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Creating a Strategy-Focused Organization

Balanced Scorecard Discussion with Adani Enterprise

November 24, 2006

For further information please contact:

Muhamed Muneer, CEO & MD,


Customer Lab Solutions – India Affiliate of Balanced Scorecard Collaborative
F-07, Golden Orchid, 10/8, Kasturba Road, Bangalore, India 560001
Ph: +91 80 22231550, +91-94484-54350

Email: muneer@customerlab.biz

The information in this document is proprietary and confidential. It may not be


reproduced or transmitted without the expressed written consent of Balanced
Scorecard Collaborative, Inc.
Today’s Agenda

 Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

Proposed Project Approach

Next Steps and Timing

Why work with CustomerLab?

Appendix
Strategy Map and Balanced Scorecard

2 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Introductions

Adani Enterprise CustomerLab

> > Muhamed Munner

> > Ramesh Saraph

>

3 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Application of the Balanced Scorecard Framework has Expanded and
Evolved Since its Introduction in 1992.

Measurement Alignment Enterprise-wide Corporate


and and Strategic Governance and
Reporting Communication Management External Reporting
1992 1993 1996 2000 2004

Alignment
Harvard Business Review:

 “The Balanced
Scorecard —
Measures that Drive
Performance”
January - February Worldwide Acceptance and Acclaim:
1992
 “Putting the Balanced Scorecard to Work” > “The Balanced Scorecard” is translated into
September - October 1993 21 languages
 “Using the Balanced Scorecard as a Strategic > Selected by Harvard Business Review as
Management System” January - February 1996 one of the “most important management
practices of the past 75 years.“
 “Having Trouble With Your Strategy? Then
Map It” September - October 2000
 “Measuring the Strategic Readiness of
Intangible Assets” March 2004
4 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
The Balanced Scorecard Collaborative helps organizations achieve
dramatic results.
BSCol Facts
BSCol Events and Publications

• Founded October 1998 by creators


of the BSC concept
• World-class practitioners – hundreds
of companies across industries
• Range of service offerings
BSCol On-line Members
– Education
• 1.2 million direct mailings/year
– Training • 2.5K del/yr in 40 global events
• 65,000 members
– Consulting • 128,000 sessions / Month • 2.5K global BSR subscribers
– Research & Publications • Unsubscribe Rate = 0.3%
– Partner support Books & Articles
Certified Software Applications
– Software Standards /
Certification
• Headquarters: Lincoln, MA
• Offices in London and Sydney
• Cognos • Oracle
• Affiliates in Latin America, Sweden, • Corvu • Peoplesoft
Italy, Spain, Portugal, South • Crystal • SAP
• FiberFlex • SAS
• Korea, China, Iceland. • 350,000 copies sold • QPR • Hyperion
• 65,000 online members • 21 language translations •

In-Phase
Panorama


Procos
Pro Dacapo
• 10,000 article reprints
• Vision Grupo

5 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The Balanced Scorecard has gained global acceptance as a strategic
management system…
Balanced Scorecard Hall of Fame

Financial Services

Engineering Polymers

Human Resources Property & Casualty North America


Marketing & Refining

National Reconnaissance Office

Royal Norwegian Air Force Saatchi & Saatchi UK Ministry of Defence

Information and
Communication Mobile
Commercial Vehicle Business Unit

6 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Because It Works!
9 out of 10 organizations fail to execute their strategies…However Balanced Scorecard users
beat those odds – successfully executing their strategies and creating breakthrough results for their
organizations

99% merged asset retention #1 in growth & profitability


3 years 3 years

+ $7b value
Customer satisfaction = 70%
5 years
Public Official award
3 years

#1 in customer satisfaction
+ $3b value 33% reduction in cost/case
2-5 years 3 years

450% increase in # of customers


Increase in customer satisfaction Best on-line bank
Increase in market revenue index 3 years
2 years

Saatchi & Saatchi
+ $2b value
Last to first in profits
3 years
$1.2b increase in cash flow
100% increase in ROI
2-5 years 9% increase in revenues Least cost producer
33% increase in net income 3-5 years
2 years

7 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The Balanced Scorecard Has Been Strongly Endorsed by its Users

