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© Bridges Business Consultancy Int 2009
Implementing Implementing the Balanced the Balanced
ScorecardScorecard
© Bridges Business Consultancy Int 2009
The Challenge
© Bridges Business Consultancy Int 2009
4 Barriers to Strategic Implementation
How many companies
successfully execute
strategy?
What percentage of the work force understand the strategy?
The Vision Barrier
What percentage of managers have
incentives linked to strategy?
The People Barrier
How much time does the executive teams
spend discussing strategy per month?
The Management Barrier
What percentage of organizations link budgets to
strategy?
The Resource Barrier
© Bridges Business Consultancy Int 2009
90%
of companies fail to execute
strategy
Only 5% of the workforce understand the strategy
The Vision Barrier
Only 25% of managers have incentives linked
to strategy
The People Barrier
85% of executive teams spend less than 1 hour per month discussing
strategy
The Management Barrier
60% of organizations don’t link budgets to strategy
The Resource Barrier
Source: Kaplan & Norton & Bridges
4 Barriers to Strategic Implementation
© Bridges Business Consultancy Int 2009
Strategic Learning Loop
Initiatives & Programs
test the hypotheses
Output(Results)
reportingManagement Control Loopfunding
Input(Resources)
update the strategy
PERFORMANCE
STRATEGY
BALANCED SCORECARD
BUDGET
Can you imagine a war based on annual budget? “Sorry colonel, you will have to wait until January for reinforcements. That’s when we get our new budget.”
Or an operation...?
The Problem: The Strategic Management Process Is Missing in Most Organizations
© Bridges Business Consultancy Int 2009
Strategy Map & Balance Scorecard
Introduction
© Bridges Business Consultancy Int 2009
The Agenda
© Bridges Business Consultancy Int 2009
Agenda
• The Vision Thing• Introduction to Balanced
Scorecard (BSC)• Introduction to Strategy Maps• The Numbers Quandary • Running the Numbers• How People Respond to Change• What it means to You
Day One Day One DeliverablesDeliverablesDay One Day One
DeliverablesDeliverables
© Bridges Business Consultancy Int 2009
The Vision Thing
© Bridges Business Consultancy Int 2009
VisionMission
Values
Balanced Scorecard
Strategy Maps
Actions
Results
© Bridges Business Consultancy Int 2009
Vision, Mission & Values
Strategy
Strategy Map
Balanced Scorecard
Actions
Results
© Bridges Business Consultancy Int 2009
Opening Thoughts
What is
Strategy
?
© Bridges Business Consultancy Int 2009
A passing cat heard the bird singing and came to investigate.PURR....
A little bird was flying south for the winter.
It was so cold, the bird froze and fell to the ground in a large field.
While it was lying there, a cow came by...
and dropped some dung on it.
As the frozen bird lay there in the pile of cow dung, it began to realise how warm it was. The dung was actually thawing him out!
He lay there all warm and happy, and soon began to sing for joy.
Following the sound, the cat discovered the bird under the pile of cow dung, and promptly dug him out and ate him!
CORPORATE LESSON I
© Bridges Business Consultancy Int 2009
1) Not everyone who drops shit on you is your enemy.
2) Not everyone who gets you out of shit is your friend.
3) And when you're in deep shit,keep your mouth shut!
CORPORATE LESSON I
Moral of the story:
© Bridges Business Consultancy Int 2009
Introduction to Strategy Maps
© Bridges Business Consultancy Int 2009
Introduction to Balanced Scorecard
(BSC)
© Bridges Business Consultancy Int 2009
Customer
Internal
Financial
Maximum return of
assets
Profitable Growth
Customer Loyalty
Seamless Cross Group
Delivery of Services
Understand Drivers Service
Effectiveness of
Customer Value
Market-Driven Skills
Development
Process
Objective Measurement Target Initiative
• Seamless Cross Group Delivery of Service
• Promised Delivery %
• 97% • Service Dispatch Automation
Learning
© Bridges Business Consultancy Int 2009
Balanced Scorecard
© Bridges Business Consultancy Int 2009
The Numbers Quandary
© Bridges Business Consultancy Int 2009
What gets measured gets focused upon, so we need to make sure the measures are
correct!
Warning…Warning…
© Bridges Business Consultancy Int 2009
EXAMPLE #1: Chicken Efficiency
A fast food chain give lip service to many objectives.
What senior management watched most rigorously was how much cooked chicken in its restaurants was thrown away (“chicken efficiency.”)
What happened?
Moral: A measurement may be good on paper but Moral: A measurement may be good on paper but you need to ask what behavior it will driveyou need to ask what behavior it will drive
Moral: A measurement may be good on paper but Moral: A measurement may be good on paper but you need to ask what behavior it will driveyou need to ask what behavior it will drive
Selecting the right measures is not easy…
What happens if we focus on one particular metric?
© Bridges Business Consultancy Int 2009
EXAMPLE #2: Call Centre
A call centre for an airline segments its customers and has a separate line for its most important customers
The line automatically disconnects after 59 min!
Why, because the call centers, managers compensation is penalized for calls over 60 min. Also key customers who were kept waiting an hour were angry when their call was finally answered so CSOs would avoid the calls and a vicious circle was started
Moral: Don’t focus your measurement on how long it takes to answer a call but on the outcome of answering customers’ enquiries and customer satisfaction. If customers are dissatisfied with your service, one reason may be the length of time to answer the call
Selecting the right measures is not easy…
© Bridges Business Consultancy Int 2009
EXAMPLE #3: The Manufacturer
Managers of an automatic components manufacturer, reached the company’s quality measures by reclassifying as acceptable certain flaws that would have caused a part to be rejected in the past.
