Académique Documents
Professionnel Documents
Culture Documents
Folkhlsan
Product #12693
MAPFRE Brazil
Merck & Co.
Minor Food Group
City of San Fernando
(Pampanga, Philippines)
Sociedad Hipotecaria Federal
TNT Express Services UK & Ireland
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INTRODUCTION
Results First: Creating Value along the Performance Continuum. . . . . . 2
PROFILES
Abu Dhabi Government/General Secretariat of the
Executive Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
AKSA Acrylic Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Barcelona City Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Boys & Girls Clubs of Puerto Rico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Christchurch City Council (New Zealand). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Cisco Systems/Customer Value Chain Management. . . . . . . . . . . . . . . . . . 19
Culligan Argentina. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Dimension Data Asia Pacific (formerly Datacraft Asia) . . . . . . . . . . . . . . . 23
Federal Bureau of Investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
First Philec Solar Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Folkhlsan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Health Insurance Review & Assessment Service (South Korea). . . . . . . 31
Hindustan Petroleum Corporation Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
The Hospital for Sick Children (Toronto). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
MAPFRE Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Merck & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Minor Food Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
City of San Fernando (Pampanga, Philippines) . . . . . . . . . . . . . . . . . . . . . . . 43
Sociedad Hipotecaria Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
TNT Express Services UK & Ireland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
1 K
otter is author of the best-selling book Leading Change (Harvard Business Press, 1995) and a popular version of the book, Our Iceberg Is Melting (St. Martins Press,
2006). Robert Kaplan mapped Kotters eight principles to the six stages of the Kaplan-Norton system in Leading Change with the Strategy Execution System,
Balanced Scorecard Report: The Strategy Execution Source, NovemberDecember 2010 (Reprint #B1011A).
According to Arun Balakrishnan, former chairman and managing director of Hindustan Petroleum, a 2010
Hall of Fame winner, The Kaplan-Norton approach helped us early on to clarify our strategic objectives,
align ourselves with them, and communicate and implement change.
companies that do not. This differential constitutes what we
call an execution premium, creating extraordinary value for
stakeholders.
A 2009 survey of members of the Palladium Execution Premium
Community (XPC), an online community of strategy management
professionals, provided powerful evidence of the added impact
of the BSC when used in combination with enterprise performance management technologies such as business intelligence
and decision analytics. Survey participants were asked about
their use (and length of use) of the BSC, as well as their use of
such technologies. It turns out that the use of decision analytics
alone (without the BSC) does little to improve an organizations
chances of strategic success; fewer than 20% reported achieving
breakthrough results.
A separate study by Palladium, published in Business Network
Transformation: Strategies to Reconfigure Your Business
Relationships for Competitive Advantage, demonstrates how
powerful the outcome is when analytics are combined with the
BSC.3 The odds of success rise dramatically: to a 57% chance of
breakthrough results (when BSC usage is less than three years)
and to 77% when the BSC has been in use for more than three
2 A
. Crabtree and G. DeBusk, The Effects of Adopting the Balanced Scorecard on Shareholder Returns, Advances in Accounting, incorporating Advances in
International Accounting 24 (2008): 815. See also BSC Adoption Boosts Shareholder Returns: Findings from a Recent Study by DeBusk and Crabtree, in Balanced
Scorecard Report, MayJune 2010 (Reprint #B1005C).
3 J. Word, ed., Business Network Transformation: Strategies to Reconfigure Your Business Relationships for Competitive Advantage (Wiley & Sons, 2009).
Strategy execution is a team sport. The roles of the chief operating officer, chief financial officer, chief
strategy officer, chief information officer, and chief human resources officeralong with the other
C-suite and business-unit chiefs that make up the senior leadership teamare critical to effective
strategy execution.
Long before Duluth, Minnesotabased Essentia Health achieved
a compound annual growth rate of 127% while improving
operating margins by a factor of 3, Essentia saw results. In fact,
Essentiaa $1.6 billion healthcare system (formerly SMDC
Health System, a 2002 Hall of Fame winner)realized results
almost immediately after adopting the Kaplan-Norton approach
more than a decade ago. Getting ourselves aligned first was a
turning point for the executive team, says CEO Peter Person,
M.D. The agenda of our monthly leadership meeting shifted
from day-to-day operations to strategic-issue decision making.
And at the Toronto-based Hospital for Sick Children (another
2010 winner), the common cause of alignment, as clarified in
the hospitals BSC and in from-to diagrams illustrating current
status to desired state, created a near-immediate culture shift
from silos to solidarity. Within two quarters, MRI wait times fell,
and medication reconciliation (analyzing the interactions of
all of a patients medications) went from being performed on
33% of patients admitted to nearly 70% of them.
Although its not easy to measure the quantitative value of
organizational results, many Hall of Fame organizations have
managed to do so. The ability of Nemours, the Wilmington,
Delawarebased pediatric healthcare institution and 2007 Hall
of Fame winner, to communicate its strategy to a bond rating
agency convinced the agency to award the hospital a AAA rating.
This organizational competency saved Nemours what might
have amounted to millions of dollars in borrowing costs (a financial result) as the organization prepared to undertake a major
capital expansion.
Even before achieving dramatic breakthroughs in revenue and
profits, strategy-focused organizations achieve operational
results. For example, their leading KPIs show improvements in
such areas as cycle time reduction, employee retention, and
Timing Is Everything
Nor are results limited to the organizational and the operational.
