1. Airline & FMCG -Implementation Anand Subramaniam
Balanced Scorecard
Airline & FMCG -Implementation
Anand Subramaniam

2. To navigate a plane, looking at the fuel indicator is too limited – other factors impact the success of a flight; a cockpit requires a balanced measuring system !!

3. Implementation Highlights
Challenges around Strategy Execution
What is Balance Scorecard (BSC) and why firms implement it?
My Client’s (FMCG & Airlines) :
Challenges,
Goals,
Benefits Seeked,
Critical Success Factors (CSF),
Strategy Map
Example – themes, CSF, measures & targets,
implementation roadmap including time frames,
Project Organisation Chart
Lessons Learnt

4. Is this happening at your firm ?
Strategic Learning Loop
Initiatives & Programs
test the hypotheses
Output (Results)
reporting
Management Control Loop
funding
Input (Resources)
update the strategy
PERFORMANCE
85% of management teams spend less than one hour per month on strategy issues
92% of organisations do not report on lead indicators
60% of organizations don’t link strategy & budgets
78% of organisations lock budgets to an annual cycle
20% of organisations take more than 16 weeks to prepare a budget
STRATEGY
BALANCED SCORECARD
BUDGET

5. Strategy Execution Challenges
Lack of Organisation Alignment
Disjointed Planning and Processes
Unclear Vision and Strategy
Inability to Test and Adapt Performance
“I’m not sure our resources are allocated against priorities and our best opportunities.”
“We spend too much time and effort creating plans instead of getting value from the planning process”
“Our strategic, operational, and financial plans are not aligned.”
“Our data is of poor quality and we have disparate systems to report on performance.”
“We are a collection of silos that do not collaborate.”
“We do not know if our strategy is working until it is too late.”
“We have a strategy, we just can’t explain it that easily.”
“Our leadership team does not agree on our key priorities.”
“Our employees don’t have a clear understanding of what the strategy is and their role in it.”
“We are trying to do 100 things, rather than do 15 critical things well.”
“Recognition and rewards are not based on driving the change we need.”
“We don’t have the right measures. There are too many of them and we’re not sure which ones to use”

6. Vision to Outcomes – Conceptual Overview
BALANCED SCORECARD
Translate, Focus and Align
STRATEGIC INITIATIVES
What are the priorities
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
STRATEGIC OUTCOMES
Satisfied SHAREHOLDERS
Delighted CUSTOMERS
Efficient & Effective PROCESSES
Motivated & Prepared WORKFORCE
EMPOWERMENT / PERSONAL OBJECTIVES
What I need to do
TOTAL QUALITY MANAGEMENT
What we must improve

7. What is a Balance Scorecard (BSC)?
The Conclusion
Measurement Must Be Linked To Strategy
Strategy
Balanced Scorecard
Measurement To Communicate, Not To Control
Measurement Communicates Values, Priorities & Direction
The Premise

8. BSC Perspectives
How can we continually get smarter, innovate, and improve?
Knowledge and Innovation
Organisational Capacity
How can we improve internal processes to improve quality, timeliness, economics, and functionality?
Efficiency
Internal Process
For businesses, how do we create value for owners?
Financial Performance
Financial Stewardship
Through the eyes of our customers and stakeholders, how will they judge our products and services?
Satisfaction
Customer/ Stakeholder
Key Questions
Key Concept
Perspective

9. BSC

10. Why firm’s implement BSC?
To align corporate strategy with daily operations
To make informed business decisions via defined reporting and analysis, to corporate best practices
To comply with regulations by disclosing corporate information timely
To achieve the vision by building rigor
To help with innovation / new product development
To adapt to changing technologies and markets
To attract and retain talented people
A management system or a check-up for the business

11. My Client’s BSC Implementation
Lesson’s Learnt

12. Challenges before BSC
Measures not aligned or changed with strategy and does not reflect critical success factors.
Short-term focus rather than taking a long-term and the focus was on what is currently being done, not what should be done
Failure to measure the impact on the overall organisation
Much quantitative information could not be reduced to monetary amounts and some could not be quantified
Some information provided feedback but no guidance
Measures poorly designed and / or collected (eg. customer satisfaction, employee morale)
Goals were arbitrarily determined, beyond the ability of the system
Measures produced were irrelevant, redundant, questionable, confusing (not defined) and some were manipulated

