061117 Adani Presentation

Creating a Strategy-Focused Organization Balanced Scorecard Discussion with Adani Enterprise November 24, 2006

For further information please contact: Muhamed Muneer, CEO & MD, Customer Lab Solutions – India Affiliate of Balanced Scorecard Collaborative F-07, Golden Orchid, 10/8, Kasturba Road, Bangalore, India 560001 Ph: +91 80 22231550, +91-94484-54350 Email: [email protected] The information in this document is proprietary and confidential. It may not be reproduced or transmitted without the expressed written consent of Balanced Scorecard Collaborative, Inc.

Today’s Agenda  Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group Proposed Project Approach Next Steps and Timing Why work with CustomerLab? Appendix Strategy Map and Balanced Scorecard 2

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Introductions Adani Enterprise

CustomerLab

>

> Muhamed Munner

>

> Ramesh Saraph

>

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©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Application of the Balanced Scorecard Framework has Expanded and Evolved Since its Introduction in 1992. Measurement and Reporting 1992

1993

Alignment and Communication

Enterprise-wide Strategic Management

1996

2000

Corporate Governance and External Reporting 2004

Alignment Harvard Business Review:





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“The Balanced Scorecard — Measures that Drive Performance” January - February 1992 “Putting the Balanced Scorecard to Work” September - October 1993



“Using the Balanced Scorecard as a Strategic Management System” January - February 1996



“Having Trouble With Your Strategy? Then Map It” September - October 2000



“Measuring the Strategic Readiness of Intangible Assets” March 2004

Worldwide Acceptance and Acclaim:

>

“The Balanced Scorecard” is translated into 21 languages

>

Selected by Harvard Business Review as one of the “most important management practices of the past 75 years.“

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The Balanced Scorecard Collaborative helps organizations achieve dramatic results. BSCol Facts

BSCol Events and Publications

• Founded October 1998 by creators • •

• • • • •

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of the BSC concept World-class practitioners – hundreds of companies across industries Range of service offerings – Education – Training – Consulting – Research & Publications – Partner support – Software Standards / Certification Headquarters: Lincoln, MA Offices in London and Sydney Affiliates in Latin America, Sweden, Italy, Spain, Portugal, South Korea, China, Iceland. 65,000 online members

BSCol On-line Members • 1.2 million direct mailings/year • 65,000 members

• 2.5K del/yr in 40 global events

• 128,000 sessions / Month

• 2.5K global BSR subscribers

• Unsubscribe Rate = 0.3% Books & Articles

• 350,000 copies sold • 21 language translations • 10,000 article reprints

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Certified Software Applications

• • • • • • •

Cognos Corvu Crystal FiberFlex QPR In-Phase Panorama

• • • • • • • •

Oracle Peoplesoft SAP SAS Hyperion Procos Pro Dacapo Vision Grupo

The Balanced Scorecard has gained global acceptance as a strategic management system… Balanced Scorecard Hall of Fame

Financial Services

Engineering Polymers

Property & Casualty

Human Resources

North America Marketing & Refining

National Reconnaissance Office

Royal Norwegian Air Force

Saatchi & Saatchi

UK Ministry of Defence

Information and Communication Mobile Commercial Vehicle Business Unit

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Because It Works! 9 out of 10 organizations fail to execute their strategies…However Balanced Scorecard users beat those odds – successfully executing their strategies and creating breakthrough results for their organizations 99% merged asset retention 3 years

#1 in growth & profitability 3 years

+ $7b value 5 years

Customer satisfaction = 70% Public Official award 3 years

#1 in customer satisfaction 33% reduction in cost/case 3 years

+ $3b value 2-5 years

450% increase in # of customers Best on-line bank 3 years

Increase in customer satisfaction Increase in market revenue index 2 years

Saatchi & Saatchi Last to first in profits $1.2b increase in cash flow 100% increase in ROI 2-5 years

