1. Operations Strategy Week #1: Concept & Framework
How to describe strategic position? Our (p,T,V,Q) value proposition & The Discipline of Market Leaders
4/17/2017
Service attributes:
Customer Relationship
Product attributes
Image
Operational Excellence P T V
QoP ✓
Smart shopper
Companies excel at competitive pricing,
Product quality, and on-time delivery
Customer Intimacy ✓ ✓ ✓ ✓
Personalized service (QoS)
Long term relationships
Trusted brand
Just a quick reminder of another useful way of describing the value position…
Companies excel at offering personalized service to
customers and at building long-term relationships with them
Product Leadership ✓ T ✓
QoP ✓
Best in class
Companies excel at creating unique products
with functionality that pushes the envelope ✓
general requirement
differentiator
Source: Discipline of market leaders by Treacy and Wiersema
© Van Mieghem

2. A Balanced Scorecard Map
Balanced scorecard measures a company's performance in: market, operations, learning and growth, and finance.
The map can be used relate an operations strategy with the firm's financial and competitive strategy. The balanced scorecard tends to emphasize the learning and growth view and represents earlier innovation lever as a separate view. The financial view specifies how the organization seeks to increase its NPV. The two financial levers are to increase revenues or decrease costs. The growth strategy must define its desired balancing point between emphasizing productivity or revenue growth.

3. A balanced scorecard map
Operations Strategy Week #1: Concept & Framework
A balanced scorecard map
4/17/2017
Value
Proposition
Market View
Competencies
Operations
Strategy
Operations View
Resources
Processes
This map is used as a one-page overview/summary of total strategy including OS.
Benefits:
Integrated, comprehensive view
Linkages and causal relationships via arrows. Should lead to alignment.
Good for teambuilding and understanding how all pieces come together.
While the value proposition is key to competitive strategy, approximately three quarters of exec teams do not have consensus about this basic information.
Similarly, L&G is important but generally hard to define.
Innovation
Learning & Growth View
Growth Strategy
Financial View x
Productivity
Revenue
NPV
© Van Mieghem

5. Four Perspectives 0f The Balanced Scorecard
Financial Perspective
Customer Perspective
Process Perspective
Learning and Growth Perspective (Infrastructure)

6. Financial Perspective
Revenue Growth
Increase amount of new products
Pricing strategy
Cost Reduction
Reducing cost
Asset Utilization
Improvement

7. Customer Perspective Increase Market Share Increase Customer Retention
Increase Customer Acquisition
Increase Customer Satisfaction
Increase Customer Profitability
Performance Value:
Product quality
Post-purchase Price 7

8. Process Perspective Innovation Operations Post-sales Service
New products
Cycle time
Operations
Quality
Time
Post-sales Service
Service Quality
Service Efficiency

9. Learning and Growth Perspective
Employee capabilities
Information Technology capabilities
Employee attitudes
Motivation
Empowerment
Alignment

10. Linking Measures to Strategy
Balanced scorecard is a collection of critical performance measures derived from a company’s vision, strategy, and objective.
Performance measures should be integration of outcome and lead measures.
Lead measures are performance drivers which makes things happen while outcome measures are indicators of results.
Cause and Effect relationship between outcome and lead measures leads all scorecard measures to be linked by same relation.
What is measured is done….. 10

11. Testable Strategy Financial Customer
Increase shareholders value
Decrease Process Cost
Increase Profits
Increase Revenue
Financial
Improve Delivery Reliability
Increase Customer Retention
Increase Market share
Customer
Testable strategy is defined as a set of linked objectives aimed at an overall goal.
It is achieved by restating the strategy into set of cause-and-effect hypotheses that are expressed by a sequence of if-then statements.
Improve Cycle time
Redesign Process
Process
Learning & Growth
Improve Employee skills 11

12. Strategic Feedback
Cause-and –effect structure indicates that viability of strategy is testable.
If desired results are not achieved through balanced scorecard it may indicate:
- Implementation problem.
- Invalid strategy.
Double loop feedback – validity of assumptions underlying the strategy and effectiveness of strategy implementation. 12

13. Strategic Alignment Implementing Creating Communicating1
Communicating
Targets & Incentives 2
Resource Allocation 3 13

14. Communicating Strategy It must be structured to support the strategy.1
Targets & Incentives 2
Targets
Incentives
It must be structured to support the strategy.
Financial
E.g.: Increase Profits, Revenues
Learning Growth
E.g.: Improve Employee Skills
Customer
E.g.: On –Time Delivery
Internal Process
E.g.: Improve Cycle Time 14