Master Sun Consulting Balanced Scorecard - Tool for

Master Sun Consulting Balanced Scorecard - Tool for

Master Sun Consulting Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard Caselet Service Industry : ICICI Bank Caselet Manufacturing Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Why Need a Balanced Scorecard? The Source of Value Has Shifted From Tangible to Intangible Assets percentage of market value related to Intangibl e Assets 38% 62% Tangible

Assets 62% 38% 85% 15% 1982 1. Brookings Institute 2. Baruch Lev analysis of S&P500 companies 19921 20002 Value Creation: Intangible Assets Training Service Quality Customer Confidence Customer Retention Revenue Information Technology

Intangible Assets Do Not Have A Direct Impact on Financial Results They Have Second- or Third-Order Impacts Conventional approach to managing financial & operational indicators insufficient Balanced Approach to Strategy Implementation should includes focus on customer/stakeholder & learning, growth & innovation Understanding & managing/leveraging inter-relationships between the above areas necessary for value creation Balanced Scorecard as a Tool for Business Excellence Malcolm Malcolm Baldrige Baldrige Balanced Balanced Scorecard Scorecard Leadership Leadership Learning Learning & & Growth Growth Perspective Perspective Human Human Resource Resource Capital Capital Learning Learning & & Growth Growth Perspective Perspective Business Business Results

Results Targets, Targets, Financial Financial Perspective Perspective Process Process Management Management Internal Internal Process Process Perspective Perspective Strategic Strategic Planning Planning Strategy Strategy Map Map Customer Customer Focus Focus Customer Customer Perspective Perspective Balanced Scorecard Balanced Scorecards key theme is not about Measurement as the term would outwardly convey Its about Value creation -Execution of Strategy Balanced Scorecard : Synonym for Managing Performance

Introduced in 1992, by Robert Kaplan and David Norton, the Balanced Scorecard is the most commonly used framework for ensuring that companies execute their strategies Today, about 70% of the Fortune 1,000 companies utilize the Balanced Scorecard to help manage performance. Balanced Scorecard Links Vision & Strategy to Personal Objectives VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Translate, Focus and Align TRANSFORMATION OBJECTIVES What we must improve PERSONAL OBJECTIVES What I need to do STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient and Effective PROCESSES Motivated & Prepared WORKFORCE Master Sun Consulting

Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard Caselet Service Industry : ICICI Bank Caselet Manufacturing Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Strategy Implementation Process Stage Business Health Check Activity Output Design Process Identification & definition of areas of improvement

Development of solution and testing Strategic Direction Strategic Guidelines Rollout Implementation of solution across all units Strategy Institutionalizati on Institutionalization of the process Sustained Strategy Business Audit Areas Business Health Check Depending on the critical needs of a business , at a point of time, the Business Health Check will focus on some or all of the following areas

Business Performance Analysis Strategy Planning Analysis Organization Culture Analysis Process & Systems Analysis Operations Analysis Marketing Analysis Sales & Distribution Analysis Customer satisfaction analysis Audit sets an agenda for transformation & also outlines the strategic thrusts for scorecard implementation Master Sun Consulting Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard Caselet Service Industry : ICICI Bank Caselet Manufacturing

Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Scorecard Design & Rollout Translate the strategy to operational terms Mobilize change through executive leadership BALANCED STRATEGY Integrate improvement programmes with scorecard SCORECARD Align the organizati on to create synergies Change people, make strategy everyones everyday job Scorecard Design & Rollout

Translate the strategy to operational terms BALANCED STRATEGY SCORECARD Translate : Strategy into 4 Components Vision and Strategy What are the financial objectives for growth and productivity? Financial Perspective What are the major sources of growth? Who are the target customers that will generate the revenue growth? What are the objectives and how do we measure success with them? Brand / product development, sales, service, operations, logistics.. Customer Perspective Internal Activities needed to create the required customer value proposition Perspective and differentiation and the desired financial outcomes Organization infrastructure, skills, capabilities, knowledge Learning and of employees, working climate.. growth

