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Transcript of Master Sun Consulting Balanced Scorecard - Tool for Value Creation Balanced Scorecard - Tool for...
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
Why Need a Balanced Scorecard?Why Need a Balanced Scorecard?The Source of Value Has Shifted From Tangible to Intangible
Assets
Intangible Assets
Tangible Assets
38% 62% 85%
38%
15%
62%
1982 19921 20002
percentage of market value related to…
1. Brookings Institute2. Baruch Lev analysis of
S&P500 companies
Value Creation: Intangible AssetsValue Creation: Intangible Assets
Intangible Assets Do Not Have A Direct Impact on Financial Intangible Assets Do Not Have A Direct Impact on Financial Results — They Have Second- or Third-Order ImpactsResults — They Have Second- or Third-Order Impacts
Conventional approach to managing financial & operational Conventional approach to managing financial & operational indicators insufficient indicators insufficient
Balanced Approach to Strategy Implementation should includes Balanced Approach to Strategy Implementation should includes focus on customer/stakeholder & learning, growth & innovation focus on customer/stakeholder & learning, growth & innovation
Understanding & managing/leveraging inter-relationships Understanding & managing/leveraging inter-relationships between the above areas necessary for value creationbetween the above areas necessary for value creation
Service Quality
Customer Confidence RevenueCustomer
Retention
Training
InformationTechnology
Balanced Scorecard as a Tool for Balanced Scorecard as a Tool for Business ExcellenceBusiness Excellence
Malcolm Baldrige Balanced Scorecard
Leadership Learning & Growth Perspective
Human Resource Capital
Business Results
Process Management
Strategic Planning Strategy Map
Learning & Growth Perspective
Internal Process Perspective
Customer Focus Customer Perspective
Targets, Financial Perspective
Balanced ScorecardBalanced Scorecard
Balanced Scorecard’s key theme is not about Balanced Scorecard’s key theme is not about Measurement as the term would outwardly Measurement as the term would outwardly
convey convey Its about Its about
Value creation -Execution of StrategyValue creation -Execution of Strategy
Balanced Scorecard : Synonym Balanced Scorecard : Synonym for Managing Performancefor Managing Performance
Introduced in 1992, by Robert Kaplan and David Introduced in 1992, by Robert Kaplan and David Norton, the Balanced Scorecard is the most commonly Norton, the Balanced Scorecard is the most commonly used framework for ensuring that companies execute used framework for ensuring that companies execute their strategiestheir strategies
Today, about 70% of the Fortune 1,000 companies Today, about 70% of the Fortune 1,000 companies utilize the Balanced Scorecard to help manage utilize the Balanced Scorecard to help manage performance.performance.
Balanced Scorecard Links Vision & Balanced Scorecard Links Vision & Strategy to Personal ObjectivesStrategy to Personal Objectives
VISIONWhat we want to be
STRATEGYOur game plan
STRATEGIC OUTCOMES
SatisfiedSHAREHOLDERS
Delighted CUSTOMERS
Efficient and EffectivePROCESSES
Motivated & PreparedWORKFORCE
PERSONAL OBJECTIVESWhat I need to do
BALANCED SCORECARDTranslate, Focus and Align
TRANSFORMATION OBJECTIVESWhat we must improve
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
Strategy Implementation ProcessStrategy Implementation Process
Sustained Strategy
Strategic Direction
Strategic Guidelines Strategy
Stage
Output
Institutionalization of the process
Identification & definition of areas of improvement
Development of solution and
testing
Implementation of solution across all
units
Activity
BusinessHealth Check
Design Process
Rollout Institutionalization
Business Audit AreasBusiness Audit Areas Business Health Check Business Health Check
Depending on the critical needs of a business , at a point Depending on the critical needs of a business , at a point of time, the Business Health Check will focus on some of time, the Business Health Check will focus on some or all of the following areasor all of the following areas
Business Performance AnalysisBusiness Performance Analysis Strategy Planning AnalysisStrategy Planning Analysis Organization Culture AnalysisOrganization Culture Analysis Process & Systems AnalysisProcess & Systems Analysis Operations AnalysisOperations Analysis Marketing AnalysisMarketing Analysis Sales & Distribution AnalysisSales & Distribution Analysis Customer satisfaction analysisCustomer satisfaction analysis
Audit sets an agenda for transformation & also Audit sets an agenda for transformation & also outlines the strategic thrusts for scorecard outlines the strategic thrusts for scorecard implementationimplementation
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Mobilize change through
executive leadership
Change people, make
strategy everyone’s
everyday job
Align the organizati
on to create
synergies
Translate the
strategy to operational
terms
Integrate improvement programmes
with scorecard
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Translate the
strategy to operational
terms
Brand / product development, sales, service, operations, logistics..
Activities needed to create the required customer value propositionand differentiation and the desired financial outcomes
Organization infrastructure, skills, capabilities, knowledge of employees, working climate..The ability to execute internal business processes in newdifferentiated ways
Who are the target customers that will generate the revenue growth?
What are the objectives and how do we measure success with them?
What are the financial objectives for growth and productivity?
What are the major sources of growth?