• “In more than 30 years, I've never come across a more powerful concept, so 
rooted in common sense, beautiful in its simplicity, easy to administer, and 
with such far­reaching effect as the Balanced Scorecard”
­  Bill Cattucci, Former CEO, AT&T Canada
 
• “The results of the BSC at Saatchi & Saatchi are too numerous to name.  One 
key indicator: shareholder value increased from $500mm to $2.5b before we 
were acquired” 
­ Bill Cochrane, Chief Financial Officer, Saatchi & Saatchi

• What the Scorecard did was to clarify the agenda, focus and align the 
organization around the priorities, and, basically, help make it happen”
­  Gerry Isom, President, Cigna Property & Casualty

• “In the fast paced world of Internet Banking, the Balanced Scorecard helped us 
focus on the key drivers of strategic success.  Its framework helped us select, 
manage and implement a multiplicity of programs and initiatives and was 
critical to our success”
­  Dudley Nigg, Executive Vice President, Wells Fargo Inc.

8 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Objectives for Today

> Confirm Understanding of Adani Group Situation and Needs

> Review Proposed Project Approach

> Agree on Next Steps and Timing

9 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Today’s Agenda

Introduction and Objectives

 Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

Proposed Project Approach

Next Steps and Timing

Why work with CustomerLab

Appendix
Strategy Map and Balanced Scorecard

10 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Bridging the Gap between Strategy and Results: Strategy Focused
Organization
MISSION
Why we exist
VISION
What we want to be

STRATEGY
Our game plan

MOBILIZE THROUGH EXECUTIVE LEADERSHIP


Create and sustain the strategic agenda
TRANSLATE THE CORPORATE STRATEGY
Define key priorities necessary for implementation
ALIGN THE ORGANIZATION
Identify priorities for business units and support functions
MAKE STRATEGY EVERYONE’S JOB
Prepare and motivate people to execute
MANAGE STRATEGY AS A CONTINUAL PROCESS
Integrate strategy into the management system

RESULTS
Motivated & Efficient and Satisfied
Delighted
Prepared Effective SHAREHOLDERS
CUSTOMERS
WORKFORCE PROCESSES

11 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Breaking Down the Barriers –
The Principles of a Strategy-Focused Organization

1. TRANSLATE 5. EXECUTIVE
STRATEGY LEADERSHIP
❑ Mission / Vision ❑ CEO Sponsorship
❑ Strategy Maps ❑ Executive Team Engaged
❑ Balanced Scorecard ❑ “New Way of Managing”
❑ Targets ❑ Accountable for Strategy
❑ Initiatives ❑ A Performance Culture
BALANCED 
SCORECARD

2. ORGANIZATION 4. CONTINUAL
ALIGNMENT PROCESS
❑ Corporate Role ❑ Linked to Budgeting
❑ Corporate - SBU ❑ Linked to Ops. Mgmt.
❑ SBU - Shared Services ❑ Management Meetings
❑ External Partners ❑ Feedback System
3. EVERYONE’S ❑ Learning Process
JOB
❑ Strategic Awareness
❑ Goal Alignment
❑ Linked Incentives

12 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


1 Executive Leadership: The BSC Creates the Agenda for Change
In This Context Leaders Must:

Create the climate for change


A successful Balanced 
Unfreeze the organization
Show the need for change Scorecard program 
starts with a 
Create the vision and strategy
recognition that it is 
not a “metrics” 
Clarify strategy with the BSC
Create the Leadership Team project, it’s a “change” 
Break down functional bias
process.
Foster “advocates”

Change the culture

13 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


2 Translate Strategy: The BSC Translates Strategy into the Four
Perspective Framework
The Strategy
The BSC represents the cause and
effect relationships in your strategy.
Financial Perspective
“If we succeed,  • Profitability
how will we look  • Growth 
to our  • Shareholder 
shareholders?”
Value
Outcomes
Customer Perspective
“To achieve our  • Price
vision, how must  • Service
we look to our  • Quality
customers?”

