STRATEGI BISNES

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MESYUARAT PENGURUS NEGERI 1/2006
BSC/KPI NEGERI
DISEDIAKAN OLEH ABD RAHAMAN RASID PENGURUS
KANAN JABATAN PERANCANGAN KORPORAT/PENGURUS
PROJEK EIS
1B FEBRUARI 2006
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SCOPE OBJECTIVE OF PRESENTATION

• Introduction and Background
• To explain basic concept on Balanced Scored Card
  (BSC)
• To highlight BPM Destination Statement
• To elaborate on BPM Corporate Scorecard
• To propose State Scorecard, Branch and Hub
• To get feedback from State Manager

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BALANCED SCORE CARD (BSC)
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CONCEPT BSC
Formal Definition A tool that translates an
organizations mission and strategy into a
comprehensive set of a performance measures that
provides the framework for a strategic
measurement and management system
MY DEFINITION A SYSTEMATIC WAY FOR MANAGEMENT TO
PLAN AND EXCUTE STRATEGY FOR THE WHOLE
ORGANIZATION
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WHY BSC?

• Traditional reliance on financial measures (e.g
  ROA)
• The rise rise of intangible assets
• The importance of reputation ( part of
  intangible asses)
• Organizations face difficulty in executing
  strategy

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Barriers to Strategy Execution
Only 10 organizations execute strategy
Barriers to Strategy Execution
Vision Barrier
People Barrier
Management Barrier
Resource Barrier
Only 25 managers have incentives linked to
strategy
85 executive teams spend less than 1 hour/month
discussing strategy
60 of organizations dont link budgets to
strategy
Only 5 workforce understands the strategy
Source Robert S. Kaplan David P. Norton
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BSC HAS FOUR PERSPECTIVES

• FINANCIAL
• CUSTOMER
• INTERNAL BUSINESS PROCESS
• LEARNING GROWTH

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BSC FOUR PERSPECTIVES
FINANCIAL PERSPECTIVE
To succeed financially, how should we appear to
our shareholders?
CUSTOMER PERSPECTIVE
To achieve our vision, how should we appear to
our customers?
INTERNAL PERSPECTIVE
To satisfy our shareholders customers, what
business processes must we excel at?
LEARNING GROWTH PERSPECTIVE
To achieve our vision, how will we sustain our
ability to change and improve?
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BALANCED SCORECARD AN OVERVIEW
Shareholder Value
Financial Perspective
Productivity Strategy
Growth Strategy
Image
Relationship
Product/Service Attributes
Customer Perspective
Partnership
Quality
Time
Function
Brand
Price
Manage Innovation
Manage Customers
Manage Operations
Internal Perspective
Learning Growth Perspective
Human Capital
Information Capital
Organisation Capital
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FINANCIAL PERSPECTIVE
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FINANCIAL PERSPECTIVE
Shareholder Value
Growth Strategy
Productivity Strategy
Improve Cost Structure
Increase Asset Utilization
Enhance Customer Value
Expand Revenue Opportunities

• Improve profitability from existing customers

• Manage capacity
• from existing assets

• New products
• New markets
• New partners

• Reduce expenses
• Improve yields

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CUSTOMER PERSPECTIVE
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CUSTOMER PERSPECTIVE
FINANCIAL PERSPECTIVE

• Customer
• Profitability

• Market Share
• Account Share

• Customer
• Acquisition

• Customer
• Retention

• Customer
• Satisfaction

Image
Relationship
Product/Service Attributes
Customer Perspective
Service
Price
Quality
Availability
Brand
Partnership
Functionality
Selection
Customer Value Proposition
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INTERNAL PERSPECTIVE
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INTERNAL BUSINESS PROCESS
FINANCIAL PERPECTIVE
CUSTOMER PERPECTIVE

• Acquire raw materials
• Convert raw materials to finished products
• Distribution

Processes that produce deliver products
services
Operation Management Process

• Select targeted customers
• Acquire targeted customers
• Retain customers
• Grow business with customers

Processes that enhance customer value
Customer Management Process
INTENAL PERSPECTIVE
Processes that create new products services

• Identify new products services
• Manage research development
• Develop new products

Innovation Management Process
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LEARNING AND GROWTH
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LEARNING AND GROWTH
FINANCIAL PERPECTIVE
CUSTOMER PERPECTIVE
INTERNAL PERPECTIVE

• Attitude
• Skill
• Knowledge

Human Capital

• System
• Database
• Network

Information Capital
LEARNING GROWTH

• Leadership
• Culture
• Teamwork

Organization Capital
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BALANCED SCORECARD OBJECTIVES, MEASURES, TARGETS
INITIATIVES
FINANCIAL
To succeed financially, how should we appear to
our shareholders?
INTERNAL BUSINESS PROCESS
CUSTOMER
To satisfy our shareholders customers, what
business processes must we excel at?
Objectives
Measures
Targets
Initiatives
To achieve our vision, how should we appear to
our customers?
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
Vision Strategy
LEARNING GROWTH
Objectives
Measures
Targets
Initiatives
To achieve our vision, how will we sustain our
ability to change improve?
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MEASUREMENT
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MEASURING BUSINESS STRATEGY
PERSPECTIVES
GENERIC MEASURES
Financial
ROI, ROA, ROE
Satisfaction, retention, acquisition, market share
Customer
Response time, new products, cost, product
service quality
Process
Employee satisfaction, information system,
competency, value system
Learning Growth
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Two Types of Strategic Objectives
MEASURES
Outcome (Lag) Measures
Driver (Lead) Measures

