the strategy execution system: achieving internal and ......2013/11/15 · i4 i5 i6 i7 i8 i9 i10...

Copyright © President & Fellows of Harvard College

The Strategy Execution System:

Achieving Internal and External Alignment

Robert S. (Bob) Kaplan

Marvin Bower Professor of Leadership Development, Emeritus

2

Stage 3 of the Management System: Align the

Organization

Process

Initiative

EXECUTION

3

4

5

6

• Mission, Values, Vision

• Stretch Targets

• Strategic Analysis

• Strategy Formulation

DEVELOP THE STRATEGY

• Strategy Map / Themes

• Measures / Targets

• Initiatives

• Funding / Stratex

TRANSLATE THE STRATEGY

ALIGN THE ORGANIZATION

• Business Units

• Support Units

• Employees

• Board of Directors

PLAN OPERATIONS

• Key process improvement

• Sales planning

• Resource capacity plan

• Budgeting

• Profitability Analysis

• Strategy Correlations

• Emerging Strategies

TEST & ADAPT

• Strategy Reviews

• Operating Reviews

MONITOR & LEARN

2 1

Alignment in Action

Aligning Multiple Organizational Units

Finance

IT

Board of

Directors

Enterprise

Strategy

Functional Unit

Strategies

HR

Corporate Support

Units

Corporate

Planning

Process

Finance

IT

SBU

Strategies

Support Unit

Strategies

HR

Support Units

Integrated

Business

Planning

Process

Customers

Vendors/Alliances

5

Aligning the Enterprise

Finance

IT

Board of Directors Enterprise Strategy

Update

Functional Strategy

Update

HR

2 3

Corporate

Support Units

Corporate

Planning

Process

Finance

IT

SBU

Strategy Update

Support Unit

Strategy Update

HR 6

5

Support Units

Integrated

Business

Planning

Process

7

Customers

Vendors/Alliances

4 8

X = Alignment Checkpoint

1

6

Corporate Role in the Cascading Process Depends

Upon Corporate Type

TATA Family

Group

Private

Equity Firm General

Electric

Ingersoll Rand

Integrated Petro

Chemical Company

Global

Manufacturing or

Pharma Company

Retail Quick

Service

Restaurants

Consumer Bank

Branches

Hotel Chain

Identical Linked

Passive Role (Holding Company)

Active Role (Operating Company)

Cascading Approach

Cascading Method

Independent

Financial Services

Company

7 7

Sources of Enterprise Synergy

Shared Services – Create economies of scale by sharing the systems,

facilities and personnel in critical support processes.

Value Chain Integration – Create value by integrating contiguous processes

in the industry value chain.

The Enterprise

Scorecard

“How can we increase the

shareholder value of our

SBU portfolio?”

Financial Synergies

“How can we share the

customer Interface to

increase total customer

value?”

Customer Synergies

“How can we manage SBU

processes to achieve

economies of scale or value

chain integration?’

Process Synergies

“How can we develop and

share our intangible assets?’

Learning & Growth Synergies

Sources of Enterprise Derived Value

Internal Capital Management – Create synergy through effective

management of internal capital & labor markets.

Corporate Brand – Integrate a diverse set of businesses around a single

brand, promoting common values or themes.

Cross-Selling – Create value by cross-selling a broad range of

products/services from several business units.

Common Value Proposition – Create a consistent buying experience,

conforming to corporate standards at multiple outlets.

Intangible Assets – Share a competency around the development of human,

information and organization capital.

Strategic Themes – Provide leadership in complex organizations through the

management of strategic themes.

8

Be a great corporate

citizen

Improve

environmental, health

and safety

performance

Enhance Customer

Relationships Achieve Operational

Excellence

Cu

sto

me

r Ta

len

t &

Te

ch

no

log

y

Deliver on-time, on-

spec

Create a High Performance Culture Expand and build strategic

skills, capabilities and

expertise

Enable learning and

knowledge sharing Improve employee morale and

engagement

Fin

an

cia

l

F1 - Increase return on

capital

F3 – Increase revenues

Excel at supply chain

efficiency

Improve quality, cost

and speed of

operating processes

Pro

ce

ss

F2 – Improve

productivity

Improve customer loyalty

and satisfaction Enhance corporate

reputation

A Strategy Map for a Conglomerate or Diversified

Business Group

9

Strategic Objectives and Measures for Diversified Corporation

Objectives Measures

Increase return-on-investment • ROCE (return on capital employed)

Improve productivity • % reduction in cost per unit sold

• SG&A expenses as % of sales

• Gross margin %

Increase revenues • Year-to-year sales increases with existing customers or

markets

• % sales from new products and services

Deliver on time, on-spec • % perfect orders (deliver right products at right time with

no defects)

Improve customer loyalty and satisfaction • % repeat customers;

• Net promoter score (willingness to recommend)

