The Executive Roundtable Series:
Business Strategy Planning
Techniques
featuring Metrics Reporting, Inc.
1
AGENDA
Brief Intro and Overview
y Blue Ocean Strategy
y Having Trouble with Your Strategy?
…Then Map It!
y Example
E
l
y Wrap-Up and Next Steps
y
2
Introduction
y
Metrics Reporting,
p
g Inc.
y
Two tools that create business value:
◦ Strategy Canvas [Blue Ocean Strategy]
◦ Strategy Map [Norton and Kaplan]
3
Background
Why Measure?
Better
Margins?
Better
Execution?
4
5
For each:
4 Questions
that drive
ACTION!
6
Blue Ocean Strategy
How to Create
H
C
U
Uncontested
d Market
M k Space
S
and
d Make
M k
the Competition Irrelevant
7
Blue Ocean Strategy
Do we know how to
“Create
Create Uncontested
Market Space and Make
the Competition
Irrelevant?
Irrelevant?”
8
Blue Ocean Strategy
gy
Red Ocean
Compete in crowded markets
Blue Ocean
Create and capture
Create and capture new space
Source: Blue Ocean Strategy, Kim and
Mauborgne
9
Blue Ocean Strategy
Source: HBR: Value Innovation Logic,
Kim and Mauborgne
10
Results of Formule 1’s Strategy
From Formule 1’s perspective:
Cost per room
Cost of staff
Profit Margins
Occupancy rates
100,000
100
000 FF ↔ 270,000
270 000 FF
20-23% of sales vs. 23-25%
> 2x industry average
> 3x industry average
From customers
customers’ perspective:
Hygiene
Bed quality
Silence
Price
> average 2* hotel
> average 2*
2 hotel
> average 2* hotel
100 FF ↔ 200 FF of industry
Source: HBR: Value Innovation Logic, Kim and Mauborgne
11
Blue Ocean Strategy
12
Blue Ocean Strategy
gy
Source: Blue Ocean Strategy, Kim and
Mauborgne
13
Blue Ocean Strategy
gy
The Four Actions Framework
Reduce
Which factors should
be reduced well
below the industry’s
standard?
Eliminate
Which of the factors
that the industry
takes for granted
should be eliminated?
New
N
Value
Curve
Raise
Which factors should
be raised well
above the industry’s
standard?
The 4 Qs
Create
Which factors should
be created that
the industry has
never offered?
Source: Blue Ocean Strategy, Kim and
Mauborgne
14
Blue Ocean Strategy
Eliminate-Reduce-Raise-Create Grid:
The Case of [yellow tail]
Eliminate
Raise
Enological terminology and
distinctions
Price versus budget wines
Retail store involvement
Aging qualities
Above-the-line marketing
Reduce
Create
Wine complexity
Easy drinking
Wine range
Ease of selection
Vineyard prestige
Fun and adventure
Source: Blue Ocean Strategy, Kim and
Mauborgne
15
Blue Ocean Strategy
Source: Blue Ocean Strategy, Kim and
Mauborgne
16
Blue Ocean Strategy
Strategy Canvas
Costs
Eliminate
Value
Innovation
Enological terminology and
distinctions
Raise
Price versus budget wines
Retail store involvement
Aging qualities
Above-the-line marketing
Buyer Value
Reduce
Create
Wine complexity
Easy drinking
Wine range
Ease of selection
Vineyard prestige
Fun and adventure
Four Actions Framework
ERRC Grid
Source: Blue Ocean Strategy, Kim and
17
Mauborgne
Blue Ocean Strategy
Blue Ocean Strategy
1. List 8 to 12 important Factors of Competition
2. Enter top 2 or 3 in each ERRC Grid Quadrant
3. Draw the Strategy Canvas: 1 on left, 4 on right
Factors of Competition / Value Factors:
Tool 1
1. List Factors of
Competition
2. Top 2 or 3 in ERRC Grid
Quadrants
1. Eliminate:
3. Raise:
2. Reduce:
4. Create:
Rev: 2006.02.21
18
Blue Ocean Strategy
Project Name:
9
8
7
1.
Very High
Write on
Worksheet:E
left, C right
6
2.
Draw “As Is”
1
3
3.
Draw “To Be”
5
High
Medium
4
3
Low
2
Very Low
0
Value Factors
Tool 2
10
19
Blue Ocean Strategy
Examples
20
Blue Ocean Strategy
21
Blue Ocean Strategy
gy
22
Having Trouble with Your
Strategy? Then Map It!
Strategy Maps
23
Strategy Maps
Alignment and Learning
Strategy Maps Help Organizations Get Better Faster
24
Strategy
gy Maps
p
Focus on What Matters Most
Greatt strategy
G
t t
enables
everyone
to set accurate
priorities
25
Strategy
gy Maps
p
Actions Drive Financial Results
Theme:
Objectives
Metrics
Initiatives
Financial
Perspective
Customer
Perspective
Internal
Processes
Perspective
Employee
Learning &
Growth
Perspective
26
Strategy
gy Maps
p
Scorecards Drive Strategy Execution
27
Strategy
gy Maps
p
Strategy Maps Add Causality (if-then)
28
Strategy
gy Maps
p
Steps for Creating Your Strategy Map
Determine:
•
Y
Your
Th
Theme(s).
( )
•
Your Perspectives.
•
The Strategic Objectives in each perspective.
•
Metrics (Measures) and targets for each
objective. Assign an owner to each metric.