Several years ago, in assessing the strategic initiatives portfolio
of a bank client, we were able to document in less than a month
that 30% of its initiatives had little or no measurable strategic
impact. At the same time, key elements of the banks strategy
lacked initiatives that could close the performance gap. By pulling the plug on the 30% of initiatives lacking strategic impact,
the bank saved millions. Launching new initiatives that did in
fact support the banks strategic objectives added some cost,
but the bank still realized a net savings of many millions of
dollarsmoney it was then able to reinvest elsewhere. Equally
important, management was assured that every strategic
objective was now supported by one or more corresponding
initiatives. This causal link, fundamental to the Kaplan-Norton
approach, translates into significant tangible benefits.
The causal links between strategy map perspectivesalso
fundamental to the Kaplan-Norton approachprovide us with
an even clearer way to understand the sequence and timing of
results. In the foundational learning and growth perspective
(known at the FBI, another 2010 Hall of Fame winner, as the
three Ts: talent, teamwork, and technology), many Hall of Fame
members measure employees awareness and understanding
of the strategy and employee engagement. Generally speaking,
Its worth noting that although weve been citing CEOs throughout these examples, strategy execution is a team sport. The roles
of the chief operating officer, chief financial officer, chief strategy
officer, chief information officer, and chief human resources
officeralong with the other C-suite and business-unit chiefs
that make up the senior leadership teamare critical to effective
strategy execution. Each of these individuals brings a unique
perspective, insight, experience, and influence to bear in executing the strategy. Each ones personal engagement, commitment
to change, and effectiveness in aligning his or her own unit or
area to the strategy are essential ingredients to success.
Strategy execution is indeed a journey. But that doesnt mean organizations cannot experience results
along the way. Organizations neednt delay gratification; in fact, by pursuing and expecting preliminary
results, they lay the groundwork for an execution premium down the road. Strategy execution is a
continuum; results are cumulative and reinforce each other.
environment in which competitors can come seemingly out of
nowhere to overtake even the most established market leader
with breathtaking speed.
Social services organizations Folkhlsan (the Finnish health
and wellness group) and the Boys & Girls Clubs of Puerto Rico
grappled with growth and the need for clear, well-communicated
strategies and new systems and processes to support them
all while maintaining the financial discipline that is often overlooked, though no less important, in nonprofits.
On top of a national economic crisis and a flood of new competitors, Culligan Argentina faced an overwhelming lack of management systems and customer service standards that threatened
its fiscal survival. Dimension Data Asia Pacific, already familiar
with the ruthlessness of IT markets, needed a mechanism for
evolving from a product to a solutions focusand one that
would help it transcend the cultural and process differences
among its 13 geographies. Hindustan Petroleum Corporation
faced market liberalization with a workforce unprepared for
the rigors of private competition. The Hospital for Sick Children
needed an organizing framework to prioritize, communicate,
and pursue its ambitious goals in care, research, and education.
In addition to unifying two separate entities, MAPFRE Brazil had
to find a way to build growth in a new marketthe substantial
lower-income segment of the Brazilian population that had
never before bought insurance. Shifting costs, expiring patents,
and skyrocketing innovation costs prompted Merck & Co. to
create a rigorous strategy management infrastructure. A raft of
strategic risks convinced executives at Minor Food Group that
a strategy makeoveralong with a disciplined management
systemwas imperative. And intensifying competition, flat customer satisfaction, and a looming recession convinced leaders
at TNT Express Services UK & Ireland that they needed a clearly
articulated strategy, strategy management structures (such as
an Office of Strategy Management), and prioritized initiatives to
remain viable.
Through the profiles of these 20 organizations, youll learn more
about the challenges they faced, their decisions and actions, and
the execution premiums they realized. Their successes are all the
more impressive considering they were achieved during a time
of recession and economic uncertainty.
4 A
n early 1980s survey of management consultants noted that fewer than 10% of well-formulated strategies were successfully implemented (reported in Corporate Strategists Under Fire, by Walter Kiechel, Fortune, December 27, 1982). By 1999, the statistics had hardly improved; in Why CEOs Fail (Fortune, June 21, 1999),
Ram Charan and Geoffrey Colvin observed that 70% of companies failed at strategy execution.
These champions identify specific whole-ofgovernment outcomes for which they are
responsible and also develop outcome definition
cardsmini-scorecards with key measures
that help the ADGSEC quickly see whether outcomes are being achieved.
and gaps; it then oversees and monitors their progress. The OSM
also prioritizes initiatives by assigning each one a score and
plotting results according to such criteria as strategic relevance
and available resources. Additional analysis examines such
considerations as the relationship between feasibility and ease
of implementation.
The GPMD also ensures that initiatives are linked to specific
budget categoriesoperating expenditures (OpEx), capital
expenditures (CapEx), and strategic expenditures (StratEx)and
takes steps to detect any misallocation of resources. As part
of the yearly budgeting process, the GPMD and Department of
Finance calculate the total budget allocated to each strategic
goal and identify relevant initiatives, as well as the entities
driving those initiatives.
Initiatives often affect multiple outcomes or themes. Those
aimed at developing human capital through education might
also, for instance, affect social sustainability, because that
theme encompasses education and healthcare quality. To
ensure fund allocations are balanced, each initiative is analyzed
to determine its impact on the WoG outcomes and entity-level
priorities, as well as on service delivery.
10
Execution Premium
(All results from 20072009 unless otherwise indicated)
Employment rose from less than 43% to 50.2%, supporting the objective on the human capital strategy map to
Strive for full employment.
GDP value increased by 22% in 2008, reflecting achievement against the objective to build rapid, sustainable
GDP growth.
Percentage of initiatives executed on time increased
from less than 65% to 74%.
