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Developing a Strategy Map: Linking Causal Models to Achieve Business Objectives

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naif
10 diapositives · 282 Views · Sep 24, 2014

This comprehensive guide outlines the construction of a strategy map, detailing the interconnections between financial, customer, internal processes, and learning perspectives. It highlights how to identify performance drivers, establish clear cause-effect relationships, and set measurable outcomes to achieve profitability in business. By integrating short-term and long-term goals, organizations can enhance performance monitoring and develop actionable strategies. The BSC tools presented serve as vital frameworks for continuous improvement, ensuring strategic alignment and operational efficiency.

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Developing a Strategy Map: Linking Causal Models to Achieve Business Objectives
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  1. BSC TOOLS • STRATEGY MAP • A GRAPHIC PRESENTATION OF CAUSAL MODEL OF STRATEGY • DEPICTS LINK BETWEEN PERSPECTIVES AND BETWEEN GOALS AND INTERNAL ARRANGEMENT. • SCORECARD • PRESENTS LINK BETWEEN SHORT-TERM AND LONG-TERM ISSUES. • DEPICTS TEMPORAL LINK OF STRATEGY. • PRESENTS SEQUENCES OF CAUSE-EFFECT RELATIONSHIPS. • PROVIDES BASIS FOR PERFORMANCE MONITORING.

  2. ACHIEVE PROFITABILITY Financial F2: Achieve BudgetedPrdctn Volume F3: Attain Sales At Budgeted Level F1: Reduce Total Cost By 6% Customer C1: Increase Value Add To Customer By Providing Technical Assistance C2: Satisfy Customer By Delivering Quality Internal Process IP2: Improve HR Morale & Productivity IP1: Reduce Plant Turnaround Time IP4: Create Technical Support Team IP5: Install Quality Mgt System IP3: Improve Logistic Cost Learning L3: Acquire Knowledge On Customers’ Technologies L1: Improve Skills Related To Plant Turnaround L2: Improve Supervisory Skills L4: Dvlp Quality Troubleshooting Skills INNOVATIVE CHEMICALS STRATEGY MAP

  3. CONSTRUCTING A STRATEGY MAP • THE ITEMS IN THE FINANCIAL PERSPECTIVE IS ALWAYS A STATEMENT OF OUTCOMES THAT IS MEASURABLE USING FINANCIAL MEASURES • THE CUSTOMER PERSPECTIVE CONSIST OF OUTCOMES THAT INDICATES WHAT COMPANY WANTS TO DELIVER TO CUSTOMER TO CREATE FINANCIAL OUTCOME • ITEMS IN THE INTERNAL PROCESS PERSPECTIVE ARE ACTIVITIES THAT COMPANY HAS TO DO TO DELIVER CUSTOMER OUTCOMES • ITEMS IN THE LEARNING PERSPECTIVE ARE KNOWLEDGE, SKILLS OR INFORMATION NEEDED TO IMPLEMENT THE ACTIVITIES IN THE INTERNAL PROCESS PERSPECTIVE • ALL OF THE ABOVE ARE CAUSALLYRELATED.

  4. THINKING CAUSALLY • A WELL DEVELOPED STRATEGY DESCRIBES THE CAUSAL MODEL OF THE BUSINESS • OUTCOMES AND PERFORMANCE DRIVERS. • OUTCOMES ARE GENERIC AND PERFORMANCE DRIVERS UNIQUE TO ORGANIZATION. • PERFORMANCE DRIVERS COMMUNICATE HOW OUTCOME TO BE ACHIEVED. • BASIS FOR DEVELOPING LEAD AND LAGGARD MEASURES.

  5. EXAMPLE LEAD MEASURES PERFORMANCE DRIVERS OUTCOME (LAGGARD MEASURES) PRODUCT LAUNCHED PER QRTR NEW PRODUCTS LAUNCHED INCREASE SALES FROM NEW PRODUCTS BY 15% PROMOTIONAL EXPENDITURE PER NEW PRDCT PROMOTIONAL CAMPAIGN INCREASE PROFIT BY 20% COST PER UNIT REDUCTION REDUCE PRODUCTION COST BY 15% REDUCE COST BY 10% REDUCE WARRANTY CLAIM BY 40% WARRANTY CLAIM WITHIN 6 MONTH OF PURCHASE

  6. CHARACTERISTICS OF GOOD STRATEGY MAP • ISSUES SPELLED OUT IN TANGIBLE AND ACTIONABLE TERMS. • IDENTIFIES THE CRITICAL AND NOT JUST THE COMMON. • SHOWS CLEAR CAUSAL LINKAGE. • COMMUNICATES IN AN EASILY UNDERSTOOD MANNER. • PRODUCT OF A PROCESS OF ITERATIVE DISCUSSION. *

  7. ELEMENTS OF THE SCORECARD • CAUSE-EFFECT RELATIONSHIP. • MEASURES DVLPD SHOULD BE PART OF CHAIN IN CAUSE-EFFECT RELATIONSHIP • DEPICTS OBJECTIVES NEEDED OVERTIME • AS PART OF PERFORMANCE MILESTONES • LINK TO FINANCIALS. • WHAT RETURNS EXPECTED FROM STRATEGY?

  8. SAMPLE SCORECARD (F3-C2-IP5-L4)

  9. ASSIGNMENT • GO BACK TO THE CASE KRISPY KREME DOUGHNUT • DEVELOP A FINAL STRATEGY FOR KRISPY KREME • PRESENT IT IN 2 SLIDES • DEVELOP A STRATEGY MAP FOR THIS STRATEGY • E-MAIL IT TO ME BY • PROVIDE THE GROUP LEADER’S HP NUMBER.

  10. WHAT YOU SHOULD HAVE UNDERSTOOD? • THE CONCEPT OF STRATEGY AS A CAUSAL MODEL OF A BUSINESS • HOW TO CONSTRUCT A STRATEGY MAP? • HOW TO DEVELOP A SCORECARD FROM THE STRATEGY MAP?