Monitoring

Monitoring

1. Balanced scorecard VS traditional control measures

   • Traditional control measures
     • tracks only the financial performance of the organization relating to profit earned from selling to the capital required
     • focus on profitability, revenue, cash flows, earnings per share (EPS), return on assets (ROA),economic value added, etc.
       • such quantitative performance metrics can control and improve the internal performance of the organization, they can result in incorrect decision-making in the long-term
       • do not measure intangible assets
         • customer relationship
         • human capital
         • intellectual capital
     • relying solely on financial metrics can motivate managers to make decisions that sacrifice long-term value creation for the benefit of short term performance
       • cost reduction can increase profit in the short-run, but only at the expense of loss of quality, loss of expertise and/or loss of customer base which all have long-term impacts
     • not linked to the organizational strategy.
       • long-term goals
       • scope of activities
       • allocation of resources to activities
     • modern organization must invest in intangible assets
       • drive value creation
       • linked to the long term growth
   • balanced scorecard
     • aligns business activities to the strategy of the organization by linking performance measurement with the company’s strategic objectives.
     • Financial Perspective
       • tracking and monitoring of financial success
         • Return on Investments
         • Return on Capital Employed
         • cash flows
         • sales growth.
       • how the company look to the shareholders
     • Customer Perspective
       • how the customers see the company
         • satisfaction rate
         • customer retention rate
         • delivery performance
         • quality performance
         • existing market share
         • percentage sales to new customers
       • customer satisfaction
         • LT growth
         • survival of the company
     • Learning and Growth Perspective
       • focuses primarily on intangible drivers of future growth
         • human capital
         • operational capital
       • objective
         • capability to continue
           • to grow
           • improve
           • create value
           • change
           • adapt
           • learn
           • innovate
         • to create future value
       • measures
         • Job satisfaction
         • employee turnover
         • employee training
         • rate of innovation
     • Internal Business Processes Perspective
       • focus into area of internal operational objectives that the company must achieve at in order to survive
       • gives an understanding of how well the organization is operating
       • helps to determine which activities are meeting the real needs of the customers
       • excel in the key processes necessary to deliver the customer’s need
         • producing value adding products or services
         • improving internal resource and asset utilization.
       • measures
         • efficiency levels
         • value analysis of unit costs
         • process alignment.

2. Measures

   • Critical Success Factors/ Value drivers
     • CSFs are aspects ( results & effort) in which a company has to excel in order to reach her strategic goals.
     • the problem with CSFs is that they are hard to measure/verify or to quantify
   • Key Performance Indicator

3. balance btw leading & lagging indicators

   • leading indicator
     • a measurable factor that changes before the economy starts to follow a particular pattern or trend
     • are tipically input oriented, hard to measure and easy to influence
     • are often related to activities undertaken by employees, associates
   • lagging indicator
     • is one that follows an event
     • are tipically output oriented, easy to measure but hard to improve or influence

4. Critics balanced scorecard

   • too formal, bureaucratic
   • based on top-down decision process
   • cost a lot of money

5. OGSM

   • processes forces a company to clearly define its objectives, identify key strategies and initiatives, and assign accountabilities and deadlines

6. Lean Startup

   • is an approach for launching business and products that relies on validated learning, scientific experimentation and iterative product release to shorten product development cycles, measures progress and gain valuable customer feedback
   • is a process fr validating and invalidating your assumptions quickly as possible to discover and deliver what people actually want
   • foundations
     • MVP
       • the minimum viable product is that version of a new product which allow to team to collect the maximum amount of validated learning about customers with the least efforts
       • why build MVP ?
         • reduce risks
         • you don't really know what customer want
         • deliver customer delight faster
         • learn faster
         • narrow scope
         • reduce variables
   • Customer development
     • customer discovery
       • captures the founders’ vision and turns it into a series of business model hypothesis. Then it develops a plan to test customer reactions to those hypothesis and turn them into facts.
     • customer validation
       • tests whether the resulting business model is repeatable and salable. If not, you return to customer discovery.
     • customer reaction
       • start of execution. It builds end-user demand and drives it into the sales channel to scale the business
     • Company-building
       • transitions he organization from a startup to a company focused on executing a validated model

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