RE-ENGINEERING  THE ROLES AND TASKS OF THE FINANCE OFFICER Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings...
Intro: CNI <ul><li>20 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, F&B...
Re-engineering the major roles of the Finance Officer It’s all about expectations
Finance Role? Finance Officer SBUs, Divs, Depts Corporate HQ Strategy Results Request Service Policies Service
Finance Function Objectives? Transactional Cost reduction, Efficiency, Agility, Fast Copy AP, General Ledger, B/S analysis...
Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consi...
Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consi...
Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consi...
Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consi...
Career Guide for Finance Officers <ul><li>Go Wide, Dig Deep </li></ul>
Finance’s Role and Business Intent
<ul><li>&quot;The digital watch didn't come from established watch companies, the calculator didn't come from slide rule o...
What’s wrong with Business Strategy Today? <ul><li>L ong-term Plans </li></ul><ul><li>O bjectives </li></ul><ul><li>S trat...
What’s wrong with Business Strategy Today? <ul><li>Biggest Threats often come from  OUTSIDE  your normal industry </li></u...
Finance Role and the Business Model How to fail without trying
Funds: What do Investors look for? www.myCNI.com.my www.OOBEY.com   Market Value 0 10 <ul><li>M&A </li></ul><ul><li>P/E </...
What is the Business Model? USP Market  Discipline Profit Model <ul><li>Google </li></ul><ul><li>Air Asia </li></ul><ul><l...
What is the Business Model? USP Market  Discipline Profit Model
Business Model: Profit Model Revenue Cost Margin Cash  Flow Assets
Strategy + BSC Revenue Financial Learning & Growth Internal Process Customers  Cost Margin Cash Flow Asset
What is the Business Model? USP Market  Discipline Profit Model
Intro: Market Discipline <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>P...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
Strategy: Value Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Tr...
<ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li...
The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li...
Strategy: Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Treacy &...
Strategy: Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Treacy &...
What is the Business Model? USP Market  Discipline Profit Model <ul><li>Google </li></ul><ul><li>Air Asia </li></ul><ul><l...
Finance Role and Strategic Planning ‘ Hope’ is not a strategy
What is Strategic Planning? Strategic  Planning Variables: Research Growth Risks Stakeholders Constraints SWOT Misc. Outpu...
What is your Goal? <ul><li>Cost Reduction </li></ul><ul><li>Growth </li></ul><ul><li>Both? </li></ul>
Growth Strategy “ Double-Digit Growth”, Michael Treacy www.myCNI.com.my www.OOBEY.com   <ul><li>Increase switching cost </...
Side Notes on Cost Reduction Strategy <ul><li>Cost Reduction </li></ul>5% - 30% 30% - 80% Business Model <ul><li>USP </li>...
Strategy vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer NPD Cycle Time Improve Edge E...
Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Inte...
Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref:  The Discipline of Market Lead...
<ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li...
<ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move  know-how  from top performing units to others </li></ul></u...
Strategy: Value Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about  customers </li></...
<ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce  time  to market </li></ul></ul></ul><ul><ul><ul><li>Commercia...
Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Inte...
Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li...
Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li...
Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li...
Example: Selection of KPIs for BSC <ul><li>Customer satisfaction </li></ul><ul><li>Customer loyalty </li></ul><ul><li>Mark...
Wrong KPIs <ul><li>“ What is the moral of the story?” </li></ul>
KPIs and Behavior <ul><li>Before:  “Handle Time” Per Call </li></ul><ul><li>Motivated Call Centre staff to transfer caller...
KPIs and Behavior <ul><li>After:  “Minutes Per Resolution” of a problem </li></ul><ul><li>Resolution in ONE CALL become th...
Sample: Other 1 st  Level KPIs across industries… Financial Services Retail Telecommunications <ul><li>Maximize ARPU </li>...
Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></...
Finance Role and Resource Allocation and Alignment Where did our money go?
Budgeting: Some thoughts… <ul><li>Two major roles of Budgeting: </li></ul><ul><li>Provide real-life  CONSTRAINTS  to strat...
