1. Why Strategy Matters
• Borrowing heavily from Kaplan’s Balanced Scorecard and Strategy Mapping.
• I have taken everyone’s feedback from the meeting on 10/29 and
attempted to place it into a comprehensive strategy map.
• A Harvard Business School study shows that between 70-90% of
businesses attempting a new strategy fail.
• The Balanced Scorecard (BSC) approach nets results in 2-3 years.
• It emphasizes consistent alignment and focus.
• Five principles have to be embraced:
– Translate strategy to operational terms.
– Align the organization to the strategy.
– Make strategy everyone’s everyday job.
– Make strategy a continual process.
– Mobilize change through executive leadership.
2. Introducing Strategy Maps
Financial Perspective
To financially sustain our mission,
what must we focus on?
Customer Perspective
Bottom-Up Process
To achieve our vision, how should we
appear to our customers? What is
that “customer delight” combination of
product, service, pricing, etc.?
Internal Perspective
To satisfy our customers, what
operational processes must we excel at?
What do we need to be better at than
any of our competitors in order to
create “customer delight”?
Learning and
Growth Perspective
How will we sustain our ability Foundation / Multi-Disciplinary
to change and improve? How do we
build a learning, growing company?
May appear to be foundational features or
grounding principles.
4. Learning & Growth Perspective
• Orienting Question: How will we sustain our
ability to change and improve? How do we build
a learning, growing company?
• Divide into 3 areas: human, information &
organizational capital.
Human Capital Information Capital Organizational Capital
• Culture
• Skills • Systems
• Leadership
• Training • Databases
• Alignment
• Knowledge • Networks
• Teamwork
6. Internal Perspective
• Orienting Question: To satisfy our customers, what
operational processes must we excel at? What do we need to be
better at than any of our competitors in order to create
“customer delight”?
Develop Supplier Distribute to
Produce Product Manage Risk
Relations Customers
•Lower cost of ownership.
•JIT delivery.
•Lower cost of production.
•High quality supply. •Financial risk (high credit
•Continuous improvement. •Lower cost to serve.
•New ideas from suppliers. rating).
•Process cycle time. •Responsive delivery time.
•Supplier partnerships. •Operating risk.
•Fixed asset utilization. •Enhance quality.
•Outsource mature non- •Technological risk.
•Working capital efficiency.
strategic products &
services.
8. Customer Perspective
• Orienting Question: To achieve our vision, how should we
appear to our customers? What is that “customer delight”
combination of product, service, pricing, etc.?
• Answer is some combination of the following:
Product / Service Attributes Relationship Image
Selection /
Price Quality Availability Functionality Service Partnership Brand
Breadth
10. Financial Perspective
• Orienting Question: To financially sustain our
mission, what must we focus on?
Long-Term Shareholder Value
Productivity Strategy Growth Strategy Operating Income Strategy
Expand Penetrate
Improve Increase Pursue Streamline
Existing New
Cost Fixed Asset “Lost” O/H
Product Market
Structure Utilization Business
Lines Segments
11. Pulling Together Strategy w/
Implementation … The Balanced
Score Card (BSC)
Keep in mind that these processes & themes (what I
previously called Core Obstacles) can be changed and
added based on your feedback from earlier slides.
12. The Time Realities
of BSC Long-Term Shareholder Value
Operations Customer
Innovation
Management Management
Processes
Processes Processes
Product
Innovation
Shareholder
Value
($) Customer
Management
Operational
Effectiveness
1 2 3 4 5
Time (years)
13. Start w/ Key Definitions - Themes
Financial Perspective
To financially sustain our mission,
what must we focus on?
Product Innovation & Meaningful Line Extension
Re-Energized & Re-Organized Sales Team
Resource Allocation – Placement & Justification
Low-Total Cost Position in Market
Customer Perspective
To achieve our vision, how should we
appear to our customers? What is
that “customer delight” combination of
product, service, pricing, etc.?
Internal Perspective
To satisfy our customers, what
operational processes must we excel at?
What do we need to be better at than
any of our competitors in order to
create “customer delight”?
Learning and
Growth Perspective
How will we sustain our ability
to change and improve? How do we
build a learning, growing company?
May appear to be foundational features or
grounding principles.
15. The BSC Methodology & Template
Strategy Map Balanced Scorecard Action Plan
Process:
Objectives Measurement Target Initiative Budget
Theme:
Financial
Perspective INTENTIONALLY BLANK
Customer
Perspective
Undefined for Now
Internal
Perspective
Learning &
Growth
Perspective
Total Budget $XXXX
16. Low Total-Cost Position in Market
Strategy Map Balanced Scorecard Action Plan
Process: Operations Management
Objectives Measurement Target Initiative Budget
Theme: Low Total-Cost Market Position
Financial Improve Cost Structure • Profitability • Savings due to Sourcing • >15%
Perspective • Reduced Cost • O/H Absorption • O/H Abs. Var.
• Defend mature P/Ns. •0 losses
• W/L by customer & P/N • W/L Analysis
• Attract & retain more @ retail.
Customer Lowest Total • Industry Growth Rate vs. • P1 – Customer Delight
customers. • Key account
Cost Supplier Growth Rate (by •Budget Process
Perspective • Challenge perception growth (% they
account)
that we will not project vs. Our
compete on cost. goal)
• Realistic
• Identify & qualify Growth Goal
Continue & Expand • China Sourcing – SP
off shore vendors.
Internal China Sourcing Evaluation • China Sourcing – TW
• Define actual vs. • P/N analysis of savings • What % justifies • China Sourcing – Top 5
Perspective perceived cost • CT Product Re-Quote moving P/N? • Co-Extrusion
CT Product advantage. • What % savings • Q1 2008 Sales Meeting
• Reduce cost of key on CT to
new product. broaden its sales?
