management tools and trends

7/28/2019 Management Tools and Trends

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Management Tools and Trends

Balanced Score Card

Balanced Scorecard is a managementperformance tool

It creates four categories of performance

which together provides a balancedintegrated picture of results

Its major contribution is in moving away

from an exclusively financial performanceevaluation environment that has beenprevalent in business and industry


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What is the Balanced Scorecard

It is a Management System(not only ameasurement system developed by RobertKaplan and David Norton of HBS in the 1990s

It enables organizations to clarify their vision andstrategy and translate them into action

It retains financial measures which only detailthe past. This system focuses on the future and

specifically the long term Through it, future value can be created through

investment in customers, other stakeholdersspecially employees and vendors and in

processes, technology and innovation


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The 4 Categories

Financial performance is given its due with appropriatemetrics for capital structure, profit/profitability and cashflow. Return on Investment using DCF the final indicator

Customer Satisfaction is the next and incorporates all

the relevant aspects of creation, servicing and retentionof customers

Business processes highlights the emphasis on systemswhich are critical for both short and long termperformance

Finally learning and growth with focus on Innovationpoints to the need to succeed competitively by beingpositively different.


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The Balanced Scorecard


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Financial Performance

In addition to the historical performance, thefocus must be on desired future performance.The advantage of financial indicators is that theyare the most convenient to measure and report

We must incorporate the concept of opportunitycost as the benchmark

We must use the time value of money

We should also prioritize the areas formeasurement(project implementation time forcapital intensive industries and optimum capitalstructure, managing cash flows for low value,

high throughput industries like personal care)


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Customer

orientation/satisfaction The customer is the most important stakeholder,

without whom an organization cannot survive letalone thrive

Serve the customers wants in the best way I.e.max convenience, maximum choice and atlowest prices

Identify your customers/segments and satisfy

the above wants in the best manner andcertainly better than its competitors

Good reliable and honest after sales service isthe key to customer satisfaction, builds loyalty

and ensures highest retention. Repeat purchaseis the onl reliable indicator


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Internal Business processes

Processes are parts of systems I.e conversion ofinputs into the desired outputs.

In business where the key to success is to

perform repetitive activities uniformly andconsistently. Relevant, related activitiesconstitute processes

Normally processes are associated with

functional processes including marketing,logistics, manufacturing.

The better way is to understand processes interms of the progressive value addition, and

value delivery to the customer


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Internal Business Processes

systems approach needed i.e. understandinglinkages between system objectives,outputs,inputs and processes

Data entry/ updation simultaneous to thephysical events e.g. material receipt to beupdated at the point of physical entry of thematerial

Identifying customer wants, developing newproducts, manufacture, delivery to customer andfulfillment of promise through after sales serviceconstitute the major organizational processes

Support processes include supply chain, Humanresource rocesses bud etin ualit control to


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Learning and Growth

We all learn from our mistakes, we growby avoiding mistakes(which we made andwhich we see others making)

We grow by doing existing things betterand by starting better things.

Enormous scope in organizations to

improve efficiency and effectiveness Innovation is doing things differently with a

positive result.


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Some bare truths about

Innovation Most business processes are the same across

Industries and business types

Logical analysis of systems requirements and

there from developing progressively bettersystems is something anyone can and everyoneshould do

Left brain thinking is paramount contrary to

popular management thinking Creativity can be taught and learnt by Panchvi

class intelligence

Japanese approach to Inventory management

and vendor management two excellent


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Assignment of Weightages

We have four factors in the balanced score card.Do we assign equal or unequal weightages tothe various factors?

Depending on the competitive situation and thefirms required priorities we assign weightages.

