Today’s Message

‘ Strategy without tactics is the

slowest route to victory.
Tactics without strategy is
the noise before defeat.’
Quote Chinese General Sun
Tzu

This words by the great general had

inspired Dr. Kaplan and Dr. Norton
work on Execution Premium
“Notable Quotes”

"If we know where we are and something about how we got there, we
might see where we are trending - and if the out - comes which lie
naturally in our course are unacceptable, to make timely change."
—Abraham Lincoln

"Without a strategy, an organization is like a ship without a rudder,

going around in circles. It’s like a tramp; it has no place to go."
—Joel Ross and Michael Kami

"The formulation of strategy can develop competitive advantage only

to the extent that the process can give meaning to workers in the
trenches."
—David Hurst
Defining Strategic Management
Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional decisions
that enable an organization to achieve its objectives. As this definition
implies, strategic management focuses on integrating management,
marketing, finance/accounting, production/operations, research and
development, and information systems to achieve organizational success.

Competitive Advantage
Strategic management is all about gaining and maintaining competitive
advantage. This term can be defined as “anything that a firm does
especially well compared to rival firms.” When a firm can do something
that rival firms cannot do, or owns something that rival firms desire, that
can represent a competitive advantage.

Strategic Management – Concepts and Cases by Fred R David

The Execution Premium Process provides an integrated framework to execute strategy
and drive the alignment between strategy, operations, leadership and innovation

Clarify Strategy

2 1
Translate Develop
the
the
Strategy
Strategy
Drive Performance

3 Strategic Plan 6

Optimize Data
Align the Test
Organization and Adapt

Dr. Robert Kaplan

4 5
Plan Monitor
Operations Operating/Financial Plan and Learn

Process

Execution

Dr. David Norton

Palladium Execution Premium Process (XPP)™

Translating the Mission into Desired Outcomes

Mission
Why we exist
Core Values
What we believe in
Vision
What we want to be
Strategy
Our game plan
Strategy Map
Define & Communicate Priorities and Focus
Balanced Scorecard
Measure performance against priorities
Initiative and Planning Process
Manage actions and resources to drive change
Empowerment / Personal Objectives
Motivate employee

Strategic Outcomes
Strategic Delighted Customers Effective Processes Motivated and
Shareholders Prepared Workforce
Alignment & Deployment
System Operational
Vision Values Strategy Process Structure
Control Excellent

System
Values Strategy Process Structure Confuse
Control

System
Vision Strategy Process Structure Frustration
Control

System
Vision Values Process Structure Wrong Start
Control

System
Vision Values Strategy Structure In-efficient
Control

Vision Values Strategy Process Structure Wrong way

System
Vision Values Strategy Process Crowded
Control

NOT AVAILABLE / NOT CLEAR

5 Principles of Strategy Focused Organization
1. Mobilize Change
Through Executive
Leadership

5. Govern to Make
2. Translate Strategy to
Strategy a Continual
Operational Terms
Process

3. Align the Organization 4. Motivate to Make

to The Strategy Strategy Everyone’s Job

page 8
HANKOOK TIRE CO
A strategy describes how the organization will achieve its
vision, While living its values and delivering its mission.
1. External Positioning
- Organizations need to match their internal resources and
capabilities to the external environment to achieve a sustainable
competitive advantage
- What services do we offer our constituents differently or better
than alternative suppliers?

2. Internal Alignment
- Ensures that resources are allocated to support strategic priorities
- Enables all organizational units and employees to make decisions
and implement policies that are consistent with achieving and
sustaining competitive advantage
Quantify The Vision
Approach to Strategy Development —
Cascading Choices
Goals and Capabilities and
Where to Play How to Win
Aspirations Systems

High level objectives The market space The differentiated The business system
for the business and where the company product/service offer configuration that
the strategy, for competes, for example for the chosen “where delivers the product /
example  Customer to play” opportunities service to the market in a
 Financial targets segments  Value proposition sustainable and
that differentiates differentiated way
 Growth rates  Geographies
us from our  Specific capabilities
 Business size  Product / service competitors and assets required
segments to enable the ‘how to
 Sources of
 Positions in the win’ choices
differentiation and
value chain advantage in terms  Gaps that exist in
of end-to-end go- terms of capabilities
to-market strategy and how they can
they be filled
 Initiatives that will
help create the
required capabilities
and timeframe
SFO #1: Mobilize Change Through Executive Leadership
 SFO #2: Translate the Strategy in the Balance Scorecard Framework
Balanced Scorecard is a framework that helps organisations
translate strategy into operational objectives that drive both
The Strategy behavior and performance

