Strategy Focused Planning System Beyond Traditional Budgeting

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Strategy Foc used Planning System beyond Traditional Budgeting
• What is strategy
• What is a strategic plan
• How to convert a strategic concept into an actionable plan with a realistic budget
• Overview of the mechanism for developing a strategic budget

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Strategy Focused Planning System Beyond Traditional Budgeting

  1. 1. STRATEGY FOCUSED PLANNING SYSTEM BEYOND TRADITIONAL BUDGETING Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
  2. 2. Intro: CNI 1. 20 years old 2. Core Business: MLM 3. Others: Contract Manufacturing, F&B Retail, Export/Trading, eCommerce, Shared Services 4. Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States, Vietnam 5. Staff force: ± 500 6. Distributors: 200,000 7. Products: Consumer Goods and Services www.myCNI.com.my www.OOBEY.com
  3. 3. Introduction to Strategy www.myCNI.com.my www.OOBEY.com
  4. 4. "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" Bob Seidensticker, Futurehype www.myCNI.com.my www.OOBEY.com
  5. 5. What’s wrong with Strategic Planning Today? Long-term Plans Objectives Strategies Enablers Resources Also known as L.O.S.E.R. www.myCNI.com.my www.OOBEY.com
  6. 6. What’s wrong with Strategic Planning Today? • Biggest Threats often come from OUTSIDE your normal industry • Planning from the base of an ‘Existing’ organization vs. zero-based • Traditional Analysis (e.g. SWOT) based only on known or existing assumptions or knowledge • Spending too much time in market research and analysis • Defining the company from a Product/Service perspective vs. Category vs. JTBD (e.g. Coca-cola) • Wrong Benchmark – already successful vs. what made them successful • Implementing BSC and PMS to improve Business Model and Strategy • New strategy, same people www.myCNI.com.my www.OOBEY.com
  7. 7. Today’s Agenda www.myCNI.com.my www.OOBEY.com
  8. 8. Summary: Today’s presentation 1. Business Model and Strategy 2. Strategic Planning 3. Budgeting and Resources www.myCNI.com.my www.OOBEY.com
  9. 9. 1. Business Model and Strategy How to fail without trying www.myCNI.com.my www.OOBEY.com
  10. 10. What is the Business Model? •Google •Air Asia USP •Tata Nano Market Profit Model Discipline www.myCNI.com.my www.OOBEY.com
  11. 11. What is the Business Model? USP Market Profit Model Discipline www.myCNI.com.my www.OOBEY.com
  12. 12. Business Model: Profit Model Revenue Assets Cost Cash Margin Flow www.myCNI.com.my www.OOBEY.com
  13. 13. Strategy + BSC Financial Revenue Cost Margin Cash Flow Asset Customers Internal Process Learning & Growth www.myCNI.com.my www.OOBEY.com
  14. 14. What is the Business Model? USP Market Profit Model Discipline www.myCNI.com.my www.OOBEY.com
  15. 15. Intro: Market Discipline Product "They are the most innovative" Leadership "Constantly renewing and creative" "Always on the leading edge" Customer Operational Intimacy Excellence "Exactly what I need" "A great deal!" Customized products Excellent/attractive price Personalized communications Minimal acquisition cost and "They're very responsive" hassle Preferential service and flexibility Lowest overall cost of Recommends what I need ownership "I'm very loyal to them" "A no-hassles firm" Helps us to be a success Convenience and speed Reliable product and service www.myCNI.com.my www.OOBEY.com
  16. 16. Strategy: Value Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  17. 17. Strategy: Value Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  18. 18. Strategy: Value Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  19. 19. Strategy: Value Disciplines Operational Product Leadership Customer Intimacy Excellence • New, state of the • Management by • Competitive price art products or Fact services • Error free, • Easy to do reliable • Risk takers business with • Fast (on • Meet volatile • Have it your way customer needs demand) (customization) • • Fast concept-to- Simple • Market segments counter • of one Responsive • Never satisfied - obsolete own and • Proactive, • Consistent competitors' flexible information for all products • Relationship and • Transactional • Learning consultative organization selling • 'Once and Done' • Cross selling www.myCNI.com.my www.OOBEY.com
