Strategic Planning And Organization Clarity

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ABF Strategic Corporate Planning Conference
March 2009, KL

*What are the key pitfalls that can derail strategy planning and implementation efforts?
*What are the critical activities that are anecdotes for driving the development of organisational clarity?
*Examples and case studies

Published in: Business

Strategic Planning And Organization Clarity

  1. 1. STRATEGIC PLANNING AND ORGANIZATION CLARITY Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad
  2. 2. Intro: CNI <ul><li>20 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, Export/Trading, eCommerce </li></ul><ul><li>Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States, Vietnam </li></ul><ul><li>Staff force: ± 500 </li></ul><ul><li>Distributors: 200,000 </li></ul><ul><li>Products: Consumer Goods and Services </li></ul>
  3. 3. <ul><li>&quot;The digital watch didn't come from established watch companies, the calculator didn't come from slide rule or adding machine companies, video games didn't come from board-game manufacturers Parker Bros or Mattel, the ballpoint pen didn't come from fountain pen manufacturers, and Google didn't come from the Yellow Pages&quot; </li></ul><ul><li>Bob Seidensticker, Futurehype </li></ul>
  4. 4. What’s wrong with Strategic Planning Today? <ul><li>L ong-term Plans </li></ul><ul><li>O bjectives </li></ul><ul><li>S trategies </li></ul><ul><li>E nablers </li></ul><ul><li>R esources </li></ul>Also known as L.O.S.E.R.
  5. 5. What’s wrong with Strategic Planning Today? <ul><li>Biggest Threats often come from OUTSIDE your normal industry </li></ul><ul><li>Planning from the base of an ‘Existing’ organization vs. zero-based </li></ul><ul><li>Traditional Analysis (e.g. SWOT) based only on known or existing assumptions or knowledge </li></ul><ul><li>Spending too much time in market research and analysis </li></ul><ul><li>Defining the company from a Product/Service perspective vs. Category vs. JTBD (e.g. Coca-cola) </li></ul><ul><li>Wrong Benchmark – already successful vs. what made them successful </li></ul><ul><li>New strategy, same people </li></ul>
  6. 6. Today’s Agenda
  7. 7. Summary: Today’s presentation 1. Business Model Clarity 2. Strategy Clarity 3. Execution Clarity
  8. 8. What is the Business Model? USP Market Discipline Profit Model
  9. 9. Business Model: USP <ul><li>Unique Selling Proposition (USP) </li></ul><ul><li>= </li></ul><ul><li>Targeted Customer </li></ul><ul><li>= </li></ul><ul><li>Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD) </li></ul>
  10. 10. Business Model: USP <ul><li>“ The Product is Not the Product” </li></ul><ul><li>What is the customer really buying? </li></ul><ul><li>What is the “Core Buying Purpose”? </li></ul><ul><li>What is the “Job To Be Done”? </li></ul>
  11. 11. Business Model: USP <ul><li>Obstacles to JBTD: </li></ul><ul><li>Insufficient WEALTH </li></ul><ul><li>Insufficient ACCESS </li></ul><ul><li>Insufficient SKILL </li></ul><ul><li>Insufficient TIME </li></ul>
  12. 12. What is the Business Model? USP Market Discipline Profit Model
  13. 13. Business Model: Profit Model Revenue Cost Margin
  14. 14. Business Model: Profit Model <ul><li>Profit Model Examples: </li></ul><ul><li>Gillette Shaver </li></ul><ul><li>iPod and iTunes </li></ul><ul><li>IBM and Lenovo </li></ul><ul><li>GM and GM Finance </li></ul><ul><li>Google and Ad Revenue </li></ul><ul><li>McD and Drive-thru revenue, </li></ul><ul><li>Subsidizing Hire Purchase Loan vs. reduce price to protect brand </li></ul><ul><li>Oracle Project Financing over 4 years covering even non-Oracle components </li></ul><ul><li>SaaS PAYU e.g. Siebel/Salesforce </li></ul>
