Business Process Management 4 Building The BPM Balanced Scorecard

Arlington, November 2007 Balanced Scorecard Masters Balanced Scorecard Masters Building Your Scorecard: Working Towards an Office of Strategy Management an Office of Strategy Management Steve Towers © Steve Towers & Terry Schurter All Rights Reserved www.bennugroup.net www bennugroup net www.bennugroup.net www.stevetowers.com Arlington, November 2007 – www.stevetowers.com & Steve Towers unless otherwise stated – All Rights Reserved All material © Terry Schurter

Arlington, November 2007 Balanced Scorecard Masters Building Your Scorecard: Working Towards an Office of Strategy Management Striving for Balanced Scorecard Success – we don’t always succeed we don t always succeed Embedding the scorecard as part of our organizational DNA i ti l DNA Developing the Office of Strategic Management – the keys to the future www.bennugroup.net www.stevetowers.com All material © Terry Schurter & Steve Towers unless otherwise stated – All Rights Reserved

S Successful f l Customer Towers Outcomes Associates www.bennugroup.net www.stevetowers.com

Bennu Group Bennu Group • Launched in 2006 • Research, mentoring and training organization • Performance & Process Management • Thought leadership • Process Qualifications • Incubates social networks Incubates social networks • www.bpcommunity.org • Main Office, Dallas, Texas , , • Associates in more than 50 countries • Led by Terry Schurter & Steve Towers Towers Associates www.bennugroup.net www.stevetowers.com

A little background… 1976 On the inside.. inside Inland Revenue INDUSTRIAL British Gas ENGINEERING Gateway Nationwide Citib k Citibank BPM Group SYSTEMS Towers Associates Bennu Group On the ENGINEERING outside outside.. 15 years 57 companies OPERATIONS ENGINEERING Financial Services Government Pharmaceuticals THOUGHT Utility ENGINEERING Telco 2007 I fact In f t 11 industries 39 countries www.bennugroup.net www.stevetowers.com All material © Terry Schurter & Steve Towers unless otherwise stated – All Rights Reserved

Arlington, November 2007 Balanced Scorecard Masters Building Your Scorecard: Working Towards an Office of Strategy Management Striving for Balanced Scorecard Success we don t always succeed Success – we don’t always succeed Embedding the scorecard as part of our organizational DNA i ti l DNA Developing the Office of Strategic Management – the keys to the future www.bennugroup.net www.stevetowers.com All material © Terry Schurter & Steve Towers unless otherwise stated – All Rights Reserved

A New Landscape is emerging

Waves of Benefits from Business Performance Management based on Towers Associates & Bennu Group Research 2006‐7 (800+ organizations) enefits 2006 Be 2004 Towers © 2007 Steve Towers & Terry Schurter 1979 1986 1993 2000 2007 Associates www.bennugroup.net www.stevetowers.com

BSC Needs to be “aligned” (driven by) the Strategy Map gy p Harvard K&N Southwest Airlines Example Strategic Theme: Objectives j Measurement Target g Initiative O Operating Efficiency ti Effi i Financial Profitability • Profitability • Market Value • 30% CAGR • More • Seat Revenue • 20% CAGR More Customers Fewer Planes • Plane Lease • 5% CAGR Customers • Fewer planes Cost Customer • Flight is on - • FAA On Time • #1 • Quality Flight Lowest time Arrival Rating management Is on Time Prices • Lowest prices • Customer • #1 • Customer Ranking (Market loyalty Survey) program Internal • Fast ground • On Ground Time • 30 Minutes • Cycle time Fast Ground turnaround • On-Time • 90% optimization Turnaround Departure program Learning • Ground crew • % Ground crew • yr. 1 70% • ESOP alignment trained yr. 3 90% Ground Crew yr. 5 100% • Ground crew Alignment • % Ground crew training stockholders

Why doesn’t it always work? Let’s review what we mean… Performance Management “The use of performance measurement information to The use of performance measurement information to help set agreed‐upon performance goals, allocate and prioritize resources, inform managers to either confirm or change current policy or program directions to meet or change current policy or program directions to meet those goals, and report on the success in meeting those goals.” Performance Measurement “A process of assessing progress towards achieving A process of assessing progress towards achieving predetermined goals, including information on [efficiency, quality, and] outcomes…. Towers Associates www.bennugroup.net www.stevetowers.com Source: “Serving the American Public: Best practices in performance measurement,” June 1997.

