Marketing Questionaire Template by osz55288


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									             Strategic Action Plan
            Process and Workshop

        Head Office: Level 2, 120 Pacific Highway, ST LEONARDS
Ph: (02) 9461 0430 Fax: (02) 9461 0429 Website:
CEG Strategic Action Plan Process

     NOW                 WHERE                         HOW              ACTION
Management Buy-In     Vision / Destination
                                                  Critical Issues       People First
   Interviews              Statement

 Business Analysis          Mission                   Strategies        Leadership

                                                     Initiatives –
     Pestlied              Purpose                                    Strategic Mapping
                                                     Action Plans
  Strategic SWOT         Core Values                                  Corrective Action
  Paradigm Shift                                                        Middle Mgt /
                          Objectives                   Budgets
     Analysis                                                           Team Leader
 Magic Wand List/       Core Business                                 High Performance
                                                   Strategy Map            Teams
   Whinge List            Statement
                        Sustainable             Balanced Scorecard    Emerging Issues
                     Competitive Advantage        KPI‟S/Initiatives
                                                 Communication           Reporting
                       Growth Strategies
                        Ranking Issues                                  Management

                       Scenario Planning

  Situation Review       Strategic Plan               Business Plan     Implementation
 Module One –
What is Strategy?
What is Strategy?

   To achieve superiors profitability and value to
   Competition is about a relative advantage
    and is dependent on differentiation
   Operational effectiveness is essential but is
    not a replacement for strategy
     A business plan is a formal statement of a set of business goals, the
      reasons why they are believed attainable, and the plan for reaching
      those goals. It may also contain background information about the
      organization or team attempting to reach those goals.
     For-profit business plans typically focus on financial goals, such as
      profit or creation of wealth.
     Business plans may be internally or externally focused. Externally
      focused plans target goals that are important to external stakeholders,
      particularly financial stakeholders. They typically have detailed
      information about the organization or team attempting to reach the
     Internally focused business plans target intermediate goals required to
      reach the external goals. They may cover the development of a new
      product, a new service, a new IT system, a restructuring of finance, the
      refurbishing of a factory or a restructuring of the organization. An
      internal business plan is often developed in conjunction with a
      balanced scorecard or a list of critical success factors
     Business plans that identify and target internal goals, but provide only
      general guidance on how they will be met are called strategic plans.
     Strategic planning is an organization's process of defining its
      strategy, or direction, and making decisions on allocating its resources
      to pursue this strategy, including its capital and people. Various
      business analysis techniques can be used in strategic planning,
      including SWOT analysis (Strengths, Weaknesses, Opportunities, and
      Threats ) and PEST analysis (Political, Economic, Social, and
      Technological analysis) or STEER analysis (Socio-cultural,
      Technological, Economic, Ecological, and Regulatory factors) and
      EPISTEL (Environment, Political, Informatic, Social, Technological,
      Economic and Legal).
     Strategic planning is the formal consideration of an organization's
      future course. All strategic planning deals with at least one of three key
         "What do we do?"
         "For whom do we do it?"
         "How do we excel?“ In business strategic planning, the third
            question is better phrased "How can we beat or avoid
            competition?". Our point of differentiation
  What is Strategic Thinking?

 Anticipation; reading the game
 Big picture; knowing what to do
 Conscious and deliberate; leadership

“I skate to where I think the puck will be.”
              Wayne Gretsky
Planned versus Emergent Strategy

                                    What happens in practice will
                 Formal Once-        always be some blend of what
                    a-year          is intended and what emerges
                  Planning &         along the way - Mintzberg (1994)
                 Adopted Strategy


                                    Continuously as
                                    New Issues Arise
Objectives & Benefits
   Strategic Plans

                      Improve Shareholder Value

         Revenue Growth                     Productivity Strategy

                  Grow new business
 Increase value                        Improve cost      Improve use of
                    in existing and
  to customer                           structure            assets
                    new customers
Revenue Growth Strategies
 Increase Revenue
 Better Margins and Product Mix Services

           Existing Products / Services    New Products / Services

             Market Penetration           Product Expansion
Markets        Existing products /        New products in existing
               services in existing              markets

             Market Expansion                Diversification

 New       Existing products in new         New products in new
Markets             markets                      markets
Six Sigma – A measure of productivity
                   THE COST OF QUALITY
  Sigma   Defects per Million                 Cost of
  Level   Opportunities                       Quality
          308,537 (Non-competitive
    2                                         Not applicable
    3     66,807                              25 – 40% of sales

    4     6,212 (Industry average)            15 – 25% of sales

    5     233                                 5 – 15% of sales
    6     3.4 (World class)                   <1% of sales
   Each sigma shift provides a 10% net income improvement
                                     Source: Six Sigma, M Harry & R Schroeder
Keys to Success
                  1. People First

 5. Teams
                           2. Strategy

 4. Operational

                    3. Sales
                    (Revenue Growth)
         People First

“Right people on the bus, wrong
 people off the bus and the right
    people in the right seats”

Jim Collins “Good to
Great” please           PRINTERS

1. Differentiate

2. Customers, Customers, Customers!

3. Increase Revenue

4. Operational Efficiency

“Obstacles are what you see if
   you lose sight of the goal”
    Teams and Training

  Teams are the foundation of
High Performance Companies –
Try as you might, you cannot get
   to high performance without
Now – Where? – How?

