strategy by measurement

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Strategy by Measurement From Butterfly Effects to Success Atif Abdul- Rahman

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Strategy is not new for many business executives. Yet, many few companies can truly link their strategy to action. Organizations need to implement EPM based on a measurement system to empower people, process and technology to deliver what is strategized!

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Page 1: Strategy by Measurement

Strategy by MeasurementFrom Butterfly Effects to Success

Atif Abdul-Rahman

Page 2: Strategy by Measurement

A single flap of a butterfly’s wing CAN lead to a tornado elsewhere…

Page 3: Strategy by Measurement

A SINGLE measure in a company can make or break the business.

Page 4: Strategy by Measurement

Although a bit exaggerated, many companies have seen similar effects…

Page 5: Strategy by Measurement

Strategy by Measurement

Page 6: Strategy by Measurement

Strategy

Page 7: Strategy by Measurement

Strategy

…is the plan to act

Page 8: Strategy by Measurement

Strategy

…is the plan to act

Act…to achieve goals

Page 9: Strategy by Measurement

Strategy

…is the plan to act

Act…to achieve goals

Goals…that define Purpose

Page 10: Strategy by Measurement

Purpose

Page 11: Strategy by Measurement

Purpose

“A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately, they make a contribution to society,

Do something which is of value.”-David Packard

Page 12: Strategy by Measurement

Purpose

“A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately, they make a contribution to society,

Do something which is of value.”-David Packard

The Vision…

Page 13: Strategy by Measurement

Purpose

“A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately, they make a contribution to society,

Do something which is of value.”-David Packard

The Vision…

The Mission…

Page 14: Strategy by Measurement

Purpose

“A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately, they make a contribution to society,

Do something which is of value.”-David Packard

The Vision…

The Mission…

The Core Values…

Page 15: Strategy by Measurement

Purpose

“A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately, they make a contribution to society,

Do something which is of value.”-David Packard

The Vision…

The Mission…

The Core Values…

All define the Purpose

Page 16: Strategy by Measurement

Am I meeting my Purpose?

Page 17: Strategy by Measurement

Am I meeting my Purpose?

Am I Successful?

Page 18: Strategy by Measurement

Success

Page 19: Strategy by Measurement

Success

Success is the accomplishment of goals and fulfillment of purpose. It is shared with all stakeholders and is aligned with mission, vision and values.

Page 20: Strategy by Measurement

Success

Success is the accomplishment of goals and fulfillment of purpose. It is shared with all stakeholders and is aligned with mission, vision and values.

Success is exceeding performance

Page 21: Strategy by Measurement

But How to you define Performance? How

Performance

Page 22: Strategy by Measurement

But How to you define Performance? How

Performance

But how do you define performance?

Page 23: Strategy by Measurement

But How to you define Performance? HowBut how do you define performance?How do you track it and then act upon it?

Performance

Page 24: Strategy by Measurement

But How to you define Performance? HowBut how do you define performance?How do you track it and then act upon it?

How do you know that the ‘SYSTEM’ is truly measuring performance?

Performance

Page 25: Strategy by Measurement

• The SYSTEM measures, monitors and manages performance.

Page 26: Strategy by Measurement

• The SYSTEM measures, monitors and manages performance.

• However, The SYSTEM may not be even present in the first place!

Page 27: Strategy by Measurement

Performance

Page 28: Strategy by Measurement

Performance

Measure

Page 29: Strategy by Measurement

Performance

MeasureWhat does it take to succeed?

Page 30: Strategy by Measurement

Performance

MeasureWhat does it take to succeed?

Each business unit has to define its performance based on its strategy, enterprise infrastructure, corporate culture and its environment.

Page 31: Strategy by Measurement

Performance

MeasureWhat does it take to succeed?

Each business unit has to define its performance based on its strategy, enterprise infrastructure, corporate culture and its environment.

By scoring performance, businesses can truly gauge their standings.

Page 32: Strategy by Measurement

Performance

MeasureWhat does it take to succeed?

Each business unit has to define its performance based on its strategy, enterprise infrastructure, corporate culture and its environment.

By scoring performance, businesses can truly gauge their standings.

What Gets Measured, Gets Done!

Page 33: Strategy by Measurement

Performance

Monitor

Page 34: Strategy by Measurement

Performance

MonitorSuccess demands agility, the ability to shift directions, change course of actions and evolve!