  20. 20. The McPlaybook* Make it easy to eat Make it easy to prepare • 50% drive-thru • High Turnover • Meals held in one • Tasks simple to learn hand & repeat Make it quick Make what customers want • “Fast Food” • Prowls market for new • Tests new products products for Cooking Times • Monitored field tests *Adapted from: Businessweek , Februrary 5th 2007 www.myCNI.com.my www.OOBEY.com
  21. 21. Strategy: Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  22. 22. Strategy: Disciplines Apple powerful Product Leadership products, premium (best product) pricing, limited range Still Doing well in HP well-balanced Acer super lean 2009 portfolio, mass cost structure, aggressive pricing customization Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  23. 23. What is the Business Model? •Google •Air Asia USP •Tata Nano Market Profit Model Discipline www.myCNI.com.my www.OOBEY.com
  24. 24. Summary: Today’s presentation 1. Business Model and  Done Strategy 2. Strategic Planning 3. Budgeting and Resources www.myCNI.com.my www.OOBEY.com
  25. 25. 2. Strategic Planning ‘Hope’ is not a strategy www.myCNI.com.my www.OOBEY.com
  26. 26. What is Strategic Planning? Variables: Research Output: Growth Strategic Plans Risks Stakeholders Planning Priorities KPIs Constraints SWOT Misc. www.myCNI.com.my www.OOBEY.com
  27. 27. What is your Goal? 1. Cost Reduction 2. Growth 3. Both? www.myCNI.com.my www.OOBEY.com
  28. 28. Growth Strategy “Double-Digit Growth”, Michael Treacy 1.Base Retention 1.New Business 1.Share Gain GROWTH 1.Adjacent Market 1.Positioning www.myCNI.com.my www.OOBEY.com
  29. 29. Growth Strategy “Double-Digit Growth”, Michael Treacy •Increase switching cost •Customize products 1. Base Retention •Preempt Defections •Brand 1. New Business 1. Share Gain •Neutralize Competitor GROWTH advantages •Superior Value •Promising Market? •Buy market share •Make or Buy? 1. Adjacent Market 1. Positioning •Spot growth opportunities •Organized search www.myCNI.com.my www.OOBEY.com
  30. 30. How Markets determine Growth Strategies (1) • Growth Rate Growth Strategy Why? Rate Fast 1. Market •Maintain market share in strategic Positioning segments 2. Share Gain •Prepare for market decline 3. Base •Competitors focus too much on Retention getting new customers Flat 1. Base •Lose customers slower than Retention competitors 2. Share Gain •Create scale economics, squeeze (Acquisitions) costs www.myCNI.com.my www.OOBEY.com
  31. 31. How Markets determine Growth Strategies (2) • Churn Rate Churn Strategy Why? Rate Low 1. Share Gain •Buying customer base is (Acquisitions) cheaper than own efforts 2. Adjacent •New products, old customers Markets strategy High 1. Base •Lose customers slower than Retention competitors 2. Share Gain •Customers are always open to 3. Adjacent the best value and offer Market •Desperate to gain revenue www.myCNI.com.my www.OOBEY.com
  32. 32. How Markets determine Growth Strategies (3) •Example: XYZ Sector Fast Growth, •Market Positioning Low Churn •Share Gain •Base Retention •Adjacent Markets www.myCNI.com.my www.OOBEY.com
  33. 33. Side Notes on Cost Reduction Strategy Cost Reduction 30% 5% - - 30% 80% Business Operational Model •USP •Finance, HR, IT •Profit Model •Supply Chain •Market Discipline •R&D •Invest/Divest •Sales & Marketing www.myCNI.com.my www.OOBEY.com
  34. 34. Business Situation vs. Focus Upturn Flat Downturn Fight Complacency Innovation Sales Sharpen Edge Acquire Cash Flow Keep Momentum Profits Conquer Build momentum ‘Change’ mgmt Talent Mgmt Top Talent focus Reduce Fat Innovation/R&D Sales, Sales, Sales Continuity Early wins Increase attrition Everyone Happy Slow Down HR Costs www.myCNI.com.my www.OOBEY.com
  35. 35. Business Situation vs. Sales 1. Optimize customers’ current Upturn assets Flat Downturn 2. Offset customers’ costs Fight Complacency Innovation Sales 3. Focus market share Sharpen Edge Acquire 4. CEO and Sr. Mgmt in the field Cash Flow 5. SellMomentum Keep up the buyer chainProfits 6. Motivate troops Build momentum Conquer 7. Add extra services 8. Control troop emotions Mgmt ‘Change’ mgmt Talent Top Talent focus 9. Specialized vs. general teams, Reduce Fat Innovation/R&D Sales, Sales, Sales i.e. sell support services, sell Continuity Early wins equipment, existing customers Increase attrition etc. (e.g. Xerox) Slow Down HR Costs Everyone Happy www.myCNI.com.my www.OOBEY.com