Start with 25% weightage, then establish therelative priorities. For small and start up firms,

financial and innovative factors would have moreweightage say 30% each and the other twocould be 20% each. For mature firms incompetitive situations, learning and growth andinternal processes would have higherweightages


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Conclusion

Balanced score card moves organizationalthinking from the historically conventional to therelevant present

In an increasingly globalized world strategicthinking and sound implementation vital

A sound framework which if understood andused effectively could make the difference

between victors and vanquished in business Needs to be supported by progressive

management focused on optimizing long termbusiness performance


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Consumer Ethnography

Ethnography is the descriptive study of humansocieties based on fieldwork(interaction andobservation)

It makes use of conceptual knowledge frompsychology, economics and cultural studies

This field has become increasingly relevant andusefully applicable in the context of increasing

globalization It is being applied in studies of consumer

behaviour and buying preference ingeographically and culturally diverse markets


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Understanding Culture

Societies are differentiated by race, creed,physical and behavioural characteristics

More importantly they are differentiated by the

system of beliefs, values and social practices. These beliefs,values and practices transmittedand sustained through several generationsconstitute Culture

Culture is evidenced by dress, food, attitude toeducation,symbols of economic and socialsuccess and family orientation.


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Significance of Culture in

understanding Consumers Popular perception is that consumer behaviour

is culture specific and always varied

Universal customer expectation over the long

term is maximum, convenience, maximumchoice and minimum prices on mass market

products/services(niches will exist but fade

away)

Key is to understand the technology cycle and

the reach of technologies over various societies


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Cultural differences in consumer

expectation Food preferences are explainable by the level of

development of a country and the availability oftechnology

Table bread produced by large baking ovenscame from the western countries. The easternworld had different types of unleavened breadbaked in small household ovens

As mass baking technologies aided by powerfulleavening agents becomes widespread bakedbread(in the form of loaves) will become thefood of the masses all over the world(next 100years)


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Cultural differences in consumer

expectation Indians for centuries have eaten hot meals

mainly because refrigeration facilities were notavailable

As refrigeration becomes universally available,Indians will adapt to warmed up cold food whichNRIs in the U.S. or Europe already are used to.

Increasing adaptation of western clothes(jeans

and Tshirts) point to the same thing. IndianSarees will never become a mass marketproduct in any other country and is already wornless even in India for obvious reasons


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Key for Marketers

Understand the universal long expectations ofcustomers

Assess the current availability of relevant

technologies. Be realistic in creating andpromoting products relevant to the currenttechnology capability.

E.g. Broad band in telecommunication is limited

in India and therefore high bandwidth devicesshould be introduced carefully and withminimum hype


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Key for Marketers

While the prosperous nations will movegenerally upmarket in new technologyareas(telecom, biotech, nanotech), there ispotential for down market stuff(small cars)whichdeveloping countries can export

Some products will be unique to some countriesfor the next few hundred years e.g. Sun tan forthe Caucasians and Fairness creams for the

Asian and Africans

However in the really long term the sameproducts and services will be available to theundifferentiated human race


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Conclusion

Understanding ethnic and cultural differences isimportant

These studies and recommendations arising

there from can point to useful marketingconclusions in terms of what will sell where

In the short and medium term exploiting ourknowledge of differences will give marketing

advantage In the long term all markets would move touniversal products and services that wouldreflect current technological capabilities and

meet the universal expectations of customersvis. Max choice and convenience at lowest rice


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Core Competences

Concept first introduced in a HBR paper1991by Gary Hamel and C.K. Prahlad

Deals with hard competency i.e. relating to

technical processes in Engineering,Electronics, Optics to name a few

It argues that superior competence in a

technology as opposed to focusing onproducts would lead to long termcompetitive advantage.


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Conceptual framework

C.C. framework can be compared to thestructure of a tree viz. roots, trunk and branchesand finally leaves, flowers, fruits

Core competence can be likened to the rootswhich sustain the structure and contribute to itslongevity

Trunk and branches can be compared to core

products which form part of the final products Leaves, flowers and fruits represent the finalproducts including product variants


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Understanding the framework

Let us take examples: Core competency ofMatshushita is in small compressor technology(less than 1hp)

Refrigerator compressors constitute the core

product of which Matshushita has a globalmarket share of 50%

Refrigerators, freezers are the finished product.World has several hundred brands and variants

accounting for millions of sale units and billionsof dollars of sale value

Half of these use the Matsushita compressor


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More Examples

Canons reinvented itself from a camera company to apioneer in Imaging technology

Its core competence is Imaging which encompassesMicro electronics, laser technology, material flow

technology and display technology Core products include the Laser imaging heads and

printer heads used on millions of copiers, fax machines,printers

Result Canon has grown from a small company to agiant with revenues exceeding the total of its formergiant rivals in their respective businesses viz. Kodak inphotography and Xerox in Photocopying


