BPM and Performance Management, Scorecards

& Strategy Maps

Architecture World 09

Enterprise BPM09 Improve efficiency and customer service, increase revenue and reduce costs

Conference Keynote

Steve Towers

BP Group

Linking Process with Performance is a critical element in ensuring ongoing success.

We will review the steps to achieve this alignment and provide insights from leading companies

to fast track you approach.

Finally we will consider the process of consolidating and maintaining

the performance gains to create the gift that keeps on giving.

www.bpcommunity.org

www.bp2009.com

www.bpgroup.org

COMMUNITY• Global 34,000

• LinkedIn 2,350

TRAINING

• Certification (7 Levels)

• Open & In house Learning

• Online Support

BUSINESS PROCESS

PROFESSIONAL

• Support Groups

• Mentoring & Coaching

INFORMATION&

RESEARCH

• Articles, News

• Discussion

• Conferences & Seminars

www.successfuloutcomes.blogspot.com

The way we think about Performance is

wrong.

90% of businesses are

unable to execute the

strategy they have on

paper

70% of businesses project

performance they will

never attain

Houston, we have a problem

Source: Axon, L. Learning to lead: How Companies Grow Profits by Growing Leaders, Sept 22,2004Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

Few Organizations Execute

Strategy Well

“Strategy has never been more

important”

“Less than 10% of

strategies

effectively

formulated are

effectively

executed” Fortune Magazine

Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

Only 5% of the workforce understands what the strategy is

“A process of assessing progress towards

achieving predetermined goals, including

information on [efficiency, quality, and]

outcomes….

Source: “Serving the American Public: Best practices in performance measurement,” June 1997.

Well if it is this easy why does it not

happen?

Performance Measurement

“We are measuring the wrong *******

things!”

Mic

hael O

’Leary

Ryan A

ir’s C

EO

Ryan Air – Europe‟s largest

And most successful Airline.

“It‟s not rocket science.

You need to be measuring

What‟s important to the

customer. Then you make

sure everything you do is

achieving those measures.

******* simple really.

That way customers keep coming back for more”.

• Growing Revenues• Enhancing Service• Reducing Costs

That is, winning The Triple Crown

UTILISE REDIRECT IMPROVE DEVELOP PREPARE

To link process with performance we need

to rethink what we mean by performance.

Red Tape and cutting through the bureaucracy

This can be overwhelming for many people and their organizations because the processes and systems in place are complex, expensiveand constrain our agility… they were built for a different era

Top-Down “Bridging

Process” To Share

the Strategy & Align

the Workforce

Bottom-Up Process

to Internalize &

Execute the Strategy

CORP

SBU

The Strategy Focused Workforce

• EDUCATION

• PERSONAL GOAL

ALIGNMENT

• BALANCED PAYCHECKS

Legacy Principles of the Strategy Focused

Organization:

„MAKE STRATEGY EVERYONE‟S JOB‟ (telco)

Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

Only 5% of the workforce understands what the strategy is

Legacy Corporate and Division Scorecard (GE)

Sample from GE Lighting Business Group

Level of Organization Financial Customer Internal Process Learning & Growth

Corporate Scorecard Increase profit margin Improve customer Increase inventory turns Increase level of

satisfaction level Improve internal process employee competency

Division Scorecard Optimize cost of production Improve customer Increase inventory turns Increase level of

Reduce inventory levels satisfaction level Improve internal process employee competency

Plant Scorecard Optimize cost of production Increase percent of Increase inventory turns Number of "on the

Increase yields ratio on time delivery Reduce number of defects job training" delivered

Increase labor productivity Reduce customer per million Number of performance

Reduce inventory levels complaints per million Improve quality incoming coaching session

materials

Maintain optimum equipment

speed

Frontline Employee Reduce waste Reduce equipment downtime Number of "on the

Scorecard Reduce overtime Reduce number of poor job training" attended

Increase production rates solders Number of performance

Reduce number of cracked coaching session

bulbs attended

The above example shows how the scorecard at corporate level is

cascaded to division level, and further to plant level and employee level.

