1. Long-range Strength Visionary Tenacity

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

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

5. Balanced Score Cards Are Not Enough…

6. 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. 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. The Shift • 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)

9. The Real Question is Why???

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

11. 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. 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. Intangible Asset Think of Intangible Asset as Behaviors, Choices, and Actions of Your Employees…

14. 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

15. 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

16. Understandable terms Strategy Translation “everyday speak” Organizational Traction

17. Effort alignment Strategy Translation Understandable “without regards to the organization” Organizational Traction

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

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

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

21. Strategy Translation Understandable Change leadership Alignment Everyone’s job Continual process Organizational Traction

22. Linkage Between Strategy and Measures

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

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

25. Statements of Strategy

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

27. Increase Profitability More Passengers Fewer Planes Customers Lowest Cost On-Time Flights Internal Fast Ground Turnaround Learning & Growth Focus on Process Redesign From Performance Measurement.ca

28. How to Build an Effective Navigational Chart and Strategic Map

29. Determine the business imperatives Score Card Essentials “what are the expectations?”

30. Score Card Essentials • Navigational Chart

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

32. Score Card Essentials • Navigational Chart • Strategic Map • Strategic Options

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

34. Score Card Essentials • Navigational Chart • Strategic Map

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

36. Score Card Essentials • Navigational Chart • Strategic Map • Strategic Options

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

38. Increase Profitability More Passengers Fewer Planes Customers Lowest Cost On-Time Flights Internal Fast Ground Turnaround Learning & Growth Focus on Process Redesign From Performance Measurement.ca

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

40. Effective Measures Are Created,Not Copied

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