The ability to execute internal business processes in new Perspective differentiated ways Translate : Terminator Zero Unhappiness Mission To ensure that the all causes of Unhappiness for Customer are Terminated in order for the bank to vie for Service Leadership Customer Financial Customer Complaints Customer Feedback Scores Repeat Contacts Request Closure beyond 24 Hours Cost of Complaints % of Business through Cross Selling Average Revenue Per Customer Internal Processes Performance within TATs Quality Productivity % Complaints to Transactions Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Patent Score for Process Improvements SWIFT Training to Branches, Terminator Workshops Translate: Types of Measurements Measure Type Leading Lagging Input Output Outcome Objective / Quantitative Subjective / Qualitative

Definition Intermediate outcomes that predicts or drive bottom-line performance results Bottom-line performance results resulting from actions taken Amount of Investments, assets, equipment, labor hours, or budget dollars used Units of a product or service rendered - a measure of yield Resulting effect (benefit) of the use or application of an output Empirical indicators of performance Perceptions and evaluations of major customers and stakeholders Example Employee turnover rate Employee satisfaction rating Number of cashiers Number of Value Meal orders fulfilled Customer satisfaction rating Wait time Customer complaints received as a % of total customers served Scorecard Design & Rollout BALANCED STRATEGY SCORECARD

Align the organizati on to create synergies Align: Use Strategy Map to Build Cause & Effect Relationships Improve ROCE Financial Perspective Revenue Growth Strategy Increase Customer Value Build the Franchise New Revenue Sources Productivity Strategy Improve Cost Structure Customer Profitability Customer Acquisition Cost per Unit Customer Retention Improve Asset Utilization Asset Utilization Market Share Product Leadership Customer Value Proposition

Customer Perspective Product/Service Attributes Price Quality Time Learning & Growth Perspective Relationship Function Service Image Relations Brand Customer Satisfaction Build the Franchise Internal Perspective Operational Excellence (Innovation Processes) Increase Customer Value Achieve Operational Excellence

(Customer Management Processes) (Operations & Logistics Processes) A Motivated and Prepared Workforce Strategic Competencies Strategic Technologies Climate for Action Align : Flow of the Scorecard Along The Organization Plant Head :Weekly Value Loss Scorecard & Analysis Department Weekly Scorecard Maintenance Weekly Scorecard Review Production Daily Scorecard Review Production Shift Scorecard Review Packing

Daily Scorecard Review Packing Shift Scorecard Review Review Maintenance Daily Scorecard Review PC/QC Weekly Scorecard Review PC/QC Daily Scorecard Review Align :KPI Roll Down Oil Refinery Man Hours is not a constraint Manpower Index (SMI) Other Hours (Outside of Maintenance Engineering Services) Man Hour Categories Turnaround Hours (Outside of current scope)

Man Hours Unit of Hardware Standard Hours Unit of Hardware is a constraint Risk constraint Contracto r Hours Skills constraint Profit constraint Shell Hours Equipment Constraint Hours Risk Constraint Hours Skills Constraint Hours Profit Constraint Hours Shell hours constraint Non Constraint Hours Backlog Hours = Sigma [Job in queue x standard time] Crew Utilization = Contracto r Costs Non Energy Cash Costs (NECC) Equipment constraint Operating Costs Total earned hrs x 100 Actual available hrs

Planning Accuracy = Actual Hours/Estimated Hours Response Time = Sigma [Job Time Raised Job Time Closed] No. of Jobs Maintenance Schedule Adherence Cost = Actual Job Cost + Lost Opportunity Maintenanc e Capex Turnaround Cost (Outside of current scope) Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs) No. of Breakdowns Availability = (Total m/c hrs) - (m/c downtime hrs) x 100 (Total m/c hrs) Turnaround Index (MI) Maintenanc e Index (MI) Routine Index (MI) PM Index = No. of m/c for which PM is carried out No. of m/c due for PM Routine Costs Maintenance Costs Plant transform ations

Extraordinary Costs Inspection Costs Maintainability (MTTR) = (m/c downtime hrs) No. of Breakdowns RCA Planned % RCA Preventative % RCA Installation/ Repair % RCA Utilization % RCA Design % MTBF = Mean Time Between Failures Versus MMTR = Mean Time To Repair MTBM = Mean Time Between Maintenance? Align : Lowest Organism in the Food Chain Mobil Truck Drivers Truck drivers were initially skeptical about how they could affect any of the corporate strategic themes. They knew that their job was to deliver to customers By driving safely and avoiding accidents truck drivers could improve performance on all internal measures that were identified lower costs, reliable, on time, environmentally friendly ICICI-Fire in the Branch

Every single mistake by a branch added up to a lot of failures countrywide Single complaint in a branch will bring the branch to a standstill Would track to one activity not being done by a single person Refer to Drawer syndrome Align : Balanced Scorecard with Organizational Design Job based on the Scorecard Matrices rather than on position descriptions, reporting relationships, and title transformations? To what extent does your organization encourage individuals, regardless of job description, to search for innovation & growth ? Brief on how your job impacts the KPIs of other department? Extent you feel you receive a sufficient amount of feedback from internal and external sources to help you improve what you do? Extent balanced scorecard tied to the transformation initiative?