Are we measuring the Right Things?

The Legacy Balanced Scorecard Adopted for a

Government Organization

The Mission of the organization is to

fulfill Public Policy expectations

“If we succeed, how will we look to our

financial donors?”

“To satisfy our customers, financial donors

and mission, what business processes must

we excel at?”

“To achieve our mission, how must our people

learn, communicate, and work together?”

“To achieve our mission, how must we

look to our customers?”

Customer Perspective Budget / Financial Perspective

Internal Perspective

Learning & Growth Perspective

Stakeholder Perspective

This type of ‘inside-out’ thinking creates complexity and functional

specialization. On the surface it looks fine, dig deeper and you see the impact

of the legacy mindset – costs, confusion and inability to achieve a SCO.

What’s

Missing?

We don‟t focus on the Customer!

Mgr

Assoc

FLM

•Service

Level

•Abandon

Rate

•Costs

•# Call/Cases

•Average

Handle Time

•Quality

•AHT

•Ability to

follow

policies/pro

cedures/scri

pts

How many of these

measures does the

customer care about?

What happens when

the actuals fall short of

targets?

Personal reviews

- Training & coaching

- Personal

Development plans

- More people

What about acting on

the system? How

much of demand is

failure?

What % of demand are

we meeting?

Our service centre hierarchy

What have we focussed on?

Mgr

Assoc

FLM

Focus: creation of value for customers

Measures: capability, predictability of

demand, response, failure

Role: Acts on the system

Focus: creation of value for customers,

removal of failure and waste

Measures: achievement of purpose,

reducing variation in system performance

Role: Act on the system

Focus: doing what the customer wants

Measures: achievement of purpose,

variation in performance

The service centre as a system

What we SHOULD pay attention to

We focus on numbers/targets which we think will mean good service for our customers. The problem is that these numbers aren’t set by the customer and;

• don’t relate to what the customer is contacting us about • don’t tell us how effectively we deal with their demands• Don’t give us a means of explicitly and progressively achieving the Successful Customer Outcomes.

(US/UK CC company)

Looking Outside-in we can then link our

existing programs to achieving improved

performance

DISCOVERY

ASSESSMENT

REVIEW

EXECUTE

ww

w.cem

meth

od.com

We can make sure that the way we

measure and reward success is linked

explicitly with achieving Successful

Outcomes

What should the Outside-In Balanced

Scorecard look like?

BPM4 - Balanced Scorecard

Customer

1. Customer Growth New

2. Customer Growth Retained

3. Customer Relationship – Depth

4. Customer Relationship - Breadth

5. Revenue

6. Operation Cost

7. Profitability

1. Process Optimization – Penetration %

2. Process Optimization - Lifecycle/Maturity

3. Process Optimization - Causes of Work

4. Process Optimization - Points of Failure

5. Scorecard - IO v. OI

6. Scorecard -Rate of Progression

FIN

AN

CIA

LINTERNAL PERSPECTIVE

1. Organisation Maturity

2. Process Maturity

3. People Maturity

4. Technique Utilisation

5. Customer Wants/Needs Analysis

6. Innovation Index

PERSPECTIVE

1. SCO Development

2. SCO Alignment

3. SCO Optimization

4. Process Optimization – IO v. OI

5. Innovation Landscape Index

6. Business Efficiency Ratio

CUSTOMER ALIGNMENTL

EA

RN

ING

PERSPECTIVE

How do we evolve that into the Outside-In

Strategy Map

• % Ground crew trained

• % Ground crew stockholders

A Complete Scorecard is a

Program for Action (successful us airline)

