Siakos penny athens_20101026_v2

Siakos & PennyStrategy - Development - Risk

The Importance of Managing Strategy How Balanced Scorecard puts you in control of business results

Hotel Grande Bretagne, November 11th , 2010

Confidential – For Internal Use Only

Siakos & Penny

Nigel Penny Vassilis Siakos

• Global 30 years expertise in Strategy and Performance issues

• Ex partner in KPMG management consulting firm

• Ex Vice President in Norton and Kaplan’s Balanced Scorecard Collaborative

• Operates extensively with the largest companies in the world’s powerhouse new economies

• Appointed by Government Ministers to advise on public sector strategy issues

• 21 years of professional experience, including 11 years of international Strategy & Organisational Development consulting

• 10 years of commercial experience with Johnson & Johnson, Diageo and Walt Disney

• Ex Principal in Hay Group (SEE), member of the international BEO R&D team developing global methodologies for Strategic Performance Management / Balanced Scorecard.

• Private and Public sector consulting experience including Athens 2004, Greek Ministry of Development, Greek Municipalities, Citadel Capital and others

A new force in strategy consulting in the region


Our Agenda

• How our current management approaches have failed us

• What is the Balanced Scorecard?

• Getting the content right

• Focusing on improving management reviews

• How do we handle Risk?

• Questions


How our current management approaches have failed us

The Global Financial Crisis has highlighted how ineffective our current management systems really are



Our prime focus as executives is to develop and implement strategies that meet our stakeholders expectations



The end to end strategy process divides into elements of strategy development and strategy implementation

ExecutingDeveloping



Management surveys continue to show that strategy implementation issues are the prime cause of failure to achieve goals.

“Less than 10% of strategies effectively formulated are effectively executed”

Fortune



There can be many reasons for this failure,…… but one is undoubtedly our reliance on ‘budget based’ reporting tools to provide the core of our feedback on business performance



Spreadsheet-based budget reporting is neither intuitive nor informative about the issues that matter

Focus on historical, financial numbers

not strategic objectives

Micro level detail on cost management

Obsession with budget variances


What is the Balanced Scorecard?

A budget (or ‘beyond budget’) is useful, but we need different tools to effectively track our strategy management

Balanced Scorecard provides a framework to translate strategy into operational terms



Balanced Scorecard ‘describes’ our chosen strategy in ways that allow us to track progress against objectives not budgets

Four perspectives to describe strategy

Key performance indicators to measure each perspective

Cause and effect as a key differentiating concept



Balanced Scorecard starts with a strategy map that describes the different elements of our strategy e.g. a call center business