Page 35: Strategy by Measurement

Performance

MonitorSuccess demands agility, the ability to shift directions, change course of actions and evolve!

This calls for timely monitoring of performance.

Page 36: Strategy by Measurement

Performance

MonitorSuccess demands agility, the ability to shift directions, change course of actions and evolve!

This calls for timely monitoring of performance.

This gives right time for action, faster decision making and brings the power of control back to the people.

Page 37: Strategy by Measurement

Performance

MonitorSuccess demands agility, the ability to shift directions, change course of actions and evolve!

This calls for timely monitoring of performance.

This gives right time for action, faster decision making and brings the power of control back to the people.

Monitoring gives Business Insight

Page 38: Strategy by Measurement

Performance

Act!

Page 39: Strategy by Measurement

Performance

Act!“Change is the process by which the future invades our lives “ Alvin Toffler

Page 40: Strategy by Measurement

Performance

Act!“Change is the process by which the future invades our lives “ Alvin Toffler

Act & take control of the environment before the environment changes and takes control of

U

Page 41: Strategy by Measurement

Performance

Act!“Change is the process by which the future invades our lives “ Alvin Toffler

Act & take control of the environment before the environment changes and takes control of

U

Develop a plan and execute it!

Page 42: Strategy by Measurement

Performance

Act!

Strategy + Action = Performance

“Change is the process by which the future invades our lives “ Alvin Toffler

Act & take control of the environment before the environment changes and takes control of

U

Develop a plan and execute it!

Page 43: Strategy by Measurement

“Knowing what to measure and how to measure it makes a complicated world much less so. If you learn how to look at the data in the right way you can explain riddles that otherwise might have seemed impossible. Because there is nothing like the sheer power of numbers to scrub away layers of confusion and contradiction.”

Page 44: Strategy by Measurement

That SYSTEM is EPM

Page 45: Strategy by Measurement

EPM = CPM (corporate) = BPM (not process)

EPM

Page 46: Strategy by Measurement

EPM = CPM (corporate) = BPM (not process)

EPM

Enterprise Performance Management

Page 47: Strategy by Measurement

EPM = CPM (corporate) = BPM (not process)

EPM

Enterprise Performance Management

Performance has to be managed!

Page 48: Strategy by Measurement

EPM = CPM (corporate) = BPM (not process)

EPM

It Is a management system which glues strategy and execution together.

Enterprise Performance Management

Performance has to be managed!

Page 49: Strategy by Measurement

EPM Manifesto

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PUT STRATEGY TO ACTION

EPM Manifesto

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ACT!EPM BENEFITS

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ACT!EPM BENEFITS

AGILITY

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ACT!EPM BENEFITS

AGILITY

AGILITY CONSOLIDATION TIMELINESS

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ACT!EPM BENEFITS

AGILITY

AGILITY CONSOLIDATION TIMELINESS

EPM provides the capability to consolidate financial & nonfinancial data and provide a holistic view between business processes and strategy. This determines the required changes quickly and with completeness.

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ACT!EPM BENEFITS

CONTROL

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ACT!EPM BENEFITS

CONTROL

ACCURACY CONTROL TOTAL QUALITY

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ACT!EPM BENEFITS

CONTROL

ACCURACY CONTROL TOTAL QUALITY

EPM provides companies the mechanism through which they can practice a total quality imitative by connecting their strategy with their control processes and with their operations processes allowing them to establish compliances effectively.

Page 58: Strategy by Measurement

ACT!EPM BENEFITS

TRANSPARENCY

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ACT!EPM BENEFITS

TRANSPARENCY

AWARENESS COLLABORATION TRANSPARENCY

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ACT!EPM BENEFITS

TRANSPARENCY

AWARENESS COLLABORATION TRANSPARENCY

EPM provides a platform where stakeholders can communicate their performance and can drill down to any KPI from any view all the way to the data sources, processes and applications. This gives the imitative for data quality, enterprise awareness and a highly collaborative work environment

Page 61: Strategy by Measurement
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ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 63: Strategy by Measurement

PEOPLE

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 64: Strategy by Measurement

PEOPLE PROCESSES

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 65: Strategy by Measurement

PEOPLE

TECHNOLOGY

PROCESSES

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 66: Strategy by Measurement

PEOPLE

TECHNOLOGY

PROCESSES

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 67: Strategy by Measurement

