using balanced scorecard for strategic agility rallyon 2015
TRANSCRIPT
#RallyON15 #RallyON15
#RallyON15 #RallyON15
Dan Montgomery Using Balanced Scorecard for Strategic Agility [email protected] 720-641-3048
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• Clear understanding of intent • Flexible adaptation to emerging
circumstances • People
• Elements • Landscape
• Disciplined avoidance of “fixation”
Sun Tzu ���The Art of War
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Topics
• Minimum Viable Strategy • Overview of Balanced Scorecard • Using the Scorecard to Achieve Agile at Scale • Lean Metrics
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Why Strategy Has to Be Agile
Intended Strategy
Realized Strategy Unrealized
Strategy
Emergent Strategy
Source: Henry Mintzberg The Rise and Fall of Strategic Planning
The PLAN
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Top Down Approach
Predictive Hubris
Overplanning
1
2
3
Get employees and customers engaged in the planning process
Regard strategy as a hypothesis, not a prediction
Solution
Adopt an agile approach to implementation
Problem
The Trouble with Strategic Planning
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• Vision • Values • Value Prop • Themes • Success Metrics
Minimum Viable Strategy
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What is the Balanced Scorecard?
• A strategy management discipline that translates business vision, values and CVP into actionable measures
• A measurement framework that balances: – Internal drivers (learning and productive outputs) – External results (customer value and financial performance)
• #4 on the “Top 10” list of corporate management tools compiled by Bain & Company
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Perspectives
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Learning & Growth: What are we learning? Process: In order to better build what? Customer: To create what customer value? Finance: For what financial results?
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Themes chunk the Vision down into specific results areas
• Goal areas • Market segments • Planning horizons • Cost and Revenue • Geographic • Business units
Themes can take many forms….
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A Measureable Vision Statement
“I believe this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” - John F. Kennedy, May 1961
• Inspiring • Measurable target • Clear timeframe • Customer-focused
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An Inspiring Vision Statement
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Apollo Mission Themes
Propulsion Get the vehicle from Earth to the Moon and back
Life Support Keep astronauts alive and able to perform mission duties
Public Relations Maintain public support for a lengthy and expensive project
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BSC Integrates Perspectives and Themes Keep the Lights on Grow the Business Breakthrough Products
Finance For what financial results?
Customer To create what kind of customer value, experience or behavior?
Process In order to execute effectively?
Learning & Growth What people, skills, culture do we need? Outcome
Outcome
Outcome
Outcome Outcome
Outcome
Outcome
Outcome
Outcome
Outcome Outcome
Outcome
Outcome
Outcome Outcome
Outcome
Outcome Outcome
Outcome
Outcome Outcome Outcome
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Scaling is really tough work
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Vs. Starting with The Big Picture
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Business Purpose, Vision and Values
Strategic Themes
Strategic Metrics
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Authentic hospitality complemented by a
high level of elegance and intimate spaces
that allow couples to reconnect with each
other
Five Star Service
We build and develop products and services
that celebrate and enhance our indigenous
environment
Nature
We seek to maximize revenue by balancing
marketing spend among our key markets and increasing occupancy during the low season
Revenue
By 2019, Sybaris will be recognized as THE adult vacation that meets the needs of the busy executive couple for relaxation, celebration, discovery and intimacy in a
Five Star setting.
Example Vision and Themes
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The Strategy Map shows the Cause and Effect Chain to Create Customer Value and Financial Results
What people, skills, tools and infrastructure do we need?
In order to execute the right activities?
To create the desired customer value, experience and behavior?
For what financial results? Ex
tern
al
Inte
rnal
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Strategy Map
Finance
Customer
Process
Learning & Growth
Validated Learning
Adaptive Culture
Productivity Quality
Customer Experience
Customer Stickiness
Cost of Sales Revenue per Customer
Time to Market
Employee Engagement
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Scorecard
Perspective Outcome Measure
Finance Revenue Average Quarterly Revenue by Customer
Cost of Sales Quarterly COS as % of Revenue by Customer
Customer
Customer Stickiness Customer Retention Rate
Customer Experience Net Promoter Score
Time to Market Concept to Cash in Days
Process Productivity Average Throughput across Teams
Quality Defect Density (Defects/Person Days)
Learning & Growth
Validated Learning Formal Completion of After Action Reviews
Adaptive Culture Percentile Score on Culture Survey
Employee Engagement Engagement Survey Score
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Cascading the Strategy Map – Human Resources
Finance (Focus on Cost)
Customer (Internal)
Process
Learning & Growth
Adaptive HR Culture
Understanding of Technical Disciplines
Recruiting Process
Candidate Evaluation Process
Employee Retention
Recruiting Costs
Right Employees
Competitive Awareness
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A Tale of Two Metrics #1: Moneyball
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#2: Chicken Efficiency A Tale of Two Metrics
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Managing by Measures Improves Alignment and Innovation
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Measurement-Managed Organizations
Non Measurement-Managed
Clear agreement on strategy among senior management 93% 37% Good cooperation and teamwork among management 85% 38% Information within the organization is shared openly and candidly 71% 30%
Effective communication of strategy to organization 60% 8% Willingness by employees to take risks 52% 22% High levels of self-monitoring of performance by employees 42% 16%
o
Source: Adapted from Crea%ng the Measurement-‐Managed Organiza%on, W. A. Schiemann, Metrus Group/KPMG, 2002.
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AND Market Leadership & Profitability
Of the organizations that WERE Measurement-Managed
Of the organizations that were NOT Measurement-Managed
74% fit the categorization Industry Leader
80% had an above average three-year ROI
Source: Adapted from Crea%ng the Measurement-‐Managed Organiza%on, W. A. Schiemann, Metrus Group/KPMG, 2002.
44% fit the categorization Industry Leader
45% had an above average three-year ROI
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Characteristics of Good Performance Measures
• STRATEGIC: Point to customer and financial outcomes • USEFUL: Provides a clear description of what success is, and
provides actionable information that better informs decision making
• ECONOMICAL: Doesn’t take too much effort to collect the data
• BEHAVIOR: Doesn’t create undesirable unintended consequences
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The Lean Metrics Canvas
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High-Level Strategy
Theme 1 Theme 3 Theme 2
Integrated Operational Planning and Budgeting
Assumptions, Facts and Hypotheses
about the Market & Customers
Agile Execution
Feedback & Learning
Purpose
Vision
Value Prop(s)
Metric(s)
#RallyON15 #RallyON15
Thank you
My next three challenges / or three big open questions: 1. 2. 3.
Dan Montgomery Text me at 720-641-3048
Can we show that Agile improves customer value? Which agile team practices work at executive level? What elements of BSC support minimum viable strategy?