E3 – Department BSC Customer Perspective –  Marketing Department Budgeting Goals  Strategies Targets CAPEX OPEX Base Reten...
Alignment: 4-Wheels Model Culture Business  Model Strategic Planning Structure Person Leadership Resources
Alignment: Framework <ul><li>Focus point </li></ul><ul><li>Alignment </li></ul><ul><li>Quality </li></ul><ul><li>Innovatio...
Alignment: Framework <ul><li>Org Structure </li></ul><ul><li>Job Design </li></ul><ul><li>C&B </li></ul><ul><li>Policies &...
Strategy: Framework <ul><li>Role modeling </li></ul><ul><li>Vision/Mission/Philosophy </li></ul><ul><li>Leadership Style <...
Strategy: Framework <ul><li>Recognition </li></ul><ul><li>Recruitment </li></ul><ul><li>Training </li></ul><ul><li>Profit ...
Strategy: Framework <ul><li>Enablers </li></ul><ul><li>Technology </li></ul><ul><li>Equipment </li></ul><ul><li>Materials ...
Alignment: 4-Wheels Model Culture Business  Model Strategic Planning Structure Person Leadership Resources
<ul><li>Product Leadership </li></ul>Each Discipline Requires Different Priorities & Resources Operational Excellence Cust...
Each Discipline Requires Different Priorities & Resources <ul><li>Operational Excellence </li></ul><ul><li>Central authori...
<ul><li>Product Leadership </li></ul><ul><li>Ad hoc, organic and cellular </li></ul><ul><li>High skills abound in loose-kn...
Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management  systems Information and  ...
Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Inte...
Budgeting in a Downturn
Budgeting in a Downturn
Budgeting in a Downturn
Budgeting in a Downturn
Budgeting in a Downturn <ul><li>StratEx </li></ul><ul><li>CoREx </li></ul>
Linking the Finance Role with Sales & Marketing Building relationships for the good of the company
Typical Corporate Planning Scenario? <ul><li>Budget ‘top down’ – no questions asked </li></ul><ul><li>Only two budget goal...
At the Table Sales and Marketing Finance and Accounts <ul><li>Field Intelligence </li></ul><ul><li>CRM </li></ul><ul><li>G...
Linking the Roles Sales and Marketing Finance and Accounts <ul><li>Four Links: </li></ul><ul><li>Philosophy </li></ul><ul>...
Philosophy <ul><li>“ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting...
Business Model USP Market  Discipline Profit Model
Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></...
Budgeting & Resource Culture Business  Model Strategic Planning <ul><li>Funding   </li></ul><ul><li>CAPEX </li></ul><ul><l...
End Notes Tying it all up
Problems, problems and more problems…
Alignment: 4-Wheels Model Culture Business  Model Strategic Planning Structure Person Leadership Resources
<ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that...
Don’t forget… <ul><li>“ The business of business is Business, not Sales, not Marketing, not Finance”  </li></ul>www.myCNI....
