BSC - Introduction, Architecture, Strategy Formulation Guide & Templates

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BSC - Introduction, Architecture, Strategy Formulation Guide & Templates

  1. 1. BUILDING A STRATEGY FOCUSED ORGANIZATIONWITH THE BALANCED SCORECARD§  Introduction to BSC§  Overview of BSC Architecture & Methodology§  BSC Internal Process Clusters§  Customizing BSC to StrategyNg Aung SanVice President & Head (Strategy & Organization) 1
  2. 2. QUOTE… “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. ” Sun Tzu The Art of War 2
  3. 3. Strategyis… Choices …About …What to do, but more importantly, what not to do …What will we truly excel in, what will be simply par …What is for today, what is for another time 3
  4. 4. Content 1.  Why BSC? 3.  Closer Look at Internal Process Clusters 2.  Overview of BSC 4.  Customizing BSC to Architecture & Strategy Methodology 4
  5. 5. Delivering value requires an strong unbroken continuum… Mission Why we exist Values What s important to us Vision What we want to be Strategy Our game plan Strategy Translation Communicate, Cascade and Align Strategy Measurement & Focus Strategy Scorecard Targets/ Objectives & Initiatives What we need to do/ achieve Personal Objectives What I need to do 5
  6. 6. …But issues typically arise at critical junctures Mission Why we exist Typical Issues with Vision of most Values Organizations… What s important to us §  Too hazy to provide any real direction or to motivate action or generate enthusiasm Vision What we want to be §  While usually able to recite the vision, Managers often do not see how to put vision into practice to direct/ guide strategy Strategy Our game plan §  Developed haphazardly, without adequate consideration of Organization s §  Internal & external influences/ interests Strategy Translation §  Hard & Soft dimensions Communicate, Cascade and Align §  Mistaken as having to be static, like Values and Mission, rather than dynamic and updated/ Strategy Measurement & Focus refreshed, when appropriate Strategy Scorecard Targets/ Objectives & Initiatives What we need to do/ achieve Personal Objectives What I need to do 6
  7. 7. …But issues typically arise at critical junctures Mission Why we exist Typical Issues with Strategy of most Values Organizations… What s important to us §  Little more than a summary statement of the myriad initiatives, projects and activities going on in the Vision organization What we want to be §  Does not answer the following fundamental questions: Strategy §  What differentiates us or makes us special/ Our game plan unique? §  What is our differentiated Value Proposition to our customers (internal & external) that we Strategy Translation can draw and hold them to us? Communicate, Cascade and Align §  Does not consider all key components of strategy and interrelationships across the organization Strategy Measurement & Focus Strategy Scorecard §  Does not consider how the organization s Business Model/ Internal Processes and Organizational Capital would be (re)configured to deliver the Value Targets/ Objectives & Initiatives Proposition What we need to do/ achieve §  Does not fully consider both the Hard & Soft determinants of strategy delivery/ change Personal Objectives management What I need to do 7
  8. 8. …But issues typically arise at critical junctures Mission Why we exist Typical Issues with Strategy Values Translation, Focus & Measurement of What s important to us most Organizations… §  Gap exists between strategy formulation and Vision strategy execution/ on-going management What we want to be §  Translating strategy top down into demands on elements of Organization s Business Model/ Strategy Internal Processes is non-uniform and frequently, Our game plan incomplete §  No overall one-view of progress of various Strategy Translation components of strategy across entire Business Communicate, Cascade and Align Model (cross-functional) §  No uniform and consistent way to describe the Strategy Measurement & Focus strategy, so that objectives and measures can be Strategy Scorecard established and managed §  No framework to measure progress and learn about Targets/ Objectives & Initiatives interrelationships/ cause and effect between various What we need to do/ achieve components of strategy and how each impact performance and guide resource allocation Personal Objectives §  Focus on strategy is typically low. Strategy often What I need to do becomes a bi-annual event at Business Planning Meetings, rather than an-going process 8