The United Arab Emirates ranking on the ICT Networked
Readiness Index rose from 29 (of 130-plus nations) in
20072008 to 23 in 20092010. The index, published by
the World Economic Forum in cooperation with
INSEAD, is the leading global ranking of the impact of
information communication technology on nations
development and competitiveness.
Future Focus
Further increasing the horizontal alignment among
entities to bolster their collaboration in delivering
results.
Linking individual objectives to overall strategy.
Increasing the use of performance management by top
leadership as a key tool in decision making.
Improving efforts by the GPMD to facilitate the exchange of best practices among entities.
11
Communications are tailored to different managerial and employee audiences and include daily
internal TV programs and access to scorecards
through information kiosks; monthly department
meetings and celebrations of successes; quarterly
performance reports and strategy reviews; and an
annual publication of corporate objectives.
The company backs its leadership approach with identification
of strategic job families, investing most heavily in development
(through training) or acquisition (through recruiting) of competencies directly affecting innovation. These competencies
include gathering information, creativity, conceptual thinking,
self-confidence, and team training. AKSA has also taken steps
to craft a culture of innovation; for instance, it provides awards
as well as individual and team incentives for inventions and
patents.
Says board member and general manager Mustafa Yilmaz,
One of the most important steps in strategic management is
to ensure the deployment of strategy through the organization and to secure its spreading and ownership throughout all
management layers. AKSAs results strongly suggest that the
company has mastered this step. In three yearsand amid a
global economic downturn that forced some competitors out of
businessAKSA saw dramatic improvements in sales, profits,
returns on investment and equity, market share, customer satisfaction, and employee loyalty.
12
Execution Premium
(All results from 20052008)
Future Focus
Aligning the BSC with the companys new strategic business unit structure to increase management efficiency.
Upgrading reporting through improvements in information technology platforms.
Using AKSAs experience to expand the use of the BSC to
its sister companies within AKKK.
Barcelona 2.0
The Barcelona City Council is no stranger to municipal selfreinvention. It launched a major transformation effort in
preparation for the 1992 Olympics that helped win Barcelona
international recognition as a best-in-class city.
The team believed that the BSC would help the City Council
translate the incumbent governments political strategy for the
20082011 termpromises made to constituents and expressed
in the Municipal Action Plan (MAP)into objectives, measures,
targets, and initiatives to fulfill those promises. The BSC would
further help the council tie its budgeting process to the city
governments political strategy. In addition, the scorecard
methodology could help the council address other frustrations. These included lack of communication and collaboration
among the districts and sectors, technological backwardness,
and a workforce not only exhausted by chronic conflict (in
part due to a lack of career planning) and overwork but also
highly resistant to change. Puig determined to replace the
councils culture of complacency and inefficiency with one of
performance, accountability, transparency, and alignment to an
agreed-upon strategy.
By June 2008, the council had developed its own strategy map
reflecting the priorities laid out in the MAP. The map had four
perspectivesValue, Citizens, Services, and Resourcesand six
strategic themes: Coexistence and Proximity [to citizens], Social
Inclusion, Sustainability and Commitment to the Environment,
Competitive with the Global Economy, Capital Status [citizens
economic well-being], and Successful Government. That same
month, the map was cascaded to the sectors and districts as
well as to shared services (functional) units. Twenty-four scorecards were developed from December 2008 through April 2010.
In 2008, the newly elected council launched another transformation programBarcelona 2.0to address the challenges of
a rapidly changing world. These include citizens demand for
ever-more-convenient and higher-quality e-services, unprecedented demographic diversity and mobility stemming from
the European Unions open-borders policy, recognition of the
need for environmental and social responsibility, and the global
economic recession (which has threatened Barcelonas allimportant tourist trade).
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14
Execution Premium
(All results from 20082010)
Future Focus
Instituting a driver model for each unit to better link
the citys strategy management process to operations
managementby identifying operational processes
and activities that support performance on strategic
objectives and metrics and establishing dashboards to
monitor them.
Extending the BSC model and its supporting technology to public institutions within the councils control,
such as the Institut Municipal dInformtica (Technical
Institute) and Barcelona Serveis Mobilitat (Mobility
Services).
But the BSC is more than just a tool for performance measurement and employee alignment. BGCPRs board, in fact, actively
uses the Balanced Scorecard and has its own strategy map to
align itself with BGCPRs strategy. Every trimester, the board
convenes for an organizational briefing, and, once a year,
members hold a retreat to evaluate the boards as well as the
organizations performance.
The team articulated an ambitious vision: becoming the leading nonprofit in Puerto Rico, offering high-quality programs,
and being the best investment choice for donors. It created a
strategy map organized around four areas: Donors and Partici-
The BSC plays a vital role in employees professional development at BGCPR. At the beginning of every fiscal year, employees meet with their supervisors to discuss personal action
plans and how their activities relate to organizational and
Investing in Employees
15
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Execution Premium
(All results from 20052010)
Future Focus
Mentoring other nonprofits in Puerto Rico on the use of
the Balanced Scorecard.
Implementing such process improvement methods as
Six Sigma, Lean Six Sigma, and the Baldrige Performance
Excellence program.
Encouraging more local autonomy in refining BSCs and
managing the BSC process.
From 2007 to 2009, the CCC created BSCs for every level of
operation, from senior management to teams. For example, the
Regulatory Services departmental BSC (which rolls up to the
executive management BSC) cascades to its units (e.g., Inspections and Enforcement) and finally to individual operational
teams (e.g., animal control). Each BSC contains the mandated
vital few strategic objectives for the four BSC perspectives
(customer, finance, process, and people). These strategic objectiveswhich the CCC calls its strategic spineare affirmed
each year by the executive team. Cross-functional initiatives
support strategic objectives. The Enterprise Project Management System (EPMS), for example, provides project management and tracking software and processes for the 1,000-plus
infrastructure projects (e.g., roads, wastewater, parks) that
the CCC delivers each year. Accountability for EPMS is shared
across the planning, IT, finance, and project delivery arms of
the CCC. Each task within an initiative has a designated owner,
and performance is tracked on the owners individual employee
performance plan.