PEOPLE

STRATEGY

TECHNOLOGY

PROCESSES

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 68: Strategy by Measurement

PEOPLE

STRATEGY

TECHNOLOGY

PROCESSES

SHAREHOLDERS

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 69: Strategy by Measurement

PEOPLE

STRATEGY

TECHNOLOGY

PROCESSES

SHAREHOLDERS CUSTOMERS

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 70: Strategy by Measurement

PEOPLE

STRATEGY

TECHNOLOGY

PROCESSES

SHAREHOLDERS CUSTOMERS

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 71: Strategy by Measurement

PEOPLE

STRATEGY

TECHNOLOGY

PROCESSES

SHAREHOLDERS CUSTOMERS

ENTERPRISE PERFORMANCE MANAGEMENTCreating Connections & Synergies

Page 72: Strategy by Measurement

EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

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EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

1.STRATEGIZE

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EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

2. PLAN

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EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

3. MONITOR/ANALYZE

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EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

4. ACT/ADJUST

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EPM LIFECYCLE Performance Dashboards, Wayne W. Eckerson, Wiley

1.STRATEGIZE 2. PLAN

3. MONITOR/ANALYZE4. ACT/ADJUST

Page 78: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

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BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 80: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 81: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 82: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 83: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 84: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 85: Strategy by Measurement

BUT WHAT DRIVES SUCCESS FOR THE EPM?

ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

Page 86: Strategy by Measurement

It’s a bit more complicated than that!

Page 87: Strategy by Measurement

Lets take a car analogy

Page 88: Strategy by Measurement

Analogy EPM

Car Analogy

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Analogy EPMDestination Vision

Car Analogy

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Analogy EPMDestination VisionMap Strategy Map

Car Analogy

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Analogy EPMDestination VisionMap Strategy MapRoutes Planning

Car Analogy

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Analogy EPMDestination VisionMap Strategy MapRoutes PlanningRoads Infrastructure

Car Analogy

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Analogy EPMDestination VisionMap Strategy MapRoutes PlanningRoads InfrastructureTraffic Rules Compliance

Car Analogy

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Analogy EPMSpeed Data Model

Car Analogy

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Analogy EPMSpeed Data ModelRear View Mirror Consolidation

Car Analogy

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Analogy EPMSpeed Data ModelRear View Mirror ConsolidationGPS Forecasting

Car Analogy

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Analogy EPMSpeed Data ModelRear View Mirror ConsolidationGPS ForecastingGears Processes

Car Analogy

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Analogy EPMSpeed Data ModelRear View Mirror ConsolidationGPS ForecastingGears ProcessesTransmission Technology

Car Analogy

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Analogy EPMSpeed Data ModelRear View Mirror ConsolidationGPS ForecastingGears ProcessesTransmission TechnologyDashboard Scorecards

Car Analogy

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Analogy EPM

Car Analogy

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Analogy EPMFuel Executive Buy-In

Car Analogy

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Analogy EPMFuel Executive Buy-InSteering KPIs

Car Analogy

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Analogy EPMFuel Executive Buy-InSteering KPIsMotion Actions

Car Analogy

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Analogy EPMFuel Executive Buy-InSteering KPIsMotion ActionsPassengers Shareholders

Car Analogy

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Analogy EPMFuel Executive Buy-InSteering KPIsMotion ActionsPassengers ShareholdersMileage Performance

Car Analogy

Page 106: Strategy by Measurement

KPIs represent a set of measures focusing on those aspects of performance that are the most crucial for the continued success of an organization.–David Parmenter, CEO, Waymark Solutions, Author “Key Performance Indicators”

KPI

Page 107: Strategy by Measurement

The only difference between a metric and a KPI is that a KPI embodies a strategic objective and measures performance against a goal.

-TDWI Best Practices Report FQ09: Performance Management Strategies , How to create and deploy effective metrics By Wayne W. Eckerson

KPI

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THE CHOSEN ONE

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THE CHOSEN ONE

K-P-IKEY PERFORMANCE INDICATOR

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“Show me a company that thinks it has key performance indicators (KPIs) measured monthly and quarterly, and I will show you measures that do not create change, alignment and growth and have never been KPIs.”