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Honda

Started by a brilliant mechanic Soichiro Honda,the companys first product was a small enginethat powered an agricultural sprayer

The company developed its core competence inPower train technology

Honda is a global leader in motor cycles, carsand portable generators

Core products are engines, gearboxes and axles Finished products cover the entire automobile

and powered portable devices field


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Kyocera the small giant

Kyocera has developed core competence inprecision ceramics technology

Its core products are ceramic holders forcomputer processor parts

The company has 55% of the world marketshare in these parts which are used in anincreasing world market for mainframe andpersonal computers

Even with this dominant global market share,Kyocera offers unparalleled customer serviceresponding to emergency requests for suppliesand rushing to attend customer complaints


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Core competence in Soft

technologies

Hamel and Prahlad have not extended the CC

logic to soft areas

We define these areas as encompassing the key

management sub processes vis planning,organizing, controlling and leading

They also include functional competences such

as marketing, manufacturing, logistics,

Information storage and processing


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Examples of Soft CCs

Reliance industries has world class project

management capabilities as a core competence

This competence has been applied to various

primary projects including petro chemicalcomplexes, oil refineries, oil exploration

These projects produce world class products

enjoying prominent market share and

contributing towards the firms profitability and

growth and sustained market leadership


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Examples of Soft CCs

Googles core competence is in informationaccessing technologies

Over a brief period of a single decade the firmhas put in place several core products such assearch engines, micro locating tools like Googleearth and map extension and reading tools

The end products are individual information

packages customized to hundreds of millions ofcustomers across the globe and marketinformation reach and access to firms andcustomers


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Timex Watches Ltd.

The core competence was technology absorbtion

Complex technologies including precision tool designand manufacture, Injection molding, Vacuum platingwere adopted, and mastered in extremely short time

frames Products and processes including precision dies for a

variety of industries, plating of industrial and consumerproducts and precision plastic products

The firm was able to utilize the core processes describedabove to make superior cost effective products in house

The core processes were leveraged into reproducingthese on a customized basis for several customers


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Conclusions

Core competences enable superior competitivecapabilities

Development of core products are the logical outcome

The firms creative and productive energy is focused on

a few products that dominate the relevant market spaceand enable it to avoid the energy sapping marketcontests in the end product field

The CC concept is applicable to hard technology (Hameland Prahlad)

The CC concept is equally applicable in soft technologyareas (R.J.M.)


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Growth Strategy

Every organization must seek continuous growth

to fulfill its purpose of long term profit

maximization

It is important to understand the process ofgrowth and the alternatives available

A firm has to facilitate first growth in demand for

its products/services existing as well as planned

This is done by expanding existing markets and

creating or entering new ones


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Alternative growth paths

Organic or internal growth is the first andobvious opportunity

Inorganic or external growth is the otheropportunity

Organic growth is achieved by capacityexpansion (domestic and global) and then byprogressive integrationforward and backward

on the value chain External growth is achieved throughdiversification -related and unrelated


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An Example- Organic Growth

An automobile co. like Maruti which

started by assembling cars from fully

assembled imported aggregates (engines,

gearboxes---)

First increase assembly capacity, then go

for backward integration i.e. components

Go for global expansion through exportsand setting up manufacturing abroad


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Inorganic Growth

Once the potential for Organic growth is fullyexploited Maruti could consider diversifying intotwo wheelers or commercial vehicles

When the automobile space is saturated,

domestically/internationally, Maruti couldconsider acquiring other auto cos

Following this the co. could consider otheropportunities in the transportation space

Only if and when all of these possibilities areexhausted, the firm can consider unrelateddiversification


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Facilitating market growth

At every stage, the firm should attempt to

expand and extend its market penetration

This would include new products and new

markets

The firm should also improve market share

in existing markets through more focussed

marketing and selling efforts


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Conclusion

Growth is an absolute imperative for everyfirm

Organic and Inorganic growth are the two

routes for growth There is a logical pattern (first organic then

inorganic: ensure full exploitation of

potential at every stage Opportunities for market expansion andextension at every