                   Business Plan
                   Critical Issues
                                     Strategic Planning
                    Strategies           Workshop
                   Action Plans
 60 – 100 Issues                         Statement
  SWOT/PEST                              Objective
   Situational                        Prioritise Issues
                                        1 Page Plan
Situational Review

     Magic Wand List / “Whinge List”
     Management Interviews
     STEER
     Strategic SWOT
     Strategic Marketing
     Business Analysis
The Strategic Plan

     Vision / Destination Statement
     Mission
     Core Values
     Purpose
     Core Business Statement
     Sustainable Competitive Advantage
     Position the Product Portfolio
     Growth Strategies
     Defining Critical Issues
     Scenario Planning
Business Plan

     Critical Issues
     Strategies
     Initiatives – Action Plans
     Strategic Accountabilities
     Budgets
     Strategy Map
     Balanced Scorecard KPIs / Initiatives
     Communication Plan

     People First
     Leadership
     Strategy Mapping
     Corrective Action
     Middle Management / Team Leader
     High Performance Teams
     Emerging Issues
     Reporting
     Performance Management
 Module Three –
Now – Situational
Situational Review

     Magic Wand List / “Whinge List”
     Management Interviews
     Strategic SWOT
     Review current business documentation
         Marketing and sales plans
         Business plans ( last year)
         Employee & customer surveys
         Financials/Budgets
         Research
Stretch Brainstorm
(Magic Wand)

       If you did not have to worry
        about time or money, what
         would I change about my
         My business “issues list”
Management Interviews
     Purpose of interviews: The easiest way to identify the key/critical
      issues in a business is to undertake a series of interviews of between
      30 minutes – 1 hour duration across the organisation using our
      diagnostic questionnaire. Within 2 or 3 days you will have identified
      everything you need to know about the business including culture, the
      politics, priorities, opportunities, issues, inhibitors etc.
     Interview a cross section of individuals at all levels – Senior
      management, middle/line mangers, supervisory level and some
      frontline staff
     Ensure you interview senior managers of marketing, sales, operations,
      technology, HR, finance, innovation/product, etc
     Ensure confidentiality ( consider using an internal/external consultant)
      typically undertake a minimum of 8 and maximum of 30 interviews
     Use Diagnostic General Questionnaire attached
     Summarise issues into Issue List Template and complete
      Diagnostic Questionnaire Survey
     Identify issues into their appropriate category – management,
      marketing, sales, operations etc. Please note an issue can be in more
      than one category

                              Political         Social
Model –                              ORGANISATION
What’s happening in the
world around us?
(Source: Annual Reports)

 STRENGTHS                                   WEAKNESSES

Build Greater Capability                     Fix or Improvise

             Assess Internal Capabilities
               Summarise from questionaire
Respond Cautiously                           Consider Responses

            Assess External Environment

 OPPORTUNITIES                               THREATS
   Module Four –
Where – Strategic Plan
The Strategic Plan

     Vision
     Mission/Purpose
     Core Values
     Core Business Statement
     Sustainable Competitive Advantage
     Porters 5 Forces
     Customer Value Proposition
     Growth Strategies – Objectives & Goals
     Defining Critical Issues
     Vision: Defines the desired or intended future state of a specific
      organization or enterprise in terms of its fundamental objective and/or
      strategic direction. Vision is a long term aim, a view of how the
      organization would like the world in which it operates to be.
     Mission: Defines the fundamental purpose of an organization or an
      enterprise, basically describing why it exists. A corporate Mission can
      last for many years, or for the life of the organization. It is not an
      objective with a timeline, but rather the overall goal that is
      accomplished over the years as objectives are achieved that are
      aligned with the corporate mission.
     Values: Beliefs that are shared among the stakeholders of an
      organization. Values drive an organization's culture and priorities.

      Values include the stated values and the “real values”. Real values
      can be described as “what really happens here” . The “real values”
      unless understood can impact a businesses ability to implement its
Vision, Mission, Values
Walt Disney Example

   Purpose       To make people happy
   Core Values    No cynicism
                  Nurturing and promulgation of “wholesome”
                   American values
                  Creativity, dreams and imagination
                  Fanatical attention to consistency and detail
                  Preservation and control of the Disney magic

   Mission       Disney‟s overriding objective is to create
                 shareholder value by continuing to be the
                 world‟s premiere entertainment company from a
                 creative strategic and financial standpoint.
Culture of one of the World’s Leading
Technology Companies

    Quality Team      Open         Stretch Goals
     Teamwork      Empowerment         Trust

     Frugality     No Technology   Drive Change

Business Statement Example

The CORE PROCESS: We market, design and construct..

The PRODUCT:          quality new homes..

The CUSTOMER:         for high net worth individuals.

