Creating a Strategy-Focused Organization Balanced Scorecard Discussion with Adani Enterprise November 24, 2006 For further information please contact: Muhamed Muneer, CEO & MD, Customer Lab Solutions – India Affiliate of Balanced Scorecard Collaborative F-07, Golden Orchid, 10/8, Kasturba Road, Bangalore, India 560001 Ph: +91 80 22231550, +91-94484-54350 Email: [email protected]The information in this document is proprietary and confidential. It may not be reproduced or transmitted without the expressed written consent of Balanced Scorecard Collaborative, Inc.
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Creating a Strategy-Focused Organization
Balanced Scorecard Discussion with Adani Enterprise
November 24, 2006
For further information please contact:
Muhamed Muneer, CEO & MD,
Customer Lab Solutions – India Affiliate of Balanced Scorecard Collaborative
F-07, Golden Orchid, 10/8, Kasturba Road, Bangalore, India 560001
Ph: +91 80 22231550, +91-94484-54350
Email: [email protected] The information in this document is proprietary and confidential. It may not be reproduced or transmitted without the expressed written consent of Balanced Scorecard Collaborative, Inc.
9 out of 10 organizations fail to execute their strategies…However Balanced Scorecard users beat those odds – successfully executing their strategies and creating breakthrough results for their organizations
Saatchi & Saatchi
99% merged asset retention
3 years
#1 in growth & profitability
3 years
Customer satisfaction = 70%
Public Official award3 years
#1 in customer satisfaction33% reduction in cost/case
The Balanced Scorecard Has Been Strongly Endorsed by its Users
• “In more than 30 years, I've never come across a more powerful concept, so rooted in common sense, beautiful in its simplicity, easy to administer, and with such far-reaching effect as the Balanced Scorecard”
- Bill Cattucci, Former CEO, AT&T Canada • “The results of the BSC at Saatchi & Saatchi are too numerous to name. One
key indicator: shareholder value increased from $500mm to $2.5b before we were acquired”
- Bill Cochrane, Chief Financial Officer, Saatchi & Saatchi
• What the Scorecard did was to clarify the agenda, focus and align the organization around the priorities, and, basically, help make it happen”
• “In the fast paced world of Internet Banking, the Balanced Scorecard helped us focus on the key drivers of strategic success. Its framework helped us select, manage and implement a multiplicity of programs and initiatives and was critical to our success”
- Dudley Nigg, Executive Vice President, Wells Fargo Inc.
Our Understanding of the Current Situation at Adani Group
> Global interests ranging from Global trading , Edible oil, Agro products, Agri logistics, Retail, Power, Coal, Oil and Gas Exploration, Gas Distribution, Real Estate, Ports, Special Economic Zones, IT enabled services etc.
> Significant expertise in Global Trading
> Successful foray into ports business – Mundra Port and acquisition of Bay Bridge Enterprises
> Communication of Adani Group Vision and Mission
Challenges:
> Ensure timely execution and profitability of new projects
> Need for performance management system that provides greater focus and alignment
> Need for clear framework that will align and govern the entire organization
> Strategic objectives are to be connected throughout the organization
> Too many initiatives, need for effective of follow-through
Possible Benefits from a Balanced Scorecard / Strategy Focused Organization at Adani Group
> Build upon and sustain each organization’s culture of performance by placing strategy at the heart of how Adani Enterprise manages the ‘new’ organization
> Enable the Board and the Staff and to clarify their strategic role, improve their own internal strategic alignment, and define how they support each other
> Establish a consistent framework for defining and managing accountability, key projects and resource allocation
> Develop a new model for conducting management meetings, characterized by robust and focused strategic dialogue with fewer distractions and clear priorities
> Develop an internal “Strategic Management Office” where the organization develops and sustains the internal capacity to develop, implement and sustain its strategic management process using primarily internal processes
Adani Group believes that the Balanced Scorecard approach can help provide these benefits and is interested in partnering with CustomerLab to achieve them
Establish a shared understanding if your strategy through background analysis and executive interviews
> Identify key drivers and potential barriers to successful strategy execution
> Develop a strategy map for the enterprise level of Adani Group
> Create an enterprise Balanced Scorecard that includes strategic measures, targets (where possible), and aligned initiatives; typically you will have good data on 60-70% of your strategic measures initially
> Formulate an implementation/cascading plan to highlight how the strategy will be managed and extended throughout Adani Group, in light of the strategy execution assessment
> Transfer BSC know-how and expertise to the Adani Group Core Team
BSCol will work with the Adani Enterprise leadership team to:
I. SFO Assessment and Benchmarking> Assess the status on 27 best practices for becoming SFO
> Benchmarking the result against organizations that achieved breakthrough results
> Road map to execute strategy in systematic and accelerated manner
II. Training Program on Mapping Strategy> Training on how to develop Strategy Map, develop scorecard with strategic
objectives, performance measures with targets and supporting initiatives, alignment across the organization, deployment of the SFO processes, preparation of the ‘First Report’ and conduct strategy review meetings
III. Strategy Map and Balanced Scorecard Development> Building of strategic measures, targets and supporting initiatives
> Clear responsibility for effective and efficient strategy execution
IV. Monthly Review Meetings> First Report Methodology for systematizing performance review mechanism
> Governance and reporting in a strategic review format
BSCol was founded and is led and managed by Drs Kaplan (Practice Development Advisor) and Norton (President).
