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Driving Business Value Through Strategic Process Management
Sloan Global Holdings Tom Coleman Chief Information & Process Officer 10500 Seymour Avenue Franklin Park, IL 60131 April 12, 2013 This template can be used as a starter file to give updates for project milestones. Sections Right-click on a slide to add sections. Sections can help to organize your slides or facilitate collaboration between multiple authors. Notes Use the Notes section for delivery notes or to provide additional details for the audience. View these notes in Presentation View during your presentation. Keep in mind the font size (important for accessibility, visibility, videotaping, and online production) Coordinated colors Pay particular attention to the graphs, charts, and text boxes. Consider that attendees will print in black and white or grayscale. Run a test print to make sure your colors work when printed in pure black and white and grayscale. Graphics, tables, and graphs Keep it simple: If possible, use consistent, non-distracting styles and colors. Label all graphs and tables. Step1 Strategic Planning Step2 BPM Step3 HCM & IT
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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 Sloan is the world’s leading manufacturer of commercial plumbing systems and has been in operation since Headquartered in Franklin Park, Illinois, the company is at the forefront of the green building movement and provides sustainable restroom solutions by manufacturing water and energy high efficiency products such as flushometers, electronic faucets and soap dispensing systems, sink systems, and vitreous china fixtures for commercial, industrial and institutional markets worldwide.
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High Efficiency | Hygienic Solutions | Trusted Performance
Product Offering Water & Energy Efficient Commercial Restroom Solutions Flushometers Sensor Faucets Vitreous China Toilets, Urinals and Lavatories Sink Systems Health & Hygiene Solutions Water Reuse Systems Water Monitoring & Control Systems SLOAN Company Overview High Efficiency | Hygienic Solutions | Trusted Performance
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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”
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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
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Adapted from: Kaplan and Norton 2004
What Are We Trying To Do? What? Cash A/R Inventory Equipment Property Goodwill How? Liquidity Tangible Assets Strategy and Process Readiness Human Capital Information Capital Organization Capital Intangible Assets Adapted from: Kaplan and Norton 2004
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Achieving Superior Performance Operational Effectiveness is Not Strategy
Value Discipline Assimilating, attaining, and extending best practices Creating a unique and sustainable competitive position Choose to run a different race (Effectiveness) Run the same races “faster” (Efficiency) Source: Michael Porter
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Source: Michael Porter
“Strategy is not about ways to get better…strategy formulation is about finding ways to get… different” Source: Michael Porter
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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 Now we talk about how to develop a good strategy Illustrate with interesting business examples; you’ll have to address in your own context Adapted from: Michael Porter (2006)
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Translating the Mission/Vision into Desired Outcomes
Why we exist Core Values What we believe in CULTURE CULTURE 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
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Note 1: This is an example of a strategic planning process Note 2: WIG = Wildly Important Goal
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Part 1 Note: This is an example of a strategic planning process
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Sample Market Needs Analysis Fragment Value Attributes Vs
Sample Market Needs Analysis Fragment Value Attributes Vs. Products (Survey Sample) Note: This analysis is done by product and also by value chain participant (customer) Value Attribute SAMPLE PORTION OF MARKET NEEDS ANALYSIS Sloan sample portion of a comprehensive market needs Analysis
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Sample Components of Competitive Analysis (Four-Phase Analysis)
What drives the competitor? What the competitor is doing and can do Future Goals Current Strategy How the business Is currently competing 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? Assumptions Held about itself & the industry Capabilities Both weakness & strengths Source: Michael E. Porter Competitive Strategy
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Five-Forces Framework
(“Industry Structure”) New Entrants (Threat) Suppliers (Bargaining Power) Industry Competitors (Intensity of Rivalry) Buyers (Customers) (Bargaining Power) Substitutes (Substitution Threat) Source: Michael E. Porter (Competitive Strategy) SAP AG
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Part 2 Note: This is an example of a strategic planning process
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The Envisioned Future Vision: What we need to become
Vivid description of new tomorrow Vibrant and engaging – yet tangible Paints a vivid picture into people’s minds 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 Inspired by Jim Collins
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Compelling Vision Questions Sloan Compelling Vision Bullets
“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? 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) example
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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
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Strategic Imperatives (BHAGs)
Compelling Vision “What” Strategic Imperatives (BHAGs) “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. Values [More here later] example How should we behave while executing on our goals.
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Part 3 Note: This is an example of a strategic planning process
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Financial Value Proposition
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Value Discipline (Strategic Position)
Best Total Cost 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 Best Total Solution Best Product Innovation Lock customer in to high switching costs Lock-in Adapted from: Norton and Kaplan 2003/2004
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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 Core Processes Product delivery Basic service cycle Built on standards No frills fixed assets Mgt Systems Command and control Compensation fixed to cost & quality Transaction profitability I.T. Integrated Low-cost transaction sys Activity-based mgt (ABM) Fulfillment systems Wal-Mart Dell Southwest Airlines AMD FedEx Adapted from: Michael Treacy and Fred Wiersema
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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 Core Processes Invention Market exploitation Commercialization Life cycle mgt Mgt Systems Decisive and risk oriented Reward individuals for innovation capacity Product life-cycle profits 3M Nike Mercedes BMW Sony Intel I.T. 1-to-1 systems 1-to-many systems Many-to many systems Knowledge mgt Technology enablement Adapted from Michael Treacy and Fred Wiersema
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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 Core Processes Client acquisition Client development Solution development Responsive procedures Mgt Systems Revenue/share of wallet Rewards based on feedback Lifetime value of client I.T. Customer databases Link of internal/external info Knowledge/analytics sys Customer relationship mgt IBM Nordstrom Home Depot HP Goldman-Sachs Empire Carpet Adapted from: Michael Treacy and Fred Wiersema
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Customer Value Proposition Attributes Value Discipline. Vs
Customer Value Proposition Attributes Value Discipline* Vs. Customer Value Attributes * Value discipline is a term used by Treacy and Wiersema which parallels strategic positioning Michael Treacy and Fred Wiersema Chart Adapted from Kaplan and Norton 2001
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Source: Michael E. Porter
Low Cost Niche Market Source: Michael E. Porter
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Mission, Vision, BHAGs, Core Ideology Financial Capital
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
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Mission, Vision, BHAGs, Core Ideology Financial Capital
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
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So…What do we have so far?