            Up market project home builder
Sustainable Competitive Advantage


    The point of difference or winning
    edge that will enable you to beat
    others in the same business.
     Competitive advantage is, in very basic words, a position a firm occupies against its competitors.
     According to Michael Porter, the three methods for creating a sustainable competitive advantage are
     1. Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but
      at a lower cost; [1]
     2. Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same
      price of its competitors. They are collectively known as positional advantages because they denote the
      firm's position in its industry as a leader in either superior services or cost; [2]
     3. Focus (economics) - A focused approach requires the firm to concentrate on a narrow, exclusive
      competitive segment (market niche), hoping to achieve a local rather than industry wide competitive
      advantage. There are cost focus seekers, who aim to obtain a local cost advantage over competition and
      differentiation focuser, who are looking for a local difference. [3]
     Many forms of competitive advantage cannot be sustained indefinitely because the promise of economic
      rents invites competitors to duplicate the competitive advantage held by any one firm.
     A firm possesses a sustainable competitive advantage when its value-creating processes and position
      have not been able to be duplicated or imitated by other firms,[4]. Sustainable competitive advantage
      results, according to the resource-based view theory in the creation of above-normal (or supranormal)
      rents in the long run..
     The primary factors of competitive advantage are innovation, reputation and relationships.
     Competitive advantage occurs when a organization acquires or develops an attribute or combination of
      attributes that allows it to outperform its competitors. These attributes can include access to natural
      resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel
      human resources. New technologies such as robotics and information technology either to be included as
      a part of the product, or to assist making it
Discipline of Market Leaders
The idea is to be excellent at one and very good at the other two !!!!

     Operational Excellence
     Price  Consistent Quality  Speed 

     Customer Intimacy
     Service  Relationship  Flexibility 

     Product leadership

     Features  Innovation  Speed to Market

                                         Adapted from Kaplan & Norton (2000)
 Stuck In The Middle

   PRICE               QUALITY

High Volume              High Margin
Low Margin
                         Low Volume
Competitive Advantage

Hyundai   Sustainable Competitive Advantage   BMW

                 Marketing Strategy

                 Operations Strategy

          Innovation              Financial
           Strategy               Strategy
Competitive Advantage Exercise
                  Hyundai                      BMW /Mercedes
                  ( price & volume)            ( quality)
 Marketing        Market on TV and mass        Market in business
                  newspapers to their their    magazines, prestige
                  age segments                 events, selective TV
                                               shows and CRM
 Operations       Located in low cost          Germany is benchmark
                  countries with high volume   & replicate in South
                  highly mechanised            Africa, USA highly
                  production                   mechanised production
 Innovation       Copy                         Lead innovation
 Human Resource   Low cost with selective      Highly qualified
 Strategy         areas of expertise           workforce – engineers
 Finance          Lowest cost                  Huge innovation
                                               budget – lead the
Step 2: Sustainable Competitive Advantage

                                     DEVELOP YOUR SCA
      VALUE TO CUSTOMERS   High 10


                             Low 0             5          10 High

                                   ABILITY TO BEAT COMPETITORS
Step 3: Sustainable Competitive Advantage


   1.   ___________________   ___________________
   2.   ___________________   ___________________
   3.   ___________________   ___________________
   4.   ___________________   ___________________
   5.   ___________________   ___________________

                   How will you WIN?

           Use attached Success Factors
A simple way to think about what is your
Sustainable Competitive Advantage Step 1


      1.    ___________________   11. ___________________
      2.    ___________________   12. ___________________
      3.    ___________________   13. ___________________
      4.    ___________________   14. ___________________
      5.    ___________________   15. ___________________
      6.    ___________________   16. ___________________
      7.    ___________________   17. ___________________
      8.    ___________________   18. ___________________
      9.    ___________________   19. ___________________
      10.   ___________________   20. ___________________
Porter’s 5 Forces Nature of Competition
                                           Potential new
                Threat of
                                                                               Bargaining power
                new entrants
                                                                                       of buyers

    Suppliers                                                                                       Buyers

                                            Rivalry among
                                             existing firms
    Bargaining power
       of suppliers                                                                 Threat of
                                                                          substitute products

                Source: Michael E Porter Competitive Advantage: Creating and Sustaining Superior Performance Free Press 1985
Porters 5 Forces
The Customer Value Proposition
Private Sector

   What Benefits Are We Offering to Customers?

   Product & Service Attributes
   Product & Service Attributes   +   Image     +   Relationship

    • Price                             • Brand       • Empathy
    • Features                          • Status      • Personal
    • Build and Dynamic Quality         • Reputation  • Membership
    • Accessibility and Convenience                   • Intimacy
    • Speed and Consistency
    • Self-Managed and Reach
    • Error-Free
    • Safety                    The challenge is to identify what
    • Comfort                   each customer segment prefers
    • Choice and Flexibility    and to deliver those preferences.
Strategy Canvas Example

   The Strategy Canvas of the Short-Haul Airline Industry

     high                                                               

                         Other                                          
                        Airlines                                                 
                                                         
Offerings            


                                       
                                                          
     low                                                                     

                     meals                    seating                                     frequent
                                                                      friendly           departures
                                              choices     hub                    speed
             price                  lounges                           service
                                Factors Of Competition                                                See reference page
Case Study - Southwest Airlines
                                        No                       No baggage
                                       meals       Limited        transfers
                    No seat                        service                            No
                  assignments                                                      with other
                                                  Limited use                                       point-to-point
                                                    of travel                                      routes between
  Frequent,                    15 - minute           agents             Standardised                midsize cities
   reliable                        gate                                  fleet of 737           and secondary airports
  departures                  turnarounds                                  aircraft