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+ $2b value 3 years

9% increase in revenues 33% increase in net income 2 years

Least cost producer 3-5 years

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The Balanced Scorecard Has Been Strongly Endorsed by its Users • “In more than 30 years, I've never come across a more powerful concept, so  rooted in common sense, beautiful in its simplicity, easy to administer, and  with such far­reaching effect as the Balanced Scorecard” ­  Bill Cattucci, Former CEO, AT&T Canada   • “The results of the BSC at Saatchi & Saatchi are too numerous to name.  One  key indicator: shareholder value increased from $500mm to $2.5b before we  were acquired”  ­ Bill Cochrane, Chief Financial Officer, Saatchi & Saatchi • What the Scorecard did was to clarify the agenda, focus and align the  organization around the priorities, and, basically, help make it happen” ­  Gerry Isom, President, Cigna Property & Casualty • “In the fast paced world of Internet Banking, the Balanced Scorecard helped us  focus on the key drivers of strategic success.  Its framework helped us select,  manage and implement a multiplicity of programs and initiatives and was  critical to our success” ­  Dudley Nigg, Executive Vice President, Wells Fargo Inc.

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Objectives for Today > Confirm Understanding of Adani Group Situation and Needs > Review Proposed Project Approach > Agree on Next Steps and Timing

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Today’s Agenda

Introduction and Objectives  Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group Proposed Project Approach Next Steps and Timing Why work with CustomerLab Appendix Strategy Map and Balanced Scorecard

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Bridging the Gap between Strategy and Results: Strategy Focused Organization MISSION Why we exist VISION What we want to be STRATEGY Our game plan

MOBILIZE THROUGH EXECUTIVE LEADERSHIP Create and sustain the strategic agenda TRANSLATE THE CORPORATE STRATEGY Define key priorities necessary for implementation ALIGN THE ORGANIZATION Identify priorities for business units and support functions MAKE STRATEGY EVERYONE’S JOB Prepare and motivate people to execute MANAGE STRATEGY AS A CONTINUAL PROCESS Integrate strategy into the management system

RESULTS Motivated & Prepared WORKFORCE 11

Efficient and Effective PROCESSES

Delighted CUSTOMERS

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Satisfied SHAREHOLDERS

Breaking Down the Barriers – The Principles of a Strategy-Focused Organization 1. TRANSLATE STRATEGY ❑ ❑ ❑ ❑ ❑

Mission / Vision Strategy Maps Balanced Scorecard Targets Initiatives

5. EXECUTIVE LEADERSHIP

BALANCED  SCORECARD

❑ ❑ ❑ ❑ ❑

2. ORGANIZATION ALIGNMENT ❑ ❑ ❑ ❑

4. CONTINUAL PROCESS

Corporate Role Corporate - SBU SBU - Shared Services External Partners

3. EVERYONE’S JOB ❑ Strategic Awareness ❑ Goal Alignment ❑ Linked Incentives

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CEO Sponsorship Executive Team Engaged “New Way of Managing” Accountable for Strategy A Performance Culture

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❑ ❑ ❑ ❑ ❑

Linked to Budgeting Linked to Ops. Mgmt. Management Meetings Feedback System Learning Process

1 Executive Leadership: The BSC Creates the Agenda for Change In This Context Leaders Must: Create the climate for change Unfreeze the organization Show the need for change Create the vision and strategy Clarify strategy with the BSC Create the Leadership Team Break down functional bias Foster “advocates”

A successful Balanced  Scorecard program  starts with a  recognition that it is  not a “metrics”  project, it’s a “change”  process.

Change the culture

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2 Translate Strategy:

The BSC Translates Strategy into the Four Perspective Framework The Strategy

The BSC represents the cause and effect relationships in your strategy.

Financial Perspective “If we succeed,  how will we look  to our  shareholders?”

Outcomes

• Profitability • Growth  • Shareholder  Value

Customer Perspective “To achieve our  vision, how must  we look to our  customers?”

• Price • Service • Quality

Internal Perspective

Drivers The BSC is comprised of themes, objectives, measures, targets, and initiatives.

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“To satisfy our  customers, what  management  processes must we  excel at?”

• Cycle Time • Productivity • Cost

Learning & Growth Perspective “To achieve our  vision, how must  our organization  learn and  improve?”

