Business Performance Mgmt 2

Business Performance Mgmt 2

1. Strategy Map

   • A strategy map is a visual representation of what the org believes will drive it's strategy. It shows a chain of objectives that will lead to successful execution of the strategy.
     • Like the BSC, it has 4 Perspective: FINANCIAL (increase profit), CUSTOMER (portrayal to consumers, how to attract them) INTERNAL OPS (what we must biz process to improve on), LEARNING & GROWTH (Ways to improve
   • Creating a Strategy Map: Objectives shld start with a verb, is 3~7 words, and contains less than 24 objectives. Always ask urself if the above obj will be driven by the success of the obj below, is that a maintenance or operational objective that is done regardless of strategy, will these result in success of strategy theme?

2. Six Sigma

   • Six Sigma (S.D: σ) is a performance measurement mythology that reduces the number of defects in a business process. As close to DPMO (zero sects per million opportunities
   • To succeed in Six Sigma, integrate it with a business strategy, ensure it supports the business objectives, religiously track results, engage key executives in the Six Sigma process, actively manage projects-in-process, and select projects based on value potential
   • Integration with BSC
     • Translate strategy into quantifiable objects, cascade (pass on) objectives the the organisation, set targets based on customer's needs, implement strategic projects using Six Sigma
   • BSC vs Six Sigma
     • BSC is a strategic mgmt system, that provides a longer term biz view, is designed to develop a balanced set of measures, identifies measurements and org's vision and values, and balances customer and internal ops without a clearly defined leadership role
     • Six Sigma is a performance mgmt system that provides a snapshot of a biz's performance, is designed to identify measures that drive performance to impact profitability, and balances mgmt and employee's roles; balances costs and revenues with accountability for leadership

3. BSC

   • A table that contains objectives, measures, targets, and initiative (sometimes the theme, and strategy map)
     • A well developed BSC have ~ 10-15 measures. They are divided into a good mix of Leading (drives an objective) & Lagging (results of an objectives) measures that drives the strategic theme and measures results. A lagging measure from one objective will be the leading measure in another measure.
     • Measures in it's 4 Perspectives: Financial contain only lag measures/results, Customer and Internal Operations contain a mix of lead and lag measures, Learning & Growth contains only lead measures. Example: % of claims paid in 30 days, % increase in revenue, % increase of cust satisfaction surveys, % decrease in waste, % of employee training completed
     • Deciding measures: Did it drive a change in behaviour that we need? Does it measure the change in processes we need? What will we do if this metric changes? Who will be responsible for these actions? How often do we measure? (how often will data be available)
     • Deciding on targets: best estimates from a panel of experts, using association or regulatory benchmarks required by legislative, horizontal comparison with a similar biz unit in the org, or best practice surveys from private consulting firms
     • Deciding on initiatives: Initiatives = collection of actions/projects that aims to achieve strategic objectives. Every objective shld be supported by an initiative, if an initiative does to support an obj, it can be eliminated