1. Siakos & Penny
Strategy - Development - Risk
The Importance of Managing Strategy
How Balanced Scorecard puts you in control of business results
Hotel Grande Bretagne, November 11th
, 2010
Confidential – For Internal Use Only
2. Siakos & Penny
Nigel Penny Vassilis Siakos
• Global 30 years expertise in Strategy and
Performance issues
• Ex partner in KPMG management consulting
firm
• Ex Vice President in Norton and Kaplan’s
Balanced Scorecard Collaborative
• Operates extensively with the largest
companies in the world’s powerhouse new
economies
• Appointed by Government Ministers to
advise on public sector strategy issues
• 21 years of professional experience, including
11 years of international Strategy &
Organisational Development consulting
• 10 years of commercial experience with
Johnson & Johnson, Diageo and Walt Disney
• Ex Principal in Hay Group (SEE), member of the
international BEO R&D team developing global
methodologies for Strategic Performance
Management / Balanced Scorecard.
• Private and Public sector consulting experience
including Athens 2004, Greek Ministry of
Development, Greek Municipalities, Citadel
Capital and others
A new force in strategy consulting in the region
Siakos & Penny
Strategy - Development - Risk
3. Our Agenda
• How our current management approaches have failed us
• What is the Balanced Scorecard?
• Getting the content right
• Focusing on improving management reviews
• How do we handle Risk?
• Questions
4. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
The Global Financial Crisis has highlighted how ineffective our
current management systems really are
5. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
Our prime focus as executives is to develop and implement
strategies that meet our stakeholders expectations
6. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
The end to end strategy process divides into elements of strategy
development and strategy implementation
ExecutingDeveloping
7. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
Management surveys continue to show that strategy
implementation issues are the prime cause of failure to achieve
goals.
“Less than 10% of strategies
effectively formulated are
effectively executed”
Fortune
8. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
There can be many reasons for this failure,…… but one is
undoubtedly our reliance on ‘budget based’ reporting tools to
provide the core of our feedback on business performance
9. Siakos & Penny
Strategy - Development - Risk
How our current management approaches have failed us
Spreadsheet-based budget reporting is neither intuitive nor
informative about the issues that matter
Focus on historical,
financial numbers
not strategic
objectives
Micro level detail on
cost management
Obsession with
budget variances
10. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
A budget (or ‘beyond budget’) is useful, but we need different
tools to effectively track our strategy management
Balanced Scorecard
provides a framework to
translate strategy into
operational terms
11. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
Balanced Scorecard ‘describes’ our chosen strategy in ways that
allow us to track progress against objectives not budgets
Four perspectives to
describe strategy
Key performance indicators
to measure each perspective
Cause and effect as a key
differentiating concept
12. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
Balanced Scorecard starts with a strategy map that describes the
different elements of our strategy e.g. a call center business
Financial
Clients
Internal – Customer
Acquisition
F1
Achieve Profitable
Revenue Growth
F3
Grow International
Client Revenue in
Voice & Data
F4. Incubation through
Domestic Clients
Retail, Automobile &
Consumer Durable
F5. Secure all
In-house Voice &
Data Outsource
Business
F6
Establish
Consulting & ASP
Revenue Stream
F9
Improve
Profitability
per seat
F7. Reduce Total
Cost per
Transaction
C1. International
Clients – Operational
Excellence through
Value for Money
C2. Domestic Clients
Product Leadership
Trusted Brand
Customers
C5. Delight Customers
Product & Process
Behavior
Channel Partners
C3. Trusted
Relationship
Influencers &
Analysts
C4. Credible
Information
F2. Pursue
Inorganic Growth
P2.
Build Domain
Specialization
P3. Effective
New Client
acquisition
P1. Brand
Building
P4. Create Sales
& Marketing Team
Service Delivery
Leadership
P11. Achieve World
Class Results
On Key Process
Measures
P10.Exceed Client
SLAs
P12.Effective Process
Documentation
L1. Build Knowledge
Management
System
L2. Build Selected
Client Service
IT Applications
L4. Drive Business
Excellence
L5. Build Our Desired
Environment in
Culture & Values
L3. Move to 100%
Automated
Process
Cost Leadership
P13. Minimize
Manpower
Cost as %
of Revenue
P14. Reduce
Agent
Breakeven
Time
P15. Reduce the
Capital
Cost per Seat
P16. Ensure
Process
Profitability
P17. Optimize
Bandwidth
Costs
F8. Identify &
Mitigate risk
Vaidya
Customer
Client
Relationship
P6. Increase
Perception
P5. Provide
Value
Added Information
& Service
Build Capacity
P7. Increase
Employee
Engagement
Level
P9. Meet the CCEs
Requirement (quality)
on
time
P8. Achieve
Just in Time
Infrastructure
Internal
Learning&
Growth
Clients
13. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
With our strategy map in place we develop measures, targets
and initiatives to support each objective
14. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
We complete the full definition for each objective to arrive with
our final balanced scorecard
15. Siakos & Penny
Strategy - Development - Risk
What is the Balanced Scorecard?