- David Parmenter, CEO, Waymark Solutions, Author “Key Performance Indicators”

KPI

Page 112: Strategy by Measurement

Measures = Metrics

KPI

Page 113: Strategy by Measurement

Measures = Metrics

All KPIs are metrics but not all metrics are KPIs

KPI

Page 114: Strategy by Measurement

Measures = Metrics

All KPIs are metrics but not all metrics are KPIs

Metrics are the key to analyzing process effectiveness and efficiency

KPI

Page 115: Strategy by Measurement

Measures = Metrics

All KPIs are metrics but not all metrics are KPIs

Metrics are the key to analyzing process effectiveness and efficiency

KPIs affect organizational behavior

KPI

Page 116: Strategy by Measurement

Case Study

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 117: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 118: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 119: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 120: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 121: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 122: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 123: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 124: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 125: Strategy by Measurement

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 126: Strategy by Measurement

Ready to GO

A single KPI lead Lord King, x-chairman of British Airways to improve overall corporate performance.

This KPI became the single ambition of each employee in her/his respective area of work

Single KPI

Source: “Key Performance Indicators”, David Parmenter** With slight enhancementsBritish Airways

Page 127: Strategy by Measurement

How Many KPIs?

What is the best number of KPIs for an organization?

Page 128: Strategy by Measurement

• Kaplan/Norton – Around 12• Parmenter – Around

10• Eckerson – Around 5-

7 How Many KPIs?

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How Many Metrics?

There are no best practices, metrics can go into hundreds and thousands depending on the level of detail captured, interdependencies, the diversity of business domains captured in the systems etc.

Page 130: Strategy by Measurement

Challenge

How does one select around 10 metrics (as KPIs) from a list of hundreds or thousands?

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Rule of Thumb guidance

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Rule of Thumb guidance

Handpicked based on certain established norms and trends.

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Systematic Short listing

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Systematic Short listing

KPIs are the output of a systematic process of short listing based on the organizational structure, strategy and planning.

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Intuition & Gut Feeling

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Intuition & Gut Feeling

Handpicking KPIs based on human intuition and gut feeling

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Challenge

Handpicking KPIs usually do not last long!

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Challenge

Handpicked KPIs may have bias of human judgment!

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Challenge

Handpicked KPIs may not be selected exhaustively!

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Challenge

Handpicking KPIs take longer time and cost!

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Challenge

Handpicked KPIs may not represent all perspectives of the business

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Strong need of a KPI framework which contains both structure and process to cater to this challenge.

Challenge

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The KPI framework needs to be interconnected with the overall EPM picture

Challenge

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Balanced Scorecard•Most Popular•Improvements - 3rd Generation BSCs

Performance Prism•Vast coverage area•Most Flexible and CustomizableApplied Information Economics•Based on Decision Theory and Actuarial Sciences•High value of worth in IT valuation

Some KPI Frameworks

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Strong emphasis on stakeholder success.

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Focuses on Processes and Capabilities, not just strategies and ambitions

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Nevertheless, focuses on long term success

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

Page 148: Strategy by Measurement

Performance Prism• Vast coverage area• Most Flexible and Customizable

Measures based management is not explicit but can be made to be so.

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Process based improvement is the key!

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Flexible in structure but development process is less incremental and less iterative

compared to alternate approaches

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Performance Prism• Vast coverage area• Most Flexible and Customizable

Development cycles might take longer times than alternatives due to vast coverage area.

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Applied Information Economics• Based on Decision Theory and Actuarial Sciences• High value of worth in IT valuation

Mostly used for Enterprise Architecture ROI

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Applied Information Economics• Based on Decision Theory and Actuarial Sciences• High value of worth in IT valuation

Rarely used as the sole framework for KPIs.

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Applied Information Economics• Based on Decision Theory and Actuarial Sciences• High value of worth in IT valuation

Works well for justifying quantification of qualitative metrics

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Applied Information Economics• Based on Decision Theory and Actuarial Sciences• High value of worth in IT valuation

Falls short of becoming a comprehensive EPM framework

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

A guideline, not a roadmap

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

A framework with flexible process approaches

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Highly collaborative

*This assessment is based on comments available on the public domain & not on any scientifically established premise.*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Highly visible and transparent

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Most popular framework

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Framework is scalable (currently 3rd Generation Balanced Scorecarding

standard is available.)

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Framework is customizable (many case studies with significant changes on the

underlying structure and approach.)

*This assessment is based on comments available on the public domain & not on any scientifically established premise.

