1. wipfli.com Long-rangeStrengthVisionaryTenacity

2. wipfli.com How many are comfortable that your internal processes will achieve the vision? Would you agree there would be 100% consensus if we asked ten people in your organization, “What are the business imperatives?” How many believe they are maximizing the time, talent, and money of the organization?

3. wipfli.com Strategy-Aligned Organization Fueled by Innovation and Driven by Balanced Performance Indicators… Focus Creativity Accountable

4. wipfli.com Overview Current observation Changing landscape of performance management Strategic translation Linkage between strategy and measures Case study Applied workshop

5. wipfli.com Balanced Score Cards Are Not Enough…

6. wipfli.com What We Have Learned Malcolm Baldridge National Quality Award Foundation survey: 300 CEOs 72% felt executing strategies was more important Fortune Magazine “Why CEOs fail” 70% failures were flawed execution of strategy

7. wipfli.com What We Do Know Only 5% of the workforce understand the company’s strategy Only 15% of the executive teams spend more than one hour per week discussing strategy Only 25% of the managers have incentives linked to strategy Only 40% of the organizations link budgets to strategy As a result, 30% to 50% of the company’s efforts are off strategy… “white collar waste” Kaplan and Norton

8. wipfli.com 80% are making PM system changes and 33% described them as major overhaul (Strategic Finance Magazine, 2002) More than 50% of the Fortune 1000 have turned to Balanced Score Card principles (Bain & Company study 2001) The Shift

9. wipfli.com The Real Question is Why???

10. wipfli.com Organizational Drifting A A B B Current State Future State Traction Unproductive use of resources

11. wipfli.com Changing Landscape “They (knowledge workers) now account for a full third of the American workforce, outnumbering factory workers two to one. In another 20 years, they will make up two-fifths of the workforce of all rich countries.” Peter F. Drucker, The Economists, November 2001

12. wipfli.com Intangible Assets? Intangibles assets may not have a direct impact on financial results Value is largely potential – must be transformed Require interdependence for success

13. wipfli.com Intangible Asset Challenge Tangible Assets Rigorously quantified Part of the balance sheet Investment produces known return Can be easily duplicated Leveraged through control Intangible Assets Difficult to quantify Not tracked through accounting Assessment based on assumption Cannot be bought or imitated Leveraged through alignment

14. wipfli.com Think of Intangible Asset as Behaviors, Choices, and Actions of Your Employees… Intangible Asset

15. wipfli.com Leadership Challenge Is to recognize: Financial measures do not tell the whole story Benefits of leveraging talent through strategy alignment and deployment Measures will change the actions and behaviors of people Capture intangible assets

16. wipfli.com Strategy Translation Unless the objective is exercise, chasing more than one rabbit is hopeless and frustrating… Strategy is a story of how the company will create value Series of cause and effects All about the future survival

17. wipfli.com Strategy Translation Understandable terms “everyday speak” Organizational Traction

18. wipfli.com Strategy Translation Effort alignment “without regards to the organization” Organizational Traction Understandable

19. wipfli.com Strategy Translation Everyone’s job “change intent to action” Organizational Traction Alignment Understandable

20. wipfli.com Strategy Translation Strategy as a continual process “part of daily management” Organizational Traction Everyone’s job Understandable Alignment

21. wipfli.com Strategy Translation Mobilize change through leadership “strategic-driven CI” Organizational Traction Understandable Alignment Everyone’s job Continual process

22. wipfli.com Strategy Translation Organizational Traction Understandable Alignment Everyone’s job Continual process Change leadership

23. wipfli.com Linkage Between Strategy and Measures

24. wipfli.com Underlying elements of the business that must be successful Key Performance Objectives Actions taken to direct the organizations efforts toward maximizing the benefit of critical success factors Fundamental Strategies Customer promise Value Proposition Measurements developed to evaluate how effective the strategies are in reaching established goals Performance Management Visions of the future Stakeholder Expectations Internal Processes

25. wipfli.com Balanced Perspectives “How do the stakeholders view us?” “How do the customers view us?” “What processes must we excel in?” “What must we understand?” Financial Customer Learning Value Stream Human “How do we preserve talent?”

