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Strategy For The 21 st Century Prometheus Process venturist incorporated Design The Future: Craft The Measures of Merit Scope the Environment Paint the Future Picture Engrave the Precepts Craft the Measures of Merit Design the Future Target for SuccessCampaign to WinFinish with Finesse Slide 2 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Measures Of Merit Results Follow Measurement The Most Important Results Are Those Which Affect The Organizations Future Strategy Is The Key To A Good Future Thus, Good Measures Of Strategy Are Essential Measures Of Merit Should Be Derived From The Future Bottom-Up (Tactical) Measures Unlikely To Be Strategic If A Tactical Measure Does Not Correlate With A Strategic Future, It Is of Little Value Slide 3 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Tactical And Strategic Measures Measurement Set 2: Seven Weeks Later Attendance 50% Over Predictions Guests Spending 30% Over Predictions Measurement Set 1: Opening Day Ran Out Of Food Rides Broke Down Boat Swamped Unkind Newspaper Stories Tactical Strategic Slide 4 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Characteristics Of A Good Measurement Process Characteristics of Good Measurement Plans Start First With Overall Measures At The Strategic Level, And Then Measure Component Parts Measure From Start To Finish And Connect Tactics To Strategy Measure The Right Things In The Right Way Characteristics Of Good Measures Absolute Not Comparative Externally Derived Or Derivable Carefully Conceived To Avoid Encouragement Of Non- Strategic Actions Aligned With Strategy, Well-Crafted, And Clearly Understood Slide 5 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Optimizes For Environmental Correctness. Wins Award For Most Environmentally Correct Plant In The World But Its Cost Of Production Is Very High And It Never Meets Deadlines. Optimizes To Improve Worker Satisfaction. Surveys Show It Best In The Industry, But Cost Per Unit Of Production Is Highest In Industry Optimizes For Speed Of Package Handling And Sets World Records, But Its Error Rates Are Very High And Its Costs Industry Leading Optimizes For Basic Research, Hires Top Lab Personnel, Wins Nobel Prize, But Develops No Commercially Successful Products. Measure The Right Things In The Right Way Individual Factories Few Commercially Viable New Products Inventory Costs Exorbitant Output Frequently Lags Customer Demand Unit Cost Of Production Very High Order Fulfillment Atrocious Net: Overall Company Productivity And Profit Bad Even Though Each Unit Is Award Winning At Its Level Optimizes To Ensure That Log Grinder Machines Have 100% Utilization Which Means Big Entering And Exiting Inventories Corporation Measure First At The Global Strategic Level Not The Local Tactical Level Slide 6 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Full Scale Measurement--War Get The High Level Measures Right Winning An Engagement, A Battle, Or A War Is Irrelevant Unless You Are Better Off After The War Than Before Understand and Measure The Whole Process PeaceWar--Peace Dont Measure Means At The Expense of Ends War Is A Means To An End, Not An End In Itself Focus On The Ultimate Measure of Success Value of The Peace Which FollowsOn Which All Planning Should Center Slide 7 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Full Scale Measurement--Business Get The High Level Measures Right Winning A Presentation, An Account, Or A Market Is Irrelevant Unless You Are Better Off Afterward Than Before Understand and Measure The Whole Process Initial Market ConditionCampaignResultant Market Condition Dont Measure Means At The Expense of Ends A Business Campaign Is A Means To An End, Not An End In Itself Focus On The Ultimate Measure of Success Condition of Company After The CampaignOn Which All Planning Should Center Slide 8 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Absolute Measurement Six Sigma Level Defects Per Million Opportunities (DPMO) Cost of Poor Quality 2 308,537 Not Applicable 3 66,807 25-40% of Sales 4 6,210 15-25% of Sales 5 233 5-15% of Sales 6 3.4 (World Class) Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Business Key Descriptor Measures Of Merit Hypothetical Disneyland Example Timeframe: 1951-1960 Financial Position : ( Profit From Operations Within Two Years Of Opening, Growing Net Profit And No- Debt By 1960) Established As A Profit Center At 1955 Opening Responsible For All Costs And Debts PFO (Per Generally Accepted Accounting Principles) For CY 1957 Net Profit In 1958 Growing =>15% per annum 1960 Debt At Zero (Excepting Short Term Cash Management) Market Position : (Disruptive Driver Of Redefined Theme Park Market) Disneyland Unique >25% Of Visitors Rarely Or Never Visited Old-Style Theme Parks (Non-Consumers) Large Scale Attempts To Copy Announced; Old-Style Parks Restructuring Business Areas : (Family Oriented Theme Parks And Complementary Products) Visitor Logs, Surveys, And Observation Shows >50% Of Visitors Are Families Income Statements Show Revenue From One Or More Theme Parks And From Associated Products (Cinderella Castle Model, Etc) Innovation : (Disruptive Innovation Drawn Primarily From In-House Studio And Secondarily From Outside Sources) Unique Rides And Services In Operation That Draw 10% Or More Of Visitors Who Say They Came Because Of The Unique Attraction Or Service Over 50% Of These Unique Attractions And Services Developed In-House Insider Perception : (A Company On The Cutting Edge Of Innovative Entertainment And Customer Service) Customer Surveys And Media Stories Report Outsider Perception Of Cutting Edge Innovation Exceptional Customer Service Regularly Observed; Backlog Of Valid Associate Proposals For Innovation Surveys Of Associates Highlight Pride In Innovation And Customer Service Outsider Perception : (The Place To Take Your Family (And Yourself) And A Superior Business Investment) Surveys Of Visitors Analyst Reports on The Walt Disney Company (WDC) Cite Disneyland Profits As Key Reason Stock Is A Strong Buy Slide 15 Strategy For The 21 st Century venturist incorporated Copyright Venturist, Inc. 2001-2006 All Rights Reserved Licensed To Advanced Micro Devices, Sunnyvale, CA and Austin, TX Business Key Descriptor Measures Of Merit Hypothetical Disneyland Example 2 Workforce Characteristics: (Creative, Empathetic, Hardworking, Self-starters) Appropriate Tests Indicate Desired Mix Observed Behavior: ideas, Anticipating Visitor Needs, Timely Job Completion, Projects Begun Before Supervisors And Managers Give Direction Brand : (Yes: The Place For Enchanting Family Entertainment) Formal Brand In Place 50% Or Greater General Public Recognition Per J.D. Powers Corporate Culture : (Open Planning; Participative; Semi-autocratic) Projects Left Out For All To See And Annotate; Planning Sessions Open To All; All Management Participate Regularly In Decision-making; Non-Management Regularly Briefed And Opinions Solicited; WD Approves Proposals Quickly Or Rapidly Provides Alternative Corporate Citizenship : (Contributions From Profits To Designated Charities) 1% Of Operating Profits (1958) And 1% Net Profit (1960-) Contributed To California Institute Of The Arts Ownership : (Everyone A Stockholder With Walt The Controlling Stockholder; Disneyland 100% Owned By Disney) 90% Of Associates Own Disney Stock Walt Disney Owns 20% Of WDC Stock Disneyland A Wholly Owned Subsidiary Of WDC Incentive Philosophy : (Salaries High Enough To Attract And Hold Right People; Bonuses To All When Profits Justify) Highly Qualified Applicants Significantly Exceed Vacancies