  9. 9. …But issues typically arise at critical junctures Mission Why we exist Typical Issues with Targets/ Values Objectives & Initiatives of most What s important to us Organizations… §  No clear linkage, bottom up, between Activities and Vision Projects with overall strategy What we want to be §  Measures only remain at compound Business/ Functional Unit level, rather than at individual key Strategy initiatives/ project level; Also, measures are typically Our game plan lag measures, rather than leading indicators of progress §  Unit Leaders face difficulty in objectively Strategy Translation determining on-going progress of respective Communicate, Cascade and Align initiatives, against set targets/ objectives, communicated upfront §  Lesser/ no time to take corrective action and/ Strategy Focus & Measurement or re-allocate resource Strategy Scorecard §  Lower levels of clarity and accountability at individual initiatives/ project and/ or personal level Targets/ Objectives & Initiatives What we need to do/ achieve §  No framework to conduct a business audit of direction, scope/ coverage, alignment and effectiveness and phasing of existing initiatives/ Personal Objectives project/ activities; And guide resource allocation What I need to do 9
  10. 10. BSC can address issues, if well embraced and executed Facilitate Vision Setting & Strategy formulation §  Balance Internal/ External influences and Hard/ Soft dimensions in Vision setting §  Framework to address in Strategy Formulation: §  Differentiation/ unique value proposition §  Re-configuration of Business Model and Organizational Capital Make Strategy a §  Hard & Soft determinants of Change Translate the Vision & Continual Process Strategy to Operational Terms§  Management Meetings §  Strategy Maps§  Feedback system §  Scorecards§  Learning Process BALANCED §  Demands on Business Model/ Internal Processes§  Linked to Budgeting Process SCORECARD §  Financial & Non-Financial Objectives & Measures §  Framework to pull together one- view of all initiatives and activities Mobilize Change Align the Organization through Executive to the Strategy Leadership §  Cross-Functional Unit §  Executive Sponsorship, linkages/ coordination Ownership & Engagement §  Strategy Education §  Change Mobilization Communication & Awareness §  Change Governance §  Initiative Prioritization §  Sustaining Change 10
  11. 11. Content 1.  Why BSC? 3.  Closer Look at Internal Process Clusters 2.  Overview of BSC 4.  Customizing BSC to Architecture & Strategy Methodology 11
  12. 12. BSC Perspectives #1 - Financial §  Defines the tangible outcome of strategy in traditional Financial terms §  How does success look like? #2 - Customer (External) §  Defines the Value Proposition for target existing and potential customers segments §  How can we become a Magnet company? #3 - Channel Partners (Int. Customers) §  Defines the Value Proposition for existing and potential channel partners/ agents §  How can we become a Magnet company? #4 - Business Model/ Int. Processes §  Defines the Vehicle for delivering the Value Proposition §  How can deliver on our promise? #5 - Organization Learning & Growth §  Defines the organization s intangible assets §  How can we align assets to support Business Model and Mobilize and sustain change? 12
  13. 13. #1 Financial Perspective Elaboration on Financial Perspective §  Summarizes readily measurable economic consequences of actions already taken. §  Typically comprise two broad drivers: §  Productivity driver (Improve cost structure/ Enhance asset yield) §  Revenue Growth driver (Expand revenue opportunities / Enhance customer value) #1 - Financial §  Defines the tangible outcome of strategy in Financial Measures traditional Financial terms Two distinct categories of Measures §  How does success look like? §  Productivity measures §  Revenue growth measures Examples of Productivity measures §  Total Assets §  Return on net assets/ total assets §  Gross margin/ NPAT §  Profit as % of Sales §  Profit/ Value added per employee §  Return on Equity/ Return on investments §  Market capitalization/ Share price/ Dividends §  Credit Rating Examples of Revenue Growth measures §  Total/ New Business Premiums (existing/ new sources) §  New Business Embedded Value (existing/ new sources) 13
