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Make Strategy Execution a Core Competency Balanced Scorecard Center of Excellence Overview. For further information please contact: Mario A. Bognanno Vice President 781.402.1117 [email protected]. Table of Contents. The Strategy Challenge - PowerPoint PPT Presentation
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Balanced Scorecard Collaborative, Inc. • 55 Old Bedford Road • Lincoln, MA 01773 • Tel: 781.259.3737 • Fax: 781.259.3389 • bscol.com
Make Strategy Execution a Core Competency
Balanced Scorecard Center of Excellence Overview
For further information please contact:
Mario A. BognannoVice [email protected]
2©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
Table of Contents
• The Strategy Challenge
• Principles of the Balanced Scorecard and Strategy-Focused Organization
• Critical Success Factors in Becoming a Strategy-Focused Organization
• The BSC Center of Excellence
3©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
StrategicStrategic
SuccessSuccess
At RiskDoomed FromDoomed From
The StartThe Start
Missed
Opportunity
Str
ateg
y F
orm
ula
tio
n
Flawed Sound
Strategic success requires going beyond successful strategy formulation to successful strategy execution
Source: 1Execution: The Discipline of Getting Things Done, by Larry Bossidy, 2002.
Strategy Execution
1
Strategy Development or Strategy Execution? Organizations Need Both
Fla
we
dS
ound
4©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
There are generally accepted tools to manage finances, customers, processes, and people. But what about strategy?
The Balanced Scorecard is the vehicle that fills the Strategy Management Gap
Financial Management Tools
EVA
Balance Sheets
Income Statements
Shareholder Value Analysis
Customer Management Tools
Customer Satisfaction Measurement
Customer Relationship Management
Segmentation Analysis
One-to-One Marketing
Process Management Tools
Six Sigma
Supply Chain Integration
Cycle Time Reduction
TQM
People Management Tools
Core Competencies
Knowledge Management
Pay for Performance
HRIS
Strategy Management Tools
?
Strategy Execution Challenges
5©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
The Balanced Scorecard - A Framework To Describe and Measure Strategy
Source: Kaplan and Norton, Strategy-Focused Organization, 2001.
The Balanced Scorecard provides a framework and mechanism to integrate strategy formulation and strategy execution
Internal Process Perspective
Financial Perspective
Learning & Growth Perspective
Customer Perspective
Return on Investment
Price Quality Time Function Image Relationship
Value Proposition
Sources of Growth Sources of Productivity
+ +
“Build the Brand”
“Make the Sale”
“Deliver the Product”
“Service Exceptionally”
Revenue Strategy
Productivity Strategy
1. The economic model of key levers driving financial performance
2. The identification of targeted customer segments and their value proposition
3. The process-focused view of the business using the value chain
4. The intangible assets necessary to drive performance
Staff Competencies
Technology Infrastructure
Climate for Action
A Balanced Scorecard tells the “story of the strategy”
6©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
Strategy-Focused Organization Profiles:Breakthrough Results
Public Sector
SMDC Health System
• Profitability up $23m• Customer Satisfaction
City of Charlotte
• Customer Satisfaction = 70%
• Public Official Award
Duke Children’s Hospital
• Customer Satisfaction #1• Cost/Case 33%
Defense Logistics Agency
• $130MM in Savings in FY2002• Processed $2.2B more requisitions
for its customers
Private Sector
Hilton Hotels
• From last to first in industry• ROI 6% --> 16%
• Customer Loyalty 5%• EDITDA margins 3% above
average
UPS
• Revenues 9%• Net Income 33%
Wendy’s International
• Mkt. Cap $2.5 --> $4b• Stock Price up 75%
Mobil
BREAKTHROUGH RESULTS
Shareholder Value
Profitable Growth
Cost Reduction
Organizational Alignment
Customer Satisfaction
7©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
50% of organizations who claim to be using Balanced Scorecards are doing it “wrong”1
A Word of Caution…
NOT Using BSC
Using It RIGHT
Using ItWRONG
Source: 1BSCol Survey Data, Pepperdine/SUNY Albany Study.
8©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
Only 5% of the work force understand the strategy
60% of organizations do not link budgets to strategy
Only 25% of managers have incentives linked to strategy
85% of executive teams spend less than one hour/ month discussing strategy
9 of 10 companies fail to execute
strategy
The People Barrier
The Vision Barrier
The Management Barrier
The Resource Barrier
Why Do Organizations Fail To Execute Strategy?
9©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
The “Strategy Focused Organization” Is Used To Execute Strategy for Breakthrough Results
STRATEGY-FOCUSED
ORGANIZATION
MOBILIZE
GOVERNALIGN
MOTIVATE
TRANSLATE
Mobilize Change through Executive Leadership
Govern to Make Strategy A Continual Process
Motivate to make Strategy Everyone’s Job
Align the Organization to the Strategy
Translate the Strategy into Operational Terms
10©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
Build the Internal Capability to Execute Strategy:The Center of Excellence (COE)
Together these people, processes, and tools form the group responsible for strategy execution in your organization: Your Center of Excellence
Successful Strategy Execution Requires
A skilled team of professionalsPeople
Integrated strategy management processesProcesses
Tools, technologies, and supportTools
11©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
You Need to Select and Train the People in Your Center of Excellence
A Center of Excellence will help your organization make strategy a core competency.