The CLab/BSCol Asia-Pacific team is the most experienced BSC team in the region and have worked with Kaplan and Norton for many years
Unlike our would-be competition, CLab and BSCol are focused entirely on the BSC and USES THE BSC TO MANAGE YOUR BUSINESS FROM TOP TO BOTTOM
CLab and BSCol have vast resources not available to other firms. Notwithstanding exclusive access to Kaplan & Norton, we have best practice benchmarks for every aspect of the strategic management process, unique tools and templates, and KPI databases that can be leveraged to help our clients.
Given CLab’s access to BSCol’s knowledge resources, CLab consultants help organizations achieve breakthrough results over an extended period of engagement
CLab as part of their methodology will transfer the consultant’s knowledge to a Centre of Excellence within the organization, thus ensuring sustainability of results and reducing dependence on consultants over a period of time
CLab / BSCol methodology can be tailored to suit the specific requirements of different client engagements. We will therefore take an approach that will best suit the client’s requirements
BSCol and CLab continues to invest in the development and enhancement of the Balanced Scorecard framework
CLab has experience with unique Indian cultures and work ethics. Our consultants have the breadth and depth of experience across industries and functions.
CustomerLab consultants provide world class consulting expertise at Indian rates Last, but not the least, CLab believes in seeing through the logical results in any
engagement by handholding the client throughout the execution of strategy
I9– Optimize Cycle Time Performance•Performance Analysis•Cycle time was reduced from 27 to 26 hours per batch representing a one hour reduction due to improvements in set-up procedures and raw material blending controls. However, we are still two hours off our target. This is due to consistent raw material inventory shortages for cobalt and nickel, longer than expected cool down times and bottlenecks in the finishing room.
•Recommendations•One week ago we launching a lean project aimed at eliminating wasted time in material planning and finishing room procedures.
= Meets or exceeds target
= < than 95% of target
= < 100% of target, but >= 95% of target
Cycle Time for Alloy Products (Order Entry to Finished Goods)
27
26
28
24.024.0 24.0
18
20
22
24
26
28
30
FY 02 Q203 Q303
Actual Target
Initiatives Supporting I6• Lean Project
Establishes accountability
How are the objective and
measure performing?
Why is the measure
performing as it is?
What are we going to do about it?
What initiatives are aimed at closing performance gaps?
Project Description / Comments:Six Sigma Lean is a proven way to eliminate waste in manufacturing cycle time. The project is aimed at reducing the overall time it takes a batch of alloy product to move from order entry to finished goods inventory. Specifically, there is an opportunity to eliminate several hours time by improving the material planning and finishing room procedures.
DATE STATUS MILESTONES
Six Sigma Lean Project for Cycle Time Performance (cobalt products)
October 2003 Complete Held a kickoff meeting with materials planning and finished department to describe the project and generate a benefits case
October 2003 Complete Identify the causal factors that lead to cycle time delays.
November 2003
In Process Conduct an impact assessment on each causal factor and develop quick-hit and longer term improvement recommendations.
November 2003
Not Started Implement quick-hit opportunities and communicate longer term improvement recommendations in the Q403 Balanced Scorecard report
Project Sponsor Jeff Schmid
Project Manager Frank Strome
Start Date Q3 2003
End Date Q4 2003
Budget $25,000
Expected Benefits:Eliminate 4 hours of cycle time per batch of alloy product.
Actions / Decisions Required from Senior Management: No action or decision required at this time.
The Initiatives that Drive Performance are Aligned with Strategy Establishes accountability
A Strategy-Focused Organization designed around a longer-term strategic view. CORPORATE
BUSINESS UNITS
SBU1
xxx
xxx
SBU2
xxx
SBU3
xxx
2. Each SBU develops a long-range plan and BSC consistent
with corporate strategic agenda.
CORPORATE SCORECARD(Shared Strategic Agenda)
Theme
1. Aggressive Growth
2. Customer Loyalty
3. Speed and Flexibility
4. Customer Intimacy
5. Operational Excellence
6. Right Skills
7. Accountability Culture
1. A corporate scorecard defines overall
strategic priorities.
SHARED SERVICE UNITS
SHARED SERVICE UNITS
• Finance
• Marketing
• IT
• Sales
• General Services
• Human Resources
• Organizational Development
3. Each Shared Service Unit develops a plan and BSC for “best
practice” sharing to create synergies across SBUs.
OrganizationalControl
Loop
StrategicLearning
Loop
TheManagement
Meeting
Team Problem Solving
Follow-upAction
Closing the Loop
Dialogue
External
InsightHarvesting
“Testing Hypotheses and
Capturing Learning”
Results
Performance
Operational Control LoopUpdate the Strategy
Reallocate Priorities
Pioneer’s Balanced ScorecardStrategic Objectives
Financially StrongDelight the ConsumerWin-Win RelationshipSafe & Reliable
Competitive Supplier
Good NeighborQuality
Motivated & Prepared
Return on Capital EmployedMystery Shopper RatingDealer / Pioneer Gross Profit SplitManufacturing Reliability IndexDays Away from Work RateLaid Down Cost vs. Best Competitive Ratable SupplyEnvironmental IndexQuality Index