     High                   Lean, highly            ticketing
 compensation                productive            machines           Very low
 of employees                ground &                               ticket prices
                             gate crews

                                     High level     aircraft                                    “Southwest
                                    of employee    utilisation                                  the low-fare
                                        stock                                                     airline”

                                                                       Porter’s Activity Map
                                                                   Source: Porter on Competition

  Frequent,                                                                         Short-haul,
   reliable                                                                        point-to-point
  departures                                                                      routes between
                                                            Standardised           midsize cities
                                                             fleet of 737      and secondary airports

The positioning of Southwest is multiple in the
sense that it is serving part of the needs of some
customers (ie. getting them to the target city at a
convenient time) who use other airlines, whilst it         Very low
may be serving all of the needs of other customers       ticket prices
who can only pay low fares and are not fussed
about landing at a secondary airport. If I had to pick
it I would say that the positioning is a mixture of
Variety and Access-based positioning. It is broadly                            “Southwest
                                                                               the low-fare
targeted in that it ignores the more idiosyncratic                               airline”
needs of particular customer groups. (The Model T
Ford of air travel!)

                                                                            Leunig View

                     No                   No baggage
                    meals    Limited       transfers
        No seat              service                          No
      assignments                                          with other
                            Limited use                                     point-to-point
                              of travel                                    routes between
                               agents           Standardised                midsize cities
                                                 fleet of 737           and secondary airports

                                              Very low
                                            ticket prices

                                                                Leunig View
Enabling Strategies

                                        No                       No baggage
                                       meals       Limited        transfers
                    No seat                        service                            No
                  assignments                                                      with other
                                                  Limited use                                        Short-haul,
                                                    of travel                                       point-to-point
 Frequent,                     15 - minute           agents             Standardised               routes between
  reliable                         gate                                  fleet of 737               midsize cities
 departures                   turnarounds                                  aircraft                      and
                                                                                                secondary airports

     High                   Lean, highly            ticketing
 compensation                productive            machines
 of employees                ground &
                             gate crews

                                     High level     aircraft
                                    of employee    utilisation

                                                                                        Leunig View

              YOU ARE TARGETTING?

                            01/02 02/03 03/04 04/05 05/06
      1.   __________________________________________
      2.   __________________________________________
      3.   __________________________________________
      4.   __________________________________________
      5.   __________________________________________
      6.   __________________________________________
  Module Five –
How – Business Plan
Business Plan

     Critical Issues
     Strategies
     Initiatives – Action Plans
     Strategic Accountabilities – Who
     When
     Budgets – how much
     Balanced Scorecard & Strategy Map
     Measurements & KPIs
What are the critical issues and how
do we determine them?
     Critical Issues: Critical issues are issues identified that will impact a
      businesses ability to implement its strategy. These issues cover all
      areas/processes of the business plus culture, politics, customers,
      suppliers. In a business planning context they all need to be addressed
      for the following reasons
       1.   They are interlinked: Interconnectivity is a concept that can be summarized as
            that all parts of a system interact with and rely on one another simply by the
            fact that they occupy the same system, and that a system is difficult or
            sometimes impossible to analyze through its individual parts considered
       2.   Prioritisation: Once all the critical issues have been identified and in the
            “How” part of the business plan we describe how to address them i.e.. critical
            issue (CI)>strategy to address CI > Action Plan > Who > When > How Much >
            Measures > Links to other CI’s, we can then determine the priority
       3.   Determining the critical issues allows one to address resourcing and
            budgetary issues i.e. We do not have enough recourses or money to address
            all the CI , which ones go first, how do we sequence
     Determining critical issues
           Step 1: Take the issues list compiled from management and staff
            questionnaires and list in category/process i.e. Management, marketing etc
           Review the list of issues in each category to determine critical issues –
            remember there will be several issues that are similar that identify an
            issue/theme identified by several people through the questionnaire
What are the critical issues and how
do we determine them? ( continued)
     Determining critical issues
          Step 1: Take the issues list compiled from management and staff
           questionnaires and list in category/process i.e. Management, marketing etc
          Step 2: Review the list of issues in each category to determine critical issues
           – remember there will be several issues that are similar that identify an
           issue/theme identified by several people through the questionnaire
          Step 3: List in Critical issue summary

     Exercise:
          Take issue list template and work out what the critical issues are


       There are normally 2 or 3 Critical Issues per Category
Critical Issues Exercise
Management                               Brand & Marketing
 Senior job roles                        Competitor reviews
 Bringing on & empowering middle         Brand & marketing strategy review
management                                Lack of penetration in x segment
 Review organisational structure of x

