The Use of Strategic Goal Modeling In the BSC Strategic Management Process Al-Falak Electronic Equipment & Supplies Co. Samer Abdulhadi, General Manager, Strategic Planning & Performance Management

Agenda Modeling The case Conclusions Q&A 2

Objective Share with you our experience of using graphical goal models to reason about strategic initiatives and link them to BSC business strategies 3

Introduction Modeling Quantitative Qualitative Mathematical Decision/Planning Tables 4

Introduction - + ++ - - +++ Availability [Disaster Management service] Cost Effectiveness Accessibility Security Privacy Cellular network - + Ad hoc network ++ - - Hybrid network +++ Correlation matrix 5

Introduction Modeling Quantitative Qualitative Mathematical Decision Tables Graphical Business Process Reengineering – Requirements Engineering the i* modelling framework: Modelling Strategic Actor Relationships and Rationales Strategy Map Graphical Model Goals and cause and effect links 6

Modeling Strategic Actor Relationships and Rationales The i* modeling framework: Modeling Strategic Actor Relationships and Rationales

Modeling Strategic Actor Relationships and Rationales Introduced in 1995 by Prof. Yu through a PhD dissertation: Modelling Strategic Relationships for Process Reengineering.” at the UofT, Canada In 2008 The i* framework became part of an international standard, The User Requirements Notation (URN), which received final approval as an international standard today in Geneva, Switzerland, as ITU-T Recommendation Z.151 8

Modeling Strategic Actor Relationships and Rationales i* stands for “distributed intentionality, referring to the premise that actors are intentional and that they do not necessarily share common goals… An actor interacts with other actors not only through actions or information flows but also relate to each other at an intentional level.” (Source: Samavi, R., Yu, E., Topaloglou, T., 2007) 9

Strategic Actors – Main Concepts have goals, beliefs, abilities, commitments – Implicit Intentionality I want … I can… Strategic Dependency Relationship (Source: Yu, 2001) 10

Strategic Actors – Main Concepts depend on each other for goals to be achieved, tasks to be performed, resources to be furnished (Source: Yu, 2001) Task Actor Softgoal Goal Resource

Strategic Actors – Main Concepts have choice, reasons about alternate means to ends (goals) – Explicit Intentionality Means-Ends alternatives (Source: Yu, 2001) 12

Strategic Actors – Main Concepts functional/goal refinement/operationalization (Source:Samavi, R., Yu, E., Topaloglou, T., 2007) 13

Linking Strategic Initiatives to Business Strategy The Case: Linking Strategic Initiatives to Business Strategy

The Case "A strategy is an Integrated set of choices that position a firm in an Industry to earn superior returns over the long run." Source: Rivkin, J., "Where do great strategies come from?” Harvard Business School Faculty Seminars and Lectures, as reported in the Palladium Kaplan and Norton BSC Certification Boot Camp Nov/Dec 2009 (www.thepalladiumgroup.com) 15

The Case Five choices that need to be made to develop a strategy: What will our economic model look like Which customer will we serve, where, and what will we provide? How can our organization serve these customers? What skills do we need to have in our organization? What is the portfolio of initiatives and their timing that we need to execute? Source: Hambrick, D. and Fredrickson, H., 2005, “Are You sure You Have a Strategy?” Academy of Management Executives, 2005, Vol. 19, No. 4, as reported in the Palladium Kaplan and Norton BSC Certification Boot Camp Nov/Dec 2009 (www.thepalladiumgroup.com) 16

The Case Help verify that initiatives are linked to business strategy Help resolve conflicting goals of various actors across the organization Note: Some actors, goals, and strategic initiative alternatives are intentionally omitted and/or altered for simplicity and to illustrate the modeling process only, not the actual decisions made 17

Strategic Performance Management The Case Board of Directors President & CEO Business Divisions Division 1 Division 2 Division 3 Division 4 Division 5 Strategic Performance Management Support Departments IT HR Accounts & Finance Marketing - Act as independent Companies - Headed by General Managers Shared Support Departments 18

Iterative BSC-Strategic Goal Models Translation Process The Case: Iterative BSC-Strategic Goal Models Translation Process Copyright © Al-Falak, Samer Abdulhadi, 2010

Iterative BSC-Strategic Goal Models Translation process 1 9 8 BSCs Reflect on the BSCs and initiative Make Decisions - Company - Business Divisions (BD) - Support Departments (IT) 2 3 4 5 6 7 Identify Affected goals Identify strategic initiative Develop Strategic Dependency model Develop initiative execution alternatives Develop Strategic Rational Model Analyze Strategic Rational Model at all the required levels and initiative requirements (Project Charter) between BDs and Support (IT) to execute the initiative refinement and validation Copyright © Al-Falak, Samer Abdulhadi, 2010 20

