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Driving Business Value Through Strategic Process Management Sloan Global Holdings Tom Coleman Chief Information & Process Officer

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Presentation on theme: "Driving Business Value Through Strategic Process Management Sloan Global Holdings Tom Coleman Chief Information & Process Officer"— Presentation transcript:

1 Driving Business Value Through Strategic Process Management Sloan Global Holdings Tom Coleman Chief Information & Process Officer Seymour Avenue Franklin Park, IL April 12,

2 2 About Sloan Founded in Chicago, Illinois, USA in 1906 by William Elvis Sloan 9 Major locations IL, China (3), PA, MA, AR, Mexico, CA 4,300 distributors, 69 Rep offices, 60 countries Privately Held, U.S. Based Commercial Plumbing Products Manufacturer The leader in water and energy high efficiency solutions The most comprehensive line of commercial restroom solutions Proven reputation for innovative designs, sustainable business practices, commitment to quality, and devotion to serving our customers Global supply chain and wholesaler distribution network SAP Business Systems enabling breakthrough business processes SLOAN Company Overview

3 Product Offering 3 Flushometers Sensor Faucets Vitreous China Toilets, Urinals and Lavatories Sink Systems Health & Hygiene Solutions Water Reuse Systems Water Monitoring & Control Systems Water & Energy Efficient Commercial Restroom Solutions High Efficiency | Hygienic Solutions | Trusted Performance SLOAN Company Overview

4 Sample Enterprise “Toolkit” Lean – Waste elimination TOC – Eliminate the constraint (bottleneck) Six Sigma – Reduce variability, solve problems BPR – Holistic redesign of end-to-end processes ADKAR – Manage the human side of change BSC/Hoshin – Connect strategy to action/KPIs 4DX (Four Disciplines of Execution) – Create a few must do must succeed goals (WIGs) – Act on the lead measures that impact goal achievement – Create a compelling scoreboard – Create a cadence of accountability Engage IT and HR “technologies” 4

5 Conclusion Companies must take an end-to-end, holistic view of their strategy Corporate Strategy is a governance process Corporate Strategy is not the same as Business or Marketing Strategy The strategy framework must tie core ideology to the value prop, core processes, Human Capital Management, Information Capital Management, and Corporate Culture Improvement ≠ Transformation 5

6 What Are We Trying To Do? Cash A/R Inventory Equipment Property Goodwill Human Capital Information Capital Organization Capital Tangible Assets Intangible Assets Liquidity Readiness Adapted from: Kaplan and Norton 2004 Strategy and Process What?How? 6

7 Creating a unique and sustainable competitive position Assimilating, attaining, and extending best practices OperationalEffectivenessValueDiscipline Run the same races “faster” (Efficiency) Choose to run a different race (Effectiveness) Achieving Superior Performance Operational Effectiveness is Not Strategy 7 Source: Michael Porter

8 “Strategy is not about ways to get better…strategy formulation is about finding ways to get… different ” Source: Michael Porter 8

9 Five Tests of a Good Strategy A unique value proposition compared to other organizations A different, tailored value chain Clear tradeoffs, and choosing what not to do [as well as what to do] Activities that fit together and reinforce each other Continuity of strategy with continual improvement in realizing the strategy A unique value proposition compared to other organizations A different, tailored value chain Clear tradeoffs, and choosing what not to do [as well as what to do] Activities that fit together and reinforce each other Continuity of strategy with continual improvement in realizing the strategy Adapted from: Michael Porter (2006) 9

10 Translating the Mission/Vision into Desired Outcomes Mission Why we exist Core Values What we believe in Vision What we want to be Strategy Our game plan Goals Outcomes we need to accomplish Strategic Initiatives What we need to do Personal Objectives What I need to do Strategic Outcomes Kaplan and Norton 2001 CULTURE CULTURE 10

11 11 Note 1: This is an example of a strategic planning process Note 2: WIG = Wildly Important Goal

12 Note: This is an example of a strategic planning process Part 1 12

13 Sample Market Needs Analysis Fragment Value Attributes Vs. Products (Survey Sample) 13 Note: This analysis is done by product and also by value chain participant (customer) Value Attribute Sloan sample portion of a comprehensive market needs Analysis SAMPLE PORTION OF MARKET NEEDS ANALYSIS

14 Sample Components of Competitive Analysis (Four-Phase Analysis) Competitor’s Response Profile Is the competitor satisfied with their current position? What likely moves or strategy shifts will the competitor make? Where is the competitor vulnerable? What will provoke the greatest and Most effective retaliation by the competitor? Future Goals Current Strategy How the business Is currently competing Capabilities Both weakness & strengths Assumptions Held about itself & the industry What drives the competitor? What the competitor is doing and can do Source: Michael E. Porter Competitive Strategy 14