  36. 36. Strategy + BSC Financial Revenue Cost Margin Cash Flow Asset Customers Satisfactio n Base Share Gain Positioning Adjacent New Retention Market Business Internal Process Learning & Growth www.myCNI.com.my www.OOBEY.com
  37. 37. Strategy: Disciplines, Priorities, and KPIs Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  38. 38. Strategy: Disciplines, Priorities, and KPIs Operational Product Leadership Customer Intimacy Excellence • New, state of the • Management by • Competitive price art products or Fact services • Error free, • Easy to do reliable • Risk takers business with • Fast (on • Meet volatile • Have it your way customer needs demand) (customization) • • Fast concept-to- Simple • Market segments counter • of one Responsive • Never satisfied - obsolete own and • Proactive, • Consistent competitors' flexible information for all products • Relationship and • Transactional • Learning consultative organization selling • 'Once and Done' • Cross selling www.myCNI.com.my www.OOBEY.com
  39. 39. Strategy: Value Disciplines • Operational Excellence • Move know-how from top performing units to others • Benchmark against best in class • Ensure operations training for all employees • Use disciplines like TQM for continuous learning to reduce costs and improve quality www.myCNI.com.my www.OOBEY.com
  40. 40. Strategy: Value Disciplines • Customer Intimacy • Capture knowledge about customers • Understand customer needs • Empower front line employees • Ensure that everyone knows the customer • Make company knowledge available to customers www.myCNI.com.my www.OOBEY.com
  41. 41. Strategy: Value Disciplines • Product Leadership • Reduce time to market • Commercialize new products fast • Ensure that ideas flow • Reuse what other parts of the company have already learned • Ensure there are multiple sources of funding www.myCNI.com.my www.OOBEY.com
  42. 42. Strategy: Value Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  43. 43. Strategy: Value Disciplines Product Leadership (best product) Operational Excellence Customer Intimacy (low cost producer) (best total solution) www.myCNI.com.my Leaders, Michael Treacy & Fred Wiersema; 1995 Ref: The Discipline of Market www.OOBEY.com
  44. 44. Strategy + BSC Financial Revenue Cost Margin Cash Flow Asset Customers Satisfactio n Base Share Gain Positioning Adjacent New Retention Market Business Internal Process Investment Operational Product Customer Strategy Excellence Leadership Intimacy Learning & Growth www.myCNI.com.my www.OOBEY.com
  45. 45. Alignment: 4-Wheels Model Business Person Structure Model Strategic Planning Culture Leadership Resources www.myCNI.com.my www.OOBEY.com
  46. 46. Alignment: Framework Culture • Focus point • Alignment • Quality • Innovation & Differentiation • Risk taking • Performance Management • Corporate obsession • Decision making www.myCNI.com.my www.OOBEY.com
  47. 47. Alignment: Framework Structure • Org Structure • Job Design • C&B • Policies & procedures • Decision making • Job fit • Management Systems • BSC and KPIs • Decentralized & Empower www.myCNI.com.my www.OOBEY.com
  48. 48. Strategy: Framework Leadership • Role modeling • Vision/Mission/Philosophy • Leadership Style • Delegation & Empowerment • C&B, Promotions • Sense of Urgency • Speak regularly about Performance www.myCNI.com.my www.OOBEY.com
  49. 49. Strategy: Framework • Recognition Person • Recruitment • Training • Profit sharing • Values • Motivation • Self Efficacy • Awareness • Useful Competencies • Career aspirations • Attribution (control) www.myCNI.com.my www.OOBEY.com
  50. 50. Strategy: Framework Enablers Resources • Technology • Equipment Funding • Materials • CAPEX • Human • OPEX • Intellectual Property • Partners • Property www.myCNI.com.my www.OOBEY.com
  51. 51. Alignment: 4-Wheels Model Business Person Structure Model Strategic Planning Culture Leadership Resources www.myCNI.com.my www.OOBEY.com
  52. 52. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Culture, values, Product norms Operationa Leadership Customer l Intimacy Information and systems Excellenc e Management systems www.myCNI.com.my www.OOBEY.com