A three-person Office of Strategy Management (OSM), established in 2006, coordinates the scorecard program throughout
the councils business units. In addition to overseeing the
integration of corporate strategy with business unit strategy,
the OSM helps link individual performance plans to strategy.
The OSM also advises the CEO on strategy management matters
and facilitates monthly scorecard reviews by key department
heads and the CFO.
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Execution Premium
(All results from 20062008 unless otherwise indicated)
Future Focus
Focusing the CCCs Six Sigma program on underperfor
ming Balanced Scorecard objectives.
Refining the midyear and annual strategy review
processes.
We wish Peter Ryan, his city management colleagues, and the people of Christchurch all the best in their recovery efforts.
18
Cisco Systems/Customer
Value Chain Management
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20
Execution Premium
(All results from 20072010)
Future Focus
Propagating the BSC framework to other parts of Cisco
to promote horizontal and vertical alignment.
Strengthening strategic analytics capabilities to manage multiple global supply chains as Cisco expands into
new markets.
Culligan Argentina
Culligan Argentina rolled out its BSC program in two waves. The
first wave, from 2002 to 2006, saw creation of the enterpriselevel strategy map and scorecard and their cascade to the three
offices. Most of the 44 strategic objectives in the enterpriselevel map were in the internal process perspective, under three
strategic themes: Operational Excellence, Client Management
Capabilities, and Corporate Social Responsibility.
The latter two themes signaled a desire to strengthen customer intimacy by moving from merely selling water coolers to
enhancing customers awareness about pressing water-related
issues. For example, the Client Management Capabilities theme
included objectives for developing a water treatment business
and validating water experts credentials. The Corporate Social
Responsibility theme included objectives for raising customers
awareness of environmental issues and educating them about
waters importance.
Results from this initial wave were impressive: annual customer
attrition fell from 71% to 22%, the client base grew 36%, workforce productivity rose 44%, and collections improved from 115
days sales outstanding to 58. Costs decreased, and resources
were focused on customers needs instead of pet projects.
21
This wave delivered more incremental results, including reductions in water-quality complaints, employee injury rates, and
service complaints, as well as improvements in logistics and
distribution efficiencies. Collections improvements gained in
the first wave held steady even during the global recession. And
the unit tightened its grip on the considerable risks inherent in
its business because of Argentinas complex regulatory environment. Independent truck owners to which it outsourced delivery
represented a labor headache, so the company helped them organize professionally into three companies. This move reduced
contingent labor liabilities from 120% to only 20% of sales.
22
Execution Premium
(All results from 20022009)
Future Focus
Enhancing data analysis through the use of statistical tools (such as Monte Carlo simulations) to validate
cause-and-effect relationships.
Launching a customer co-creation initiative to test
value creation assumptions in the corporate strategy
map.
Developing a strategic expenditure (StratEx) budget to
improve funding of strategic initiatives.
with the parent company. In March, executives convene at regional strategy retreats to address four questions: Where are we
now? Where do we want to go? How will we get there? How will
we drive and measure results? They review past performance as
well as market and competitor trends, set priorities three years
out, and outline eight to 10 core initiatives. Each country team
aligns its initiatives to the strategy, selecting those most appropriate to its market and internal capabilities. Each countrys
budget includes separate strategic expenditure (StratEx) funds
to support these initiatives.
So in 2006 the firm launched its BSC, strategy map, and Office
of Strategy Management (OSM), cascading the BSC and map the
following year. The strategy map was organized around four
themes: Accelerate Solutions and Services Innovation, Maximize
Client Value, Drive Quality and Productivity, and Foster a
Performance-oriented Culture.
23
Execution Premium
(All results from 20062010 unless otherwise indicated)
24
Future Focus
Developing regional scorecards for large, complex
markets, such as India and China.
Expanding joint partner scorecards to include Global
Solution partners.
Increasing the number of joint scorecards with
strategic clients.
Federal Bureau of
Investigation
25
An Expanding OSM
In 2007, the FBI established its Strategy Management Office
(SMO), which reports to the head of the bureaus Resource Planning Office. Originally staffed with four full-time employees,
the SMO today has 10 people who handle the offices expanded
responsibilities. These include educating new hires on the SMS,
providing quarterly reporting documentation, and coordinating
performance to such oversight entities as the DOJ, the Office of
the Director of National Intelligence, and the Office of Management and Budget. As of 2010, the office has led 27 branches and
divisions in developing their first strategy maps and scorecards.
Signs of Success
Although the bureau cant reveal classified or sensitive information about its operations, several achievements that it can
reveal speak to the value that the SMS has provided in helping
the FBI fulfill its complex mandate.
For example, through its focus on the strategic objective Information dissemination and integration, the FBI has stepped
up production of intelligence information reports and is now
measuring their quality and timeliness. A strategic initiative on
surveillance has significantly increased surveillance capacity
in only two years. The bureau has also updated IT systems and
reengineered hiring processes to recruit employees with hardto-find skills and expertise as well as to increase the speed and
efficiency with which people are processed for security clearance and hiring.
Says Mueller, SMS has been incredibly useful to the FBIs senior
executive team in terms of setting the course for the bureau ...
and the objectives we must meet to get there. SMS provides the
means to focus on long-term goals while balancing the need to
address crime and terrorism, every day.