Enhance corporate reputation • Company rankings in international surveys

Excel at supply chain efficiency • Supplier dashboard (cost, quality, timeliness)

Improve operating process quality, cost and speed

• % decrease in costs

• Defect rates

• % decrease in production cycle times

Improve environmental, health and safety

performance

• EHS indexes and scores

Expand and build strategic skills • % employees with adequate capabilities and experience

Improve employee morale and engagement • Employee engagement and morale scores

Enable learning and knowledge sharing • Number best practices shared and adopted

10

Category #1:

Relationship• Understanding customer needs

• Being a trusted advisor

Fin

an

cia

lC

usto

me

rP

roce

ss

Hu

ma

n

Ca

pita

l

Category #2:

Product• Features• Price

Category #3:

Service• Timely•Accurate

Category #1:

Revenue• Interest Income

• Non-Interest Income

Category #2:

Risk• Credit Costs

• Litigation Costs

Category #3:

Efficiency• Reduce Costs

• Increase Productivity

Increase Net Income

Category #1:

Skills• Training, sucession planning, etc.

Category #2:

Work Environment• Ethics, culture, etc.

Category #3:

CompensationPay-for-performance, etc.

Theme #1:

GROW REVENUE

• Customer Relationships

•Cross-selling efforts

• Market Research

• Etc.

Theme #2:

MANAGE RISK

• COSO Self-Assessment

• Regulatory Risk

• Technology Risk

• Etc.

Theme #3:

ENHANCE PRODUCTIVITY

• Reengineering

• IT Initiatives

• Quality Control

• Etc.

Customer: Internal / External (Description)

Bank of Tokyo Mitsubishi Americas Corporate

Strategy Map Template

11

Bank of Tokyo Mitsubishis HQ asked each business

unit to use three types of strategic objectives.

Type Definition Example

Bank-wide objectives, mandated throughout the

organization on every scorecard

“Enhance cost efficiency”

(financial perspective objective)

Inter-divisional objectives shared between two or

more units expected to cooperate in order to

achieve the result

“Streamline credit approval

process” (process perspective

operational efficiency objective)

Intra-divisional objectives describing an activity

expected to be fulfilled independently by that

group

“Maintain know your customer

files” (internal risk management

theme objective for Treasury)

Common

Unique

Shared

12

Strategy Map for BTM Global Corporate Banking Unit

Shared objective

Grow Revenues Manage Risk Improve Productivity

Increase fee

income

Maximize

income from

core

customers

Enhance

cost

efficiency

Be #1 foreign

wholesale

bank in the

Americas

Be a reliable

source of

credit

Provide global

network

banking

Provide

speedy and

accurate

service

Develop

succession

plan

Provide training

on credit and

product

Competitive

environment:

teamwork, safe

and fair

Competitive

compensation

Segmentation and

tier up

Increase net income

Enhance disaster

recovery/business

continuity plan

Enhance risk

management in

Latin America

Strategically focus

on opportunities in

Asia

Proactive risk

management

and compliance

Execute major

technology and

efficiency projects

Tie up between

business strategy

and risk appetite

Financial

Perspective

Customer

Perspective

Process

Perspective

Human

Capital

Perspective

Minimize

credit

costs

Ensure

collaboration -

Relationship &

Purchasing

Managers Streamline

credit approval

process

Enhance

collaboration

throughout

supply chain

(Corporate and Units)

(Between

Units)

Bankwide identical

objective

Objective unique

to GCBU

© 2006 Palladium Group, Inc. - Confidential

To align division areas with the overall FBI strategy, the FBI

HQ map and scorecard was cascaded to operational divisions

and branches FBI Headquarters

NSB Criminal

S&T IT HR

Am

eric

an P

ublic

Exp

ecta

tions

Inte

rnal

Pro

cess

Deter, Detect and Disrupt National

Security Threats and Criminal Activity

Maximize PartnershipsManagement Excellence

Leverage Technology and Science

Maximize Workforce Success

Res

ourc

e

Optimize Resources

Tal

ent a

nd T

echn

olog

y

A1 - “Protect US from

terrorist and foreign

intelligence activity”

A2 - “Combat criminal

activity that threatens the

safety and security of society”

A3 - “Preserve civil

liberties”

A4 - “Provide leadership,

intelligence, and law enforcement

assistance to our partners”

Am

eric

an P

ublic

Exp

ecta

tions

Inte

rnal

Pro

cess






Res

ourc

e

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CTD

WMD

Va

lor

Ciu

tad

àS

erv

eis

Infr

ae

str

uc

ture

sR

ec

urs

os

Organització i Persones

• Atraure i retenir el talent.

• Impulsar l'excel·lència en la gestió.

• Formalitzar, coordinar i fer el seguiment de les

relacions amb els operadors.

Aliances

• Impulsar les relacions i les aliances amb els organismes del transport i mobilitat a nivell municipal i metropolità.

