Transcript Strategic Theme

M A RKETING
M G T.
S I M U LA T I ON
As soon as he said“Money isn’t Everything”
- I knew we were in trouble
M A RKETING
M G T.
S I M U LA T I ON
It is important to focus on the means used to
achieve the ends …
…..not just on the ends themselves…
To only focus on
traditional financial
accounting measures
(such as ROI, ROE, EPS…)
…..does not give
mgt the whole
picture….
Performance
needs to be
judged thru
mix of both
financial &
non-financial
measures….
M A RKETING
M G T.
Will Make $$$ - if sell
product
S I M U LA T I ON
As - nonfinancial
measures are
drivers of
financial
outcomes
Will sell product if consumer wants,
knows about , can get, & LIKES
product
To achieve “above’ everyone must
effectively do their job
To effectively do job must know
what to do
Organizations Often Have A Gap
Between Strategy and Action
Strategy Is a Step In a Continuum
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
Motivated & Prepared
WORKFORCE
The Balanced Scorecard Is A
Bridge To Close That Gap
Strategy Is a Step In a Continuum
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Implementation & Focus
STRATEGIC INITIATIVES
What we need to do
PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
Motivated & Prepared
WORKFORCE
M A N A G E M E N T
S I M U LA T I ON
M A N A G E M E N T
Strategic Thinking- the ten big ideas
S I M U LA T I ON
9 9. Metrics that matter
Balanced score card- a system that
attempts to balance financial
performance w/ consideration of
customer's perspective, learning &
growth perspective, & internal
business process perspective
Balanced Scorecard History
Measurement
and
Reporting
1992


2000
1996
Articles in Harvard Business Review:

Enterprise-wide
Strategic
Management
Alignment and
Communication
Acceptance and Acclaim:
“The Balanced Scorecard —
Measures that Drive Performance”
January - February 1992
 “The Balanced
“Putting the Balanced Scorecard to
Work” September - October 1993
 Selected by Harvard
Scorecard” is translated
into 18 languages
“Using the Balanced Scorecard as
a Strategic Management System”
January - February 1996
1996
Business Review as
one of the “most
important management
practices of the past 75
years.“
2000
Balanced Scorecard Hall of Fame Implemented
Strategies and Achieved Breakthrough Results… Fast
Mobil
3 years
Saatchi & Saatchi
+ $2b
• Last to first
• Cash flow +$1.2b
• ROI 6% --> 16%
ATT Canada
3 years
+ $7b
2-5 years
Cigna
Brown & Root
2-5 years
3 years
• #1 in growth &
profitability
+ $3b
City of Charlotte
3 years
Duke Children’s
• Customer Satisfaction = 70%
• Public Official Award
• Customer Satisfaction #1
• Cost/Case
33%
3 years
Wells Fargo
Southern Garden
3-5 years
• # Customers 450%
• Best Online Bank
• Least Cost Producer
3 years
2 years
Chemical Bank
3 years
• 99% Merged Target
Asset Retention
UPS
Hilton Hotels
• Customer Satisfaction
• Market Revenue Index
• Revenues
• Net Income
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
9%
33%
2 years
9
M A N A G E M E N T
S I M U LA T I ON
Today …
~ 70% of Fortune
1,000 companies
utilize a Balanced
Scorecard to help
manage
performance—
because…..
What is measured
gets noticed
What is noticed
gets acted on
What
is acted on
gets improved
M A N A G E M E N T
S I M U LA T I ON
Perspectives Encompass all
Respective Functional Domains
M A N A G E M E N T
S I M U LA T I ON
M A N A G E M E N T
For Each Perspective:
S I M U LA T I ON
Financial…
Objectives Measures Targets Initiatives Responsibility Budget
1.
2.
3.
Customer… Business Processes…Learning & Growth
Objectives Measures Targets Initiatives Responsibility Budget
1.
2.
3.
M A N A G E M E N T
Basic Scorecard Terminology
(Southwest Airlines Example)
S I M U LA T I ON
Strategy Map
Strategic Theme:
Operating Efficiency
Profits and
RONA
Financial
Grow
Revenues
Customer
Fewer planes
Objectives:
What the
strategy is
trying to
achieve
Measures
Targets
Initiatives
How
performance
is measured
against
objectives
The level of
performance
or rate of
improvemen
t needed
Key action
programs
required to
achieve
targets
Attract &
Retain More
Customers
On-time
Service
Lowest
prices
Internal
Fast ground
turnaround
Learning
Ground crew
alignment
Objectives
Measures
• Fast ground
• On Ground
turnaround
Time
• On-Time
Departure
Targets
Initiatives
• 30 Minutes • Cycle time
• 90%
optimization
M A N A G E M E N T
A Complete Scorecard
is a Program for Action
S I M U LA T I ON
Strategic
Theme:
Strategic Theme:
Operations
OperatingExcellence
Efficiency
Profits and
RONA
Financial
Grow
Revenues
Customer
Fewer planes
Attract &
Retain More
Customers
On-time
Service
Lowest
prices
Internal
Fast ground
turnaround
Objectives
• Profitability
• Grow
Revenues
turnaround
alignment
Ground crew
alignment
Targets
Initiatives
• 30% +/yr
• 20%
• 5%
• Fewer planes
• # Customers
• More
Customers
• FAA On Time
Arrival Rating
• Flight is on time
• Market Survey
• Lowest prices
• Fast ground • On Ground
• Ground crew
Learning
Measures
•
Time
On-Time
Departure
• 12% growth •Customer
• Ranked #1 loyalty
• Ranked #1 program
• Quality
management
• 30 Minutes • Cycle time
• 90%
optimization
• % Ground crew • yr. 1
trained
• % Ground crew
stockholders
70%
yr. 3 90%
yr. 5 100%
• Ground crew
training
• ESOP
The Complete Balanced Scorecard Strategy Map
Improve Shareholder Value
Financial
Perspective:
the drivers of
shareholder
value
Shareholder Value
ROCE
Productivity Strategy
Improve Cost
Structure
Increase Asset
Utilization
 Cost per Unit
Internal
Perspective:
how value is
created and
sustained
Learning & Growth
Perspective: role for
intangible assets –
people, systems,
climate and culture
Enhance Customer
Value
 Customer
Profitability
 Asset Turnover
•Market and Account Share 
Customer
Perspective:
the
differentiating
value
proposition
Revenue Growth Strategy