15 Industry Competitors (Intensity of Rivalry) Five-Forces Framework (“Industry Structure”) Source: Michael E. Porter (Competitive Strategy) Suppliers (Bargaining Power) Buyers (Customers) (Bargaining Power) Substitutes (Substitution Threat) New Entrants (Threat) 15

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18 Part 2 18 Note: This is an example of a strategic planning process

19 The Envisioned Future 1.Vision: What we need to become – Vivid description of new tomorrow – Vibrant and engaging – yet tangible – Paints a vivid picture into people’s minds 2.Strategic Imperatives (AKA BHAGs – Big, hairy, audacious goals) – Ambitious plans – an “audible gulp” – Reachable plans (unlike core purpose) – Rev up the organization / source of motivation – Will require 10 or more years to achieve 19 Inspired by Jim Collins

20 20 Compelling Vision Questions “What” Compelling Vision Questions “What”  What does our organization look like in 5 years?  How big?  What are we famous for?  Why does anyone care about what we do?  How do our people feel about being part of our organization?  What does our organization look like in 5 years?  How big?  What are we famous for?  Why does anyone care about what we do?  How do our people feel about being part of our organization? example Sloan Compelling Vision Bullets “What” Sloan Compelling Vision Bullets “What”  Private Company  Global Leader  Manufacturing Company  Serving the Commercial Market  Innovation that saves $ for clients  Innovation that benefits the environment by saving water  “X” revenues (to $X billion)  Private Company  Global Leader  Manufacturing Company  Serving the Commercial Market  Innovation that saves $ for clients  Innovation that benefits the environment by saving water  “X” revenues (to $X billion)

21 21 Compelling Vision “What” Compelling Vision “What” By 2017, Sloan will be a $X billion global manufacturing leader of innovative commercial plumbing solutions, enabling millions of people to preserve life by minimizing water consumption. example

22 22 Compelling Vision “What” Compelling Vision “What” By 2017, Sloan will be a $X billion global manufacturing leader of Innovative commercial plumbing solutions, enabling millions of people to preserve life by minimizing water consumption. Strategic Imperatives (BHAGs) “What” Strategic Imperatives (BHAGs) “What” How should we behave while executing on our goals. Values [More here later] example

23 Part 3 23 Note: This is an example of a strategic planning process

24 Financial Value Proposition 24

25 Value Discipline (Strategic Position) Best Total Cost Best Total Solution Best Product Innovation Adapted from: Norton and Kaplan 2003/2004 Achieve the low cost position on product and service support Solve the customer’s broader problem and share in the benefit Build a better product for which customers will pay a premium Lock-in 25 Lock customer in to high switching costs

26 The Discipline of Best Total Cost Culture Disciplined teamwork Process focused Conformance to “one size fits all” mindset Organization Centralized functions High skills at core I.T. Integrated Low-cost transaction sys Activity-based mgt (ABM) Fulfillment systems Mgt Systems Command and control Compensation fixed to cost & quality Transaction profitability Adapted from: Michael Treacy and Fred Wiersema Core Processes Product delivery Basic service cycle Built on standards No frills fixed assets Wal-Mart Dell Southwest Airlines AMD FedEx 26

27 The Discipline of Best Product Innovation Culture Concept, future driven Experimentation Out of the box mindset Attack, go for it, win Organization Organic, cellular Technical skills abound Loose-knit structures I.T. 1-to-1 systems 1-to-many systems Many-to many systems Knowledge mgt Technology enablement Mgt Systems Decisive and risk oriented Reward individuals for innovation capacity Product life-cycle profits Adapted from Michael Treacy and Fred Wiersema Core Processes Invention Market exploitation Commercialization Life cycle mgt 3M Nike Mercedes BMW Sony Intel 27

28 The Discipline of Total Customer Solutions Culture Client and field driven “Have it your way” mindset Organization Entrepreneurial client teams High skills in the field I.T. Customer databases Link of internal/external info Knowledge/analytics sys Customer relationship mgt Mgt Systems Revenue/share of wallet Rewards based on feedback Lifetime value of client Adapted from: Michael Treacy and Fred Wiersema Core Processes Client acquisition Client development Solution development Responsive procedures IBM Nordstrom Home Depot HP Goldman-Sachs Empire Carpet 28

29 Customer Value Proposition Attributes Value Discipline* Vs. Customer Value Attributes Michael Treacy and Fred Wiersema Chart Adapted from Kaplan and Norton 2001 * Value discipline is a term used by Treacy and Wiersema which parallels strategic positioning 29