Balanced Scorecards are developed at different levels within an
organisation. This ensures alignment to organisational strategies
16. Siakos & Penny
Strategy - Development - Risk
Getting the right content
Describing strategies in ways that highlight each major
component of our thinking is key to strategy management. We
call this ‘strategy waves’
17. Siakos & Penny
Strategy - Development - Risk
Getting the right content
Strategy waves are a key interface between strategy
development and the creation of the balanced scorecard
Strategies are expressed as a series of waves, developing in
parallel over time
Strategic waves provide a base to structure strategic thinking into
‘boxes’ of activity
They allow management thinking to transcend typical ‘lists of
projects’ which are common in traditional approaches to strategy
development
They enable management to construct a clear mental picture of
different components within the strategy
They aid in resource allocation
They aid in developing performance measurement as they can be
incorporated as ‘waves’ within a balanced scorecard strategy map
18. Siakos & Penny
Strategy - Development - Risk
Getting the right content
An example of strategy waves at a USD 2billion Chinese company
• This strategy map clearly
identifies 3 strategy waves
• Monthly performance reviews
highlight progress in each
wave
• Reviews are carried out
dynamically by reference to
the strategy map, not
traditional financial budget
reports
• Each SBU carries out a
similar management review
based on its own aligned
strategy map
Strategy waves form
the basis for strategy
map design
19. Siakos & Penny
Strategy - Development - Risk
Focusing on improving management reviews
The way we conduct monthly business reviews is still one of the
biggest hurdles to achieving effective strategy management
Little preparation amongst participants – not coming
‘armed’ with a clear understanding of the issues to be
discussed
Presentational in style – each attendee makes a
presentation about their part of the business, usually
highlighting the ‘good bits’
Little shared responsibility for problems
Limited time spent on identifying solutions
No process for follow through
20. Siakos & Penny
Strategy - Development - Risk
Focusing on improving management reviews
The new management review uses the balanced scorecard to
identify problems in advance of the meeting. Attendees arrive
prepared and document actions decided. An Office of Strategy
Management oversees the process
Ref
(REFERS
TO
RELEVANT
REPORT
PAGE)
Strategy
Map
objective(
s)
impacted
Key Issues (1)
(INDICATIVE)
Analysis Impact (2) Proposed actions (3) Due
Date
for
resolut
ion
Responsi
bility
YTD sales
performance adversely
impacted by failure to
grow business from
XXXXXXX key
account
Growth from XXXXXXX
is expected to continue
below forecast for
current year. Other key
accounts are on target,
but offer little further
scope for expansion
beyond existing targets
- USD 10m
revenue impact
on current year
results
Sales team requested to identify other short
term opportunities in existing Tier 2
accounts; regional sales heads to review
opportunity for fast track sales closing
based on existing opportunity lists; regional
çlose teams established to facilitate fast
track close at identified accounts
(1) Refers to any performance issue adversely impacting , or likely to impact, the achievement of highest level business results
(2) Quantified year end sales and/or profit impact where available if problem is not resolved or continues at current levels
(3) Initial proposed actions from responsible executive (to be debated at review meeting)
21. Siakos & Penny
Strategy - Development - Risk
How do we handle risk?
Too often, risk management is seen as a separate process from
ongoing strategic performance reviews
22. Siakos & Penny
Strategy - Development - Risk
How do we handle risk?
New developments in balanced scorecard thinking can
incorporate risk into mainstream business management
processes
23. Siakos & Penny
Strategy - Development - Risk
How do we handle risk?
Risk threats and risk opportunities can be built as strategy waves
within an expanded strategy map
24. Siakos & Penny
Strategy - Development - Risk
In conclusion
Balanced Scorecard puts you in control of strategy management
Focuses on strategic objectives not just budgets
Highlights key elements of the strategy allowing each
one to be discretely analysed and reviewed
Creates a framework for improved management review
meetings leading to faster identification and resolution
of emerging problems
Can be extended to incorporate risk and opportunity
management