13. Goals seeked
To improve management effectiveness by having a shared and actionable view of the strategy
To provide a generic framework to translate strategy into operational terms
To create a systems approach or an integrated Strategic Management Process
To provide a clear line of sight to the vision and strategy of the company, providing feedback and guidance
To provide a tool for communicating the strategy and the processes and systems required for strategy implementation
To draw a cause and effect roadmap to stakeholder value – shareholder, customer, and employee.
To provide a balance between current performance and long- term competitive abilities (financial & non-financial measures)

14. Benefits achieved
Improved management effectiveness by having a shared and actionable view of the strategy
Ensured strategic outcomes for a given set of resources
Enabled employees to work in a coordinated, collaborative fashion towards organisational goals
Provided timely information for informed decision-making on resource allocation
Provided guidance on future operations & decisions
BSC was utilised as an change agent, to translate the strategy into action, providing feedback and learning

15. Lesson’s Learnt / Success Criteria
“Story of the firm’s strategy” in actionable terms.
Executive Involvement - strategic decision makers validated and owned the strategy and related measures
Cause and Effect Relationships - every objective selected was analysed for cause and effect linkages and to the strategy
Balance between outcome and leading measures - there was a balance and facilitated anticipatory management
Financial Linkage - every objective was ultimately linked to the financial results
Linkage of Initiatives and Measures - each initiative was analysed for variance, between baseline and target.

16. Strategy Map designed Improve Shareholder Value Financial Perspective:
drivers of shareholder value
Productivity Strategy
Shareholder Value
ROCE
Revenue Growth Strategy
Improve Cost Structure
Increase Asset Utilisation
Enhance Customer Value
Create Value from New Products & Services
Cost per Unit
Asset Turnover
Customer Profitability
New Revenue Sources
Market and Account Share
Customer Acquisition
Customer Retention
Customer Satisfaction
Customer Perspective:
differentiating value proposition
Product Leader
Customer Solutions
Customer Value Proposition
Low Total Cost
Product/Service Attributes
Relationship
Image
Price
Quality
Time
Function
Service
Relations
Brand
Internal Perspective:
how value is created and sustained
(Processes that Produce and Deliver Products & Services)
(Processes that Enhance Customer Value)
Operations Theme
Customer Management Theme
Innovation Theme
Regulatory and Society Theme
(Processes that Create New Products & Services)
(Processes that Improve the Environment and Communities)
Learning & Growth Perspective:
role for intangible assets – people, systems, climate and culture
Human, Information, and Organisational Capital
Strategic Competencies
Strategic Technologies
Climate for Action

17. Example - Internal / Operations Themes
Objective
Objective Statement
Measure
Initiatives
Certification Rates of all
course.
Charter attrition work
group.
% deploying BCT receiving
deployment training across
all modules.
TBD
Adherence to the (re)
verification, (re) validation, and
(re) accreditation process.
Incorporate audit
guidance.
Improve Access to
Products and Services
Enhance accessibility of our products and
services to our customers through
innovative, cutting edge delivery.
% of products available via
online and traditional
methods (hard copy, CDs)
Market products and
service.
Increase Organisational
Efficiency and
Standardisation
Institutionalise processes that increase our
efficiency and get rid of those that don’t.
% increase in updated policies
and procedures from baseline.
Survey employees
concerning alignment and
duplication of efforts.
Improve Joint
Integration
Posture our organisation to optimise joint
integration
Adherence to Schedule
Comprehensive and
integrated program
management plan.
Enhance Training & Development
Ensure health services assets of all three
components are trained and modular and
cutting edge to support full spectrum
operation and joint force requirements.
Internal Perspective