Objectives Measures

• # Customers

• FAA On Time Arrival Rating

• Market Survey

• On Ground Time• On-Time

Departure

Strategic Theme:Operating Efficiency

Initiatives

• Cycle time optimization

• Ground crew training

• ESOP

•Customer loyalty program

• Quality management

Targets

• 30% CAGR

• 20% CAGR

• 5% CAGR

• 12% growth

• Ranked #1

• Ranked #1

• 30 Minutes• 90%

• yr. 1 70%yr. 3 90%yr. 5 100%

• Profitability

• Grow Revenues

• Fewer planes

• More Customers

• Flight is on -time

• Lowest prices

• Fast ground turnaround

• Ground crew alignment

Strategic Theme: Operations Excellence

Profits andRONA

Ground crew alignment

Fewer planes

Fast ground turnaround

Attract & Retain More Customers

GrowRevenues

Lowest prices

On-time Service

FINANCIAL

CUSTOMER ALIGNMENT

INTERNAL PERSPECTIVE

LEARNING PERSPECTIVE

Progressively...

• assess the Current State

e.g. Process Performance Audit

• Identify those areas needing rapid

attention

• Roll out a strategy to migrate the teams,

departments and divisions towards

Outside-In performance management

Migrate from the Legacy Strategy Performance system

Strategy

Budgets

Divisional Objectives

Management Incentives

Planning & Decision Making

Review Requests and Adjust

Top team

Knows best

Broken down into

specialism's

Negotiation &

Horse trading

Pro

cess &

Perfo

rman

ceM

anagem

ent

Devolve high level SCO‟s into individual

performance appraisal processes

DETERMINE THESCO’S

TRANSLATE THE SCO’S into

OPERATIONS

DEVELOP , PLAN & PREPARE

OPERATIONS

DELIVER PROCESSES & PROJECTS

OPERATIONAL REVIEWS – MANAGE

& REFINE

ADVISE & MATURE THE OPERATION

DEVELOP THE STRATEGY

Strategic SCO Plan

Operations Plan

STA

GE

1

STA

GE

2

STA

GE

3STA

GE

5

STA

GE

6

STA

GE

4Results

Performance Metrics

Performance Metrics

Results

Moving to the Outside-In

Balanced Strategy

Scorecard

Some elements that change …

From (Inside-out) To (Outside-In)

Processes Complex Simple

People Controlled Empowered

Structure Hierarchy/Functional

Team

Systems Prescriptive Adaptive

Measurement Activities Results

Customer End of chainSegmented

InclusiveIndividual

DISCOVERY

ASSESSMENT

REVIEW

EXECUTE

ww

w.cem

meth

od.com

Business Process Professional

pathwayLevel Objective Attainment Designation

7 Leadership MasterCPP

Champion

6 Strategy Master CPP Master

5 Integrate Professional CPP 5

4 Perform Professional CPP 4

3 innovate Professional CPP 3

2 Align Professional CPP 2

1 Optimise Practitioner CPP 1

Community

Everyone

Business Analyst

Process Managers

Technologists

Senior Managers

Leaders

www.bp2009.com

www.icmgworld.c

om

South Africa –

June

Gulf States –

June

Australia

India

US & Europe

In summary

To realise the

performance

improvements

from process…

We just need to

open our eyes

wider and see

things anew

Questions?

www.bpcommunity.org

www.bp2009.com

www.bpgroup.org

COMMUNITY• Global 34,000

• LinkedIn 2,350

TRAINING

• Certification (7 Levels)

• Open & In house Learning

• Online Support

BUSINESS PROCESS

PROFESSIONAL

• Support Groups

• Mentoring & Coaching

INFORMATION&

RESEARCH

• Articles, News

• Discussion

• Conferences & Seminars

www.successfuloutcomes.blogspot.com

BPM and Performance Management, Scorecards

& Strategy Maps

Architecture World 09

Enterprise BPM09 Improve efficiency and customer service, increase revenue and reduce costs

Conference Keynote

Steve Towers

BP Group