“We were measuring the wrong ******* things!” Ry Air’s CE Mi yan ichael O’Le Ryan Air – Europe’s largest And most successful Airline. Airline eary EO “It’s not rocket science. You need to be measuring What’s important to the Wh ’ i h customer. Then you make sure everything you do is achieving those measures. ******* simple really. That way customers keep coming back for more”. Towers Associates www.bennugroup.net www.stevetowers.com

We don’t focus on the Customer! Our service centre hierarchy The service centre as a system What have we focussed on? What we SHOULD pay attention to How many of these •Service measures does the Focus: creation of value for customers Level customer care about? Measures: capability, predictability of Mgr •Abandon Mgr demand, response, failure Rate Role: Acts on the system •Costs What happens when pp the actuals fall short of targets? Personal reviews Focus: creation of value for customers, - Training & coaching removal of failure and waste •# Call/Cases - Personal Measures: achievement of purpose, •AHT FLM •Quality Development plans FLM reducing variation in system performance -MMore peoplel Role: Act on the system •AHT What about acting on •Ability to the system? How follow much of demand is Focus: doing what the customer wants Assoc policies/pro failure? Assoc What % of demand are Measures: achievement of purpose, M hi t f cedures/scri variation in performance pts we meeting? We focus on numbers/targets which we think will mean good service for our customers. The problem is that these numbers aren’t set by the customer and; aren t Towers • don’t relate to what the customer is contacting us about • don’t tell us how effectively we deal with their demands Associates a means of explicitly and progressively achieving the Successful Customer Outcomes. • Don’t give us www.bennugroup.net www.stevetowers.com

Successful BSc’s start with a Strategy Map Mobil (US Marketing & Refining) Map Mobil (US Marketing & Refining) Growth Theme Return on Capital p Productivity Theme Financial Improve quality of revenue by I lit f b Increased from 6% to 16% Maximize utilization of existing Perspective understanding customer needs assets and integrate the business Competitive Position and differentiating ourselves accordingly. (profitability) to reduce total delivered cost. From last (1993) to first (95, 96, 97, 98) Volume Growth Reduce Cash Expenses Improve Cash Flow Exceeds industry by 2-2.5% annually Down by 20% From -$500 M/Yr to +$700 M/Yr Customer Perspective Customer Satisfaction Continuous improvement for 3 p consecutive years Internal Product Innovation Customer Management Perspective Speedpass Active Dealer Quality Perfect Orders Increasing at rate of Continuous Continuous 1M per year improvement for 4 improvement for 4 consecutive years consecutive years Operational Excellence Good Neighbor Quality Capacity Utilization Safety Environmental Continuous Annual value of lost Lost work incidents Number of incidents Learning & improvement for 4 yield reduced from down from 150 to 30 reduced by 63% consecutive years $175m to $50m per year Growth Perspective Motivated & Prepared Workforce Strategic Awareness Source: The Balanced Scorecard Annual employee survey shows awareness of D. Norton & R. Kaplan strategy increased from 20% to 80%

STRATEGIC ALIGNMENT around SCO’s The Process Performance Landscape Provides the structure Provides the structure and language to align everything with the y g Customer… then from There create the BSC/SM Towers Associates Arlington, November 2007 – www.stevetowers.com www.bennugroup.net www.stevetowers.com

Can You Imagine How Different Things Would Be? Towers Associates www.bennugroup.net www.stevetowers.com

Welcome to An example of how to Innovate through Innovate through Successful Customer Outcomes Towers Associates www.bennugroup.net www.stevetowers.com

The FEDEX KINKO SCO... CHALLENGE 1 Su uccess Cu mer Ou How could we make business travelers’ lives Simpler, Easier and more Successful? sful ustom What is t 1) I want to have a great presentation tomorrow. 2) I need to have packets to hand out the 3) I have to get the packets printed and bound. 4) They need to be nice. ) y utcome? 5) They need to be ready when I need them Towers 6) I need to have them when I go to my meeting Associates www.bennugroup.net www.stevetowers.com

WHAT DID FEDEX KINKO’S DO? Towers Associates www.bennugroup.net www.stevetowers.com

