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Balanced Scorecard For Strategic Planning and Measurement
Balanced Scorecard For Strategic Planning and Measurement
Balanced Scorecard For Strategic Planning and Measurement
Kenny Ong
CNI Holdings Berhad
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Intro: CNI
1. 20 years old
2. Core Business: MLM
3. Others: Contract Manufacturing, F&B Retail,
Export/Trading, eCommerce, Shared Services
4. Malaysia, Singapore, Brunei, Indonesia, India,
China, Hong Kong, Philippines, Italy, Taiwan,
Oman, United States, Vietnam
5. Staff force: ± 500
6. Distributors: 200,000
7. Products: Consumer Goods and Services
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Introduction to Balanced Scorecard and
Strategy
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"The digital watch didn't come from
established watch companies, the calculator
didn't come from slide rule or adding
machine companies, video games didn't come
from board-game manufacturers Parker Bros
or Mattel, the ballpoint pen didn't come from
fountain pen manufacturers, and Google
didn't come from the Yellow Pages"
Bob Seidensticker, Futurehype
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What’s wrong with Strategic
Planning Today?
Long-term Plans
Objectives
Strategies
Enablers
Resources
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What’s wrong with Strategic
Planning Today?
1. Biggest Threats often come from OUTSIDE your normal
industry
2. Planning from the base of an ‘Existing’ organization vs.
zero-based
3. Traditional Analysis (e.g. SWOT) based only on known
or existing assumptions or knowledge
4. Spending too much time in market research and
analysis
5. Defining the company from a Product/Service
perspective vs. Category vs. JTBD (e.g. Coca-cola)
6. Wrong Benchmark – already successful vs. what made
them successful
7. Implementing BSC and PMS to improve Business
Model and Strategy
8. New strategy, same people
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Why BSC?
• Reason 1: Balanced
• Reason 2: Cause-and-Effect
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Balanced Scorecard:
Corporate
Financial Customer
“To satisfy our “Who are our target
stakeholders, what customers?
Financial objectives
What is our value
must we accomplish?”
proposition?”
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Balanced Scorecard: NGOs,
Non-Profits, Governments
Internal Process Mission
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Side notes on BSC
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Today’s Agenda
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Summary: Today’s
presentation
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What is the Business
Model?
•Google
•Air Asia USP
•Tata Nano
Market
Profit Model
Discipline
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What is the Business
Model?
USP
Market
Profit Model
Discipline
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Business Model: Profit
Model
Revenue
Assets Cost
Cash
Margin
Flow
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Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Internal
Process
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What is the Business
Model?
USP
Market
Profit Model
Discipline
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Intro: Market Discipline
Customer
Operational Intimacy
Excellence "Exactly what I need"
"A great deal!"
Customized products
Excellent/attractive price
Personalized communications
Minimal acquisition cost and "They're very responsive"
hassle
Preferential service and
Lowest overall cost of flexibility
ownership Recommends what I need
"A no-hassles firm" "I'm very loyal to them"
Convenience and speed Helps us to be a success
Reliable product and
service
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Strategy: Value Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Value Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Value Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Value Disciplines
Operational
Operational Product
ProductLeadership
Leadership Customer
CustomerIntimacy
Intimacy
Excellence
Excellence •• New,
New,state
stateof
ofthe
the •• Management
Managementbyby
•• Competitive
Competitiveprice
price art products or
art products or Fact
Fact
•• Error services
services
Errorfree,
free,reliable
reliable •• Easy
Easyto
todo do
•• Risk
Risktakers
takers business
businesswith
with
•• Fast
Fast(on
(ondemand)
demand)
•• Meet
Meetvolatile
volatile •• Have
Haveitityour
yourway
way
•• Simple
Simple customer
customerneeds
needs (customization)
(customization)
•• Responsive
Responsive •• Fast
Fastconcept-to-
concept-to- •• Market
Marketsegments
segments
•• Consistent
Consistent counter
counter of
ofone
one
information
informationfor
forall
all •• Never
Neversatisfied
satisfied-- •• Proactive,
Proactive,flexible
flexible
•• Transactional
Transactional obsolete
obsoleteown
ownand
and •• Relationship
Relationshipandand
competitors'
competitors'
•• 'Once
'Onceand
andDone'
Done' consultative
consultative
products
products selling
selling
•• Learning
Learning •• Cross
Crossselling
selling
organization
organization
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The McPlaybook*
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Strategy: Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Disciplines
Still
Doing
Acer super lean well in HP well-balanced
cost structure, 2009 portfolio, mass
aggressive pricing customization
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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What is the Business
Model?
•Google
•Air Asia USP
•Tata Nano
Market
Profit Model
Discipline
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Summary: Today’s
presentation
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2. Strategy + BSC = How
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What is your Goal?
