Architecture World2009 Business Performance
 

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Keynote from Architecture World 2009 in Bangalore....

Keynote from Architecture World 2009 in Bangalore.
Explores the migration to Outside-In and its impact on the way we measure performance. More on this theme in the webinar series at http://www.bpgroup.org

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Architecture World2009 Business Performance Presentation Transcript

  • 1. Architecture World 09 Enterprise BPM09 Improve efficiency and customer service, increase revenue and reduce costs Conference Keynote BPM and Performance Management, Scorecards & Strategy Maps Steve Towers BP Group
  • 2. Linking Process with Performance is a critical element in ensuring ongoing success. We will review the steps to achieve this alignment and provide insights from leading companies to fast track you approach. Finally we will consider the process of consolidating and maintaining the performance gains to create the gift that keeps on giving.
  • 3. www.bpcommunity.org • Global 34,000 COMMUNITY • LinkedIn 2,350 www.bp2009.com • Certification (7 Levels) TRAINING • Open & In house Learning • Online Support www.bpgroup.org BUSINESS • Support Groups PROCESS PROFESSIONAL • Mentoring & Coaching • Articles, News INFORMATION & • Discussion RESEARCH • Conferences & Seminars www.successfuloutcomes.blogspot.com
  • 4. The way we think about Performance is wrong.
  • 5. Houston, we have a problem 90% of businesses are unable to execute the strategy they have on paper 70% of businesses project performance they will never attain Source: Axon, L. Learning to lead: How Companies Grow Profits by Growing Leaders, Sept 22,2004 Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005
  • 6. Few Organizations Execute Strategy Well “Strategy has never been more important” “Less than 10% of strategies effectively formulated are effectively executed” Fortune Magazine
  • 7. Only 5% of the workforce understands what the strategy is Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005
  • 8. Performance Measurement “A process of assessing progress towards achieving predetermined goals, including information on [efficiency, quality, and] outcomes…. Well if it is this easy why does it not happen? Source: “Serving the American Public: Best practices in performance measurement,” June 1997.
  • 9. “We are measuring the wrong ******* things!” Ryan Air’s CEO Michael O’Leary Ryan Air – Europe‟s largest And most successful Airline. “It‟s not rocket science. You need to be measuring What‟s important to the customer. Then you make sure everything you do is achieving those measures. ******* simple really. That way customers keep coming back for more” .
  • 10. • Growing Revenues • Enhancing Service • Reducing Costs That is, winning The Triple Crown UTILISE REDIRECT IMPROVE DEVELOP PREPARE
  • 11. To link process with performance we need to rethink what we mean by performance.
  • 12. Red Tape and cutting through the bureaucracy This can be overwhelming for many people and their organizations because the processes and systems in place are complex, expensive and constrain our agility… they were built for a different era
  • 13. Legacy Principles of the Strategy Focused Organization: „MAKE STRATEGY EVERYONE‟S JOB‟ (telco) CORP SBU Top-Down “Bridging • EDUCATION Bottom-Up Process Process” To Share to Internalize & the Strategy & Align Execute the Strategy the Workforce • PERSONAL GOAL ALIGNMENT • BALANCED PAYCHECKS The Strategy Focused Workforce
  • 14. Only 5% of the workforce understands what the strategy is Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005
  • 15. Legacy Corporate and Division Scorecard (GE) Sample from GE Lighting Business Group Level of Organization Financial Customer Internal Process Learning & Growth Corporate Scorecard Increase profit margin Improve customer Increase inventory turns Increase level of satisfaction level Improve internal process employee competency Division Scorecard Optimize cost of production Improve customer Increase inventory turns Increase level of Reduce inventory levels satisfaction level Improve internal process employee competency Plant Scorecard Optimize cost of production Increase percent of Increase inventory turns Number of "on the Increase yields ratio on time delivery Reduce number of defects job training" delivered Increase labor productivity Reduce customer per million Number of performance Reduce inventory levels complaints per million Improve quality incoming coaching session materials Maintain optimum equipment speed Frontline Employee Reduce waste Reduce equipment downtime Number of "on the Scorecard Reduce overtime Reduce number of poor job training" attended Increase production rates solders Number of performance Reduce number of cracked coaching session bulbs attended The above example shows how the scorecard at corporate level is cascaded to division level, and further to plant level and employee level. Are we measuring the Right Things?
  • 16. The Legacy Balanced Scorecard Adopted for a Government Organization Stakeholder Perspective The Mission of the organization is to fulfill Public Policy expectations Customer Perspective Budget / Financial Perspective “To achieve our mission, how must we “If we succeed, how will we look to our look to our customers?” financial donors?” Internal Perspective “To satisfy our customers, financial donors and mission, what business processes must we excel at?” Learning & Growth Perspective “To achieve our mission, how must our people learn, communicate, and work together?” This type of ‘inside-out’ thinking creates complexity and functional specialization. On the surface it looks fine, dig deeper and you see the impact of the legacy mindset – costs, confusion and inability to achieve a SCO.