Fin

an

cia

l

Clients

Internal – Customer Acquisition

F1Achieve ProfitableRevenue Growth

F3Grow InternationalClient Revenue inVoice & Data

F4. Incubation through Domestic ClientsRetail, Automobile &Consumer Durable

F5. Secure allIn-house Voice &Data Outsource Business

F6EstablishConsulting & ASPRevenue Stream

F9Improve Profitabilityper seat

F7. Reduce Total Cost perTransaction

C1. InternationalClients – OperationalExcellence throughValue for Money

C2. Domestic ClientsProduct LeadershipTrusted Brand

Customers

C5. Delight CustomersProduct & ProcessBehavior

Channel Partners

C3. Trusted Relationship

Influencers & Analysts

C4. CredibleInformation

F2. Pursue Inorganic Growth

P2. Build DomainSpecialization

P3. Effective New Clientacquisition

P1. BrandBuilding

P4. Create Sales& Marketing Team

Service DeliveryLeadership

P11. Achieve WorldClass ResultsOn Key ProcessMeasures

P10.Exceed ClientSLAs

P12.Effective ProcessDocumentation

L1. Build KnowledgeManagement System

L2. Build SelectedClient ServiceIT Applications

L4. Drive Business Excellence

L5. Build Our DesiredEnvironment inCulture & Values

L3. Move to 100% AutomatedProcess

Cost Leadership

P13. MinimizeManpowerCost as %of Revenue

P14. ReduceAgent

BreakevenTime

P15. Reduce theCapital

Cost per Seat

P16. EnsureProcessProfitability

P17. OptimizeBandwidthCosts

F8. Identify & Mitigate risk

Vaidya

Cu

sto

me

r

ClientRelationship

P6. Increase Perception

P5. Provide ValueAdded Information& Service

Build CapacityP7. IncreaseEmployeeEngagementLevel

P9. Meet the CCEsRequirement (quality) ontime

P8. Achieve Just in TimeInfrastructure

Inte

rn

al

Le

arn

ing

&

Gro

wth

Clients



With our strategy map in place we develop measures, targets and initiatives to support each objective



We complete the full definition for each objective to arrive with our final balanced scorecard



Balanced Scorecards are developed at different levels within an organisation. This ensures alignment to organisational strategies


Getting the right content

Describing strategies in ways that highlight each major component of our thinking is key to strategy management. We call this ‘strategy waves’



Strategy waves are a key interface between strategy development and the creation of the balanced scorecard

Strategies are expressed as a series of waves, developing in parallel over time

Strategic waves provide a base to structure strategic thinking into ‘boxes’ of activity

They allow management thinking to transcend typical ‘lists of projects’ which are common in traditional approaches to strategy development

They enable management to construct a clear mental picture of different components within the strategy

They aid in resource allocation

They aid in developing performance measurement as they can be incorporated as ‘waves’ within a balanced scorecard strategy map



An example of strategy waves at a USD 2billion Chinese company

• This strategy map clearly identifies 3 strategy waves

• Monthly performance reviews highlight progress in each wave

• Reviews are carried out dynamically by reference to the strategy map, not traditional financial budget reports

• Each SBU carries out a similar management review based on its own aligned strategy map

Strategy waves form the basis for strategy

map design


Focusing on improving management reviews

The way we conduct monthly business reviews is still one of the biggest hurdles to achieving effective strategy management

Little preparation amongst participants – not coming ‘armed’ with a clear understanding of the issues to be discussed

Presentational in style – each attendee makes a presentation about their part of the business, usually highlighting the ‘good bits’

Little shared responsibility for problems

Limited time spent on identifying solutions

No process for follow through


Focusing on improving management reviews

The new management review uses the balanced scorecard to identify problems in advance of the meeting. Attendees arrive prepared and document actions decided. An Office of Strategy Management oversees the process

Ref(REFERS

TO RELEVANT

REPORT PAGE)

Strategy Map

objective(s)

impacted

Key Issues (1)

(INDICATIVE)

Analysis Impact (2) Proposed actions (3) Due Date for

resolution

Responsibility

YTD sales performance adversely impacted by failure to grow business from XXXXXXX key account

Growth from XXXXXXX is expected to continue below forecast for current year. Other key accounts are on target, but offer little further scope for expansion beyond existing targets

- USD 10m revenue impact on current year results

Sales team requested to identify other short term opportunities in existing Tier 2 accounts; regional sales heads to review opportunity for fast track sales closing based on existing opportunity lists; regional çlose teams established to facilitate fast track close at identified accounts

(1) Refers to any performance issue adversely impacting , or likely to impact, the achievement of highest level business results (2) Quantified year end sales and/or profit impact where available if problem is not resolved or continues at current levels(3) Initial proposed actions from responsible executive (to be debated at review meeting)


How do we handle risk?

Too often, risk management is seen as a separate process from ongoing strategic performance reviews



New developments in balanced scorecard thinking can incorporate risk into mainstream business management processes



Risk threats and risk opportunities can be built as strategy waves within an expanded strategy map


In conclusion

Balanced Scorecard puts you in control of strategy management

Focuses on strategic objectives not just budgets

Highlights key elements of the strategy allowing each one to be discretely analysed and reviewed

Creates a framework for improved management review meetings leading to faster identification and resolution of emerging problems

Can be extended to incorporate risk and opportunity management

Contact info:

Vassilis Siakos Nigel Penny

Athens: +30 6944 77 97 03Singapore: +65 9815 7830Australia: +61413 177380

[email protected]@pacific.net.sg