  14. 14. #2 Customer Perspective Elaboration on Customer Perspective §  Identifies the markets and customer segments that organization will serve and compete §  Identifies the differentiated Value Propositions that the organization will offer to target market and customer segment #2 - Customer (External)§  Defines the Value Proposition for target existing Customer Measures and potential customers segments Two distinct categories of Measures§  How can we become a Magnet company? §  Measures of performance in markets and target customers §  Measures of Value Propositions organization will offer to target customers Examples of Customer Performance Measures §  Share in target Market and Customer segments §  Market and Customer segment profitability §  Sales Volume/ Sales Volume per channel §  No. of Customers §  Target customer acquisition/ retention rates §  Percentage of revenue from New Customers §  Target customer segments complaints/ compliments §  Brand recognition/ awareness in target customer segments Customer Value Proposition Measures §  Measures of elements of value propositions to be delivered 14
  15. 15. #3 Channel Partner Perspective Elaboration on Channel Partner Perspective §  Identifies the channel partners which organization can partner and work with §  Identifies the differentiated Value Propositions that the organization will offer to channel partners #3 - Channel Partners (Int. Customers) §  Defines the Value Proposition for existing Customer Measures and potential channel partners/ agents Two distinct categories of Measures §  How can we become a Magnet company? §  Measures of performance in target channels §  Measures of Value Propositions organization will offer to channel partners Examples of Channel Partner Performance Measures §  Channel product volume/ product mix §  Channel productivity/ profitability §  Channel market share §  Channel customer acquisition/ retention rates §  Channel development/ growth §  Percentage of revenue from new channels §  Channel complaints/ compliments §  Channel scorecard/ survey feedback Channel Partner Value Proposition Measures §  Measures of elements of value propositions to be delivered 15
  16. 16. #4 Business Model Perspective Elaboration on Business Model Perspective §  Describes how organization will deliver its customer and channel partner value propositions §  Identifies related process clusters that make up the organization. Broadly grouped into three process clusters: §  Operations Management cluster - Producing and delivering products to customer §  Customer Management cluster - Establishing and #4 - Business Model/ Int. Processes leveraging relationship with customers §  Innovation processes cluster - Developing new §  Defines the Vehicle for delivering the Value products, services, processes and relationships Proposition §  How can deliver on our promise? Business Model/ Internal Process Measures Examples of Operations Management measures §  Cost of key operating processes §  Marketing, selling, administrate expense as % of total costs §  No. of processes with substantial improvements §  Cycle time Examples of Customer Management measures §  No. of referrals/ Percentage of leads converted §  Customer response rate to campaigns §  No. of products per customer/ Depth of relationship §  Costs per new customer acquired Examples of Innovation measures §  Time to Market/ Percentage of product launches on-time §  No. of new products first-to-market §  No. of new applications from platform products §  No. of joint collaborative new product projects 16
  17. 17. #5 Learning & Growth Perspective Elaboration on Learning & Growth Perspective §  Defines organization s intangible asset and their role in strategy. Intangible assets classified into three categories: §  Human capital - Skills, talents and know how to perform activities, required by strategy §  Information capital - Information systems and infrastructure required to support the strategy §  Organization capital - Culture, Leadership, #5 - Organization Learning & Growth Alignment and Teamwork§  Defines the organization s intangible assets§  How can we align assets to support Business Model and Mobilize and sustain change? Business Model/ Internal Process Measures Examples of Human Capital readiness measures §  Training investment per employee/ Training hours §  Competency coverage ratio §  % of employees with advanced degrees §  Number of cross-trained employees §  Best practice sharing Examples of Information Capital readiness measures §  Strategic information ratio §  Knowledge management index Examples of Organizational Capital readiness measures §  Span of control per manager §  Quality of work environment §  Motivation index §  Turnover rate/ Absenteeism §  Strategic awareness 17
