ABF Advanced Balanced Scorecard Conference April 2009 * How BSC can link and facilitate strategy planning * Performance management measurement through Balanced Scorecard * BSC as business intelligence to help organisation build strategic direction and measure the progress of strategic execution

1. BALANCED SCORECARD FOR STRATEGIC PLANNING AND MEASUREMENT Case Study, Concepts and Debatable Ideas Kenny Ong CNI Holdings Berhad

3. Introduction to Balanced Scorecard and Strategy

8. Balanced Scorecard: Corporate Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” Internal Process “ To satisfy our customers, in which internal business processes must we excel?" Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?

9. Balanced Scorecard: NGOs, Non-Profits, Governments Mission “ Who are our targets? What is our value proposition?” Internal Process “ To satisfy our targets, in which internal processes must we excel?" Learning & Growth “ What capabilities and tools do our staff require to help them execute our strategy? Financial “ To fulfill the Mission, what Financial, how do we fund Internal Processes?”

11. Today’s Agenda

12. Summary: Today’s presentation 1. Business Model + BSC = Boundaries 2. Strategy + BSC = How 3. PMS + BSC = Execution

14. What is the Business Model? USP Market Discipline Profit Model

15. Business Model: Profit Model Revenue Cost Margin Cash Flow Assets

16. Strategy + BSC Revenue Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset

17. What is the Business Model? USP Market Discipline Profit Model

19. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

20. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

21. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com

24. Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

25. Strategy: Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) HP well-balanced portfolio, mass customization Acer super lean cost structure, aggressive pricing Apple powerful products, premium pricing, limited range Still Doing well in 2009

27. Summary: Today’s presentation 1. Business Model + BSC = Boundaries  Done 2. Strategy + BSC = How 3. PMS + BSC = Execution

28. 2. Strategy + BSC = How ‘Hope’ is not a strategy

36. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Satisfaction

37. Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

42. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

43. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)

44. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Satisfaction

45. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

51. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

56. Strategy + BSC Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction

57. Summary: Today’s presentation 1. Business Model + BSC = Boundaries  Done 2. Strategy + BSC = How 3. PMS + BSC = Execution  Done

58. 3. PMS + BSC = Execution KPIs and PMS

67. Cause and Effect Revenue Base Retention Share Gain Positioning Adjacent Market New Business Financial Learning & Growth Internal Process Customers Cost Margin Cash Flow Asset Operational Excellence Product Leadership Customer Intimacy Investment Strategy Competencies Information Systems Motivation, empowerment, alignment Satisfaction

68. Cause and Effect: An Example Financial Learning & Growth Internal Process Customers / Distributors Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes

72. Cascading Customer Perspective BD New Business Mkt Share Gain Mkt Base Retention Indirect Direct Targets Strategies Goals

73. E3 – Department BSC Customer Perspective – Marketing Department Budgeting Share Gain Base Retention OPEX CAPEX Targets Strategies Goals

74. Individual MBO Employee A – Marketing Executive Re: Base Retention Competition Crossovers Class B Customer Retention Class A Customer Retention Score Weight (%) Targets Action Plans KRAs

75. What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model www.myCNI.com.my www.OOBEY.com

76. What’s In Between Planning and Execution? Succession Planning (Business Continuity) Talent Management Differentiation Performance Management System Budgeting + Planning KPIs BSC Business Model a.k.a. Strategy Planning a.k.a. Strategy Implementation www.myCNI.com.my www.OOBEY.com

77. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A

78. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A

79. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A

80. Performance Execution Clarity www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A

84. Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 1 2 3 4 5 6 2 3 4 5% 6 7 3 4 5 6 7 8 4 5 6 7 8 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

85. Performance and Pay Clarity www.myCNI.com.my www.OOBEY.com 0 0 0 0 0 1 0 0 1 1 1 2 3 4 5% 7 9 3 3 5 9 12 18 4 5 8 12 15 20 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7

86. Curse of the Bell Curve ‘ A’ Staff ‘ B’ Staff ‘ D’ Staff ‘ E’ Staff ‘ C’ Staff www.myCNI.com.my www.OOBEY.com

87. End Notes Tying it all up

89. Problems, problems and more problems…

90. Alignment: 4-Wheels Model Culture Business Model Strategic Planning Structure Person Leadership Resources

91. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com