Having troublewith your strategy then map it

Having Trouble With Your Strategy? – Then Map It

Source: Kaplan & NortonHarvard & BSCol

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Strategy Maps (Military War; Business War)

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Inte

rnal

Pro

cess

Stak

ehol

der

Lear

ning

& G

row

th

Reduce Re-Activities thru ABC/M

Establish Web Based Self Services

Knowledge Management

Human Capital

Improved Returns on Investments

More rapid and accessible services

Leadership Development

Inve

stm

ents

Strategy Map: Capture a Cause Effect Relationship from the Bottom Up

IT InfrastructureFacilities and Fixed Assets

Economic Model Process

Expand Global Facility Reach

You can’t have the fruits without the roots!

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Organization

Belief System Management System

• Vision• Mission/ Purpose• Values

• BEM + BSC

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What Does the BSC Balance?

1.Short/ Long Term Objectives

2.Financial/ Non

Financial Measures

4.Lagging & Leading Indicators

3.External &

Internal

Performance

Perspectives

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BSC – A Multi Purpose Tool

• Measurement Tool

• Performance Management Tool

• Communication Tool

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Maps

• Provide “Line of Sight” – work in coordinated, collaborative fashion

• Visual representation of critical objectives

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Four Views of Performance

• Strategy can be described as a series of cause and effect relationships.

• Provides a “line of sight” from strategic to operational activity• working on the “right”

things.

“If we succeed, how will we look to our stakeholders?”

Stakeholders

Strategic Objectives

“To satisfy our customers, at which processes must we excel?

Internal Processes

"To execute our processes, how must our organization learn and

improve?"

Learning & Growth

“In order to succeed, what investments in people and

infrastructure must we make?”

Investments

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Maps

• Line of sight – work in coordinated, collaborative fashion

• Visual representation of critical objectives

• Cause & effect links>> cause & effect thinking >> Systems Thinking vs Laundry List Thinking

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Double Loop Learning

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Corporate Culture

Employee Knowledge

Tangible Outcomes+

How Maps Help

Intangibles

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Value Depends upon - Organizational Context- StrategyIndustrial Age

• Land• Factory• Inventories• Equipment------------------------------

-TANGIBLE ASSETS

Information Age

• Customer Relationships

• Employee skills & Knowledge

• Information Technologies

------------------------------INTANGIBLE

ASSETS

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A Growth Oriented Strategy …Calls for:• Knowledge abt

customers• Addl trng for sales • New database info

sys• Diff. Orgnl

structure• Incentive based

compensation prog.

------------------------------

----------------------• Requires all • Investing in just

one or two items will cause strategy to fail.

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Strategy Maps are being used in…• Insurance

• Banking

• Retail

• Healthcare

• eCommerce

• Chemicals

• Energy

• Telecomms

• Govt

• Non-Profit

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In two years:- Op. cash flow up by > $ 1bn/year- industry’s profit leader

• From centrally controlled manufacturer of commodity products

To• Decentralized customer driven

organization

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Financial Perspective – Generic/ Template

Improved Shareholder Value

Share price. roce

Revenue Growth Strategy Productivity Strategy

Build the franchise Incrse ValueTo customers

Improv costStructure

Improv useOf assets

Revenue fromnew sources

Customerprofitability

Operating costPer unit produced

Asset utilization

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Customer PerspectiveCustomer Value Proposition

Operational Excellence

Customer Intimacy

Product Leadership

differentiator On par

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Customer Value Proposition Strategies

CustomerIntimacy

ProductLeadership

Time

Features

OperationalExcellence

Price

Feat

ures

Time Qua

lity

Serv

ice

Custo

mer

Relat

ions

SmartShopper

TrustedBrand

Best inClass

Companies excel at Competitive pricing,Product quality &On-time delivery

Companies excel at offeringpersonalized service to customers & at building long term relationshipswith them

Companies excel at creating unique products that push the envelope.

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Customer Perspective

• Operational Excellence: Dell, McDonald’s

• Customer Intimacy: Home Depot, IBM

• Product Leadership: Intel, sony

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Internal Process Perspective

Build the franchise thru’ innovations

Inc. customer valuethru’ customer mgmt processes

achive opnl excellence thru ops & logistics

processes

Becom a good Corporate citizen thru’

Regulatory & environmentalprocesses

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Learning & Growth Perspective

Employeecompetencies

Corporate culture

Technology

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What’s Missing?Revenue Growth

