constructing high performing organisations - building blocks, structures, and culture
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CONSTRUCTING HIGH-PERFORMING ORGANISATIONS: Building Blocks, Structures, And Culture Case Study, Concepts and Debatable Ideas
Kenny OngCNI Holdings Berhad
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Workforce Psychology
“Cow don’t drink water cannot
push cow head down”
Workforce Psychology
Behavior
Influence
Decision Making
Direct
Communication
In-Direct
Environment
Summary: Today’s presentation
1. Business Model
2. Building Blocks
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1. Get the right Business Model first
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• How to fail without trying
1. Wrong Business Model
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The Roadmap to Failure
Fred Wiersema and Mike TreacyP
erf
orm
ance
Time
Clear Sailing
Today’s performance
Ad-hoc Tactics
Denial & Defense
Doom Projections
Overdue Failure
The Moment of Truth
X
Performance Freefall
Tomorrow’s actual
performance
Downpresure of Unclear Strategy
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Denial and Defense
• “It’s not really good value our competitor is offering, because it doesn’t include a lot of our features.” - ABC vs Air Asia
• “It’s good value but not in our preferred customer market.” - ABC vs Toyota
• “Sure they’re hurting us, but with their unfair advantage, what can we do?” – ABC vs MILO
• “The rules we are playing by have always worked before” – AMEX vs VISA
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The Roadmap to Failure
Fred Wiersema and Mike TreacyP
erf
orm
ance
Time
Clear Sailing
Today’s performance
Ad-hoc Tactics
Denial & Defense
Doom Projections
Overdue Failure
The Moment of Truth
X
Performance Freefall
Tomorrow’s actual
performance
Downpresure of Unclear Strategy
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Ad Hoc Tactics• Selectively hold discounts to hold business that has
started to go elsewhere• Introduce new promotions, terms, conditions, and offers to
confuse and cloud the market• Beef up customer service by adding people to fix mess-
ups and quicken delayed shipments• Delay capital investments and adjust accounting methods
to portray quarterly financial results more favorably• Introduce “new and improved” products that are new in
form, but not in substantive ways that are of consequence to purchasers
• Introduce Balanced Scorecards and Performance Management Systems
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The Roadmap to Failure
Fred Wiersema and Mike TreacyP
erf
orm
ance
Time
Clear Sailing
Today’s performance
Ad-hoc Tactics
Denial & Defense
Doom Projections
Overdue Failure
The Moment of Truth
X
Performance Freefall
Tomorrow’s actual
performance
Downpresure of Unclear Strategy
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“What is the moral of the story?”
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What is the Business Model?
USP
Market Discipline
Profit Model
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Intro: Market Discipline
• Mamak stall
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Intro: Market Discipline
"They are the most innovative"
"Constantly renewing and creative"
"Always on the leading edge"
"A great deal!"
Excellent/attractive price
Minimal acquisition cost and hassle
Lowest overall cost of ownership
"A no-hassles firm"
Convenience and speed
Reliable product and service
"Exactly what I need"
Customized products
Personalized communications
"They're very responsive"
Preferential service and flexibility
Recommends what I need
"I'm very loyal to them"
Helps us to be a success
Product Leadership
OperationalExcellence
CustomerIntimacy
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Strategy: Disciplines
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Intro: Market Discipline
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes Relationship Image
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Intro: Market Discipline
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
Price
Quality
Time
Selection
√
√
Smart Shopper
Relationship Image
Operational Excellence: Quality and selection in key categories with unbeatable prices
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Intro: Market Discipline
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
Brand
Time
Function
√
√
Best Product
Relationship Image
Product Leadership: Unique products and services that push the standards
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Intro: Market Discipline
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
√
√
√
Service Trusted Brand
Relationship Image
Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships
Relations
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Summary: Today’s presentation
1. Business Model
2. Building Blocks
Done
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2. Strategies, Structures, Culture
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Dangers of Best Practice and Benchmarking…
“Abraham Wald’s Work on Aircraft Survivability”, M. Mangel and F.J. Samaniego
Where would you focus reinforcement?
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Dangers of Best Practice and Benchmarking…
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Company Performance
high
low
‘Best Practice’ theories
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
Dangers of Best Practice and Benchmarking…
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Company Performance
high
low
‘Best Practice’ theories
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
How about Competencies?