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31 Source: Michael E. Porter Low Cost Niche Market 31

32  key positions/skills  education/train  Knowledge mgt  teams  change management  capital asset mgmt  risk mgmt  fiduciary controls  budget controls  financial planning  Process mgmt  Systems mgmt  Knowledge mgmt  Database mgmt  Network mgmt Financial Capital Mission, Vision, BHAGs, Core Ideology 32

33  key positions/skills  education/train  Knowledge mgt  teams  change management  capital asset mgmt  risk mgmt  fiduciary controls  budget controls  financial planning  Process mgmt  Systems mgmt  Knowledge mgmt  Database mgmt  Network mgmt Financial Capital Mission, Vision, BHAGs, Core Ideology 33

34 So…What do we have so far? 1.Market Needs 2.Competitive Analysis 3.OTWS (aka SWOT) 4.Mission 5.Vision 6.Strategic Imperatives (BHAGs) 7.Core Values 8.Financial Value proposition 9.Customer Value Proposition 34

35 Part 5 35 Note: This is an example of a strategic planning process

36 Focus on the Wildly Important In addition to the whirlwind... “The Law of Diminishing Return” Source: FranklinCovey 4DX 36

37 37 A WIG is a goal that makes all the difference. Failure to achieve this goal renders any other achievements secondary as it relates to the long term well- being of the organization. Source: Rick Spencer (Franklin Covey)

38 38 Besides the whirlwind, what are you absolutely going to do? and… What are you absolutely going to stop doing?

39 39 Compelling Vision “What” Compelling Vision “What” Strategy Execution “Operating System” Strategy Execution “Operating System” Wildly Important Goals (War & Battles) Wildly Important Goals (War & Battles) The Day Job What does our organization look like in 5 years? How big? What are we famous for? Why does anyone care about what we do? How do our people feel about being part of our organization? What does our organization look like in 5 years? How big? What are we famous for? Why does anyone care about what we do? How do our people feel about being part of our organization? Strategic Imperatives “What” Strategic Imperatives “What” Daily Operations “Whirlwind” Daily Operations “Whirlwind” How should we behave while executing on our goals. Values Source: FranklinCovey 4DX

40 40 Daily Operations “Whirlwind” Daily Operations “Whirlwind” Strategy Execution “Operating System” Strategy Execution “Operating System” Continuous Improvement Strategic War Plan TransformationalChange Source: FranklinCovey 4DX Whirlwind To-Do List: 1.This is important 2.So it is 3.So is this, but… 4.So is this but… 5.This is important 6.So is this 7.So is this… 8.Not as important as…

41 41 WAR Grow Profits from X to Y by 12/31/2013 WAR Grow Profits from X to Y by 12/31/2013 BATTLE B Grow gross margin from X to Y by 12/31/2013 BATTLE B Grow gross margin from X to Y by 12/31/2013 BATTLE A Lower COGS from X to Y by 12/31/2013 BATTLE A Lower COGS from X to Y by 12/31/2013 OTC Proc. Team WIG Increase productivity from X to Y by 12/31/2013 OTC Proc. Team WIG Increase productivity from X to Y by 12/31/2013 STP Mat. Team WIG Reduce material costs from X to Y by 12/31/2013 STP Mat. Team WIG Reduce material costs from X to Y by 12/31/2013 OTC Proc. Team WIG Grow throughput from X to Y by 12/31/2013 OTC Proc. Team WIG Grow throughput from X to Y by 12/31/2013 Machining WIG Reduce scrap from X to Y by 12/31/2013 Machining WIG Reduce scrap from X to Y by 12/31/2013 Mfg Eng WIG Reduce setup from X to Y by 12/31/2013 Mfg Eng WIG Reduce setup from X to Y by 12/31/2013 Inspired by : FranklinCovey 4DX OTC = Order-to-Cash Process STP = Source-to-Pay Process TransformationalChange

42 Order To Cash Process Demand Generation Process New Product Development Process Sloan Strategy and Goals Customer Support Process Wheels of Competitive Strategy 1980 Source: Michael E. Porter (Competitive Strategy) 2007 Source: T. Coleman Goals Strategy Objectives Finance MfgMktg Sales Service HREngineering Other Functions 42 X

43 Sample Old Functions Vs Processes Information Technology (IT) Finance Human Resources (HR) MarketingSalesMat MgtMfgQAResearchDes EngTech Support Demand Generation New Product Development Order Acquisition Cust Support Order-to-Cash Strategic Planning Source-to-Pay 43

44 New Functions Vs Processes Information Technology & Process Mgt Financial Capital Mgt Human Resource Mgt (HR) Business Development Supply Chain & Ops Product Development Demand Generation Product Development & Lifecycle Mgt (Domain Divided) Order Acquisition Cust Support Order-to-Cash Strategic Planning Procure-to-Pay 44