  18. 18. BSC comprise two main related elements – Strategy Map andScorecard Strategy Map Scorecard §  Visual representation of the cause-and-effect §  Translates objectives in strategy map into relationships that connects desired Financial, measures of success and targets, across Customer and Channel Partner outcomes respective financial/ non financial and with the Business Model drivers that will internal/ external perspectives. transform intangible assets into these outcomes §  Organizes in a structured way, bundles of aligned strategic initiatives – action plans and scarce resources e.g. people, funding §  Functions as a checklist for strategy s and capacity – required to meet targets for granular components and interrelationships respective measures, and achieve objectives – Missing components usually indicate incomplete or flawed strategy §  Functions as a checklist and resource deployment decision tool for strategic §  Provides an uniform and consistent way to initiatives – emphasis/ coverage of action describe strategy, so that objectives across plans and targeted allocation of resources. all perspectives and measures can be established and managed – through the §  Provides a cohesive, integrated and Scorecard systematic way to manage effective implementation of strategy 18
  19. 19. BSC Strategy Map depicts chain of cause-and-effectrelationships VISION Guided by and to achieve our Vision…… To achieve #1 - Financial Top-downour financialsuccess, and …What is the desired financial Thinking & Logic §  Defines the tangible outcome of goals we have to achieve…our Vision strategy in traditional Financial terms §  How does success look like?… And, togetherwith Channel #2 - Customer (External) …What is the unique set of benefits we willPartners, to our §  Defines the Value Proposition for target offer to customers for their patronage...Customers… existing and potential customers segments §  How can we become a Magnet company? #3 - Channel Partners (Int. Customers) …And our channel partners for … Needed to deliver their partnership... Value Proposition to §  Defines the Value Proposition for existing Channel Partner,… and potential channel partners/ agents §  How can we become a Magnet company? #4 - Business Model/ Int. …What do we have to do to … To build strategic ensure consistent delivery of capabilities to effectively Processes value propositions… execute the processes … §  Defines the Vehicle for delivering the Value Proposition §  How can deliver on our promise? Bottom-Up #5 - Organization Learning & Growth Test & Linkage §  Defines the organization s intangible …And what assets do we Align and enhance our Organizational Assets… assets have to develop §  How can we align assets to support Business Model and Mobilize and sustain change? 19
  20. 20. Financial perspective provides definition of success or valuein tangible financial termsFinancialPerspective Sustain growth in Shareholder Value Productivity Strategy Revenue Growth Strategy §  NPAT §  ROE/ ROI §  NBEV/ Premiums from new §  NBEV/ Premiums §  Expenses §  Investment returns products, markets & segment §  NBEV/ Prems. per Customer Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer Value Typical Objectives §  Lower direct and §  Reduce working and fixed §  Tap into new sources of §  Deepen relationship with indirect expenses capital needed to support revenue (new products, existing customers business markets, segments) §  Improve investment yield §  Tap into new channels 20
  21. 21. Customer perspective identifies value proposition to be amagnet company to External Customers Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer (External) §  Customer profitability §  Market Share §  Customer §  CustomerPerspective §  Segment profitability §  Segment Share Acquisition Retention CUSTOMER VALUE PROPOSITION Product/ Service Attributes Relationship Image Price Quality/ Selection Functionality/ Reputation Returns Availability Features Service §  Product Price/ §  Bonus Levels §  Distribution §  Range of §  Product §  Quality & §  Brand Strength & Pricing §  Yields/ Channels/ Product Lines Features/ Coverage of §  Financial Strength Investment Reach Quality Support/ & Ratings Returns Service §  Identifies the customer and market segments in §  Unique configuration of seven pillars of Customer which organization will serve and compete Value Proposition differentiates organization: §  Identifies two distinct types of measures: §  What company expects to do for its customers better or differently than its competitors §  Measures of value propositions organization will deliver to target customers §  What draws customers to our company §  Measures of performance in the target segments §  Customers perceive where company stands, in relation to each of seven pillars, and decides on patronage 21
