The Executive Roundtable Series: The Executive Roundtable ...

The Executive Roundtable Series: The Executive Roundtable Series: Business Strategy Planning Business Strategy Planning Business Strategy Planning Business Strategy Planning TechniquesTechniques

featuring Metrics Reporting, Inc.

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Brief Intro and OverviewBlue Ocean StrategyHaving Trouble with Your Strategy? Having Trouble with Your Strategy? …Then Map It!E lExampleWrap-Up and Next Steps

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IntroductionIntroductionIntroductionIntroduction

Metrics Reporting, Inc.p g

Two tools that create business value:◦ Strategy Canvas [Blue Ocean Strategy]◦ Strategy Canvas [Blue Ocean Strategy]◦ Strategy Map [Norton and Kaplan]

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BackgroundBackgroundBackgroundBackground

Why Measure?Why Measure?

BetterMargins?

BetterExecution?

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For each: 4 Questions

that drive ACTION!

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Blue Ocean StrategyBlue Ocean StrategyH C U d M k S d M k How to Create Uncontested Market Space and Make the Competition Irrelevant

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Blue Ocean StrategyBlue Ocean Strategy

Do we know how to “Create UncontestedCreate Uncontested Market Space and Make the Competition Irrelevant?”Irrelevant?

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Blue Ocean StrategyBlue Ocean StrategygygyRed Ocean

Compete in crowded markets

Blue OceanCreate and captureCreate and capture 

new space

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Source: Blue Ocean Strategy, Kim and Mauborgne

Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

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Source: HBR: Value Innovation Logic, Kim and Mauborgne

Results of Results of FormuleFormule 1’s Strategy1’s Strategy

Cost per room 100 000 FF ↔ 270 000 FF

From Formule 1’s perspective:

Cost per room 100,000 FF ↔ 270,000 FFCost of staff 20-23% of sales vs. 23-25% Profit Margins > 2x industry averageOccupancy rates > 3x industry averageOccupancy rates > 3x industry average

From customers’ perspective:From customers perspective:

Hygiene > average 2* hotelBed quality > average 2* hotelBed quality > average 2 hotelSilence > average 2* hotelPrice 100 FF ↔ 200 FF of industry

Source: HBR: Value Innovation Logic, Kim and Mauborgne

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Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

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Blue Ocean StrategyBlue Ocean Strategygygy

Source: Blue Ocean Strategy, Kim and Mauborgne 13

Blue Ocean StrategyBlue Ocean StrategygygyThe Four Actions Framework

ReduceWhich factors should

be reduced wellbelow the industry’s

standard?

The 4 Qs

standard?

Eliminate CreateNWhich of the factors

that the industrytakes for granted

should be eliminated?

Which factors should be created that the industry hasnever offered?

NewValueCurve

RaiseWhich factors should

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be raised wellabove the industry’s

standard? Source: Blue Ocean Strategy, Kim and Mauborgne

Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyEliminate-Reduce-Raise-Create Grid:The Case of [yellow tail]The Case of [yellow tail]

Eliminate RaiseEnological terminology and distinctions

Aging qualities

Price versus budget wines

Retail store involvement

Above-the-line marketing

Reduce CreateWine complexity

Wine range

Vineyard prestige

Easy drinking

Ease of selection

Fun and adventure

15Source: Blue Ocean Strategy, Kim and Mauborgne

Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

16Source: Blue Ocean Strategy, Kim and Mauborgne

Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyStrategy Canvas

CostsEliminate

Enological terminology and

RaisePrice versus budget wines

Value Innovation

Buyer Value

distinctions

Aging qualities

Above-the-line marketing

Retail store involvement

Reduce CreateWine complexity

Wine range

Vineyard prestige

Easy drinking

Ease of selection

Fun and adventure

Four Actions FrameworkERRC Grid

17Source: Blue Ocean Strategy, Kim and Mauborgne

Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy3. Draw the Strategy Canvas: 1 on left, 4 on right

Factors of Competition / Value Factors:

Blue Ocean Strategy1. List 8 to 12 important Factors of Competition2. Enter top 2 or 3 in each ERRC Grid Quadrant

Tool 11. List Factors of

Competition

1. Eliminate: 3. Raise:

2. Top 2 or 3 in ERRC Grid Quadrants

2. Reduce: 4. Create:

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Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

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Project Name:

Very High

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9Tool 27

6

5

4

Medium

High

1. Write on Worksheet:E

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2

1

0

Low

Very Low

left, C right

2. Draw “As Is”

3 Draw “To Be”

Valu

e Fa

ctor

s

3. Draw “To Be”

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Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

Examples

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Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

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Blue Ocean StrategyBlue Ocean Strategygygy

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Having Trouble with Your Strategy? Then Map It!

Strategy Maps

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Strategy MapsStrategy MapsAlignment and LearningStrategy Maps Help Organizations Get Better Faster

Strategy MapsStrategy Maps

Strategy Maps Help Organizations Get Better Faster

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Strategy MapsStrategy Mapsgy pgy pFocus on What Matters Most

G t t tGreat strategy enables everyone to set accurate priorities

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Strategy MapsStrategy MapsActions Drive Financial Results

gy pgy p

Theme:

Objectives Metrics Initiatives

FinancialPerspective

CustomerPerspective

InternalInternal ProcessesPerspective

Employee Learning &

GrowthPerspective

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Strategy MapsStrategy Mapsgy pgy pScorecards Drive Strategy Execution

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Strategy MapsStrategy Mapsgy pgy pStrategy Maps Add Causality (if-then)

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Strategy MapsStrategy Mapsgy pgy pSteps for Creating Your Strategy Map

Determine:

Y Th ( )• Your Theme(s).

• Your Perspectives.

• The Strategic Objectives in each perspective.

• Metrics (Measures) and targets for each Metrics (Measures) and targets for each objective. Assign an owner to each metric.

• Initiatives to drive each metric

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Initiatives to drive each metric.

Strategy MapsStrategy Mapsgy pgy pFinancialP tiPerspective: What financial steps are needed pto ensure the execution of our strategy?strategy?

The 4 Qs

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Employee Learning andGrowth Perspective Internal Perspective Customer Perspective Financial Perspective

Crew Scheduling System Fast Ground Turnaround On Time Service Profits and RONAGround Crew Alignment Lower Prices More Revenue

Train Ramp Agents Attract and Retain Customers Fewer Planes

Strategy MapsStrategy Mapsgy pgy pCustomerP tiPerspective: Who are our targeted gcustomers, and what is our value proposition inproposition in serving them?

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Employee Learning andGrowth Perspective Internal Perspective Customer Perspective Financial Perspective

Crew Scheduling System Fast Ground Turnaround On Time Service Profits and RONAGround Crew Alignment Lower Prices More Revenue

Train Ramp Agents Attract and Retain Customers Fewer Planes

Strategy MapsStrategy Mapsgy pgy p

Internal Processes(Operations)(Operations) Perspective: To satisfy our

t t h tcustomers, at what processes must we excel?

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Employee Learning andGrowth Perspective Internal Perspective Customer Perspective Financial Perspective

Crew Scheduling System Fast Ground Turnaround On Time Service Profits and RONAGround Crew Alignment Lower Prices More Revenue

Train Ramp Agents Attract and Retain Customers Fewer Planes

Strategy MapsStrategy Mapsgy pgy p

Employee Learning and GrowthGrowthPerspective: What capabilities and tools do o rand tools do our employees need to help them execute our strategy?

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Employee Learning andGrowth Perspective Internal Perspective Customer Perspective Financial Perspective

Crew Scheduling System Fast Ground Turnaround On Time Service Profits and RONAGround Crew Alignment Lower Prices More Revenue

Train Ramp Agents Attract and Retain Customers Fewer Planes

Strategy MapsStrategy Mapsgy pgy pObjectives Metrics Initiatives

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Strategy MapsStrategy Mapsgy pgy pMetrics: Accountability, not Blame

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Strategy MapsStrategy Mapsgy pgy pTeam Exercise: Determining ObjectivesDDetermine:

• Your Theme(s).