  53. 53. Each Discipline Requires Different Priorities & Resources Operational Excellence Organization, • Central authority, low level of empowerment jobs, skills • High skills at the core of the organization • Disciplined Teamwork Culture, values, norms • Process, product- driven • Conformance, 'one size fits all' mindset Information and • Integrated, low cost transaction systems systems • The system is the process Management • Command and control systems • Quality management www.myCNI.com.my www.OOBEY.com
  54. 54. Each Discipline Requires Different Priorities & Resources Product Leadership Organization, jobs,•Ad hoc, organic and cellular skills •High skills abound in loose-knit structures •Concept, future-driven Culture, values, •Experimentation and 'out of the box' mindset norms •Person-to-person communications systems •Technologies enabling cooperation Information and systems •Rewarding individuals' innovative capacity •Risk and exposure management Management •Product Life Cycle profitability systems www.myCNI.com.my www.OOBEY.com
  55. 55. Each Discipline Requires Different Priorities & Resources Customer Intimacy Organization, jobs,• Empowerment close to point of customer skills contact • High skills in the field and front-line Culture, values, norms • Customer-driven • Variation and 'have it your way' mindset Information and systems • Strong customer databases, linking internal and external information • Strong analytical tools Management systems • Customer equity measures like life time value • Satisfaction and share management www.myCNI.com.my • Focus on ‘Share of Wallet’ www.OOBEY.com
  56. 56. Strategy + BSC Financial Revenue Cost Margin Cash Flow Asset Customers Satisfactio n Base Share Gain Positioning Adjacent New Retention Market Business Internal Process Investment Operational Product Customer Strategy Excellence Leadership Intimacy Learning & Growth Competencies Information Motivation, Systems empowerment, alignment www.myCNI.com.my www.OOBEY.com
  57. 57. Before we start… Which comes first? 2. Strategies -> KPI? 3. KPI -> Strategies? www.myCNI.com.my www.OOBEY.com
  58. 58. Before we start… Which comes first? • Strategies -> KPI? • KPI -> Strategies? •already know our priorities, aware of all strategy options available •creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia •conducting a business Turnaround e.g. MAS www.myCNI.com.my www.OOBEY.com
  59. 59. Before we start… Which comes first? • Strategies -> KPI? • KPI -> Strategies? •want to find out possible strategies, •determine our priorities first thru selection of important KPIs; •growing through ‘normal’ business, not a Turnaround. www.myCNI.com.my www.OOBEY.com
  60. 60. Example: Selection of KPIs for BSC •Customer satisfaction •Win rate (sales closed/sales contact) •Customer loyalty •Customer visits to the company •Market share •Hours spent with customers •Customer complaints •Marketing cost as a percentage of sales •Complaints resolved on first contact •Number of ads placed •Return rates •Number of proposals made •Response time per customer •Brand recognition request •Response rate •Price relative to competition •Number of trade shows attended •Total cost to customer •Sales volume •Average duration of customer •Share of target customer spending relationship •Sales per channel •Customers lost •Average customer size •Customer retention •Customers per employee •Customer acquisition rates •Customer service expense per customer •Percentage of revenue form new •Customer profitability customers •Frequency (number of sales •Number of customers transactions) •Annual sales per turnover www.myCNI.com.my www.OOBEY.com
  61. 61. Wrong KPIs “What is the moral of the story?” www.myCNI.com.my www.OOBEY.com
  62. 62. KPIs and Behavior Before: “Handle Time” Per Call • Motivated Call Centre staff to transfer callers, getting rid of complainers, making them someone else’s problem • Callers at 45% chance of being transferred • 7,000 customers each week suffered transfers 7 times or more www.myCNI.com.my www.OOBEY.com
  63. 63. KPIs and Behavior After: “Minutes Per Resolution” of a problem • Resolution in ONE CALL become the core goal • Reduced probability of call transfers from 45% to 18% www.myCNI.com.my www.OOBEY.com
