strategic planning and organization clarity
DESCRIPTION
ABF Strategic Corporate Planning Conference March 2009, KL *What are the key pitfalls that can derail strategy planning and implementation efforts? *What are the critical activities that are anecdotes for driving the development of organisational clarity? *Examples and case studiesTRANSCRIPT
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STRATEGIC PLANNING AND ORGANIZATION CLARITY Case Study, Concepts and Debatable Ideas
Kenny OngCNI Holdings Berhad
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Intro: CNI
1. 20 years old2. Core Business: MLM3. Others: Contract Manufacturing,
Export/Trading, eCommerce4. Malaysia, Singapore, Brunei, Indonesia, India,
China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States, Vietnam
5. Staff force: ± 5006. Distributors: 200,0007. Products: Consumer Goods and Services
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"The digital watch didn't come from established watch companies, the calculator
didn't come from slide rule or adding machine companies, video games didn't come from board-game manufacturers Parker Bros or Mattel, the ballpoint pen didn't come from
fountain pen manufacturers, and Google didn't come from the Yellow Pages"
Bob Seidensticker, Futurehype
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What’s wrong with Strategic Planning Today?
Long-term Plans
Objectives
Strategies
Enablers
Resources
Also known as L.O.S.E.R.
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What’s wrong with Strategic Planning Today?
1. Biggest Threats often come from OUTSIDE your normal industry
2. Planning from the base of an ‘Existing’ organization vs. zero-based
3. Traditional Analysis (e.g. SWOT) based only on known or existing assumptions or knowledge
4. Spending too much time in market research and analysis
5. Defining the company from a Product/Service perspective vs. Category vs. JTBD (e.g. Coca-cola)
6. Wrong Benchmark – already successful vs. what made them successful
7. New strategy, same people
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Today’s Agenda
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Summary: Today’s presentation
1. Business Model Clarity
2. Strategy Clarity
3. Execution Clarity
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What is the Business Model?
USP
Market Discipline
Profit Model
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Business Model: USP
Unique Selling Proposition (USP)
=
Targeted Customer
=
Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD)
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Business Model: USP
“The Product is Not the Product”
• What is the customer really buying?
• What is the “Core Buying Purpose”?
• What is the “Job To Be Done”?
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Business Model: USP
Obstacles to JBTD:
1. Insufficient WEALTH
2. Insufficient ACCESS
3. Insufficient SKILL
4. Insufficient TIME
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What is the Business Model?
USP
Market Discipline
Profit Model
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Business Model: Profit Model
Revenue
CostMargin
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Business Model: Profit Model
Revenue
CostMargin
Revenue
CostMargin
Profit Model Examples:1. Gillette Shaver2. iPod and iTunes3. IBM and Lenovo4. GM and GM Finance5. Google and Ad Revenue6. McD and Drive-thru revenue, 7. Subsidizing Hire Purchase Loan vs.
reduce price to protect brand 8. Oracle Project Financing over 4 years
covering even non-Oracle components9. SaaS PAYU e.g. Siebel/Salesforce
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Who Killed Disney™?
Revenue
CostMargin
Revenue
CostMargin
Profit Model vs. Competition:1. DVD vs. video games and online
movies2. car sales vs. car leasing3. newspaper vs. online news4. client server systems vs. SaaS
Bussinessweek, February 19 2009, “Hollywood Is Worried as DVD Sales Slow”
your greatest competitor for
market share is often a different
profit model
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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: Value 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)
Strategy: Value 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)
Strategy: Value 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)
Strategy: Disciplines
HP well-balanced portfolio, mass customization
Acer super lean cost structure, aggressive pricing
Apple powerful products, premium
pricing, limited range
Still Doing well in 2009
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Business Model vs. Competition
USP
Market Discipline
Profit Model
Competitor Anchoring vs. Business Model:
1. Air Asia vs. Busses & Trains2. Tata Nano vs. Motorbikes3. iPod vs. Sony BMG4. Kindle (Amazon) vs. iPhone (Apple)5. Google vs. Newspaper (Ads) vs.
Yahoo (Search) vs. Microsoft (Software)
6. McD vs. Toys ‘R’ Us
Shift your Business Model,
and your Competitor will
change
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Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Strategy: Value Disciplines
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The McPlaybook*
Make it easy to eat• 50% drive-thru• Meals held in one
hand
Make it easy to prepare• High Turnover• Tasks simple to learn
& repeat
Make it quick• “Fast Food”• Tests new products
for Cooking Times
Make what customers want• Prowls market for new
products• Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007
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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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Business Model
1. change one, effect
three USP
Market Discipline
Profit Model
2. change one, change
model
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Summary: Today’s presentation
1. Business Model Clarity Done
2. Strategy Clarity
3. Execution Clarity
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2. Strategy Clarity
‘Hope’ is not a strategy
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What is Strategic Planning?