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• Market Innovation • Continuous  Learning • Intellectual Assets

3

Organization Alignment: Cascade the BSC to Business & Support Units 1. A Corporate Scorecard defines overall strategic priorities.

CORPORATE

BUSINESS UNITS

CORPORATE SCORECARD

(Shared Strategic Agenda) Theme         Measure 4. Aggressive Growth

3. Each Shared Service Unit develops a plan and BSC for “best practice” sharing to create synergies across SBU's.

SBU 1

xxx

SBU 2

SBU 3

SHARED SERVICE UNITS • Finance

5. Customer Loyalty

xxx

xxx

6. Speed and Flexibility

xxx

xxx

7. Customer Intimacy

xxx

8. Operational Excellence

xxx

• Human Resources

9. Right Skills

xxx

• Organizational Development

10. Accountability Culture

xxx

xxx xxx

• Marketing • IT • Sales • General Services

2. Each SBU develops a long-range plan and BSC consistent with the corporate strategic agenda

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SHARED SERVICE UNITS

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4 Everyone’s Job: From the Boardroom to the Front Line Performance Management Processes Are Essential for Moving Strategy from the Top to the Bottom. CORP SBU

Top-Down “Bridging Process” to Share the Strategy and Align the Workforce

• EDUCATION • PERSONAL GOAL ALIGNMENT • BALANCED PAYCHECKS The Strategy–Focused Workforce

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Bottom-Up Process to Internalize and Execute the Strategy

Process: Tie the Balanced Scorecard to the Planning, 5 Continual Budgeting, & Governance Process

STRATEGIC  PLANNING

Planning

Update the Strategy

Strategic Learning Loop

Test the Hypotheses

BALANCED  SCORECARD

Governance

BUDGETING  PROCESS

Funding

Management Control Loop

Reportin g

PERFORMANCE

Budgeting

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Input (Resource s)

Initiatives & Programs

Output (Results)

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Today’s Agenda Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization  Situation at Adani Group Proposed Project Approach Next Steps and Timing Why work with CustomerLab? Appendix Strategy Map and Balanced Scorecard 18

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Our Understanding of the Current Situation at Adani Group Challenges:

Success: >

>

Significant expertise in Global Trading

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Successful foray into ports business – Mundra Port and acquisition of Bay Bridge Enterprises

>

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Global interests ranging from Global trading , Edible oil, Agro products, Agri logistics, Retail, Power, Coal, Oil and Gas Exploration, Gas Distribution, Real Estate, Ports, Special Economic Zones, IT enabled services etc.

Communication of Adani Group Vision and Mission

>

Ensure timely execution and profitability of new projects

>

Need for performance management system that provides greater focus and alignment

>

Need for clear framework that will align and govern the entire organization

>

Strategic objectives are to be connected throughout the organization

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Too many initiatives, need for effective of follow-through

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Possible Benefits from a Balanced Scorecard / Strategy Focused Organization at Adani Group >

Build upon and sustain each organization’s culture of performance by placing strategy at the heart of how Adani Enterprise manages the ‘new’ organization

>

Develop a new model for conducting management meetings, characterized by robust and focused strategic dialogue with fewer distractions and clear priorities

>

Enable the Board and the Staff and to clarify their strategic role, improve their own internal strategic alignment, and define how they support each other

>

>

Establish a consistent framework for defining and managing accountability, key projects and resource allocation

Develop an internal “Strategic Management Office” where the organization develops and sustains the internal capacity to develop, implement and sustain its strategic management process using primarily internal processes

Adani Group believes that the Balanced Scorecard approach can help provide these benefits and is interested in partnering with CustomerLab to achieve them 20

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Objectives and Scope BSCol will work with the Adani Enterprise leadership team to: Establish a shared understanding if your strategy through background analysis and executive interviews

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>

Identify key drivers and potential barriers to successful strategy execution

>

Develop a strategy map for the enterprise level of Adani Group

>

Create an enterprise Balanced Scorecard that includes strategic measures, targets (where possible), and aligned initiatives; typically you will have good data on 60-70% of your strategic measures initially

>

Formulate an implementation/cascading plan to highlight how the strategy will be managed and extended throughout Adani Group, in light of the strategy execution assessment

>

Transfer BSC know-how and expertise to the Adani Group Core Team ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Today’s Agenda Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group  Proposed Project Approach Next Steps and Timing Why CustomerLab? Appendix Strategy Map and Balanced Scorecard 22

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Approach I.