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Knowledge Management

knowledge is the understanding of a subject gainedthrough experience or study

it can also be described as know how which enables aperson to perform a specialized task

it can also be viewed as an accumulation of factsprocedures and heuristics

facts are true statements about a subject matter

procedures are uniform consistent and documented

activities heuristics are rules of thumb developed over years ofvalidated experience

intelligence is the ability to acquire and apply knowledge


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Some More Definitions

memory is the ability to store and retrieve relevantexperience at will and is part of intelligence

learning is knowledge or skill acquired by instruction orstudy

instruction and study refer to the formal excercisedealing with exploration and understanding of concepts

experience is the validation of theoretical conceptthrough active or passive practical application and whatwe learn from it.

common sense is the innate ability to sense judge orperceive situations acquired initially in childhood anddeveloped progressively as one gets older


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Understanding Knowledge

first we understand what data and information are. dataare facts.

information is data processed for use by an individual oran organization

knowledge is the understanding of information based onits perceived relevance/importance to a specific subject

data information and knowledge are related with dataforming the base of the pyramid, information the middleand knowledge the top of the pyramid

knowledge can be summed up as the integrate ofperceptions, skills, common sense and experience


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Types of Knowledge

there are four basic ways of categorizing knowledge procedural knowledge deals with performance of a standard tasks

e.g. making and sending an appointment letter

declarative knowledge is routine awareness short term knowledgee.g. memorizing a phone no. from a directory to dial the no.

semantic knowledge is knowledge of major concepts and hierarchicknowledge e.g. understanding McGregors theory X and theory Yand how it is to be applied

episodic knowledge is deep personal knowledge based onexperience and resides in the mind. e.g. sacking a senior unionoffice bearer for gross misconduct

procedural and declarative knowledge are short term and shallow.semantic and episodic knowledge are deep and long term anddifferentiate the expert from the novice


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What is Knowledge

Management(k.m) k.m. is an inter disciplinary model that has knowledge

within an organization as its focus

it uses accessible knowledge from outside sources

it captures and stores knowledge in existing business

processes, products and services it enhances data bases and documents with additional

knowledge

transfers and shares knowledge throughout theorganization

promotes knowledge growth through the orgn.s cultureand incentive systems


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The k.m Process

k,m. is the process of capturing and making use of afirms collective expertise spread throughout the orgn.

the expertise may be available in documents ordatabases( called explicit knowledge)

it may be resident in individuals minds(this is called tacitknowledge)

tacit knowledge is the more precious and accounts forthe greater part of knowledge in most orgns.

a competitive orgn. should view all its processes asknowledge processes and continuously enrich eachprocess with explicit and tacit knowledge


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Explicit and Tacit Knowledge

explicit knowledge is codified and stored and therefore widely andeasily available. e.g. personnel data incl employee personal andsalary related data

tacit knowledge is knowledge embedded in the human mind throughpersonal knowledge, experience and discrimination e.g. theknowledge of characteristics of people who are not team players

and in fact destructive personalities tacit knowledge is not only accumulation of and mastery of facts but

involves beliefs and values gained through years of worthwhileexperience (positive and negative

it has been established that 90% of knowledge that will enable a firmto become and remain a superior competitor is tacit knowledge

the aim of every firm should be to access, store and use as much ofits potential wealth of tacit knowledge as it possibly can


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expertise and experts

knowledge developed over time throughsuccessful experience leads to expertise

an expert is a person with advanced knowledgewho can solve difficult problems swiftly andaccurately

an expert is characterised by attention to detailand quality results

experts are adept at problem solving withresults far above the ordinary

an expert is usually a perfectionist and wants thesolution to be exactly what is called for by the

problem

ifi liti f


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some specific qualities of an

expert uses chunked knowledge i.e. large

patterned chunks of knowledge(facts,circumstances, people involved etc)

sees the big picture e.g. people will jumpbonds dont count on them for retention:trysomething better

thinks creatively i.e. thinking differentlywith a positive outcome. e.g. how Timexwatches avoided a union

ifi liti f


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some specific qualities of an

expert possesses good communication skills i.e both

conveying and receiving viz verbal as well aslistening skills

exhibits confidence and is able to maintaincredibility judged by the people who sheinteracts with

is a good teacher and by implication is a goodlearner

the greatest advantage possessed by experts isthe ability to spot patterns that are relevant to aproblem and therefore to its solution


