Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC)

FATHI ELLOUMI

Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC)

FOB Research Forum – January 27, 2012

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If I can’t measure it, I can’t manage it, I can’t

improve it.


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Makes vision, mission, and strategy statements meaningful and actionable for employees

Motivation


Economic uncertainty and business survival

Why do so many business fail? 6 out of 10 businesses fail < 4 years (Knaup, 2005) Poor strategy execution No viable market Lack of competitive advantage Competing Head-to-Head with industry leader Too much leverage Undercapitalizing the business Etc.

A Map is a Must have!

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Question/Objective


How to make vision, mission, and strategy statements meaningful and actionable for employees?

Applying BSC as a strategy mapping tool to ASFC to track and monitor capabilities building for future growth and profitability.

Builds on Kaplan (2000, 2002, 2005, 2009), Kaplan & Norton (2000), Schneiderman (1999, 2001), Arveson (2009), and Atkinson et al. (2012)

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Strategy


A strategy accomplishes two principal functions:

Creating a competitive advantage by positioning the company in its external environment with resources to support customers better than its competitors

Having a clear strategy provides clear guidance for how internal resources should be used to gain a competitive advantage in the marketplace (Porter , 1996)

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Strategy Map


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Learning & Growth

How do we align & enhance our intangible

assets to improve critical process?

Process

To meet our financial & customer objectives, at which process must we

excel?

Customer

To achieve our vision & financial objectives, how must we deliver value to

customers?

Financial

What financial performance should we

deliver for our shareholders?

Mission, vision, & strategy

Kaplan & Norton (2000)

Strategy and the BSC (Kaplan & Norton, 2000)

A BSC tells the story of the business unit’s strategy

A BSC identifies and makes explicit the hypotheses about the cause-and-effect relationships between: Outcome measures in the Financial and Customer

perspectives Performance drivers of those outcomes in the

Internal and Learning and Growth perspectives

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BSC Objectives


Concise statements that articulate what the organization hopes to accomplish

Action phrasesTell the story of the strategy through the

cause-and-effect relationships

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Schneiderman (1999)

BSC Objectives

Typical objectives found in each of the four BSC perspectives include: (Atkinson et al., 2012) Increase revenues through expanded sales to existing

customers (Financial perspective) Become service oriented (Customer perspective) Achieve excellence in order fulfillment through continuous

process improvements (Internal perspective) Align employee incentives and rewards with the strategy

(Learning and Growth perspective)

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Measures

Provide specificity and reduce the ambiguity that is inherent in word statements

Specifying exactly how an objective is measured will give employees a clear focus for their improvement efforts

Once the objectives have been translated into measures, managers select targets for each measure

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FOB Research Forum – January 27, 2012 Schneiderman (1999, 2001)

Targets and Initiatives

Targets establish the level of performance or rate of improvement required for a measure Should be set to represent excellent performance Should, if achieved, place the company as one of the

best performers in its industry

Initiatives are the short-term programs and action plans that will help achieve the stretch targets established for its measures

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FOB Research Forum – January 27, 2012 Atkinson et al. (2012)

ASFC – the case study

ASFC, Canadian subsidiary of ASF Intl, a large manufacturer of salty snack foods.

Due to disappointing sales growth and financial results ASFC underwent a major restructuring of its senior management team in 2009.

The mandate of the new team was to double the size of Canadian operations and generate pre-tax profit greater than 10% within a five year period.

End 2011. Despite the best efforts of the management team, ASFC is still short of achieving that mandate.

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SITUATIONAL ANALYSIS13


SWOT

ASFC Strategy Gap14


ASFC Strategic Alternatives

The key issues to be addressed to achieve the mandate:

Identification of a market expansion strategy Improvement in logistics and distribution

networks

The key strategic alternatives identified were:Organic Growth Amalgamate with SSIAcquire Deli Snack

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ASFC Strategy Map - Financial

Companies generate revenue growth by: Selling new products Selling to new customers Selling in new markets

Increased productivity occurs by: Lowering direct and indirect expenses Utilizing their financial and physical assets more

efficiently

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ASFC Strategy Map - Customer

Identify the targeted customer segments in which the business unit competes and the measures of the business unit’s performance in these targeted segments

This perspective typically includes several common measures of the successful outcomes from a well-formulated and implemented strategy: Achieve customer satisfaction and loyalty Acquire new customers Increase market share Enhance customer profitability

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ASFC Strategy Map - Customer

ASFC value proposition? - the unique mix of product, price, service, relationship, and image offered to the targeted customers Defines the company’s strategy Communicates what the company expects to do for its

customers better or differently from its competitorsValue propositions used successfully by different

companies include: “Best buy” or lowest total cost Product innovation and leadership Complete customer solutions

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ASFC Value Proposition


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“Low-Total-Cost Value Proposition “Deliver a combination of quality, price, and ease of purchase that no one can match”

Low-total-cost

Measures

Be a low cost

supplier

Be a low cost

supplier

Deliver consistent

high quality

Deliver consistent

high quality

Provide a speedy,

easy purchase

Provide a speedy,

easy purchase

Offer appropriate

selection

Offer appropriate

selection

-Price relative to competitors

- Customer’s cost of ownership

-Price relative to competitors

- Customer’s cost of ownership

- # returns; $ value of returns

- # & % customer complaints

- # health incidents

- # returns; $ value of returns

- # & % customer complaints

- # health incidents

- # on-time delivery

- Customer lead time

- % perfect orders

- product-mix growth

- # new product lines

- Product mix range

Adapted from Atkinson et al. (2012)

ASFC Strategy Map - Process

How ASFC will: Create and deliver the value proposition for customers Achieve the productivity improvements for the financial

objectives

ASFC critical processes at which it must excel to achieve its customer, revenue growth, and profitability: Operating processes: day-to-day processes

Day-to-day processes by which companies produce their existing products and services and deliver them to customers

Customer management processes Innovation processes to develop new products & processes Regulatory and social processes to meet regulations/BBP

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FOB Research Forum – January 27, 2012 Arveson (2009)

ASFC Strategy Map – Learning & Growth

ASFC objectives for the people, systems, and organizational alignment that create long-term growth and improvement Define the employee capabilities, skills, technology,

and organizational alignment that will contribute to improving performance in the measures selected in the first three perspectives

Identify investments needed to improve the skills of employees, enhance information technology and systems, and align people to the company’s objectives

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ASFC Strategy Map – Learning & Growth

Develop core competencies and skills Encourage employees to gain a broader business

understanding Build the level of skills Develop leadership skills

Provide access to strategic informationEngage and empower employees

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Connecting the Four Perspectives


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A strategy map provides a visual representation of the linkages in the four perspectives of the BSC

Financial Perspective Return on Investment

Customer Perspective Customer Loyalty

On-Time Delivery

Process Perspective

Learning and Growth Perspective

Process Quality Cycle Time

Employees’ Process Improvement Skills

Opportunities

The benefits from BSC are realized as the organization integrates its new measurement system into management processes that: Communicate the strategy to all employees and

organizational units Align employees’ individual objectives and incentives

to successful strategy implementation Integrate the strategy with ongoing management

processes

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Challenges

Poor organizational process for developing & implementing the scorecard: (Atkinson et al, 2012) Senior management is NOT committed Scorecard responsibilities do not filter down Scorecard is treated as a one-time event BSC treated as a systems project rather than as a

management project

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Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC)

Documents

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