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Success
high
low
‘Superior’ Competencies
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
Dangers of ‘Superior’ Competencies…
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Success
high
low
‘Superior’ Competencies
low high
zero Performance
Trend line
“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005
Dangers of Best Practice and Benchmarking…
Selection Bias:
1. Success Traits = Failure Traits
2. Successful Cases + Failure Cases
3. Worst effects in ‘Old’ industries
4. Overvalue ‘best practice’ theories
5. Current accomplishments unfairly magnified by past achievements
6. Reverse Causal
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Dangers of Best Practice and Benchmarking…
Also known as ‘Beware of Consultants’:
1. Selection Bias
2. Big vs. Small company
3. Selective success stories
4. Correlation vs. Causal
5. Survey problems
6. Practical vs. Glamour-to-have
7. Leaders who benchmark
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Financial
“To satisfy our stakeholders, what Financial objectives must we accomplish?”
Internal Process
“To satisfy our customers, in which internal business processes must we excel?"
Customer
“Who are our target customers?
What is our value proposition?”
Learning & Growth
“What capabilities and tools do our employees require to help them execute our strategy?
Focus: Corporate Alignment
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Revenue Growth
Base Retention
Share Gain Positioning Adjacent Market
New Business
Operational Excellence
Product Leadership
Customer Intimacy
Competencies Information Systems
Motivation, empowerment,
alignment
Financial
Learning & Growth
Internal Process
Customers
Investment Strategy
Productivity Market Value
Linking BSC to Strategy
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Financial
Learning & Growth
Internal Process
Customers / Distributors
Revenue Growth
ProductivityMarket Value
Department Operations
Supplier & Alliances
External Involvement
Target Markets
Products/ Services
Channel Strategies
Human Resources
Technology
Information & IntelligenceSystems &
Processes
Focus: Corporate Alignment
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Alignment: 4-Wheels Model
Culture
Business
ModelStrategic Planning
StructurePerson
Leadership
Resources
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Alignment: Framework
• Focus point• Alignment• Quality• Innovation & Differentiation• Risk taking• Performance Management• Corporate obsession• Decision making
Culture
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Alignment: Framework
• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower
Structure
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Strategy: Framework
• Role modeling• Vision/Mission/Philosophy• Leadership Style• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about Performance
Leadership
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Strategy: Framework
• Recognition• Recruitment• Training• Profit sharing• Values• Motivation• Self Efficacy• Awareness• Useful Competencies• Career aspirations• Attribution (control)
Person
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Strategy: Framework
Enablers• Technology• Equipment• Materials• Human• Intellectual
Property• Partners• Property
Resources
Funding • CAPEX• OPEX
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Alignment: 4-Wheels Model
Culture
Business
ModelStrategic Planning
StructurePerson
Leadership
Resources
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The New Rules of Market Competition
• Rule 1–Provide the best offering in the marketplace by excelling in ONE specific dimension of value
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Market Disciplines
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Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Market Disciplines
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The New Rules of Market Competition
•Rule 2–Maintain ‘market standards’ on the other two disciplines of value
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The New Rules of Market Competition
•Rule 3–Dominate your market by improving value year after year
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The New Rules of Market Competition
•Rule 4–Build a well-tuned operating model dedicated to delivering unmatched value
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Each Value Discipline Requires Different Emphasis
Operational Excellence
• Production, Logistics, Finance
• Order fulfillment, Resource stewardship
• Transactions, costs, time
• Costs, quality, speed
• Trends (past), Transactions Employee tools/tasks
Operational Excellence
• Production, Logistics, Finance
• Order fulfillment, Resource stewardship
• Transactions, costs, time
• Costs, quality, speed
• Trends (past), Transactions Employee tools/tasks
CustomerIntimacy
• Marketing Sales, Service
• Market mgmt, Customer satisfaction
• Customers, analysis, linkages
• Satisfaction, cust. success, share, anecdotes
• Today, Relation-ships, Employee empowerment
CustomerIntimacy
• Marketing Sales, Service
• Market mgmt, Customer satisfaction
• Customers, analysis, linkages
• Satisfaction, cust. success, share, anecdotes
• Today, Relation-ships, Employee empowerment
Product Leadership• R&D, Legal
(Licenses), Engineering
• Product development, Concept-to- Customer
• Linkages, insight, comm, groupware
• Ideas-thru- funnel, patents, etc.
• Tomorrow, Product Portfolio, Ideas and Risks
Product Leadership• R&D, Legal
(Licenses), Engineering
• Product development, Concept-to- Customer
• Linkages, insight, comm, groupware
• Ideas-thru- funnel, patents, etc.
