Case Study Summary: A Strategy-Focused Organization

Transcription

1 Case Study Summary: A Strategy-Focused Organization Balanced Scorecard Collaborative, Inc. 55 Old Bedford Road Lincoln, MA Tel: Fax: bscol.com

2 Hall of Fame Winner Mobil Balanced Scorecard introduced into 18 business units Last to first in its industry in 3 years Most profitable oil company 5 years straight Segmented customers into niche markets 2

3 There are Three Phases to Creating a Strategy-Focused Organization (SFO) Mobilization Phase Objective: To initiate the process of change. Gain consensus and momentum at the top Migration Phase Objective: To move change throughout the organization, to create focus and to establish the new performance culture. Strategic Management Phase Objective: To institutionalize change into a new management process Establish Need for Change Build Executive Team Develop Vision & Strategy Rationalize the Organization Educate & Communicate Align the Workforce Focus Initiatives Feedback & Learning Strategy Update Planning & Budgeting Goals & Incentives Performance Reviews 3

4 Mobil USM&R Built an SFO by Placing Strategy at the Center of its Management Processes Mobilize Change through Executive Leadership Translate the Strategy to Operational Terms Mobilization Governance Process Strategic Management Make Strategy a Continual Process Strategy Maps Balanced Scorecards Link Budgets & Strategy Strategic Learning Analytics & Information Systems Align the Organization to the Strategy Make Strategy Everyone s Job Corporate Role Business Unit Synergies Support Unit Synergies Strategic Awareness Personal Scorecard Balanced Paychecks 4

5 Executive Team Leadership to Mobilize Strategic Change In 1990 we weren t making any money; in fact there was half a billion dollar cash drain. Expenses had doubled. Capital had doubled, margins had flattened, and volumes were heading down. You didn t need an MBA to know we were in trouble. Bob McCool Mobil NAM&R Chief Executive Leadership Roles 1. Executive Sponsorship 2. Sense of Urgency 3. Scorecard Leadership Team 4. Shared Vision 5

6 Translate Strategy into Operational Terms Mobil Oil NAM&R Balanced Scorecard Strategic Themes Strategic Objectives Strategic Measures Financial Financial Growth F1 Return on Capital Employed F2 Existing Asset Utilization F3 Profitability F4 Industry Cost Leader F5 Profitable Growth ROCE Cash Flow Net Margin Rank (vs. Competition) Full Cost per Gallon Delivered (vs. Competition) Volume Growth Rate vs. Industry Premium Ratio Non-Gasoline Revenue and Margin Customer Delight the Consumer Win-Win Dealer Relationships C1 Continually Delight the Targeted Consumer C2 Build Win-Win in Relations with Dealer Share of Segment in Selected Key Markets Mystery Shopper Rating Dealer Gross Profit Growth Dealer Survey Build the Franchise I1 Innovative products and services New Product ROI New Product Acceptance Rate I2 Best-In-Class Franchise Teams Dealer Quality Score Internal Safe & Reliable Competitive Supplier I3 I4 Refinery Performance Inventory Management Yield Gap Unplanned Downtime Inventory Levels Run-out Rate I5 Industry Cost Leader Activity Cost vs. Competition Quality I6 On Spec On Time Perfect Orders Good Neighbor I7 Improve EHS Number of Environmental Incidents Days Away from Work Rate Learning & Growth Motivated and Prepared Workforce L1 Climate for Action L2 Core Competencies and Skills L3 Access to Strategic Information Employee Survey Personal BSC (%) Strategic Competency Availability Strategic Information Availability Customer-Focused Strategy Map Quantify the Vision Balanced Scorecard 6

7 Align the Organization to the Strategy #1. A Corporate Scorecard defines overall strategic priorities. CORPORATE #3. Each Support Unit develops a plan for best practice sharing to create synergies across SBUs. CORPORATE SCORECARD (Shared Strategic Agenda) LINE BUSINESSES SUPPORT UNITS Themes 1. Financial Growth Measures x SBU A SBU B SBU C SBU D 2. Delight the Consumer x Convenience Store Marketing 3. Win-Win Relationship x Gasoline Marketing 4. Safe and Reliable x Manufacturing Services 5. Competitive Supplier x Supply Programs 6. Good Neighbor x Environment and Safety 7. Quality x 8. Motivated and Prepared x Human Resources #2. Each SBU develops a long-range plan and BSC consistent with corporate strategic agenda. #4. Departments, teams and individuals develop scorecards consistent with SBU strategy. Mobil s Strategies business Are Executed unit Through scorecards Business Units. link The with Strategies the of corporate the Business scorecard Units Must Be Integrated If Organization Purpose and Synergies Are to Be Achieved. 7

8 Make Strategy Everyone s Job Mobil NAM&R Executive Presentations The balanced paycheck: BSC-linked Incentive Plan Monthly Balanced Scorecard Reports Periodic Newsletters Quarterly Business Review Annual State of the Business Address Business Unit Line of Site Strategy Maps Employee awareness of NAM&R s strategy increased from 20% to 80% of the workforce Personal Employee Scorecards 8

