STIA-LAN:Balance.Score.Card on Strategic.Management

1. Strategic Management, Balance
Score Card and Scenario Planning
by
Ir.Djadja Achmad Sardjana, MM.
djadja@bapinger.web.id

2. Strategy Purposes
• Where do you want to go?
• How do you want to get there?
Loren Gary, Harvard Management Update, Special Report July 2001

3. Strategy as Simple Rules
Position Resources Simple Rules
Logic Establish Leverage Chase
position resources opportunities
Question Where What How
Best in Stable, well- Changing, well- Ambiguous,
structured structured evolving
markets markets markets
Goal Profitability Long-term Growth
dominance
Kathleen M Eisenhardt and Donald N Sull, Harvard Business Review January 2001 Page 107-
116

4. Strategy Overview
Analysis Design Implementation
Analysis Tools Decision Making Making It Happen
Positioning Options Roadmap
Resource Measurement Communication

5. Strategy Overview
Analysis Design Implementation
External
Mapping Decision Trees
PESTEC Scenarios
5 Forces Critical Success Factors
SWOT
Internal
Core Competencies
Balanced Score Card
Value Chain
Knowledge Management

6. The Challenge - Developing
Strategies in an Uncertain World
•How do we cope with risk and uncertainty?
•How do we select the right indicators to track?
•How do we identify key trends and developments?
•How do we spot new opportunities, ‘white spaces’
and the potential for major discontinuities?
•How do we plan, operate and survive in a turbulent
and fast-changing world?
•How do we handle those not playing by ‘our rules'?

7. Successful Strategies
Successful Strategy
Effective Implementation
Simple, Profound Objective
Consistent & Understanding Appraisal of
Long-Term of the The
Objectives Competitive Organisation’s
Market Resources
Source: Contemporary Strategy Analysis, R Grant 1998, p 10

8. A Path Through Strategy
• Environmental Audit - e.g. 5-forces, PESTEC
• Organisational Audit - e.g. Balanced Scorecard, SWOT, Value Chain
Analysis, Knowledge, Resource, Competence Based analysis
• Map Out alternative Futures - e.g. Scenario Planning
• Define Rules / Guiding Principles / Values
• Determine Strategic Direction
• Develop Business Model
• Design Strategic Architecture
• Define Strategies and Objectives for Business Units
• Create Change Roadmap and Implementation Programmes
• Embed into Operational Plans
• Create Measurement and Communications Framework
• Learn, Implement, Learn

9. Gap on Strategic Management

10. BSC & Strategic Management

11. Power of BSC

12. The Balanced Business Scorecard
Customer Perspective
What’s important to the
customer?
How well are we
meeting their
expectations?
How effectively are we
managing the key
drivers of customer
satisfaction?
What are the key drivers of Which processes are key
shareholder value? to achieving customer
How well are we meeting and financial Internal
Financial shareholder expectations?
How effectively are we
performance objectives?
How effectively are we
Business
Perspective using financial resources managing those Process
across the organisation? processes?
How good are we at Perspective
changing key processes?
How effective are we at
sharing our knowledge?
Have we the right
mechanisms in place to
support learning and
innovation?
Are we doing enough and
in the right areas to ensure
survival and growth?
Innovation & Learning Perspective

13. A Strategy-Focused Organization

14. TRANSLATE THE STRATEGY TO
OPERATIONAL TERMS

15. BSC Strategy Map

16. Defining Strategic Direction
What Is Who Are How Will
What Is
Why Are We The Basis The We
Our
in Of Our Stake Measure
Ambition?
Business? Offering? Holders? Ourselves?
Strategic Specific Distinctive Customers Balanced
Intent Goals Capabilities Policy Scorecard:
Mission Scope Knowledge Financial - CSF’s
Values Scale Product/ Commercial - KPI’s
Speed Service Ethical - Learning/Growth
Portfolio Regulatory - Service
Partnerships/ - Innovation
Alliances - Creativity
Leverage - Financials
Assets / - Outcomes
Resources

17. Strategic Architecture
Strategy &
Stakeholder
Relationships
People Resources &
Knowledge Core
Values
Management Skills
Culture
Operational
Processes,
Technology &
Structures
Financial and Social Performance