• Cooperació amb altres institucions de mobilitat de l’Estat.

• Impulsar relacions internacionals per al intercanvi d’experiències.

Sistemes d’Informació

• Millorar l’explotació dels Sistemes d’Informació

existents.

• Fomentar les noves tecnologies per a la gestió

de serveis.

Una mobilitat globalment sostenible

Infraestructures de Transport Instal·lacions Espais Públics

Prioritzar els vianants tot i potenciant els

desplaçaments a peu.

Impulsar l'ús eficient i racional del vehicle

privat.

Garantir la qualitat i la cobertura del transport públic, especialment en

desplaçaments de connexió.

Consolidar la bicicleta com a mode de

transport.

Millorar les operacions de càrrega i

descàrrega de mercaderies.

Sostenibilitat VitalMillorar la seguretat viària i reduir

els efectes del transport en la salut

Sostenibilitat AmbientalReduir les conseqüències ambientals de la mobilitat.

Sostenibilitat SocialGarantir la universalitat dels

serveis.

Sostenibilitat EconòmicaOptimar els recursos i reduir la

necessitat de mobilitat.

Gestió d’Operacions Comunicació i ParticipacióPlanificació

Millorar la capacitat d’anàlisi i

detecció de nous fenòmens

urbans.

Definir les infraestructures i els

serveis necessaris per impulsar

una mobilitat sostenible a la

ciutat de Barcelona.

Disposar de criteris

per a una millor

senyalització.

Assegurar la informació i la

formació de la ciutadania.

Impulsar les comissions

cíviques relacionades amb la

mobilitat.

Millorar la gestió del

sistema Bicing.

Optimitzar els usos de

la via pública.

Millorar la gestió i

regulació del transit.

Millorar l’accessibilitat

del espai i dels

edificis públics

Assolir la utilització de

les vies en base a la

seva jerarquització ja

definida.

Impulsar la millora de

la xarxa ferroviària i

els aparcaments

d’intercanvi.

Millorar carrils i

parades de transport

públic i col·lectiu

Millorar carrils i

estacionaments

bicicletes.

Millorar les

infraestructures del

Bicing. Millorar la oferta

d’aparcaments per

residents.

Millorar les

instal·lacions

semafòriques.

Millorar la

senyalització de la via

pública.

Millorar els sistemes

de seguretat als

túnels.

Optimitzar

l’aprofitament de la

xarxa de fibra òptica.

V1 V2 V3 V4

C1 C2 C3 C4 C5

S1

S2

S3

S4

S5

S6

S7

S8

I1

I2

I3

I4

I5

I6

I7

I8

I9

I10

I11

R1R2

R3

R4

R5

R6

R7

R8

Ajuntament Persones

Formació i desenvolupament

SeleccióGestió de RH Atenció i comunicacióPlanificació de necessitats de RH

Disseny de l’estructura organitzativa

Processos i sistemes de RH

Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os

Estructura organitzativa de GRHO

Contribuir a la millora de la qualitat en la prestació dels serveis als ciutadans

