balanced score card and strategy
Post on 26-Oct-2014
Embed Size (px)
Strategic Management process part II Balanced score card and strategyStrategy maps and alignment
Value proposition and strategies
Value creation = CDV + EDV Value creation strategy : CVP + EVP
Why the Balanced Scorecard? The Organization will become more strategically focused .
People at all levels have relied heavily on tactical performance measurements, such as number of maps submitted, and % of supply vendor contracts in place. Need more balanced approach to looking at performance, both tactical and strategic. Only 5% of a workforce tends to understand their companys strategy. 86% of executive teams spend less than one hour per month discussing strategy.
A Major Driver is . . . The Organizations Information Resource Planning
- Enterprise wide system for how we will evaluate success division read outs, data turnarounds, global partnerships, etc. - Must be integrated into all agency components (such as region and global outlet offices)- Designed around the Balanced Scorecard framework
The Balanced Scorecard will be the strategic view of performance for the agency, balancing out our current tactical view of performance which is already in place.
The enterprise value proposition Financial Customer Internal process Learning and growth
Some Basic Principles Quantifies the Strategy in measurable terms Strategy is summarized on a Strategy Map over four
views of performance (perspectives). Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map. Critical Components include: - Measurements - Targets - Initiatives Everything must be linked: Goals to Objectives, Objectives to Measurements, Measurements to Targets.
Building Alignment into the Planning ProcessCorporate Support Units Enterprise Strategy Map2
Board Board of Directors Of directors
Board Strategy Map
finance Enterprise Enterprise Strategy Update finance Strategy update
Enterprise Strategy Map3
Corporate Planning Process
Functiona Functional l Strategy Update Strategy update
Corporate Functional Strategy Map Enterprise Functional Strategy Map
Enterprise Strategy Map
SBU Strategy Map
Business Unit Functional Map
Corporate Support Units
customer Vendors/ s 6 Customers alliancesVendors/ Alliances7
SBU Strategy Map
SBU Strategy Update
Functional StrategyFinance update ITHR
Business Planning Process
Functional Strategy Update Support Units
Support Unit Services
Four Views of PerformanceStrategic Objectives
Strategy can be described as a
StakeholdersIf we succeed, how will we look to our stakeholders?
series of cause and effect relationships. Provides a line of sight from
Internal ProcessesTo satisfy our customers, at which processes must we excel?
strategic to operational activity working on the right things.
Learning & Growth"To execute our processes, how must our organization learn and improve?"
Agency InvestmentsIn order to succeed, what investments in people and infrastructure must we make?
The Importance of AlignmentComplete Framework for IRPSStrategyAgency Department Team/ Individual
Alignment all the Way ThroughGoal: Improve environmental health Performance Gap: Less than Organization watershed water quality Initiative: Data Mining ResourceInnovationImproved "Cause and Effect" Knowledge
Investment Management Business ProcessesImproved Environmental Assessment Reports Justified Initiatives to Improve Water Quality Investments Available to be Allocated to Other Critical Areas
Financial ManagementDecreased Litigation Costs
Relationship ManagementEnhanced Public Confidence Increased Investment Accountability
Environmental HealthImproved Water Quality
Strategy Map: Capture a Cause Effect Relationship from the Bottom UpStakeholder More rapid and accessible services
Improved Returns on Investments
Economic Model Process
Reduce Re-Activities thru ABC
Establish Web Based Self Services
Learning & Growth
Expand Global Facility Reach
Facilities and Fixed Assets
Two Special Techniques for Building Strategy MapsGeneral Rule of Thumb to ensure strategy map is developed both vertically and horizontally
The 4 to 5 Rule
Splitting the Perspective
Way of pulling out both drivers and outcomes that match up against the core competencies of the business modelCustomer Perspective Customer Growth Timely Delivery Retention Rate Pricing Quality
Customer SatisfactionService Reputation
Key Benefits of Strategy Maps Articulates how the organization creates value for its constituents and
legitimizing authority Displays key priorities and relationships between outcomes (the "what") and performance enablers or drivers (the "how") Provides a clear view of "how I fit in" for sub-organizations, teams, and individuals "Cascading the scorecard throughout the organization, and clearly mapping the various units and functions back to the organization or agency-wide map is critical to leveraging and ensuring alignment"
Strategy Maps A Better Way to Communicate StrategyExecutive consensus and accountability: Building the map eliminates ambiguity and clarifies responsibility. Educate and Communicate: Build awareness and understanding of organization strategy across the workforce.
Promote Transparency: Ensure Alignment: Each sub-unit and individual link their objectives to the map. Communicate with and educate constituents, partners, oversight bodies, and the general public.
Aligning the ScorecardsOnce you have completed your strategy map, make sure it aligns with agencies or divisions you report up to. This overall alignment of scorecards throughout the entire Organization forms the Strategic Management System within IRPS. IRPS Organization ScorecardBest Business Practices Expand Global Reach Expand the Skill Base
Improve Asian Footprint
Develop the Workforce
Highly Skilled Workers
Continue to Expand Range
Improve Employee Competencies
Extend the Map into Measurements, Targets and Initiatives
Strategy MapFaster Service Access Detailed statement of what is critical to successfully achieving the strategy How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action programs required to achieve objectives
Self Service Applications
Objective DescriptionEliminate waste, reworks, and other errors in our processes
MeasureNumber of Reworks
Target2 per setup per month each Outlet Office
InitiativeLean / Six Sigma
Process and Value Map Analysis
Web Enable Technologies
Invest in IT
Alignment of Scorecard ComponentsMake sure the components of your scorecard fit together. We want to create a tight model for driving execution of your strategy.
GoalAchieve Agency operational efficiencies with best practices in the private sector
ObjectiveReduce Operational Service Costs by 50% over the next 5 years
MeasurementCost per Outlet Office, Cost per Region, Cost per FTE
Target5% - Year 1 10% - Year 2 15% - Year 3
InitiativeActivity 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
Examples of Measurements by PerspectiveStakeholder / Customer Current customer satisfaction level Improvement in customer satisfaction Customer retention rate Frequency of customer contact by customer service Average time to resolve a customer inquiry Number of customer complaints
Internal Processes Number of unscheduled maintenance calls Production time lost because of maintenance problems Percentage of equipment maintained on schedule Average number of monthly unscheduled outages Mean time between failures
Learning and Growth Percentage employee absenteeism Hours of absenteeism Job posting response rate Personnel turnover rate Ratio of acceptances to offers Time to fill vacancy
% of facility assets fully funded for upgrading % of IT infrastructure investments approved # of new hire positions authorized for filling % of required contracts awarded and in place
Making the connection to the Baldrige CriteriaMalcolm BaldrigeLeadership Human Resource Capital Business Results Process Management Strategic Planning
Balanced ScorecardLearning & Growth Perspective Learning & Growth Perspective Measurements and Targets Internal Process Perspective Strategy Map
Stakeholder / Customer Perspective
End of Chapter