Internal Perspective
“To satisfy our  • Cycle Time
customers, what  • Productivity
management 
processes must we  • Cost
excel at?”
Drivers
Learning & Growth Perspective
The BSC is comprised of themes, “To achieve our  • Market Innovation
vision, how must  • Continuous 
objectives, measures, targets, our organization 
learn and  Learning
and initiatives. improve?” • Intellectual Assets

14 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Organization Alignment: Cascade the BSC to Business & Support
3 Units
3. Each Shared Service Unit
1. A Corporate
CORPORATE develops a plan and BSC for “best
Scorecard defines overall
practice” sharing to create
strategic priorities.
synergies across SBU's.

BUSINESS UNITS SHARED SERVICE UNITS
CORPORATE SCORECARD
(Shared Strategic Agenda)
Theme         Measure SBU SBU SBU SHARED SERVICE UNITS
1 2 3
4. Aggressive Growth xxx
• Finance
5. Customer Loyalty xxx xxx xxx • Marketing
xxx xxx • IT
6. Speed and Flexibility xxx
• Sales
7. Customer Intimacy xxx
• General Services
8. Operational Excellence xxx • Human Resources

9. Right Skills xxx • Organizational Development

10. Accountability Culture xxx

2. Each SBU develops a


long-range plan and BSC consistent
with the corporate strategic agenda

15 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


4 Everyone’s Job: From the Boardroom to the Front Line
Performance Management Processes Are Essential for
Moving Strategy from the Top to the Bottom.
Top-Down “Bridging
CORP Process” to Share
the Strategy and
SBU
Align the Workforce

• EDUCATION

• PERSONAL GOAL Bottom-Up Process


to Internalize and
ALIGNMENT
Execute the Strategy

• BALANCED PAYCHECKS

The Strategy–Focused Workforce

16 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


5 Continual Process: Tie the Balanced Scorecard to the Planning,
Budgeting, & Governance Process

STRATEGIC 
PLANNING

Planning Update the Test the


Strategy Strategic Learning Hypotheses
Loop

BALANCED 
SCORECARD

BUDGETING  Governance
PROCESS

Management Control
Funding Loop
Reportin
g
PERFORMANCE

Budgeting Input Initiatives & Output


(Resource Programs (Results)
s)

17 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Today’s Agenda

Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

 Situation at Adani Group

Proposed Project Approach

Next Steps and Timing

Why work with CustomerLab?

Appendix
Strategy Map and Balanced Scorecard

18 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Our Understanding of the Current Situation at Adani Group

Success: Challenges:

> Global interests ranging from > Ensure timely execution and
Global trading , Edible oil, Agro profitability of new projects
products, Agri logistics, Retail,
Power, Coal, Oil and Gas > Need for performance
Exploration, Gas Distribution, Real management system that provides
Estate, Ports, Special Economic greater focus and alignment
Zones, IT enabled services etc.
> Need for clear framework that will
> Significant expertise in Global align and govern the entire
Trading organization

> Successful foray into ports > Strategic objectives are to be


business – Mundra Port and connected throughout the
acquisition of Bay Bridge organization
Enterprises
> Too many initiatives, need for
> Communication of Adani Group effective of follow-through
Vision and Mission

19 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Possible Benefits from a Balanced Scorecard / Strategy Focused
Organization at Adani Group
> Build upon and sustain each > Develop a new model for conducting
organization’s culture of performance management meetings, characterized
by placing strategy at the heart of how by robust and focused strategic
Adani Enterprise manages the ‘new’ dialogue with fewer distractions and
organization clear priorities

> Enable the Board and the Staff and to > Develop an internal “Strategic
clarify their strategic role, improve Management Office” where the
their own internal strategic alignment, organization develops and sustains
and define how they support each the internal capacity to develop,
other implement and sustain its strategic
management process using primarily
internal processes
> Establish a consistent framework for
defining and managing accountability,
key projects and resource allocation

Adani Group believes that the Balanced Scorecard approach can help provide these
benefits and is interested in partnering with CustomerLab to achieve them
20 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
Objectives and Scope

BSCol will work with the Adani Enterprise leadership team to:

Establish a shared understanding if your strategy through background analysis


and executive interviews

> Identify key drivers and potential barriers to successful strategy execution

> Develop a strategy map for the enterprise level of Adani Group

> Create an enterprise Balanced Scorecard that includes strategic measures,


targets (where possible), and aligned initiatives; typically you will have good
data on 60-70% of your strategic measures initially

> Formulate an implementation/cascading plan to highlight how the strategy


will be managed and extended throughout Adani Group, in light of the
strategy execution assessment

> Transfer BSC know-how and expertise to the Adani Group Core Team

21 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Today’s Agenda

Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

 Proposed Project Approach

Next Steps and Timing

Why CustomerLab?