  64. 64. Sample: Other 1st Level KPIs across industries… Financial Services Retail Telecommunications •Maximize ARPU •Understand customer •Anticipate and prevent churn •Minimize Churn behavior related to customer despite compensation •Mutichannel customer conversion, acquisition, and •Increase number of products retention per customer service •Single view of customer •Turn call center information •Multichannel customer opportunity to up-sell and experience cross-sell •Personalized customer •Increase customer experience satisfaction and loyalty Hospitality Travel & Leisure Manufacturing •Personalized customer •Increase customer loyalty •Single view of customers experience and preference across supply chain •Maximize share of wallet •Maximize customer revenue •Zero-error order capture •Player/customer loyalty •Improve service quality and •Streamline opportunity to •Multichannel customer efficiency cash processes service •Capture and close sales •Leverage investment in ERP opportunities and backoffice systems www.myCNI.com.my www.OOBEY.com
  65. 65. Sample KPIs for Each Discipline Operational Product Customer Intimacy Excellence Leadership • Price • Marketing • Customer • Selection Knowledge • Functionality • Convenience • Solutions Offered • Zero Defects • # of Successes • Penetration • Growth • # of Failures • Customer Data • Learn from key • Customer-success users focus • Interdisciplinary teams • Pipeline www.myCNI.com.my www.OOBEY.com
  66. 66. Summary: Today’s presentation 1. Business Model and  Done Strategy  Done 2. Strategic Planning 3. Budgeting and Resources www.myCNI.com.my www.OOBEY.com
  67. 67. 3. Budgeting and Resources The art and science of allocating and aligning Resources to strategic plans www.myCNI.com.my www.OOBEY.com
  68. 68. Budgeting: Some thoughts… Two major roles of Budgeting: • Provide real-life CONSTRAINTS to strategic planning • Provide RESOURCES to realize strategic plans Why Constraints? 2. Over aggressive unrealistic planning, usually by Marketing/Sales need to be grounded to real life 3. Creative entrepreneurial thinking when resources are limited 4. Enforce the need for Accountability i.e. ‘ROI’ thinking for all Managers www.myCNI.com.my www.OOBEY.com
  69. 69. E3 – Department BSC Customer Perspective – Marketing Department Goals Strategies Targets CAPEX OPEX Base Retention Share Gain Budgeting www.myCNI.com.my www.OOBEY.com
  70. 70. Alignment: 4-Wheels Model Business Person Structure Model Strategic Planning Culture Leadership Resources www.myCNI.com.my www.OOBEY.com
  71. 71. Strategy: Framework Enablers Resources • Technology • Equipment Funding • Materials • CAPEX • Human • OPEX • Intellectual Property • Partners • Property www.myCNI.com.my www.OOBEY.com
  72. 72. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Culture, values, Product norms Operationa Leadership Customer l Intimacy Information and systems Excellenc e Management systems www.myCNI.com.my www.OOBEY.com
  73. 73. Each Discipline Requires Different Priorities & Resources Operational Excellence Organization, • Central authority, low level of empowerment jobs, skills • High skills at the core of the organization • Disciplined Teamwork Culture, values, norms • Process, product- driven • Conformance, 'one size fits all' mindset Information and • Integrated, low cost transaction systems systems • The system is the process Management • Command and control systems • Quality management www.myCNI.com.my www.OOBEY.com
  74. 74. Each Discipline Requires Different Priorities & Resources Product Leadership Organization, jobs,•Ad hoc, organic and cellular skills •High skills abound in loose-knit structures •Concept, future-driven Culture, values, •Experimentation and 'out of the box' mindset norms •Person-to-person communications systems •Technologies enabling cooperation Information and systems •Rewarding individuals' innovative capacity •Risk and exposure management Management •Product Life Cycle profitability systems www.myCNI.com.my www.OOBEY.com
  75. 75. Each Discipline Requires Different Priorities & Resources Customer Intimacy Organization, jobs,• Empowerment close to point of customer skills contact • High skills in the field and front-line Culture, values, norms • Customer-driven • Variation and 'have it your way' mindset Information and systems • Strong customer databases, linking internal and external information • Strong analytical tools Management systems • Customer equity measures like life time value • Satisfaction and share management www.myCNI.com.my • Focus on ‘Share of Wallet’ www.OOBEY.com