1. Cost Reduction
2. Growth
3. Both?
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Growth Strategy
1.Base Retention
GROWTH
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Growth Strategy
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Side Notes on Cost
Reduction Strategy
Cost Reduction
30% 5% -
- 30%
80% Business Operational
Model
•USP •Finance, HR, IT
•Profit Model •Supply Chain
•Market Discipline •R&D
•Invest/Divest •Sales & Marketing
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Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process
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Strategy: Disciplines,
Priorities, and KPIs
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Disciplines,
Priorities, and KPIs
Operational
Operational Product
ProductLeadership
Leadership Customer
CustomerIntimacy
Intimacy
Excellence
Excellence •• New,
New,state
stateof
ofthe
the •• Management
Managementbyby
•• Competitive
Competitiveprice
price art products or
art products or Fact
Fact
•• Error services
services
Errorfree,
free,reliable
reliable •• Easy
Easyto
todo do
•• Risk
Risktakers
takers business
businesswith
with
•• Fast
Fast(on
(ondemand)
demand)
•• Meet
Meetvolatile
volatile •• Have
Haveitityour
yourway
way
•• Simple
Simple customer
customerneeds
needs (customization)
(customization)
•• Responsive
Responsive •• Fast
Fastconcept-to-
concept-to- •• Market
Marketsegments
segments
•• Consistent
Consistent counter
counter of
ofone
one
information
informationfor
forall
all •• Never
Neversatisfied
satisfied-- •• Proactive,
Proactive,flexible
flexible
•• Transactional
Transactional obsolete
obsoleteown
ownand
and •• Relationship
Relationshipandand
competitors'
competitors'
•• 'Once
'Onceand
andDone'
Done' consultative
consultative
products
products selling
selling
•• Learning
Learning •• Cross
Crossselling
selling
organization
organization
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Strategy: Value Disciplines
• Operational Excellence
• Move know-how from top performing
units to others
• Benchmark against best in class
• Ensure operations training for all
employees
• Use disciplines like TQM for continuous
learning to reduce costs and improve
quality
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Strategy: Value Disciplines
• Customer Intimacy
• Capture knowledge about customers
• Understand customer needs
• Empower front line employees
• Ensure that everyone knows the
customer
• Make company knowledge available to
customers
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Strategy: Value Disciplines
• Product Leadership
• Reduce time to market
• Commercialize new products fast
• Ensure that ideas flow
• Reuse what other parts of the company
have already learned
• Ensure there are multiple sources of
funding
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Strategy: Value Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy: Value Disciplines
Product Leadership
(best product)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
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Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process
Operational Product Customer Investment
Excellence Leadership Intimacy Strategy
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Alignment: 4-Wheels Model
Business
Person
Structure Model
Strategic
Planning
Culture
Leadership
Resources
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Alignment: Framework
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Alignment: Framework
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Strategy: Framework
• Recognition
Person • Recruitment
• Training
• Profit sharing
• Values
• Motivation
• Self Efficacy
• Awareness
• Useful Competencies
• Career aspirations
• Attribution (control)
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Strategy: Framework
Enablers
Resources • Technology
• Equipment
Funding
• Materials • CAPEX
• Human • OPEX
• Intellectual
Property
• Partners
• Property
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Alignment: 4-Wheels Model
Business
Person
Structure Model
Strategic
Planning
Culture
Leadership
Resources
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Each Discipline Requires
Different Priorities & Resources
Organization, jobs,
skills
Culture, values,
norms Operational
Operational Product
Product Customer
Customer
Excellence
Excellence Leadership Intimacy
Information and Leadership Intimacy
systems
Management
systems
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Each Discipline Requires
Different Priorities & Resources
Operational
Operational Excellence
Excellence
Organization, ••Central
Centralauthority,
authority,low
lowlevel
levelof
ofempowerment
empowerment
jobs, skills ••High
Highskills
skillsat
atthe
thecore
coreof
ofthe
theorganization
organization
Management ••Command
Commandandandcontrol
control
systems ••Quality
Qualitymanagement
management
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Each Discipline Requires
Different Priorities & Resources
Product
Product Leadership
Leadership
Organization, jobs, ••Ad
skills Adhoc,
hoc,organic
organicand
andcellular
cellular
••High
Highskills
skillsabound
aboundin
inloose-knit
loose-knitstructures
structures
Management
systems ••Rewarding
Rewardingindividuals'
individuals'innovative
innovativecapacity
capacity
••Risk
Riskand
andexposure
exposuremanagement
management
••Product Life Cycle profitability
Product Life Cycle profitability
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Each Discipline Requires
Different Priorities & Resources
Customer
Customer Intimacy
Intimacy
Organization, jobs, ••Empowerment
Empowermentclose closetotopoint
pointof
ofcustomer
customercontact
contact
skills ••High
Highskills
skillsin
inthe
thefield
fieldand
andfront-line
front-line
Management ••Customer
Customerequity
equitymeasures
measureslike
likelife
lifetime
timevalue
value
systems ••Satisfaction
Satisfactionand
andshare
sharemanagement
management
••Focus
Focusonon‘Share
‘Shareof
ofWallet’
Wallet’
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Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process
Operational Product Customer Investment
Excellence Leadership Intimacy Strategy
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3. PMS + BSC = Execution
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Reminder: Why BSC?