Execution Premium
(All results from 20062010)
Future Focus
Continuing to integrate the SMS with individual
employee performance evaluations, particularly for
senior executives, as well as with the internal
inspection and budget processes.
Continuing to translate the organizational strategy to
operational strategies in the field.
Increasing the use of SMS measures in external
performance reporting.
Implementing future releases and versions of the
recently released strategy management tool.
1 P
ersonnel numbers are as of January 2011. In addition, the FBI uses some 175 personnel from other agencies and 4,500 task force officers (personnel employed by
partner organizations who work at least part-time on joint investigative efforts with FBI personnel).
26
27
cause analysis, and fishbone diagrams support the BSC in arming decision makers with the information needed to assess and
test strategy and, where needed, make the case for change.
These tools helped FPSC in 2009 achieve two important strategic successes in quality and process improvement. First, to
reduce unit costs associated with the price fluctuations of
raw materials, the cost of air freighting raw materials, and an
increase in material use, FPSC purchased equipment to recycle
materials in-house. Doing so saved the company $3 million by
year-end. In addition, FPSC established 28% higher saw-cutting
times than the industry average within its first four months,
and increased saw utilization (by 22%) and capacity (by 30%),
saving about $4 million in 2009.
Execution Premium
In its first six months of operations, FPSC surpassed
stretch targets for revenue and NIAT.
During its first full year of operations, FPSC broke
even, far exceeding the $2 million loss expected in its
business plan.
The company achieved the most aggressive sawcutting time in the world28% faster than the industry
average.
Floor space utilization and materials efficiencies
have yielded a cumulative savings of $7 million within
three years.
Customer satisfaction improved by 16% from 2008
to 2009.
In year 1 of operations, FPSC achieved 100% timely
deployment of quality hires, and 98% of key positions
were filled for 2009.
Future Focus
Improving strategic awareness and understanding
of the BSC to bolster alignment.
Cascading the BSC throughout more departments
(such as marketing) and subcontracted services (such
as transportation).
Creating supplier and contractor BSCs in coordination with those partners to monitor their performance
against company goals.
Deepening the incentives for strategy execution
excellence by further integrating the BSC into the
performance management and rewards system.
Consolidating the Lot Tracking System, the HR Information System, and ERP systems data into a single BSC
database.
Implementing a separate strategic expenditures
(StratEx) category into the management reporting
system.
1 First Philippine Electric Corporation is part of the Lopez Group of Companies, a Philippine conglomerate with holdings chiefly in power and telecommunications.
2 Supplier financing involves arranging alternative payment terms or providing equipment and services in demo condition prior to actual purchase.
28
Folkhlsan
Folkhlsan has also used documentation to identify the processes critical for achieving its strategic objectives and ensur-
29
1 An effort to make the nations healthcare system more efficient and fairer to all.
30
Execution Premium
(All results from 20062009)
Future Focus
Enhancing the monitoring of strategic initiatives.
Developing an internal audit process to monitor the
effectiveness of process improvement efforts.
Using Map and Compass to report strategic
performance to the board of directors.
Improving links between rewards and employees
performance; strategic objectives and risk management; and objectives and the organizations
environmental policy.
Growing workloads,
a medically needier
population, and new
technologies were overwhelming the agency
charged with monitoring quality and cost for South
Koreas public healthcare system. A new management system, strong leadership, and mechanisms
that raised accountability took the agency to new
levels of performanceearning it a reputation as a
model government agency.
31
Execution Premium
(All results from 20052009 unless otherwise indicated)
Customer satisfaction (as measured in the 2009 Customer Satisfaction Survey for Public Organizations) rose
44.4% between 2004 and 2009, from 57.7 to 83.3.
HIRAs key risk indicator system gives executives early warning signssuch as the number of reviews closed in any given
quarter exceeding the legal deadline. Leaders can thus determine
whether the risk of delay in the review process has increased
and respond appropriately.
Best practice sharing has fueled innovation at HIRA, including the development of a comprehensive medical information
system. Today, HIRA has more than 180 communities of practice
(CoPs), with nearly 4,600 members (many people participate in
multiple CoPs). The CoP for the Healthcare Fee Review department, for example, consists of virtual review rooms categorized
according to the different areas of review (e.g., rehabilitation,
neurosurgery). In addition, HIRAs OSM offers coaching and consulting services to underperforming divisions by leveraging the
best practices of high-performing divisions.
Among the most dramatic illustrations of the BSCs effectiveness at HIRA has been the agencys One-Stop Service for Refunds
program, which reduced the processing time for medical fee
refunds from an average of 74 days to 32 days. Newfound efficiencies have led to significant cost reductions; in 2009 alone,
the agency cut $220 million in medical expenses by preventing
inaccurate or excessive prescriptions at healthcare institutions
that participated in HIRAs on-site reviews.
Future Focus
32
Hindustan Petroleum
Corporation Ltd.
environment of trust, pride, and camaraderieall while achieving the highest possible growth rate and ROI.
Management then built the corporate strategy map and scorecard. Objectives included Improve strategic thinking capabilities (learning and growth perspective), Ensure inter-SBU coordination (internal process), Increase profitability of dealers
(customer), Increase focus on premium products (financial),
and Conscientious corporate citizen (corporate).