Market Needs Competitive Analysis OTWS (aka SWOT) Mission Vision Strategic Imperatives (BHAGs) Core Values Financial Value proposition Customer Value Proposition
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Part 5 Note: This is an example of a strategic planning process
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Focus on the Wildly Important
In addition to the whirlwind . . . 2-3 4-10 11-20 2-3 1-2 (Ask questions as you build ) When people focus on two to three goals, they tend to accomplish two to three goals… Too often “our eyes are bigger than our stomachs.” “The Law of Diminishing Return” Source: FranklinCovey 4DX
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A WIG is a goal that makes all the difference
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)
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Besides the whirlwind, what are you absolutely going to do?
and… What are you absolutely going to stop doing?
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Strategic Imperatives
Compelling Vision “What” Strategic Imperatives “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? Daily Operations “Whirlwind” Strategy Execution “Operating System” Values How should we behave while executing on our goals. The Day Job Wildly Important Goals (War & Battles) Source: FranklinCovey 4DX
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Continuous Improvement
Transformational Change Daily Operations “Whirlwind” Strategy Execution “Operating System” Strategic War Plan Whirlwind To-Do List: This is important So it is So is this, but… So is this but… So is this So is this… Not as important as… Source: FranklinCovey 4DX
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OTC = Order-to-Cash Process STP = Source-to-Pay Process
Transformational Change WAR Grow Profits from X to Y by 12/31/2013 BATTLE A Lower COGS from X to Y by 12/31/2013 BATTLE B Grow gross margin from X to Y by 12/31/2013 OTC Proc. Team WIG Grow throughput from X to Y by 12/31/2013 Rick explains wars and battles STP Mat. Team WIG Reduce material costs from X to Y by 12/31/2013 OTC Proc. Team WIG Increase productivity from X to Y by 12/31/2013 OTC = Order-to-Cash Process STP = Source-to-Pay Process 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 Inspired by : FranklinCovey 4DX
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Wheels of Competitive Strategy
X Goals Strategy Objectives Finance Mfg Mktg Sales Service HR Engineering Other Order To Cash Process Demand Generation New Product Development Sloan Strategy and Goals Customer Support Functions Functions Functions Functions 1980 Source: Michael E. Porter (Competitive Strategy) 2007 Source: T. Coleman
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Sample Old Functions Vs Processes
Strategic Planning New Product Development Sample Old Functions Vs Processes Marketing Sales Tech Support Mat Mgt Mfg QA Research Des Eng Information Technology (IT) Demand Generation Order Acquisition Finance Human Resources (HR) Order-to-Cash Source-to-Pay Cust Support Coleman
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New Functions Vs Processes
Strategic Planning New Functions Vs Processes Product Development & Lifecycle Mgt (Domain Divided) Business Development Information Technology & Process Mgt Supply Chain & Ops Product Development Demand Generation Financial Capital Mgt Order Acquisition Human Resource Mgt (HR) Order-to-Cash Procure-to-Pay Cust Support Coleman
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APQC Process Classification Framework
Source: APQC
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Sloan Enterprise Process Model
Master Governance Process Processes Core Enabling (many more) SPP Strategic Planning Process EPM/OCM Employee Perf. Mgt. & Org. Chg. Mgt Process BPM Business Process Mgt Process AOP Annual Oper Plan Process QAP Quality Assurance Process S&OP Sales & Oper Planning Process DGP Demand Generation Process OAP Order Acquisition Process OTC Order-to-Cash Process CSP Customer Support Process NPD New Product Development Process MDM Master Data Mgt Process ECM Engineering Change Mgt Process PCM Shop Process Change Mgt Process STP Source-to-Pay Process HCM Human Capital Processes
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Where do strategic goals
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 Where do strategic goals Flow to? PROCESSES!
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2008 Sloan Strategic Planning Cycle
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Sloan Business Process Mgt. (Process Lifecycle Mgt.)
Strategic Planning Process LEVEL 0 DIAGRAM VERSION Version: April 7, 2008
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LEVEL 1 DIAGRAM Version: April 7, 2008
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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
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Sample Methodology for Problem Solving and Improvement
From PLMP Process Define Problem Measure Problem Analyze Problem Improve Control 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. LEVEL 1 DIAGRAM VERSION
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Sample Enterprise “Toolkit”
BPM CM: ADKAR Lean PMO BSC/Hoshin IT TOC Six Sigma ADKAR = Awareness, Desire, Knowledge, Ability, Reinforcement BPR Need a recipe???
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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.
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Mission, Vision, BHAGs, Core Ideology Financial Capital
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
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“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
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DA
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CM Tools Vs. Phases of Change
DA Source: Prosci SAP AG
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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
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Mission, Vision, BHAGs, Core Ideology Financial Capital
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
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Labor is the single biggest operating expense in most businesses
IT Contribution U.S. Bureau of Labor Statistics – 2000 to 2010
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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”
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Note 1 : This is an example of a strategic planning process Note 2: WIG = Wildly Important Goal
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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
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