Sales                                    Operations
 Leveraging sales & marketing across     File management, protocol & storage
the channel                               Review and update our processes in line
 Develop the sales culture              with new technology
 Sales Strategy                          Project Management of IT integration
 Lack of sales process                   Supply chain review (printing, telco,
 Key account management                 stationary, freight/couriers)
 Leverage our resources                  Making the key supplier relationship
                                         work effectively
                                          Gross Margin
Critical Issues Exercise answers
Finance                                            Innovation
 Review general ledger requirements                Review how we innovate
 Review management reporting                       Develop an innovation culture
 Early warning key performance indicators
 Cash and cash management
 Shareholder communication
 Review key supplier reporting
Quantify capital requirements going forward

Human Resources                                    Technology
 Career Path Development                           Smooth implementation of new technology
 HR Job Role clarification and interaction with   SAP
managers                                            Look at our IT resource (internal vs.
 Communication                                    Outsourcing)
 Look at High Performance Team Process             Printer, copier & outsourcing / productivity
 Training (team training, project mgt,             Intranet
leadership, HR training, sales & key account        Server
mgt, KPI training, technology, mentoring)
Critical Issues
          Management             Marketing

    1.    Sales / Channel   1.    Customers

     1.     Competitors     1.     Suppliers
Critical Issues
         Technology             Culture

    1.   Human Resources   1.   Operations

         1.   Finance      1.   Innovation
Critical Issue Action Plan Template
  Critical Issue   Action Plan
                   Critical Issue Description:
                   Action Plans:

                           Action                Comments

                   How Much:
                   How to measure the results:
Example Critical Issue/Action Plan
   NO    ISSUE                                         STRATEGY / ACTIONS

   1.1   Management team   ISSUE:
         development       The business plan calls for 25% growth over the next 3years. We need
                           to develop a top management team capable of operating with more
                           complexity in a challenging enviroment
                           We need to review HO capabilities and resourcing requirements for the
                           next 3 years and determine the capabilities required to run this size
                           business and when should we be recruiting and or developing internal
                           The same would apply for middle managers and supervisors
                           1.   Eight of the top 10 key roles have been filled
                           2.   Communicate the business plan in 1 or 2 day offsite and get others
                                input – include leadership development program on second d ay.
                           3.   Allocate action plans to members of the team as a way of testing
                                and developing them
                           4.   Develop and or source leadership and skill programs for all staff
                                including coaching, effective communication and working as a team
                           WHO:                    CEO & HR Director
                           WHEN:                   March 2010
                           COST:         $55,000
Benefits of a Business Plan

   Lead to better management and         Help to integrate personal and
    superior business performance          business goals
   Help you win the war against          Enhance any funding needs
    your competitors                      Improve efficiency
   Lead to better decision making        Help identify emerging problems
   Result in better management            and threats
   Offset uncertainty brought about      Facilitate the coordination of work
    change                                 activities
   Lead to better control (keeping       Increase the focus on results
    the business „on track‟)              Put you in charge of your
   Help people work smarter               business
   Help to build confidence about
    the business
Operational and Strategic Budgeting
                Strategic Initiatives     10%

                        Enhancement       25%

Efficiency &


Why Is Strategy Execution So Difficult?
                                     The Vision Barrier
                                                                  Only 5% of the
                                Strategy is not understood by       work force
                                those who must implement it       understands the
   Only 25% of
  managers have
incentives linked to

  The People Barrier                                                 The Management Barrier
    Personal goals,                                                  Management systems are
     incentives and                                                  designed for operational
 competencies are not                    STRATEGY                    control and little time is
   linked to strategy                                                spent on strategy

                                                                              85% of executive
                                                                              teams spend less
                                                                             than one hour per
                                                                              month discussing
                                   The Operational Barrier
                   60% of
             organizations don’t Budgeting process is separated
               link budgets to      from strategic planning
   Module Six –
How - Implementation

     People First
     Leadership
     Balanced Scorecard/Strategy Mapping
     Corrective Action
     Middle Management / Team Leader
     High Performance Teams
     Emerging Issues
     Reporting
     Performance Management
Balanced Scorecard - Strategy Maps

   “The formulation of great strategies is an art,
    and it will always remain so. But the description
    of strategy should not be an art. If people can
    describe strategy in a more disciplined way, they
    will increase the likelihood of its successful

                                   Kaplan & Norton
     From Wikipedia, the free encyclopedia
     The Balanced Scorecard (BSC) is a strategic performance management tool for measuring whether the
      smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of
      vision and strategy.
     By focusing not only on financial outcomes but also on the operational, marketing and developmental
      inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in
      turn helps organizations act in their best long-term interests.
     Organizations were encouraged to measure, in addition to financial outputs, those factors which influenced
      the financial outputs. For example, process performance, market share / penetration, long term learning
      and skills development, and so on.
     The underlying rationale is that organizations cannot directly influence financial outcomes, as these are
      "lag" measures, and that the use of financial measures alone to inform the strategic control of the firm is
      unwise. Organizations should instead also measure those areas where direct management intervention is
      possible. In so doing, the early versions of the Balanced Scorecard helped organizations achieve a degree
      of "balance" in selection of performance measures. In practice, early Scorecards achieved this balance by
      encouraging managers to select measures from three additional categories or perspectives: "Customer,"
      "Internal Business Processes" and "Learning and Growth.“
     Strategy Maps:
     measures are selected based on a set of "strategic objectives" plotted on a "strategic linkage model" or
      "strategy map With this modified approach, the strategic objectives are distributed across the four
      measurement perspectives, so as to "connect the dots" to form a visual presentation of strategy and
     To develop a strategy map, managers select a few strategic objectives within each of the perspectives,
      and then define the cause-effect chain among these objectives by drawing links between them. A balanced
      scorecard of strategic performance measures is then derived directly from the strategic objectives. This
      type of approach provides greater contextual justification for the measures chosen, and is generally easier
      for managers to work through.
The Balanced Scorecard Strategy Map
Kaplan and Norton
Financial                            Improve Shareholder Value