  22. 22. Channel partner perspective identifies value proposition tobe a magnet company to Channel Partners Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Returns FeaturesChannel Partner (Agency) §  Agent Business Volume/ Mix §  Agents Recruited §  No. of Agents onPerspective §  Agent Productivity §  Agent Attrition Management Path CHANNEL VALUE PROPOSITION Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. Support §  Identifies the channel partners which §  Unique configuration of six pillars of Channel Value organization can partner and work with Proposition differentiates organization: §  Identifies two distinct types of measures: §  What company expects to do for its channel partner better or differently than its competitors §  Measures of value propositions organization will deliver to target §  What draws existing partners/ agents to stay with channel partners/ agents us and new partners/ agents to join us. §  Measures of performance in the target channels §  Channel partners/ agents perceive where company stands, in relation to each of six pillars, and decides on partnership 22
  23. 23. Internal Processes/ Business perspective defines vehicle todeliver on Value Propositions… Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Returns FeaturesChannel Partner Channel Value PropositionPerspective Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. SupportInternal ProcessPerspective Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social Processes Processes Processes Process which expand and Processes which develop new products, Basic, day to day processes by Processes which help organizations deepen relationships with processes and services, to enable which companies produce their continually earn the right to targeted customers company to penetrate new markets existing products and deliver operate in communities and and customer segments them to customers countries in which they operate §  Identifies Four Process clusters that make §  Business Model enables organization to deliver on up the organization elements of value propositions. §  Changes to value propositions requires corresponding changes to business model 23
  24. 24. … And groups Organization s myriad existing and newprocesses into four Clusters Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Returns FeaturesChannel Partner Channel Value PropositionPerspective Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. SupportInternal ProcessPerspective Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social Processes Processes Processes Process which expand and Processes which develop new products, Basic, day to day processes by Processes which help organizations deepen relationships with processes and services, to enable which companies produce their continually earn the right to targeted customers company to penetrate new markets existing products and deliver operate in communities and and customer segments them to customers countries in which they operate §  Customer Selection §  Opportunity Identification §  Supply §  Environment §  Customer Acquisition §  R&D Portfolio §  Production §  Safety and Health §  Customer Retention §  Design/ Develop §  Distribution §  Employment §  Customers Growth §  Launch §  Risk Management §  Community 24
  25. 25. Learning & Growth perspective defines and alignsorganization s intangible assets, completing Strategy Map Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Returns FeaturesChannel Partner Channel Value PropositionPerspective Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. SupportInternal ProcessPerspective Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social Processes Processes Processes §  Customer Selection §  Opportunity Identification §  Supply §  Environment §  Customer Acquisition §  R&D Portfolio §  Production §  Safety and Health §  Customer Retention §  Design/ Develop §  Distribution §  Employment §  Customers Growth §  Launch §  Risk Management §  CommunityLearning & GrowthPerspective Organization s Intangible Assets Human Capital Information Capital Organizational Capital §  Skills/ Talent §  Systems §  Culture §  Knowledge §  Databases §  Leadership §  Capabilities §  Networks §  Alignment/ Teamwork 25