HerculesX Dashboard Welcome Joe User Today is Saturday, February 23, 2008 © 2007 Bennu Group LLC & Associates Dashboard Moments of Truth Breakpoints Rules (for representative purposes only) Print | Help | Log Out Page 1 | Page 2 | Page 3 Summary (pre drill) Process Analytics MOT Overview Diagnostic No State Activity Name Assessment Trend COW (f) POF (f) Owner Moment of Truth 35,722 Generate the Business Done 23,000 33,400 23,000 Bill S. Breakpoints 181,220 Promote Done 45,112 64,023 45,112 Joey D. Rules 117,900 Conversion To Do 89,778 93,000 89,778 Frank Points Of Failure (f) 16.4M Completion To Do 12,110 45,112 12,110 Susie Grant the Business To Do 34,000 89,778 34,000 Jill Alerts Open Account Done 23,000 42,110 23,000 Bob C. Alerts from last 2 weeks BPs by Priority Upsell Done 45,112 50,000 45,112 Charles GTB - Conversion Visit every day To Do 89 778 89,778 90,004 90 004 89 778 89,778 Jimbo Frank Keep the Custom To Do 12,110 12,007 12,110 Benny COW Improvement ratio Retention To Do 34,000 55,009 34,000 Linda MOT Creation 10,500 12,889 Gigi Renewal Done 10,500 more... Growth To Do 66,998 82,002 Rose 66,998 Program President’s Message Rules Analysis MOT under management I’d like to take this opportunity to publicly thank the Hercules X team for the incredible job that Processes pending Asses 29 they’ve done. This is our most improved Successful Customer Outcome (SCO) period. Most Improved 183% As a direct consequence of the improvements TRIPLE CROWN benefits this month exceeded Least Improved -7% forecast in all categories including Cost Reduction, Service Improvement and Revenue Generation. Compliance has also improved with Regulatory sign-off now complete. Months target +23% www.bennugroup.net www.stevetowers.com All material © Terry Schurter & Steve Towers unless otherwise stated – All Rights Reserved

The good news.. We are not alone! The good news.. We are not alone! The BSCOL Hall of fame Towers Associates www.bennugroup.net www.stevetowers.com

So how do we: So how do we: 1. Ensure the hard won benefits of initial BSC the hard won benefits of initial BSC initiatives are secured 2. Create a framework to ensure ongoing a framework to ensure ongoing success 3. Establish the strategic discipline and rigour the strategic discipline and rigour across the organization to encourage and grow future success? 4. Consolidate the gains and become a triple crown + company Towers Associates www.bennugroup.net www.stevetowers.com

STRATEGIC ALIGNMENT around SCO’s Towers Associates Arlington, November 2007 – www.stevetowers.com www.bennugroup.net www.stevetowers.com

5 Key attributes of the leader of the OSM • Strategist – owns the process owns the process • Scorekeeper – creates, manages and grows the structure for how things should be done the structure for how things should be done • Gatekeeper – sets the agenda • Guide ‐ Content – focuses the senior team and the companies attention on what we must do • Guide ‐ Operations – provides the direction for implementation and change management p g g Towers Associates www.bennugroup.net www.stevetowers.com

Towers Associates www.bennugroup.net www.stevetowers.com

Skill‐sets within the OSM (US Bank) Project Managers to lead initiatives • I iti ti Initiative coordinators and drum beaters di t dd b t Certifed Process Professionals to align for SCO's • process improvements and a process process improvements, and a process management/documentation team Performance Analysts to count towards SCO s Performance Analysts to count towards SCO's • Gather data, first level analysis, scorecard updates OD Expertise • Plan, Review & Check • Communication Towers Associates • Training www.bennugroup.net www.stevetowers.com

Organizations achieving BSC success Leaders use the BSC/SM to make their customers’ lives Simpler, Easier and More Successful They focus Outside‐in and reduce complexity by applying focus to and fixing the Causes of Work applying focus to and fixing the Causes of Work They Align everything they do through measurement to y g y g y g the Customer and eradicate the things that don’t They apply technology where technology Th l t h l h t h l adds CUSTOMER value! Towers Associates Geneva, November 2007 – www.stevetowers.com www.bennugroup.net www.stevetowers.com

A New Landscape is emerging

Arlington, November 2007 Balanced Scorecard Masters Building Your Scorecard: Working Towards an Office of Strategy Management ion Striving for Balanced Scorecard Success focus on Successful Customer Outcomes In Conclusi Embedding the scorecard as part of our organizational DNA Get everyone focused on SCO’s f d ’ thru the BSC & SM Develop the Office of Strategic Management Develop the Office of Strategic Management help on the journey to the Promised Land www.bennugroup.net www.stevetowers.com Arlington, November 2007 – www.stevetowers.com – All Rights Reserved All material © Terry Schurter & Steve Towers unless otherwise stated

Arlington, November 2007 Balanced Scorecard Masters Balanced Scorecard Masters Building Your Scorecard: Working Towards an Office of Strategy Management an Office of Strategy Management Download this presentation from www.bennugroup.net (you will need to ‘register’ for free) From Saturday 1 December If you would like a book (complimentary) give me your business card Steve Towers © Steve Towers & Terry Schurter All Rights Reserved www.bennugroup.net www bennugroup net www.bennugroup.net www.stevetowers.com Arlington, November 2007 – www.stevetowers.com & Steve Towers unless otherwise stated – All Rights Reserved All material © Terry Schurter

Business Process Management 4 Building The BPM Balanced Scorecard

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