•
Initiatives to drive each metric.
metric
29
Strategy
gy Maps
p
Financial
P
Perspective:
ti
What financial
steps
p are needed
to ensure the
execution of our
strategy?
The 4 Qs
Employee Learning and
Growth Perspective
Crew Scheduling System
Ground Crew Alignment
Train Ramp Agents
Internal Perspective
Customer Perspective
Fast Ground Turnaround
On Time Service
Lower Prices
Attract and Retain Customers
Financial Perspective
Profits and RONA
More Revenue 30
Fewer Planes
Strategy
gy Maps
p
Customer
P
Perspective:
ti
Who are our
targeted
g
customers, and
what is our value
proposition in
serving them?
Employee Learning and
Growth Perspective
Crew Scheduling System
Ground Crew Alignment
Train Ramp Agents
Internal Perspective
Customer Perspective
Fast Ground Turnaround
On Time Service
Lower Prices
Attract and Retain Customers
Financial Perspective
Profits and RONA
More Revenue 31
Fewer Planes
Strategy
gy Maps
p
Internal
Processes
(Operations)
Perspective:
To satisfy our
customers,
t
att what
h t
processes must we
excel?
Employee Learning and
Growth Perspective
Crew Scheduling System
Ground Crew Alignment
Train Ramp Agents
Internal Perspective
Customer Perspective
Financial Perspective
Fast Ground Turnaround
On Time Service
Lower Prices
Attract and Retain Customers
Profits and RONA
More Revenue
Fewer Planes
32
Strategy
gy Maps
p
Employee
Learning and
Growth
Perspective:
What capabilities
and tools do o
ourr
employees need to
help them execute
our strategy?
Employee Learning and
Growth Perspective
Crew Scheduling System
Ground Crew Alignment
Train Ramp Agents
Internal Perspective
Customer Perspective
Financial Perspective
Fast Ground Turnaround
On Time Service
Lower Prices
Attract and Retain Customers
Profits and RONA
More Revenue
Fewer Planes
33
Strategy
gy Maps
p
Objectives
Metrics
Initiatives
34
Strategy
gy Maps
p
Metrics: Accountability, not Blame
35
Strategy
gy Maps
p
Team Exercise: Determining Objectives
Determine:
•
Your Theme(s).
•
Your Perspectives.
•
Strategic Objectives in each perspective.
perspective
•
Metrics (Measures) and targets for each
objective Assign an owner to each metric.
objective.
metric
•
Initiatives to drive each metric.
36
Strategy Maps
Case Study
• You are the CFO for an NFL team. The
owner wants yyou to focus on increasingg
stadium and licensing revenues.
• Your I.T.
I T director suggests building a website
to let season ticket holders sell their tickets
for games that they cannot attend.
attend
• Should you approve her project?
37
Strategy Maps – Case Study
Building Revenue for an NFL team
• Background on your team’s operations
– Home ggames are sold out for manyy years
y
into the future.
– Your team loses more than it wins,, so a
significant number of season ticket holders
do not show up for home games.
– An important source of revenue comes
from people who spend money on parking
and concessions.
38
Strategy Maps - Case Study
Task: Identify Objectives Across Perspectives
Theme:
NFL Team: Increase Stadium and Licensing Revenue
Objectives
Metrics
Initiatives
Owner
(Financial)
Perspective
Fan
(Customer)
Perspective
Internal
Processes
Perspective
Employee
L
Learning
i &
Growth
Perspective
39
Identify Perspectives, then Initiatives within each perspective
Financial
(Owner)
Customer
(Fan)
Operations
Employee
and
Supplier
40
Should This Project Be Funded?
Financial
(Owner)
Customer
(Fan)
Operations
Build Ticket
Website
Employee
and
Supplier
41
Where is Our Financial Focus (Revenue, Margin, ROE)?
Financial
(Owner)
Increase
Stadium Revenue
Increase
Licensing Revenue
Customer
(Fan)
Operations
Employee
and
Supplier
42
What Customer Initiatives Are We Going to Focus on?
Financial
(Owner)
Customer
(Fan)
Increase
Stadium Revenue
Reduce No Shows
Increase
Licensing Revenue
Increase Fan Loyalty
Grow Fan Base
Operations
Employee
and
Supplier
43
Does this Operational Initiative Support these Customer Initiatives?
Financial
(Owner)
Customer
(Fan)
Operations
Increase
Stadium Revenue
Reduce No Shows
Increase
Licensing Revenue
Increase Fan Loyalty
Grow Fan Base
Build Ticket
Website
Employee
and
Supplier
44
Decide How to Build The Ticket Website
Financial
(Owner)
Customer
(Fan)
Reduce No Shows
Increase Fan Loyalty
Grow Fan Base
Build Ticket
Website
Operations
Employee
and
Supplier
Increase
Licensing Revenue
Increase
Stadium Revenue
Train I.T.
I T team
to Build Website
Identify
Ticket Website
Vendors
45
Understand Linkages: If I do this, then that happens
Financial
(Owner)
Customer
(Fan)
Reduce No Shows
Increase Fan Loyalty
Grow Fan Base
Build Ticket
Website
Operations
Employee
and
Supplier
Increase
Licensing Revenue
Increase
Stadium Revenue
Train I.T.
I T team
to Build Website
Identify
Ticket Website
Vendors
46
Metrics – Putting
g it all
Together
g
47
http://www.michigancrc.org
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Metrics
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Metrics
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Metrics
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Metrics
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Questions?
Eric Heller
Metrics Reporting, Inc.
(616) 644-3190
eric.heller@metricsreporting.com
@
p
g
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