SFO Assessment and Benchmarking > Assess the status on 27 best practices for becoming SFO > Benchmarking the result against organizations that achieved breakthrough results > Road map to execute strategy in systematic and accelerated manner

II. Training Program on Mapping Strategy > Training on how to develop Strategy Map, develop scorecard with strategic objectives, performance measures with targets and supporting initiatives, alignment across the organization, deployment of the SFO processes, preparation of the ‘First Report’ and conduct strategy review meetings

III. Strategy Map and Balanced Scorecard Development > Building of strategic measures, targets and supporting initiatives > Clear responsibility for effective and efficient strategy execution

IV. Monthly Review Meetings > First Report Methodology for systematizing performance review mechanism > Governance and reporting in a strategic review format 23

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Project Deliverables Work Streams

Deliverables

I. SFO Assessment and Benchmarking

Assessment report of the strategic management process Roadmap for implementation

II. Training Program on Mapping Strategy

III. Strategy Map and Balanced Scorecard Development

Training and case materials Knowledge transfer so that every one speaks same language Strategy map with Objectives, Measures, targets and initiatives  Targets where available

Implementation plan for communications and governance IV. Monthly Review Meetings

Governing monthly strategic review meetings Meetings focused on strategic issues Actionable recommendations

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©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

… Assess your strategy execution readiness against our data base of best practices.

BSCol Breakthrough Results Profile

Best Practice

Survey

BSCol Assessment

Mobilize Change Through Executive Leadership

3.9

4.0

4.1

Translate Strategy Into Operational Terms

3.9

3.5

4.0

Align the Organization to Strategy

3.6

3.0

3.3

Make Strategy Everyone’s Job

3.2

Make Strategy a Continuous Process

3.4

Clear Direction & Priorities

2.5

1

2

3

4

5

3.7

Executive Sponsorship

2.5 for Change Clear Case

3.6

Engaged Leadership Team

Key 5 = Best Practice; 4 = We’re OK; 3 = Moving Slowly; 2 = Thinking About it; 1 = Not at All

Strengths

New Way of Managing



Strength 1



Weakness 1

Key 5 = Best Practice; 4 = We’re OK; 3 = Moving Slowly; 2 = Thinking About it; 1 = Not at All



Strength 2



Weakness 2



Strength 3



Weakness 3

Change Agent Identified

Quote(s)

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Weaknesses

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Quote(s)

Identify the key business drivers and barriers for successful strategy execution.

Strategic Target: Mission/Vision in 3 years Drivers

Barriers

Adani Group Today

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©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Markets/Custom er Perspective

Financial Perspective

Completed Strategy Map with Key Themes and Objectives Across four Perspectives

F1: Support Corporate’s Overall Financial Performance F2: Grow new business:

F3: Grow current business:

F4: Drive margins

Increase revenue from new products, customers, and markets

Increase revenue from existing customers

Optimize resources and grow EBITDA

Customer Value Proposition (Clients and Candidates) Delivery C1: Make the testing process easy and secure

Content C2: Present content in new and innovative ways

People Perspective

Internal Process Perspective

Markets and Customers

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EXAMPLE

Financial Performance

I1: Anticipate and understand market and customer needs

I2: Identify, evaluate, and execute new business development opportunities

Channel Value Proposition

Relationship

Delivery

C3: Build trusted, lasting partnerships throughout the world

C4: Make the testing administration process easy and cost effective

Solutions I3: Implement new capabilities that change the value of our testing solutions