Learning & • Develop the necessary • 1 week for
Growth Perspective skills in purchasing. standard products.
• Design the support • Lead Time for Quotes • 2 weeks for • Design RFQ Process
system to make • Awareness of Expectations custom products. • Expectations for Sourced
Information Human for Sourced Products & New Product Launches.
sourcing more • ____ our cost
Capital Capital efficient. • Go/No-Go – Purchasing to purchase • Personnel Review
RFQ for Logistics/ • Establish standards Capability w/ These Needs sourced product. Process
Sourced Supply Chain/ for what we should be • Purchasing
Products Purchasing pursuing as sourced manager capable
products. of handling this. Total Budget $XXXX
17. Product Innovation &
Meaningful Line Extension
Strategy Map Balanced Scorecard Action Plan
Process: Innovation Processes
Objectives Measurement Target Initiative Budget
Theme: Product Innovation & Line Ext.
Financial Growth Strategy • Revenue Growth • YOY Expectation • Defined.
Perspective • Improved ROI • ROI Expectation • Defined.
• New Products • ROR or $ revenue on • Renewed Existing
• Obvious functionality existing NPD launches. • Defined. Product for Contractor
Customer Appropriate differences. • # of Functional ∆s vs. • Min. of 3. • ER Product
Perspective Selection • Ability to leverage competitive products. • Defined. • SP Redesign
against other companies • Numerical goal on • TW Gen II
in our segment. bay space or P/N’s gained. • OPP TW
• In-House Development • 1 NPD Staff
Internal Supplier Capabilities • Staff Addition(s) • NPD – Add Staff or
Capability. • Metric for New
• New Market Quarterly Outsource?
Perspective • Penetrate New Market
Report
Markets Defined
• Develop NM Report
Market Operating Risks Segments & Developed
Learning &
Growth
Perspective
Human • NPD – Add Staff or
• 1 NPD Staff
Capital • Additional Staff Outsource?
• Develop and • 1 NPD Training
Training on • Do We Invest in NPD • Identify NPD Training
Human communicate Program for X
Innovation Training Program?
philosophy w/ Employees
Capital
procedures and
Product
expectations on new
Design & product development.
Development
Information Total Budget $XXXX
Capital
Justification
For New
Products
18. Re-Energized & Re-Organized
Sales Team
Strategy Map Balanced Scorecard Action Plan
Process: Customer Management
Objectives Measurement Target Initiative Budget
Theme: Re-Energized & Organized Sls
Financial Growth Strategy & • Revenue Growth • YOY Expectation • Defined.
Perspective Operating Income • Profitability • GM or O/H Abs. • Defined.
Quality & Cost • New Awareness of • TBD • Defined.
Perception our Attitude & Ability • Calls / Day • Defined.
Customer • Heightened Presence • NP Placed @ Customer • Defined. •Sales Team
• Add in-house NPD • P/N Growth by Cust. • Defined. Expectations Program
Perspective Relationship /
• Expand P/N’s • Account Touch Metrics • Defined.
Service • Build Relationships
• Consistent Performance • Grading System for • System designed
Internal Re-Energized Team Standards & Expectations Field Sales Staff tied & implemented by
Perspective • Accountability Systems To Annual Review January. • CRM Project
Re-Organized Team (Budget & CRM) • # of NP Placed • Defined •Sales Team
• Emphasis on Organization • % P/N & Gross Sales • Defined Meeting
Learning & Growth Perspective Growth • Defined •Sales Team
• Calls / Day • 2 / Year (Q1, 4) Expectations Program
• # of Sales Meetings
Human Human Information
Capital Capital Capital • Large Account
Key Large Paint & Mid- CRM / Sales • Training in Key Account
• 1 Session/yr. Training Program
Account Level Retail Mgmt Software Management.
• 1 EC Sls Mgr. • EC Sales Manager
Management • Added Staff @ Sr. Lvl.
• By XXX. • CRM Project
• Added CRM System
• Min. 2 @ each. •Sales Team
• # of Key Retailer
Expectations Program
Meetings
Human Human Human
Capital Capital Capital Total Budget $XXXX
Senior Sales Team Expand Ears @
Retail Management Retail Mtgs
Sales
19. Resource Allocation –
Placement & Justification
Strategy Map Balanced Scorecard Action Plan
Process: Operations Management
Objectives Measurement Target Initiative Budget
Theme: Resource Allocation
Financial Streamline O/H • Profitability • GM or O/H Abs. • Defined.
Perspective • % O/H Savings. • Defined.
• Higher Quality • Calls / Day • Defined.
•Sales Team
Face Time with Focused • NP Placed @ Customer • Defined.
Customer Relationship / Expectations Program
Staff. • P/N Growth by Cust. • Defined.
Perspective Service • Attitude, Aptitude & • Account Touch Metrics • Defined.
Follow-Through .
• New Standards for • System designed
Internal • Performance Review • CRM Project
Job-Specific Accountability & implemented by
Accountability • Performance Review
Perspective • Tied to Compensation January.)
•Sales Team
Expectations Program
Learning & • Communicate Clear • Defined Expectations • System designed
• Performance Review
Expectations & Goals. By Job Category (top-down). & implemented by
Growth Organizational • Transparency (on • Quarterly Presentation January.
•Sales Team
Perspective Capital Expectations Program
performance & As to Job Performance • 4 Presentations
• Quarterly Company
Compensation on “my” Performance. On Financial
Update Presentation
Tied to Performance
Performance
Organizational Organizational Organizational
Capital Capital Capital Total Budget $XXXX
Quarterly Transparency on Refine
Strategy Financial Annual Review
Presentations Performance Process