Translate : Strategy into 4 Translate : Strategy into 4 ComponentsComponents
Vision and Strategy
Financial Perspective
Customer Perspective
Internal Perspective
Learning and growth
Perspective
•Patent Score for Process Improvements•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs•Quality•Productivity•% Complaints to Transactions•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Translate : Terminator Zero UnhappinessTranslate : Terminator Zero Unhappiness
Internal Processes
MissionTo ensure that the all causes of Unhappiness for Customer are Terminated in order for the bank to vie for Service Leadership
•Customer Complaints•Customer Feedback Scores•Repeat Contacts•Request Closure beyond 24 Hours
Customer•Cost of Complaints•% of Business through Cross Selling•Average Revenue Per Customer
Financial
LeadingLeading
Definition
LaggingLagging
InputInput
OutputOutput
OutcomeOutcome
Objective / Objective / QuantitativeQuantitative
Example
Intermediate outcomes that predicts or drive bottom-line
performance results
Measure Type
Bottom-line performance results resulting from
actions takenAmount of Investments, assets,
equipment, labor hours, or budget dollars usedUnits of a product or service rendered - a
measure of yieldResulting effect (benefit) of the use or application of an
outputEmpirical indicators of
performanceSubjective / Subjective / QualitativeQualitative
Perceptions and evaluations of major customers and
stakeholders
Employee turnover rate
Employee satisfaction rating
Number of Value Meal orders fulfilled
Customer satisfaction rating
Wait time
Customer complaints received as a % of total
customers served
Number of cashiers
Translate: Types of MeasurementsTranslate: Types of Measurements
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Align the organizati
on to create
synergies
Align: Use Strategy Map to Build Align: Use Strategy Map to Build Cause & Effect RelationshipsCause & Effect Relationships
Improve ROCERevenue Growth Strategy Productivity Strategy
Build the Franchise Increase Customer Value
Improve Cost Structure
Improve Asset Utilization
A Motivated and Prepared Workforce
New Revenue Sources Customer Profitability Cost per Unit Asset Utilization
Price
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth Perspective
Product/Service Attributes
Strategic Competencies
Strategic Technologies
Climate for Action
“Build the Franchise” “Increase Customer Value”
“Achieve Operational Excellence”
(Innovation Processes)
(Customer Management Processes)
(Operations & Logistics Processes)
Customer Value Proposition
Quality
Operational Excellence
Product Leadership
Customer Satisfaction
Customer Acquisition Customer Retention
Time Function Service Relations Brand
Relationship Image
Market Share
Review
Review
Review
ReviewReview
Review Review
Review
Review
Align : Flow of the Scorecard AlongAlign : Flow of the Scorecard AlongThe OrganizationThe Organization
Production Shift
Scorecard
Packing Shift
Scorecard
Production Daily
Scorecard
Maintenance Daily
Scorecard
Department Weekly
Scorecard
Packing Daily
Scorecard
PC/QC Daily Scorecard
Maintenance Weekly
Scorecard
PC/QC Weekly
Scorecard
Plant Head :Weekly Value Loss Scorecard & Analysis
Manpower Index (SMI)
Non Energy Cash Costs (NECC)
Maintenance Index (MI)
Man HoursUnit of Hardware
Unit of Hardware is a constraint
Man Hours is not a constraint
Man Hour Categories
Standard Hours
Turnaround Hours (Outside of current scope)
Other Hours (Outside of Maintenance Engineering Services)
Contractor Hours
Shell Hours
Skills constraint
Risk constraint
Profit constraint
Equipment constraint
Shell hours constraint
Response Time = Sigma [Job Time Raised – Job Time Closed] No. of Jobs
Availability = (Total m/c hrs) - (m/c downtime hrs) x 100 (Total m/c hrs)
Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs) No. of Breakdowns
Maintainability (MTTR) = (m/c downtime hrs) No. of Breakdowns
PM Index = No. of m/c for which PM is carried out No. of m/c due for PM
Crew Utilization = Total earned hrs x 100 Actual available hrs
MMTR = Mean Time To RepairMTBF = Mean Time Between Failures VersusMTBM = Mean Time Between Maintenance?
Backlog Hours = Sigma [Job in queue x standard time]
Cost = Actual Job Cost + Lost Opportunity
Routine Index (MI)
Turnaround Index (MI)
Maintenance Capex
Maintenance Costs
Inspection Costs
Routine Costs
Plant transformations
Extraordinary Costs
Operating Costs
Contractor Costs
Turnaround Cost(Outside of current scope)
Equipment Constraint Hours
Risk Constraint Hours
Skills Constraint Hours
Profit Constraint Hours
Non Constraint Hours
RCA Design %
RCA Installation/ Repair %
RCA Utilization %
RCA Preventative %
RCA Planned %
Maintenance Schedule Adherence
Planning Accuracy = Actual
Hours/Estimated Hours
Align :KPI Roll Down – Oil RefineryAlign :KPI Roll Down – Oil Refinery
Align : Lowest Organism in the Align : Lowest Organism in the Food ChainFood Chain
Mobil – Truck DriversMobil – Truck Drivers Truck drivers were initially skeptical about how they Truck drivers were initially skeptical about how they
could affect any of the corporate strategic themes. They could affect any of the corporate strategic themes. They knew that their job was to deliver to customersknew that their job was to deliver to customers
By driving safely and avoiding accidents truck drivers By driving safely and avoiding accidents truck drivers could improve performance on all internal measures that could improve performance on all internal measures that were identified… lower costs, reliable, on time, were identified… lower costs, reliable, on time, environmentally friendlyenvironmentally friendly
ICICI-Fire in the BranchICICI-Fire in the Branch Every single mistake by a branch added up to a lot of Every single mistake by a branch added up to a lot of
failures countrywidefailures countrywide Single complaint in a branch will bring the branch to a Single complaint in a branch will bring the branch to a
standstillstandstill Would track to one activity not being done by a single Would track to one activity not being done by a single
personperson Refer to Drawer syndromeRefer to Drawer syndrome
Align : Balanced Scorecard with Align : Balanced Scorecard with Organizational Design Organizational Design
Job based on the Scorecard Matrices rather than on position descriptions, reporting relationships, and title transformations?