Appendix
Strategy Map and Balanced Scorecard

22 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Approach
I. SFO Assessment and Benchmarking
> Assess the status on 27 best practices for becoming SFO
> Benchmarking the result against organizations that achieved breakthrough results
> Road map to execute strategy in systematic and accelerated manner

II. Training Program on Mapping Strategy


> Training on how to develop Strategy Map, develop scorecard with strategic
objectives, performance measures with targets and supporting initiatives, alignment
across the organization, deployment of the SFO processes, preparation of the ‘First
Report’ and conduct strategy review meetings

III. Strategy Map and Balanced Scorecard Development


> Building of strategic measures, targets and supporting initiatives
> Clear responsibility for effective and efficient strategy execution

IV. Monthly Review Meetings


> First Report Methodology for systematizing performance review mechanism
> Governance and reporting in a strategic review format

23 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Project Deliverables
Work Streams Deliverables
I. SFO Assessment and Assessment report of the strategic
Benchmarking management process
Roadmap for implementation

II. Training Program on Mapping Training and case materials


Strategy Knowledge transfer so that every one
speaks same language

Strategy map with Objectives,


III. Strategy Map and Balanced
Measures, targets and initiatives
Scorecard Development
 Targets where available
Implementation plan for communications
and governance

Governing monthly strategic review


IV. Monthly Review Meetings meetings
Meetings focused on strategic issues
Actionable recommendations
24 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
… Assess your strategy execution readiness against our data base
of best practices.

BSCol
BSCol Breakthrough
Best Practice Survey Assessment Results Profile
Mobilize Change
Through Executive 3.9 4.0 4.1
Leadership

Translate Strategy Into


Operational Terms 3.9 3.5 4.0

Align the Organization 1 2 3 4 5


to Strategy 3.6 3.0 3.3

Make Strategy Clear Direction & Priorities


Everyone’s Job 3.2 2.5 3.7
Executive Sponsorship
Make Strategy a
Continuous Process 3.4 2.5 for Change
Clear Case 3.6

Engaged Leadership Team


Key 5 = Best Practice; 4 = We’re OK; 3 = Moving Slowly; 2 = Thinking About it; 1 = Not at All
New Way of Managing Strengths Weaknesses

Change Agent Identified  Strength 1  Weakness 1


Key 5 = Best Practice; 4 = We’re OK; 3 = Moving Slowly; 2 = Thinking About it; 1 = Not at All Strength 2  Weakness 2

 Strength 3  Weakness 3

Quote(s) Quote(s)

25 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Identify the key business drivers and barriers for successful strategy
execution.

Strategic Target: Mission/Vision in 3 years

Drivers Barriers

Adani Group Today

26 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Completed Strategy Map with Key Themes and Objectives Across
four Perspectives
EXAMPLE
Financial Performance
Financial Perspective

F1: Support Corporate’s Overall Financial


Performance

F2: Grow new business: F3: Grow current business: F4: Drive margins
Increase revenue from new products, Increase revenue from existing Optimize resources and grow
customers, and markets customers EBITDA
Markets/Custom

Customer Value Proposition (Clients and Candidates) Channel Value Proposition


er Perspective

Delivery Content Relationship Delivery Relationship

C1: Make the testing C2: Present content in C3: Build trusted, C4: Make the testing C5: Develop mutually
process easy and new and innovative lasting partnerships administration profitable partnerships
secure ways throughout the world process easy and cost
effective

Markets and Customers Solutions Operations


Perspective

I2: Identify, I3: Implement new I4: Focus I6: Consolidate


Internal
Process

I1: Anticipate and I5: Drive customer


evaluate, and capabilities that technology to processes and
understand market satisfaction and
execute new change the value of deploy common make investments
and customer profitability
business our testing and integrated that drive
needs
development solutions platforms operational
opportunities efficiency

