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2002 ClaritasAsia Pte Ltd2002 ClaritasAsia Pte Ltd..

AIM Presentation - March 2007

Phil Best BSc(Elec) CertEng(Elec)

Director Applied PC Systems P/L ABN: 64.056.607.713Strategy Map Software System Architect

t: +61.7.3871.0011

e: [email protected]

w: www.strategymap.com.au

www.StrategyMap.com.au

www.StrategyMap.com.auThe worlds most popular Strategy Map BalancedScorecard Software System

Mentors:

Paul Arveson, BSC InstituteNigel Penny, Claritas Asia
http://www.strategymap.com.au/http://www.strategymap.com.au/


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Welcome!As a Guest Speaker my goal is to leave you with a simple

methodology that you can immediately apply.

We describe BSC basic concepts within a framework relevant to

Computer Screen Tables & Relational Data Structure.

PTCLP = Post Training Course Latency ProblemStrategic Framework -> Data (automation) Framework


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Presentation Agenda

The BSC Spectrum

Balanced Scorecard (BSC) & Evolution

BSC Performance Grid or Table a Golf Game?

Where is the Strategy in a BSC Table?

Where is the How and Why?

How can we be Right on the Money?

HTDI Converging Starting Points

Tools you can use.

Types of Software Systems.

Platforms and Development Systems.

Mission > StrategyMap > BSC > Implementation

Strategic Plan Static Components Strategic Components Scorecard Components Cross Referencing Strategy Map WYSIWYG


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The BSC Spectrum & Package

Harvard BS, Kaplan & Norton, BSCol - USA

Cranfield CBP Performance Prism - UK

Various Other Systems

KRA or KPI Based

Project Based

Almost anything imaginable is possible

Every implementation is different

Software Scene & Flow Charts

Software Variability and Setups

Our new Version 3 has > 150 setup options

Harvard or Cranfield

Strategic

BSC/HR

Collaboration


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The Strategy Map is the most strategic part

and now drives the more HR based BSC

MeasurementSystem

StrategyImplementation

Total StrategyManagement

Articles in HarvardBusiness Review:

The Balanced Scorecard Measures that DrivePerformance January -February 1992

Putting the BalancedScorecard to Work September- October 1993

Using the Balanced ScorecardasStrategic Management SystemJanuary - February 1996

1996 2000 2004

1992 1996 2000 2004

Books are pre-Internet and mainly for Reference Only


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A BSC is a HR (QA style)Collaboration Tool where

associates can work

together to establish their

quality and makeimprovements to their work.

The BSC & Initiatives Grid (not a starting point)

Implemented using a

SuccessiveApproximation

refinement process

where you improve the

Quality of your

Scorecard Quality.

Obj Kra Meas Score Wt

Init Date Status Money

Note

Use Cell Merging to display grid

One-to-Many relationship.


7/212002 ClaritasAsia Pte Ltd2002 ClaritasAsia Pte Ltd..

BSC Grid Objectives and Initiatives



Strategic Planning:

The tool we use to establish our direction

StrategyMapNeeds

Design

Strategies



Objectives

Fast groundturnaround

Statement ofwhat strategymust achieve

and whats

critical to itssuccess

Target

30 Minutes 90%

The level ofperformance

or rate of

improvementneeded

Cycle timeoptimization

Key actionprograms

required to

achieveobjectives

InitiativeMeasurement

On Ground Time On-Time

Departure

How successin achievingthe strategy

will be

measured andtracked

Strategic Theme:Operating Efficiency

ProfitabilityFinancial

Learning

Morecustomers

Ground crewalignment

Lowestprices

Fewer planes

Customer

Internal


Strategy Map: Diagram of thecause-and-effect relationships

between strategic objectives

FlightIs on time

Balanced Scorecard terminology

South-West Airlines

Non KRA example (an early SM/BSC)

Possible Grid Conflict now with automation



% Ground crewtrained

% Ground crewstockholders

Objectives Measurement

Market Value

Seat Revenue

Plane LeaseCost

FAA On TimeArrival Rating

CustomerRanking (MarketSurvey)

On Ground Time On-Time

Departure

Strategic Theme:Operating Efficiency

Initiative

Cycle timeoptimizationprogram

ESOP

Ground crewtraining

Qualitymanagement

Customerloyaltyprogram

Target

30% CAGR

20% CAGR

5% CAGR

#1

#1

30 Minutes 90%

yr. 1 70%yr. 3 90%yr. 5 100%

ProfitabilityFinancial

Learning

MoreCustomers

Ground CrewAlignment

LowestPrices

Fewer Planes

Customer

Internal

Fast GroundTurnaround

FlightIs on Time

Profitability

MoreCustomers

Fewer planes

Flight is on-time

Lowest prices


Ground crewalignment

BSC Needs to be aligned (driven by) the

Strategy MapHarvard K&N Southwest Airlines Example

Stylised SM->BSC no clear responsibility or one-to-many structure



Profitability

Growth

ShareholderValue

Organisation Vision

Price

Service

Quality

Market Innovation

ContinuousLearning

Intellectual Assets

Strategy is describedusing four perspectives

Cause and effect is a keyelement

Measures are developedto monitor performance

If we succeed,how will welook to ourshareholders?

To achieve ourvision, how mustwe look to ourcustomers?

To satisfy ourcustomers, whatmanagementprocesses must weexcel at?

To achieve ourvision, how mustour organisationlearn and

improve?

Cycle Time

Productivity

Cost

Financial Perspective

Customer Perspective

Internal Perspective

Organization Learning

Perspectives as view-ports or windowsBalanced Scorecard provides the framework to translatestrategy into operational terms.