  15. 15. Who Killed Disney ™ ? <ul><li>Profit Model vs. Competition: </li></ul><ul><li>DVD vs. video games and online movies </li></ul><ul><li>car sales vs. car leasing </li></ul><ul><li>newspaper vs. online news </li></ul><ul><li>client server systems vs. SaaS </li></ul>Bussinessweek, February 19 2009, “Hollywood Is Worried as DVD Sales Slow” your greatest competitor for market share is often a different profit model
  16. 16. What is the Business Model? USP Market Discipline Profit Model
  17. 17. Intro: Market Discipline <ul><li>Mamak stall </li></ul>
  18. 18. Intro: Market Discipline <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Personalized communications </li></ul><ul><li>&quot;They're very responsive&quot; </li></ul><ul><li>Preferential service and flexibility </li></ul><ul><li>Recommends what I need </li></ul><ul><li>&quot;I'm very loyal to them&quot; </li></ul><ul><li>Helps us to be a success </li></ul>&quot;They are the most innovative&quot; &quot;Constantly renewing and creative&quot; &quot;Always on the leading edge&quot; &quot;A great deal!&quot; Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership &quot;A no-hassles firm&quot; Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy
  19. 19. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  20. 20. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  21. 21. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  22. 22. Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) HP well-balanced portfolio, mass customization Acer super lean cost structure, aggressive pricing Apple powerful products, premium pricing, limited range Still Doing well in 2009
  23. 23. Business Model vs. Competition <ul><li>Competitor Anchoring vs. Business Model: </li></ul><ul><li>Air Asia vs. Busses & Trains </li></ul><ul><li>Tata Nano vs. Motorbikes </li></ul><ul><li>iPod vs. Sony BMG </li></ul><ul><li>Kindle (Amazon) vs. iPhone (Apple) </li></ul><ul><li>Google vs. Newspaper (Ads) vs. Yahoo (Search) vs. Microsoft (Software) </li></ul><ul><li>McD vs. Toys ‘R’ Us </li></ul>Shift your Business Model, and your Competitor will change
  24. 24. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Strategy: Value Disciplines <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>www.myCNI.com.my www.OOBEY.com
  25. 25. The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li></ul><ul><li>Make it easy to prepare </li></ul><ul><li>High Turnover </li></ul><ul><li>Tasks simple to learn & repeat </li></ul><ul><li>Make it quick </li></ul><ul><li>“ Fast Food” </li></ul><ul><li>Tests new products for Cooking Times </li></ul><ul><li>Make what customers want </li></ul><ul><li>Prowls market for new products </li></ul><ul><li>Monitored field tests </li></ul>*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
  26. 26. Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
  27. 27. Business Model 1. change one, effect three 2. change one, change model
  28. 28. Summary: Today’s presentation 1. Business Model Clarity  Done 2. Strategy Clarity 3. Execution Clarity
  29. 29. 2. Strategy Clarity ‘Hope’ is not a strategy
  30. 30. What is Strategic Planning? Strategic Planning Variables: Research Growth Risks Stakeholders Constraints SWOT Misc. Output: Plans Priorities KPIs
  31. 31. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul>
  32. 32. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul><ul><li>already know our priorities, aware of all strategy options available </li></ul><ul><li>creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia </li></ul><ul><li>conducting a business Turnaround e.g. MAS </li></ul>
  33. 33. Before we start… <ul><li>Which comes first? </li></ul><ul><li>Strategies -> KPI? </li></ul><ul><li>KPI -> Strategies? </li></ul><ul><li>want to find out possible strategies, </li></ul><ul><li>determine our priorities first thru selection of important KPIs; </li></ul><ul><li>growing through ‘normal’ business, not a Turnaround. </li></ul>
