Finally, we need to cascade internal objectives. This allows the entire organization to maintain a clear understanding of the overarching strategy and vision. As the management system is cascaded, objectives become more operational and strategic.
The process of cascading objectives basically revolves around finding the specific tasks required to complete the objective objectives within objectives. Note how among the different tiers of the company, there is a constant alignment of strategy and objectives within different perspectives. Toyota is one of the leading car companies in the world, originating from Japan but eventually manufacturing cars all over the world.
In America, their mission statement is to be the most successful and respected car brand in America. To gain this success in , Toyota management implemented a BSC. They began by creating a strategy to complement their mission statement like expand sales to youth buyers, expand shares of the SUV market and have the tops sales in passenger cars. Throughout this process, the executives maintained contact with their employees for feedback and updated them about their progress.
This was done in order to align the company and ensure that the whole system understood the process and objectives of each goal. This meant having a balance between the four goals with some of the objectives overlapping with each other. For increasing financial goals they had tasks like control the growth of general expenses, manage workforce costs and also sustain a high level of profitability given a challenging market.
While looking at the internal business process they had focused on expanding sales and service capability and focus on completing major technology process. Toyota also wanted to maintain its high level of customer loyalty, sustain a high level of dealership satisfaction and also improve customer and sales satisfaction.
Lastly to improve their learning and growth they wanted a successful model launch, achieve 1 in passenger sales and maintain luxury SUV leadership Delta Publishing With Toyotas implementation of the BSC we can see their strategy succeed in many areas of their vision. The BSC shown above provides an excellent example of creating an understandable project for the employees and management to understand.
We can also see the crossing over of each of the four BSC perspectives, for example in learning and growth the successful launch of a new car will impact the financial goals of the company. The dashboard is also seen on the side of each BSC which shows the managerial team where the company is at with the targets. The BSC was able to benefit the employees, customers, and management in a different way.
Employees saw more contribution from their work, managers saw increased profit and sales while improving customers loyalty. From Toyota, other companies can learn success and follow the BSC with a strategy of their own. It shows that financial success is not always the only measure of success and that other non-financial options can lead a company to be just as successful. The only thing Toyota could have improved on was a strategy map that would include the causal relationships between each goal Delta Publishing The BSC is a strategic management tool helping to measure, monitor, and communicate strategic goals throughout the organization through an understandable way and get everybody on the same page working towards the same goals Lawson et al.
Norton Bjarne Rugelsjoen. Fifty percent of corporate alliances fail. If you were a military general on the march, you'd want your troops to have plenty of maps--detailed information about the mission they were on, the roads Kaplan and David P.
By going beyond traditional measures of financial performance, the concept has given a generation of managers a better understanding of how their companies are really doing.
These nonfinancial metrics are so valuable mainly […]. Business models Digital Article Stefan Michel. Costing Magazine Article Jon Meliones. His tools: reams of data, a fresh approach to teamwork, a sense of humor—and the balanced scorecard. And that allows companies to excel. Decision making and problem solving Magazine Article Christopher D.
Ittner David F. Tracking things like customer satisfaction and employee turnover can powerfully supplement traditional bookkeeping.
Unfortunately, most companies botch the job. Ready Linda A. Hill Robert J. When most of the world's financial services giants were stumbling and retrenching in the aftermath of the recession, the asset management firm BlackRock Hansen Herminia Ibarra Urs Peyer. Three critical questions need to be addressed at this stage. Stage 4: Plan operations using such tools as rolling forecasts and budgets, process management, process dashboards, activity-based costing and resource capacity planning.
Two major questions need to be answered in respect of stage 4. Stage 5: Monitor and learn about barriers, problems and challenges. This will be achieved through a carefully designed structure of management review meetings. These meetings should be short, highly focused, data-driven and action-oriented.
The review meetings need to focus on two key questions. Stage 6: Test and adapt the strategy using internal data on operations and external data on the economic and competitive environment. This will launch a new cycle of integrated strategy planning and operational execution. It would be fair to observe that there is nothing radically new in this six-stage process.
A strategic theme, typically a vertical slice within the map, consists of a distinct set of related strategic objectives. This generic strategy map illustrates how a corporate strategy can be sliced into four themes, each with its own cause-and-effect relationships.
Real-life maps will be more complex but will still have the desirable property of making strategy much easier to understand and manage. The strategic themes provide a common structure that unit managers can use to develop their own maps within the big picture and a governance structure that assigns accountability for actions. Strategic themes offer several advantages.
At the business unit level, the theme structure allows unit managers to customize each theme to their local conditions and priorities, creating focus for their competitive situation while still keeping their objectives integrated with the overall strategy. Second, the vertical strategic themes typically deliver their benefits over different time periods, helping companies simultaneously manage short-, intermediate-, and long-term value-creating processes. Using themes, executives can plan and manage the key elements of the strategy separately but still have them operate coherently.
Once managers have developed the strategy map, they link it to another tool of our design: a balanced scorecard of performance metrics and targets for each strategic objective. The balanced scorecard metrics allow executives to make better decisions about the strategy and quantitatively assess its execution. A strategic initiative is a discretionary project or program, of finite duration, designed to close a performance gap.
It might focus on, say, developing a customer loyalty program or training all employees in Six Sigma quality management tools. In our original conception of the strategy map and the balanced scorecard, we encouraged companies to select initiatives independently for each objective. We came to realize, however, that by doing so, companies would fail to benefit from the integrated and cumulative impact of multiple, related strategic initiatives.