18. Example - Critical Success Factors
Success Factor Imp. Cap Supporting Actions
Imp. - Importance 1- Minor Relevance Critical
Cap. - Current Capability Major Weakness Best Practice
Business-wide
clarity on customer needs & concerns
10 3
Customer Focus Groups
0800 complaint line
System of ‘Listening Posts’
Effective internal
communications
10 7
Team Listening structure
Intranet Web-sites for all projects
48 hour responses to all project queries
Involvement and Participation (I&P) at all levels
8 2
Management workshop on I&P ideas
Pilot participative ‘event’
Staff design of business forums
Demonstrable support for new culture / ethos
9 6
Regular business forums
Team charters at all levels
Open access to performance data
Process
Ownership Infrastructure
7 9
Formal ownership guidelines
Regular process owners forums
Central process design repository

19. Measures & Targets - Example
Employee
Customer
What do we have to do to get there?
Financial
Process
Strategic Goals
Measures
How do we know if we are achieving our goals?
Targets
What will we measure our progress against?
Vision & Mission
What activities are we doing to reach our targets?
Initiatives

20. BSC - Airways Balanced Scorecard Action Plan Strategy Map Measure
Measurement
Target
Market Value
Seat Revenue
Plane Lease Cost
30% CAGR
20% CAGR
5% CAGR
FAA On-Time Arrival Rating
Customer Ranking
# Repeat Customers
# Customers #1
70%
Increase 12% annual
On Ground Time
On-Time Departure
30 Minutes
90%
% Ground Crew Stockholders
Strategic Awareness
Strategic Job Readiness
Info System Availability
100%
Yr 1 - 0% Yr % Yr %
Action Plan
Initiative
Budget
Customer Loyalty Program
$XXX
On Ground Cycle Time Optimisation
Quality Management
ESOP
Ground Crew Training
Crew Scheduling System Rollout
CRM System
Total Budget
$XXXX
Strategy Map
Theme: Operating Efficiency
Objective
Profitability
Grow revenues
Fewer planes
Financial
Profits & RONA
Grow Revenues
Fewer Planes
Flight is on-time
Lowest prices
Attract and retain more customers
Customer
Attract & Retain More Customers
On-time Service
Lowest Prices
Fast Ground Turnaround
Internal
Fast ground turnaround
Ground crew aligned with strategy
Develop the necessary skills
Develop the support system
Learning
Strategic Job
Ramp Agent
Strategic Systems
Crew Scheduling
Ground Crew Alignment
Measure
Communicate
Execute

21. Implementation Roadmap
Week
Step 1
Step 3
Step 4
Step 5
Step 6
Define and Clarify Mission & Vision
Develop Strategic Goals
Step 2
Draft Strategic Map with linkages & themes
Develop Baseline
Define Measures
Set Targets
Identify Initiatives
Allocate Resources
Get Buy-in!
Plan & Implement
Identify Unit Objectives/ Critical Success Factors / Architecture
Ongoing Management

22. Implementation - Steps 1 ~ 3
Develop a
Business Case
Step 2
Build
Strategic
Architecture
Step 3
Draft a
Strategy Map
With Linkages
And Themes
Step 4
Determine Measures and Targets
Step 5
Select Strategic Initiatives
Step 6
Plan and implementation
Week
Agree upon stretch targets
Review and refine themes
Refine and rework draft linkages
Discuss next steps
Work/Inputs
Strategy Documents
Draft themes & linkages based on Strategic Destination
Outputs:
Agreed upon stretch targets
Finalised themes
Strategy map

23. Implementation - Step 4 Work/Inputs Refined strategy
Develop a
Business Case
Step 2
Build
Strategic
Architecture
Step 3
Draft a
Strategy Map
With Linkages
And Themes
Step 4
Determine Measures and Targets
Step 5
Select Strategic Initiatives
Step 6
Plan and implementation
Week
Work/Inputs
Refined strategy
Existing measures assigned to objectives
Draft measures developed
Refine and validate linkages
Review draft measures
Design new measures
Begin targets discussion
Plan for measures development
Outputs:
90% complete linkages
Complete measures
Measures development plan in place