• Tomorrow, Product Portfolio, Ideas and Risks
Functional emphasis
Process Emphasis
Information emphasis
Key metrics
Key concerns
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Operational Excellence
Operational Excellence
Customer Intimacy
Customer Intimacy
Product Leadership
Product Leadership
Organization, jobs,skills
Management systems
Information and systems
Culture, values,norms
Each Discipline Requires Different Priorities & Resources
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Operational Excellence
•Central authority, low level of empowerment•High skills at the core of the organization
•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset
• Integrated, low cost transaction systems•The system is the process
•Command and control•Quality management
Operational Excellence
•Central authority, low level of empowerment•High skills at the core of the organization
•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset
• Integrated, low cost transaction systems•The system is the process
•Command and control•Quality management
Organization, jobs, skills
Management systems
Information and systems
Culture, values,norms
Each Discipline Requires Different Priorities & Resources
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Organization, jobs,skills
Management systems
Information and systems
Culture, values,norms
Product Leadership
•Ad hoc, organic and cellular•High skills abound in loose-knit structures
•Concept, future-driven•Experimentation and 'out of the box' mindset
•Person-to-person communications systems•Technologies enabling cooperation
•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability
Product Leadership
•Ad hoc, organic and cellular•High skills abound in loose-knit structures
•Concept, future-driven•Experimentation and 'out of the box' mindset
•Person-to-person communications systems•Technologies enabling cooperation
•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability
Each Discipline Requires Different Priorities & Resources
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Organization, jobs,skills
Management systems
Information and systems
Culture, values,norms
Customer Intimacy
•Empowerment close to point of customer contact•High skills in the field and front-line
•Customer-driven•Variation and 'have it your way' mindset
•Strong customer databases, linking internal and external information
•Strong analytical tools
•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’
Customer Intimacy
•Empowerment close to point of customer contact•High skills in the field and front-line
•Customer-driven•Variation and 'have it your way' mindset
•Strong customer databases, linking internal and external information
•Strong analytical tools
•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’
Each Discipline Requires Different Priorities & Resources
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Core Processes for Each Discipline
Operational Excellence
1. Product Delivery and basic service cycle
2. Built on standard, no frills fixed assets
Operational Excellence
1. Product Delivery and basic service cycle
2. Built on standard, no frills fixed assets
Customer Intimacy
Client acquisition and development
1. Solution Development
2. Flexible and responsive work procedures
Customer Intimacy
Client acquisition and development
1. Solution Development
2. Flexible and responsive work procedures
Product Leadership
1. Invention, commercialization
2. Market exploitation
3. Disjoint work procedures
Product Leadership
1. Invention, commercialization
2. Market exploitation
3. Disjoint work procedures
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Sample KPIs for Each Discipline
Operational Excellence
• Price• Selection• Convenience• Zero Defects• Growth
Operational Excellence
• Price• Selection• Convenience• Zero Defects• Growth
Customer Intimacy
• Customer Knowledge
• Solutions Offered• Penetration• Customer Data• Customer-
success focus
Customer Intimacy
• Customer Knowledge
• Solutions Offered• Penetration• Customer Data• Customer-
success focus
Product Leadership
• Marketing• Functionality• # of Successes• # of Failures• Learn from key
users• Interdisciplinary
teams• Pipeline
Product Leadership
• Marketing• Functionality• # of Successes• # of Failures• Learn from key
users• Interdisciplinary
teams• Pipeline
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• Operational Excellence• Move know-how from top performing
units to others• Benchmark against best in class• Ensure operations training for all
employees• Use disciplines like TQM for continuous
learning to reduce costs and improve quality
Strategy: Value Disciplines
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Strategy: Value Disciplines
• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the
customer• Make company knowledge available to
customers
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• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company
have already learned• Ensure there are multiple sources of
funding
Strategy: Value Disciplines
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The Final Lever: PAY
• Pay for Service
• Pay for Job
• Pay for Performance
• Pay for Competency
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What’s the Difference?
• Increment
• Bonus
• Promotion
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Employee Distinction
Group I
(Talent Pool)
Group II
( Potential)
Group III
( Performance)
Group IV
(Counseling)
2 3 4 5
23
45
PE
RF
OR
MA
NC
E
POTENTIAL• Identify
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Curse of the Bell Curve
‘A’ Staff
‘B’ Staff
‘D’ Staff
‘E’ Staff
‘C’ Staff
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Reminder…
• Great Wall of China– humans are the weakest link– bad treatment of staff will lead to weak link i.e.
easier to bribe, easier to con, etc; – bad treatment examples: insulting, lose face,
broken promises, no dignity, public criticism, restructure without communication
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Other thoughts…
1. Big matters/Small Matters
2. Differentiate of Die
3. Define “Talent”
4. No “Jerk” rule
5. Flat Structure?
6. The Jerk Boss
7. All aspects
8. Hire Strict
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Thank You.
soft copy of slides: www.totallyunrelatedrandomanddebatable.
blogspot.com
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