To what extent does your organization encourage individuals, regardless of job description, to search for innovation & growth ?
Brief on how your job impacts the KPIs of other department? Extent you feel you receive a sufficient amount of feedback
from internal and external sources to help you improve what you do?
Extent balanced scorecard tied to the transformation initiative? Extent performance appraisal system integrated with balanced
scorecard KPIs? Extent does your current compensation/promotion system
support/promote balanced scorecard KPIs? Extent do you understand what you must do to satisfy the
customer’s needs?
All complaints to be resolved with root fix Complaints
Get it right first time. Call up a customer if
error is noticed Transactions
Ensure First ContactResolution Contacts
Close SR Within TAT Good Closure Quality Service Requests
Root Cause Analysis & Review
Reduce Service Failure Flow
Delivery Failure
Align :Mission Zero UnhappinessAlign :Mission Zero Unhappiness
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Change people, make
strategy everyone’s
everyday job
Cons
ciou
sU
ncon
scio
us
Incompetent Competent
Direct Delegate
Support Coach
The Four States of Mind!
Cons
ciou
sU
ncon
scio
us
Incompetent Competent
Compliance Culture
Understanding Usage
Minds Path Matrix
……No shortcuts No shortcuts possible...possible...
Change : Minds Path MatrixChange : Minds Path Matrix
Change : Minds Path MatrixChange : Minds Path Matrix
Compliance Culture
Understanding Usage
• People understand that they are “being told” to do something new. • God knows why because they don’t see the use of it !!• This is normally viewed as extra non-value added responsibility. • If you stop checking, they will stop trying.
• People start realising why the data recorded in the system might be of use to them and the business in the future. Process transformation begin to inspire confidence
• There is some light at the end of the tunnel.• You still need to keep them on close track however.
• Recording this new or extra data and working in a new way has now become a fact of life. Process compliance is high
• They now start using (read : analyzing) the scorecards. • Meetings are held to review the data. The wheel starts turning!
Change: Minds Path MatrixChange: Minds Path Matrix
Compliance Culture
Understanding Usage
• People understand that they are “being told” to do something new. • God knows why because they don’t see the use of it !!• This is normally viewed as extra non-value added responsibility. • If you stop checking, they will stop trying.
• People start realising why the data recorded in the system might be of use to them and the business in the future. Process transformation begin to inspire confidence
• There is some light at the end of the tunnel.• You still need to keep them on close track however.
• Recording this new or extra data and working in a new way has now become a fact of life. Process compliance is high
• They now start using (read : analyzing) the scorecards. • Meetings are held to review the data. The wheel starts turning!
• People don’t think about the new system& processes anymore. It is THEIR system now.
• They fully optimize the usage of data gathered at all levels. • They use the Scorecards to drive improvements in business performance. • They improve details of the systems as per the requirements.
Success
Hope
ProblemDefinition
Solution Development
Solution Implementatio
n
Culture Change
Pain
The Mind’s Path To Success
Change ManagementChange Management
Change : Keep Scorecards FocusedChange : Keep Scorecards Focused At least one objective/measure per perspectiveAt least one objective/measure per perspective
No more than 15 measuresNo more than 15 measures
Personal scorecard must support supervisor’s Personal scorecard must support supervisor’s scorecardscorecard
Every supervisor must have an objective and Every supervisor must have an objective and measure for coaching and employee developmentmeasure for coaching and employee development
Scorecard must include an objective and measure Scorecard must include an objective and measure that that supports another part of the businesssupports another part of the business
•
•Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling
•Every deliverable cleared resulted in a happy customer, lesser rework & cost savings•Average Contact Ratio:65%
Data :Nov04-Jun 05
Change : RCA Deliverables Not Change : RCA Deliverables Not ReceivedReceived
Change Management : Link to IncentivesChange Management : Link to Incentives
ICICIICICI Zero Unhappiness BranchesZero Unhappiness Branches
VNCVNC Incremental Performance over Base Performance is Incremental Performance over Base Performance is
rewardedrewarded Sales Reps often make incentive over and above salarySales Reps often make incentive over and above salary Performance observed over a quarterly period to avoid Performance observed over a quarterly period to avoid
monthly manipulationsmonthly manipulations
Change : Assessment Management Change : Assessment Management SystemSystem
“ “ If you can’t If you can’t measure it, you measure it, you
can’t manage it.”can’t manage it.”