  26. 26. Closer look at Human Capital Readiness – Strategic JobFamilies, Headcount, Knowledge, Skills & Capabilities Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer ValueCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Returns FeaturesChannel Partner Channel Value PropositionPerspective Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. SupportInternal Process Perspective Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social Processes Processes ProcessesLearning & GrowthPerspective (illustrative for Human Capital Readiness – Identify Strategic Job Families) Operations Marketing BD Underwriters Executives Underwriters Executives BD Executives (No.) (No.) Executives (No.) ??? ??? ??? (No.) (No.) (No.)Competency Profile§  Knowledge List the Knowledge & Skills Required by various Strategic Job Families identified above§  SkillsReadiness Assessment (Assess HC Readiness in terms of adequacy of Headcount, required level of Knowledge & Skills) XX% XX% XX% XX% XX% XX% XX% XX% XX% 26
  27. 27. Strategy comprise complementary strategic themes that cutacross respective perspectives Sustain growth inFinancial Shareholder ValuePerspective Productivity Strategy Revenue Growth Strategy Improve Cost Enhance Expand Revenue Enhance Structure Asset Yield Opportunities Customer Value Strengthen franchise for sustainable growthCustomer Customer Value Proposition(External) Product/ Service Attributes Relationship ImagePerspective Quality/ Functionality/ Price Availability Selection Service Reputation Expand Revenue Opportunities Returns FeaturesChannel Partner Channel Value PropositionPerspective Sales Production Support Growth & Development Support Product Range Sales Support Brand Support Career & Agency Admin Support Comp. Mgmt. Support Deliver profitInternal ProcessPerspective Customer Mgmt. Innovation Processes Operations Mgmt. Regulatory & Social Processes Processes Processes §  Customer Selection §  Opportunity Identification §  Supply §  Environment §  Customer Acquisition §  R&D Portfolio §  Production §  Safety and Health §  Customer Retention §  Design/ Develop §  Distribution §  Employment §  Customers Growth §  Launch §  Risk Management §  CommunityLearning & GrowthPerspective § Organization s Intangible Assets Human Capital Information Capital Organizational Capital §  Skills/ Talent §  Systems §  Culture §  Knowledge §  Databases §  Leadership §  Capabilities §  Networks §  Alignment/ Teamwork 27
  28. 28. Strategy Map Construction – Step1: VisionTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail, respective internal, Vision VISION external, hard and soft components of overall strategic vision Perspective Financial PerspectiveChannel Partner Customer PerspectiveBusiness Model PerspectivePerspective L&G 28
  29. 29. Strategy Map Construction – Step 2: FinancialTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail, respective internal, Vision VISION external, hard and soft components of overall strategic vision Grow new sources Perspective Strategic objective §  STEP 2: Identify a strategic theme for the Financial of revenue identified to grow new sources of financial perspective, linked to Strategic Vision, revenue Tap into new that will drive the target financial result customer segment §  Revenue Growth Strategy §  Theme 1: Expand revenue opportunities Perspective §  Theme 2: Enhance customer valueChannel Partner Customer §  Productivity improvement strategy §  Theme 3: Improve cost structure §  Theme 4: Enhance asset yield PerspectiveBusiness Model PerspectivePerspective L&G 29
  30. 30. Strategy Map Construction – Step 3: CustomerTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail respective internal, Vision VISION external, hard and soft components of, overall strategic vision Grow new sources Perspective §  STEP 2: Identify a strategic theme for the Financial of revenue financial perspective, linked to Strategic Vision, Strategic objective Tap into new identified for Target customer segment that will drive the target financial result Market & Customer Segment Increase new §  STEP 3: Identify the target market and customer segments in which organization will Perspective customer acquisitionChannel Partner Customer Strategic objectives serve and compete and unique customer value identified for Offer innovative Offer highest Customer Value features service level proposition organization will offer Proposition §  Components of Customer Value Proposition: Price, Features, Quality. Availability, Service and Perspective Reputation §  Basic Par Requirements vs. DifferentiatorsBusiness Model PerspectivePerspective L&G 30
