Strategy maps and alignment

Strategic Management process
part II
Balanced score card and strategy
Value proposition and strategies



 Value creation = CDV + EDV

 Value creation strategy : CVP + EVP
• The Organization will become more “strategically
focused” .
• People at all levels have relied heavily on tactical
performance measurements, such as number of maps
submitted, and % of supply vendor contracts in place.
• Need more balanced approach to looking at
performance, both tactical and strategic.
• Only 5% of a workforce tends to understand their
company’s strategy.
• 86% of executive teams spend less than one hour per
month discussing strategy.
Why the Balanced Scorecard?
• The Organization’s Information Resource Planning
System (IRPS):
- Enterprise wide system for how we will evaluate
success – division read outs, data turnarounds, global
partnerships, etc.
- Must be integrated into all agency components (such
as region and global outlet offices)
- Designed around the Balanced Scorecard framework
• The Balanced Scorecard will be the strategic view of
performance for the agency, balancing out our current
tactical view of performance which is already in place.
A Major Driver is . . .
The enterprise value proposition
 Financial

 Customer

 Internal process

 Learning and growth
Some Basic Principles
 Quantifies the Strategy in measurable terms
 Strategy is summarized on a Strategy Map over four
views of performance (perspectives).
 Must capture a cause-effect relationship between
strategic objectives over the four perspectives on the
Strategy Map.
 Critical Components include:
- Measurements
- Targets
- Initiatives
 Everything must be linked: Goals to Objectives,
Objectives to Measurements, Measurements to
Targets.
rocess

finance
finance

Board
Of
directors
Enterprise
Strategy
update
Functiona
l
Strategy
update
customer
s
Vendors/
alliances
Functional
Strategy
update
Finance
IT
HR
Functional
Strategy Update
Enterprise
Strategy Update

Board of
Directors

1
2
Enterprise
Strategy Map
Board Strategy
Map

3
Enterprise
Strategy Map
Corporate
Functional
Strategy Map

Corporate Support Units
Corporate
Planning
Process
Finance
IT
HR
Functional
Strategy Update
SBU
Strategy Update

Customers

6
5
SBU Strategy
Map
Support Unit
Services

Corporate Support Units
Business
Planning
Process
7
Support Units
Vendors/
Alliances

Enterprise
Strategy Map
Business Unit
Functional Map
SBU
Strategy Map
Enterprise
Functional
Strategy
Map

4 8
Building Alignment into the Planning Process
Four Views of Performance
 Strategy can be described as a
series of cause and effect
relationships.
 Provides a “line of sight” from
strategic to operational activity
 working on the “right” things.


“If we succeed, how will we look to
our stakeholders?”
Stakeholders
Strategic Objectives


“To satisfy our customers, at which
processes must we excel?
Internal Processes


"To execute our processes, how must
our organization learn and improve?"
Learning & Growth


“In order to succeed, what
investments in people and
infrastructure must we make?”
Agency Investments
Strategy
Agency
Department
Team/
Individual
Measures Objectives
Complete Framework for IRPS
The Importance of Alignment
Alignment all the Way Through
Improved "Cause
and Effect"
Knowledge
Innovation
Business
Processes
Improved Environmental
Assessment Reports
Management
Justified Initiatives to
Improve Water Quality
Investments Available to
be Allocated to Other
Critical Areas
Environmental
Health
Improved Water Quality
Relationship
Management
Enhanced Public
Confidence
Increased
Investment
Accountability
Financial
Management
Decreased Litigation
Costs
Resource
Investment
Goal: Improve environmental health
Initiative: Data Mining
Performance Gap: Less than Organization watershed water quality
I
n
t
e
r
n
a
l

P
r
o
c
e
s
s

S
t
a
k
e
h
o
l
d
e
r

L
e
a
r
n
i
n
g

&

G
r
o
w
t
h

Reduce Re-Activities
thru ABC
Establish Web Based
Self Services
Knowledge
Management
Human Capital
Improved Returns on
Investments
More rapid and
accessible services
Leadership
Development
I
n
v
e
s
t
m
e
n
t
s

Strategy Map: Capture a Cause Effect
Relationship from the Bottom Up
IT Infrastructure
Facilities and
Fixed Assets
Economic
Model Process
Expand Global
Facility Reach
Two Special Techniques
for Building Strategy Maps
The 4 to 5
Rule
Splitting the
Perspective
General Rule of Thumb to ensure strategy map is developed both
vertically and horizontally
Way of pulling out both drivers and outcomes that match up against the
core competencies of the business model
Customer Growth Customer Satisfaction Retention Rate
Timely Delivery Pricing Quality Service Reputation
Customer Perspective
Outcomes
Drivers
Weak Strong
Key Benefits of Strategy Maps