Relationship C5: Develop mutually profitable partnerships

Operations I4: Focus technology to deploy common and integrated platforms

I5: Drive customer satisfaction and profitability

I6: Consolidate processes and make investments that drive operational efficiency

People P1: Rapidly integrate, develop or hire people with the right skills

P2: Lead a rigorous employee assessment and development process

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

P3: Build employee engagement with customers

…Associated Key Performance Indicators EXAMPLE OBJECTIVE

KPI Financial Perspective

Targets

Corporate Overall Financial F1 Support Performance

M1

Total Revenue Growth

Grow new business: Increase revenue F2 from new products, customers, and markets

M2

Revenue from New Markets

K1

25%

current business: Increase F3 Grow revenue from existing customers

M3

Revenue from Existing Markets

K2

75%

margins: Optimize resources and F4 Drive grow EBITDA

K3

5% increase per quarter

M4

EBITDA Growth

10% increase per quarter

K4

Customer Perspective M5

Candidate Satisfaction (Ease of Use)

4.0 on 5.0 scale

M6

Security-Related Incidents (#)

10% decrease on prior year

content in new and innovative C2 Present ways

M7

Client Migration to MRB/GAR

trusted, lasting partnerships C3 Build throughout the world

M8

Client Contract Renewal

the testing administration process C4 Make easy and cost effective

M9

Level I Helpdesk Calls and Costs

the testing process easy and C1 Make secure

Delivered Through NonM10 Tests Traditional Channels mutually profitable C5 Develop partnerships

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K2

TBD 80%

K3

20% volume increase with zero change in cost

K4

15%

M11 Royalties Paid Per Site

10%

M12 Fees Paid Per Test Delivered

TBD

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

ID Strategic Initiative

HSP Testing Market

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F1

orpo rate ’s P erfo Gro rm a wn nce ew bus ines Gro wc s urre nt b usin Driv ess em argi ns Eas y& sec ure Clie test nt s ing atis fact i o nw Qua ith c lity onte of c nt lien t rel Cos a t eff tion ecti ship ve d s Mut e l iver uall y in y pr cha ofita nne ble Ant l cha icip nne ate l pa / un rtne ders rshi tand Iden ps cus tify tom / ex er n ecu eed te M s AC Imp o ppo lem rtun ent ities new cap Foc a b us c ilitie omm s o n te Pro chn fitab olog le c y usto mer serv Inve ice st fo r ef f i c Inte ienc grat y e th e rig ht p eop Deve le lop e mplo y e es Buil d en gag em e nt

K1 Expansion Sup por tC

…and an Initiative Alignment Matrix. EXAMPLE

F2 F3 F4 C1 C2 C3 C4 C5 I1

K2 Internet-Based Testing

K3 CCO

K4 Channel Optimization

K5 Fargo Services Integration

K6 Launch BOZ Initiatives

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I2

I3

I4

I5

I6

P1 P2 P3

Together with an Effective plan to Implement the Balanced Scorecard Across the Organization. EXAMPLE Program Schedule KEY ACTIVITIES

Q1

Q2

Q3

Mobilization Phase Clear Direction & Priorities Executive Sponsorship Clear Case for Change Engaged Leadership Team New Way of Managing Change Agent Identified

Alignment Phase Clearly Articulated Strategy Targets Established Measures Developed Clear Accountabilities Initiatives rationalized Strategy Refreshed Annually Strategic Awareness Supporting Communications Personal Goals Aligned Personal Incentives Aligned Development Aligned Accountability for Results

Sustainment Phase Regular Strategy Review Reporting System Links to Budgets & Strategy Links to Strategic Investments Links to HR & IT Planning Links to Governance Process Strategic Management Capability

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©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Q4

Q5

The BSCol Portal will Provide the Project Management Platform for the Duration of the Project and accelerate your time to results