  • 17. What’s Missing?
  • 18. We don‟t focus on the Customer! CC company) (US/UK 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 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, •Average FLM Handle Time Development plans FLM reducing variation in system performance - More people Role: Act on the system •Quality •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, 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; • don’t relate to what the customer is contacting us about • don’t tell us how effectively we deal with their demands • Don’t give us a means of explicitly and progressively achieving the Successful Customer Outcomes.
  • 19. Looking Outside-in we can then link our existing programs to achieving improved performance
  • 20. www.cemmethod.com EXECUTE REVIEW ASSESSMENT DISCOVERY
  • 21. We can make sure that the way we measure and reward success is linked explicitly with achieving Successful Outcomes
  • 22. What should the Outside-In Balanced Scorecard look like?
  • 23. BPM4 - Balanced Scorecard PERSPECTIVE FINANCIAL 1. Customer Growth New 2. Customer Growth Retained 3. Customer Relationship – Depth 4. Customer Relationship - Breadth 5. Revenue 6. Operation Cost 7. Profitability CUSTOMER ALIGNMENT INTERNAL PERSPECTIVE 1. SCO Development 1. Process Optimization – Penetration % 2. SCO Alignment 2. Process Optimization - Lifecycle/Maturity 3. SCO Optimization 3. Process Optimization - Causes of Work 4. Process Optimization – IO v. OI Customer 4. Process Optimization - Points of Failure 5. Innovation Landscape Index 5. Scorecard - IO v. OI 6. Business Efficiency Ratio 6. Scorecard -Rate of Progression PERSPECTIVE LEARNING 1. Organisation Maturity 2. Process Maturity 3. People Maturity 4. Technique Utilisation 5. Customer Wants/Needs Analysis 6. Innovation Index
  • 24. How do we evolve that into the Outside-In Strategy Map
  • 25. A Complete Scorecard is a Program for Action (successful us airline) Strategic Theme: Strategic Theme: Objectives Measures Targets Initiatives Operations Efficiency Operating Excellence FINANCIAL Profits and RONA • Profitability • 30% CAGR Grow Fewer • Grow Revenues • 20% CAGR Revenues planes • Fewer planes • 5% CAGR CUSTOMER Attract & Retain More Customers • # Customers • 12% growth •Customer ALIGNMENT • More Customers • Ranked #1 loyalty program • FAA On Time On-time Lowest • Flight is on -time Arrival Rating • Ranked #1 • Quality Service prices • Lowest prices • Market Survey management INTERNAL • 30 Minutes • Cycle time PERSPECTIVE Fast ground • Fast ground • On Ground Time • 90% optimization turnaround turnaround • On-Time Departure LEARNING • Ground crew • % Ground crew • yr. 1 70% • Ground crew PERSPECTIVE alignment trained yr. 3 90% training Ground crew yr. 5 100% alignment • % Ground crew • ESOP stockholders
  • 26. Progressively... • assess the Current State e.g. Process Performance Audit • Identify those areas needing rapid attention • Roll out a strategy to migrate the teams, departments and divisions towards Outside-In performance management
  • 27. Migrate from the Legacy Strategy Performance system Divisional Process & Performance Strategy Objectives Management Management Budgets Incentives Planning & Decision Making Top team Knows best Review Requests and Adjust Negotiation & Horse trading Broken down into specialism's
  • 28. Devolve high level SCO‟s into individual performance appraisal processes
  • 29. Moving to the Outside-In DEVELOP THE Balanced Strategy STRATEGY 1 Scorecard STAGE 6 2 DETERMINE THE STAGE STAGE SCO’S ADVISE & MATURE TRANSLATE THE Performance Metrics Strategic SCO SCO’S into THE OPERATION Plan OPERATIONS Results 5 3 STAGE STAGE Operations Plan OPERATIONAL DEVELOP , PLAN Performance REVIEWS – MANAGE Metrics & PREPARE & REFINE 4 Results OPERATIONS STAGE DELIVER PROCESSES & PROJECTS
  • 30. Some elements that change … From (Inside-out) To (Outside-In) Processes Complex Simple People Controlled Empowered Structure Hierarchy/ Team Functional Systems Prescriptive Adaptive Measurement Activities Results Customer End of chain Inclusive Segmented Individual
  • 31. www.cemmethod.com EXECUTE REVIEW ASSESSMENT DISCOVERY
  • 32. Business Process Professional pathway Level Objective Attainment Designation CPP 7 Leadership Master Champion 6 Strategy Master CPP Master 5 Integrate Professional CPP 5 4 Perform Professional CPP 4 3 innovate Professional CPP 3 2 Align Professional CPP 2 1 Optimise www.bp2009.com Practitioner CPP 1 www.icmgworld.c Community om Everyone   Business Analyst     South Africa – Process Managers      June Technologists      Gulf States – Senior Managers       June Australia Leaders        India US & Europe
  • 33. In summary To realise the performance improvements from process… We just need to open our eyes wider and see things anew
  • 34. Questions?
  • 35. www.bpcommunity.org • Global 34,000 COMMUNITY • LinkedIn 2,350 www.bp2009.com • Certification (7 Levels) TRAINING • Open & In house Learning • Online Support www.bpgroup.org BUSINESS • Support Groups PROCESS PROFESSIONAL • Mentoring & Coaching • Articles, News INFORMATION & • Discussion RESEARCH • Conferences & Seminars www.successfuloutcomes.blogspot.com
  • 36. Architecture World 09 Enterprise BPM09 Improve efficiency and customer service, increase revenue and reduce costs Conference Keynote BPM and Performance Management, Scorecards & Strategy Maps Steve Towers BP Group