The secret to successful change management is to be able to The secret to successful change management is to be able to assess and measure your progress through the ‘minds path’ assess and measure your progress through the ‘minds path’
Change Management Assessment System Change Management Assessment System
The four mindsets must be measured by Auditing.The four mindsets must be measured by Auditing.Auditing is Auditing is a quantitative measure of a qualitativea quantitative measure of a qualitative
• Audit questionnaires are developed to assess the mindset levels using a structured approach:
1. Closed ended questions for compliance.2. Open ended questions for understanding.3. Demonstrative questions for usage.
• The audit questionnaire answers get converted into a scoring scheme…
• 0 for wrong or not done.• 1 for partially right or partly done.• 3 for correct or demonstrated.
• The percentages of each system performance category are plotted
• The target is 100%.
Change :Assessment Management Change :Assessment Management System (CAMS)System (CAMS)
Installation Status
0%10%20%30%40%50%60%70%80%90%
100%
-5 -4 -3 -2 -1 0 CurrentPeriod
Achi
evem
ent
InstalledPartially InstalledNot Installed System Utilization Status
0%
20%40%
60%80%
100%
-5 -4 -3 -2 -1 Current
Period
Achi
evem
ent
Mechanical Understanding Usage
Installation StatusInstallation Status
Change : Assessment Management Change : Assessment Management System(CAMS)System(CAMS)
Ask the Head
THE PUNY
PAYOFF FROM
OFFICE COMPUTERS
E D IT ORIAL
H
S pecia l Report
MA NAGEMEN T'S
NE W EST STE P
C ov er Story
THE COMPUTER
SLUMP
Speci al Re po rt
MANAG EMEN T DISCOVER S
THE HUM AN SIDE OF AUTOM ATION
Bulletin Boards
NewslettersClasses Training Workshops
Company Intranet
Change : Training & Change : Training & CommunicationCommunication
Change : Training in Problem Solving –Change : Training in Problem Solving –Decision MakingDecision Making
Objective: Objective: The Program intends to provide an insight to the participants inThe Program intends to provide an insight to the participants in
to the techniques for confronting the issues and arrive at alternatives toto the techniques for confronting the issues and arrive at alternatives toresolve them effectively using various tools and techniques. The program isresolve them effectively using various tools and techniques. The program isstructured to provide an exposure to the systematic approach to logicalstructured to provide an exposure to the systematic approach to logicaldecision making for attaining most optimal use of resources and enhancedecision making for attaining most optimal use of resources and enhanceeffectiveness.effectiveness.
Proposed Program Contents: Proposed Program Contents: Problem SolvingProblem Solving A conscious, systematic approach for analyzing situations and articulatingA conscious, systematic approach for analyzing situations and articulating
problems, underlying assumptions and expected outcomesproblems, underlying assumptions and expected outcomes Root Cause AnalysisRoot Cause Analysis: A structured investigation that aims to identify the true : A structured investigation that aims to identify the true
cause of a problem and the actions necessary to eliminate it. Covers tools & cause of a problem and the actions necessary to eliminate it. Covers tools & techniques for problem understanding, cause generation, data collection, cause-techniques for problem understanding, cause generation, data collection, cause-and-effect analysis and-effect analysis
Six Hat Thinking: Six Hat Thinking: Harness lateral thinking capabilities to unearth the resources Harness lateral thinking capabilities to unearth the resources available and make optimal use of them to gain expected outcomes. Avoiding ten available and make optimal use of them to gain expected outcomes. Avoiding ten mental creative locksmental creative locks
Force Field AnalysisForce Field Analysis: Identifying potential risks and opportunities inherent in the : Identifying potential risks and opportunities inherent in the situationssituations
80-20 Analysis or Pareto Principle:80-20 Analysis or Pareto Principle: Prioritizing & focusing problem solving Prioritizing & focusing problem solving exercise on key issuesexercise on key issues
Decision MakingDecision Making Even SwapsEven Swaps : A rational method for analyzing decision options & making swaps : A rational method for analyzing decision options & making swaps Hidden Traps of Decision MakingHidden Traps of Decision Making & how to avoid them & how to avoid them Group Decision Making:Group Decision Making: Using group decision making techniques like consensus Using group decision making techniques like consensus
& NGT. Avoiding usual traps of decision making like Groupthink& NGT. Avoiding usual traps of decision making like Groupthink Decision Implementation: Decision Implementation: Decision implementation plan, monitoring, feedback & Decision implementation plan, monitoring, feedback &
change managementchange management
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Integrate improvement programmes
with scorecard
Scorecard’s Role in TransformationScorecard’s Role in Transformation Scorecard is an indispensable tool to manage & Scorecard is an indispensable tool to manage &
monitor a transformation/business performance monitor a transformation/business performance improvement programmeimprovement programme
Scorecard Implementation needs to be supported by Scorecard Implementation needs to be supported by functional/departmental initiatives functional/departmental initiatives
Scorecard supported by a Transformation Initiative Scorecard supported by a Transformation Initiative drives Business Resultsdrives Business Results
Goal Objective Measurement Target Initiative
Achieve operational efficiencies with best practices in
Reduce Operational Service Costs by 50% over the next 5 years
Cost per Outlet Office, Cost per Region, Cost per FTE
5% - Year 110% - Year 215% - Year 3
Activity Based Costing / Management
Reduce identified re-activities within primary processes by 80% over the next 3 years
Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions)
Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75%
Lean / Six Sigma
Integrate : Goals, Measurement & Integrate : Goals, Measurement & Improvement InitiativesImprovement Initiatives
When you first launch your Initiative, you probably want to use an Output Measurement. Once the Initiative is up and running, integrate your measurement to an Outcome to see if the Initiative is really having strategic impact.