24. Implementation - Step 5 & 6
Develop a
Business Case
Step 2
Build
Strategic
Architecture
Step 3
Draft a
Strategy Map
With Linkages
And Themes
Step 4
Determine Measures and Targets
Step 5
Select Strategic Initiatives
Step 6
Plan and implementation
Week
Review and validate linkages and measures
Review existing initiatives
Brainstorm new initiatives
Align/
rationalise initiatives to themes
Work/Inputs:
Refined linkages and measures
Inventory of existing initiatives
Proposed new initiatives
Outputs:
“Locked in” on objectives and linkages
Measures defined
Initiatives defined
Plan for initiatives review established
implementation

25. Executive Sponsor/ Steering Committee Executive Leadership Team
Project Organisation
Vendor
Engagement
Manager (part-time)
Executive Sponsor/ Steering Committee
Project Team
1-2 Consultants (full-time)
Client Core Team
Staff knowledgeable of business strategies and organisation
Project Leader
(full-time)
Client Project Leader
Executive Leadership Team
Overall project ownership
Consultations/workshops as needed
2-4 staff
3- 5 days/week
Briefings with others as needed
3 days/week
8 Half-day workshops
One 90-minute briefing/ interview
Consultations/ workshops as needed

26. Lessons Learnt Measures must relate to the strategy and interrelated
Must understand how the perspectives influence each other
Organisation-wide view replaces local focus
Determine the critical success factors
Identify long-term and short-term business objectives and prioritise them based on business goals
What must be achieved to survive, or what will cause the company to fail if it is not achieved?
Determine success factors for each of the four perspectives
Limit the number to items that are critical, not just interesting
Must understand the linkages between the activities and the goals
Develop metrics to evaluate performance
Provide feedback and also indicate risk / opportunity areas
Metrics may be financial, non-financial, trends, surrogates, internally or externally gathered
Should include leading and lagging measures, not too much or little

27. Lessons Learnt (Contd.)
Requires teamwork and collaboration
Different perspectives and expertise are required
No one individual has a complete view of the organisation
Greater participation produces greater “buy-in”
Employees have a sense of ownership in the resulting scorecard
More likely to use the scorecard to guide their decisions
Identify owners and assign responsibilities
Initiative must start with Senior Management
Who understand the overall strategy and have authority to make strategic decisions
Their Commitment level will determine success or failure
The project may fail if senior management does not show continued interest and support in the design process
The scorecard will be ignored if management does not promote its use for performance evaluation and guidance

28. Lessons Learnt (Contd.)
Requires teamwork and collaboration
Different perspectives and expertise are required
Link to databases and IT system
Modify information system if necessary to collect and report the metrics
What data is available / not available?
The scorecard should determine what data is collected and the data available should not determine the scorecard
Determine reporting procedures
Who gets the information? How is it reported? How often is it reported?
Communicate to employees regularly - tactics, objectives, assumptions, timetables
What is being measured
Why it is being measured
What is expected of the employees
How to use the information

29. Lessons Learnt (Contd.)
Develop scorecards for lower levels
For staff to understand what they must do to support the level above
Interview senior managers
Input on strategic objectives, critical success factors, possible measures
Periodic reviews and re-align
Has company strategy changed?
Are the critical success factors still valid?
Are the activities still valid?
Are the metrics still valid?
Analyse results
Pitfall to avoid
Senior management committed and there is consensus
Staff buy in and regular communication between staff and management

30. ROI & BSC
It may not be obvious to YOU or YOUR managers, how to increase sales, decrease costs, and decrease investments in a way that is consistent with the company’s strategy.
A well constructed balanced scorecard can provide YOU with a road map that indicates how YOUR company intends to increase ROI.

31. Take Away
BSC not only supports management decisions, but also identifies possibilities for change and motivates people
Reports on the performance against the corporate goals
Supports management decisions & establishes priorities regarding human and other resources
Identifies ways to improve performance
Identifies the need for adjusting processes and the flaws in supporting systems and infrastructure
Identifies the need for change in the organisational culture
Motivates people in their work by giving signals about what is important to the organisation

32. Good Luck