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Balanced Scorecard• Most Popular• Improvements - 3rd Generation BSCs

Structure

• Perspectives• Strategy Maps

Approach

• Iterative• JAD

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Balanced ScorecardStructure

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Balanced ScorecardStructure

An organization of performance artifacts (metrics, KPIs, Goals, Objectives & Strategy)

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Balanced ScorecardStructure

Structure develops context for each performance artifact

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Balanced ScorecardStructure

The context determines the purpose and usage for each performance artifact.

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Balanced ScorecardStructure

It also allows for clearer communication

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Balanced ScorecardStructure

The contexts are developed through 'Perspectives'

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Balanced ScorecardStructure

'Perspectives' can be any and many

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Balanced ScorecardStructure

The original Balanced Scorecard approach had four…

Page 172: Strategy by Measurement

Balanced ScorecardStructure

Financial PerspectiveCustomer PerspectiveBusiness ProcessesInternal Learning and Growth

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Balanced ScorecardStructure

The recent 3rd Generation BSC has two more...

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Balanced ScorecardStructure

Employee PerspectiveShareholder Perspective

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Balanced ScorecardStructure

Companies can choose to develop their own perspectives

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Balanced ScorecardStructure

However, the essence of having a balance between financial and nonfinancial perspective has to be maintained

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Balanced ScorecardStructure

Balancing means that all perspectives are taken under consideration when determining performance

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Balanced ScorecardStructure

It also means that all performance artifacts chosen are mutually consistent

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Balanced ScorecardStructure

...meaning one performance artifact does not conflict or negate any other chosen artifact.

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Balanced ScorecardStructure

Perspectives are chained through cause and effect relationships

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Balanced ScorecardStructure

Perspectives also allow for determining KPIs from metrics

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Balanced ScorecardStructure

Perspectives are used as a tool for strategy communication using strategy maps

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Balanced ScorecardStructure

The Strategy Map is the cornerstone of strategy communication

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Balanced ScorecardStructure

It groups and links the organizational goals & objectives into perspectives and determine a cause effect relationship

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Balanced ScorecardStructure

This allows all stakeholders to identify the fundamental line of action for combined success

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Balanced ScorecardStructure

A strategy map helps people at all levels in the organization to relate performance with their domain of responsibility

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Balanced ScorecardStructure

Strategy maps enable a unidirectional approach towards better performance.

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Sample Strategy Map

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• OK…• There is the Strategy Map…

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• OK…• There is the Strategy Map…• The KPIs…

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• OK…• There is the Strategy Map...• The KPIs…• The KPIs Framework…

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• OK…• There is the Strategy Map …• The KPIs…• The KPIs Framework…• The People…

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• OK…• There is the Strategy Map…• The KPIs…• The KPIs Framework…• The People…• The Processes…

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• OK…• There is the Strategy Map…• The KPIs…• The KPIs Framework…• The People…• The Processes…• The Technology…

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• OK…• There is the Strategy Map…• The KPIs…• The KPIs Framework…• The People…• The Processes…• The Technology…• The Governance…

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• OK…• There is the Strategy Map…• The KPIs…• The KPIs Framework…• The People…• The Processes…• The Technology…• The Governance…• The Business…

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• OK…• There is the Strategy Map…• The KPIs…• The KPIs Framework…• The People…• The Processes…• The Technology…• The Governance…• The Business…

Where Do I Start?

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• The approach to establish an EPM framework is subjective and depends on…

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• The Company

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• The Company• The KPI Team

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• The Company• The KPI Team• Market Conditions

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• The Company• The KPI Team• Market Conditions• Existing Maturity of EPM Know-How

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And…

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ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

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ORGANIZATION STRATEGY MAP VISION

INFRASTRUCTURE TARGETS TECHNOLOGY

MISSION BUDGETING PROCESS INCENTIVES PLANNING EXECUTIVE BUY-IN

FORECASTING KPI CONSOLIDATION MODELS

METRICS SCORECARDS INITIATIVES ALERTS

GOALS AGENTS ACTIONS DECISIONS

DASHBOARDS BI ANALYTICS DATA MODEL REPORTS PEOPLE

A cloud of other aspects!