Boasting $25 billion in annual sales and an 11,000-strong workforce, Hindustan Petroleum Corporation Ltd. (HPCL) is a Fortune
500 giant. The Mumbai-headquartered company was created in
1974 and owns and operates two major oil refineries as well as
the largest lubricants refinery in India. Its other business units
include Aviation, Bulk Fuel, Liquefied Petroleum Gas (LPG), Lubricants, Retail (60% of the companys business), Trade (including
oil and petroleum-product imports and exports), Exploration
and Production, and Joint Venture Companies.1
HPCL has 13 regional marketing offices, 130 terminals and depots, more than 8,500 gas stations, 43 LPG plants, and 2,250 LPG
dealerships. Three large cross-country pipelines carry petroleum
products to the companys major supply points.
33
Execution Premium
(All results from 20042009)
Future Focus
Integrating BSC reporting software with the companys
existing enterprise resource planning platform.
Continuing to train newly hired managers in the BSC
methodology.
Holding vision-building workshops.
Revisiting strategy maps at least quarterly to ensure
alignment of objectives and initiatives.
Reviewing and refreshing individual Balanced
Scorecards to conform to strategy map and BSC
changes.
1 H
PCL currently has nine joint ventures and two subsidiaries in such businesses as manufacturing and marketing specialized bitumen emulsion, underground LPG
storage, and distributing and marketing environmentally friendly fuels.
2 S
hared Vision is one of the five disciplines of a learning organization defined by Peter Senge in his book The Fifth Discipline. The remaining disciplines are Team
Learning, Personal Mastery, Mental Models, and Systems Thinking.
34
Data gathering in the healthcare industry has become a widespread imperative in Canada (as elsewhere, due to the growth
of public insurance), with a focus on measuring clinical performance, financial performance, and patient satisfaction. In the
mid-1990s, a handful of Ontario hospitals implemented dashboards, report cards, and scorecards.
For these and other reasonsleadership changes, new directions taken by the Ontario MOHLTC, and developments in
healthcarein April 2005 SickKids began developing what it
calls strategic directions to identify challenges, opportunities,
and priorities. To measure and manage the strategy, executives
in 2007 adopted the Balanced Scorecard (which had already
Fast Results
35
Target-Setting Expertise
Because SickKids is a mission-driven organization, nonfinancial
performance is the ultimate measure of success in its BSC.
Known for its expertise in developing nonfinancial metrics,
SickKids is regularly consulted about target setting; hospital
officials chair provincial and national benchmarking initiatives.
Moreover, the hospital is often asked to consult on quality
topics such as patient safety, access to care, and family-centered
care, and OSM personnel speak at industry meetings about
implementing an OSM.
Having a well-articulated strategy not only benefits the hospital
internally but also helps attract top international recruits, who
cite it as a key reason for their interest in joining the organization. Using the BSC framework to define, operationalize, monitor,
and report its strategy, SickKids is on healthcares leading edge,
an achievement that CEO Mary Jo Haddad attributes to its focus
on the measurement, monitoring, and management enabled
by the scorecard. Closely linking abstract concepts such as
quality and safety with concrete actions enables SickKids to
pursue its vision of ushering in a better world by improving the
health of children.
Execution Premium
(All results from 20062010)
Future Focus
Cascading the scorecard into all business and support
service units, and then more deeply into their subunits,
as appropriate.
Integrating operational dashboards into the BSC
framework.
Building the internal capacity to align and integrate the
scorecard with Six Sigma, Lean, and other performance
and continuous improvement initiatives.
Enhancing automation and use of the SickKids decision
support reporting tool on the hospital intranet. The tool
will include all scorecards for the organization as well
as each areas dashboard of operational indicators.
Enhancing public performance reporting on the public
website to include relevant aspects of the SickKids
scorecard for patients and families, government stakeholders, and prospective staff.
1 Infection rates are complicated (with many risk factors), and changes in rates cannot easily be attributed to any single prevention strategy. Increasing
compliance rates is also about the process and about enhancing a culture of safety/improvement, and hand hygiene compliance contributes to the overall
culture of safety at SickKids.
36
MAPFRE Brazil
Already adept at operational
efficiencies, this major Latin
American insurer was bent on innovating products
and services. Creative strategy education programs
and a rigorous approach to target setting helped
MAPFRE Brazil win new customers and realize
breakthrough financial performance.
Founded in 1933 by a group of Spanish farmers to protect their
investments, MAPFRE is one of the worlds largest insurance
companies.1 Outside Spain, its largest operation is MAPFRE
Brazil, with 15 million customers, some $2.9 billion in issued
premiums, $301.8 million in revenue, and 2,750 employees.
MAPFRE Brazilwhich now represents around 69% of the
companys total profits in Latin America and more than 15%
worldwidewas formed in 1992 from an acquisition. Originally
two separate entities (insurance and pensions), the company in
2003 became a single organization to facilitate growth. Senior
executives realized that the new unit required a new way of
managing as well as a common management language. So that
year, they developed a Balanced Scorecard and strategy map
to define the companys strategic fundamentals, create a new
culture, and align its initiatives among its four business units:
Auto, General Insurance, Life Insurance and Pensions, and Credit
and Warranties.
Over the past 10 years, the company has fostered operational efficiency through Six Sigma, saving an estimated $29 million. But
the real challenge to growth was demographic: many Brazilians
lived near the poverty line and did not traditionally buy insurance. Thus, the dominant strategy of the retooled MAPFRE Brazil
was innovating products and services, a strategy it has pursued
by offering as many insurance products as possible in as many
ways as possible, with each product customized for the channel.
Thanks to top executives early support, within a year of its BSC
rollout, MAPFRE Brazil had developed a BSC and strategy map,
cascaded them to the business and support units, launched
a performance management system, and aligned strategy to
compensation.