Extent performance appraisal system integrated with balanced scorecard KPIs? Extent does your current compensation/promotion system support/promote balanced scorecard KPIs? Extent do you understand what you must do to satisfy the customers needs? Align :Mission Zero Unhappiness All complaints to be resolved with root fix Complaints Root Cause Analysis & Review Reduce Service Failure Flow Close SR Within TAT Good Closure Quality Service Requests Ensure First Contact Resolution Contacts Get it right first time. Call up a customer if error is noticed Delivery Failure Transactions Scorecard Design & Rollout BALANCED STRATEGY SCORECARD

Change people, make strategy everyones everyday job Change : Minds Path Matrix No shortcuts possible... The Four States of Mind! Incompetent Support Coach Direct Delegate Conscious Competent Unconscious Unconscious Conscious Incompetent Minds Path Matrix Competent Understanding Usage Compliance Culture

Change : Minds Path Matrix Understanding Usage Compliance Culture People realising why the data recorded ininto the system be become of use to Peoplestart understand that they are being told something Recording this new or extra data and working ado new way might has new. now them

and the business in the future. Process transformation begin to inspire fact knows of life. Process compliance is high aconfidence God why because they dont see the use of it !! They start using (read : extra analyzing) the scorecards. Thisnow isisnormally viewed non-value There some light at theas end of the tunnel. added responsibility. Meetings arechecking, held to review thestop data.trying. The wheel starts turning! If you they will You stillstop need to keep them on close

track however. Change: Minds Path Matrix Understanding Usage Compliance Culture People dont think about the new system& processes anymore. It is THEIR People understand they are being toldinin tothe something Recording this new orthat extra data and working adonew waymight hasnew. now become fact and of People realising why the data recorded system be of use to athem

systemstart now. Process is Process high the business in thebecause future. transformation begin life. God knowscompliance why they dont see the use of it !! to inspire confidence They fully optimize the usage of data gathered at all levels. They start light using : analyzing) the scorecards. There is normally some at(read theas end of the tunnel. Thisnow is viewed extra non-value added responsibility. They use the Scorecards to drive improvements in business performance. Meetings arechecking, held to review

theclose data.trying. The wheel starts turning! You stillstop need to keep them on track however. If you they will stop They improve details of the systems as per the requirements. Change Management The Minds Path To Success Success Hope Pain Problem Definition Solution Development Solution Implementatio n Culture Change Change : Keep Scorecards Focused

At least one objective/measure per perspective No more than 15 measures Personal scorecard must support supervisors scorecard Every supervisor must have an objective and measure for coaching and employee development Scorecard must include an objective and measure that supports another part of the business Change : RCA Deliverables Not Received Key Issue: RTO returns would sit at the branches, waiting for customer to collect them Solution: Outbound Calling Every deliverable cleared resulted in a happy customer, lesser rework & cost savings Average Contact Ratio:65% Data :Nov04-Jun 05 Change Management : Link to Incentives ICICI

Zero Unhappiness Branches VNC Incremental Performance over Base Performance is rewarded Sales Reps often make incentive over and above salary Performance observed over a quarterly period to avoid monthly manipulations Change : Assessment Management System If you cant measure it, you cant manage it. The secret to successful change management is to be able to assess and measure your progress through the minds path The Change Management Assessment System four mindsets must be measured by Auditing.Auditing is a quantitative measure of a qualitative Change :Assessment Management System (CAMS) Audit questionnaires are developed to assess the mindset levels using a structured approach:

1. Closed ended questions for compliance. 2. Open ended questions for understanding. 3. Demonstrative questions for usage. The audit questionnaire answers get converted into a scoring scheme 0 for wrong or not done. 1 for partially right or partly done. 3 for correct or demonstrated. The percentages of each system performance category are plotted The target is 100%. Change : Assessment Management System(CAMS) Installation Status 100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