Strategic
Planning
Variables:
Research
Growth
Risks
Stakeholders
Constraints
SWOT
Misc.
Output:
Plans
Priorities
KPIs
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Before we start…
Which comes first?
1. Strategies -> KPI?
2. KPI -> Strategies?
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Before we start…
Which comes first?
1. Strategies -> KPI?
2. KPI -> Strategies?
•already know our priorities, aware of all strategy options available
•creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia
•conducting a business Turnaround e.g. MAS
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Before we start…
Which comes first?
1. Strategies -> KPI?
2. KPI -> Strategies?
•want to find out possible strategies,
•determine our priorities first thru selection of important KPIs;
•growing through ‘normal’ business, not a Turnaround.
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Business Situation vs. Focus
Upturn Flat Downturn
Fight Complacency
Sharpen Edge
Keep Momentum
Conquer
‘Change’ mgmt
Reduce Fat
Continuity
Everyone Happy
Innovation
Acquire
Profits
Build momentum
Sales
Cash Flow
Talent Mgmt
Innovation/R&D
Early wins
Slow Down HR Costs
Top Talent focus
Sales, Sales, Sales
Increase attrition
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Business Situations vs. Focus
Upturn Flat Downturn
Fight Complacency
Sharpen Edge
Keep Momentum
Conquer
‘Change’ mgmt
Reduce Fat
Continuity
Everyone Happy
Innovation
Acquire
Profits
Build momentum
Sales
Cash Flow
Talent Mgmt
Stack R&D
Early wins
Slow Down HR Costs
Top Talent focus
Stack Sales
Increase attrition
Many times, you need a different CEO/Leader/Management Team
for each business situation
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What is your Goal?
1. Cost Reduction
2. Growth
3. Both?
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Growth Strategy
1.Base Retention
2.Share Gain
3.Positioning4.Adjacent Market
5.New Business
GROWTH
“Double-Digit Growth”, Michael Treacy
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How Markets determine Growth Strategies (1)
• Growth Rate
Growth Rate
Strategy Why?
Fast 1. Market Positioning
2. Share Gain
3. Base Retention
•Maintain market share in strategic segments•Prepare for market decline•Competitors focus too much on getting new customers
Flat 1. Base Retention
2. Share Gain (Acquisitions)
•Lose customers slower than competitors•Create scale economics, squeeze costs
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• Churn RateChurn Rate
Strategy Why?
Low 1. Share Gain (Acquisitions)
2. Adjacent Markets
•Buying customer base is cheaper than own efforts•New products, old customers strategy
High 1. Base Retention
2. Share Gain
3. Adjacent Market
•Lose customers slower than competitors•Customers are always open to the best value and offer•Desperate to gain revenue
How Markets determine Growth Strategies (2)
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How Markets determine Growth Strategies (3)
Fast Growth,
Low Churn
1.Market Positioning
2.Share Gain (M&A)
3.Base Retention
4.Adjacent Markets (M&A)
•Example: XYZ Sector
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Downturn Strategy
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Downturn Strategy
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Downturn Strategy
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Downturn Strategy
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Side Notes on Cost Reduction Strategy
Cost Reduction
Business Model
•USP
•Profit Model
•Market Discipline
Operational
•Finance and HR
•Supply Chain
•R&D
•Sales & Marketing
5% - 30%
30% - 80%
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Business Situation vs. Sales
Upturn Flat Downturn
Fight Complacency
Sharpen Edge
Keep Momentum
Conquer
‘Change’ mgmt
Reduce Fat
Continuity
Everyone Happy
Innovation
Acquire
Profits
Build momentum
Sales
Cash Flow
Talent Mgmt
Innovation/R&D
Early wins
Slow Down HR Costs
Top Talent focus
Sales, Sales, Sales
Increase attrition
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1. Optimize customers’ current assets
2. Offset customers’ costs 3. Focus market share 4. CEO and Sr. Mgmt in the field 5. Sell up the buyer chain 6. Motivate troops 7. Add extra services 8. Control troop emotions9. Specialized vs. general teams,
i.e. sell support services, sell equipment, existing customers etc. (e.g. Xerox)
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Marketing Clarity:
Goods Return Policy“I don’t care if they return a
Goodyear tire. If they said they paid $200, pay them $200.”
Nordstrom does not sell tires
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Marketing Clarity: CNI
“CNI is more than business.
We strongly believe that every individual has the opportunity to
attain a better living through CNI.”
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Marketing Clarity: Segment & Target
Who?
Experience Swing Former
Opposition
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Branding Clarity: Segment & Target
• Who are you attracted to?