InitiativeInitiative Output Output MeasurementMeasurement
Outcome Outcome MeasurementMeasurement
Lean Process / Six Lean Process / Six SigmaSigma
Number of Projects Number of Projects Defined by RegionDefined by Region
Overall reductions in Overall reductions in errors, reworks, and cycle errors, reworks, and cycle timestimes
Employee Employee Competency ModelsCompetency Models
% of Employees who % of Employees who have a Competency have a Competency Model in placeModel in place
Higher skill levels of Higher skill levels of employees using the employees using the modelsmodels
Integrate :Going from Output to Integrate :Going from Output to OutcomeOutcome
Integrate: Retail Integrate: Retail Management Control Management Control
SystemSystemForecastForecast PlanPlan ControlControl ReportReport
Manager Manager RetailRetail
DistributorDistributor
DSMDSMRetailer / Customer Sales Plan
Route plan
Contact Plan
Customer / Retail Card
DSM Daily Score Card
Territory Sales Target
Retail Manager
Contact Plan
Distributor Coverage
Target
DSM Target
DSM Weekly Score Card
DSM Monthly
Score Card
Distributor Weekly
Score Card
Distributor Monthly
Score Card
Review
Distributor Sales Target
Market Intelligence Retail Mgr
Segment Segment ManagerManager
Marketing Department
Review
Review
Segment Mgr Monthly Score Card
Retail Mgr Ride with
Segment Mgr Weekly Score Card
Segment Sales Target
Review
Distributor Daily Score
Card
Review
Direct Sales input
Retail Mgr Daily Score
Card
Review
Review
Review
Review
Segment Mgr Daily
Score CardReview
Review
Review
Distributor Quarterly
ROI Analysis
Marketing Ride with
Retail Mgr Weekly
Score Card
Retail Mgr Monthly
Score Card
Integrate : ICICI Transformation Control Integrate : ICICI Transformation Control System System
Budget for Key Metrics for Mar 05
Daily Measurement of Metrics:Alarm
Express
Daily Review & Course Correction
Weekly comparison of
Budget vs. Actual Root Cause
Analysis
Fortnightly Review
Zero Unhappiness Scorecard & RCA
Improvement Implementation
Plan
Senior Management
Junior &Middle Management
Planning Control Analysis & Review
Focus on Short Interval Measurement, Analysis &Review
Scorecard Design & RolloutScorecard Design & Rollout
BALANCED
SCORECARD
S T R A T E G Y
Mobilize change through
executive leadership
Mobilize : Top Management CommitmentMobilize : Top Management Commitment1.Creating the Climate for Change1.Creating the Climate for Change
Unfreeze the organizationUnfreeze the organizationShow the need for changeShow the need for change
2.2. Creating the Leadership TeamCreating the Leadership TeamBreaking down functional biasBreaking down functional bias
3.3. Creating the Vision and StrategyCreating the Vision and StrategyBSC as a “visioning process”BSC as a “visioning process”BSC to clarify the strategyBSC to clarify the strategy
4.4. Creating Team AccountabilityCreating Team AccountabilityAccountability for cross-functional strategic themes at Executive Team levelAccountability for cross-functional strategic themes at Executive Team level
A successful Balanced Scorecard program starts with a A successful Balanced Scorecard program starts with a recognition that it is not a “metrics” project, it’s a recognition that it is not a “metrics” project, it’s a “change” process.“change” process.
