Aligning Organizational Goals and Operations Strategy Oct , 2002

Agenda Four Seasons Hotels and Resorts The Strategy Development Process

Four Seasons Hotels and Resorts Service Concept What is the service concept? What distinguishes Four Seasons in the marketplace?

The Internet How should Four Seasons view opportunities presented by the Internet?

Technology and Four Seasons Conceptualize Four Seasons technology strategy. Is this a viable strategy?

The future – A Growth Company? What should Four Season do to become “one of the decade’s great growth companies?”

The Strategy Design Process (Kaplan and Norton) A template that helps executive teams describe their strategies

Strategy Development Process

Step 1 – Financial Perspective Revenue Growth Strategy –Develop new revenue sources (“Franchise Building”) –Increase profitability per customer (“Better Value”) Productivity Strategy –Reduce cost/unit –Improve asset utilization

Step 2 – Understand what the customer wants (Customer Perspective) What is our basis for competing? Prioritize important competitive dimensions that will allow us to compete on this basis –Those that relate to Operational Excellence Customer Intimacy Product Leadership Goal  Understand how to satisfy the customer

Step 3 – Learning and Growth Perspective Identify key: –Strategic Competencies –Strategic Technologies –Culture – Climate for action

Step 4 – Internal Perspective (i.e. capabilities) Optimize Key –Innovation Processes (new products, core technologies) –Customer Management processes (strategic control, integration between customer and supplier) –Delivery Processes and Systems (optimize) –Regulatory and Environmental processes

Need a comprehensive plan Short term (quick) –Implementation of productivity related changes New techniques for doing things. Relocate/outsource processes Longer term –New products –New customer markets Measures to track success and failure –Balanced Scorecard approach (Kaplan)

Summary Contrast between developing operations strategic capabilities – high volume, low cost vs. low volume, high service. A comprehensive process for strategy development.

Operations Strategy Alignment of capabilities with strategy requirements. Capabilities – product/service delivery processes, management and control systems, other organizational capabilities. Competitive priorities – qualifiers, winners. Strategy design process – financial, customer, internal perspectives – key competencies. Alignment of plan with goals.