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Branding Clarity: Basics & Differentiators
Segments
Targets
Targets
Basics
Differentiators
Experience = Branding
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Swing Loyalty
Swing Customers are “loyal” because:
• Individual Relationships• Convenience (at that point in
time)• Tied-up• Product Uniqueness• Promotions• No better alternative• Downlines• No known alternative• Psychologically lazy
Swing = Best alternative at the current
moment until I find another alternative
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“Swing” Marketing
• Increase switching costs
• Mega packages• Community• Reward programs
(Points)• Membership
Subscription• Email communication
• Newsletters• Personalized alerts• Survey• Suggestion Box• Switching Techniques
(e.g. Balance Transfer of credit cards)
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R&D Clarity: The “Old” Days
InventR&D
BuildManufacturing
MarketMarketing
SellSales
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R&D Clarity: The “New” Days
Invent
Build
Market
Sell
R&D
Manufacturing
Marketing
Sales
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R&D Clarity: Marketing 101
Product
Promotion
Pricing
Place
4Ps
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R&D Clarity: Marketing & R&D
Product
Promotion
Pricing
Place
4Ps
Features
Brand
Target
Logistics
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R&D Clarity: Marketing & R&D
FeaturesBrand
Target
Logistics
Price
Promotion
Place
Product
IKEA Apple Nestle Asus
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R&D Clarity: RD&D
• Garnier• Digi
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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R&D Clarity: RD&D
• CNI Waterlife
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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R&D Clarity: RD&D
• Research, Development & DESIGN
1.Features
2.Benefits
3.Differentiation
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R&D Clarity: RD&D
• Research, Development & DESIGN
1.Function
2.Aesthetics
3.Logistics
Design Point 1: Designed to SELL
Design Point 2: Before-After R&D
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Innovation Clarity
Product/ Service
Process Business Model
Break-through
Sub-stantial
Incre-mental
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Summary: Today’s presentation
1. Business Model Clarity Done
2. Strategy Clarity
3. Execution Clarity
Done
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3. Execution Clarity
Accountability, Benchmarking, BSC, KPIs and other evils
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“…in the past 18 months, we have heard that profit is more important than revenue,
quality is more important that profit, people are more important than profit,
customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our
performance is inconsistent"CEO, Anonymous
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Wrong KPIs
“What is the moral of the story?”
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KPIs and Behavior
Before: “Handle Time” Per Call• Motivated Call Centre staff to transfer callers,
getting rid of complainers, making them someone else’s problem
• Callers at 45% chance of being transferred• 7,000 customers each week suffered transfers 7
times or more
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KPIs and Behavior
After: “Minutes Per Resolution” of a problem
• Resolution in ONE CALL become the core goal• Reduced probability of call transfers from 45% to
18%
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Why BSC?
• Reason 1: Balanced
• Reason 2: Cause-and-Effect
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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?
Cause and Effect
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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
Cause and Effect: An Example
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Example: Selection of KPIs for BSC
•Customer satisfactionCustomer loyaltyMarket shareCustomer complaintsComplaints resolved on first contactReturn ratesResponse time per customer requestPrice relative to competitionTotal cost to customerAverage duration of customer relationshipCustomers lostCustomer retentionCustomer acquisition ratesPercentage of revenue form new customersNumber of customersAnnual sales per turnover
•Win rate (sales closed/sales contact)•Customer visits to the companyHours spent with customersMarketing cost as a percentage of salesNumber of ads placedNumber of proposals madeBrand recognitionResponse rateNumber of trade shows attendedSales volumeShare of target customer spendingSales per channelAverage customer sizeCustomers per employeeCustomer service expense per customerCustomer profitabilityFrequency (number of sales transactions)
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Financial
Learning & Growth
Internal Process
Customers / Distributors
Example: 1st Level BSC & KPIs
Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow
Average Revenue Per User (ARPU), Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. No. of Active Members. No. Retail Points.
Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Loyalty Programs. On Time Delivery. Number of Effective A&P
% of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment
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Sample: Other 1st Level KPIs across industries…
Financial Services Retail Telecommunications
•Maximize ARPU•Minimize Churn•Mutichannel customer service
•Understand customer behavior related to customer conversion, acquisition, and retention•Single view of customer•Multichannel customer experience•Personalized customer experience
•Anticipate and prevent churn despite compensation•Increase number of products per customer•Turn call center information opportunity to up-sell and cross-sell•Increase customer satisfaction and loyalty
Hospitality Travel & Leisure Manufacturing
•Personalized customer experience•Maximize share of wallet•Player/customer loyalty•Multichannel customer service
•Increase customer loyalty and preference•Maximize customer revenue•Improve service quality and efficiency•Capture and close sales opportunities
•Single view of customers across supply chain•Zero-error order capture•Streamline opportunity to cash processes•Leverage investment in ERP and backoffice systems
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Lagging and Leading KPIs
Lagging
Leading
Historical, Outcome, Results, 1st Level, Usually Financial or tangible, Quarterly and Annually
Current, Indicators, Drivers, 2nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly
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Developing ‘Driver’ KPIs
Customer Retention % Lagging, 1st Level
Customer Satisfaction Index
Leading, 2nd Level
On time delivery
Time to market for new products
TNA %
Defect levels, warranty claims
Leading, 3rd Level onwards
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What is the Objective?