Thank You. soft copy of slides:  www.totallyunrelatedrandomanddebatable.blogspot.com
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Re-engineering the roles and tasks of the Finance Officer

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ABF Singapore Conference on Finance Function Excellence
Singapore, October 2009

*Finance and the company's Business Model
*Finance and Strategic Planning
*Finance and Resource Allocation and Optimization
*Linking Finance with the Sales & Marketing Function

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Re-engineering the roles and tasks of the Finance Officer

  1. 1. RE-ENGINEERING THE ROLES AND TASKS OF THE FINANCE OFFICER Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad
  2. 2. Intro: CNI <ul><li>20 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, F&B Retail, Export/Trading, eCommerce, Shared Services </li></ul><ul><li>Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States, Vietnam </li></ul><ul><li>Staff force: ± 500 </li></ul><ul><li>Distributors: 200,000 </li></ul><ul><li>Products: Consumer Goods and Services </li></ul>
  3. 3. Re-engineering the major roles of the Finance Officer It’s all about expectations
  4. 4. Finance Role? Finance Officer SBUs, Divs, Depts Corporate HQ Strategy Results Request Service Policies Service
  5. 5. Finance Function Objectives? Transactional Cost reduction, Efficiency, Agility, Fast Copy AP, General Ledger, B/S analysis, Accounting, Fixed Assets, AR, Facilities Value-added Budgeting, Reporting, Financial Analysis, Forecasting, Tax, Legal, Treasury Consistency, Analysis, Value creation, customization Systems, Standardize, Benchmarking, ERP, Streamlining, Automation, Governance Best Practices Process improvement, service innovation, secondary KPIs, internal customers Transformation Market Leadership, Competitive Differentiation, Business model, M&A Direct Business Impact, primary KPIs, external customers
  6. 6. Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consistency, Analysis, Value Process improvement, service innovation, secondary KPIs, internal customers Transformation Direct Business Impact, primary KPIs, external customers Time Cost Quantity Quality
  7. 7. Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consistency, Analysis, Value creation, customization Process improvement, service innovation, secondary KPIs, internal customers Transformation Direct Business Impact, primary KPIs, external customers Time Cost Quantity Quality Innovation Service
  8. 8. Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consistency, Analysis, Value Process improvement, service innovation, secondary KPIs, internal customers Transformation Direct Business Impact, primary KPIs, external customers Time Cost Quantity Quality Innovation Service KPI
  9. 9. Finance Role vs. Measurement Transactional Cost reduction, Efficiency, Agility, Fast Copy Value-added Best Practices Consistency, Analysis, Value Process improvement, service innovation, secondary KPIs, internal customers Transformation Direct Business Impact, primary KPIs, external customers Time Cost Quantity Quality Innovation Service KPI Impact
  10. 10. Career Guide for Finance Officers <ul><li>Go Wide, Dig Deep </li></ul>
  11. 11. Finance’s Role and Business Intent
  12. 12. <ul><li>&quot;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&quot; </li></ul><ul><li>Bob Seidensticker, Futurehype </li></ul>
  13. 13. What’s wrong with Business Strategy Today? <ul><li>L ong-term Plans </li></ul><ul><li>O bjectives </li></ul><ul><li>S trategies </li></ul><ul><li>E nablers </li></ul><ul><li>R esources </li></ul>Also known as L.O.S.E.R.