People
Perspective
People

P1: Rapidly integrate, develop or P2: Lead a rigorous employee P3: Build employee engagement
hire people with the right skills assessment and development with customers
process

27 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


…Associated Key Performance Indicators
EXAMPLE

OBJECTIVE KPI Targets


Financial Perspective
F1 Support Corporate Overall Financial
Performance M1 Total Revenue Growth 10% increase per quarter

Grow new business: Increase revenue


F2 from new products, customers, and M2 Revenue from New Markets K1 25%
markets

F3 Grow current business: Increase


revenue from existing customers M3 Revenue from Existing Markets K2 75%

K3 5% increase per quarter


F4 Drive margins: Optimize resources and
grow EBITDA M4 EBITDA Growth
K4

Customer Perspective
M5 Candidate Satisfaction (Ease of Use) 4.0 on 5.0 scale
C1 Make the testing process easy and
secure
M6 Security-Related Incidents (#) 10% decrease on prior year

C2 Present
ways
content in new and innovative M7 Client Migration to MRB/GAR K2 TBD

C3 Build trusted, lasting partnerships


throughout the world M8 Client Contract Renewal 80%

C4 Make the testing administration process


easy and cost effective M9 Level I Helpdesk Calls and Costs K3 20% volume increase with zero change
in cost

M10 Tests Delivered Through Non-


Traditional Channels K4 15%

C5 Develop mutually profitable


partnerships M11 Royalties Paid Per Site 10%

M12 Fees Paid Per Test Delivered TBD

28 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


29
K3 CCO
K1 Expansion
HSP Testing Market

K4 Channel Optimization
ID Strategic Initiative

K6 Launch BOZ Initiatives


K2 Internet-Based Testing

K5 Fargo Services Integration


Sup
por

F1
orpotC
rate
’s P
Gro erfo
wn rm a
ew nce
bus
Gro ines
wc s
urre
nt b
Driv usin
em ess
argi
ns
Eas
y&
sec
Clie ure
nt s test
atis ing
…and an Initiative Alignment Matrix.

fact
Qua io nw
lity ith c
of c onte
lien nt
Cos t rel
t eff a tion
ecti ship
ve d s
Mut
uall e liver
y pr y in
F2 F3 F4 C1 C2 C3 C4 C5

ofita cha
ble nne
Ant
icip cha l
ate nne
I1

/ un l pa

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


ders rtne
tand rshi
Iden
cus ps
tify
I2

/ ex tom
ecu er n
te M eed
AC s
Imp o
I3

lem ppo
rtun
ent
new ities
cap
a
I4

Foc b
us c ilitie
omm s
Pro o n te
I5

fitab chn
olog
le c
usto y
mer
I6

Inve serv
st fo ice
EXAMPLE

r ef
Inte f ic ienc
grat
e th y
e rig
ht p
Deve eop
lop e le
mplo
y e es
P1 P2 P3

Buil
d en
gag
em e
nt
Together with an Effective plan to Implement the Balanced Scorecard
Across the Organization.
EXAMPLE

Program Schedule
KEY ACTIVITIES Q1 Q2 Q3 Q4 Q5

Mobilization Phase
Clear Direction & Priorities
Executive Sponsorship
Clear Case for Change
Engaged Leadership Team
New Way of Managing
Change Agent Identified

Alignment Phase
Clearly Articulated Strategy
Targets Established
Measures Developed
Clear Accountabilities
Initiatives rationalized
Strategy Refreshed Annually
Strategic Awareness
Supporting Communications
Personal Goals Aligned
Personal Incentives Aligned
Development Aligned
Accountability for Results

Sustainment Phase
Regular Strategy Review
Reporting System
Links to Budgets & Strategy
Links to Strategic Investments
Links to HR & IT Planning
Links to Governance Process
Strategic Management Capability

30 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The BSCol Portal will Provide the Project Management Platform for
the Duration of the Project and accelerate your time to results

• Multimedia Content

• Proven Methodology •Self-Check Questions

•Structured Templates •Extensive Curriculum

•Process Management •Integrated Case Studies

•Multimedia Coaching •End of Lesson Exams

•Custom Presentations •Reports Tracking


Organization’s eLearning
•XML Export Progress

•Familiar Design Center look


and feel • 130+ BSR Articles
•Information directly •35+ Case Studies
populated from Design
Center •35+ Example Strategy Maps