Equip de GRHO

Disposar d'equips de persones amb

competències adequades, polivalents i flexibles C2

Garantir una organització i un dimensionament

que donin resposta a les necessitats

de servei

Oferir a les persones un projecte de

desenvolupament professional

Millorar la productivitat de l’equip de l’Ajuntament

Oferir un bon lloc per treballar

Promoure un bon ambient de treball que impliqui i motivi a les persones

Esdevenir el soci estratègic als àmbits de

RH i organització

Planificar els recursos en base a

les prioritats de l'organització

Enfortir la funciódirectiva i el rol de

comandament

Desenvolupar les competències

d’acord amb les funcions dels llocs

de treball

Donar suport a les persones en el

procés de transformació de

l’organització

S10

S11

S1

Cohesionar la xarxa de gestors

de RH R1

V1

V2

Impulsar els plans de carrera vertical i

horitzontal

Oferir una atenciópropera i de qualitat a les persones de l’Ajuntament

Renovar i tecnificar la plantilla

Garantir un sistema

d’ordenació dels llocs de treball adequat que

incorpori criteris objectius i

transparents d’accés, promoció i

retribució

Desenvolupar mecanismes per atraure el talent

Adaptar l'estructura i el dimensionament de la

GRHO a les necessitats de l'organització

S3

Retenir el talent i reduir la

temporalitat de la plantilla de

l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5

Procurar l'adequació de la persona al lloc de

treballS6

Incorporar la dimensió humana

en la gestió de persones S7

S4

Responsabilitat Social Corporativa

Implicar als agents socials en els processos de canvi de l’Ajuntament

Integrar la prevenció de riscos laborals en totes

les actuacions de l'Ajuntament

Impulsar pràctiques que contribueixin a l’equilibri

entre dimensióeconòmica i social.S14 S15 S16

Disposar d’un equip motivat,

capacitat i orientat al client

Agilitzar els processos i garantir l'acompliment

dels nivells de servei de la GRHO

R3

Unificar els sistemes

d’informació de RHR5R4

Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

S11

S1


de RH R1

V1

V2


horitzontal



Garantir un sistema




retribució




S3



l’Ajuntament

C1

V3

C4

R2

C3

S2

S12

S13

S8

S9

S5


treballS6



S4











R3



Ajuntament Persones





Va

lor

Cli

en

tsS

erv

eis

Rec

urs

os



Equip de GRHO





de servei







RH i organització




comandament



de treball



l’organització

S10

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horitzontal



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C1

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C4

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C3

S2

S12

S13

S8

S9

S5


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Ajuntament Persones





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R3



Barcelona City - Aligning Sectors and Districts

Global Map for the City Hall

Drill-down into 20 Maps:

• One for each Sector

• One for each District

City Manager

Sectors & Districts Managers

Are we

executing

our

strategy?

Global view of each District and Sector:

– 80+ KPIs by Sector and District

– Consolidated information

What KPIs and

action plans

will achieve

our targets?

URBANISME

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Improve conditions

of urban buildings

# of buildings restored Objectives details Strategy Map

KPI performance against target

Budget assigned to a

given Objective

Management

Report

Are we allocating

resources to the

correct actions and

initiatives? Are they

bringing the expected

results?

Finance Department Budgetary Programs

Where should we

allocate our

budget in order

to reach the

targets

stablished at our

plan?

CONSTRUCCIÓ

MANTENIMENT

URBANITZACIÓ

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BVBXG

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Status of objectives linked to a

given budgetary program

A new way of managing Barcelona City

Shared (Corporate) Services

“We have done very little to define our strategy for corporate staff

utilization. How does staff provide competitive advantage? Are

they offering low cost or differentiated services? If they are

offering neither, we should probably outsource the function.”

Larry D. Brady

President, FMC Corporation

HR

IT

FIN

Strategic Support Service

Portfolio

Enterprise

Strategy

(Strategy Map)

1 2

Strategic Support Services: Aligning the HR

Department to the Company’s Strategy

• Analytic and Decision Support

Applications

• Transaction Processing

Applications

• Technology Infrastructure

Strategic Information

Capital Services

• Competency Development

• Organization and Leadership

development

• Performance Management

Strategic HR

Services • Transactions, Controls &

Processing

• External Compliance &

Communication

• Planning and Decision Support

Services

Strategic Financial

Services

Ingersoll Rand’s HR Organization Strategy Map

Be The Employer of Choice Enhance Leadership Effectiveness Develop and

Broaden

Competencies,

Experiences and

Contributions

Develop Leaders

Partner to

Drive Culture

Change

Provide the Right

People, at the Right

Place, at the Right

Time

Drive Organizational Performance Build Strategic Employee

Competencies

• Facilitate Movement of Talent Across Businesses

• Leverage the OLR Process

• Develop IR Leadership Competencies

• Retain Employees and Leaders with Superior Potential

• Recruit and Select Employees and Leaders with Superior Potential

• Leverage Performance Management Systems

• Align and Leverage Reward Systems with the Strategy

• Develop the Organization’s Change Management Capability

• Facilitate Internal Communications

• Champion Enterprise Best Practice Sharing

• Provide Tools that Enable Employee Development

• Develop and Implement a Training and Development Strategy

• Assess Critical Competency Gaps

• Identify Strategic Employee Competencies

Achieve HR Process Excellence

• Achieve Best-in-Class Customer Service Standards

• Provide Timely and Accurate Administration of Compensation and Benefits Delivery

• Develop Highly Efficient HR Processes that are Aligned with Business Priorities

• Ensure that Consistent and Aligned HR Policies, Procedures and Tools are Implemented

Leverage HR Community to Achieve Functional Excellence

Design and

Develop an

Integrated HR

Toolkit

Implement and

Leverage

HRMS System

Improve

Business

Acumen

Enable Business Growth

Through Leadership

Effectiveness

Build Organizational

Capability to Drive

Shareholder Value

Enable Acquisition

Integration

Effectiveness

Enable

Organizational

Efficiency &

Effectiveness

Promote a

Global,

Diverse

Culture

Develop HR

Leaders as

Change

Agents

Drive Organizational

Transformation to a

High Performance

Culture

Be a Trusted

Coach &

Advisor

Provide

Positive Work

Environment

Develop

Functional HR

Competencies

Attract,

Develop and

Retain HR

Professionals

Deliver Results

Improve productivity – V1

“Guarantee, secure, reliable,

high-quality solutions” – C1

“Show me the value of my

investment” – C2

Grow and sustain revenue – V3 Leverage investments – V2

“Deliver on commitments to enable my Mission

Success” – C3

Manage, optimize, and communicate costs clearly – P1 Innovate and lead change – P7