  31. 31. Strategy Map Construction – Step 4: Channel PartnerTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail respective internal, Vision VISION external, hard and soft components of, overall strategic vision Grow new sources Perspective §  STEP 2: Identify a strategic theme for the Financial of revenue financial perspective, linked to Strategic Vision, Tap into new that will drive the target financial result customer segment Increase new §  STEP 3: Identify the target market and customer segments in which organization will Perspective customer acquisitionChannel Partner Customer serve and compete and unique customer value Offer innovative Offer highest features service level proposition organization will offer Strategic objective identified for Target Enhance channel §  STEP 4: Identify the channel partner Perspective Channel Partner capability organization can partner and work with and Offer strongest unique channel partner value proposition Offer highest product quality admin support organization will offer Strategic objectives identified for Channel Partner Value PropositionBusiness Model PerspectivePerspective L&G 31
  32. 32. Strategy Map Construction – Step 5: Business ModelTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail respective internal, Vision VISION external, hard and soft components of, overall strategic vision Grow new sources Perspective §  STEP 2: Identify a strategic theme for the Financial of revenue financial perspective, linked to Strategic Vision, Tap into new that will drive the target financial result customer segment Increase new §  STEP 3: Identify the target market and customer segments in which organization will Perspective customer acquisitionChannel Partner Customer serve and compete and unique customer value Offer innovative Offer highest features service level proposition organization will offer Enhance channel §  STEP 4: Identify the channel partner Perspective capability organization can partner and work with and Offer strongest unique channel partner value proposition Offer highest product quality admin support organization will offer §  STEP 5: Choose, align and resource the Enhance Enhance organization s business model or internalBusiness Model Product Innovation Operational Perspective Strategic objectives Process Process processes to deliver on the channel partner identified for and customer value proposition Business ModelPerspective L&G 32
  33. 33. Strategy Map Construction – Step 6: Learning & GrowthTheme: EXPAND REVENUE OPPORTUNITIES §  STEP 1: Clarify, in detail respective internal, Vision VISION external, hard and soft components of, overall strategic vision Grow new sources Perspective §  STEP 2: Identify a strategic theme for the Financial of revenue financial perspective, linked to Strategic Vision, Tap into new that will drive the target financial result customer segment Increase new §  STEP 3: Identify the target market and customer segments in which organization will Perspective customer acquisitionChannel Partner Customer serve and compete and unique customer value Offer innovative Offer highest features service level proposition organization will offer Enhance channel §  STEP 4: Identify the channel partner Perspective capability organization can partner and work with and Offer strongest unique channel partner value proposition Offer highest product quality admin support organization will offer §  STEP 5: Choose, align and resource the Enhance Enhance organization s business model or internalBusiness Model Product Innovation Operational Perspective Process Process processes to deliver on the channel partner and customer value proposition Strategic objectives identified for Organization s Assets to enable Business Model §  STEP 6: Identify capabilities and organizational climate required to enable thePerspective Strengthen Strengthen business model or strategic internal processes L&G Product R&D Operational IT capabilities capabilities identified 33
  34. 34. Scorecard Construction – Step 1: Establish Objectives,Measures, Targets & Measure Owners Strategy Map ScorecardTheme: TRANSFORM PRODUCT MIX Objectives Objective Measure Yr 1 Targets Owner §  Grow new sources of §  Total revenue from new sources §  $50m §  ABC Grow new sources revenue §  Market share in targeted new Perspective §  15% §  ABC Financial of revenue §  Tap into new customer segment customer segments Tap into new customer segment §  Increase new §  No. of new customers from target §  25,000 §  DEF Increase newPerspective customer acquisition customer acquisition segment §  85% §  DEF Customer §  Offer innovative §  Brand awareness (survey) §  10 new §  GHJ Offer innovative Offer highest features §  No. of new-to-market product features §  KLM features service level §  Offer highest service features §  