Customer Acquisition
Customer Retention

Create Value from
New Products &
Services
 New Revenue
Sources
Customer Satisfaction
Product Leader
Customer Solutions
Customer Value Proposition
Product/Service Attributes
Price
Quality
Time
Operations Theme
(Processes that Produce
and Deliver Products
& Services)
Low Total Cost
Relationship
Function
Service
Customer
Management
Theme
(Processes that
Enhance Customer
Value)
Image
Relations
Brand
Innovation Theme
(Processes that
Create New
Products and
Services)
Regulatory and
Society Theme
(Processes that
Improve the
Environment
and
Communities)
Human, Information, and Organizational Capital
Strategic
Competencies
Strategic
Technologies
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Climate for
Action
16
Mobil NAM&R Strategy Map
Increase ROE to 12%
Financial
Perspective
Increase Customer
Profitability Through
Premium Brands
New Sources of NonGasoline Revenue
Customer
Perspective
q
q
Share of
Targeted
Segment
Mystery
Shopper
Score
q
Productivity Strategy
ROCE
Net Margin (vs. industry)
Revenue Growth Strategy
Non-Gasoline
Revenue & Margin
q
q
Become Industry
Cost Leader
Volume vs. Industry
Premium Ratio
q
Cash Expense (cpg)
vs. Industry
“Delight the Consumer”
Speedy
Purchase
“Build the Franchise”
q
Friendly Helpful
Employees
Improve
Hardware
Performance
q
q
Best-In-Class
Franchise
Teams
q
Help Develop
Business
Skills
“Achieve Operational Excellence”
Understand
Consumer
Segments
New Product
Acceptance Rate
More
Consumer
Products
Recognize
Loyalty
“Increase Customer Value”
Create NonGasoline
Products &
Services
q
Cash Flow
Differentiators
Clean
Safe
Quality Product
Trusted Brand
Internal
Perspective
q
“Win-Win Dealer Relations”
Basic
q
q
q
q
Maximize Use of
Existing Assets
Yield Gap
Unplanned
Downtime
q
On-Spec
On-Time
q
Dealer Quality
Rating
“Be a Good Neighbor”
Improve
Inventory
Management
q
q
Dealer Profit
Growth
Dealer
Satisfaction
Improve
Environmental,
Health and
Safety
Inventory
Levels
Run-Out Rate
Industry Cost
Leader
q
Activity Cost
vs. Competition
q
Environment
Incidents
Safety Incidents
A Motivated and Prepared Workforce
Climate for Action
Learning &
Growth
Perspective
• Aligned
• Personal Growth
q
q
Personal BSC
Employee Feedback
Competencies
• Functional Excellence
• Leadership Skills
• Integrated View
q
Strategic Skill
Coverage Ratio
©2002 Balanced Scorecard Collaborative, Inc and Robert S. Kaplan. All rights reserved.
Technology
• Process Improvement
q
Systems Milestones
17
Capstone's Balanced
Scorecard
M A N A G E M E N T
S I M U LA T I ON
M A N A G E M E N T
S I M U LA T I ON
M A N A G E M E N T
S I M U LA T I ON
M A N A G E M E N T
S I M U LA T I ON
Additional – AFTER-the-FACT Tools for
Managing & Assessing Your
Performance:
1. Company
Round Analysis
2. Analyst
Report
M A N A G E M E N T
S I M U LA T I ON
Round Aanalysis
-example
M A N A G E M E N T
S I M U LA T I ON
Simulation
Scoring System