Commit this Framework to your memory!



With Forward Planning, New Strategies kick-in totake us to the next level of growth

..

Needs Collaboration & Alignment: Vision, Persps, Objectives, Inits. & BudgetsNeeds Collaboration & Alignment: Vision, Persps, Objectives, Inits. & Budgets

Business

Business

growth

growth

T1T1 T2T2

S1S1

S2S2

Plan for T2 before reaching the top of T1 Especially in IT and Share TradingPlan for T2 before reaching the top of T1 Especially in IT and Share Trading



Successful Balanced Scorecards start with aStrategy Map Example Mobil (US Marketing & Refining)

Growth Theme

Improve quality of revenue by understanding customer

needs and differentiating ourselves accordingly.

Productivity Theme

Maximize utilization of existing assets and integrate

the business to reduce total delivered cost.Financial

Perspective

Return on Capital

Increased from 6% to 16%

Competitive Position(profitability)

From last (1993)to first (95, 96, 97, 98)

Volume Growth

Exceeds industry by 2-2.5% annually

Reduce Cash Expenses

Down by 20%

Improve Cash Flow

From -$500 M/Yr to +$700 M/Yr

CustomerPerspectiv

e

InternalPerspectiv

e

Customer Satisfaction

Continuous improvement for 3consecutive years

Speedpass Active

Increasing at rate of1M per year

Dealer Quality Perfect Orders

Continuousimprovement for 4

consecutive years

Learning &Growth

Perspectiv

e

Quality Capacity Utilization SafetyLost work incidents

down from 150 to 30per year

Environmental

Number of incidentsreduced by 63%

Continuousimprovement for 4consecutive years

Annual value of lostyield reduced from

$175m to $50m

Product Innovation Customer Management

Operational Excellence Good Neighbor

Motivated & Prepared Workforce

Continuousimprovement for 4

consecutive years

Strategic Awareness

Annual employee survey shows awareness of

strategy increased from 20% to 80% Source:Source:The Balanced ScorecardThe Balanced Scorecard

D. Norton & R. KaplanD. Norton & R. Kaplan



Back at the BSC Coal-Face Implementation

Assign SM Objective to an employee

Break down each (broad) Objective withrelated measurable concepts in one or more

columns called KRA, KPI, CPI, Target, Focus,

etc.

How to Measure it and Score it?

Repeat the planning and building process until

correct.

Correctness = Alignment = Efficiency =

Collaborative Cross Referencing.

Every Org BSC is different and changesregularly.

New BSC every year for Planning & Budgeting

Comparison between Planned and Actual

Income and Expenses

1. Static Done!

2. Strategic Done!3. Scorecard Components

with SM Alignment



Choice of Objective Grid ColumnsWhere does the actual strategy live?

KPI Brand ImageKPI Brand Image KPI Value for moneyKPI Value for money

Both these companies makecars but its the strategy that

differentiates



The SM >> BSC Full Data Structure

Static Components Vision Mission Goals

Perspectives (4 or 5 is common) possible Multiple Goals

Initiatives with Dates,

Gauges, Budgets

ObjectivesKRAs

Measures & Scores

Monthly Outcomes

Planned Vs Actual

Income Vs Expense

Does not have to be overly complex. Eventually involves a

series of Tiered One-to-Many relationships

Makeit sitjustright



How to do itSM/BSC is not a Tertiary Education Concept (not Rocket Science).It is practical & hands-on and requires your extensive company structural

knowledge.It is a successive approximation process using the industry skills that youalready have. The CEO flies Solo with managers as flight attendants.

1. Train CEO and Upper Management.2. Run strategic retreat for managers. Discard current roles.

Combine their industry and company knowledge. Use

Strategic Facilitator (Quality >> Outcome).3. Define Static Components: Vision, Mission, Market, SWOT,

Values, Policies, etc.4. Strategic Components: Persps. & Objectives5. Alignment with (KISS) Objectives in Strategy Map6. Build Alignment & Accountability. Define & assign

Employee KRAs/KPIs to Objectives

7. Engage and Train Employees in Your Vision/SM/BSCFramework and how they can help.8. Focus on Change Management if needed.9. Train and engage Managers & Employees to complete the

picture and prepare budgets.10. Monitor & Continue to improve the SM&BSC.

The CEO

Leads fromthe front.



Scorecard Benefits for Your Organisation?

Clarify the vision

Gain consensus and ownership

Align the organisation

Integrate strategic planning

Drive resource allocation

Improve management effectiveness

The journey is not easy or short

Source:The Strategy Focused Organization, D. Norton & R. Kaplan

The journey is not easy or short

Source:The Strategy Focused Organization, D. Norton & R. Kaplan



Tools you can use

AIM Training,Facilitators to guide you,

Case Studies.

StrategyMap Balanced

Scorecard

Software BSC SystemsSM front End,Adaptable,

Cross ReferencingStrategy Map WYSIWYG

Avoid the Post-Training-Course Latency Period(The Office Dust) by using an office automation

and collaborative software product.



Types of software systems

Word tables with cell merging

Excel with formulas

Old Tech Windows Forms based BSC Products

Dedicated Windows Forms based BSC Products

Dedicated Windows Forms based SM/BSC products

More complex systems that link to Outlook Tasks

Web Browser Based Systems (Insecure or Expensive) Lower

usability, sometimes better availability.

The Strategic Planning system is not an accounting system. (Somefinance data may be duplicated)

It has different users and data entry permissions. It operates in adifferent time-zone.


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Thankyou

Questions Please

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