18. Shaping Strategy in the Face of Uncertainty
Demography
Climate The Economy
Global Commercial
Developments Developments
Infrastructure Media
S&SR
Lifestyles Education
People
Knowledge Values Resources &
Natural Crime
Management Culture Core Skills
World
Operational
Processes &
Structures
Providers
Technology of Finance
Financial and Social Performance
Government Suppliers
Policy
Environment Interest Alternative Workers
Public
Providers
Groups Regulation Expectations Substitutes
& Values

19. Alternative ‘Futures’ Approaches
• Strategies, goals, intentions, objectives, plans and
tactics
• Possibilities, options and opportunities
• Projections, assumptions, simulations, models and
forecasts
• Alternative arguments, cases, rationales and causes
• Models of stakeholder behavior
• Follow the Leader / Regulator / Market influencers
• Anticipation and prediction of events or sequences of
events
All of these might be considered ‘Scenario Planning’
techniques

20. Scenarios - A Definition
“The precise definition of ‘scenario’ is:
a tool for ordering one’s perceptions about
alternative future environments in which
one’s decisions might be played out.
Alternatively:
a set of organised ways for us to dream
effectively about our own future.”
Peter Schwartz, The Art of The Long View (Doubleday Currency, 1992) p4

21. An Effective Scenario
Tells a story about possible future changes in a particular ‘system’,
domain, environment, society, etc.
Engages the imagination
Is written in the past or present tense - as if the forecasted trends and
events had already happened
Helps clarify the causes and consequences of key developments
Challenges our current thought processes and assumptions about the
future
Enables us to define and assess a range of alternative policies, strategies
and actions
Is seen as relevant and an important element of the strategic process

22. Scenarios Challenge us to
‘Rehearse the Future’
• Engaging the Future - “using scenarios is rehearsing the future. You run
through the simulated events as if you were already living them. You train
yourself to recognize which drama is unfolding. That helps you avoid
unpleasant surprises and you know how to act.” (p.200)
• Role Playing - “by the end of the session, managers (at Shell) understood the
implications of each possible future, because they had literally rehearsed
them” (p.205)
• Challenging Beliefs - “that was the reason for creating the scenarios in the
first place” (p.202)
• Changing Behaviour - “the test is not whether you got future right... The real
test is whether anyone changed his behaviour because he saw the future
differently. And did he change his behaviuor in the right direction?”(p.214)
Peter Schwartz, The Art of The Long View

23. Scenario Planning may be Valuable but...
• We don’t have enough time
• We haven’t got the budget
• We’re not convinced
• Our people are very cynical
• We have a long term plan
• We are too busy with current projects
• We are a numbers organisation
…So is there a way we can prove the value quickly?

24. The Basic Scenario Process
1. Assess the Current Situation
8. Implement and
Monitor 2. Gather the Data
7. Define Strategy
and Plans 3. Identify the Driving
Forces
6. Assess the 4. Generate Alternative
Implications for your Scenarios
Organisation
5. Assess the
Implications
for your
Environment

25. Assessing the Implications
• Identify what we think will be the main
implications of this scenario on how we will
live, how we will work and the general impact
on the business environment
• Identify the implication, threats and
opportunities this will create for your company

26. Defining Improvement Objectives
The clearer we can be about the improvement objectives, the easier it will be to assess
whether the new design will meet its requirements. Typical objectives might include:
Adding Value
Create new customer offerings or product features
Improve customer service, added value and responsiveness
Provide better, more timely performance information
Increasing Efficiency
Faster product launch
Reduce time spent on routine tasks
Reduce paperwork / Minimise processing errors
Cut transaction costs / Simplify and streamline processing steps
Consolidation and elimination of roles, procedures and tasks
Improving Effectiveness
Clarify roles and responsibilities
Increased empowerment / Devolution of responsibility
Standardise processes and procedures performed in multiple locations
Make more effective use of technology
Improve speed, flexibility and productivity

27. Typical Strategy Options
1. Select most probable
2. Hope for the most attractive
3. Parallel strategies - e.g. Nokia
4. Risk Aversion / Hedging
5. Wait for indicators of developments
on key drivers
6. Seek to influence - choose your own
destiny
7. Ignore