  14. 14. What’s wrong with Business Strategy Today? <ul><li>Biggest Threats often come from OUTSIDE your normal industry </li></ul><ul><li>Planning from the base of an ‘Existing’ organization vs. zero-based </li></ul><ul><li>Using Sunk Costs for decision making and planning </li></ul><ul><li>Traditional Analysis (e.g. SWOT) based only on known or existing assumptions or knowledge </li></ul><ul><li>Spending too much time in market research and analysis </li></ul><ul><li>Defining the company from a Product/Service perspective vs. Category vs. JTBD (e.g. Coca-cola) </li></ul><ul><li>Wrong Benchmark – already successful vs. what made them successful </li></ul><ul><li>Implementing BSC and PMS to improve Business Model and Strategy </li></ul>
  15. 15. Finance Role and the Business Model How to fail without trying
  16. 16. Funds: What do Investors look for? www.myCNI.com.my www.OOBEY.com Market Value 0 10 <ul><li>M&A </li></ul><ul><li>P/E </li></ul><ul><li>Investor </li></ul><ul><li>Etc. </li></ul>Strategic Control 0 10 <ul><li>I.P. </li></ul><ul><li>Monopoly </li></ul><ul><li>Gov-linked </li></ul>Business Model 0 10 <ul><li>USP </li></ul><ul><li>Profit Mod. </li></ul><ul><li>Mkt Disc. </li></ul><ul><li>Growth </li></ul>
  17. 17. What is the Business Model? USP Market Discipline Profit Model <ul><li>Google </li></ul><ul><li>Air Asia </li></ul><ul><li>Tata Nano </li></ul>
  18. 18. What is the Business Model? USP Market Discipline Profit Model
  19. 19. Business Model: Profit Model Revenue Cost Margin Cash Flow Assets
  20. 20. Strategy + BSC Revenue Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset
  21. 21. What is the Business Model? USP Market Discipline Profit Model
  22. 22. Intro: Market Discipline <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Personalized communications </li></ul><ul><li>&quot;They're very responsive&quot; </li></ul><ul><li>Preferential service and flexibility </li></ul><ul><li>Recommends what I need </li></ul><ul><li>&quot;I'm very loyal to them&quot; </li></ul><ul><li>Helps us to be a success </li></ul>&quot;They are the most innovative&quot; &quot;Constantly renewing and creative&quot; &quot;Always on the leading edge&quot; &quot;A great deal!&quot; Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership &quot;A no-hassles firm&quot; Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy
  23. 23. Strategy: Value Disciplines 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) www.myCNI.com.my www.OOBEY.com
  24. 24. Strategy: Value Disciplines 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) www.myCNI.com.my www.OOBEY.com
  25. 25. Strategy: Value Disciplines 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) www.myCNI.com.my www.OOBEY.com
  26. 26. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Strategy: Value Disciplines <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>www.myCNI.com.my www.OOBEY.com
  27. 27. The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li></ul><ul><li>Make it easy to prepare </li></ul><ul><li>High Turnover </li></ul><ul><li>Tasks simple to learn & repeat </li></ul><ul><li>Make it quick </li></ul><ul><li>“ Fast Food” </li></ul><ul><li>Tests new products for Cooking Times </li></ul><ul><li>Make what customers want </li></ul><ul><li>Prowls market for new products </li></ul><ul><li>Monitored field tests </li></ul>*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
  28. 28. Strategy: Disciplines 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)
  29. 29. Strategy: Disciplines 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) 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
  30. 30. What is the Business Model? USP Market Discipline Profit Model <ul><li>Google </li></ul><ul><li>Air Asia </li></ul><ul><li>Tata Nano </li></ul>
  31. 31. Finance Role and Strategic Planning ‘ Hope’ is not a strategy
  32. 32. What is Strategic Planning? Strategic Planning Variables: Research Growth Risks Stakeholders Constraints SWOT Misc. Output: Plans Priorities KPIs
  33. 33. What is your Goal? <ul><li>Cost Reduction </li></ul><ul><li>Growth </li></ul><ul><li>Both? </li></ul>