• Your Perspectives.

• Strategic Objectives in each perspectiveStrategic Objectives in each perspective.

• Metrics (Measures) and targets for each objective Assign an owner to each metricobjective. Assign an owner to each metric.

• Initiatives to drive each metric.

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Strategy MapsStrategy MapsStrategy MapsStrategy MapsCase Study

• You are the CFO for an NFL team. The owner wants you to focus on increasing y gstadium and licensing revenues.

• Your I T director suggests building a website • Your I.T. director suggests building a website to let season ticket holders sell their tickets for games that they cannot attend for games that they cannot attend.

• Should you approve her project?

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Strategy MapsStrategy Maps –– Case StudyCase StudyStrategy Maps Strategy Maps Case StudyCase StudyBuilding Revenue for an NFL team• Background on your team’s operations

– Home games are sold out for many years g y yinto the future.

– Your team loses more than it wins, so a ,significant number of season ticket holders do not show up for home games.

– An important source of revenue comes from people who spend money on parking

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and concessions.

Strategy MapsStrategy Maps -- Case StudyCase StudyStrategy Maps Strategy Maps Case StudyCase Study

Theme: NFL Team: Increase Stadium and Licensing Revenue

Task: Identify Objectives Across Perspectives

Objectives Metrics Initiatives Owner

(Financial)

(Financial)Perspective

Fan(Customer)

Internal

(Customer)Perspective

ProcessesPerspective

Employee L i &

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Learning & Growth

Perspective

Identify Perspectives, then Initiatives within each perspective

Financial(Owner)

CustomerCustomer(Fan)

Operations

EmployeeandSupplier

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Should This Project Be Funded?

Financial(Owner)

CustomerCustomer(Fan)

Operations Build TicketWebsite

EmployeeandSupplier

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Where is Our Financial Focus (Revenue, Margin, ROE)?

Financial(Owner) Increase

Stadium RevenueIncrease

Licensing Revenue

CustomerCustomer(Fan)

Operations

EmployeeandSupplier

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What Customer Initiatives Are We Going to Focus on?

Financial(Owner) Increase

Stadium RevenueIncrease

Licensing Revenue

CustomerCustomer(Fan) Increase Fan Loyalty Grow Fan BaseReduce No Shows

Operations

EmployeeandSupplier

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Does this Operational Initiative Support these Customer Initiatives?

Financial(Owner) Increase

Stadium RevenueIncrease

Licensing Revenue

CustomerCustomer(Fan) Increase Fan Loyalty Grow Fan BaseReduce No Shows

Operations Build TicketWebsite

EmployeeandSupplier

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Decide How to Build The Ticket Website

Financial(Owner) Increase

Stadium RevenueIncrease

Licensing Revenue

CustomerCustomer(Fan) Increase Fan Loyalty Grow Fan BaseReduce No Shows

Operations Build TicketWebsite

Employee Identify Train I T teamandSupplier

Ticket WebsiteVendors

Train I.T. teamto Build Website

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Understand Linkages: If I do this, then that happens

Financial(Owner) Increase

Stadium RevenueIncrease

Licensing Revenue

CustomerCustomer(Fan) Increase Fan Loyalty Grow Fan BaseReduce No Shows

Operations Build TicketWebsite

Employee Identify Train I T teamandSupplier

Ticket WebsiteVendors

Train I.T. teamto Build Website

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Metrics – Putting it all gTogetherg

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http://www.michigancrc.org

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MetricsMetricsMetricsMetrics

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MetricsMetricsMetricsMetrics

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MetricsMetricsMetricsMetrics

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MetricsMetricsMetricsMetrics

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Questions?

Eric HellerMetrics Reporting, Inc.(616) 644-3190eric.heller@metricsreporting.com@ p g

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