                    Revenue Growth                               Productivity
                       Strategy                                   Strategy

               Build the          Increase            Improve cost          Improve use
              franchise             value               structure             of assets
                                to customers
Customer                                                  Product Leadership
                                         Customer Intimacy       
Customer Value
                     Operational Excellence     
Proposition                   

   Internal          Process No 1      Process No 2       Process No 3          Process No 4
   Process           New Product       Brand              Retail & Outlet       Operations
   Perspective       Development       Development        Management

    Learning &              Employee competencies        Technology         Corporate culture
    Growth Perspective
Components of a Balanced Scorecard

      Strategy Map                                                              Scorecard

     THEME      THEME                          Strategic Objectives                         Measures                Targets        Initiatives

                                               F1 - Improve Returns                     Return on Investment        15%        Finance 2000
                      Financial                F2 - Broaden Revenue Mix                 Revenue Growth              +10%
                     Perspective                                                        Deposit Service Cost Change -5%        Global Re-Engineers
                                               F3 - Reduce Cost Structure

                                               C1 - Increase Customer Satisfaction      Share of Segment            20%        Sales & marketing
                                                     With Our Products & People                                                   Reorganization &

                     Perspective               C2 - Increase Satisfaction “After the
                                                     Sale”                              Customer Retention          95%

                       Internal                I1 - Understand Our Customers
                                               I2 - Create Innovative Products          New Product Revenue         10%        QFD Project
                                               I3 - Cross-Sell Products                 Cross-Sell Ratio            9%

                                               I4 - Shift Customers to Cost-            Channel Mix Change          TBD        Customer Database
                                                    Effective Channels
                                               I5 - Minimize Operational                Service Error Rate          <1%
                                               I6 - Responsive Service                  Request Fulfillment Time    <2 days    Global Service
                                                                                                                                  Training Program

                                                L1 - Develop Strategic Skills           Skills Coverage                         HRMS

                                                L2 - Provide Strategic Info             Employee Satisfaction        100%      Knowledge
                                                L3 - Align Personal Goals               Revenue per Employee         80%
                      Learning                                                                                                    Management
                     Perspective                                                                                                  System
Financial Outcomes

Customer Outcomes

 Process Drivers

    Learning /
  Development /
Technology Drivers
What A Good Scorecard Looks Like
Mobil NMA&R’s Strategy Map
(Kaplan & Norton (2000), The Strategy-Focused Organization)
                                                                                   Increase ROCE to 12%

                                              Revenue Growth Strategy                • ROCE
  Financial                                                                          • Net Margin (vs. Industry)
                                                                                                                           Productivity Strategy

  Perspective                     New Sources of               Increase Customer                             Become Industry              Maximize Use of
                                   Nongasoline                 Profitability through                          Cents Leader                Existing Assets
                                    Revenue                     Premium Brands
                               • Nongasoline Revenue           • Volume vs. Industry                    • Cash Expense (Cost per          • Cash Flow
                                 and Margin                    • Premium Ratio                            Gallon) vs. Industry

                           “Delight the Consumer”                                                       “Win-Win Dealer Relations”
  Customer                   Basic                        Differentiators
              •   Mystery                                                                                                                        • Dealer Profit
                                                                                                                More             Help
  Perspective     Shopper
                           • Clean
                                                Speedy          Friendly,          Recognize                 Consumer          Develop
                  Rating                       Purchase          Helpful            Loyalty                                                      • Dealer
                • Share of • Safe                                                                             Products         Business            Satisfaction
                  segment • Quality Product
                                                               Employees                                                        Skills
                           • Trusted Brand

                                  “Build the Franchise”   “Increase Customer                     “Achieve Operational                     “Be a Good
                                                                Value”                                Excellence”                          Neighbor”

                                         Create                  Understand                   Improve              Understand                Improve
                                       Nongasoline               Consumer                    Hardware              Consumer                Environmental,
                                       Products &                 Segments                  Performance             Segments               Health & Safety
  Internal                              Services
                                                               • Share of Target          • Yield Gap          • Inventory Levels         • Environmental
                                     • New Product ROI
  Perspective                        • New Product
                                                                 Segment                  • Unplanned Downtime • Run-out Rate               Incidents
                                                                                                                                          • Safety Incidents
                                       Acceptance Rate           Best-in-Class                 On Spec             Industry Cost
                                                                  Franchise                    On Time                Leader
                                                                    Teams                 • Perfect Orders       • Activity Cost vs.
                                                               • Dealer Quality