•Interactive Strategy Map •100+ Conference


Presentations
•Online Graphs and
Comments •75+ Video and Audio
Executive Interviews
•Customizable color coding
for status indicators •25+ Strategy Management
Best Practices Explained
•Easy report printouts and
customizable PDFs

31 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The Project Plan Assumes a Joint Adani Group / CustomerLab Team

Adani Group CustomerLab


Executive Team:
> Provide overall leadership, direction and ownership of the > Take responsibility for timeliness and quality of
BSC project deliverables
> Participate in selected interviews and workshops > Provide project leadership and guidance
> Dedicate resources necessary to complete the BSC > Conduct discussions and planning meetings
project > Lead executive workshops
> Champion the BSC in the organization

Core Team:
> Participate in the all aspects of BSC project > Facilitate all aspects of the project
> Provide perspectives on the company strategy to support > Draft BSC architecture (themes) and Strategy Map
BSC development (objectives)
> Review and refine BSC objectives and themes > Draft BSC (objectives, KPI’s and initiatives)
> Review and refine KPI’s > Facilitate initiative mapping
> Drive initiative inventory > Draft implementation plan
> Assist in initiative mapping > Provide BSC expertise in the ongoing use of the BSC as
> Assist in developing the implementation plan a management tool

32 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Proposed Project Plan culminates with effective review meetings at
corporate level
DRAFT

Indicative Strategy Execution Framework Implementation for Adani Group

 
Month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
 
Step 0: Kick Off

Step 1: SFO Assessment


and Benchmarking

Step 2: Training in
Strategy Mapping

Step 3: Develop
Corporate Strategy Map
/ BSC

Step 4: Facilitate Monthly


Review Meetings ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲

33 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Today’s Agenda

Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

Proposed Project Approach

 Next Steps and Timing

Why CustomerLab

Appendix
Strategy Map and Balanced Scorecard

34 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Next Steps ….

35 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Today’s Agenda

Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

Proposed Project Approach

Next Steps and Timing

 Why CustomerLab?

Appendix
Strategy Map and Balanced Scorecard

36 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Why CustomerLab…..

 BSCol was founded and is led and managed by Drs Kaplan (Practice Development
Advisor) and Norton (President).
 The CLab/BSCol Asia-Pacific team is the most experienced BSC team in the region
and have worked with Kaplan and Norton for many years
 Unlike our would-be competition, CLab and BSCol are focused entirely on the BSC and
USES THE BSC TO MANAGE YOUR BUSINESS FROM TOP TO BOTTOM
 CLab and BSCol have vast resources not available to other firms. Notwithstanding
exclusive access to Kaplan & Norton, we have best practice benchmarks for every
aspect of the strategic management process, unique tools and templates, and KPI
databases that can be leveraged to help our clients.
 Given CLab’s access to BSCol’s knowledge resources, CLab consultants help
organizations achieve breakthrough results over an extended period of engagement
 CLab as part of their methodology will transfer the consultant’s knowledge to a Centre
of Excellence within the organization, thus ensuring sustainability of results and
reducing dependence on consultants over a period of time
 CLab / BSCol methodology can be tailored to suit the specific requirements of different
client engagements. We will therefore take an approach that will best suit the client’s
requirements
 BSCol and CLab continues to invest in the development and enhancement of the
Balanced Scorecard framework
 CLab has experience with unique Indian cultures and work ethics. Our consultants have
the breadth and depth of experience across industries and functions.
 CustomerLab consultants provide world class consulting expertise at Indian rates
 Last, but not the least, CLab believes in seeing through the logical results in any
engagement by handholding the client throughout the execution of strategy
37 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
Today’s Agenda

Introduction and Objectives

Overview of the Balanced Scorecard and Strategy Focused Organization

Situation at Adani Group

Proposed Project Approach

Next Steps and Timing

Why CustomerLab?

 Appendix
Strategy Map and Balanced Scorecard

38 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


What is a Balanced Scorecard?

At the highest conceptual level, the Balanced Scorecard is

aframework that helps organizations translate


strategy into operational objectives that
drive both behavior and performance.

