lunchtime webinar series: aligning breakthrough … operating...the innovation portfolio balanced...
TRANSCRIPT
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Lunchtime Webinar Series: Aligning Breakthrough Objectives with Operating Models
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Operational Strategy Overview
• Saturate
• Incubate
• Illuminate
Mental Modelling
Growth Strategy Matrix
The Innovation Portfolio
The S-Curve
• Establish Vision
• Develop 3-5 Year
Breakthrough
Objectives
Ambidextrous Paradox
Strategy Maps
Balanced Scorecard
X-Matrix
• Annual Objectives
• Deploy Objectives
VS Assessment
Focal Area Assessment
Prioritization Matrix
X-Matrix
• Deploy Objectives
• Implement Objectives
• Metrics
• Monthly Review
• Annual Review
VS Mapping
Lean
Six Sigma
Rapid Innovation Teams
WIG Teams
A3 Reporting
• Process Improvement
Management
• KPI’s
• Rapid Problem
Solving
Management Boards
Improvement Dialogs
Leadership Std Work
PPSR
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The 7 Step Strategy Planning Process
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Vision and KPIs
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Balanced Scorecard
• Typically 3 to 6 KPIs per Topic Area • 12 to 24 Metrics • Not all are strategic
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Y=f(Xs) approach: • Profits = f(revenues, costs) • Revenues = f(innovative products, right prices,
effective promotion, distribution channels…)
The Pareto approach:
• 80% of costs are Raw Materials and Energy • 80% of promotion budget is spent on TV ads
Know your Operating Model.
How To Choose Your Strategic KPIs?
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Suppliers Inputs Process Outputs Customers
Customers Share holders Employees
Delivered products and services Achieved annual objectives Achieved breakthrough objectives
Customers Share holders Senior Leaders
Jobs to be done Business Environment Growth Plan Strategic Due Diligence Operating Model
Operational Strategy as SIPOC
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One of the first decisions leadership has to make is which “Standard Model” they feel is best to create differentiation and profitability. There are three basic models to select from:
1. Operational Excellence 2. Product Leadership 3. Customer Intimacy
Selecting an Operating Model
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Operational Excellence Model: An unprecedented combination of Quality,
Delivery and Cost. Examples: Wal-Mart, Federal Express
Product Leadership Model: Focus on invention.
Example: Apple
Customer Intimacy: To give the customer more than they expect.
Example: Ritz-Carlton
Standard Operating Models
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Not choosing one model can create:
Lack of employee alignment
Wasted resources
Silo based competition
Unnecessary complexity
The Cost of Not Choosing
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Selecting an Operating Model
Comparative view of the Three Operating Models
Product View Convenience View Service View Price View Core Business View
Operational Excellence
Products are simple and standardized
Easy to find and choose
Predictable and reliable service
The lowest prices for their services
and products.
Capital spend tends to be focused on improved asset
utilization.
Product Leadership
Products are superior, sought
after.
Extra efforts to obtain
Stuff helps to understand the
special features of products
Customers are expected to pay for
leading edge products.
Capital spent on new products and
swift commercialization.
.
Customer Intimacy
Wide variety of offerings
Choice from many options
The customer expects to be
treated as a partner
Sometimes the price doesn't
matter because the customer gets
exactly what they want
Capital spent on finding perfect solutions to the
customer
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Current Situation: BaltiColors is a small but rapidly growing industrial paints company operating in the Baltic states of Europe Vision: “To become a major player (among top 5 by revenue) on European market of industrial paints” Current Challenge: To Define the breakthrough objectives for next 7 years, taking into account their selected Operating Model
Industrial Paints Case Study: BaltiColors, Inc.*
*This example has been created for illustration purposes only! Any resemblance to real products or companies is purely accidental!
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Financial Perspective: • Increase revenue by 100% in 7 years • Increase the number of active clients to >100
Customer Perspective: • Improve OTIF (on-time in full) delivery to >98%
Internal Processes • Increase Overall Equipment Efficiency to >80% • Keep the number of SKUs at <300
Infrastructure • 30% of employees at YB level, 10% at GB level, 2% at BB
level
BaltiColors – Operational Excellence Approach to Breakthrough Objectives
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Financial Perspective: • Increase revenue by 100% in 7 years • Increase sales of New Products to >40% by revenue
Customer Perspective: • Increase Customer rating on “Innovative and Superior
Products” to > 8.5 on a 1-10 Scale
Internal Processes • Reduce Time To Market to < 120 days • Increase Rolled Throughput Yield for new products to
>98%
Infrastructure • Increase involvement of employees on NPD projects to
>30%
BaltiColors – Product Leadership Approach to Breakthrough Objectives
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Financial Perspective: • Increase revenue by 100% in 7 years • Increase growth of sales to existing customers to >25% by
annual revenue
Customer Perspective: • Increase Customer rating on “BaltiColors are our Partners”
to > 8.5 on a 1-10 Scale
Internal Processes • Increase percentage of fulfilled customer requests to >70% • Reduce lead time <48 hours to >80% of orders
Infrastructure • Increase interactions of employees with customers to >30%
BaltiColors – Customer Intimacy Approach to Breakthrough Objectives
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In order to choose one of the Operating Models, BaltiColors might look at:
Current areas of expertize and budget: Building NPD capacities for product leadership
might take time Customer intimacy requires regional presence
Industry trends: Commoditization makes product leadership and
Customer intimacy difficult Operational Excellence works poorly against
disruptive innovation
Choosing your Own Operating Model
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How to Link to the X-Matrix
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