  34. 34. Growth Strategy “ Double-Digit Growth”, Michael Treacy www.myCNI.com.my www.OOBEY.com <ul><li>Increase switching cost </li></ul><ul><li>Customize products </li></ul><ul><li>Preempt Defections </li></ul><ul><li>Brand </li></ul><ul><li>Neutralize Competitor advantages </li></ul><ul><li>Superior Value </li></ul><ul><li>Buy market share </li></ul><ul><li>Spot growth opportunities </li></ul><ul><li>Organized search </li></ul><ul><li>Promising Market? </li></ul><ul><li>Make or Buy? </li></ul><ul><li>Base Retention </li></ul><ul><li>Share Gain </li></ul><ul><li>Positioning </li></ul><ul><li>Adjacent Market </li></ul><ul><li>New Business </li></ul>GROWTH
  35. 35. Side Notes on Cost Reduction Strategy <ul><li>Cost Reduction </li></ul>5% - 30% 30% - 80% Business Model <ul><li>USP </li></ul><ul><li>Profit Model </li></ul><ul><li>Market Discipline </li></ul><ul><li>Invest/Divest </li></ul>Operational <ul><li>Finance, HR, IT </li></ul><ul><li>Supply Chain </li></ul><ul><li>R&D </li></ul><ul><li>Sales & Marketing </li></ul>
  36. 36. Strategy vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer NPD Cycle Time Improve Edge Extensions Counter Competitor Innovation Acquire Profits Build momentum Sales Cash Flow Innovation/R&D Focus ‘Breakthroughs’ JV, In-source, Out-source Eliminate bottom 20% Improve Top 15% revenue-generating products ↓ R&D, ↑ Sales www.myCNI.com.my www.OOBEY.com
  37. 37. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Satisfaction
  38. 38. Strategy: Disciplines, Priorities, and KPIs 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)
  39. 39. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Strategy: Disciplines, Priorities, and KPIs <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>
  40. 40. <ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move know-how from top performing units to others </li></ul></ul></ul><ul><ul><ul><li>Benchmark against best in class </li></ul></ul></ul><ul><ul><ul><li>Ensure operations training for all employees </li></ul></ul></ul><ul><ul><ul><li>Use disciplines like TQM for continuous learning to reduce costs and improve quality </li></ul></ul></ul>Strategy: Value Disciplines
  41. 41. Strategy: Value Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about customers </li></ul></ul></ul><ul><ul><ul><li>Understand customer needs </li></ul></ul></ul><ul><ul><ul><li>Empower front line employees </li></ul></ul></ul><ul><ul><ul><li>Ensure that everyone knows the customer </li></ul></ul></ul><ul><ul><ul><li>Make company knowledge available to customers </li></ul></ul></ul>
  42. 42. <ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce time to market </li></ul></ul></ul><ul><ul><ul><li>Commercialize new products fast </li></ul></ul></ul><ul><ul><ul><li>Ensure that ideas flow </li></ul></ul></ul><ul><ul><ul><li>Reuse what other parts of the company have already learned </li></ul></ul></ul><ul><ul><ul><li>Ensure there are multiple sources of funding </li></ul></ul></ul>Strategy: Value Disciplines
  43. 43. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Satisfaction
  44. 44. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul>
  45. 45. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul><ul><li>already know our priorities, aware of all strategy options available </li></ul><ul><li>creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia </li></ul><ul><li>conducting a business Turnaround e.g. MAS </li></ul>
  46. 46. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul><ul><li>want to find out possible strategies, </li></ul><ul><li>determine our priorities first thru selection of important KPIs; </li></ul><ul><li>growing through ‘normal’ business, not a Turnaround. </li></ul>