Strategic Learning Loop
Initiatives & Programs
test the hypotheses
Output(Results
)
reporting
Management Control Loopfunding
Input(Resource
s)
update the strategy
PERFORMANCE
85% of management teams spend less than one hour
per month on strategy issues
92% of organizations do not report on lead
indicators
60% of organizations don’t link strategy & budgets
78% of organizations lock budgets to an annual cycle20% of organizations take
more than 16 weeks to prepare a budget
STRATEGY
BALANCED SCORECARD
BUDGET
Mobilize :Tight Focus & Extensive ReviewMobilize :Tight Focus & Extensive Review
Mobilize : Red Buttons to Avoid Mobilize : Red Buttons to Avoid Middle Management Team: Lack of Senior Middle Management Team: Lack of Senior
Management CommitmentManagement Commitment Done by One or Two IndividualsDone by One or Two Individuals Held at the Top: For Senior Management OnlyHeld at the Top: For Senior Management Only Too Long a Development Process: “Best Becomes the Too Long a Development Process: “Best Becomes the
Enemy of the Good”Enemy of the Good” Treating the Balanced Scorecard as a Systems Treating the Balanced Scorecard as a Systems
ProjectProject Done Only for CompensationDone Only for Compensation Not Treated as a Change Management ProjectNot Treated as a Change Management Project
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
ContextContext Focus on Top line. ICICI Bank perceived to be very Focus on Top line. ICICI Bank perceived to be very
aggressive on sales , very poor on service. aggressive on sales , very poor on service. For bottom-line to improves it was important for the For bottom-line to improves it was important for the
bank to be a service leader.bank to be a service leader. Improved ServiceImproved Service
Leads to improved productivity & profit Leads to improved productivity & profit Generates a positive word of mouth. Attracts new Generates a positive word of mouth. Attracts new
customers customers Provides a competitive advantage. Provides a competitive advantage.
More difficult and slower for a competitor to respond to More difficult and slower for a competitor to respond to service improvement than to price change. service improvement than to price change.
Help us retain customers. Help us retain customers. Cheaper to retain customers than to acquire new onesCheaper to retain customers than to acquire new ones
•Patent Score for Process Improvements•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs•Quality•Productivity•% Complaints to Transactions•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Terminator : Zero UnhappinessTerminator : Zero Unhappiness
Internal Processes
MissionTo ensure that the all causes of Unhappiness for Customer are fullyTerminated in order for the bank to vie for Service Leadership
•Customer Complaints•Customer Feedback Scores•Repeat Contacts•Request Closure beyond 24 Hours
Customer•Cost of Complaints•% of Business through Cross Selling•Average Revenue Per Customer
Financial
Zero Unhappiness Scorecard Branches-Zero Unhappiness Scorecard Branches-Sample Sample
Top Branch CRs# Feb
Budget Feb Actual
Variance J an '05 Dec '04 Nov '04
Ikit not activated 125 50 75 169 245 422Instruction for A/c closure not executed 120 80 40 242 139 182Cash Deposited At Branch Not Credited 90 86 4 121 209 188Address change not done 140 137 3 183 187 189Transfer Of Accounts related issues 65 55 10 88 169 168A/c Not Opened 20 4 16 37 131 101Outstation collection - Dispute in Amt 20 2 18 50 64 66FD Renewal not done - deposits 10 9 1 8 32 23TDS Amount Deducted Disputed 5 5 0 11 13 10Fixed deposit not linked to account 5 0 5 6 10 6Form 15 H Not Entered 0 0 0 0 0 1Cash Deposit In Atm Not Crdited 12 4 8 21 35 56Fixed Deposit Interest Chq Not Received 2 0 2 3 3 8Local Outwrd chq returned physical chq not recd 5 3 2 11 17 24TOTAL 619 435 950 1254 1444Total Quality Budget Feb 1-15Variance J an Dec NovQuality -North 90% 90% 0% 45% 55% 58%Quality -East 90% 83% -7% 69% 58% 70%Quality -West 90% 95% 5% 65% 59% 59%Quality -South 90% 79% -11% 60% 58% 58%Overall Branch Banking 90% 87% -3% 60% 58% 61%Total TAT Budget Feb 1-15Variance J an Total CR beyond 24 hours 0 51 -51 82
Zero Unhappiness Scorecard -Deposits - Branches Sample ScorecardSample Scorecard Scorecard presented & Scorecard presented &
reviewed in fortnightly reviewsreviewed in fortnightly reviews All variances are linked to RCAAll variances are linked to RCA Comparison of Monthly Comparison of Monthly
Performance Vs. BudgetPerformance Vs. Budget Focus on Top Service FailuresFocus on Top Service Failures Key Indicators Focused On : Key Indicators Focused On :
Number of Service Failures, Number of Service Failures, Quality, Service Request Quality, Service Request Closed within TATClosed within TAT
Scorecard Related RCA : Scorecard Related RCA : Deliverables Not ReceivedDeliverables Not Received
Apart from wrong creation, dispatch/delivery related issues needed focus
•Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling
•Every deliverable cleared resulted in a happy customer, lesser rework & cost savings•Average Contact Ratio:65%
Data :Nov04-Jun 05
RCA: Deliverables Not ReceivedRCA: Deliverables Not Received
RCA : Deliverables Not ReceivedRCA : Deliverables Not Received Issue :E-search UpdateIssue :E-search Update
E-search information for certain deliverables not updated/ E-search information for certain deliverables not updated/ available resulting in inadequate /incomplete information to available resulting in inadequate /incomplete information to customers & Service Request creation errorscustomers & Service Request creation errors
Initiative :E-Search Update (CTD Initiative)Initiative :E-Search Update (CTD Initiative) Identified mandatory uploads for First Contact Resolution Identified mandatory uploads for First Contact Resolution
related to RPC/ CPC processes related to RPC/ CPC processes Designed and finalized the file formats for all mandatory Designed and finalized the file formats for all mandatory
uploads - easy reading for front enduploads - easy reading for front end National Co-ordinator appointed to tracking e-search open National Co-ordinator appointed to tracking e-search open
cases and timely uploadscases and timely uploads I-KIT AOF Rejections,Modification Request I-KIT AOF Rejections,Modification Request
Rejections,Nomination Rejection Letters Nomination Rejections,Nomination Rejection Letters Nomination Registration Request Rejections,Non I-Kit SB/FD-RD AOF Registration Request Rejections,Non I-Kit SB/FD-RD AOF Rejections,Transfer of Account- Rejections,Transfer Cheque Rejections,Transfer of Account- Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS - Form 15G Rejections etc. Returns, ATM Retained Cards,TDS - Form 15G Rejections etc.