• Purpose
• Focus on the performance results at the end of a
  time period or activity
• Examples
• year-end-budget expense
• client satisfaction
• cases per caseworker
• Strengths
• Usually objective and easily captured
• Issues
• Outcome measures reflect success of past, not
  current, activities and decisions

• Purpose
• Measure intermediate processes and activities
• Examples
• hours spent with clients
• spent on automation.
• Strengths
• More predictive in nature
• Allows organisations to adjust behaviors for
  performance
• Issues
• Based on hypotheses of strategic cause and
  effect
• Often difficult to collect supporting data

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STRATEGY MAP
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BSC TERMINOLOGY
KEY PERFORMANCE INDICATOR (KPI)
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FROM STRATEGY TO ACTION PLAN LOAN BUSINESS
STRATEGY MAP
BALANCED SCORECARD
ACTION PLAN
Strategy
Objective
Measurement
Target
Initiative
Budget

• Identify new customers
• Offer new limit to existing customers

ROA

• Profitability

Grow Revenue

• Increase loan

• Loan approval

• RM 2 million

• Attract new
• customer

• No. customer

• 700

• Corporate advertisement

Customers
RM10,000

• Days taken to approve loan

• Fast loan approval

• One week

Fast Service

• Review New authority limit

• Day taken to approve loan

• Proposal to Management

Decision making

• One week

• Enhance Knowledge on corporate loan

Knowledge
Number of training/year

• Find suitable courses

2 times
RM4,000
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INITIATIVE
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INITIATIVES
Initiatives Are Defined to Help Close the
Performance Gap
OBJECTIVE Increase Customer Satisfaction
Objectives articulate the components of our
strategy
MEASURE / TARGET
90
Measure
Customer Satisfaction Survey Rating
gap
INITIATIVE Implement automated case management
system and train Every Rep in 99
45
M
Target
90 favorable overall
Target
Actual
Initiatives help close the gap between our
current and desired performance
Measures track our progress toward achieving and
communicating the intent of the objective
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CASCADING
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CASCADING
What does cascading the BSC means?

• The process of developing BSC at each division
  and business unit levels
• The scorecards must align with organization
  highest level scorecard by identifying the
  strategic objectives and measures
• Lower level scorecard will also include
  additional measures and initiatives that
  reflecting the specific opportunities and
  challenges faced at that level

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BALANCED SCORECARD THE CASCADING PROCESS
Mission, Vision Value
Strategy
Financial Financial Financial Financial
O M T I

Customer Customer Customer Customer
O M T I

Internal Internal Internal Internal
O M T I

L G L G L G L G
O M T I

CORPORATE
Financial Financial Financial Financial
O M T I

Customer Customer Customer Customer
O M T I

Internal Internal Internal Internal
O M T I

L G L G L G L G
O M T I

DEPARTMENT
Financial Financial Financial Financial
O M T I

Customer Customer Customer Customer
O M T I

Internal Internal Internal Internal
O M T I

L G L G L G L G
O M T I

STATE
Financial Financial Financial Financial
O M T I

Customer Customer Customer Customer
O M T I

Internal Internal Internal Internal
O M T I

L G L G L G L G
O M T I

BRANCH
Team Personal BSC
Note O Objectives M Measures T
Targets I Initiatives
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Three Ways to Cascade
Cascading is accomplished using one of three
approaches
Corporate
Business Unit
Shared Identical Objectives
Contributory Translated Objectives
Hybrid Identical, Translated and
Unit Specific Objectives
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GLOSSARY
Balanced Scorecard A tool that translates an
organizations mission and strategy into a
comprehensive set of a performance measures that
provides the framework for a strategic
measurement and management system Cause and
Effect Relationship A cause and effect
relationship identifies the initiatives,
responsibilities or activities (causes) necessary
to achieve an objective or target
(effect) Customer Value Proposition Defines who
the customer is and what they want Initiative
Key action programs to achieve objectives or
close gap between measures performance and
targets. Initiatives are often known as projects,
actions or activities. Lag Indicator Measures
to determine the outcome of an objective that
indicate company performance at the end of a
period. These are results-oriented and do not
reflect a process. Lag indicators often appear in
BSCs outcome-oriented Financial and Customer
perspectives.
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GLOSSARY
Lead Indicator Measures that indicate progress
againts a process or behavior. These measures are
helpful in predicting the future outcome of an
objective. Lead indicators tend often appear in
the Internal and Learning Growth
perspectives. Measures Statement of how success
in achieving an objective will be measured and
tracked. Measures are written statements of WHAT
we will track and trend over time, NOT the actual
targets such as direction and speed. A measure
should include a statement of the unit to be
measured (RM, , rating). Objective Concise
statement articulating a specific component of
what the strategy must achieve/what is critical
to its success. Each perspective usually contains
3-6 primary objectives that state a key aspect of
the strategy to be achieved over the next 3-5
years. Objectives are best stated as action
phrases and may include the means and/or desired
results as well as the action. E.g Increase
market share through current customers Strategy
Map A visual representation of an organizations
strategy and the processes and systems necessary
to implement that strategy. A strategy map will
show employees how their jobs are linked to the
organizations overall objectives