• Reason 1: Balanced
• Reason 2: Cause-and-Effect
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Before we start…
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Before we start…
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Before we start…
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Example: Selection of KPIs
for BSC
•Customer satisfaction •Win rate (sales closed/sales contact)
Customer loyalty •Customer visits to the company
Market share Hours spent with customers
Customer complaints Marketing cost as a percentage of sales
Complaints resolved on first contact Number of ads placed
Return rates Number of proposals made
Response time per customer Brand recognition
request Response rate
Price relative to competition Number of trade shows attended
Total cost to customer Sales volume
Average duration of customer Share of target customer spending
relationship Sales per channel
Customers lost Average customer size
Customer retention Customers per employee
Customer acquisition rates Customer service expense per customer
Percentage of revenue form new Customer profitability
customers Frequency (number of sales
Number of customers transactions)
Annual sales per turnover
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Wrong KPIs
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KPIs and Behavior
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KPIs and Behavior
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Cause and Effect
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process
Operational Product Customer Investment
Excellence Leadership Intimacy Strategy
Customers /
Distributors Products/ Channel Target
Services Strategies Markets
Operational
Operational Product
Product Customer
CustomerIntimacy
Intimacy
Excellence
Excellence Leadership
Leadership
•• Price
Price •• Marketing •• Customer
Customer
•• Selection Marketing
Selection Knowledge
Knowledge
•• Functionality
Functionality
•• Convenience •• Solutions
Convenience
•• ##of SolutionsOffered
Offered
•• Zero
ZeroDefects
Defects ofSuccesses
Successes •• Penetration
Penetration
•• Growth •• ##of
ofFailures
Failures •• Customer
Growth CustomerData
Data
•• Learn
Learnfrom
fromkey
key •• Customer-success
Customer-success
users
users focus
focus
•• Interdisciplinary
Interdisciplinary
teams
teams
•• Pipeline
Pipeline
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B2B/B2G BSC Matching
Customer/Client/
Government BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers Satisfaction
Your BSC
Base Share Gain Positioning Adjacent New
Retention Market Business
Financial
Revenue Cost Margin Cash Flow Asset
Internal
Process Customers Satisfaction
Investment
Operational Product Customer
Strategy
Excellence Leadership Intimacy Base Share Gain Positioning Adjacent New
Retention Market Business
Learning & Growth
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Cascading
Customer Perspective
New BD
Business
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E3 – Department BSC
Customer Perspective –
Marketing Department
Goals Strategies Targets CAPEX OPEX
Base
Retention
Share Gain
Budgeting
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Individual MBO
Re: Base
Employee A – Marketing Executive Retention
KRAs Action Targets Weight Score
Plans (%)
Class A
Customer
Retention
Class B
Customer
Retention
Competition
Crossovers
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What’s In Between Planning
and Execution?
Business Model
BSC
KPIs
Budgeting + Planning
Talent Management
B Good
C Average
D Poor
E Useless
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Performance Execution
Clarity
A Excellent
B Good
C Average Good
D Poor
E Useless
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Performance Execution
Clarity
A Excellent Excellent
C Average Good
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Performance Execution
Clarity
A Excellent Consistently achieved 4 for 3
quarters
B Very Good Higher than planned results
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Performance and Pay Clarity
• Increment
• Bonus
• Promotion
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Compa Ratio Table
Def:
Mid-Point = Mid Point of Pay Grade
Grade E2
Min MID Max
RM2,000 RM2,500 RM3,000
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Performance and Pay Clarity
4 8 7 6 5 4
3 7 6 5% 4 3
2 6 5 4 3 2
1 5 4 3 2 1
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Performance and Pay Clarity
4 18 12 9 5 3
3 9 7 5% 4 3
2 1 1 1 0 0
1 0 0 0 0 0
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Curse of the Bell Curve
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End Notes
Tying it all up
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Review processes
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Problems, problems and
more problems…
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Alignment: 4-Wheels Model
Business
Person
Structure Model
Strategic
Planning
Culture
Leadership
Resources
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Thank You.