ABF Strategic Corporate Planning Conference March 2009, KL *What are the key pitfalls that can derail strategy planning and implementation efforts? *What are the critical activities that are anecdotes for driving the development of organisational clarity? *Examples and case studies

1. STRATEGIC PLANNING AND ORGANIZATION CLARITY Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad

6. Today’s Agenda

7. Summary: Today’s presentation 1. Business Model Clarity 2. Strategy Clarity 3. Execution Clarity

8. What is the Business Model? USP Market Discipline Profit Model

12. What is the Business Model? USP Market Discipline Profit Model

13. Business Model: Profit Model Revenue Cost Margin

16. What is the Business Model? USP Market Discipline Profit Model

19. 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

20. 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

21. 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

22. 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

26. 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)

27. Business Model 1. change one, effect three 2. change one, change model

28. Summary: Today’s presentation 1. Business Model Clarity  Done 2. Strategy Clarity 3. Execution Clarity

29. 2. Strategy Clarity ‘Hope’ is not a strategy

30. What is Strategic Planning? Strategic Planning Variables: Research Growth Risks Stakeholders Constraints SWOT Misc. Output: Plans Priorities KPIs

34. Business Situation vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com

35. Business Situations vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition Many times, you need a different CEO/Leader/Management Team for each business situation www.myCNI.com.my www.OOBEY.com

41. Downturn Strategy

42. Downturn Strategy

43. Downturn Strategy

44. Downturn Strategy

49. Marketing Clarity: Segment & Target Who? Experience Swing Former Opposition

51. Branding Clarity: Basics & Differentiators Segments Targets Targets Basics Differentiators Experience = Branding

54. R&D Clarity: The “Old” Days Invent R&D Build Manufacturing Market Marketing Sell Sales

55. R&D Clarity: The “New” Days Invent Build Market Sell R&D Manufacturing Marketing Sales

56. R&D Clarity: Marketing 101 Product Promotion Pricing Place 4Ps

57. R&D Clarity: Marketing & R&D Features Brand Target Logistics Product Promotion Pricing Place 4Ps

58. R&D Clarity: Marketing & R&D Features Brand Target Logistics Price Promotion Place Product IKEA Apple Nestle Asus

63. Innovation Clarity Product/ Service Process Business Model Break-through Sub-stantial Incre-mental

64. Summary: Today’s presentation 1. Business Model Clarity  Done 2. Strategy Clarity 3. Execution Clarity  Done

65. 3. Execution Clarity Accountability, Benchmarking, BSC, KPIs and other evils

71. Cause and Effect 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?

72. Linking BSC to Strategy Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value

73. 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

75. Example: 1 st Level BSC & KPIs Financial Learning & Growth Internal Process Customers / Distributors Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow Average Revenue Per User (ARPU), Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. No. of Active Members. No. Retail Points. Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Loyalty Programs. On Time Delivery. Number of Effective A&P % of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment

77. Lagging and Leading KPIs Historical, Outcome, Results, 1 st Level, Usually Financial or tangible, Quarterly and Annually Current, Indicators, Drivers, 2 nd Level onwards, usually non-financial or intangible, Weekly, Monthly and Quarterly Leading Lagging

78. Developing ‘Driver’ KPIs Customer Retention % Lagging, 1 st Level Customer Satisfaction Index Leading, 2 nd Level On time delivery Time to market for new products TNA % Defect levels, warranty claims Leading, 3 rd Level onwards

80. 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)

85. 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)

86. 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)

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

93. E3 – Department BSC Financial Perspective Budgeting On Time Delivery Innovation Quality OPEX CAPEX Targets Measures Goals

100. 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

101. 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. Business Plan Implementation a.k.a. Talent Management www.myCNI.com.my www.OOBEY.com

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

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

104. 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

105. 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

108. 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

109. 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

110. End Notes Tying it all up

112. Problems, problems and more problems…

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

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