A Center of Excellence Requires:
A COE requires people who can influence the execution team and the strategy
The RightPeople
A COE team member must understand the BSC and SFO concepts and methodologies
The RightSkills
A COE team must be able to facilitate, reach, and manage change
The Right Competencies
12©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
COE’s Need To Establish and Maintain Processes for Strategy Execution in Your Organization
Successful Strategy Execution Requires:
A process to mobilize the organization to changeMobilize
A process to describe and communicate strategyTranslate
A process to align the organization around the strategyAlign
A process to ensure personal objectives and incentives are supporting the strategyMotivate
An integrated reporting and decision making processGovern
13©2003 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol – 01497 COE Document – 02/18/03
Leveraged Tools and Approaches Help Rapidly and Effectively Build the Capability to Execute Strategy
COE’s set of tools and approaches ensure knowledge transfer and repeatable, scalable processes
Successful Strategy Execution Requires:
Proven, Repeatable Approaches• BSC Design• Communication• BSC Cascade• Reporting
Leveraged Technology• Online Design• Measure Library• Industry Templates
• Online Training• Online Learning
Center
14©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
A Center of Excellence Is Built In Three Phases
Source: Kaplan and Norton, Strategy-Focused Organization
Phase I:
Launch
• Builds understanding of the strategic challenges
• Develops commitment by providing a Plan of action
Phase II:
Build
• Develops the internal capabilities to execute strategy through:
•Education
•Facilitation
•Knowledge Transfer
Phase III:
Sustain
• Enhances internal strategic capabilities through continuous learning and involvement
15©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
Evaluate the Current Status Relative to BSCol Best Practices
Phase 1: Launch with Assessment & Design
SFO Development PlanStrategic Readiness
Mobilization
Translate
Alignment
Empower
Governance
Status ActionSFO Competency
Sense ofUrgency
Bes
tP
ract
ice
Case forChange
Vision&
Strategy
AlignExecutive
Team
New Wayof
Managing
Account-ability
ChangeAgents
60
70
80
90 Self Assessment
Best Practice Total
BSCol Score
Define a Program to Build and Sustain a Strategy-Focused
Organization
I. Mobilize1. Assessment2. Plan3. Workshop
II. Build1. Executive
Education2. Pilot Program
(Coaching)3. BSCol Leverage
Toolkit Training
III. Sustain1. Benefits Tracking2. Coaching & Check
Point Reviews 3. Executive Updates4. Change Agent
Roundtables
Task Time
16©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
The Program Design Will Detail the Knowledge Transfer Requirements
That are Needed
People/Process and Tools are selected to meet the requirements
of the Client
Phase 2: Build by Executing the Program
Executive Education
BSC Awareness
Building Strategy-Focused Organizations
Coaching and Advisory Support
Expert Facilitation
Pilot Program Development and Deployment
Corporate/Pilot BSC
Cascading Process
Implementation Planning
BSCol Leveraged Toolkit
Online Learning
Communities
Executive Awareness
E-Library
Development & Transfer of Core Competencies
Leveraged Trainer Training
I. Mobilize1. Assessment2. Plan3. Workshop
II. Build1. Executive
Education2. Pilot Program
(Coaching)3. BSCol Leverage
Toolkit Training
III. Sustain1. Benefits Tracking2. Coaching & Check
Point Reviews 3. Executive Updates4. Change Agent
Roundtables
Task Time
17©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
Phase 3: Sustain the Program by Creating Irreversible Momentum
“A New Way of Managing” “Irreversible Momentum”
Processes Are Put Into Place That Create “Irreversible Momentum”
Benefits TrackingContinuous focus on defining,
documenting, and harvesting the benefits created by the BSC program
Coaching and Check-Point ReviewsPeriodic check-point reviews of progress
against SFO development plan
Executive Updates Periodic executive education sessions
on topics of importance to maintaining momentum
Change Agent RoundtableA community of BSC program managers
from different organizations sharing issues of common interest
The Program Design Will Detail the Key Processes and “Habits” to Create
Change
I. Mobilize1. Assessment2. Plan3. Workshop
II. Build1. Executive
Education2. Pilot Program
(Coaching)3. BSCol Leverage
Toolkit Training
III. Sustain1. Benefits Tracking2. Coaching & Check
Point Reviews 3. Executive Updates4. Change Agent
Roundtables
Task Time
18©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
Center of Excellence Critical Success Factors
Leadership Commitment
Commitment From The Leader And The Majority Of The Leadership
Team
Integrated Program Coordination
Expert Internal Advocates/Consultants
Expert Resources
A Designated Position Responsible For The Program – Advocacy,
Monitoring And Facilitation
A Group Of Trained Internal Facilitators Who Can Consult And
Support Internal Clients
Affinity Groups/Community – Learning Technology – Program
Management Technology
19©2002 Balanced Scorecard Collaborative, Inc. • bscol.comBSCol - 01436 - 11/21/02
For Further Information
Our Mission:
“To facilitate the worldwide awareness,
use, enhancement, and integrity of the
Balanced Scorecard as a value-added
management process”
Join Balanced Scorecard Online™ at bscol.com
Tel: (USA) 781.259.3737
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