Achieving an objective in the customer or financial realm generally requires complementary initiatives from different parts of the organization, such as human resources, information technology, marketing, distribution, and operations.
Also, stand-alone cross-unit initiatives often have no clear owner or home in the organization. Companies with theme-based strategy maps avoid these problems by assigning a senior executive to lead each strategic theme. In this way, the company gains an accountability and reporting structure even for cross-business and cross-functional-unit objectives. The executive team authorizes the resources required for the various portfolios; we call the designated funds strategic expenditures or StratEx.
Committing funds to StratEx is similar to budgeting for research and development: Both categories represent spending on near-term actions expected to deliver mid- to long-term performance, and both are separate from the operating and capital expenditures OpEx and CapEx, described in the next stage that support current operations.
With strategic metrics, targets, and initiative portfolios in place, the company next develops an operational plan that lays out the actions that will accomplish its strategic objectives. This stage starts with setting priorities for process improvement projects, followed by preparing a detailed sales plan, a resource capacity plan, and operating and capital budgets. However, to execute their strategies, companies generally must also enhance the performance of their ongoing processes—measured, for example, by their responsiveness, speed, quality, and cost.
Companies will get the biggest bang for their buck when they focus their business process management, total quality management, lean management, Six Sigma, and reengineering programs on processes directly related to the objectives on their strategy maps and scorecards. The goal is to align near-term process improvements with long-term strategic priorities. Managers need to deconstruct each strategic process to identify the critical success factors and metrics that employees can focus on in their daily activities.
Electronic and physical dashboards, displaying data on the key indicators of local process performance, will inform the actions of and provide feedback to employees attempting to achieve process performance targets. For example, one large pharmaceutical chain has a dashboard system that gives each store manager a customized, single page display of financial and operating metrics—those that a statistical analysis revealed have the highest correlation with aggregate store performance.
Managers also must identify the resources required to implement their strategic plan. Before they can do that, they need to deconstruct their overall sales target into the expected quantity, mix, and nature of individual sales orders, production runs, and transactions. Companies with well-functioning ERP systems will have a historical record of product and customer mix and transaction volumes they can draw upon to do this.
Finally, data-rich companies can easily embrace scenario planning to explore the sensitivity of their sales forecasts to alternative economic and competitive assumptions. In this chart, Towerton Financial calculated the quantity of resources required to implement the sales plan at left, using a time-driven ABC model.
The numbers under total hours show what Towerton would need from each kind of personnel or IT resource. Note that the capacity of computing resources is measured by MIPS, not hours. The next column indicates how many hours or MIPS are supplied monthly by one unit of each resource.
The numbers for resource units required were obtained simply by dividing the total demand for each resource by the quantity supplied monthly by one unit of it. After examining the resource requirements under a range of assumptions, Towerton authorized the level of resource supply to be carried into the next period. In general, companies will want to supply somewhat more capacity than forecast, as shown in the column for resource units supplied; resource demands are not uniform throughout a period.
As the final column shows, Towerton expects to operate at close to full capacity during the upcoming period. Armed with data about productivity from process improvements and likely sales numbers, companies can now estimate what resources they will need in the year ahead to execute on their strategic goals.
The time-driven version of ABC adds a new capability, the ability to easily translate future sales numbers into a forecast of required resource capacity. At the heart of the TDABC model is a set of equations, based on historical experience, that describe how various transactions and demands consume the capacity of resources such as people, equipment, and facilities.
A company that has such a model in place can update these equations for any productivity gains that have occurred or are anticipated from process improvements determined during the first step in this stage.
Managers then feed the new detailed sales plans from the second step into the updated model, to produce estimates of the demand for resources implied by the sales forecast. The company, seeing the capacity required to deliver on its strategic plan, can then authorize the quantity of people, equipment, and other resources to be supplied, including any buffer capacity to handle fluctuations or short-term spikes in demand.
Once managers have determined the authorized level of resources for the future period, the financial implications become easy to calculate. In the Towerton Financial case used in the resource capacity exhibit, the company already knew the full monthly cost of each kind of personnel—brokers, account managers, financial planners, customer service representatives, and IT consultants—as well as the monthly cost for each server, the unit of computing capacity.
Most of the resource capacity represents personnel costs and would be included in the OpEx budget. The process quickly and analytically generates operating and capital budgets that grow logically and dynamically out of the sales and operating plans, rather than being imposed by fiat or through power negotiations. Companies that have shifted from an annual budgeting cycle to one with quarterly updates can use this process to obtain resource capacity plans for every period for which they have a sales forecast.
In a final budgeting step, the company authorizes the discretionary spending that does not have an immediate relationship with sales and operations, such as process improvement initiatives, advertising, promotion, research and development, training, and maintenance. The amount of such spending remains a judgment call for experienced executives and is not a decision that can yet be automated through an analytic model. From here on, it is up to the managers to execute, learn, and adapt, moving the management cycle into its fourth stage.
As companies implement their strategic and operational plans, they need to hold three types of meetings to monitor and learn from their results. First, managers should convene meetings that review the performance of operating departments and business functions and address problems that have arisen or persist. They also should hold strategy management meetings that review balanced scorecard performance indicators and initiatives to assess progress and identify barriers to strategy execution.
Those two meetings make up Stage 4 of the system. In Stage 5, managers meet to assess the performance of the strategy itself and adapt it if necessary.
0コメント