Financial Perspective
Financial Objectives Measures Targets
“To satisfy our shareholders, what Profitability
financial objectives must we accomplish?” Growth
Four Business Perspectives

Shareholder Value

Customer Perspective
Customer Objectives Measures Targets
“To achieve our financial objectives, Image
what customer needs must we serve?” Service
Price/Cost

Internal Perspective
Internal Objectives Measures Targets Initiatives
“To satisfy our customers, and shareholders, in which Cycle Time
internal business processes must we excel?” Quality
Productivity

Learning & Growth Perspective

Learning & Growth Objectives Measures Targets Initiatives
"To achieve our goals, how must our organisation learn and Market Innovation
innovate?” Continuous
Learning
Intellectual
Assets
The Four Perspectives Pull Together Proven Management
Concepts into a Simple Framework And Realize
The Vision

1 The economic model of

key levers driving
Financial Perspective
Return on
That meet our
shareholder
financial performance Investment (stakeholder)
Revenue Productivity
Strategy Strategy expectations
Sources of Growth Sources of Productivity

2 The identification of
targeted customer
Customer Perspective That provide
a satisfying
segments and their Product
Relationship Image Reputation customer
Service
value proposition experience

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

4 The intangible assets

necessary to drive
Learning & Growth Perspective
Human
+ Information
+ Organization We will enable
performance Capital Capital Capital
our people
 BSC Example & Terminology
Strategic Theme Low Cost Airline
Key focus area that help organization
on arriving at Strategic Destination Objectives Measurements Targets Initiatives
/Strategic Intent Action Statement of How succes in The level of Key action
what strategy must achieving the strategy performance or programs required
Strategy Map achieve and what ‘s will be measured and rate of to achive
Diagram of Cause-Effect Relationship critical to its success tracked improvement Objectives
between Objectives to achiveve Strategic needed
Intent.

Strategic Theme:
Objectives Measurement Target Initiative
Operating Efficiency
Financial
Profitability • Profitability • Market Value • 30% CAGR
• More Customers • Seat Revenue • 20% CAGR
More
Fewer Planes
Customers • Fewer planes • Plane Lease • 5% CAGR
Cost
Customer • Flight is on -time • FAA On Time • #1 • Quality
Flight Lowest • Lowest prices Arrival Rating management
Is on Time Prices • Customer • #1 • Customer
Ranking (Market loyalty
Survey) program
Internal • Fast ground • On Ground Time • 30 Minutes • Cycle time
Fast Ground turnaround • On-Time • 90% optimization
Turnaround Departure program

Learning • Ground crew • % Ground crew • yr. 170% • ESOP

alignment trained yr. 3 90%
Ground Crew yr. 5 100%
• Ground crew
Alignment • % Ground crew training
stockholders
SFO #3: Align the Organization to The Strategy

STRATEGY SUPPORT UNITS  Corporate Finance

Corporate Human
Capital
CORPORATE
Corporate Office
Strategic Management

LOB / etc
SBU
DIVISION

DEPARTMENT

INDIVIDUAL
Align Organization Methodology Overview
 Link and Align Organization around Its Strategy
CORPORATE

CORPORATE SCORECARD OPERATING UNITS SUPPORT EXTERNAL PARTNERS

UNITS

Objective Metrics LOB LOB LOB LOB

A B C D
1.Financial Growth xxx • Finance
2.Delight the Consumer xxx • Marketing • Customer Scorecards

3.Win-Win Relationshipsxxx • Distribution • Distributor Scorecard

4.Safe & Reliable xxx • Procurement • Joint Venture Scorecard

5.Competitive Supplier xxx • Purchasing • Vendor Scorecard

6.Good Neighbor xxx • Safety • New Venture Scorecard

7.Motivated & Prepared xxx xx xx xx xx • Human Resources • Outsourcer Scorecard

8.Quality xxx • Information Technology

SFO #4: Making Strategy Everyone’s Job
Link Corporate Scorecard to Individual Scorecard

Corporate Parent

Division (Press)

Operation (VP)

Plant Manager Personal

Cascaded Scorecards
BSCs Shift Supervisor

Machine
Operator
Completed Personal Scorecard - Example
SFO #5: Govern to Make Strategy a Continual Process

Organization needs to continually

monitor and adjust its performance to
achieve Strategic Objective and
Strategic Intents

P–D–C–A
Strategic Management Process – From Mission to Action

Plan

Do, Check
& Act