95% level §  Customer satisfaction (survey) §  Enhance channel §  Channel productivity §  75% §  NOP Channel Partner Enhance channel capability Perspective capability §  Channel professionalism (survey) §  85% §  NOP §  Offer highest product §  Product benchmarking §  Top quartile §  QRS Offer highest Offer strongest quality §  Total Cycle/ Process Time §  2 days §  QRS product quality admin support §  Offer strongest admin turnaround support §  Enhance product §  No. of new projects or product §  15 projects/ §  TUVBusiness Model Enhance Enhance innovation process concepts presented for concepts Perspective Operational §  WXY Product Innovation development Process §  Enhance operational §  5 processes Process process §  No. of processes with substantial improvement §  Strengthen product §  R&D Process Strategic Job §  80% §  UVWPerspective Strengthen Strengthen R&D capabilities Family Human Capital Readiness §  75% §  XYZ L&G Product R&D Operational IT §  Strengthen §  Operational Process Strategic Job capabilities capabilities operational IT family IT Readiness capabilities 34
  35. 35. Scorecard Construction – Step 2: Identify/ Organize StrategicInternal Business Process & Organizational L&G Initiatives Strategy Map ScorecardTheme: TRANSFORM PRODUCT MIX Objectives Measure Targets Owner Initiatives §  Grow new sources of §  ___ §  ___ §  ___ Grow new sources revenue §  ___ §  ___ §  ___ Perspective Financial of revenue §  Tap into new §  ___ §  ___ §  ___ customer segments Tap into new customer segment §  Increase new §  ___ §  ___ §  ___ Increase newPerspective customer acquisition customer acquisition §  ___ §  ___ §  ___ Customer Outcome of Initiatives & Activities §  Offer innovative §  ___ §  ___ §  ___ features undertaken at Business Model/ Offer innovative Offer highest Internal Business Process and features service level §  Offer highest service level Organizational Asset level §  Enhance channel §  ___ §  ___ §  ___ Channel Partner Enhance channel capability §  ___ §  ___ §  ___ Perspective capability §  Offer highest product §  ___ §  ___ §  ___ Offer highest Offer strongest quality product quality admin support §  Offer strongest admin support §  Enhance product §  ___ §  ___ §  ___ §  Pro-active manage and extendBusiness Model Enhance Enhance innovation process §  ___ §  ___ §  ___ Product Portfolio Perspective Product Innovation Operational §  Enhance operational §  ___ §  ___ §  ___ §  Extend current product platforms Process Process process into new markets §  Improve process efficiency and responsiveness §  Strengthen product §  ___ §  ___ §  ___ §  R&D process trainingPerspective Strengthen Strengthen R&D capabilities §  ___ §  ___ §  ___ §  Operational IT process L&G Product R&D Operational IT §  Strengthen §  ___ §  ___ §  ___ management training/ systems capabilities capabilities operational IT §  Operational IT process capabilities management staff alignment 35
  36. 36. Scorecard Construction – Step 3: Determine/ AllocateResource Requirements Strategy Map ScorecardTheme: TRANSFORM PRODUCT MIX Objectives Measure Targets Owner Initiatives Resource §  Grow new sources of §  ___ §  ___ §  ___ Grow new sources revenue §  ___ §  ___ §  ___ Perspective Financial of revenue §  Tap into new §  ___ §  ___ §  ___ customer segments Tap into new customer segment §  Increase new §  ___ §  ___ §  ___ Increase newPerspective customer acquisition customer acquisition §  ___ §  ___ §  ___ Customer §  Offer innovative §  ___ §  ___ §  ___ Offer highest features N.A. N.A. Offer innovative features service level §  Offer highest service level §  Enhance channel §  ___ §  ___ §  ___ Channel Partner Enhance channel capability §  ___ §  ___ §  ___ Perspective capability §  Offer highest product §  ___ §  ___ §  ___ Offer highest Offer strongest quality product quality admin support §  Offer strongest admin support §  Enhance product §  ___ §  ___ §  ___ §  ___ §  5 Headcount/Business Model Enhance Enhance innovation process §  ___ §  ___ §  ___ §  ___ 50 Man-days Perspective Product Innovation Operational §  Enhance operational §  ___ §  ___ §  ___ §  ___ §  $100k Process Process process §  8 Headcount/ 80 Man-days §  $200k §  Strengthen product §  ___ §  ___ §  ___ §  ___ §  Total of $300k R&D capabilities §  ___ §  ___ §  ___ §  ___ for trainingPerspective Strengthen Strengthen §  ___ §  ___ §  ___ §  ___ §  $500k for IT §  Strengthen L&G Product R&D Operational IT system upgrade capabilities operational IT capabilities §  $20k for capabilities Workshop 36

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