Post on 30-Dec-2016
Palladium / Thailand Stock Exchange Conference 2011
16th June 2011
Dr. David P. Norton
Director, Palladium Group, Inc.
Author, The Balanced Scorecard
3110612_APAC Tour_Module1_Strategy_dpn
© 2011 Palladium Group Asia-Pacific -
Confidential
We provide our clients an integrated set of services designed to
deliver tangible results and leave lasting capabilities—the
Execution Premium
Founded by Balanced Scorecard creators Drs. Robert S. Kaplan
and David P. Norton
Global expertise in:
— Strategy Design
— Strategy Management
— Leadership
— Innovation
700 total client organisations; 200 employees
Services include:
Palladium Group is the global leader in helping organisations execute strategy
Consulting Conferences Training Technology
— Operational Performance
— Governance
— Risk Management
4110612_APAC Tour_Module1_Strategy_dpn
Strategy Design We help our clients to formulate strategy with a highly deductive, client driven approach designed for successful execution
Strategy Management We help our clients build the capability to translate strategy, align the organisation, measure and report performance and efficiently deploy resources to achieve breakthrough results
Innovation We help our clients identify and deploy new business models and develop new, highly differentiated ways to engage stakeholders and customers through innovation of key interactions and experiences.
Leadership We help leaders (directors, executives, managers) to enhance their capabilities to execute strategy through coaching and mentoring and robust methodologies that help eliminate key barriers to execution.
Operational Performance We help our clients to identify, understand, and manage the critical drivers of operational performance and build the appropriate governance, reporting and information management disciplines to drive enhanced decision making
Risk and Governance We help our clients to improve Board and executive governance and the management and measurement of enterprise, strategic and operational risk
© 2011 Palladium Group Asia-Pacific. - Confidential
Dr. David P. NortonDirector, Palladium Group, Inc.
Author, The Balanced Scorecard
Mastering The Strategy Management System
Overview: Managing Strategy is Managing Change
Palladium Group Asia Pacific
Strategy Execution Forum
June 2011
7110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Biography
Dr. David P. NortonDirector, Palladium Group
Dr. Norton is a founder and director of the Palladium Group, an organization specializing in systems and processes to improve the execution of business strategy.
He has founded and built a series of professional service firms during the course of his career, each focused on leading edge issues of management. Nolan,
Norton and Company, founded in 1975, specialized in the emerging science of information technology management. Renaissance Solutions, founded in 1992,
focused on the emerging niche of knowledge management. The Balanced Scorecard Collaborative, founded in 1998, helped form the new professional discipline of
strategy management.
A frequent lecturer and author, Dr. Norton is best known for his work with the Balanced Scorecard, which has been the subject of many conferences and articles.
He is the co-author, with Robert S. Kaplan, of eight Harvard Business Review (HBR) articles and five books:
• The Balanced Scorecard (1996)
• The Strategy Focused Organization (2000)
• Strategy Maps (2004)
• Alignment (2006)
• The Execution Premium (2008)
His books have sold more than one million copies in 23 different languages.
The Balanced Scorecard concept was selected by the editors of the Harvard Business Review as one of the most influential management ideas of the past 75
years. Dr. Norton was voted on as one of the world’s 12 most influential management thinkers by Sun Top Media’s “Thinkers 50” for 2007. Drs. Norton and Kaplan
were recently honored with the “Champion of Workplace Learning and Performance Award (2008)” by ASTD (The American Society for Training and Development).
Dr. Norton earned a BS in electrical engineering from Worcester Polytechnic Institute, an MS in operations research from the Florida Institute of Technology, an
MBA from Florida State University, and his doctorate in business administration from Harvard Business School.
8110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.© 2011 David Norton and Palladium Group, Inc.
The Evolution of a Performance Management Approach
Silo IntegrationSchool of
Thought
Point
Solution
1992 - 1996
An Idea (Balanced
Scorecard)
Early Adopters
• Mobil
• Cigna
• Chem Bank
1996 - 2002
A Philosophy
(Strategy Focused
Organization)
Hall of Fame
2000 - 2009
Management System
(Execution Premium)
Link to Other
Management
Processes
(HR / IT / TQM)
2006 -
A Competency (Office
of Strategy
Management)
Certified Professionals
Global Communities
school
Kno
wle
dge
/ Im
pact
PROGRESS IS CUMULATIVE
time
integration
silo
point solution
A
Problem
1990
Measurement
systems causing
myopic behavior
90% of organizations
fail to execute their
strategies
WHY?
9110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
How do you build an effective strategy management system?