• Multimedia Content • Proven Methodology

•Self-Check Questions

•Structured Templates

•Extensive Curriculum

•Process Management

•Integrated Case Studies

•Multimedia Coaching

•End of Lesson Exams

•Custom Presentations •XML Export

•Reports Tracking Organization’s eLearning Progress

•Familiar Design Center look and feel

• 130+ BSR Articles

•Information directly populated from Design Center

•35+ Case Studies

•Interactive Strategy Map

•100+ Conference Presentations

•35+ Example Strategy Maps

•Online Graphs and Comments

•75+ Video and Audio Executive Interviews

•Customizable color coding for status indicators

•25+ Strategy Management Best Practices Explained

•Easy report printouts and customizable PDFs 31

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

The Project Plan Assumes a Joint Adani Group / CustomerLab Team

Adani Group

CustomerLab

Executive Team:

>

Provide overall leadership, direction and ownership of the BSC project

>

Take responsibility for timeliness and quality of deliverables

> >

Participate in selected interviews and workshops

> > >

Provide project leadership and guidance

> >

Facilitate all aspects of the project

> > > >

Draft BSC (objectives, KPI’s and initiatives)

>

Dedicate resources necessary to complete the BSC project Champion the BSC in the organization

Conduct discussions and planning meetings Lead executive workshops

Core Team:

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> >

Participate in the all aspects of BSC project

> > > > >

Review and refine BSC objectives and themes

Provide perspectives on the company strategy to support BSC development Review and refine KPI’s Drive initiative inventory Assist in initiative mapping Assist in developing the implementation plan

Draft BSC architecture (themes) and Strategy Map (objectives) Facilitate initiative mapping Draft implementation plan Provide BSC expertise in the ongoing use of the BSC as a management tool

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Proposed Project Plan culminates with effective review meetings at corporate level DRAFT Indicative Strategy Execution Framework Implementation for Adani Group   Month

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

  Step 0: Kick Off

Step 1: SFO Assessment and Benchmarking

Step 2: Training in Strategy Mapping

Step 3: Develop Corporate Strategy Map / BSC

Step 4: Facilitate Monthly Review Meetings

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▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Today’s Agenda Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group Proposed Project Approach  Next Steps and Timing Why CustomerLab Appendix Strategy Map and Balanced Scorecard 34

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Next Steps ….

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Today’s Agenda Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group Proposed Project Approach Next Steps and Timing  Why CustomerLab? Appendix Strategy Map and Balanced Scorecard 36

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Why CustomerLab…..

           37

BSCol was founded and is led and managed by Drs Kaplan (Practice Development Advisor) and Norton (President). The CLab/BSCol Asia-Pacific team is the most experienced BSC team in the region and have worked with Kaplan and Norton for many years Unlike our would-be competition, CLab and BSCol are focused entirely on the BSC and USES THE BSC TO MANAGE YOUR BUSINESS FROM TOP TO BOTTOM CLab and BSCol have vast resources not available to other firms. Notwithstanding exclusive access to Kaplan & Norton, we have best practice benchmarks for every aspect of the strategic management process, unique tools and templates, and KPI databases that can be leveraged to help our clients. Given CLab’s access to BSCol’s knowledge resources, CLab consultants help organizations achieve breakthrough results over an extended period of engagement CLab as part of their methodology will transfer the consultant’s knowledge to a Centre of Excellence within the organization, thus ensuring sustainability of results and reducing dependence on consultants over a period of time CLab / BSCol methodology can be tailored to suit the specific requirements of different client engagements. We will therefore take an approach that will best suit the client’s requirements BSCol and CLab continues to invest in the development and enhancement of the Balanced Scorecard framework CLab has experience with unique Indian cultures and work ethics. Our consultants have the breadth and depth of experience across industries and functions. CustomerLab consultants provide world class consulting expertise at Indian rates Last, but not the least, CLab believes in seeing through the logical results in any engagement by handholding the client throughout the execution of strategy ©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Today’s Agenda Introduction and Objectives Overview of the Balanced Scorecard and Strategy Focused Organization Situation at Adani Group Proposed Project Approach Next Steps and Timing Why CustomerLab?  Appendix Strategy Map and Balanced Scorecard 38

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

What is a Balanced Scorecard?