39 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The Four Perspectives Pull Together Proven Management Concepts
into a Simple Framework
Financial Perspective
Return on
Investment
1 The economic model of
key levers driving
Revenue Productivity
Strategy Strategy financial performance
Sources of Growth Sources of Productivity

Customer Perspective 2 The identification of


targeted customer
Product
Service
Relationship Image Reputation segments and their value
proposition

Internal Perspective
“Build the
Brand”
“Make the
Sale”
“Deliver the
Product”
“Service
Exceptionally”
3
. The process-focused
view of the business
using the value chain

Learning & Growth Perspective 4


The intangible assets
Human necessary to drive
Capital + Information
Capital + Organization
Capital performance

40 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


A strategy map uses four perspectives to describe cause and effect
relationship between strategic objectives

Strategic Theme: Revenue Growth


Financial Improve Returns

To succeed financially, how Broaden


should we appear to our Revenue Mix
shareholders?

Customer
Increase Customer
To achieve our vision, how Confidence in Our
should we appear to our Advice

customers? What is the value proposition?

Internal Business Process


Understand Develop Cross-Sell
Customer New the Product
To satisfy our shareholders Segments Products Line
and customers, at what business
processes must we excel?
Learning and Growth Increase Employee
Productivity
To achieve our vision, how
will we sustain our ability Develop Strategic Access to Strategic Align Personal
Skills Information Goals
to change and improve?
41 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
Measures and targets are identified and communicated for each
objective to motivate members of the organization
Strategic Theme:
Revenue Growth Measure: Target:
Financial Objective: How The required
Improve Returns
What the performance level of Initiative:
strategy is against performance An action
Broaden trying to objectives is or rate of program to
Revenue Mix
achieve monitored improvement achieve target

Customer

Increase Customer
Confidence in Our Advice

Objective Measure(s) Target(s) Initiative(s)


Internal • Cross-Sell • Share of • 40% Year 1 • Customer
Understand Develop
the full customers • 45% Year 2 Information
Cross-Sell the
Customer New range of with two or System
Segments Products
Product Line • 50% Year 3
financial more
products. products.
Learning Increase Employee
& Growth Productivity

Develop Access to Align


Strategic Strategic Personal
Skills Information Goals

42 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


The Balanced
Manufacturing Scorecard
Strategy Map Is Used to Manage Strategic Performance

F1- Grow Earnings and RONA


Perspective
Financial

F2- Drive F4- Manage F5- Optimize


Profitable Volume F3- Manage Costs Working Asset
Growth Globally Capital Utilization
Perspective
Customer

C1- Provide Innovative C3- Provide Quality


C2- Tailor Your
Solutions To Complex Products and Services
Approach To My
Product Design at Competitive Value
Business Needs
Problems

Product Innovation Account Management Operational Excellence

I3- Bring New or


I7- Increase I10- Manage Raw
Extended Products To
Metal Sales In Material Costs and
Market Quickly
Targeted Improve Yield
Accounts
Perspectiv
Internal

I2- Identify I6- Grow


and Pursue I5- Gain US I9- Optimize Cycle Time
Presence in
Strategic Marketshare Performance
China
Acquisitions
e

I1- Identify and Develop I4- Improve the Hit Rate on


Proposals in Western I8- Improve Alignment
New or Extended Between Sales Forecasts
Products European Via Better
Technical Information And Manufacturing Capacity
Knowledge
Perspectiv
People &

P2- Attract Marketing P4- Improve


P1- Foster A Culture P3- Ensure a Safe, Management of
and Technical Staff
That Encourages Clean Environmentally Customer
And Ensure They Are
Risk-Taking Friendly Workplace Information
Sufficiently Trained
e

43 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Establishes accountability Performance Owner: Jeff Schmid
Measure Leader: Meredith Kokko
INTERNAL PERSPECTIVE Reporting Frequency: Monthly
I9– Optimize Cycle Time Performance
•Performance Analysis
Cycle Time for Alloy Products (Order Entry
•Cycle time was reduced from 27 to 26 hours
to Finished Goods)
30
per batch representing a one hour reduction due
to improvements in set-up procedures and raw
28 material blending controls. However, we are still
28
27
two hours off our target. This is due to
consistent raw material inventory shortages for
26
26 cobalt and nickel, longer than expected cool
down times and bottlenecks in the finishing
24.0
24.0
24.0 room.
24