MANAGING PROCESS
• Managing strategy is synonymous with
managing change
• Strategy defines the changes to the status
quo required by the vision
• Managing change is the art of strategy
execution
• A common process is needed
to synchronize the efforts of
many people
Present
Vision
Strategy
t
Performance
Gap
productivity
growth
innovationPresent
Vision
Strategy
t
Performance
Gap
productivity
growth
innovation
MANAGING CHANGE
results
performance measures
ProcessInitiative
EXECUTION
performance measures
results
1
3
5
6
Strategic Plan
• Strategy Map
• Balanced Scorecard
• Stratex
Operating Plan
• Sales Forecast
• Resource Requirements
• Dashboards
• Budgets
2
• Key process improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
10110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Leadership Matters! It is not a simple process for a CEO to mobilize transformation
Graham Sher
CEO, Canadian Blood Services
HBR, October 2005
“While many people believe that chief executives wield direct
and easy influence, the reality is that any CEO has a difficult
time influencing his or her organization”
• “A CEO’s attempts at command and control undermine
the authority of senior executives”
• “Bad news is filtered before it gets to me”
11110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Source: BSCol Research (Survey of 143 performance management
professionals, drawn from BSCol Online Community, March 2006)
Process Matters! Organizations with a formal strategy execution process in place
are dramatically outperforming organizations without formal processes.
Do you have a formal strategy
execution process in place?
Describe your organization’s
current performance.
Yes No
(54%) (46%)
• …. We have breakthrough results
• …. We are performing better than our peer group
Sub-Total
12%
58%
70%
7%
20%
27%
Do you use a formal performance management methodology?
Rated “most competitive” in
their industry
Rated “least competitive” in
their industry
Source: IDC Research (Improving Organization Decision-Making
through Pervasive Business Intelligence, 2009)
75% 43%
12110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
The Balanced Scorecard Management System provides a structured framework
for managing change
Present
Vision
Strategy
t
Performance
Gap
productivity
growth
innovationPresent
Vision
Strategy
t
Performance
Gap
productivity
growth
innovation
results
performance measures
Process
Initiative
EXECUTION
performance measures
results
1
3
5
6Strategic Plan
• Strategy Map
• Balanced Scorecard
• Stratex
Operating Plan
• Sales Forecast
• Resource Requirements
• Dashboards
• Budgets
2
• Key process improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
results
performance measures
Process
Initiative
EXECUTION
performance measures
results
1
3
5
6Strategic Plan
• Strategy Map
• Balanced Scorecard
• Stratex
Operating Plan
• Sales Forecast
• Resource Requirements
• Dashboards
• Budgets
2
• Key process improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS
• Key process improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
PROCESS-AIDED CHANGE MANAGEMENT
“LEFT-BRAIN”
LEADERSHIPStructured
change-management
tools
Scorecards
Strategy Maps
Stratex
“RIGHT-BRAIN”
LEADERSHIPUnstructured
leadership
behavior
Unfreezing
Visioning
Consensus
Culture
STRATEGY MANAGEMENT PROCESS
13110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
In our recent book, we posit that organizations need to build a formal system to
execute their strategies.
How does a management system promote
successful strategy execution?
results
performance measures
Process
Initiative
EXECUTION
performance measures
results
1
3
5
6
Strategic Plan
• Strategy Map
• Balanced Scorecard
• Stratex
Operating Plan
• Sales Forecast
• Resource Requirements
• Dashboards
• Budgets
2
• Key process improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
14110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
The strategy management system promotes speed, flexibility and adaptability to
change
• Focus on short-term
• Protect long-term
• Shorten time horizon
• Rapid response
• Communicate
• Shift priorities
• Re-align organization
• Analyze
• Find new
opportunities
• Be clear about
objectives and measures
• Re-prioritize investments
• Manage Stratex
• Change the strategy
Process
Initiative
EXECUTION
1
3
5
6
2
• Key process
improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Strategy Maps
Process
Initiative
EXECUTION
1
3
5
6
2
• Key process
improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS
• Key process
improvement
• Sales planning
• Resource capacity plan
• Budgeting
PLAN OPERATIONS4
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Business Units
• Support Units
• Employees
ALIGN THE ORGANIZATION
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Strategy Reviews
• Operating Reviews
MONITOR & LEARN
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Profitability Analysis
• Strategy Correlations
• Emerging Strategies
TEST & ADAPT
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Strategy Map / Themes
• Measures / Targets
• Initiative Portfolios
• Funding / Stratex
TRANSLATE THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
• Mission, Values, Vision
• Strategic Analysis
• Strategy Formulation
DEVELOP THE STRATEGY
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Strategy Maps
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Price Quality Time Function Relation Brand
Product/Service Attributes Relationship Image
Process Perspective
Financial Perspective
Customer Perspective
Sustained
Shareholder
Value
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Regulatory and
Social Processes
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Strategy Maps
15110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Strategy Management is an emerging profession. It requires new organization and
leadership roles
“A New Way of Managing”
Enterprise Management
Office of Strategy
Management
Financial
ManagementHuman Resource
Management
Marketing /
Communications
Technology
Management
Strategic
Planning
Organizational
Unit A
Organizational
Unit B
Organizational
Unit C
Organizational
Unit D
Strategy Council
Theme Teams
16110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Does it work? Research studies show that Balanced Scorecard users create
dramatically higher levels of shareholder value for their organizations.
