilment efficiency.
Finance contributes through capital discipline, benefit validation and resource allocation.
Technology contributes through simplification, automation and scalability.
Stores and frontline teams contribute through execution, customer experience, productivity and local decision-making.
The contributions are different.
The economic objective is the same.
This is where value creation stops being only a VCP and becomes what I call:
CVC, or Continuous Value Creation
CVC is not another project, governance layer or transformation program.
It is the point at which value creation becomes a permanent management discipline.
The organization no longer waits for a formal VCP to ask:
Where are we creating value?
Where are we losing it?
What should we simplify?
Where should capital move next?
What should we stop doing?
Those questions become part of the normal operating rhythm.
A company may still have one strategic VCP.
But when CVC is truly embedded, every part of the business has its own value creation role to play and understands how that contribution connects to the whole.
That is the real shift.
The objective is not to make the VCP permanent.
It is to make value creation permanent.
The VCP creates focus. CVC creates the habit.
Conclusion / Takeaway
Value creation becomes useful when it moves from ambition to discipline.
For me, the sequence is straightforward:
Find the leakage.
Quantify the gap.
Set the target.
Focus the levers.
Sequence the priorities.
Measure the economics.
Embed the discipline.
A strong VCP creates clarity, focus and accountability.
But the real objective is bigger than the plan itself.
It is to build an organization where value creation becomes part of the way people think, decide and operate at every level.
A VCP creates the plan. CVC creates the habit.