0% -5 -4 -3 -2 -1 0 Current Period InstalledPartially InstalledNot Installed System Utilization Status 100% Achievement Achievement Installation Status 80% 60% 40% 20% 0% -5 -4 -3 -2 -1 Period

Mechanical Understanding Usage Current Change : Training & Communication Ask the Head Bulletin Boards Company Intranet E D IT ORIAL THE PUNY PAYOFF FROM OFFICE COMPUTERS H S pecia l Report MA NA GE MEN T' S NE W ES T STE P C ov er Stor y THE COMPUTER SLUMP S peci al Re po rt MA NAG EMEN T DIS CO VER S THE HUM AN SIDE O F AUTO M ATION Newsletters Classes Training Workshops

Change : Training in Problem Solving Decision Making Objective: The Program intends to provide an insight to the participants in to the techniques for confronting the issues and arrive at alternatives to resolve them effectively using various tools and techniques. The program is structured to provide an exposure to the systematic approach to logical decision making for attaining most optimal use of resources and enhance effectiveness. Proposed Program Contents: Problem Solving A conscious, systematic approach for analyzing situations and articulating problems, underlying assumptions and expected outcomes Root Cause Analysis: Analysis: A structured investigation that aims to identify the true cause of a problem and the actions necessary to eliminate it. Covers tools & techniques for problem understanding, cause generation, data collection, causeand-effect analysis Six Hat Thinking: Harness lateral thinking capabilities to unearth the resources available and make optimal use of them to gain expected outcomes. Avoiding ten mental creative locks Force Field Analysis: Analysis: Identifying potential risks and opportunities inherent in the situations

80-20 Analysis or Pareto Principle: Prioritizing & focusing problem solving exercise on key issues Decision Making Even Swaps : A rational method for analyzing decision options & making swaps Hidden Traps of Decision Making & how to avoid them Group Decision Making: Using group decision making techniques like consensus & NGT. Avoiding usual traps of decision making like Groupthink Decision Implementation: Decision implementation plan, monitoring, feedback & change management Scorecard Design & Rollout BALANCED STRATEGY SCORECARD Integrate improvement programmes with scorecard Scorecards Role in Transformation Scorecard is an indispensable tool to manage & monitor a transformation/business performance improvement programme Scorecard Implementation needs to be supported by functional/departmental initiatives Scorecard supported by a Transformation Initiative drives Business Results

Integrate : Goals, Measurement & Improvement Initiatives Goal Achieve operational efficiencies with best practices in Objective Measurement Target Initiative Reduce Operational Service Costs by 50% over the next 5 years Cost per Outlet Office, Cost per Region, Cost per FTE 5% - Year 1 10% - Year 2 15% - Year 3 Activity Based Costing / Management Reduce identified re-activities within primary processes by 80% over the next 3 years

Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions) Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75% Lean / Six Sigma Integrate :Going from Output to Outcome When you first launch your Initiative, you probably want to use an Output Measurement. Once the Initiative is up and running, integrate your measurement to an Outcome to see if the Initiative is really having strategic impact. Initiative Output Measurement Outcome Measurement Lean Process / Six Sigma Number of Projects Defined by Region Overall reductions in errors, reworks, and cycle times

Employee Competency Models % of Employees who have a Competency Model in place Higher skill levels of employees using the models Forecast Integrate: Retail Management Control System Plan Control Report Review Segment Mgr Monthly Score Card Review Segment Manager Manager Retail Segment Sales Target Review Segment Mgr Daily Score Card

Retail Manager Contact Plan Territory Sales Target Retail Mgr Monthly Review Score Card Retail Mgr Review Weekly Retail Mgr Score Card Daily Score Card Review Direct Sales input Distributor Distributor Sales Target Review Distributor Coverage Target Review Distributor Daily Score Card DSM Target

Review Retailer / Customer Sales Plan Distributor Weekly Score Card DSM Weekly Score Card Customer / Retail Card DSM Monthly Score Card Market Intelligence Retail Mgr DSM Daily Score Card Contact Plan Distributor Monthly Score Card Distributor Quarterly ROI Analysis Review Review Route plan DSM