  47. 47. Example: Selection of KPIs for BSC <ul><li>Customer satisfaction </li></ul><ul><li>Customer loyalty </li></ul><ul><li>Market share </li></ul><ul><li>Customer complaints </li></ul><ul><li>Complaints resolved on first contact </li></ul><ul><li>Return rates </li></ul><ul><li>Response time per customer request </li></ul><ul><li>Price relative to competition </li></ul><ul><li>Total cost to customer </li></ul><ul><li>Average duration of customer relationship </li></ul><ul><li>Customers lost </li></ul><ul><li>Customer retention </li></ul><ul><li>Customer acquisition rates </li></ul><ul><li>Percentage of revenue form new customers </li></ul><ul><li>Number of customers </li></ul><ul><li>Annual sales per turnover </li></ul><ul><li>Win rate (sales closed/sales contact) </li></ul><ul><li>Customer visits to the company </li></ul><ul><li>Hours spent with customers </li></ul><ul><li>Marketing cost as a percentage of sales </li></ul><ul><li>Number of ads placed </li></ul><ul><li>Number of proposals made </li></ul><ul><li>Brand recognition </li></ul><ul><li>Response rate </li></ul><ul><li>Number of trade shows attended </li></ul><ul><li>Sales volume </li></ul><ul><li>Share of target customer spending </li></ul><ul><li>Sales per channel </li></ul><ul><li>Average customer size </li></ul><ul><li>Customers per employee </li></ul><ul><li>Customer service expense per customer </li></ul><ul><li>Customer profitability </li></ul><ul><li>Frequency (number of sales transactions) </li></ul>
  48. 48. Wrong KPIs <ul><li>“ What is the moral of the story?” </li></ul>
  49. 49. KPIs and Behavior <ul><li>Before: “Handle Time” Per Call </li></ul><ul><li>Motivated Call Centre staff to transfer callers, getting rid of complainers, making them someone else’s problem </li></ul><ul><li>Callers at 45% chance of being transferred </li></ul><ul><li>7,000 customers each week suffered transfers 7 times or more </li></ul>
  50. 50. KPIs and Behavior <ul><li>After: “Minutes Per Resolution” of a problem </li></ul><ul><li>Resolution in ONE CALL become the core goal </li></ul><ul><li>Reduced probability of call transfers from 45% to 18% </li></ul>
  51. 51. Sample: Other 1 st Level KPIs across industries… Financial Services Retail Telecommunications <ul><li>Maximize ARPU </li></ul><ul><li>Minimize Churn </li></ul><ul><li>Mutichannel customer service </li></ul><ul><li>Understand customer behavior related to customer conversion, acquisition, and retention </li></ul><ul><li>Single view of customer </li></ul><ul><li>Multichannel customer experience </li></ul><ul><li>Personalized customer experience </li></ul><ul><li>Anticipate and prevent churn despite compensation </li></ul><ul><li>Increase number of products per customer </li></ul><ul><li>Turn call center information opportunity to up-sell and cross-sell </li></ul><ul><li>Increase customer satisfaction and loyalty </li></ul>Hospitality Travel & Leisure Manufacturing <ul><li>Personalized customer experience </li></ul><ul><li>Maximize share of wallet </li></ul><ul><li>Player/customer loyalty </li></ul><ul><li>Multichannel customer service </li></ul><ul><li>Increase customer loyalty and preference </li></ul><ul><li>Maximize customer revenue </li></ul><ul><li>Improve service quality and efficiency </li></ul><ul><li>Capture and close sales opportunities </li></ul><ul><li>Single view of customers across supply chain </li></ul><ul><li>Zero-error order capture </li></ul><ul><li>Streamline opportunity to cash processes </li></ul><ul><li>Leverage investment in ERP and backoffice systems </li></ul>
  52. 52. Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></ul><ul><li>Convenience </li></ul><ul><li>Zero Defects </li></ul><ul><li>Growth </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Customer Knowledge </li></ul><ul><li>Solutions Offered </li></ul><ul><li>Penetration </li></ul><ul><li>Customer Data </li></ul><ul><li>Customer-success focus </li></ul><ul><li>Product Leadership </li></ul><ul><li>Marketing </li></ul><ul><li>Functionality </li></ul><ul><li># of Successes </li></ul><ul><li># of Failures </li></ul><ul><li>Learn from key users </li></ul><ul><li>Interdisciplinary teams </li></ul><ul><li>Pipeline </li></ul>
  53. 53. Finance Role and Resource Allocation and Alignment Where did our money go?