45 APQC Process Classification Framework 45 Source: APQC

46 DGP Demand Generation Process OAP Order Acquisition Process STP Source-to-Pay Process OTC Order-to-Cash Process CSP Customer Support Process SPP Strategic Planning Process EPM/OCM Employee Perf. Mgt. & Org. Chg. Mgt Process BPM Business Process Mgt Process QAP Quality Assurance Process S&OP Sales & Oper Planning Process MDM Master Data Mgt Process ECM Engineering Change Mgt Process PCM Shop Process Change Mgt Process NPD New Product Development Process AOP Annual Oper Plan Process HCM Human Capital Processes Master Governance Process Governance Processes Core Processes Enabling Processes (many more) Sloan Enterprise Process Model 46

47  key positions/skills  education/train  Knowledge mgt  teams  change management  capital asset mgmt  risk mgmt  fiduciary controls  budget controls  financial planning  Process mgmt  Systems mgmt  Knowledge mgmt  Database mgmt  Network mgmt Financial Capital Mission, Vision, BHAGs, Core Ideology 47 Where do strategic goals Flow to? PROCESSES!

48 Sloan Strategic Planning Cycle

49 Sloan Business Process Mgt. ( Process Lifecycle Mgt.) LEVEL 0 DIAGRAM VERSION Strategic Planning Process Version: April 7,

50 LEVEL 1 DIAGRAM Version: April 7,

51 Strategic Levers of Transformation Integrated with Sloan’s Strategic Plan Process Redesign as well as Improvement Policies, Rules, Procedures Computing & Technology Organization Structure Change Management Roles & Job Changes Paradigm Shifts Communications Knowledge Facilities 51

52 Sample Methodology for Problem Solving and Improvement Define Problem Measure Problem Analyze Problem ImproveControl LEVEL 1 DIAGRAM VERSION From PLMP Process D M A I C Note: There are many types of CI methods. DMAIC Is only one of the many methods in the toolkit that should be used depending on the objective and tool Needed for change. 52

53 Sample Enterprise “Toolkit” BSC/Hoshin 53 Need a recipe???

54 BPM is a management discipline that treats Processes as assets that directly drive enterprise performance through (1) operational excellence, (2) business agility, and (3) strategic differentiation. 54

55  key positions/skills  education/train  Knowledge mgt  teams  change management  capital asset mgmt  risk mgmt  fiduciary controls  budget controls  financial planning  Process mgmt  Systems mgmt  Knowledge mgmt  Database mgmt  Network mgmt Financial Capital Mission, Vision, BHAGs, Core Ideology 55

56 “The hardest part of succeeding in the age of Process is not technical in nature; it revolves around people and organizational change.” Source: Michael Hammer 56

57 57

58 Source: Prosci CM Tools Vs. Phases of Change 58

59 A word about HR… Benefits, onboarding, functional OD, and related HR work is important but may do little to help the organization with transformation An HR organization can gain high credibility by linking HCM to both functions & process work HR is usually knowledgeable about what’s possible regarding human capability Often HR and IT are the only functions that see operationally across the entire enterprise The true value of HR is proportional to how they enable human beings and process teams to support the value proposition 59

60  key positions/skills  education/train  Knowledge mgt  teams  change management  capital asset mgmt  risk mgmt  fiduciary controls  budget controls  financial planning  Process mgmt  Systems mgmt  Knowledge mgmt  Database mgmt  Network mgmt Financial Capital Mission, Vision, BHAGs, Core Ideology 60

61 Labor is the single biggest operating expense in most businesses 61 U.S. Bureau of Labor Statistics – 2000 to 2010 IT Contribution

62 A word about IT… There is a strong correlation between companies that view IT as a strategic enabler and those that outperform their competition financially An IT organization can gain high credibility by substituting “technology” with “Process” as THE major discussion point IT is usually knowledgeable about what’s possible Often IT is the only function that sees operationally across the entire enterprise (add HR to the mix) The true value of IT is proportional to how integrated company systems are to core processes Core processes must support of the value proposition and strategic differentiation IT must consider becoming “BT” 62

63 63 Note 1 : This is an example of a strategic planning process Note 2: WIG = Wildly Important Goal

64 Conclusion Companies must take an end-to-end, holistic view of their strategy Corporate Strategy is a governance process Corporate Strategy is not the same as Business or Marketing Strategy The strategy framework must tie core ideology to the value prop, core processes, Human Capital Management, Information Capital Management, and Corporate Culture Improvement ≠ Transformation 64

65 Any questions?


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