Segment Mgr Weekly Score Card Review Marketing Department Marketing Ride with Retail Mgr Ride with Integrate : ICICI Transformation Control System Planning Senior Manageme nt Junior & Middle Managemen t Control Analysis & Review Fortnightly Review Zero Unhappiness Scorecard & RCA Budget for Key Metrics for Mar 05 Daily Measurement of Metrics:Alarm Express

Daily Review & Course Correction Improvement Implementation Plan Weekly comparison of Budget vs. Actual Root Cause Analysis Focus on Short Interval Measurement, Analysis &Review Scorecard Design & Rollout Mobilize change through executive leadership BALANCED STRATEGY SCORECARD Mobilize : Top Management Commitment 1.Creating the Climate for Change Unfreeze the organization Show the need for change 2. Creating the Leadership Team Breaking down functional bias 3. Creating the Vision and Strategy BSC as a visioning process BSC to clarify the strategy 4. Creating Team Accountability Accountability for cross-functional strategic themes at Executive Team level

A successful Balanced Scorecard program starts with a recognition that it is not a metrics project, its a change process. Mobilize :Tight Focus & Extensive Review STRATEGY 60% of organizations dont link strategy & budgets update the strategy Strategic Learning Loop test the hypotheses 85% of management teams spend less than one hour per month on strategy issues BALANCED SCORECARD BUDGET 78% of organizations lock budgets to an annual cycle funding 20% of organizations take more than 16 weeks to prepare a budget Management Control Loop reportin g

PERFORMANCE Input (Resource s) Initiatives & Programs Output (Results ) 92% of organizations do not report on lead indicators Mobilize : Red Buttons to Avoid Middle Management Team: Lack of Senior Management Commitment Done by One or Two Individuals Held at the Top: For Senior Management Only Too Long a Development Process: Best Becomes the Enemy of the Good Treating the Balanced Scorecard as a Systems Project Done Only for Compensation

Not Treated as a Change Management Project Master Sun Consulting Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard Caselet Service Industry : ICICI Bank Caselet Manufacturing Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Context Focus on Top line. ICICI Bank perceived to be very aggressive on sales , very poor on service.

For bottom-line to improves it was important for the bank to be a service leader. Improved Service Leads to improved productivity & profit Generates a positive word of mouth. Attracts new customers Provides a competitive advantage. More difficult and slower for a competitor to respond to service improvement than to price change. Help us retain customers. Cheaper to retain customers than to acquire new ones Terminator : Zero Unhappiness Mission To ensure that the all causes of Unhappiness for Customer are fully Terminated in order for the bank to vie for Service Leadership Customer Financial Customer Complaints Customer Feedback Scores Repeat Contacts Request Closure beyond 24 Hours Cost of Complaints % of Business through Cross Selling Average Revenue Per Customer Internal Processes

Performance within TATs Quality Productivity % Complaints to Transactions Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Patent Score for Process Improvements SWIFT Training to Branches, Terminator Workshops Zero Unhappiness Scorecard BranchesSample Zero Unhappiness Scorecard -Deposits - Branches Top Branch CRs# Feb Feb Varian Budget Actual ce J an '05 Dec '04 Nov '04 Ikit not activated 125 50 75 169 245 422 Instruction for A/c closure not executed 120 80 40

242 139 182 Cash Deposited At Branch Not Credited 90 86 4 121 209 188 140 137 3 183 187 189 Transfer Of Accounts related issues 65 55 10 88 169

168 A/c Not Opened 20 4 16 37 131 101 Outstation collection - Dispute in Amt 20 2 18 50 64 66 FD Renewal not done - deposits 10 9 1 8 32

23 TDS Amount Deducted Disputed 5 5 0 11 13 10 Fixed deposit not linked to account 5 0 5 6 10 6 Form 15 H Not Entered 0 0 0 0 0 1

Cash Deposit In Atm Not Crdited 12 4 8 21 35 56 Fixed Deposit Interest Chq Not Received 2 0 2 3 3 8 5 3 2 11 17 24 619

435 1254 1444 Address change not done Local Outwrd chq returned physical chq not recd TOTAL Total Quality 950 Budget Feb 1-15 Variance J an Dec Nov Quality -North 90% 90% 0% 45% 55% 58% Quality -East 90% 83% -7% 69% 58%

70% Quality -West 90% 95% 5% 65% 59% 59% Quality -South 90% 79% -11% 60% 58% 58% Overall Branch Banking 90% 87% -3% 60% 58% 61% Total TAT Total CR beyond 24 hours Budget Feb 1-15 Variance J an

