BALANCED SCORECARD FOR STRATEGIC PLANNING AND MEASUREMENT Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad

Introduction to Balanced Scorecard and Strategy

Balanced Scorecard: Corporate Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” Internal Process “ To satisfy our customers, in which internal business processes must we excel?" Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?

Balanced Scorecard: NGOs, Non-Profits, Governments Mission “ Who are our targets? What is our value proposition?” Internal Process “ To satisfy our targets, in which internal processes must we excel?" Learning & Growth “ What capabilities and tools do our staff require to help them execute our strategy? Financial “ To fulfill the Mission, what Financial, how do we fund Internal Processes?”

Today’s Agenda

Summary: Today’s presentation 1. Business Model + BSC = Boundaries 2. Strategy + BSC = How 3. PMS + BSC = Execution

What is the Business Model? USP Market Discipline Profit Model

Business Model: Profit Model Revenue Cost Margin Cash Flow Assets

Strategy + BSC Revenue Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset

What is the Business Model? USP Market Discipline Profit Model

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) HP well-balanced portfolio, mass customization Acer super lean cost structure, aggressive pricing Apple powerful products, premium pricing, limited range Still Doing well in 2009

Summary: Today’s presentation 1. Business Model + BSC = Boundaries  Done 2. Strategy + BSC = How 3. PMS + BSC = Execution

2. Strategy + BSC = How ‘Hope’ is not a strategy

Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Satisfaction

Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Satisfaction

Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction

Summary: Today’s presentation 1. Business Model + BSC = Boundaries  Done 2. Strategy + BSC = How 3. PMS + BSC = Execution  Done

3. PMS + BSC = Execution KPIs and PMS

Cause and Effect Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction

Cause and Effect: An Example Financial Learning & Growth Internal Process Customers / Distributors Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes

Cascading Customer Perspective BD New Business Mkt Share Gain Mkt Base Retention Indirect Direct Targets Strategies Goals

E3 – Department BSC Customer Perspective – Marketing Department Budgeting Share Gain Base Retention OPEX CAPEX Targets Strategies Goals

Individual MBO Employee A – Marketing Executive Re: Base Retention Competition Crossovers Class B Customer Retention Class A Customer Retention Score Weight (%) Targets Action Plans KRAs

What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model www.myCNI.com.my www.OOBEY.com

What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model a.k.a. Strategy Planning a.k.a. Strategy Implementation www.myCNI.com.my www.OOBEY.com

Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A

Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A

Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A

Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A

Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com

End Notes Tying it all up

Problems, problems and more problems…

Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com