  34. 34. Business Situation vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com
  35. 35. Business Situations vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition Many times, you need a different CEO/Leader/Management Team for each business situation www.myCNI.com.my www.OOBEY.com
  36. 36. What is your Goal? <ul><li>Cost Reduction </li></ul><ul><li>Growth </li></ul><ul><li>Both? </li></ul>
  37. 37. Growth Strategy “ Double-Digit Growth”, Michael Treacy www.myCNI.com.my www.OOBEY.com <ul><li>Base Retention </li></ul><ul><li>Share Gain </li></ul><ul><li>Positioning </li></ul><ul><li>Adjacent Market </li></ul><ul><li>New Business </li></ul>GROWTH
  38. 38. How Markets determine Growth Strategies (1) <ul><li>Growth Rate </li></ul>www.myCNI.com.my www.OOBEY.com <ul><li>Base Retention </li></ul><ul><li>Share Gain (Acquisitions) </li></ul><ul><li>Market Positioning </li></ul><ul><li>Share Gain </li></ul><ul><li>Base Retention </li></ul>Strategy <ul><li>Lose customers slower than competitors </li></ul><ul><li>Create scale economics, squeeze costs </li></ul><ul><li>Maintain market share in strategic segments </li></ul><ul><li>Prepare for market decline </li></ul><ul><li>Competitors focus too much on getting new customers </li></ul>Why? Flat Fast Growth Rate
  39. 39. <ul><li>Churn Rate </li></ul>How Markets determine Growth Strategies (2) www.myCNI.com.my www.OOBEY.com <ul><li>Base Retention </li></ul><ul><li>Share Gain </li></ul><ul><li>Adjacent Market </li></ul><ul><li>Share Gain (Acquisitions) </li></ul><ul><li>Adjacent Markets </li></ul>Strategy <ul><li>Lose customers slower than competitors </li></ul><ul><li>Customers are always open to the best value and offer </li></ul><ul><li>Desperate to gain revenue </li></ul><ul><li>Buying customer base is cheaper than own efforts </li></ul><ul><li>New products, old customers strategy </li></ul>Why? High Low Churn Rate
  40. 40. How Markets determine Growth Strategies (3) <ul><li>Example: XYZ Sector </li></ul>www.myCNI.com.my www.OOBEY.com <ul><li>Market Positioning </li></ul><ul><li>Share Gain (M&A) </li></ul><ul><li>Base Retention </li></ul><ul><li>Adjacent Markets (M&A) </li></ul>Fast Growth, Low Churn
  41. 41. Downturn Strategy
  42. 42. Downturn Strategy
  43. 43. Downturn Strategy
  44. 44. Downturn Strategy
  45. 45. Side Notes on Cost Reduction Strategy <ul><li>Cost Reduction </li></ul>5% - 30% 30% - 80% Business Model <ul><li>USP </li></ul><ul><li>Profit Model </li></ul><ul><li>Market Discipline </li></ul>Operational <ul><li>Finance and HR </li></ul><ul><li>Supply Chain </li></ul><ul><li>R&D </li></ul><ul><li>Sales & Marketing </li></ul>
  46. 46. Business Situation vs. Sales Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com <ul><li>Optimize customers’ current assets </li></ul><ul><li>Offset customers’ costs </li></ul><ul><li>Focus market share </li></ul><ul><li>CEO and Sr. Mgmt in the field </li></ul><ul><li>Sell up the buyer chain </li></ul><ul><li>Motivate troops </li></ul><ul><li>Add extra services </li></ul><ul><li>Control troop emotions </li></ul><ul><li>Specialized vs. general teams, i.e. sell support services, sell equipment, existing customers etc. (e.g. Xerox) </li></ul>
  47. 47. Marketing Clarity: <ul><li>Goods Return Policy </li></ul><ul><li>“ I don’t care if they return a Goodyear tire. If they said they paid $200, pay them $200.” </li></ul>Nordstrom does not sell tires
  48. 48. Marketing Clarity: CNI <ul><li>“ CNI is more than business. </li></ul><ul><li>We strongly believe that every individual has the opportunity to attain a better living through CNI.” </li></ul>
  49. 49. Marketing Clarity: Segment & Target Who? Experience Swing Former Opposition