‘Do-or-Die’ KPIs for CNI• Revenue• ARPU
• Sponsoring• Retention
• Commission Plan (BDP)• Product• Corporate Image
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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, Priorities, and KPIs
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Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Strategy: Disciplines, Priorities, and KPIs
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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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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: Value 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)
Strategy: Value Disciplines
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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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Execution: 4-Wheels Alignment
Culture
Business
ModelStrategic Planning
StructurePerson
Leadership
Resources
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Execution: 4-Wheels Alignment
• Focus point• Alignment• Quality• Innovation & Differentiation• Risk taking• Performance Management• Corporate obsession• Decision making
Culture
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Execution: 4-Wheels Alignment
• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower
Structure
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Execution: 4-Wheels Alignment
• Role modeling• Vision/Mission/Philosophy• Leadership Style• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about Performance
Leadership
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Execution: 4-Wheels Alignment
• Recognition• Recruitment• Training• Profit sharing• Values• Motivation• Self Efficacy• Awareness• Useful Competencies• Career aspirations• Attribution (control)
Person
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E3 – Department BSC
Financial Perspective
Goals Measures Targets CAPEX OPEX
Quality
Innovation
On Time Delivery
Budgeting
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Resource Alignment
Enablers• Technology• Equipment• Materials• Human• Intellectual
Property• Partners• Property
Resources
Funding • CAPEX• OPEX
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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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Budgeting in a Downturn
1. StratEx
2. CoREx
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What’s In Between Planning and Execution?
Succession Planning (Business Continuity)
Talent Management
Differentiation
Performance Management System
Budgeting + Planning
KPIs
BSC
Business Model
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What’s In Between Planning and Execution?
Succession Planning (Business Continuity)
Talent Management
Differentiation
Performance Management System
Budgeting + Planning
KPIs
BSC
Business Model
a.k.a. Business Plan Implementation
a.k.a. Talent Management
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Performance Execution Clarity
A Excellent
B Good
C Average
D Poor
E Useless
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Performance Execution Clarity
A Excellent
B Good
C Average Good
D Poor
E Useless
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Performance Execution Clarity
A Excellent Excellent
B Good Very Good
C Average Good
D Poor Not Good
E Useless Commit Suicide
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Performance Execution Clarity
A Excellent Consistently achieved 4 for 3 quarters
B Very Good Higher than planned results
C Good Achieved Planned Results
D Not Good Did not fully meet planned results
E Commit Suicide
Unacceptable performance
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Performance and Pay Clarity
• Pay for Service
• Pay for Job
• Pay for Performance
• Pay for Competency
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Performance and Pay Clarity
• Increment
• Bonus
• Promotion
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Performance and Pay Clarity
< 0.7 ≥0.7 - ≤0.9
>0.9 - <1.1
≥1.1 - ≤1.3
> 1.3
5 9 8 7 6 5
4 8 7 6 5 4
3 7 6 5% 4 3
2 6 5 4 3 2
1 5 4 3 2 1
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Performance and Pay Clarity
< 0.7 ≥0.7 - ≤0.9
>0.9 - <1.1
≥1.1 - ≤1.3
> 1.3
5 20 15 12 8 5
4 18 12 9 5 3
3 9 7 5% 4 3
2 1 1 1 0 0
1 0 0 0 0 0
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End Notes
Tying it all up
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Review processes
1. Result Planning schedule inc. BSC, Budget
2. Quarterly Performance Appraisals
3. Sales performance reviews
4. Non-sales performance reviews
5. Annual Appraisals
6. Specialized KPI committees
7. CAR, PAR, SCAR KPI improvements
8. Internal Audit & MSD – process problems
9. HRM & TND – people problems
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Problems, problems and more problems…
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Problems, problems and more problems…
1. No serious budget to tackle key risks
2. Too much optimism or pessimism
3. Investment ≠ Portfolio Management
4. Top down vs. Bottom up
5. Good to have vs. Need to have
6. Line Manager not thinking like Investors
7. Too focused on KPI and BSC
8. Budget allocation seen as ‘popularity’ vote
9. Public Listing -> pressure for short-term budgets and results vs. long-term innovation
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Alignment: 4-Wheels Model
Culture
Business
ModelStrategic Planning
StructurePerson
Leadership
Resources
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Way back in 2004…
• Thomas Cup, Indonesia
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In 2007…
CNI ‘Beemax’ Factory Visit, China
1. Top Leaders
2. Product Development
3. Media
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Thank You.
soft copy of slides: www.totallyunrelatedrandomanddebatable.
blogspot.com