Strengthen communications to build trust

through active listening and inclusive

behaviors – W4

Enable agility in systems and

infrastructure leveraging

enterprise architecture – P9

Develop and retain a talented,

diverse, strategy-focused, and

engaged workforce – W3

Promote a culture of collaboration, creative thinking,

knowledge sharing, and innovation – W2

Serve the National Interest and Increase Shareholder Value

Business and Technology Leaders say:

Shape the Future

Perform With

Excellence

Respect Others

Do What’s Right

Energize the Team

Model Personal Excellence, Integrity, and Accountability

Realize the value of our investments: Inside/Out and

Outside/In – P8

Execute flawlessly through

continuous improvement – P3

Magnify The

Power of LM

Through IT

“Leverage IT to solve human capital

challenges” – C4

Demonstrate honesty, responsibility, balanced risk

taking, and be accountable for results – W1

Drive standardization and

supplier leverage – P2

“Enable successful and profitable program

execution” – C5

Exemplify teamwork and a

positive attitude to motivate

action – W5

Understand the business strategies

to ensure IT alignment – P4

Accelerate horizontal integration

through information sharing – P5

Anticipate and influence, with

social acumen, to deliver on

expectations – P6

Build Effective Relationships

Inte

rnal B

usin

ess P

rocess

Work

forc

e

Va

lue

Cu

sto

me

r (P

art

ner)

Our Vision: Powered By Innovation, Guided By Integrity, We Help Our Customers Achieve Their Most Challenging Goals. Our Values

Our Mission

and

to

Internal IT Group’s Complete Customer Solutions Strategy Map

../../../../../deleonj1/Local Settings/Temporary Internet Files/lfreedma/deleonj1/Local Settings/Temporary Internet Files/OLK42/x

20

Aligning the Enterprise

Finance

IT


Update

Functional Strategy

Update

HR

2 3

Enterprise Strategy

Map

Board Strategy

Map

Enterprise Strategy

Map

Functional

Strategy Map

Corporate Support Units

Corporate

Planning

Process

Finance

IT

SBU

Strategy Update

Support Unit

Strategy Update

HR 6

5

SBU Strategy Map

Support Unit

Services Support Units

Integrated

Business

Planning

Process

7

Customers

Vendors/Alliances

4 8 Enterprise

Strategy Map

SBU

Strategy Map

Enterprise

Functional

Strategy Map

Business Unit

Functional

Strategy Map


1

21

Jeff Immelt, CEO, on Role of Corporate Board at

General Electric Select, evaluate and compensate the CEO; oversee CEO succession

planning

Provide counsel and oversight on selecting, evaluating, developing, and

compensating senior management

Review, monitor and approve fundamental financial and business strategies

and major corporate actions

Assess major risks facing the company, and review option to mitigate these

risks

Ensure processes are in place for maintaining the integrity of the company,

including:

– Integrity of financial statements

– Integrity of compliance with law and ethics

– Integrity of relationships with customers and suppliers

– Integrity of relationships with other stakeholders

22

People

Financial Performance

Markets and

Customers Solutions

Customer Value Proposition

Operations

Board Scorecard

People


Markets and

Customers Solutions


Operations

Executive Scorecards

People


Markets and

Customers Solutions


Operations

Enterprise Scorecard

Board Balanced Scorecard

• Defines the strategic contributions of the Board

• A tool to manage the performance of the Board and its committees

• Clarifies the strategic information required by the Board

Enterprise Balanced Scorecard

• Describes the enterprise strategy, measures and targets

• A tool to manage the performance of the enterprise

• A key information input to the Board

A three-part BSC program is the cornerstone of the

Corporate Governance System.

Executive Balanced Scorecards

• Defines the strategic contributions of each executive

• A tool to assess and reward the performance of executives

• A key information input to the Board

“The Balanced Scorecard

system helps us promote a high-

performing and well-governed

organization.”

James Trimarchi, Chairman of the Board, First

Commonwealth Financial Corporation

23

Peo

ple

&

Kn

ow

led

ge

Sta

keh

old

er

Fin

anci

al

S1- Approve Plan and

Monitor Corporate

Performance

S2- Strengthen

and Motivate

Executive

Performance

S3- Ensure

Corporate

Compliance

Compliance and Communication

I1- Approve Strategy and

Oversee its Execution

I2- Approve and Monitor

Funding for Strategic

Initiatives I4- Oversee Succession

Planning for Key Positions

L1- Ensure Board Skills and

Knowledge Match the

Strategic Direction

L3- Assure Access to

Strategic Information

L2- Foster Engaging

Board Member

Discussion

I5- Evaluate and Reward

Executive Performance

I6- Actively Monitor Risk and

Regulatory Compliance

I7- Ensure Disclosures are Clear

and Reliable

Executive Enhancement Performance Oversight

I3- Be an Advocate for

the Corporation

F1- Maximize the Long -Term

Total Return to Shareholders

F2- Grow Revenue F5- Strategically

Invest/Divest

F3- Maintain a High

Level of Risk

Management

F4- Manage Expenses

The board strategy map clarifies how the board

intends to contribute.