Vol. Growth Net Margin

Delight theconsumer

Non gasolineProds/ services

Personal Growth

Best in ClassFranchise team

Win win dealerrelns

Prods on specOn time

Processimprovement

Functional excellence

F

C

I

L

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Strategy

SBU

Department

Team/Individual

Measures Objectives

Complete Framework

The Importance of Alignment

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Detailed statement of

what is critical to successfully achieving the

strategy

How success in achieving the

strategy will be measured and

tracked

Key action programs

required to achieve

objectives

The level of performance

or rate of improvement

needed

Objective Description Target

2 per setup per month each Outlet Office

InitiativeMeasure

Number of Reworks

Strategy Map

Stak

ehol

der

Inte

rnal

Pro

cess

L&G

Faster Service Access

Self Service Applications

Web Enable Technologies

Process and ValueMap Analysis

Lean Processes

Inve

stm

ents

Invest in IT

Extend the Map into Measurements, Targets and Initiatives

Lean / Six Sigma

Eliminate waste, reworks, and other errors in our processes

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Value Creation: What a Business Aims to Achieve

Com

mitt

ed

Man

agem

ent

Committed

Employees

Delighted

Shareholders

Deliver

Greater

Perceived

Value

Delighted

Customers

Increased

Market

Share

Revenue

Growth

Continually

Refine

Processes

Reduced

Waste

Greater

Productivity

Lower

Costs

•Improved Margins

•Improved Asset

Utilization

•Improved Competitive

PositionInnovat io n

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Supplementary Slides

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In order to be successful, a firm’s BSC should . . .

• Be comprised of a balanced set of a limited vital few measures;

• Produce timely and useful reports at a reasonable cost;

• Display and make readily available information that is shared, understood, and used by the firm; and

• Supports the organization’s values and the relationship the organization has with customers, suppliers, and stakeholders.

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• Get down to a set of quantifiable strategic objectives:

Too vague

More precise

• Make sure your objectives have a direct relationship to your goals and your goals have a direct relationship to your mission and values.

Before we can map your strategy . . .

Improve Customer Service

Reduce average customer wait times by 30% by year end

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Two Special Techniquesfor Building Strategy Maps

The 4 to 5 Rule

Splitting the Perspective

General Rule of Thumb to ensure strategy map is developed both vertically and horizontally

Way of pulling out both drivers and outcomes that match up against the core competencies of the business model

Customer Growth Customer SatisfactionRetention Rate

Timely Delivery Pricing Quality Service Reputation

Customer PerspectiveOutcomes

Drivers

Weak Strong

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Multiple Choice Question – Cause Effect on Strategy MapThe top perspective of the Balanced Scorecard is the final end results or outcomes we want to achieve. This perspective is called:a. Internal Processesb. Stakeholder / Customerc. Learning & Growthd. Investments

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Multiple Choice Question – and the answer is . . .

b – “Stakeholder / Customer” are those who we ultimately serve and we must meet their needs and requirements. This is our final end result within the scorecard model.

Balanced Scorecards tell you the knowledge, skills and systems that your employees will need (learning and growth) to innovate and build the right strategic capabilities and efficiencies (internal processes) that deliver specific value to the market (customer) which will eventually lead to higher shareholder value (financial).

– “Having Trouble with Your Strategy? Then Map It” by Robert S. Kaplan and David P. Norton - Harvard Business Review

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Multiple Choice Question – Create a Tight Model

The Balanced Scorecard process captures a cause and effect relationship based on having all parts linked together. Strategic goals link down to objectives, objectives link down to measurements, and measurements link to:

a. Missionb. Goalsc. Budgetsd. Targets

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d – Measurements should be linked to targets. We want a one-to-one relationship so that measurements are actionable.

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Multiple Choice Question – Appropriate Measurement

The measurement, % of employees following a supervisor approved competency model, would most likely be placed in which perspective of the Balanced Scorecard?

a. Stakeholder / Customerb. Learning and Growthc. Investmentsd. Internal Processes

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b – this measurement relates to helping grow the workforce and this would most likely fit with the Learning and Growth perspective of the Balanced Scorecard.

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The Measurement Pyramid

Goal

Outcome Performance

MeasuresProgram

Program Performance Measures

Program Components

Program Component Performance Measures

Activities

Activity Performance Measures

Strategic GoalsEnd-Outcomes

Longer-Term IntermediateOutcomes

Shorter-TermIntermediateOutcomes& Outputs

Outputs& Inputs

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Some Tools for Determining

What to Measure

Inputs Process/System Output Intermediate

OutcomesEnd

Outcome

Program Logic Model

DesiredOutcome

Causal AnalysisProcess Flow

ResultsOf

Testing

Not AcceptableAcceptable

PrototypeProduct

Back to LaboratoryTo Market

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Multiple Choice Question – Sequence Of Steps

The basic steps for creating a Balanced Scorecard include:

A = Align your strategy map to other organizational unitsB = Create your strategic plan – including goals and

objectivesC = Extend your strategy map into measurements and targets D = Map your strategy over four perspectives

The sequence or order of these steps is (left to right):

Step 1 Step 2 Step 3 Step 4a. A C B Db. C A D Bc. B D A Cd. C B A D

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c – Step 1 or B – Start with your strategic planStep 2 or D – Map your strategic planStep 3 or A – Align your strategy mapStep 4 or C – Extend the strategy map into measurements and targets

Having troublewith your strategy then map it

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