9 Make Strategy Everyone s Job Exhibit 9-6: Cascading to Teams and Individuals at Mobil Lubricants Strategic Themes Financial Reward our shareholders by providing a long-term return which exceeds our peers. Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Division President ROCE (%) Cash Flow ($MM) Integrated Cost ($MM) Integrated Income ($MM) VP Order Fulfillment LOB Integrated Cost ($MM) Net Integrated Income ($MM) Manager of Plant Operation Inv. Value ($MM) Transformation Cost ($MM) Facility Manager Inventory Carrying Cost Line 44 / CPG Formulation Giveaway $M Delivery Supervisor Line 25 CPG Backhaul $ Terminal Coordinator Line 2 CPG Unavailable Hours Backhauls Savings Motor Vehicle Driver Line 24 CPG Idle Time Out of Route Miles Miles per Gallon Customer Provide valueadded business solutions to our customers and channel partners. Market Share - Finished Percent Perfect Orders Distributor Survey Develop/Implement Customer Survey Percent Perfect Orders Distributor Survey Develop/Implement Customer Survey Percent Perfect Orders Percent Perfect Orders Service Failures of Strategic Product Lines % On-Time Delivery Develop Market Info Survey % On-Time Delivery Empty Drums Returned % On-Time Delivery Returns Drums Customer Assessment Internal Develop market focused strategies and become operationally excellent. Safety Index Environmental Index Continuous Improvement Cost Reduction ($MM) Develop/Implement Capital Plan Safety Index Environmental Index Develop/Implement Standard Offering Asset Utilization Refinery Capacity (%) Network vs. Optimum (%) Inventory Accuracy Safety Index Environmental Index Complexity Index Inventory Accuracy DAFW NOV Hits Off-Spec Receipts Transfers to Move Excess Base Stock Motor Vehicle Accidents DAFW NOV Complete Environmental Self Audit Safety Meetings Complete % Attendance Safety Meeting Accurate Reporting Repts. 731, 601, 727 LOG Book Violations Completed Market Surveys L & G Create a high performance organization by equipping our people to succeed. Employee Development Plans Completed (%) Develop / Implement / Measure progress of Change Program Employee Development Plans Completed (%) Develop/Implement Marketing Comp. Plan Product Mgt. Comp. Plan Distrib/Logistics Comp. Plan Employee Development Plans Completed (%) Attendance Employee Development Plans Completed (%) Develop Plan Climate Survey Employee Development Plans Completed (%) Employees Trained ISO 9000 Certification Vacation Relief - Shift Coord. Training on CCE Develop Personal Imp. Plan Vacation Relief - Term. Coord. SBU Scorecard 9

10 Make Strategy a Continual Process December NBU/SP meet with ELT Coach to review current results & proposed plan. BSC s Metric Owners complete leveling January All results due to HR for Incentive Compensation/Variable Pay Metric Owners review leveled measures with ELT Coaches November Correspondence from NAM&R communicating guidelines for NBU/SP BSC development. NBUs/SPs develop proposed BSC October NAM&R Metric Owners develop NAM&R BSC measures & targets Metric Owners on the ELT agenda to present proposed BSC for approval February Metric Owners complete leveling NBU/SP final Scorecard due to ELT Coach and NAM&R BSC Coordinator Final proposed NAM&R BSC to Executive Office March Variable Pay/Incentive Compensation pay-out to employees 1st Quarter review of BSC Mobil s Balanced Scorecard is integrated with its annual planning, budgeting, and reporting cycle. September Strategic Outlook Review to EXCOM April - August Monthly review of results 10

11 The Results from : A Strategy-Focused Organization Growth Strategy Improve quality of revenue by understanding customer needs and differentiating ourselves accordingly. Productivity Strategy Maximize utilization of existing assets and integrate the business to reduce total delivered cost. Financial Perspective Return on Capital Increased from 6% to 16% Volume Growth Exceeds industry by 2-2.5% annually Competitive Position (profitability) From last (1993) to first (95, 96, 97, 98) Reduce Cash Expenses Down by 20% Improve Cash Flow From -$500 M/Yr to +$700 M/Yr Customer Perspective Customer Satisfaction Continuous improvement for 3 consecutive years Internal Perspective Product Innovation Speedpass Active Increasing at rate of 1M per year Customer Management Dealer Quality Perfect Orders Continuous Continuous improvement for 4 improvement for 4 consecutive years consecutive years Learning & Growth Perspective Operational Excellence Quality Capacity Utilization Safety Annual value of lost yield reduced from $175m to $50m Continuous improvement for 4 consecutive years Lost work incidents down from 150 to 30 per year Motivated & Prepared Workforce Strategic Awareness Annual employee survey shows awareness of strategy increased from 20% to 80% Good Neighbor Environmental Number of incidents reduced by 63% 11