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Myriad of Approaches

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Myriad of ApproachesChoose which meets your EPM’s purpose

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ApproachBalanced Scorecard

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ApproachBalanced Scorecard

No matter what approach U take, follow these guidelines…

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

Each Powers the Other

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

Each Powers the Other

Frequent Iterations

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

Each Powers the Other

Frequent Iterations

To and Fro

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

Each Powers the Other

Frequent Iterations

To and Fro

Till Convergence…

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ApproachBalanced Scorecard

KPI Survey

Data Survey

Process Survey

Parallel Activities

Each Powers the Other

Frequent Iterations

To and Fro

Till Convergence…

i.e. Agreement & Feasibility

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ApproachBalanced Scorecard

1st Iteration 2nd Iteration3rd Iteration

KPI Development

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ApproachBalanced Scorecard

1st Iteration 2nd Iteration3rd Iteration

KPI Survey must be scoped into iterations

KPI Development

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ApproachBalanced Scorecard

1st Iteration 2nd Iteration3rd Iteration

KPI Survey must be scoped into iterations

KPIs must be worked in batches

KPI Development

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ApproachBalanced Scorecard

1st Iteration 2nd Iteration3rd Iteration

KPI Survey must be scoped into iterations

KPIs must be worked in batches

Starting with the most critical…and visible

KPI Development

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ApproachBalanced Scorecard

1st Iteration 2nd Iteration3rd Iteration

KPI Survey must be scoped into iterations

KPIs must be worked in batches

Starting with the most critical…and visible

Iterations...KPIs from focused to comprehensive

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ApproachBalanced Scorecard

Program Launch

Presentation

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ApproachBalanced Scorecard

Program Laun

ch Presentation

…Set the tone, direction and

agenda

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ApproachBalanced Scorecard

Focus Group

Meeting

Iteration

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ApproachBalanced Scorecard

Focus

Group

Meeting

…KPI team meet up to re-assess,

re-align & initiate actions

Iteration

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ApproachBalanced Scorecard

Focus Group

Meeting

Workshop: Strategy

Maps

Iteration

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ApproachBalanced Scorecard

Workshop: KPI Library

Focus Group

Meeting

Workshop: Strategy

Maps

Iteration

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ApproachBalanced Scorecard

Workshop: KPI Library

Workshop: Dashboard

Design

Focus Group

Meeting

Workshop: Strategy

Maps

Iteration

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ApproachBalanced Scorecard

Workshop: KPI Library

Workshop: Dashboard

Design

Demo Runs

Focus Group

Meeting

Workshop: Strategy

Maps

Iteration

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ApproachBalanced Scorecard

Finalization…time to

implement & launch

Iteration

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ApproachBalanced Scorecard

No matter how much you think you have finalized the KPI framework….

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ApproachBalanced Scorecard

No matter how much you think you have finalized the KPI framework….

Be ready for changes and further iterations

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ApproachBalanced Scorecard

No matter how much you think you have finalized the KPI framework….

Be ready for changes and further iterations

Be Agile!

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References and Credits• Photo Credits:

• adactio• AmyLovesYah• arjun01• brian_hillegas• drcorneilus• easyflow• exfordy• faisal198846• lepiaf• Malias• rhett maxwell

• References:

• The Balanced Scorecard: Translating Strategy into Action by Robert S. Kaplan and David P. Norton (Hardcover - Sep 1, 1996)

• Performance Dashboards: Measuring, Monitoring, and Managing Your Business by Wayne W. Eckerson (Hardcover - Oct 14, 2005)

• Key Performance Indicators: Developing, Implementing,and Using Winning KPIs by David Parmenter (Hardcover - Jan 16, 2007)

• Performance Dashboards and Analysis for Value Creation (Wiley Finance) by Jack Alexander (Hardcover - Nov 3, 2006)

• Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results - Hardcover (Sep 1, 2006) by Paul R. Niven

• The Performance Prism: The Scorecard for Measuring and Managing Business Success by Andrew Neely, Chris Adams, and Mike Kennerley (Hardcover - Jun 27, 2002)

• How to Measure Anything: Finding the Value of "Intangibles" in Business by Douglas W. Hubbard (Hardcover - Aug 3, 2007)

• TDWI Best Practices Report: How to create and deploy effective metrics, Wayne Eckerson, Q1, 2009

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Contact

Atif Abdul-Rahman, atif.abdulrahman <at> gee mail

www.linkedin.com/in/atifabdulrahman

www.knowledgeworks.wordpress.com