Matching Criteria
BSC Firms
(mean)
Control Firms
(mean) Difference
Market value of equity
Market to Book
Net Assets
Sample: 164 publicly traded firms
Reference: “The effects of adopting the Balanced Scorecard on shareholder returns,” Aaron Crabtree and Gerald DeBusk, Advances in Accounting, June 2008, Elsevier (www.elsevier.com)
Three-year post-adoption performance (“Buy and Hold Returns”) of matched BSC firms vs control firms
50.72%
39.14%
41.05%
43.6%
23.60%
8.97%
13.47%
15.3%
27.12%
30.17%
27.58%
28.3%
The Execution Premium
17110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
Palladium Balanced Scorecard Hall of Fame for Executing Strategy®
By Industry 2000-2010
18110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
The Execution Premium: Behind every story of shareholder value, there is another
story of value creation. That is the real story of strategy execution.
Execution Premium
Valuation
Profitable
Growth
Brand
ValueCustomer
Satisfactio
n
Technolog
y Support
“Best
Employer”
Key Process
Effectiveness
Ranked #1 employer in
IT sector (Dataquest)
Ranked India’s best
managed company
Innovation (new
product revenues) up
48%
Active clients rose from
293 to 500
Big accounts ($20M+)
up from 6 to 27
Revenue up 310%
EPS up 305%Financial
Perspective
Customer
Perspective
Internal
Perspective
Learning & Growth
Perspective
“Our BSC helped us deliver superior performance consistently and
predictably in all facets of our operations.”
Kris Gopalakrishnan – CEO
Infosys®
19110612_APAC Tour_Module1_Strategy_dpn © 2011 David Norton and Palladium Group, Inc.
SUMMARY: The Kaplan Norton Strategy Management System facilitates
successful strategy execution and dramatic execution premiums
FIN
AN
CIA
L + 200%
+ 150% + 225%Shareholder
ValueProfitability
Revenue
Growth
CU
ST
OM
ER
+ 2X #1
Customer
Satisfaction
Brand
Ranking
PR
OC
ES
S
+ 10X #1
Process
Execution
Performance
Awards
LE
AR
NIN
G
100% #1
Strategic
Awareness
Best
Employer
BSC Hall of FameComposite Results
The Vision
BHAG
The Strategy
“Grow The Profits of the Business by 50% by 2012”
(TNT Express)
The
Results
The Measures
The System
Executive
Leadership
Visit Palladium at:
www.thepalladiumgroup.com/apac
Join the Palladium Group Global Community of
Strategy Execution Practitioners:
www.thepalladiumgroup.com/XPC
For Strategy Execution excellence, visit the Hall
of Fame winners at:
www.thepalladiumgroup.com/about/hof
Palladium Asia Pacific Offices
APAC Head Office
Level 20,
44 Market Street
Sydney, NSW 2000
Australia
+61.2.8259.1010 T
+61.2.8259.1003 F
Indonesia
30th Floor, Menara Standard
Chartered
Jalan Prof. Dr. Satrio, Kav.164
Jakarta 12950
+62.21.2555.5798 T
+62.21.2555.5601 F
Singapore
Level 35, UOB Plaza 1
80 Raffles Place
Singapore 04862
+65.6248.4701 T
+65.6248.4501 F
Malaysia
Level 40, Tower 2,
Petronas Twin Towers,
Kuala Lumpur City Centre
50088, Kuala Lumpur
+603 2168 4720 T
+603 2168 4201 F
Thailand
36th Floor, CRC Tower
All Seasons Place
87/2 Wireless Road
Lumpini, Phatumwan
Bangkok 10330
+66.2625.3161 T
+66.2625.3000 F
Philippines
28th Floor, Tower Two
The Enterprise Center
6766 Ayala Avenue
Corner Paseo de Roxas
Makati City 1226
+63.2.849.3426 T
+63.2.886.5008 F
India
Level 1, Trade Centre
Bandra Kurla Complex
Bandra (East)
Mumbai 400 051
+91.22.4070.0191 T
+91.22.4070.0800 F
T M Nagarajan
South East Asia Director, Palladium Group Asia Pacific
eMail: rajan@thepalladiumgroup.com Phone: + 60 163 300 330