Using the Balanced Scorecards in Corporate Governance

• The Enterprise Balanced Scorecard is reviewed at each board meeting

• A Board Balanced Scorecard is formally reviewed on a semi-annual

basis. Board committees work their respective objectives at each

meeting

• Executive Scorecards are discussed with the CEO on a quarterly

basis. The Compensation and Governance Committee review these

cards on an annual basis

25

Aligning Strategic Customers and Suppliers to the

Strategy

Finance

IT


Update

Functional Strategy

Update

HR

2 3

Enterprise Strategy

Map

Board Strategy

Map

Enterprise Strategy

Map

Functional

Strategy Map

Corporate Support Units

Corporate

Planning

Process

Finance

IT

SBU

Strategy Update

Support Unit

Strategy Update

HR 6

5

SBU Strategy Map

Support Unit

Services Support Units

Integrated

Business

Planning

Process

7

Customers

Vendors/Alliances

4 8 Enterprise

Strategy Map

SBU

Strategy Map

Enterprise

Functional

Strategy Map

Business Unit

Functional

Strategy Map


1

26

DESCRIBE the

strategy

MANAGE the

strategy

Make Strategy

Management a CORE

COMPETENCY

WHY? They over-emphasise

the financial & legal

issues

They tout the future

benefits of the

alliance to their

shareholders

They worry more

about controlling the

relationship

But alliances often fail!

…rather than managing the

partnership in human

terms*

… but don’t help their

managers create those

benefits*

…rather than nurturing

the relationship*

”Cross-border alliances have

roughly a 50% rate of success” – Harvard Business Review

“The median life-span for alliances is

only about seven years”

– Harvard Business Review

” Over half of all alliances are

dissolved within three to five

years” – Novartis Journal

“PWC benchmarking clearly

shows that despite their rising

popularity, over 60% of alliances

and channel arrangements fail”

“85% alliance failure due to manageable reasons” - IBM

Pharma company (Solvay) wanted to create a strategic

alliance by outsourcing all its clinical testing to a single

clinical research organisation (Quintiles)

WHO?

WHY?

WHAT?

Quintiles A worldwide leader in

pharmaceutical services with over

15,000 specialized employees and

offices in 50 countries

Solvay An international chemical and

pharmaceutical group with about

30,000 people in 50 countries

• Wanted to save costs in

clinical development

• Lack of expertise

• Contracts with many

providers

• Wanted to “lock-in” the customer

• Wanted to expand services to

the client (needed framework for

opening up dialog)

Formed an Alliance

(initially 5 years, recently

renewed)

Both parties wanted to

“Lead the Alliance to the

Next Level”

Wins for Solvay

Increased profits

“The innovative developer

– fast to market”

Wins for Quintiles

Increased payments (tie-in)

“Managing the relationship

differently – act as one

company”

Why a Balanced Scorecard Approach?

• Provides visibility and ownership across both

organizations

• Robust framework for execution

• Streamline and implement initiatives and ensure

measurement of ongoing progress

• Great communication tool to align all members of the

Alliance

Provides the platform to drive value for both organizations

• For Solvay - more compounds to market and maximised portfolio value

• For Quintiles - increased revenue and milestone payments

>29 >Leading the Alliance to the Next Level

Speed and Process Innovation /

Breakthrough Growth

Collaboration

Living the Alliance

Value For Both

The Joint Steering Committee (JSC) identified 5 Strategic Themes for the Alliance

>30 >Leading the Alliance to the Next Level

execute

Business Processes

Customer Value

Stakeholder Outcomes

Value For Both

Employees and Organisation

Speed and Process Innovation / Breakthrough

COL1 - Ensure transparency

into cost drivers and

project resourcing

COL2 - Manage resources

to ensure flexibility and

best use of talent

Collaboration

Growth

Living the Alliance

Wins for Quintiles: Increased revenue Milestone payments

Wins for Solvay:: Compounds to market

Maximised value of portfolio

V1 - Create shareholder value for both organisations by bringing significant number

of commercially viable compounds to market

SP8 - Dramatically improve clinical

development efficiency V2 - Increase value from new and innovative approaches to

clinical development

“The Breakthrough Innovator”

SP7 - “I want access to effective medicines that treat my illness”

SP6 - “Fulfill my regulatory

requirements so I can approve safe and

effective drugs”

Regulators

COL6 - “I want you to offer

drugs at a fair price”

Investigators

COL5 - “I want drugs which provide efficacy

and/or safety improvements to current

treatments”

Prescribers Patients

GR4 – “I want to be part of the Alliance and contribute to bringing innovative drug developments to patients”