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capturing tacit knowledge

the goal of knowledge capture is to extractproblem solving knowledge from the humanexpert to build the k.m. system

apart from the skills previously discussed theexpert should have motivation, enthusiasm andwillingness to share his knowledge

three levels of experts: the highly expert person,the moderate expert and the novice expert

where the domain knowledge is concentrated, asingle expert is accessed. where the d.k. isdiffuse multiple experts will be accessed


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capturing tacit knowledge

the primary instrument for accessing e.k. theinterview: may be structured or unstructured:approach to be logical and properly sequenced.

be prepared for the experts pattern matchingand analogies which may seem like fuzzyreasoning

ambiguities of language to be considered andaddressed

reliability of experts information can be affectedby question construction and by perceptual slant

other problems include response bias, and

hostile attitude.


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things to avoid

generalizing conclusions on the basis of a fewsessions. Always verify with expert

do not force the expert to repeat anythingbecause of poor recording of previous sessions

avoid taping: good listening and recording willensure good coverage

avoid videotaping: unfavourable with most

experts do not interrupt the expert nor convert the

interview into an interrogation session

problems that ma be


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problems that may be

encountered in interviews

response bias of expert due to selectiveinterpretation, lack of time, motivation, andhostility

inconsistency specially where more than oneexpert is involved and poor questioningtechnique

communication problems between expert andinterviewer

Required a competent and sensitive k.d. askingthe right questions, being a good listener and

disciplined recorder


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other k.c. techniques

on site observation observing, interpreting andrecording an experts problem solving behaviouron site.

brainstorming two or more experts in an ideageneration and opinion sharing session.

protocol analysis where experts articulate the

process of specific problem solving. the Delphi method is a progressive way of

generating ideas among the experts involved:working towards convergence and consensus

Blackboarding is a collaborative approach where

A practical application:Using spare tool room


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A practical application:Using spare tool room

capacity to build a world class tool room

Timex Watches was equipped with a toolroom to maintain precision watchassembly line tooling(repair and rebuild)

We used Marketing, technical and R&Dand resource optimization expertise withinthe company

Our tool room became the foremost toolroom in North India, then the wholecountry and finally a global player


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The resources and the process

Experts included, tool room senior managers,machine and tooling marketers and resourceand logistics experts

Senior Manager tool room, Vice presidentoperations and the Managing Director all usingexpertise gained during their respective careers

Approach was collaborative and proactive,driven by top management with intent to improveresource utilization, profitability and exploitpotential growth areas for the company

Time frame was aggressive but realistic.Information gathering was informal butdisci lined

Another Example World class


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Another Example. World class

info systems Starting with 1 PC and 1 incompetent IT

professional Timex in 3 years was ready with itsin house third generation info system

Initially we worked with standard functionalsoftware packages like Tally

Encouraged key employees to leverage theirknowledge of simple RDBMS packages tooperate and build integrated systems

Managed the teething problems of duplicatedatabases and conflicting info between deptslike Accounts and Materials

Another Example World class


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Another Example. World class

info systems Established responsibility for dbase building and

maintenance and encouraged interactiveprocessing and info sharing

After three years the company had developedcapability for introducing its third generationRDBMS comparable to Oracle RDBMS

The company throughout kept accurate and uptodate information as the objective going beyondconventional claims of superior hardware andsoftware availability


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The resources and the process

The expertise was from the IT area, the userareas starting with the materials and finance andaccounting area

Key experts included the heads of IT,accounting, Materials, Operations and the topmanagement

Experts used past experience as well as theshared and integrated knowledge of thePrecision Engineering industry of which thewatch industry is a member

Data collection, problem solving was again acollaborative exercise informal but disciplined

management tools and trends

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