  50. 50. Branding Clarity: Segment & Target <ul><li>Who are you attracted to? </li></ul>
  51. 51. Branding Clarity: Basics & Differentiators Segments Targets Targets Basics Differentiators Experience = Branding
  52. 52. Swing Loyalty <ul><li>Swing Customers are “loyal” because: </li></ul><ul><li>Individual Relationships </li></ul><ul><li>Convenience (at that point in time) </li></ul><ul><li>Tied-up </li></ul><ul><li>Product Uniqueness </li></ul><ul><li>Promotions </li></ul><ul><li>No better alternative </li></ul><ul><li>Downlines </li></ul><ul><li>No known alternative </li></ul><ul><li>Psychologically lazy </li></ul>Swing = Best alternative at the current moment until I find another alternative
  53. 53. “Swing” Marketing <ul><li>Increase switching costs </li></ul><ul><li>Mega packages </li></ul><ul><li>Community </li></ul><ul><li>Reward programs (Points) </li></ul><ul><li>Membership Subscription </li></ul><ul><li>Email communication </li></ul><ul><li>Newsletters </li></ul><ul><li>Personalized alerts </li></ul><ul><li>Survey </li></ul><ul><li>Suggestion Box </li></ul><ul><li>Switching Techniques (e.g. Balance Transfer of credit cards) </li></ul>
  54. 54. R&D Clarity: The “Old” Days Invent R&D Build Manufacturing Market Marketing Sell Sales
  55. 55. R&D Clarity: The “New” Days Invent Build Market Sell R&D Manufacturing Marketing Sales
  56. 56. R&D Clarity: Marketing 101 Product Promotion Pricing Place 4Ps
  57. 57. R&D Clarity: Marketing & R&D Features Brand Target Logistics Product Promotion Pricing Place 4Ps
  58. 58. R&D Clarity: Marketing & R&D Features Brand Target Logistics Price Promotion Place Product IKEA Apple Nestle Asus
  59. 59. R&D Clarity: RD&D <ul><li>Garnier </li></ul><ul><li>Digi </li></ul>Design Point 1: Designed to SELL Design Point 2: Before-After R&D
  60. 60. R&D Clarity: RD&D <ul><li>CNI Waterlife </li></ul>Design Point 1: Designed to SELL Design Point 2: Before-After R&D
  61. 61. R&D Clarity: RD&D <ul><li>R esearch, D evelopment & DESIGN </li></ul><ul><li>Features </li></ul><ul><li>Benefits </li></ul><ul><li>Differentiation </li></ul>
  62. 62. R&D Clarity: RD&D <ul><li>R esearch, D evelopment & DESIGN </li></ul><ul><li>Function </li></ul><ul><li>Aesthetics </li></ul><ul><li>Logistics </li></ul>Design Point 1: Designed to SELL Design Point 2: Before-After R&D
  63. 63. Innovation Clarity Product/ Service Process Business Model Break-through Sub-stantial Incre-mental
  64. 64. Summary: Today’s presentation 1. Business Model Clarity  Done 2. Strategy Clarity 3. Execution Clarity  Done
  65. 65. 3. Execution Clarity Accountability, Benchmarking, BSC, KPIs and other evils
  66. 66. <ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistent&quot; </li></ul>CEO, Anonymous
  67. 67. Wrong KPIs <ul><li>“ What is the moral of the story?” </li></ul>
  68. 68. KPIs and Behavior <ul><li>Before: “Handle Time” Per Call </li></ul><ul><li>Motivated Call Centre staff to transfer callers, getting rid of complainers, making them someone else’s problem </li></ul><ul><li>Callers at 45% chance of being transferred </li></ul><ul><li>7,000 customers each week suffered transfers 7 times or more </li></ul>
  69. 69. KPIs and Behavior <ul><li>After: “Minutes Per Resolution” of a problem </li></ul><ul><li>Resolution in ONE CALL become the core goal </li></ul><ul><li>Reduced probability of call transfers from 45% to 18% </li></ul>
  70. 70. Why BSC? <ul><li>Reason 1: Balanced </li></ul><ul><li>Reason 2: Cause-and-Effect </li></ul>www.myCNI.com.my www.OOBEY.com
  71. 71. Cause and Effect Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” Internal Process “ To satisfy our customers, in which internal business processes must we excel?&quot; Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?