26. wipfli.com Statements of Strategy

27. wipfli.com Customers Internal Learning & Growth Fewer Planes More Passengers Increase Profitability Focus on Process Redesign Fast Ground Turnaround On-Time Flights Lowest Cost How will our people do that? –Educate and compensate personnel for cycle-time reduction What must the internal focus be? –Fast turnaround How will we do that? –Attract targeted customer segments who value price and on-time arrivals What will drive operating efficiency? –More customers on fewer planes Financial Southwest Airlines – Operating Efficiency From Performance Measurement.ca

28. wipfli.com Customers Internal Learning & Growth Fewer Planes More Passengers Increase Profitability On-Time Flights Fast Ground Turnaround Lowest Cost Financial WEIGHTING MEASURE 0F SUCCESS PROCESS/ PROJECT PROCESS MEASURE ROLE OWN/LEADAPPROVEREVIEWDEVELOP/ EXECUTE 15%# CustomersMarketing# ContactsBLKSGLBPKMktg Travel Agent Blitz # New Agents BLKTSBPKMktg 5% Plane Lease CostRenegotiate Leases Sublease Program Time to Sublease PM PBKLegal 15%Price RankingPricing # Days at Lowest Cost # Price Changes BLKSGLBPKMktg 20% FAA On-Time Rating Customer Ranking Project On- Time # Late Arrivals # Late Departures JAKOPNTTGrnd 30% On-Ground Time Hands-On Time Plane Servicing Cycle TimeBRBLKJAMGrnd Passengers Off and On Off/On Cycle Time JAKPILTTCrew 15% % People Trained BPR Project Training Hours Total Identified NVAT JAKPILJAMExec % Employee Shareholders ESOP# Shareholding Employees JWTTPBKExec Focus on Process Redesign From Performance Measurement.ca

29. wipfli.com How to Build an Effective Navigational Chart and Strategic Map

30. wipfli.com Score Card Essentials Determine the business imperatives “what are the expectations?”

31. wipfli.com Navigational Chart Score Card Essentials

32. wipfli.com Determine the fundamental strategies Create the linkage Score Card Essentials “what must we do in order to achieve the vision and imperatives?”

33. wipfli.com Navigational Chart Strategic Map Strategic Options Score Card Essentials

34. wipfli.com Determine key performance objectives Score Card Essentials “what needs to be accomplished in order to be successful?”

35. wipfli.com Navigational Chart Strategic Map Score Card Essentials

36. wipfli.com Identify key performance indicators Score Card Essentials “how will we know our efforts are working?”

37. wipfli.com Navigational Chart Strategic Map Strategic Options Score Card Essentials

38. wipfli.com Identify key processes and action plans Score Card Essentials “what action needs to occur in the gemba?”

39. wipfli.com Customers Internal Learning & Growth Fewer Planes More Passengers Increase Profitability On-Time Flights Fast Ground Turnaround Lowest Cost Financial WEIGHTING MEASURE 0F SUCCESS PROCESS/ PROJECT PROCESS MEASURE ROLE OWN/LEADAPPROVEREVIEWDEVELOP/ EXECUTE 15%# CustomersMarketing# ContactsBLKSGLBPKMktg Travel Agent Blitz # New Agents BLKTSBPKMktg 5% Plane Lease CostRenegotiate Leases Sublease Program Time to Sublease PM PBKLegal 15%Price RankingPricing # Days at Lowest Cost # Price Changes BLKSGLBPKMktg 20% FAA On-Time Rating Customer Ranking Project On- Time # Late Arrivals # Late Departures JAKOPNTTGrnd 30% On-Ground Time Hands-On Time Plane Servicing Cycle TimeBRBLKJAMGrnd Passengers Off and On Off/On Cycle Time JAKPILTTCrew 15% % People Trained BPR Project Training Hours Total Identified NVAT JAKPILJAMExec % Employee Shareholders ESOP# Shareholding Employees JWTTPBKExec Focus on Process Redesign From Performance Measurement.ca

40. wipfli.com Place the right measures Score Card Essentials “what processes measures will monitor the action plan?”

41. wipfli.com Effective Measures Are Created, Not Copied

42. wipfli.com Close enough to show trends… Can get better over time… Move quickly… Part of the current business… Understandable and believable… Effective Measures

43. wipfli.com

52. Tangible Benefits Renewed purpose and focus Improvements without any real change 15% to 20% new management capacity 25% to 30% meeting time reduction 5% to 10% shop floor productivity bump 15% to 20% administrative productivity Competitive weapon

53. wipfli.com Performance Measurement Gets Results Industry leader past three years 74% Measurement Managed Org. Financially ranked in top third of industry 83% Measurement Managed Org. Success in last major change effort 97% Measurement Managed Org. Management Review, Measuring People, and Performance

54. wipfli.com Measurement drives agreement on what matters and the communication of strategy, leading to successful change efforts and, ultimately, improved financial results

55. wipfli.com The Complexity of Strategy is Keeping it Simple…

56. wipfli.com Questions