MAPFRE Brazil developed three strategic themesProcess
Excellence (Lean management, Six Sigma, internal control, and
technology); Customer Focus (distribution, services and clubs,
and branding); and People (high performance, recognition, and
working environment). The company does not manage themes
cross-functionally, although the move from a product-structured
to a customer-focused organizational structure, currently under
consideration, might prompt such an approach. Today, MAPFRE
Brazil uses two types of strategy maps: a short-term (one-year
Bulls-Eye on Targets
Every year, as part of its strategy refresh process, MAPFRE Brazil
looks at long-term (three- to five-year) goals (defined for all key
performance indicators [KPIs] in all perspectives) and focuses
on the current years activities toward each goal, broken down
by deadlines. For example, the target for the combined ratio is
divided among 12 products, each with its own accountability
and target, and is further deconstructed into specific components for each of the business units. Stretch targets emphasize
continuous improvement.
Each business unit assesses its challenges and develops its
financial and nonfinancial targets in a workshop attended by all
business and support units. Following the workshops, managers
discuss and revise these targets, with final approval by senior
executives. Each business unit then updates its strategy map,
targets, and KPIs, and creates action plans. Next, the Office of
Strategy Management (OSM) conducts workshops with executives and business unit (BU) leaders to validate the revised
strategy framework (map, KPIs, targets, and initiatives). Each BU
discusses its revised targets and commits to a specific level of
performance. Then the units cascade the objectives and targets,
both short- and long-term, to individuals.
37
Execution Premium
(All results from 20032009 unless otherwise specified)
Future Focus
Related to postmerger integration:
1. Updating the corporate short-term and long-term
strategy maps and corresponding Balanced
Scorecards.
2. Launching a new strategy communication plan
for new merged employees, with strong emphasis
on training and development on the management
model and dynamics.
Developing a new technology solution to enhance
graphics and various capabilities.
Improving initiative management capability to view
strategic initiatives as a single portfolio.
1 In Spanish, MAPFRE stands for Mutualidad de la Agrupacin de Propietarios de Fincas Rusticas en Espaa.
2 Ranking is from the Best Companies to Work for in Brazil survey, provided by the Great Place to Work Institute.
3 An insurance industry measure of profitability, a ratio of the sum of incurred losses and expenses divided by earned premium. The lower the number, the better.
4 At press time, approval was pending from SUSEP, the insurance regulatory body in Brazil.
38
A Confluence of Challenges
The pharmaceutical industry has always faced unique challenges. But in 2005, a number of challenges converged to create
a particularly daunting business environment. Throughout
the world, governments and managed-care companies were
making drug reimbursement more difficult, thus shifting costs
to consumers, who are typically more price sensitive. Patents
protecting an entire generation of successful products were
set to expire. Innovation was becoming costlier and riskier. And
a series of high-profile product withdrawals had heightened
regulatory scrutiny.
Merck wasnt immune to these pressures. The firm had experienced its share of late-stage product failures and, looking ahead
to 2010, expected to lose around $10 billion in revenues due to
patent expiries on key products. Industry analysts ranked Merck
near the bottom of leading health care companies2 in expectations for near-term revenue and earnings-per-share growth.
A Plan to Win
Yet Merck had numerous strengths it could build on to regain its
leadership position, among them a global workforce, a range of
innovative offerings sold worldwide, and an unrelenting commitment to investing in R&D.
39
others as needed, was designed to enhance postmerger coordination and ensure clarity of strategic priorities, with its members
serving as change agents for major strategic initiatives. With
the existing SRO structure in place, this new group enabled
Merck to more readily align its postmerger activities around key
objectives. It smoothed the integration process, and that helped
Merck maintain momentum in its ongoing operations and
enabled managers to resume business as usual more quickly.
Chief Strategy Officer Mervyn Turner sums up Mercks experience with the BSC in straightforward language: [The strategy
map and scorecard] are critical to our alignment as a company,
ensuring that everything we do, at every level, is focused on the
successful execution of Mercks strategy.
40
Execution Premium
(All results from 20052009 unless otherwise indicated)
Future Focus
Enhancing strategy reviews with information from the
companys enterprise risk management group.
Enhancing strategy reviews with dashboards, allowing
deeper analysis of key initiatives.
Continuing to review best practices to improve strategy
alignment and execution throughout the world.
Another major setback came in 2000, when MFG lost the Pizza
Hut franchise after a drawn-out court battle over a franchising rights contract. The companys market capitalization was
decimated, and MFG was taken off the Thailand Stock Exchange.
Six years later, the Thai government fell in a military coup, which
spawned political instability and loss of consumer and tourist
confidence in Thailand, resulting in significant sales losses.
Shaken by these blows, as well as by intensifying competition
in Thailands quick-service restaurant industry, MFGs executive
41
42
MFG has also been able to weather instability and risk. In 2008,
for example, political upheaval in Thailand led to closure of
the nations airportsthreatening to shut down the tourism
industry and significantly affecting Thai consumer confidence.
MFG not only survived the crisis by adjusting and realigning its
strategies, but it also scored a profit increase of 72% in 2009. That
year, it also made gains in sales growth and market share, while
its biggest competitor saw sales and market share decrease.
As OSM director Charles Clinton puts it, The BSC has contributed to our phenomenal success and has truly made a difference
to Minor Food Group from the strategy execution perspective.
Execution Premium
(All results from 20072009)
Future Focus
Using the BSC to facilitate knowledge sharing across
brands and franchise networks.
Extending the BSC to Thai Express Concept and The
Coffee Club and to sister companies within Minor
International, such as Minor Hotel Group.
Automating BSC reporting.