  72. 72. Linking BSC to Strategy Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value
  73. 73. Cause and Effect: An Example Financial Learning & Growth Internal Process Customers / Distributors Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes
  74. 74. Example: Selection of KPIs for BSC <ul><li>Customer satisfaction </li></ul><ul><li>Customer loyalty </li></ul><ul><li>Market share </li></ul><ul><li>Customer complaints </li></ul><ul><li>Complaints resolved on first contact </li></ul><ul><li>Return rates </li></ul><ul><li>Response time per customer request </li></ul><ul><li>Price relative to competition </li></ul><ul><li>Total cost to customer </li></ul><ul><li>Average duration of customer relationship </li></ul><ul><li>Customers lost </li></ul><ul><li>Customer retention </li></ul><ul><li>Customer acquisition rates </li></ul><ul><li>Percentage of revenue form new customers </li></ul><ul><li>Number of customers </li></ul><ul><li>Annual sales per turnover </li></ul><ul><li>Win rate (sales closed/sales contact) </li></ul><ul><li>Customer visits to the company </li></ul><ul><li>Hours spent with customers </li></ul><ul><li>Marketing cost as a percentage of sales </li></ul><ul><li>Number of ads placed </li></ul><ul><li>Number of proposals made </li></ul><ul><li>Brand recognition </li></ul><ul><li>Response rate </li></ul><ul><li>Number of trade shows attended </li></ul><ul><li>Sales volume </li></ul><ul><li>Share of target customer spending </li></ul><ul><li>Sales per channel </li></ul><ul><li>Average customer size </li></ul><ul><li>Customers per employee </li></ul><ul><li>Customer service expense per customer </li></ul><ul><li>Customer profitability </li></ul><ul><li>Frequency (number of sales transactions) </li></ul>
  75. 75. Example: 1 st Level BSC & KPIs Financial Learning & Growth Internal Process Customers / Distributors Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow Average Revenue Per User (ARPU), Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. No. of Active Members. No. Retail Points. Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Loyalty Programs. On Time Delivery. Number of Effective A&P % of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment
  76. 76. Sample: Other 1 st Level KPIs across industries… <ul><li>Single view of customers across supply chain </li></ul><ul><li>Zero-error order capture </li></ul><ul><li>Streamline opportunity to cash processes </li></ul><ul><li>Leverage investment in ERP and backoffice systems </li></ul><ul><li>Increase customer loyalty and preference </li></ul><ul><li>Maximize customer revenue </li></ul><ul><li>Improve service quality and efficiency </li></ul><ul><li>Capture and close sales opportunities </li></ul><ul><li>Personalized customer experience </li></ul><ul><li>Maximize share of wallet </li></ul><ul><li>Player/customer loyalty </li></ul><ul><li>Multichannel customer service </li></ul>Manufacturing Travel & Leisure Hospitality <ul><li>Anticipate and prevent churn despite compensation </li></ul><ul><li>Increase number of products per customer </li></ul><ul><li>Turn call center information opportunity to up-sell and cross-sell </li></ul><ul><li>Increase customer satisfaction and loyalty </li></ul><ul><li>Understand customer behavior related to customer conversion, acquisition, and retention </li></ul><ul><li>Single view of customer </li></ul><ul><li>Multichannel customer experience </li></ul><ul><li>Personalized customer experience </li></ul><ul><li>Maximize ARPU </li></ul><ul><li>Minimize Churn </li></ul><ul><li>Mutichannel customer service </li></ul>Telecommunications Retail Financial Services
  77. 77. Lagging and Leading KPIs Historical, Outcome, Results, 1 st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2 nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly Leading Lagging
  78. 78. Developing ‘Driver’ KPIs Customer Retention % Lagging, 1 st Level Customer Satisfaction Index Leading, 2 nd Level On time delivery Time to market for new products TNA % Defect levels, warranty claims Leading, 3 rd Level onwards
  79. 79. What is the Objective? <ul><li>‘ Do-or-Die’ KPIs for CNI </li></ul><ul><li>Revenue </li></ul><ul><li>ARPU </li></ul><ul><li>Sponsoring </li></ul><ul><li>Retention </li></ul><ul><li>Commission Plan (BDP) </li></ul><ul><li>Product </li></ul><ul><li>Corporate Image </li></ul>
  80. 80. Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
