IBA -Cedar Consulting Jt. Seminar on Balanced Scorecard December 2004. Synopsis Presentation Smt.

Chanda Executive Director, ICICI Bank Ltd.

17, Mumbai

by Kochar

Key Note Presentation by Ms.Chanda Kochhar,Executive Director, ICICI Bank Ltd.

Background - Increasingly complex business environment, shorter business cycles, need for multipronged strategy environment Merger of ICICI with ICICI Bank in 2001 - Stretch targets in business areas; retail credit, corporate transaction banking, agri and SME business, international foray Challenges Rapid growth in employee base o Building knowledge and skill base o Enable growth, profitability, service levels, building talent Ensuring consistent implementation of strategy o Aligning organizational, business-level and individual goals o Incentivising achievement of goal set Performance measures covered only financial aspects o Other perspectives covered qualitatively o Focus on work done rather than work achieved Additional perspectives were not addressed o Retail strategy required service focus o Wholesale banking required focus on transaction capabilities and quality of credit origination Solution - Implement the balanced scorecard that provided a strategic framework to address financial, customer, process and organizational objectives Role of Operationalize Scorecard strategy

Aligning employees' Ensure focus - Enable flexibility

goals

to across

that

of the multiple

organization perspectives

Balanced Scorecard Implementation Stage 1 - Expansion of financial perspective; growth, market share, profitability & credit costs - Concept of customer service levels as an area of performance evaluation - Focus on building a process perspective in the organization - Reskilling of existing employees and speed to job of new recruits Stage 2 - Further detailing and development of process & customer initiatives Specific measures of performance introduced - Focused measures for achieving financial goals Stage 3 Learning & Development perspective o Building leadership pool o Reduction of scorecard templates from 750 to 230 in two years. To be further reduced to 150 - Scorecards for new geographies outside India How the Scorecard has benefited Rapid business Strategic consistency despite scale and - Systematic and objective performance evaluation ICICI growth diversity

Key Learning - Performance measures should be output based rather than input based - Scorecard need not be balanced for individuals, but for business units as a whole - Need for scorecard templates Conclusion - The Balanced Scorecard can platform for sustained future growth & value creation Presentation Sanjiv by Anand

Global Balanced Cedar Consulting Pvt.Ltd.

Scorecard

Practice

Head

Presentation by Mr.Sanjiv Anand,Global Balanced Scorecard Practice Head,Cedar Consulting

Historical perspective of Scorecard Founded by David Norton and Robert Kaplan - Strategy Implementation and enterprise performance management methodology - Founded on rationale of having an 'implementable' strategy rather than a 'great' strategy Issues facing the banking industry - Improve service quality by focusing on the client, to improve profitability - Profitable customers need to be identified and offered differentiated products & services - Customer retention and utilization rates of products & services are key focus areas - External economic and regulatory factors are not necessarily primary issues Transformation of financial service organizations Deeper understanding of customers Lifetime value identification of customers - Differentiated products & services to cater to specific needs of customer segments IT and process enhancements Fee Income Focus on revenue and cost Strategic alliances & partnerships - Anytime Anywhere delivery 4 Barriers to Strategy Implementation - Vision; strategy not understood by people who must implement it - Management; management systems are designed for operational control, little time spent on strategy - Operational; budgeting process is separate from strategic planning - People; personal goals, incentives and competencies not linked to strategy About the Balanced Scorecard - A tool that focuses on shareholder, customer, internal and learning requirements of a

business to create a system of linked objectives, targets, measures and initiatives that collectively describe the strategy of an organization. Measurability Clarity for vague - Development of consensus and teamwork within the organization ensures: concepts Communication

Benefits of the Balanced Scorecard Clarifies vision Gains consensus and ownership Alignment within the organization Integration of strategic planning and implementation process Focuses on e-Strategy Drives capital and resource allocation process Creates a customer focused organization - Knowledge enabled business processes organization Balanced Scorecard Proposed strategic vision o Strategy study to generate o Starting point for Balanced Scorecard development Methodology & objectives intial ideas team linkages workshop objectives meetings scorecard design measures workshop design setting

One to one meetings with management o Understand strategic issues and o Develop initial linkage model and set of strategic objectives First o Confirm strategic o Begin process of defining measures vision &

Second set of o Confirm understanding of final strategy & o Finalize o Facilitate development of measurement and project templates o Finalize o Begin o Plan scorecard roll-out Second scorecard target

After o o o o Communicate scorecard Approach

second Complete Set Implement

workshop templates targets scorecard

- Internal Assessment; identify financial, customer, process and organizational issues, challenges, goals, roadmap to achieve goals - External Assessment; economic growth, key drivers of market growth, analysis of competitive scenario, distribution channel assessment, end-use assessment - Building strategy maps to derive linkages across financial, customer, process and learning & growth perspectives - Building the scorecard to align objectives, measures, initiatives, owners Aligning projects with strategic objectives Operational cascading of scorecards across business units Cascading the BSC to the individual - Prioritizing initiatives/projects Key drivers for scorecard implementation Existence of Strategic planning process Clarity between Scorecard and EVA/TQM/Six Sigma Integration of strategic planning & scorecard process Ownership of scorecard process Aligninment of individual and enterprise performance Financial commitment Selection of the 'right' scorecard coordinator MIS systems to ensure accurate reporting Confidentiality to enable transparency Number of Measures should be realistic Prioritize projects Individual performance versus enterprise scorecard CEO commitment Manual reporting and automation Frequency of reporting Communicating the scorecard - Objectives & measures change approx. 20%. Targets always change! - BSC should be the first step in a strategy/budgeting exercise - Not a project but a strategy implementation process

Speakers' Reactions at the IBA-Cedar Consulting Seminar on Balanced Scorecard held on December 17, 2004 at Mumbai. "I must compliment IBA for taking the initiative in organizing seminars on many diverse subjects, which, I am sure add a lot of value to the participants and therefore to the Banking industry in India. Wishing IBA all the very best in all such initiatives." Smt.Chanda Executive ICICI Bank Ltd. "Well organized event.Hopefully, it is a successful program for IBA. Sanjiv Global Balanced Cedar Consulting Pvt.Ltd. Scorecard Practice Anand Head Kochar Director