  Learning &                                                            A Motivated and Prepared Workforce
                                          Climate for Action                             Competencies                                 Technology
  Growth                               • Aligned                                    • Functional Excellence                     • Process Improvement
  Perspective                          • Personal Growth                            • Leadership Skills                         • Y2K
                                                                                    • Integrated View
                                       • Personal Scorecard                         • Strategic Skill                           • Systems Milestones
                                       • Employee Feedback                            Coverage Ratio
Mobil NMA&R’s Balanced Scorecard
(Kaplan & Norton [2000], The Strategy-Focused Organization)
               Strategic Themes           Strategic Objectives                             Strategic Measures

  Financial    Financial Growth           F1 Return on Capital Employed                •   ROCE
                                          F2 Existing Asset Utilisation                •   Cash Flow
                                          F3 Prof itability                            •   Net Margin Rank (vs. Competition)
                                          F4 Industry Cost Leader                      •   Full Cost per Gallon Delivered (vs. Competition)
                                          F5 Prof itable Growth                        •   Volume Growth Rate vs. Industry
                                                                                       •   Premium Ratio
                                                                                       •   Non-gasoline Revenue and Margin

  Customer     Delight the Consumer       C1 Continually Delight the Targeted Consumer • Share of Segment in Selected Key Markets
                                                                                       • Mystery Shopper Rating

               Win-Win Dealer Relations   C2 Build Win-Win Relations with Dealer       • Dealer Gross Prof it Growth
                                                                                       • Dealer Survey

  Internal     Build the Franchise        I1 Innovative Products and Services          • New Product ROI
                                                                                       • New Product Acceptance Rate

                                          I2 Best-in-Class Franchise Teams             • Dealer Quality Score

               Saf e and Reliable         I3 Ref inery Perf ormance                    • Yield Gap
                                                                                       • Unplanned Downtime

               Competitive Supplier       I4 Inventory Management                      • Inventory Levels
                                                                                       • Run-out Rate

                                          I5 Industry Cost Leader                      • Activity Cost vs. Competition

               Quality                    I6 On Spec, On Time                          • Perf ect Orders

               Good Neighbour             I7 Improve EHS                               • Number of Environmental Incidents
                                                                                       • Days Away f rom Work Rate
  Learning     Motivated and Prepared     L1 Climate f or Action                       •   Employee Survey
  And Growth                              L2 Core Competencies and Skills              •   Personal Balanced Scorecard (%)
                                          L3 Access to Strategic Inf ormation          •   Strategic Competency Availability
                                                                                       •   Strategic Inf ormation Availability
Mobil NMA&R’s Educational Brochure
(Kaplan & Norton (2000), The Strategy-Focused Organization)
 NAM&R Strategic Themes                                       Win/Win Relationship                                            Good Neighbor
                                                              Improve Dealer/Wholesale Marketer profitability                 Protect the health and safety of our people, the communities
Will guide us to our vision and are defined                   through customer-driven products and services                   in which we work, and the environment we all share.
above each graph.                                             And by developing their business competencies.
                                                                                       Dealer/Mobil Gross Profit                                       Environmental Index
 NAM&R Strategic Measures                                     Total profit earned                                             Composite of:
                                                              at Mobil outlets                                                • Reportable
Will keep us focused on achieving                             and split                                                         releases to air
NAM&R‟s strategic themes. They are                            between our                                                       and water
                                                              dealers/wholesaler                                              • Reportable spills
explained in the graphs and the bulleted                      marketers and                                                   • Community
text accompanying them.                                       Mobil                                                             reported incidents
                                                                                           1993          1994      Target                                 1993       1994        Target

 Financially Strong                                           Safe & Reliable                                                 On Spec On Time
 Reward our shareholders by providing a superior long-term    Maintain a leadership position in safety while keeping our      Provide quality products supported by quality business
 return which exceeds that of our peers.                      refineries fully utilized.                                      processes that are on time and done right the first time.

                           ROCE                               Days Away from Work             Manufacturing Reliability                                Quality Index
 Income divided by                                                                                                            Composite of:
 capital employed                              12%                                                                            • Product off spec
 including all                     8%                                                                                         • Order shipped late
 allocations                                                                                                                  • Business process
                                                                                                                              • Customer
                                                                                                                              • Cost of rework
                            1993        1994         Target     1993     1994     Target          1993      1994    Target                                1993       1994        Target

 Delight the Consumer                                         Competitive Supplier                                            Motivated & Prepared
 Understand our consumers‟ needs better than anyone and       Provide product to our terminals at a cost equal to or better   Develop and value teamwork and the ability to think Mobil,
 offer them products and services with exceed their           than the competitive market maker.                              act locally.
                          Mystery Shopper                                               Activity Cost vs. Competition                                  Climate Survey
 The Mystery                                                                                                                  Survey of
 Shopper program                                                                                                              employees to
 rates how well each                                          Our cost to deliver                                             measure how people
                                                              product to the
 of our stations is                                                                                                           perceive the Mobil
                                                              terminal vs. lowest
 delivering the “best                                                                                                         workplace
 buying experience.”                                          cost provider.                                                  environment

                            1993        1994         Target                                1993          1994      Target                                 1993       1994        Target
                                  Corporate Strategy

                    Bus. Unit Strategy       Individual’s
                                             Performance Plan