  54. 54. Budgeting: Some thoughts… <ul><li>Two major roles of Budgeting: </li></ul><ul><li>Provide real-life CONSTRAINTS to strategic planning </li></ul><ul><li>Provide RESOURCES to realize strategic plans </li></ul><ul><li>Why Constraints? </li></ul><ul><li>Over aggressive unrealistic planning, usually by Marketing/Sales need to be grounded to real life </li></ul><ul><li>Creative entrepreneurial thinking when resources are limited </li></ul><ul><li>Enforce the need for Accountability i.e. ‘ROI’ thinking for all Managers </li></ul>
  55. 55. E3 – Department BSC Customer Perspective – Marketing Department Budgeting Goals Strategies Targets CAPEX OPEX Base Retention Share Gain
  56. 56. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources
  57. 57. Alignment: Framework <ul><li>Focus point </li></ul><ul><li>Alignment </li></ul><ul><li>Quality </li></ul><ul><li>Innovation & Differentiation </li></ul><ul><li>Risk taking </li></ul><ul><li>Performance Management </li></ul><ul><li>Corporate obsession </li></ul><ul><li>Decision making </li></ul>Culture
  58. 58. Alignment: Framework <ul><li>Org Structure </li></ul><ul><li>Job Design </li></ul><ul><li>C&B </li></ul><ul><li>Policies & procedures </li></ul><ul><li>Decision making </li></ul><ul><li>Job fit </li></ul><ul><li>Management Systems </li></ul><ul><li>BSC and KPIs </li></ul><ul><li>Decentralized & Empower </li></ul>Structure
  59. 59. Strategy: Framework <ul><li>Role modeling </li></ul><ul><li>Vision/Mission/Philosophy </li></ul><ul><li>Leadership Style </li></ul><ul><li>Delegation & Empowerment </li></ul><ul><li>C&B, Promotions </li></ul><ul><li>Sense of Urgency </li></ul><ul><li>Speak regularly about Performance </li></ul>Leadership
  60. 60. Strategy: Framework <ul><li>Recognition </li></ul><ul><li>Recruitment </li></ul><ul><li>Training </li></ul><ul><li>Profit sharing </li></ul><ul><li>Values </li></ul><ul><li>Motivation </li></ul><ul><li>Self Efficacy </li></ul><ul><li>Awareness </li></ul><ul><li>Useful Competencies </li></ul><ul><li>Career aspirations </li></ul><ul><li>Attribution (control) </li></ul>Person
  61. 61. Strategy: Framework <ul><li>Enablers </li></ul><ul><li>Technology </li></ul><ul><li>Equipment </li></ul><ul><li>Materials </li></ul><ul><li>Human </li></ul><ul><li>Intellectual Property </li></ul><ul><li>Partners </li></ul><ul><li>Property </li></ul><ul><li>Funding </li></ul><ul><li>CAPEX </li></ul><ul><li>OPEX </li></ul>Resources
  62. 62. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources
  63. 63. <ul><li>Product Leadership </li></ul>Each Discipline Requires Different Priorities & Resources Operational Excellence Customer Intimacy Organization, jobs, skills Management systems Information and systems Culture, values, norms
  64. 64. Each Discipline Requires Different Priorities & Resources <ul><li>Operational Excellence </li></ul><ul><li>Central authority, low level of empowerment </li></ul><ul><li>High skills at the core of the organization </li></ul><ul><li>Disciplined Teamwork </li></ul><ul><li>Process, product- driven </li></ul><ul><li>Conformance, 'one size fits all' mindset </li></ul><ul><li>Integrated, low cost transaction systems </li></ul><ul><li>The system is the process </li></ul><ul><li>Command and control </li></ul><ul><li>Quality management </li></ul>Organization, jobs, skills Management systems Information and systems Culture, values, norms
  65. 65. <ul><li>Product Leadership </li></ul><ul><li>Ad hoc, organic and cellular </li></ul><ul><li>High skills abound in loose-knit structures </li></ul><ul><li>Concept, future-driven </li></ul><ul><li>Experimentation and 'out of the box' mindset </li></ul><ul><li>Person-to-person communications systems </li></ul><ul><li>Technologies enabling cooperation </li></ul><ul><li>Rewarding individuals' innovative capacity </li></ul><ul><li>Risk and exposure management </li></ul><ul><li>Product Life Cycle profitability </li></ul>Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms
  66. 66. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms <ul><li>Customer Intimacy </li></ul><ul><li>Empowerment close to point of customer contact </li></ul><ul><li>High skills in the field and front-line </li></ul><ul><li>Customer-driven </li></ul><ul><li>Variation and 'have it your way' mindset </li></ul><ul><li>Strong customer databases, linking internal and external information </li></ul><ul><li>Strong analytical tools </li></ul><ul><li>Customer equity measures like life time value </li></ul><ul><li>Satisfaction and share management </li></ul><ul><li>Focus on ‘Share of Wallet’ </li></ul>
  67. 67. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction
  68. 68. Budgeting in a Downturn
  69. 69. Budgeting in a Downturn
  70. 70. Budgeting in a Downturn
  71. 71. Budgeting in a Downturn
  72. 72. Budgeting in a Downturn <ul><li>StratEx </li></ul><ul><li>CoREx </li></ul>
  73. 73. Linking the Finance Role with Sales & Marketing Building relationships for the good of the company
  74. 74. Typical Corporate Planning Scenario? <ul><li>Budget ‘top down’ – no questions asked </li></ul><ul><li>Only two budget goals – revenue, expenses </li></ul><ul><li>The only planning we needed to do was “do better than last year” </li></ul><ul><li>Planning was ‘bottom up’ - compilation of plans within set budget </li></ul><ul><li>No one knew what the other was planning </li></ul><ul><li>FAC’s role was only to compile budget for approval </li></ul><ul><li>KPIs were not used </li></ul><ul><li>Sales was resource priority, everything else not important </li></ul><ul><li>Assumed no major changes in market </li></ul><ul><li>R&D was ‘bottom up’ </li></ul>www.myCNI.com.my www.OOBEY.com
  75. 75. At the Table Sales and Marketing Finance and Accounts <ul><li>Field Intelligence </li></ul><ul><li>CRM </li></ul><ul><li>Growth (organic) </li></ul><ul><li>Lagging KPIs </li></ul><ul><li>Adaptability </li></ul><ul><li>Channels </li></ul><ul><li>1 st Level Branding </li></ul><ul><li>Stakeholder Interest: Customers </li></ul><ul><li>Gut Feel/Instincts </li></ul><ul><li>External Intelligence </li></ul><ul><li>Ratios </li></ul><ul><li>Leading KPIs </li></ul><ul><li>Control/ Constraints </li></ul><ul><li>Resource Mgmt </li></ul><ul><li>Stability & Systems </li></ul><ul><li>Pyramid roles </li></ul><ul><li>Containment </li></ul><ul><li>Shareholder Interest: Shareholder </li></ul>www.myCNI.com.my www.OOBEY.com
  76. 76. Linking the Roles Sales and Marketing Finance and Accounts <ul><li>Four Links: </li></ul><ul><li>Philosophy </li></ul><ul><li>Business Model </li></ul><ul><li>KPIs </li></ul><ul><li>Resource Allocation </li></ul>www.myCNI.com.my www.OOBEY.com
  77. 77. Philosophy <ul><li>“ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .” </li></ul>HBR March/April 1996 www.myCNI.com.my www.OOBEY.com
  78. 78. Business Model USP Market Discipline Profit Model
  79. 79. Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></ul><ul><li>Convenience </li></ul><ul><li>Zero Defects </li></ul><ul><li>Growth </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Customer Knowledge </li></ul><ul><li>Solutions Offered </li></ul><ul><li>Penetration </li></ul><ul><li>Customer Data </li></ul><ul><li>Customer-success focus </li></ul><ul><li>Product Leadership </li></ul><ul><li>Marketing </li></ul><ul><li>Functionality </li></ul><ul><li># of Successes </li></ul><ul><li># of Failures </li></ul><ul><li>Learn from key users </li></ul><ul><li>Interdisciplinary teams </li></ul><ul><li>Pipeline </li></ul>www.myCNI.com.my www.OOBEY.com
  80. 80. Budgeting & Resource Culture Business Model Strategic Planning <ul><li>Funding </li></ul><ul><li>CAPEX </li></ul><ul><li>OPEX </li></ul>Structure Person Leadership Resources
  81. 81. End Notes Tying it all up
  82. 82. Problems, problems and more problems…
  83. 83. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources
  84. 84. <ul><li>“… 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&quot; </li></ul>CEO, Anonymous www.myCNI.com.my www.OOBEY.com
  85. 85. Don’t forget… <ul><li>“ The business of business is Business, not Sales, not Marketing, not Finance” </li></ul>www.myCNI.com.my www.OOBEY.com
  86. 86. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com
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