4307529
9037555
14793313
21799520
29187237
37593205
Oct-04 Nov-04 Dec-04 J an-05 Feb-05 Mar-05
Terminator Results- Cost Saving Terminator Results- Cost Saving Through Failure ReductionThrough Failure Reduction
Results - Service Failures as % of Results - Service Failures as % of TransactionsTransactions
472116292671624
76392
102705108124
84805 85096 86549
79463 8041055161
0.09%
0.17%
0.26% 0.27%
0.20% 0.20% 0.21% 0.18% 0.17%
0.11%0.12%0.15%
0
20000
40000
60000
80000
100000
120000
Apr-04 May-04
Jun-04 Jul-04 Aug-04
Sep-04
Oct-04 Nov-04
Dec-04
Jan-05 Feb-05
Mar-05
Months
# of
Crit
ical
Req
uest
s
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
% a
ge to
Tot
al T
rans
actio
ns
# of Critical Requests % Age to Total Transactions (RHS)
Results – Quality of Request Results – Quality of Request HandlingHandling
55%
62% 62% 64% 64%68% 69%
72%68%
77%
88% 87%
30%
50%
70%
90%
Apr-04 May-04
Jun-04
Jul-04 Aug-04
Sep-04
Oct-04 Nov-04
Dec-04
Jan-05 Feb-05
Mar-05
Results-Customer Feedback ScoresResults-Customer Feedback Scores
74%78%
80%
64%
70%
85%88% 87%
63%67%
75%
83%
56%
62%
77%80%80%82%
80% 81%
76%72%
55%
65%
75%
85%
Q-I '04 Q-II '04 Q-III '04 Jan'05 Feb'05 Mar'05
Phone banking Liability BranchesAsset Branches- Home Loan Asset Branches- Consumer Loan
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
Indonesian Textile Giant CaseletIndonesian Textile Giant Caselet The company is one of the largest Textile company in The company is one of the largest Textile company in
IndonesiaIndonesia Company had been hit heavily by currency crashCompany had been hit heavily by currency crash In order to improve bottom-lines a plan to reduce the In order to improve bottom-lines a plan to reduce the
various kind of value losses in production, quality, various kind of value losses in production, quality, packing, utility etc.packing, utility etc.
Ambitious target of USD 4 Million in Value Loss Ambitious target of USD 4 Million in Value Loss Reduction was setReduction was set
Initiatives like TQM, Setting up Management Control Initiatives like TQM, Setting up Management Control Systems Organizational re-structuring were Systems Organizational re-structuring were pioneeredpioneered
Balanced Scorecard was used as a strategy Balanced Scorecard was used as a strategy implementation tool to support Strategy implementation tool to support Strategy ImplementationImplementation
•Patent Score for Process Improvements•SWIFT Training to Branches, Terminator Workshops
•Performance within TATs•Quality•Productivity•% Complaints to Transactions•Branch Contacts with Customers, Delivery Success Rate %
Research, Education & Teaching
Project Zero Value LossProject Zero Value Loss
Internal Processes
MissionTo ensure that the all causes of Unhappiness for Customer are fullyTerminated in order for the bank to vie for Service Leadership
•Customer Complaints•Customer Feedback Scores•Repeat Contacts•Request Closure beyond 24 Hours
Customer•Cost of Complaints•% of Business through Cross Selling•Average Revenue Per Customer
Financial
Weekly CEO Scorecard – Value Weekly CEO Scorecard – Value LossLoss
Total Cost USD 47,493 50,132 52,089 -4,596
Maintenance Cost USD 0 0
Steam Cost USD 1,200 1,080 1,140 1,137 -57
Power Cost USD 51,570 46,413 48,992 50,952 -4,539
Total Value Loss USD 45,636 48,314 70,513 -28,559
Reuse Material Savings/Loss USD 7,000 6,000 5,159 -1,841
Complaint Settlement Cost USD 0 0 0 0
Process Chemicals Loss USD 10,065 10,065 13,287 -3,222
Packing Material Loss USD 10,926 10,926 12,500 -1,574
Waste Loss USD 9,636 10,841 19,802 -10,166
Quality Loss USD 4,974 5,495 6,048 -1,074
Throughput Loss USD 3,035 4,988 13,717 -10,682
VarianceBase Target Plan Actual
Financial perspective
KPI U.O.M Overall This week
Strategy: Reduction of Value Loss became the central agenda
Review
Review
Review
ReviewReview
Review Review
Review
Review
Scorecard Reporting Flow- PlantScorecard Reporting Flow- Plant
Production Shift
Scorecard
Packing Shift
Scorecard
Production Daily
Scorecard
Maintenance Daily
Scorecard
Department Weekly
Scorecard
Packing Daily
Scorecard
PC/QC Daily
Scorecard
Maintenance Weekly Scorecard
PC/QC Weekly
Scorecard
Weekly Value Loss Scorecard & Analysis
Focused: Incredible focus on “value loss reduction” strategy was created by linking scorecards of all departments into the CEO ‘ Value Loss Scorecard’
Weekly Dept. Manager ScorecardWeekly Dept. Manager Scorecard