At the highest conceptual level, the Balanced Scorecard is

framework that helps organizations translate strategy into operational objectives that drive both behavior and performance. a

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©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

The Four Perspectives Pull Together Proven Management Concepts into a Simple Framework

1

Financial Perspective Return on Investment

Revenue Strategy

Sources of Growth

Productivity Strategy

Sources of Productivity

2

Customer Perspective Product Service

Relationship

Image

Reputation

Internal Perspective “Build the Brand”

“Make the Sale”

“Deliver the Product”

“Service Exceptionally”

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+

Information Capital

+

Organization Capital

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

The identification of targeted customer segments and their value proposition

3

. The process-focused view of the business using the value chain

4

Learning & Growth Perspective Human Capital

The economic model of key levers driving financial performance

The intangible assets necessary to drive performance

A strategy map uses four perspectives to describe cause and effect relationship between strategic objectives Strategic Theme: Revenue Growth

Financial

Improve Returns

To succeed financially, how should we appear to our shareholders?

Broaden Revenue Mix

Customer Increase Customer Confidence in Our Advice

To achieve our vision, how should we appear to our customers? What is the value proposition?

Internal Business Process To satisfy our shareholders and customers, at what business processes must we excel?

Learning and Growth To achieve our vision, how will we sustain our ability to change and improve? 41

Develop New Products

Understand Customer Segments

Cross-Sell the Product Line

Increase Employee Productivity Develop Strategic Skills

Access to Strategic Information

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Align Personal Goals

Measures and targets are identified and communicated for each objective to motivate members of the organization Strategic Theme: Revenue Growth Financial

Improve Returns

Broaden Revenue Mix

Objective: What the strategy is trying to achieve

Measure: How performance against objectives is monitored

Target: The required level of performance or rate of improvement

Initiative: An action program to achieve target

Objective

Measure(s)

Target(s)

Initiative(s)

Customer Increase Customer Confidence in Our Advice

Internal Understand Customer Segments

Learning & Growth Develop Strategic Skills

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Develop New Products

Cross-Sell the Product Line

• Cross-Sell the full range of financial products.

• Share of customers with two or more products.

Increase Employee Productivity Access to Strategic Information

Align Personal Goals

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

• 40% Year 1 • 45% Year 2 • 50% Year 3

• Customer Information System

Customer Perspective

Financial Perspective

The Balanced Scorecard Is Used to Manage Strategic Performance Manufacturing Strategy Map F1- Grow Earnings and RONA F2- Drive Profitable Volume Growth Globally

C1- Provide Innovative Solutions To Complex Product Design Problems

C2- Tailor Your Approach To My Business Needs

Product Innovation

Internal Perspectiv e

I2- Identify and Pursue Strategic Acquisitions

People & Knowledge Perspectiv e

43

P1- Foster A Culture That Encourages Risk-Taking

F5- Optimize Asset Utilization

C3- Provide Quality Products and Services at Competitive Value

Account Management

Operational Excellence

I7- Increase Metal Sales In Targeted Accounts

I10- Manage Raw Material Costs and Improve Yield

I3- Bring New or Extended Products To Market Quickly

I1- Identify and Develop New or Extended Products

F4- Manage Working Capital

F3- Manage Costs

I5- Gain US Marketshare

I6- Grow Presence in China

I4- Improve the Hit Rate on Proposals in Western European Via Better Technical Information

P2- Attract Marketing and Technical Staff And Ensure They Are Sufficiently Trained

P3- Ensure a Safe, Clean Environmentally Friendly Workplace

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

I9- Optimize Cycle Time Performance

I8- Improve Alignment Between Sales Forecasts And Manufacturing Capacity

P4- Improve Management of Customer Information

Establishes accountability INTERNAL PERSPECTIVE

Performance Owner: Jeff Schmid Measure Leader: Meredith Kokko Reporting Frequency: Monthly

I9– Optimize Cycle Time Performance Cycle Time for Alloy Products (Order Entry to Finished Goods) 30 28 28

27 26

26 24.0

24.0

24.0

24

•Performance Analysis •Cycle time was reduced from 27 to 26 hours per batch representing a one hour reduction due to improvements in set-up procedures and raw material blending controls. However, we are still two hours off our target. This is due to consistent raw material inventory shortages for cobalt and nickel, longer than expected cool down times and bottlenecks in the finishing room. •Recommendations •One week ago we launching a lean project aimed at eliminating wasted time in material planning and finishing room procedures.