Philippines 2030
In 2006, the ISA created Philippines 2030, a road map that laid
out a vision and strategic priorities for the nation. Priorities
included enhancing Filipinos personal dignity, strengthening
their solidarity, and encouraging their participation in local decision making. The road map identified four key drivers of change:
government, business, education, and family. Institutions from
these sectors that have joined the effort receive guidance from
the ISA, which defined four steps along this pathway:
(1) Initiation: Crafting a vision and strategy road map; establishing measurable targets for BSC perspectives.
By the end of 2005, Rodriguez and his team had built a strategy
map topped by three strategic themesResponsible Citizenship, Effective Government, and Sustainable Development. The
maps five perspectives included such objectives as Improved
socioeconomic condition and Sense of pride in being a
Fernandino (in the uppermost Social Impact perspective);
Dynamic and competitive local economy and Quality infrastructure (in Strategic Agenda); Participatory government,
which involves fostering public-private activities and projects
(in Strategic Partnerships); Highly competent and committed
public servants (in Organization); and Increase and optimize
LGU income (in Finance, at the base).
During 2006 and 2007, the citys strategy map and scorecard
were cascaded to its 22 departments and offices, resulting in a
total of 791 scorecards.
43
Execution Premium
(All results from 20052010 unless otherwise indicated)
Future Focus
Establishing a Center for Leadership, Excellence, and
Responsible Citizenship to disseminate information
about the PGS to nearby towns through seminars and
programs.
Exploring the feasibility of extending the PGS to San
Fernandos barangays.
Automating BSC reporting.
44
Sociedad Hipotecaria
Federal
45
Execution Premium
SHF-facilitated home loans rose from 54,229 in 2003
to a cumulative 296,624 through 2010. More than
1.1 million families joined the ranks of homeowners.
By 2010, SHF had granted a cumulative 194,066
microloans.
From 2009 through 2010 (its first two years of operation),
SHFs mortgage insurance company provided 18,589
new policies through 12 financial intermediaries.
SHFs share in the total portfolio of Mexican development banks rose from nearly 3.5% in 2002 to almost
14.9% in 2009.
The value of SHFs credit reserves in both 2008 and
2009 exceeded $500 million, nearly twice its reserves
during any year in the period 2002 to 2007. At the end
of 2009, SHFs capitalization index reached 12.85%,
well above the 8% minimum required by law.
The number of operational incidents related to
information technology dropped from 121 to 58 in
that time period.
Future Focus
Cascading the BSC deeper into the operational levels
of SHF, ultimately down to the level of the individual
employee.
Developing a complete measurement system for all
employees, along with an individual employee incentive
system (goals set forth in the Human Capital Management project).
Developing dashboards to automate key performance
indicator input and retrieval in the agencys second
(and latest) scorecard software system, installed in 2008.
Appointing a strategy leader in all seven functional
units. The strategy leader serves as a liaison to the OSM,
helping coordinate strategy advancement.
1 M
ortgage SOFOLES (Sociedades Financieras de Objeto Limitado), single-credit issuers, and Mortgage SOFOMES (Sociedades Financieras de Objeto Multiple),
multiple-credit issuers, suffered liquidity problems during the financial crisis due to their commercial paper issuance. In 2010, through various action plans
(equity, mergers, restructurings, or acquisitions), these entities were strengthened and/or reformed, with the support and oversight of SHF.
2 Based on an exchange rate of 12 pesos/$1 U.S., the average rate from 2007 to the present.
3 I n 2004 and 2005, SHF made bridge loans, but as a development bank, such lending was removed from the agencys charter. When the crisis erupted, SHF decided
to modify its strategy and grant new bridge loans, but such a change required Congresss approval.
46
From the start, TNTs OSM has helped operationalize the strategy in two important ways: by engaging executives who were
initially skeptical of the new strategy management process, and
by appointing and managing theme groups (theme teams).
47
Sure We Can
By achieving its asset utilization and efficiency goals, TNT
Express has reduced overhead significantly while outperforming
its main competitors in return on sales. The company has made
significant strides in the primary goals of its Customer Relationship Management themeto grow revenue and outperform the
marketwith performance in revenues per parcel 28% better
than competitors average.
For us now the strategy map has become part of the way that
we work, says Stuart Stobie, divisional managing director. It
tells us what we need to do, and how we need to do it and by
when. We have truly instilled the strategy into our work. Thanks
to its strategy management system, TNT Express has thrived,
experiencing both growth and improved customer satisfactionliving up to its motto, Sure We Canin a downturn that
has stymied less adept, but often far better known, competitors.
Execution Premium
From 2006 to 2008, market share increased by 3.2%, to
26.23%.
Customer loyalty rose by 3.8% between 2007 and 2009.
(This score is based on a survey asking customers how
strongly they would recommend the company.)
Return on sales hit 5.8% in 2009, compared with 3.88%
for the next highest-performing competitor.
Revenue per parcel in 2009 was 5.60 versus the market
average of 4.37.
Customers use of the technology interface grew by
16.1% to reach 83.2%.
Employee turnover fell 16.7% from 2007 to 2009.
On-time delivery, already high, increased from 2007 to
2009: by more than 4.3% for international deliveries,
and 1.5% for domestic deliveries.
Future Focus
Continuing to improve alignment across support
functions and business areas.
Refreshing strategy map objectives to reflect new
challenges.
Relaunching the employee suggestion program to
better align it to areas of strategic focus.
Implementing the innovation framework.
48
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Editor
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Folkhlsan
Product #12693
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Merck & Co.
Minor Food Group
City of San Fernando
(Pampanga, Philippines)
Sociedad Hipotecaria Federal
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