22
•Recommendations
•One week ago we launching a lean project
aimed at eliminating wasted time in material
20
planning and finishing room procedures.
18
FY 02 Q203 Q303

Actual Target

How are the Why is the What are Initiatives Supporting I6


objective and measure we going to • Lean Project
measure performing do about it?
performing? as it is?
= Meets or exceeds target
What initiatives are aimed at
= < 100% of target, but >= 95% of target
closing performance gaps?
= < than 95% of target
44 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com
The Initiatives that Drive Performance are Aligned with Strategy
Six Sigma Lean Project for Cycle Time Establishes accountability

Performance (cobalt products) Project Sponsor Jeff Schmid

Project Description / Comments: Project Manager Frank Strome


Six Sigma Lean is a proven way to eliminate waste in Start Date Q3 2003
manufacturing cycle time. The project is aimed at reducing
the overall time it takes a batch of alloy product to move from End Date Q4 2003
order entry to finished goods inventory. Specifically, there is Budget $25,000
an opportunity to eliminate several hours time by improving
the material planning and finishing room procedures.
Expected Benefits:
How is the initiative Eliminate 4 hours of cycle time per
Is there anything we batch of alloy product.
need to do? performing?

DATE STATUS MILESTONES

October 2003 Complete Held a kickoff meeting with materials planning and finished department to describe the project and generate a
benefits case
October 2003 Complete Identify the causal factors that lead to cycle time delays.

November In Process Conduct an impact assessment on each causal factor and develop quick-hit and longer term improvement
2003 recommendations.
November Not Started Implement quick-hit opportunities and communicate longer term improvement recommendations in the Q403
2003 Balanced Scorecard report

Actions / Decisions Required from Senior Management:


No action or decision required at this time.

45 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com


Why the Balanced Scorecard works.

Focuses the Organization Aligns the Organization Adapts the Organization

A Strategy-Focused Organization 1. A corporate


scorecard defines overall
3. Each Shared Service Unit
develops a plan and BSC for “best

designed around a longer-term strategic view. strategic priorities. CORPORATE practice” sharing to create
synergies across SBUs.

Translate Executive
1 Translate 5 Executive
CORPORATE SCORECARD
Strategy
BUSINESS UNITS SHARED SERVICE UNITS
Strategy Leadership (Shared Strategic Agenda)
Leadership
Theme SBU SBU SBU
SHARED SERVICE UNITS
1 2 3
4. Aggressive Growth • Finance
5. Customer Loyalty xxx xxx • Marketing
• IT
Organization Continual
6. Speed and Flexibility xxx xxx The Strategy

2 Organization 4Process
Financial
Perspective

Continual • Sales Customer


Perspective
Follow-up
7. Customer Intimacy
Internal
Perspective

Alignment Process Action


Alignment
Learning

The
Perspective

• General Services Update the Pioneer’s Balanced Scorecard


Strategy Management
8. Operational Excellence Financial
Customer Strategic
Financially Objectives
Strong ReturnStrategic
on CapitalMeasures
Employed Strategic
Closing the
• Human Resources Organizational Internal Delight the Consumer
Win-Win Relationship
Mystery Shopper Rating
Dealer / Pioneer Gross Profit Loop
Learning Insight
Meeting
Control
L&G Split Results
9. Right Skills
Safe & Reliable Manufacturing Reliability Index

• Organizational Reallocate
Loop
Performance
Operational
InitiativesControl Loop
& Programs
Competitive Supplier
Days Away from Work Rate
Laid Down Cost vs. Best
Loop Harvesting Team Problem
External
Priorities Competitive Ratable Supply Dialogue Solving
Development “Testing
10. Accountability Culture Good Neighbor Environmental Index

Everyone’s
3
Quality Index
Quality
Strategic Competency
Hypotheses and
Everyone’s Motivated & Prepared Availability
Capturing Learning”
Job
Job 2. Each SBU develops a
long-range plan and BSC consistent
with corporate strategic agenda.

46 ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com