Payers

GR3 - Accelerate flow of compounds

through risk share models and joint

development plans

COL4 - Utilize and manage

3rd parties to deliver

excellence

COL3 - Leverage the services

and opportunities in the

existing organizations

SP1 - Leverage the global expertise, continuously improving processes and ensuring no redundancies

SP2 - Improve protocol

development and adopt

new trial methodologies

SP3 – Develop and manage

investigator relationships

and performance

SP4 - Compress time from

site identification to completion

of patient enrollment

Alliance Strategy Map

that deliver

which drives

GR1 - Collaborate to make joint go/no-go

decisions for compounds

GR2 - Improve investment management by

investing in the right compounds

L3 - Rewards and Recognition

Align and embed incentives to focus employees on

Alliance strategy

L2 - Strategy and Leadership

Ensure strategy execution and visionary leadership

L5 - Technology Implement comprehensive IT strategy to drive speed

and collaboration

L4 - People Development Attract, retain and develop

the talent we need

L1 - Culture and Communication

Ensure trust at all levels and create a culture of learning and achieving team goals

SP5 – Compress time from LPO to CSR

I1 - Drive for innovation

Put Patients First – Focus on Science and Innovation – Communicate – Trust – Respect – Support – Commit – Make a Difference

Solvay and Quintiles used the alliance strategy map to

create differentiation by managing differently!

• The approach enables senior managers in both organisations to

reach consensus on a common set of objectives for the

relationship

• The process of discussing changes going forward, setting joint

objectives, setting up improvement initiatives and identifying

measures will help to:

• Create understanding and trust across the organisations

• Reduce double work

• Minimise misalignment between the two parties

• The joint Strategy Map is an excellent communication tool to ensure

all involved parties understand what the relationship is trying to

achieve

• The Balanced Scorecard provides an explicit contract by which the

inter-organizational performance can be measured

R. Kaplan, D. Norton, and B. Rugelsjoen, “Managing Alliances with the Balanced Scorecard,” HBR (Jan-Feb 2010)

In Summary

• Two culturally different organizations

• Pharmaceutical company and service organization

• Previously

• Traditional transactional, then partnership model

• Moved the relationship “to the next level” with a shared vision to create value for both

• Being executed using a joint strategy map and scorecard

Amanco: Aligning to Communities

Vision: To be recognized as the leading Latin American distributor of

plastic pipe systems for fluid (water) transportation; generate

economic value while operating in a framework of ethics, eco-

efficiency and with social responsibility to improve people's

quality of life.

Regions: South America

MEXICO

ANDINAR

(Argentina, Ecuador,

Peru, Venezuela)

BRAZIL

CENTRAL AMERICAN

REGION

(Costa Rica, El Salvador, Guatemala,

Honduras, Nicaragua, Panama)

COLOMBIA

Regions: South America

MEXICO

ANDINAR

(Argentina, Ecuador,

Peru, Venezuela)

BRAZIL

CENTRAL AMERICAN

REGION

(Costa Rica, El Salvador, Guatemala,

Honduras, Nicaragua, Panama)

COLOMBIA

Amanco’s Corporate Social Responsibility

Triple bottom line performance focused on:

o Economic sustainability

o Corporate Social Responsibility

o Environmental Management

Customers want products that improve society and protect the environment

Amanco created ‘Social and Environmental’ as a separate dimension in its

Scorecard to signal its importance

Amanco’s Strategy Map includes excellent

environmental and social performance.

From CSR to Shared Value

Corporate Social Responsibility

Sustainability

Shared

Value

36

How Companies Create Shared Value

Definition: Companies create shared value when they enhance their

competitiveness while advancing economic and social

conditions in the communities in which they operate

M. Porter and M. Kramer, “Creating Shared Value,” Harvard Business Review (Jan-Feb 2011)

Examples of creating shared value: Amanco illustrates first two

1. Introduce new products and markets to meet societal needs

(nutrition, energy and water conservation, employee skills,

health and safety, finance for bottom-of-pyramid, … )

2. Enhance productivity through reduced pollution, energy and

water consumption

3. Facilitate local cluster development

• Local infrastructure: ports, rail, roads, telecom, energy

• More competitive local product and labor markets

• More employment

Consensus

Com

mitm

ent

Achieve Consensus and Commitment by Co-

Creating a Strategy Map and Scorecard

• The multiple players in a shared strategy must concur on

both the vision and the plan to execute a shared-value

strategy successfully

• Strategy execution requires two pillars of support

o Build consensus

o Secure commitment Successful Strategy

Implementation

An Hypothesis About the Future

Co-Creating the strategy map and scorecard creates consensus,

commitment and a common agenda among a company and its

multiple community and environmental stakeholders for a long-

term, sustainable, shared-value strategy.

Closing words: Abraham Lincoln’s Gettysburg

Address in 1863 (150 years ago)

We here highly resolve that these dead shall not have died in vain

…

and that government

of the people,

by the people,

for the people

shall not perish from the earth.