Identify Affected goals Company - BSC 1 BSCs Financial 2 Customer Identify Affected goals Internal Learning

Business Division 1 - BSC BSCs Financial 2 Customer Identify Affected goals Internal Learning

Company and Business Davison 1 - BSCs Contribution 1 2 Financial Customer Internal Learning Support

Business Division 1 – BSC and Initiative 3 Identify strategic initiative Financial Customer Initiative New System Internal - Jobs - Competencies Project Charter Budget Learning

Business Davison 1 and IT Department - BSCs Contribution Financial Customer Internal Learning Initiative New System 3 Strategic Dependency

Division 1 and IT Department – SD Model 4 Develop Strategic Dependency model Initiative New System 26

IT Strategic Rational Model 5 Develop initiative execution alternatives 27

Division 1 Strategic Rational Model 2 6 Identify Affected goals Develop Strategic Rational Model 28

Strategic Rational Model 6 Develop Strategic Rational Model 29

Strategic Rational Model Contribution 6 Develop Strategic Rational Model 30

Strategic Rational Model 2 6 Identify Affected goals Develop Strategic Rational Model

Strategic Rational Model Leaf 6 Develop Strategic Rational Model 32

Strategic Rational Model Leaf 6 Develop Strategic Rational Model 33

Develop Strategic Rational Model 6 Develop Strategic Rational Model 34

Develop Strategic Rational Model 6 Develop Strategic Rational Model 35

Develop Strategic Rational Model 6 Develop Strategic Rational Model 36

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model Evaluation Horkoff, Yu, Liu, 2006) 37

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 38

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 39

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 40

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 41

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 42

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model What if? 43

Develop Strategic Rational Model 6 Develop Strategic Rational Model 44

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 45

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 46

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 47

Analyze Strategic Rational Model 7 Analyze Strategic Rational Model 48

IT Department – Modified BSC 8 9 Make Decisions Reflect on the BSCs and initiative - Jobs - Competencies Project Charter Budget Initiative New System Developer 49

The Case: Conclusions

Some Concerns about the Process Adds a layer of complexity to the strategic analysis and management process Time consuming, specially with large models and very busy management agendas Visualization issues arise with very large models Involves human judgment that is subject to errors and subjectivity Unfamiliar to analysts, strategists, executives, and practitioners that we met. Requires familiarization training However, it … 51

Some Benefits of the Process Engaged decisions makers in a collective strategic decision making process, specially when used (a) for key and strategic initiatives and decisions (b) for few (5 to10) critical goals (c) for few major actors (3 to 5) Helped capture tacit domain knowledge systematically, grasp the basic assumptions, make them explicit, and document and communicate the rationale behind the decisions Helped qualitatively validate and align the strategic initiatives to the divisions’ and company’s BSC strategies by reasoning about goals, analyzing tradeoffs, resolving conflicts, and identifying and responding to risk 52

Some Benefits of the Method Helped provide a basis to deal explicitly with change Can be generalized to qualitatively analyze goals at and between various organizational and strategy levels/BSC perspectives It also helped promote strategic thinking, which is “fundamentally an act of imagination” (Coyle, 2008) and an “intense judgment” (Galt et al. 1997, as reported in Coyle, 2008) using models that explicitly provide the foundation to stimulate further insight 53

References Coyle, 2008, Chapter 11, Scenario Thinking and Strategic Modelling, The Oxford Handbook of Strategy, Oxford University Press, 2003 Horkoff, J., Yu, E., and Liu, Li. (2006) Analyzing Trust in Technology Strategies. International Conference on Privacy, Security and Trust (PST 2006), Markham, Ontario, Canada. i* website, 2004, an agent-oriented modelling framework http://www.cs.toronto.edu/km/istar/ i* Wiki, 2010, http://istar.rwth-aachen.de/tiki-view_articles.php Samavi, R., Yu, E., and Topaloglou, T., 2007, Strategic Reasoning about Business Models: A Conceptual Modeling Approach, Inf. Syst. E-Business Management (7): 171-198 (2009). Yu, Eric, 2001, Strategic Actor Relationships Modelling with i*, A tutorial given at IRST/University of Trento, Italy, December 2001, Italy, extracted from http://www.cs.toronto.edu/~eric/. 54

Thank You Q & A 55