  81. 81. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Strategy: Disciplines, Priorities, and KPIs <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>
  82. 82. <ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move know-how from top performing units to others </li></ul></ul></ul><ul><ul><ul><li>Benchmark against best in class </li></ul></ul></ul><ul><ul><ul><li>Ensure operations training for all employees </li></ul></ul></ul><ul><ul><ul><li>Use disciplines like TQM for continuous learning to reduce costs and improve quality </li></ul></ul></ul>Strategy: Value Disciplines
  83. 83. Strategy: Value Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about customers </li></ul></ul></ul><ul><ul><ul><li>Understand customer needs </li></ul></ul></ul><ul><ul><ul><li>Empower front line employees </li></ul></ul></ul><ul><ul><ul><li>Ensure that everyone knows the customer </li></ul></ul></ul><ul><ul><ul><li>Make company knowledge available to customers </li></ul></ul></ul>
  84. 84. <ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce time to market </li></ul></ul></ul><ul><ul><ul><li>Commercialize new products fast </li></ul></ul></ul><ul><ul><ul><li>Ensure that ideas flow </li></ul></ul></ul><ul><ul><ul><li>Reuse what other parts of the company have already learned </li></ul></ul></ul><ul><ul><ul><li>Ensure there are multiple sources of funding </li></ul></ul></ul>Strategy: Value Disciplines
  85. 85. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
  86. 86. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
  87. 87. Sample KPIs for Each Discipline <ul><li>Operational Excellence </li></ul><ul><li>Price </li></ul><ul><li>Selection </li></ul><ul><li>Convenience </li></ul><ul><li>Zero Defects </li></ul><ul><li>Growth </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Customer Knowledge </li></ul><ul><li>Solutions Offered </li></ul><ul><li>Penetration </li></ul><ul><li>Customer Data </li></ul><ul><li>Customer-success focus </li></ul><ul><li>Product Leadership </li></ul><ul><li>Marketing </li></ul><ul><li>Functionality </li></ul><ul><li># of Successes </li></ul><ul><li># of Failures </li></ul><ul><li>Learn from key users </li></ul><ul><li>Interdisciplinary teams </li></ul><ul><li>Pipeline </li></ul>
  88. 88. Execution: 4-Wheels Alignment Culture Business Model Strategic Planning Structure Person Leadership Resources
  89. 89. Execution: 4-Wheels Alignment <ul><li>Focus point </li></ul><ul><li>Alignment </li></ul><ul><li>Quality </li></ul><ul><li>Innovation & Differentiation </li></ul><ul><li>Risk taking </li></ul><ul><li>Performance Management </li></ul><ul><li>Corporate obsession </li></ul><ul><li>Decision making </li></ul>Culture
  90. 90. Execution: 4-Wheels Alignment <ul><li>Org Structure </li></ul><ul><li>Job Design </li></ul><ul><li>C&B </li></ul><ul><li>Policies & procedures </li></ul><ul><li>Decision making </li></ul><ul><li>Job fit </li></ul><ul><li>Management Systems </li></ul><ul><li>BSC and KPIs </li></ul><ul><li>Decentralized & Empower </li></ul>Structure
  91. 91. Execution: 4-Wheels Alignment <ul><li>Role modeling </li></ul><ul><li>Vision/Mission/Philosophy </li></ul><ul><li>Leadership Style </li></ul><ul><li>Delegation & Empowerment </li></ul><ul><li>C&B, Promotions </li></ul><ul><li>Sense of Urgency </li></ul><ul><li>Speak regularly about Performance </li></ul>Leadership
  92. 92. Execution: 4-Wheels Alignment <ul><li>Recognition </li></ul><ul><li>Recruitment </li></ul><ul><li>Training </li></ul><ul><li>Profit sharing </li></ul><ul><li>Values </li></ul><ul><li>Motivation </li></ul><ul><li>Self Efficacy </li></ul><ul><li>Awareness </li></ul><ul><li>Useful Competencies </li></ul><ul><li>Career aspirations </li></ul><ul><li>Attribution (control) </li></ul>Person
  93. 93. E3 – Department BSC Financial Perspective Budgeting On Time Delivery Innovation Quality OPEX CAPEX Targets Measures Goals
  94. 94. Resource Alignment <ul><li>Enablers </li></ul><ul><li>Technology </li></ul><ul><li>Equipment </li></ul><ul><li>Materials </li></ul><ul><li>Human </li></ul><ul><li>Intellectual Property </li></ul><ul><li>Partners </li></ul><ul><li>Property </li></ul><ul><li>Funding </li></ul><ul><li>CAPEX </li></ul><ul><li>OPEX </li></ul>Resources
  95. 95. <ul><li>Product Leadership </li></ul>Each Discipline Requires Different Priorities & Resources Operational Excellence Customer Intimacy Organization, jobs, skills Management systems Information and systems Culture, values, norms