40

The Takeaways

Co-Creating the strategy map and scorecard creates consensus,

commitment and a common agenda among

1. The Executive Leadership Team of the company, public sector

agency, or NGO (Amanco; Solvay and Quintiles strategic

alliance, any nonprofit or NGO, a public sector agency)

2. A company and its multiple community and environmental

stakeholders for a long-term, sustainable, shared-value strategy

(the next frontier).

Stage 4 of the Management System: Plan

Operations

Process

Initiative

EXECUTION

1

3

4 5

6

• Mission, Values,

Vision

• Strategy Formulation

DEVELOP THE

STRATEGY

• Strategy Map/Themes

• Measures / Targets

• Initiative Portfolios

• Funding / Stratex

TRANSLATE THE

STRATEGY

ALIGN THE

ORGANIZATION

• Business Units

• Support Units

• Employees

PLAN OPERATIONS

• Establish priorities for

process improvement

initiatives

• Risk Management

• Profitability Analysis

• Strategy

Correlations

• Emerging Strategies

TEST & ADAPT

• Strategy Reviews

• Operating Reviews

MONITOR & LEARN

2

Strategy Map

Theme: Operating Excellence Objective

• Profitability

• Grow revenues

• Fewer planes

Financial Profits &

RONA

Grow

Revenues

Fewer

Planes

• Flight is on-time

• Lowest prices

• Attract and retain more customers

Customer Attract & Retain

More Customers

On-time

Service

Lowest

Prices

Internal

• Ground crew aligned with strategy

• Develop the necessary skills

• Develop the support system

Learning

Strategic Job

Ramp Agent

Strategic Systems

Crew Scheduling

Ground Crew

Alignment

Achieve

Fast Ground

Turnaround

• Achieve fast ground turnaround

Balanced Scorecard

Measurement Target

• Market Value

• Seat Revenue

• Plane Lease Cost

• 30% CAGR

• 20% CAGR

• 5% CAGR

• FAA On-Time Arrival Rating

• Customer Ranking

• # Repeat Customers

• # Customers

• #1

• #1

• 70%

• Increase 12% annual

• On Ground Time

• On-Time Departure

• 30 Minutes

• 90%

• % Ground Crew Stockholders

• Strategic Awareness

• Strategic Job Readiness

• Info System Availability

• 100%

• 100%

• Yr 1 - 0% Yr 3 - 90% Yr 5 - 100%

• 100%

Link process improvement programs to strategic

objectives

Wait for airline door to open 3:16

Unload passengers 5:14

Wait for cleaning crew to board 0:24

Clean airplane 10:48

Wait for cabin crew to board 4:11

Wait for first passenger to board 4:06

Load passengers 17:32

Wait for passenger info list 1:58

Close aircraft door 0:57

Detach boarding ramp 1:39

Total cycle time 50:05

Ground Turnaround Activities

Current minutes per step

Best practice minutes per

step

Turnaround time between flights Process improvements

A. Agent anticipates plane arrival time; waiting at

jetway for plane to dock

B. Stricter controls on carry-on bags, fewer

passengers moving back in aisle to find bags

C. Cleaning crew in position ahead of time

D. Standardized workflow, timing and methods,

such as prearranged kits

E. Visual signal from cabin crew to agent when

plane is ready to board

F. Active management of overhead storage bins

by flight crew

G. Passenger information list delivered by agent

following last passenger on board

H. Agent ready at aircraft to close door

0:00

4:38

0:18

7:40

0:00

0:00

14:00

0:13

0:09

0:43

27:41

Can process improvements close the

performance gap?

Improve to levels of

quality excellence

Maintain high quality

levels

Improve to minimum

acceptable quality

levels

Potential to cut back

current investment

Business Processes

Quality Assessment Model

Weak Strong

Strategic (Competitive

Advantage)

Vital (‘Hygiene’)

Balanced

Scorecard

Using the BSC and Quality Assessment Models

(Baldrige, EFQM) Together

Identify operational processes key to executing strategy and manage those processes with frequent feedback on dashboard KPIs

Strategy Map Cause-and-Effect

Model of Each Key

Process

Web-based Dashboard

of metrics used to

manage a Key Process

THEME linked to

PROCESS PROCESS linked to

METRICS

METRICS improve

PROCESS

PROCESS

supports THEME

Dashboards articulate the critical link between strategy

management and operations management.

A dashboard for Discount Airline’s ground turnaround process

47

Task Task Time

Open airline door 2:30

Unload passengers 5:10

Cleaning crew boards 0:20

Clean airplane 10:00

Cabin crew boards 4:00

First passenger boards 4:00

Boarding process complete 16:30

Passenger list confirmed 2:00

Close aircraft door 1:00

Detach boarding ramp 1:30

Total boarding time 47:00

the strategy execution system: achieving internal and ......2013/11/15 · i4 i5 i6 i7 i8 i9 i10...

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