      High                                                              High

                    “LINE OF SIGHT” ALIGNMENT

Knowledge                                                               of Work &
of Strategy                                                             Processes

      Low                                                               Low

              Executive            Middle                  Individual
Linking Performance Management
To Change
                                Leadership Development
                               Leadership is about Change
    Balanced Scorecard

                                                                Capabilities Required
                               Balanced Scorecard Identifies
                                  Strategic Initiatives and
                                                                     Team Leader
                                     Emerging Issues
                                                               High Performance Teams

 Identification and Testing
                                   KPI and Performance
Leaders at all levels though
                                        Report Back
  Strategy implementation

                                     Corrective Action

                                    High Performance
Understanding Process Flow vs
Organisational Structure

            Department   Department   Department
               A             B            C

       Business Processes Cut Across Departments

 Customer                                          Customer
Michael Porter’s Value Chain
   Primary Activities = Generic Core Processes

                  Generate Revenues
                   Develop Markets          U
                  Build Relationships       T
                  Manage Operations         M
                 Coordinate Logistics       R
                   Conduct R & D
Michael Porter’s - Support Activities
Infrastructure & Management Processes

               Manage Human Resources     R
                Manage Information
                Administer the Business   R
                Manage the Finances       C
                 Manage the Assets
                   Manage Risks
Example - Manufacturing Company

                Core Processes

              New Product Development

            Order Generation and Fulfilment

                 Integrated Logistics
Example - Consumer Goods Company

             New Product Development

                Brand Development

             Retail Outlet Management

                Integrated Logistics
Eg. - Government Agencies in the USA

                 Core Processes

             Establish [Agency's] Direction

             Acquire Necessary Resources

                  Provide Capabilities

             Execute the [Agency's] Mission

Example - The Dupont Company

                Core Processes


             Deliver the Current Offering

Identifying Core Processes - Guidelines

   They should face the customer.
   Core processes represent core business. They
    do not have to cover 100% of all things the
    business does.
   The management team should nominate core
    processes. A single person should not be
    tasked with the job.
   The processes need to be defined at levels high
    enough so that major improvements are visible
    to everyone in the organisation or unit.
Identifying Core Processes - Guidelines

   They should be recognisable as the platform
    around which strategy is developed.
   They should capture the major workflows, which
    result in something very quantifiable being
    offered to the customer. These workflows
    typically involve more than one function.
   There should be minimum overlap between the
    core processes. The skills, technologies and
    sub-processes should be substantially different
    for each.
Identifying Core Processes - Guidelines
   It should be clear that measures of quantity,
    quality, cost, revenue, and time, applied to these
    processes would form the backbone of the
    organisation's performance measurement system.
   It should be clear that all strategic contact points
    with the customer are covered.
   Vagueness should be avoided. For example
    Manage the Business seems to say it all, but is at
    too high a cognitive level to work with.
   Elevating a small process to core status puts it
    under the spotlight at management reviews.
    Forces it to be resourced and managed.
Template for Core Processes
Activity Core Processes
Case Study 1
            Global FMCG Subsidiary

  A subsidiary of a multinational manufacturing
   company that needed to increase their gross margin
   from 49% to 62% or close manufacturing operation and
   source from overseas.
  Worst-in-class in inter-company benchmarking
  Culture resistant to change with silo mentality
  Top-heavy management
Case Study 1
        Global FMCG Subsidiary

 Set Vision of “best-in-class” and 62% Gross
  Margin within 15 months
 Developed implementation plan and
  communicated it and restructured quickly
 Focused on process across silos using Value
  Stream Analysis
 Implemented high performance team culture and
 Re-trained workforce ($0.75M)
Case Study 1
           Global FMCG Subsidiary

  Introduced MRPII solution and performance
  Activity Based Costing to identify customer and
   product profitability
  Co-ordination with marketing and customers to
   improve manufacturing velocity by
   standardisation of packaging
  Re-equipment program ($4M)
Case Study 1
              Global FMCG Subsidiary

  Improved gross margin by 13% to 62%
  “Best-in-class”
  Reduced workforce from 150 to 75 and increased output
   by 40%
  Reduced stock levels from 120 days to 45 days
  Reduced out-of-stocks from 30% to 5%
  Used some of the cost saving (part of the negotiation
   with marketing dept for using consistent bottle shapes)
   to increase advertising budget by $3M and increased
   sales revenue by 20%
  Developed a multi-skilled high performance team culture
Case Study 2
  2200 customers of which
     Top 200 = 92% of total revenue
     Top 24 customers = 80% of total revenue

  98 sales force & customer service
  Operating in a mature market with no perceived
   opportunity for growth
Case Study 2
   Introduced new CRM system with a sales process
   Develop consultative/solution selling capability model
   Assessed all sales force personnel and restructured
    sales force
   Activity Based Costing to identify customer and
    product profitability
   Migrated 2000 customers to lower cost customer
    service / call centre model or increased prices to get rid
    of unprofitable customers
   Refocused sales team on generating sales growth from
    top 200 customers
Case Study 2

  Identified growth opportunities that equated to
   98% of current revenue
  Increased gross margin
  Reduced cost of sales force by $5 million

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