 Articulates how the organization creates value for its constituents and
legitimizing authority
 Displays key priorities and relationships between outcomes (the "what")
and performance enablers or drivers (the "how")
 Provides a clear view of "how I fit in" for sub-organizations, teams, and
individuals
 "Cascading the scorecard throughout the organization, and clearly
mapping the various units and functions back to the organization or
agency-wide map is critical to leveraging and ensuring alignment"
Executive consensus and
accountability:

Building the map eliminates
ambiguity and clarifies
responsibility.
Educate and Communicate:

Build awareness and
understanding of organization
strategy across the
workforce.
Ensure Alignment:

Each sub-unit and individual
link their objectives
to the map.
Promote Transparency:

Communicate with and
educate constituents, partners,
oversight bodies, and the
general public.
Strategy Maps –
A Better Way to Communicate Strategy
Once you have completed your strategy map, make sure it aligns with agencies or divisions you report up to.
This overall alignment of scorecards throughout the entire Organization forms the Strategic Management
System within IRPS.
Best Business
Practices
Expand Global
Reach
Expand the Skill
Base
Lean Processes
Organization
Scorecard
Improve Asian
Footprint
Develop the
Workforce
Functional
Scorecard
Process Efficiency
Grow Globally
Highly Skilled
Workers
Agency
Scorecard
Streamline
Processes
Continue to
Expand Range
Improve
Employee
Competencies
Outlet
Scorecard
IRPS
Aligning the Scorecards
Detailed statement
of what is critical
to successfully
achieving the
strategy
How success in
achieving the
strategy will be
measured and
tracked
Key action
programs
required to
achieve
objectives
The level of
performance
or rate of
improvement
needed
Objective
Description
Target
2 per setup per
month each
Outlet Office
Initiative Measure
Number of Reworks
Strategy Map
S
t
a
k
e
h
o
l
d
e
r

I
n
t
e
r
n
a
l

P
r
o
c
e
s
s

L
&
G

Faster Service Access
Self Service
Applications
Web Enable
Technologies
Process and Value
Map Analysis
Lean Processes
I
n
v
e
s
t
m
e
n
t
s

Invest in IT
Extend the Map into Measurements,
Targets and Initiatives
Lean / Six
Sigma
Eliminate waste,
reworks, and other
errors in our
processes
Make sure the components of your scorecard fit together. We want to create a
tight model for driving execution of your strategy.
Goal Objective Measurement Target Initiative
Achieve
Agency
operational
efficiencies
with best
practices in
the private
sector
Reduce
Operational
Service Costs by
50% over the
next 5 years
Cost per Outlet
Office, Cost per
Region, Cost
per FTE
5% - Year 1
10% - Year 2
15% - Year 3
Activity
Based
Costing /
Management
Reduce identified
re-activities
within primary
processes by
80% over the
next 3 years
Waste Volume
Charts, Rework
Tracking, Cycle
Time End to End
in S-LX (5 of 7
Regions)
Waste stream
reductions of
5% each year,
Reworks cut in
half for next 3
years, cycle
time cut by 75%
Lean / Six
Sigma
Alignment of Scorecard Components
Stakeholder / Customer Internal Processes
Learning and Growth
Investments
• % of facility assets fully funded for
upgrading
• % of IT infrastructure investments
approved
• # of new hire positions authorized for
filling
• % of required contracts awarded and in
place
• Percentage employee absenteeism
• Hours of absenteeism
• Job posting response rate
• Personnel turnover rate
• Ratio of acceptances to offers
• Time to fill vacancy

• Number of unscheduled maintenance
calls
• Production time lost because of
maintenance problems
• Percentage of equipment maintained
on schedule
• Average number of monthly
unscheduled outages
• Mean time between failures
• Current customer satisfaction level
• Improvement in customer satisfaction
• Customer retention rate
• Frequency of customer contact by
customer service
• Average time to resolve a customer
inquiry
• Number of customer complaints
Examples of Measurements by Perspective
Making the connection to the
Baldrige Criteria
Malcolm Baldrige Balanced Scorecard
Leadership Learning & Growth Perspective
Human Resource Capital
Business Results
Process Management
Strategic Planning Strategy Map
Learning & Growth Perspective
Internal Process Perspective
Customer Focus Stakeholder / Customer Perspective
Measurements and Targets





 End of Chapter

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