  76. 76. Managing Gaps between actual and planned budgets 1. Budgeting vs. Priorities 2. Basic Budgeting policies 3. Activity Grid to determine budget priorities 4. Budgeting for Investments based on the ‘BCG Matrix’ principles www.myCNI.com.my www.OOBEY.com
  77. 77. Budgeting vs. Priorities Priority = Time + Money www.myCNI.com.my www.OOBEY.com
  78. 78. Budgeting vs. Priorities Example: Business Situation vs. R&D Priorities Upturn Flat Downturn Fight Complacency Innovation Sales Sharpen Edge Acquire Cash Flow Keep Momentum Profits Conquer Build momentum NPD Cycle Time Focused on Improve Top 15% ‘Breakthrough’ Improve Edge revenue-generating JV, In-source, Out- products Extensions source Counter Competitor ↓ R&D, ↑Sales Eliminate bottom 20% www.myCNI.com.my www.OOBEY.com
  79. 79. Basic Budgeting policies • Flexibility to switch between line items • Reserve Funds • Loans/External Funding www.myCNI.com.my www.OOBEY.com
  80. 80. Activity Grid to determine budget priorities Increase (↑) Create (+) What are features/ What are features/ activities/services to activities/services to increase? introduce? Reduce (↓) Eliminate (-) What are features/ What are features/ activities/services to activities/services to reduce? eliminate? 1. Manage conflicts where limited resources should go 2. Solve problem of compounding activities & resources www.myCNI.com.my www.OOBEY.com
  81. 81. Budgeting for Investments based on the ‘BCG Matrix’ principles Market Potential Business Performance www.myCNI.com.my www.OOBEY.com
  82. 82. Budgeting in a Downturn www.myCNI.com.my www.OOBEY.com
  83. 83. Budgeting in a Downturn www.myCNI.com.my www.OOBEY.com
  84. 84. Budgeting in a Downturn www.myCNI.com.my www.OOBEY.com
  85. 85. Budgeting in a Downturn www.myCNI.com.my www.OOBEY.com
  86. 86. Budgeting in a Downturn 1. StratEx 2. CoREx www.myCNI.com.my www.OOBEY.com
  87. 87. End Notes Tying it all up www.myCNI.com.my www.OOBEY.com
  88. 88. Business Situation vs. Post- Downturn Possibilities Deflation Inflation Stagflation •Strong supply of •Huge amount of •Combination of Source goods and weak money being slow growth and demand pumped surging inflation •CPI •CPI •Misery Index, = Unemployment + Indicator •Real estate •Commodity Inflation Rates values prices •Savings rate •Government debt as a % of GDP Investment •Short-term •Pegged to •Conservative •Technology inflation •High-quality •Commodities growth www.myCNI.com.my Businessweek, 22nd June 2009, “Pick Your Poison” www.OOBEY.com
  89. 89. 10 Questions for CFOs – post recovery 1. Recovery shape? 1. Financial resources 2. Restructured for upturn? enough? 2. Buying talent, 3. Supply Chain marketing, R&D? flexible? 3. New risks? 4. Acquisition targets? 4. How to sell recovery 5. Restart alliances? plan to investors? 6. Divest underperforming businesses? McKinsey & Company, May 2009, “What’s Next www.myCNI.com.my - 10 Questions for CFOs” www.OOBEY.com
  90. 90. Review processes 1. Result Planning schedule inc. BSC, Budget 2. Quarterly Performance Appraisals 3. Sales performance reviews 4. Non-sales performance reviews 5. Annual Appraisals 6. Specialized KPI committees 7. CAR, PAR, SCAR KPI improvements 8. Internal Audit & MSD – process problems 9. HRM & TND – people problems www.myCNI.com.my www.OOBEY.com
  91. 91. Problems, problems and more problems… 1. No serious budget to tackle key risks 2. Too much optimism or pessimism 3. Innovation vs. Results vs. Baseline 4. Investment ≠ Portfolio Management 5. Top down vs. Bottom up 6. Good to have vs. Need to have 7. Line Manager not thinking like Investors 8. Too focused on KPI and BSC 9. Budget allocation seen as ‘popularity’ vote 10. Public Listing -> pressure for short-term budgets and results vs. long-term innovation www.myCNI.com.my www.OOBEY.com
  92. 92. Problems, problems and more problems… www.myCNI.com.my www.OOBEY.com
  93. 93. Alignment: 4-Wheels Model Business Person Structure Model Strategic Planning Culture Leadership Resources www.myCNI.com.my www.OOBEY.com
  94. 94. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable. blogspot.com

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