0 51 -51 82 Sample Scorecard Scorecard presented & reviewed in fortnightly reviews All variances are linked to RCA Comparison of Monthly Performance Vs. Budget Focus on Top Service Failures Key Indicators Focused On : Number of Service Failures, Quality, Service Request Closed within TAT Scorecard Related RCA : Deliverables Not Received Apart from wrong creation, dispatch/delivery related issues needed focus RCA: Deliverables Not Received Key Issue: RTO returns would sit at the branches, waiting for customer to collect them Solution: Outbound Calling Every deliverable cleared resulted in a happy customer, lesser rework & cost savings Average Contact Ratio:65% Data :Nov04-Jun 05

RCA : Deliverables Not Received Issue :E-search Update E-search information for certain deliverables not updated/ available resulting in inadequate /incomplete information to customers & Service Request creation errors Initiative :E-Search Update (CTD Initiative) Identified mandatory uploads for First Contact Resolution related to RPC/ CPC processes Designed and finalized the file formats for all mandatory uploads - easy reading for front end National Co-ordinator appointed to tracking e-search open cases and timely uploads I-KIT AOF Rejections,Modification Request Rejections,Nomination Rejection Letters Nomination Registration Request Rejections,Non I-Kit SB/FD-RD AOF Rejections,Transfer of Account- Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS - Form 15G Rejections etc. Terminator Results- Cost Saving Through Failure Reduction 37593205 29187237 21799520 14793313

9037555 4307529 Oct-04 Nov-04 Dec-04 J an-05 Feb-05 Mar-05 Results - Service Failures as % of Transactions 0.26% 0.30% 0.27% # of Critical Requests 100000 0.25% 0.20% 0.20% 0.21% 0.18% 0.17% 80000 102705 108124 0.17% 0.15% 60000 84805

85096 0.20% 0.12% 0.11% 0.09% 0.15% 86549 40000 47211 79463 80410 76392 71624 62926 0.10% 55161 20000 0.05% 0 0.00% Apr-04 May- Jun-04 Jul-04 Aug04 04 Sep- Oct-04 Nov04 04 Dec- Jan-05 Feb04 05 Mar05 Months # of Critical Requests % Age to Total Transactions (RHS)

% age to Total Transactions 120000 Results Quality of Request Handling 88% 87% Dec- Jan-05 Feb04 05 Mar05 90% 77% 68% 70% 62% 62% Apr-04 May04 Jun04 64% 69% 72% 68% 64% 55% 50% 30% Jul-04 Aug04

Sep- Oct-04 Nov04 04 Results-Customer Feedback Scores 85% 80% 78% 75% 80% 74% 70% 65% 85% 80% 75% 88% 87% 81% 83% 82% 80% 77% 76% 72% 67% 64%

63% 62% 56% 55% Q-I '04 Q-II '04 Q-III '04 Phone banking Asset Branches- Home Loan Jan'05 Feb'05 Mar'05 Liability Branches Asset Branches- Consumer Loan Master Sun Consulting Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard

Caselet Service Industry : ICICI Bank Caselet Manufacturing Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Indonesian Textile Giant Caselet The company is one of the largest Textile company in Indonesia Company had been hit heavily by currency crash In order to improve bottom-lines a plan to reduce the various kind of value losses in production, quality, packing, utility etc. Ambitious target of USD 4 Million in Value Loss Reduction was set Initiatives like TQM, Setting up Management Control Systems Organizational re-structuring were pioneered Balanced Scorecard was used as a strategy implementation tool to support Strategy Implementation Project Zero Value Loss Mission To ensure that the all causes of Unhappiness for Customer are fully

Terminated in order for the bank to vie for Service Leadership Customer Financial Customer Complaints Customer Feedback Scores Repeat Contacts Request Closure beyond 24 Hours Cost of Complaints % of Business through Cross Selling Average Revenue Per Customer Internal Processes Performance within TATs Quality Productivity % Complaints to Transactions Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Patent Score for Process Improvements SWIFT Training to Branches, Terminator Workshops Weekly CEO Scorecard Value Loss Financial perspective Strategy: agenda Target Plan This week Actual USD 3,035 4,988

