The benefits of an interactive value creation model

Written by: Marcel Rosenbrand

An increasing number of organizations are taking the step towards Integrated Reporting. This means that their annual report is more than an annual review of financial results. It is also a strategic look-ahead that includes the communication of relevant non-financial information. The concept of 'value creation' is central to Integrated Reporting and it recurs in every Integrated Report. In essence, an Integrated Report is a story about the way – and the extent to which – an organization creates value. Not just financial value, but also non-financial value, e.g. value for employees and for the environment. This article describes how the value creation model can be an important tool in online communication with stakeholders.

What is a value creation model?

The International Integrated Reporting Counsel (IIRC) is an organization that has developed Integrated Reporting guidelines. Organizations can decide for themselves whether to base their annual report on these guidelines. The IIRC has also developed a blueprint that serves as a schematic representation of the value creation model process (see image 1). They distinguish between different 'capitals' (financial, manufactured, intellectual, human, social and relationship, and natural) to indicate that all these forms of capital have effects that influence the organization.

Image 1 Value creation according to IIRC

The value creation model provides insight into the different phases that these capitals go through. In short:

  • The 'Inputs' are the capitals an organization works with (organizations not necessarily work with all 6 capitals);
  • The 'Throughput' phase describes what the business model and activities of an organization are;
  • The 'Outputs' describes the results of these activities;
  • The ‘Outcomes’ describe the ultimate impact of these results in terms of effects on the capitals (many organizations are also establishing a link between these outcomes and the Sustainability Development Goals (SDGs).

Organizations that create an Integrated Report usually translate the IIRC’s blueprint into a representation that fits their reality. The value creation model is therefore different for every organization, often with different visualizations.

The benefits of an interactive value creation model

Nowadays many organizations also publish an online version – or at least a summary – of their annual report. This provides clear advantages: the annual report has a greater reach and stakeholders are better served. The value creation model is often displayed interactively in these online reports (see images 2 and 3).

Image 2 Value creation model Dutch railways

Image 3 Value creation model Alliander

Compared to the value creation model in the pdf, the interactive value creation model has great benefits:

  1. The value creation model is easier to find
    A link to the value creation model can be added to the homepage or to the sitewide navigation which helps visitors to navigate quickly to the value creation model.
  2. The value creation model reaches a broader audience
    Because the webpage is indexed by search engines, more interested visitors will find the value creation model. The model can also easily be promoted through social media.
  3. The value creation model functions as a signpost
    This is the clearest benefit: Because all items in de value creation model are clickable, visitors not only have an impression of a company’s value creation story at a glance, they also have a shortcut to the relevant underlying information.

So, does your company have a value creation model? Then publish an interactive version of it as well and improve your stakeholder engagement!

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