22

20

18 FY 02

Q203

Actual

How are the objective and measure performing?

Q303

Target

Why is the measure performing as it is?

What are we going to do about it?

Initiatives Supporting I6 • Lean Project

= Meets or exceeds target = < 100% of target, but >= 95% of target 44

= < than 95% of target

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

What initiatives are aimed at closing performance gaps?

The Initiatives that Drive Performance are Aligned with Strategy Six Sigma Lean Project for Cycle Time Performance (cobalt products) Project Description / Comments: Six Sigma Lean is a proven way to eliminate waste in manufacturing cycle time. The project is aimed at reducing the overall time it takes a batch of alloy product to move from order entry to finished goods inventory. Specifically, there is an opportunity to eliminate several hours time by improving the material planning and finishing room procedures. Is there anything we need to do?

How is the initiative performing?

Establishes accountability Project Sponsor

Jeff Schmid

Project Manager

Frank Strome

Start Date

Q3 2003

End Date

Q4 2003

Budget

$25,000

Expected Benefits: Eliminate 4 hours of cycle time per batch of alloy product.

DATE

STATUS

MILESTONES

October 2003

Complete

Held a kickoff meeting with materials planning and finished department to describe the project and generate a benefits case

October 2003

Complete

Identify the causal factors that lead to cycle time delays.

November 2003

In Process

Conduct an impact assessment on each causal factor and develop quick-hit and longer term improvement recommendations.

November 2003

Not Started

Implement quick-hit opportunities and communicate longer term improvement recommendations in the Q403 Balanced Scorecard report

Actions / Decisions Required from Senior Management: No action or decision required at this time. 45

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Why the Balanced Scorecard works.

Aligns the Organization

Focuses the Organization

A Strategy-Focused Organization designed around a longer-term strategic view.

Translate Strategy Strategy 1 Translate

1. A corporate scorecard defines overall strategic priorities.

Executive CORPORATE SCORECARD (Shared Strategic Agenda) Leadership Leadership 5 Executive

BUSINESS UNITS

4. Aggressive Growth

xxx

Continual 4Process 8. Operational Excellence 6. Speed and Flexibility Continual 7. Customer Intimacy Process

xxx

46

SHARED SERVICE UNITS

SBU 3

SHARED SERVICE UNITS

xxx xxx

• Marketing • IT

• Human Resources • Organizational Development

10. Accountability Culture

The Strategy

Financial Perspective Customer Perspective Internal Perspective

• Sales • General Services

9. Right Skills Everyone’s Everyone’s Job 3 Job

SBU 2

• Finance

5. Customer Loyalty

Organization Alignment 2 Organization Alignment

3. Each Shared Service Unit develops a plan and BSC for “best practice” sharing to create synergies across SBUs.

CORPORATE

SBU 1

Theme

Adapts the Organization

2. Each SBU develops a long-range plan and BSC consistent with corporate strategic agenda.

©2004 Balanced Scorecard Collaborative, Inc. • bscol.com

Update the Financial Strategy Customer

Organizational Control Reallocate Loop Priorities

Internal L&G

Learning Perspective

Pioneer’s Balanced Scorecard Strategic Objectives Financially Strong Delight the Consumer Win-Win Relationship Safe & Reliable

Good Neighbor Quality

ReturnStrategic on CapitalMeasures Employed Mystery Shopper Rating Dealer / Pioneer Gross Profit Split Manufacturing Reliability Index Days Away from Work Rate Laid Down Cost vs. Best Competitive Ratable Supply Environmental Index Quality Index

Motivated & Prepared

Strategic Competency Availability

Performance Operational Loop InitiativesControl & Programs

Competitive Supplier

Follow-up Action The Management Closing the Strategic Meeting Loop Insight Learning Results Problem Loop Harvesting Team External Dialogue Solving “Testing Hypotheses and Capturing Learning”