  96. 96. Each Discipline Requires Different Priorities & Resources <ul><li>Operational Excellence </li></ul><ul><li>Central authority, low level of empowerment </li></ul><ul><li>High skills at the core of the organization </li></ul><ul><li>Disciplined Teamwork </li></ul><ul><li>Process, product- driven </li></ul><ul><li>Conformance, 'one size fits all' mindset </li></ul><ul><li>Integrated, low cost transaction systems </li></ul><ul><li>The system is the process </li></ul><ul><li>Command and control </li></ul><ul><li>Quality management </li></ul>Organization, jobs, skills Management systems Information and systems Culture, values, norms
  97. 97. <ul><li>Product Leadership </li></ul><ul><li>Ad hoc, organic and cellular </li></ul><ul><li>High skills abound in loose-knit structures </li></ul><ul><li>Concept, future-driven </li></ul><ul><li>Experimentation and 'out of the box' mindset </li></ul><ul><li>Person-to-person communications systems </li></ul><ul><li>Technologies enabling cooperation </li></ul><ul><li>Rewarding individuals' innovative capacity </li></ul><ul><li>Risk and exposure management </li></ul><ul><li>Product Life Cycle profitability </li></ul>Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms
  98. 98. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms <ul><li>Customer Intimacy </li></ul><ul><li>Empowerment close to point of customer contact </li></ul><ul><li>High skills in the field and front-line </li></ul><ul><li>Customer-driven </li></ul><ul><li>Variation and 'have it your way' mindset </li></ul><ul><li>Strong customer databases, linking internal and external information </li></ul><ul><li>Strong analytical tools </li></ul><ul><li>Customer equity measures like life time value </li></ul><ul><li>Satisfaction and share management </li></ul><ul><li>Focus on ‘Share of Wallet’ </li></ul>
  99. 99. Budgeting in a Downturn <ul><li>StratEx </li></ul><ul><li>CoREx </li></ul>
  100. 100. What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model www.myCNI.com.my www.OOBEY.com
  101. 101. What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model a.k.a. Business Plan Implementation a.k.a. Talent Management www.myCNI.com.my www.OOBEY.com
  102. 102. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A
  103. 103. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A
  104. 104. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A
  105. 105. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A
  106. 106. Performance and Pay Clarity <ul><li>Pay for Service </li></ul><ul><li>Pay for Job </li></ul><ul><li>Pay for Performance </li></ul><ul><li>Pay for Competency </li></ul>www.myCNI.com.my www.OOBEY.com
  107. 107. Performance and Pay Clarity <ul><li>Increment </li></ul><ul><li>Bonus </li></ul><ul><li>Promotion </li></ul>www.myCNI.com.my www.OOBEY.com
  108. 108. Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  109. 109. Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  110. 110. End Notes Tying it all up
  111. 111. Review processes <ul><li>Result Planning schedule inc. BSC, Budget </li></ul><ul><li>Quarterly Performance Appraisals </li></ul><ul><li>Sales performance reviews </li></ul><ul><li>Non-sales performance reviews </li></ul><ul><li>Annual Appraisals </li></ul><ul><li>Specialized KPI committees </li></ul><ul><li>CAR, PAR, SCAR KPI improvements </li></ul><ul><li>Internal Audit & MSD – process problems </li></ul><ul><li>HRM & TND – people problems </li></ul>
  112. 112. Problems, problems and more problems…
  113. 113. Problems, problems and more problems… <ul><li>No serious budget to tackle key risks </li></ul><ul><li>Too much optimism or pessimism </li></ul><ul><li>Investment ≠ Portfolio Management </li></ul><ul><li>Top down vs. Bottom up </li></ul><ul><li>Good to have vs. Need to have </li></ul><ul><li>Line Manager not thinking like Investors </li></ul><ul><li>Too focused on KPI and BSC </li></ul><ul><li>Budget allocation seen as ‘popularity’ vote </li></ul><ul><li>Public Listing -> pressure for short-term budgets and results vs. long-term innovation </li></ul>
  114. 114. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources
  115. 115. Way back in 2004… <ul><li>Thomas Cup, Indonesia </li></ul>
  116. 116. In 2007… <ul><li>CNI ‘Beemax’ Factory Visit, China </li></ul><ul><li>Top Leaders </li></ul><ul><li>Product Development </li></ul><ul><li>Media </li></ul>
  117. 117. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com

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