13,717 -10,682 Quality Loss USD 4,974 5,495 6,048 -1,074 Waste Loss USD 9,636 10,841 19,802 -10,166 Packing Material Loss USD 10,926 10,926 12,500 -1,574 Process Chemicals Loss

USD 10,065 10,065 13,287 -3,222 Complaint Settlement Cost USD 0 0 0 0 Reuse Material Savings/Loss USD 7,000 6,000 5,159 -1,841 Total Value Loss USD 45,636 48,314 70,513

-28,559 Power Cost USD 51,570 46,413 48,992 50,952 -4,539 Steam Cost USD 1,200 1,080 1,140 1,137 -57 Maintenance Cost USD 0 0 Total Cost USD

52,089 -4,596 KPI U.O.M Throughput Loss Overall Base 47,493 50,132 Variance Reduction of Value Loss became the central Scorecard Reporting Flow- Plant Weekly Value Loss Scorecard & Analysis Departmen t Weekly Scorecard Maintenanc e Weekly Scorecard Review Productio n Daily Scorecard Review Productio n Shift Scorecard Review

Packing Daily Scorecard Review PC/QC Weekly Scorecard Review Maintenanc e Daily Scorecard Review PC/QC Daily Scorecard Review Packing Shift Scorecard Review Focused: Incredible focus on value loss reduction strategy was created by linking scorecards of all departments into the CEO Value Loss Scorecard Review Weekly Dept. Manager Scorecard Organization: Mobilize employees to act in fundamentally different ways, guided by value loss strategy with each employee having an individual scorecard & action plan

Packing Superintendent Scorecard Superintendents of Departments like Packing had individual Scorecards. These flowed into Production Managers Scorecard Utility Generation Scorecard Support functions like Utilities also were giving cost saving targets which were monitored through utility scorecard Cumulative Savings : Planned vs Actual 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 -200,000 -400,000 Project Week Planned Actual The Strategy Implementation Programme supported by the Balanced Scorecard produced significant Savings for the Company 40 39 38 37 36 35 34

33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 - 15 US Dollars

Results- Cumulative Savings Master Sun Consulting Balanced Scorecard - Tool for Value Creation Business Audit: Agenda for Scorecard Led Transformation Strategy Maps to Individual Scorecard Caselet Service Industry : ICICI Bank Caselet Manufacturing Caselet Marketing & Sales : Tata Steel Wire Division : Texmaco Jakarta Approach: Retail Management Control System Forecast Plan Control Report Review Segment Mgr Monthly Score Card

Review Segment Manager Manager Retail Segment Sales Target Review Segment Mgr Daily Score Card Retail Manager Contact Plan Territory Sales Target Retail Mgr Monthly Review Score Card Retail Mgr Review Weekly Retail Mgr Score Card Daily Score Card Review Direct Sales input Distributor

Distributor Sales Target Review Distributor Coverage Target Review Distributor Daily Score Card DSM Target Review Retailer / Customer Sales Plan Distributor Weekly Score Card DSM Weekly Score Card Customer / Retail Card DSM Monthly Score Card Market Intelligence Retail Mgr DSM Daily Score Card Contact Plan

Distributor Monthly Score Card Distributor Quarterly ROI Analysis Review Review Route plan DSM Segment Mgr Weekly Score Card Review Marketing Department Marketing Ride with Retail Mgr Ride with Distributor Weekly/Monthly Scorecard Retail Manager Weekly/Monthly Scorecard Chief of Sales & Marketing- Weekly Scorecard Results 1.

GI Contributions increased by Rs. 3 Crores 2. Outstanding collection savings of Rs 93 Lacs @ 12% interest PA 3. Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. 1337 Lacs post-Renoir period Incremental contribution of Rs.77 Lacs by 29% increase in sales in MTB 4. Domestic Net Realization (NR) per ton for GI increased by 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 2002) 1125 TPM for the H1 of 2002-03 compared to average of 874 TPM for the year 2001-02. Outsourcing Savings targeted at Rs. 6 Crore Finally In God We Trust , Everybody Else Must Bring Data You see, all the right things are written in books and research papers. The trick is to ensure that there is no gap between what is written in the books and your vision; from what is happening on the shop-floor and what is going on in the marketplace. That is execution. That is what makes the difference Mukesh Ambani

www.mastersungroup.com http://strategy-execution.blogspot.com [email protected] Sarvajeet Chandra: +91 9920803060 Jasravee Kaur : +91 9892301590

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