Organization: Mobilize employees to act in fundamentally different ways, guided by ‘value loss’ strategy with each employee having an individual scorecard & action plan
Packing Superintendent ScorecardPacking Superintendent Scorecard
Superintendents of Departments like Packing had individualScorecards. These flowed into Production Manager’s Scorecard
Utility Generation ScorecardUtility Generation Scorecard
Support functions like Utilities also were giving cost saving targets whichwere monitored through utility scorecard
Cumulative Savings : Planned vs Actual
-400,000
-200,000
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000 1
5
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Project Week
US
Dol
lars
Planned Actual
Results- Cumulative Savings Results- Cumulative Savings
The Strategy Implementation Programme supported by the Balanced Scorecard produced significant Savings for the Company
Master Sun ConsultingMaster Sun Consulting
Balanced Scorecard - Tool for Value CreationBalanced Scorecard - Tool for Value Creation
Business Audit: Agenda for Scorecard Led Business Audit: Agenda for Scorecard Led Transformation Transformation
Strategy Maps to Individual ScorecardStrategy Maps to Individual Scorecard
Caselet Service Industry : ICICI BankCaselet Service Industry : ICICI Bank
Caselet Manufacturing : Texmaco JakartaCaselet Manufacturing : Texmaco Jakarta
Caselet Marketing & Sales : Tata Steel Wire DivisionCaselet Marketing & Sales : Tata Steel Wire Division
Approach: Retail Approach: Retail Management Control Management Control
SystemSystemForecast Plan Control Report
Manager Retail
Distributor
DSMRetailer / Customer Sales Plan
Route plan
Contact Plan
Customer / Retail Card
DSM Daily Score Card
Territory Sales Target
Retail Manager
Contact Plan
Distributor Coverage
Target
DSM Target
DSM Weekly Score Card
DSM Monthly
Score Card
Distributor Weekly
Score Card
Distributor Monthly
Score Card
Review
Distributor Sales Target
Market Intelligence Retail Mgr
Segment Manager
Marketing Department
Review
Review
Segment Mgr Monthly Score Card
Retail Mgr Ride with
Segment Mgr Weekly Score Card
Segment Sales Target
Review
Distributor Daily Score
Card
Review
Direct Sales input
Retail Mgr Daily Score
Card
Review
Review
Review
Review
Segment Mgr Daily
Score CardReview
Review
Review
Distributor Quarterly
ROI Analysis
Marketing Ride with
Retail Mgr Weekly
Score Card
Retail Mgr Monthly
Score Card
Distributor Weekly/Monthly Distributor Weekly/Monthly ScorecardScorecard
Retail Manager Weekly/Monthly Retail Manager Weekly/Monthly ScorecardScorecard
Chief of Sales & Marketing- Weekly Chief of Sales & Marketing- Weekly ScorecardScorecard
ResultsResults1.1. GI Contributions increased by Rs. 3 CroresGI Contributions increased by Rs. 3 Crores
Domestic Net Realization (NR) per ton for GI increased by Domestic Net Realization (NR) per ton for GI increased by 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 2002)2002)
2.2. Outstanding collection savings of Rs 93 Lacs Outstanding collection savings of Rs 93 Lacs @ 12% interest PA @ 12% interest PA
Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. 1337 Lacs post-Renoir period 1337 Lacs post-Renoir period
3.3. Incremental contribution of Rs.77 Lacs by Incremental contribution of Rs.77 Lacs by 29% increase in sales in MTB29% increase in sales in MTB
1125 TPM for the H1 of 2002-03 compared to 1125 TPM for the H1 of 2002-03 compared to average of 874 TPM for the year 2001-02. average of 874 TPM for the year 2001-02.
4.4. Outsourcing Savings targeted at Rs. 6 CroreOutsourcing Savings targeted at Rs. 6 Crore
Finally Finally
In God We Trust , Everybody Else Must Bring DataIn God We Trust , Everybody Else Must Bring Data
““You see, all the right things are written in books You see, all the right things are written in books and research papers.and research papers.
The trick is to ensure that there is no gap The trick is to ensure that there is no gap between what is written in the books and your between what is written in the books and your vision; from what is happening on the shop-floor vision; from what is happening on the shop-floor and what is going on in the marketplace.and what is going on in the marketplace.
That is execution. That is what makes the That is execution. That is what makes the difference”difference”
Mukesh AmbaniMukesh Ambani
www.mastersungroup.comhttp://strategy-execution.blogspot.com
[email protected] Chandra: +91 9920803060
Jasravee Kaur : +91 9892301590