Moral: The measures drove behaviors that lowered standards not improved them.
Selecting the right measures is not easy…
© Bridges Business Consultancy Int 2009
STRATEGY
IfIf you fold a large piece of paper over once and then you fold a large piece of paper over once and then fold it over again and again, until you have folded the fold it over again and again, until you have folded the original paper 50 times. original paper 50 times.
How tall do you think How tall do you think the stack will be?the stack will be?
© Bridges Business Consultancy Int 2009
The real answer is that it would be approximately the distance to the sun –
some 17,770,000 miles tall!
Key Message
In complicated decision making some form of analysis can compliment your intuition. Such analysis helps you bring to the surface those factors that are usually operating below the level of conscious thought.
© Bridges Business Consultancy Int 2009
After just three opening moves by a player on the chessboard how many possible different positions are there?
© Bridges Business Consultancy Int 2009
The total number of possible different moves in a single game of chess is more than the number of seconds that have elapsed since the big bang created the universe.
9 million positions are
possible! This is because chess is a mathematical infinite game.
© Bridges Business Consultancy Int 2009
"I would love to be able to get to the top of that tree," sighed the turkey, "but I haven't got the energy.”
CORPORATE LESSON II
A turkey was chatting with a bull.
"Well, why don't you nibble on some of my droppings?" replied the bull. They're packed with nutrients."
The turkey pecked at a lump of dung and found that it actually gave him enough strength to reach the first branch of the tree.
The next day, after eating more dung, he reached the second branch.
Finally after a fortnight, there he was proudly perched at the top of the tree
Soon he was spotted by a farmer
Who promptly shot the turkey out of the tree.
© Bridges Business Consultancy Int 2009
CORPORATE LESSON II
Moral of the story:
Bullshit might get you to the top, but it won't keep you there.
© Bridges Business Consultancy Int 2009
A woman buys a $78 necklace at a jewelry store. She gives the jeweler a check for $100. Because he does not have the $22 change on hand, he goes to another merchant next door.There he exchanges the woman’s check for $100 in cash. He returns and gives the woman the necklace and her change.Later the check bounces and he must make it good to the other merchant. He originally paid $39 for the necklace.
What is his total out of pocket expenses?
© Bridges Business Consultancy Int 2009
“Get your facts first and then you can distort them as much as you please.”
Mark Twain
© Bridges Business Consultancy Int 2009
Running the Numbers
© Bridges Business Consultancy Int 2009
How People Respond
to Change
© Bridges Business Consultancy Int 2009
20%60%20%
Critical Mass
GroupiesMavericksSaboteurs
Double Agents
© Bridges Business Consultancy Int 2009
Double Agents Secret Code
N.A.T.O.F.O.T.M.S.S.D.D.S.S.D.C.T.I.N.A.
B.O.H.I.C.A.
© Bridges Business Consultancy Int 2009
Double Agents switch partly because they are called to arms far too
often and on too many occasions for failed
attempts.
© Bridges Business Consultancy Int 2009
© Bridges Business Consultancy Int 2009
“You can divide any workforce into three categories:
1. people who are engaged (loyal and productive) 2. those who are not engaged (just putting in time), 3. those who are actively disengaged (unhappy and
spreading discontent).
U.S. workers are 26 percent engaged, 55 percent not engaged, and 19 percent actively disengaged.
Marcus Buckingham
© Bridges Business Consultancy Int 2009
In Applebee’s casual dinning segment of the restaurant business, where they have high turnover, they measure the staff turnover of the top 20% of performers, the middle 60% and the bottom 20%. Managers are rewarded for their success in retaining the top 80% and not penalized when the bottom 20 performer leaves the company.
© Bridges Business Consultancy Int 2009
Draw the bell curve for your department and explain its shape to a partner.
© Bridges Business Consultancy Int 2009
“Mavericks – support the people
who support you”
© Bridges Business Consultancy Int 2009
“Some where in your organization, groups of people are already doing things
differently and better. To create lasting change, find these areas of positive deviance
and fan the flames”
Richard Pascale & Jerry Sternin
“Your Companies Secret Chang Agents”
HBR
STRATEGY
© Bridges Business Consultancy Int 2009
Mottos
“It is easier to ask forgiveness than it is to ask for permission”
“Safety in numbers”Groupies
“Status Quo”Saboteurs
“After all is said and done, more is said than done”
Double Agents
Mavericks
© Bridges Business Consultancy Int 2009
So, the rabbit sat on the ground below the crow, and rested.
CORPORATE LESSON III
A crow was sitting on a tree, doing nothing all day.
A small rabbit saw the crow, and asked him, "Can I also sit like you and do nothing all day long?”The crow answered: "Sure, why not.”
All of a sudden, a fox appeared,
Jumped on the rabbit... and ate it.
© Bridges Business Consultancy Int 2009
CORPORATE LESSON III
Moral of the story is….
To be sitting and doing nothingyou must be sitting very, very high up.
© Bridges Business Consultancy Int 2009
What it means to You
© Bridges Business Consultancy Int 2009
What can you do to implement the strategy?
Ask:
© Bridges Business Consultancy Int 2009
How can I use the numbers to manage my
area?
Ask:
© Bridges Business Consultancy Int 2009
What actions and/or behaviors should I take?
Ask: