Improving your business operations by meeting your company’s objective, mission and current...

IMPROVING YOUR BUSINESS OPERATIONS BY MEETING YOUR COMPANY’S OBJECTIVE, MISSION AND CURRENT BUSINESS LANDSCAPECase Study, Concepts and Debatable Ideas

Kenny OngTakaful Ikhlas Sdn Bhd

The World Today…

13th April 2009

•Two Domino’s employees

•YouTube

•Apology from Domino’s after 48 hours

•1 million hits

•Twitter: questions on silence

•LinkedIn: suggestions by users in forum

BusinessWeek, May 4, 2009

• Shareholder : MNRB Holdings Berhad (100%)

• Established Date : 18 September 2002

• Operational since : 2 July 2003

• Takaful Model : Al-Wakalah

• Business Portfolio : General and Family Takaful

• Number Products : More than 90

• Number of Participants : More than 1,800,000

• Number of Agents : More than 6,000

• Number of Staff : 490

• Regional Offices : 11

• Paid Up Capital : RM295 million

TAKAFUL IKHLAS CORPORATE PROFILE

Referral

Employees

Specialist& Hospitals

Panel GP Clinics

EMPLOYEES & DEPENDANT• Claims Submission• Tracking of eligibility• Enquiries & Complaints • Employee benefit materials• Unions• Abuse of benefits

PANEL CLINICS•Processing Bills•Payment •Appointment and removal•Policies & Procedures•Tracking Entitlements •Issues & Complaints•Overcharging & Abuse •MC Verification

SPECIALIST & HOSPITALS•Issuance of GL•Hosp. Bank Guarantee/Deposit•Appointment and removal •Tracking Entitlements•Processing Bills•Payment •Hospital Reports

CLIENT

TISB

EASY ACCESS TO CARE•Panel of 2000 clinics

nationwide•All major hospitals recognises

our GLs•Appointment & management of

medical panel

1st CLASS SERVICE•Benefit & Procedure briefing

•Help Desk•Tri-annual Cost & Utilization

Report•Benchmarking

•Analysis & Recommendations

PEACE OF MIND•24/7 LOG Issuance •Cashless Admission

•Comments

TISB Medical/Health (EB/GHS) Solution

Contents

• Re-energising your company’s mission by developing a strategic improvement plan that aligns with its objective

• Establishing business imperatives, defining vision and targets, realising the targets and fine-tuning your upcoming business transformation needs

• Measuring the effectiveness of your business processes to see how you can improve your margins

In Other Words…

↑ Focus

↓ Complexity

“…in the past 18 months, we have heard that profit is more important than revenue,

quality is more important that profit, people are more important than profit,

customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our

performance is inconsistent"CEO, Anonymous

Before we start…

In the old days of HR…• Average training hours per staff• % of staff attending training• # of training programs• % of training programs conducted• Training needs analysis conducted• Competency models developed• Training budget as % of payroll

What’s wrong with this picture?

Before we start…

Moral of the story…

1. Innovation:– Business models– Products– Services

2. Market Leadership

3. Competitive differentiation

Get the picture?

Understanding Your Business Model and Strategy

Focus on the Business Strategy and Business Direction first

The McPlaybook*

Make it easy to eat• 50% drive-thru• Meals held in one

hand

Make it easy to prepare• High Turnover• Tasks simple to learn

& repeat

Make it quick• “Fast Food”• Tests new products

for Cooking Times

Make what customers want• Prowls market for new

products• Monitored field tests

*Adapted from: Businessweek , Februrary 5th 2007

What is the Business Model?

USP

Market Discipline

Profit Model

•Google

•Tata Nano

Business Model: USP

Unique Selling Proposition (USP)

=

Targeted Customer

=

Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD)

Business Model: USP

“The Product is Not the Product”

• What is the customer really buying?

• What is the “Core Buying Purpose”?

Business Model: USP

1. Insufficient WEALTH

2. Insufficient ACCESS

3. Insufficient SKILL

4. Insufficient TIME

Business Model: Profit Model

Revenue

Cost

MarginCash Flow

Assets

RevenueFinancial

Learning & Growth

Internal Process

Customers

Cost Margin

Strategy + BSC

Cash Flow Asset

What is the Business Model?

USP

Market Discipline

Profit Model

Market Discipline

"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy•Air Asia

•LV

•Ramly

Operational Excellence(low cost producer)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Product Leadership(best product)

Customer Intimacy(best total solution)

Alignment & Consistency: Market Disciplines

Eg. GoogleTata Nano

Operational Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent information for all

• Transactional

• 'Once and Done'





• Simple

• Responsive


• Transactional

• 'Once and Done'

Customer Intimacy

• Management by Fact

• Easy to do business with

• Have it your way (customization)

• Market segments of one

• Proactive, flexible

• Relationship and consultative selling

• Cross selling

Customer Intimacy







• Cross selling

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors' products

• Learning organization

Product Leadership


• Risk takers





Alignment & Consistency: Disciplines, Priorities, and KPIs




Alignment & Consistency

HP well-balanced portfolio, mass customization

Acer super lean cost structure, aggressive pricing

Apple powerful products, premium

pricing, limited range

Still Doing well in

2009/2011

ALIGNING YOUR ORGANIZATION TO THE BUSINESS MODEL





Strategy: Disciplines, Priorities, and KPIs





• Simple

• Responsive


• Transactional

• 'Once and Done'





• Simple

• Responsive


• Transactional

• 'Once and Done'

Customer Intimacy







• Cross selling

Customer Intimacy







• Cross selling

Product Leadership


• Risk takers





Product Leadership


• Risk takers





Strategy: Disciplines, Priorities, and KPIs

• Operational Excellence• Move know-how from top performing

units to others• Benchmark against best in class• Ensure operations training for all

employees• Use disciplines like TQM for continuous

learning to reduce costs and improve quality

Strategy: Value Disciplines


• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the

customer• Make company knowledge available to

customers

• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company

have already learned• Ensure there are multiple sources of

funding


Alignment: 4-Wheels Model

Culture

Business

Model

Strategic Planning

StructurePerson

Leadership

Resources

Alignment: Framework

• Focus point• Alignment• Quality• Innovation & Differentiation• Risk taking• Performance Management• Corporate obsession• Decision making

Culture

Alignment: Framework

• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower

Structure

Strategy: Framework

• Role modeling• Vision/Mission/Philosophy• Leadership Style• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about Performance

Leadership

Strategy: Framework

• Recognition• Recruitment• Training• Profit sharing• Values• Motivation• Self Efficacy• Awareness• Useful Competencies• Career aspirations• Attribution (control)

Person

Strategy: Framework

Enablers• Technology• Equipment• Materials• Human• Intellectual

Property• Partners• Property

Resources

Funding • CAPEX• OPEX


Culture

Business

Model

Strategic Planning

StructurePerson

Leadership

Resources

Revenue

Base Retention

Share Gain Positioning Adjacent Market

New Business

Financial

Learning & Growth

Internal Process

Customers

Cost Margin

Strategy + BSC

Cash Flow Asset


Product Leadership

Customer Intimacy

Investment Strategy

Satisfaction

Aligning Budget and Resources to Business and Organization Goals

The art and science of allocating and aligning Resources to strategic plans


Culture

Business

Model

Strategic Planning

StructurePerson

Leadership

Resources

Strategy: Framework

Enablers• Technology• Equipment• Materials• Human• Intellectual

Property• Partners• Property

Resources

Funding • CAPEX• OPEX



Customer Intimacy

Customer Intimacy

Product Leadership

Product Leadership

Organization, jobs,skills

Management systems

Information and systems

Culture, values,norms

Each Discipline Requires Different Priorities & Resources


•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management


•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management

Organization, jobs, skills

Management systems





Management systems



Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability



Management systems



Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’

Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’


Budgeting vs. Priorities

Upturn Flat Downturn

Fight Complacency

Sharpen Edge

Keep Momentum

Conquer

NPD Cycle Time

Improve Edge

Extensions

Counter Competitor

Innovation

Acquire

Profits

Build momentum

Sales

Cash Flow

Focused on ‘Breakthrough’

JV, In-source, Out-source

Eliminate bottom 20%

Improve Top 15% revenue-generating products

↓ R&D, ↑Sales

Example: Business Situation vs. R&D Priorities

Activity Grid to determine budget priorities

Increase (↑)What are features/

activities/services to increase?

Create (+)What are features/

activities/services to introduce?

Reduce (↓) What are features/

activities/services to reduce?

Eliminate (-)What are features/

activities/services to eliminate?

1. Manage conflicts where limited resources should go2. Solve problem of compounding activities & resources

Budgeting for Investments based on the ‘BCG Matrix’ principles

Business Performance

Market Potential

Measuring Success

KPIs and PMS

Before we start…

Which comes first?

1. Strategies -> KPI?

2. KPI -> Strategies?

Before we start…

Which comes first?



•already know our priorities, aware of all strategy options available

•creating something UNIQUE, INNOVATIVE and DISRUPTIVE e.g. Air Asia

•conducting a business Turnaround e.g. MAS

Before we start…

Which comes first?



•want to find out possible strategies,

•determine our priorities first thru selection of important KPIs;

•growing through ‘normal’ business, not a Turnaround.

Example: Selection of KPIs for BSC

• Customer satisfaction• Customer loyalty• Market share• Customer complaints• Complaints resolved on first

contact• Return rates• Response time per customer

request• Price relative to competition• Total cost to customer• Average duration of customer

relationship• Customers lost• Customer retention• Customer acquisition rates• Percentage of revenue form new

customers• Number of customers• Annual sales per turnover

• Win rate (sales closed/sales contact)• Customer visits to the company• Hours spent with customers• Marketing cost as a percentage of

sales• Number of ads placed• Number of proposals made• Brand recognition• Response rate• Number of trade shows attended• Sales volume• Share of target customer spending• Sales per channel• Average customer size• Customers per employee• Customer service expense per

customer• Customer profitability• Frequency (number of sales

transactions)

Wrong KPIs

“What is the moral of the story?”

KPIs and Behavior

Before: “Handle Time” Per Call• Motivated Call Centre staff to transfer callers,

getting rid of complainers, making them someone else’s problem

• Callers at 45% chance of being transferred• 7,000 customers each week suffered transfers 7

times or more

KPIs and Behavior

After: “Minutes Per Resolution” of a problem

• Resolution in ONE CALL become the core goal• Reduced probability of call transfers from 45% to

18%

Revenue

Base Retention


New Business

Financial

Learning & Growth

Internal Process

Customers

Cost Margin

Cause and Effect

Cash Flow Asset


Product Leadership

Customer Intimacy

Investment Strategy

Competencies Information Systems

Motivation, empowerment,

alignment

Satisfaction

Financial

Learning & Growth

Internal Process

Customers / Distributors

Revenue Growth

ProductivityMarket Value

Department Operations

Supplier & Alliances

External Involvement

Target Markets

Products/ Services

Channel Strategies

Human Resources

Technology

Information & IntelligenceSystems &

Processes

Cause and Effect: An Example

Sample: Other 1st Level KPIs across industries

Financial Services Retail Telecommunications

•Maximize ARPU•Minimize Churn•Mutichannel customer service

•Understand customer behavior related to customer conversion, acquisition, and retention•Single view of customer•Multichannel customer experience•Personalized customer experience

•Anticipate and prevent churn despite compensation•Increase number of products per customer•Turn call center information opportunity to up-sell and cross-sell•Increase customer satisfaction and loyalty

Hospitality Travel & Leisure Manufacturing

•Personalized customer experience•Maximize share of wallet•Player/customer loyalty•Multichannel customer service

•Increase customer loyalty and preference•Maximize customer revenue•Improve service quality and efficiency•Capture and close sales opportunities

•Single view of customers across supply chain•Zero-error order capture•Streamline opportunity to cash processes•Leverage investment in ERP and backoffice systems

Sample KPIs for Each Discipline


• Price• Selection• Convenience• Zero Defects• Growth



Customer Intimacy

• Customer Knowledge

• Solutions Offered• Penetration• Customer Data• Customer-success

focus

Customer Intimacy



focus

Product Leadership

• Marketing• Functionality• # of Successes• # of Failures• Learn from key

users• Interdisciplinary

teams• Pipeline

Product Leadership



teams• Pipeline

B2B/B2G BSC Matching

Revenue

Base Retention


New Business

Financial

Learning & Growth

Internal Process

Customers

Cost Margin Cash Flow Asset


Product Leadership

Customer Intimacy

Investment Strategy



alignment

Satisfaction

Customer/Client/ Government BSC

Revenue

Base Retention


New Business

Financial

Learning & Growth

Internal Process

Customers

Cost Margin Cash Flow Asset


Product Leadership

Customer Intimacy

Investment Strategy



alignment

Satisfaction

Your BSC

1. Draw your ‘customer’s’ BSC

2. Match their CP/IP with your CP

3. Identify IPs that support/conflict

Why we hate Performance Appraisals

How we de-motivate our own Talent Pool

Complaints about Performance Management Systems

• Bias• Different Standards• Surprise• Subjective• No linkage• No differentiation• Secretive• No follow up• No control• No support

Systems Problem…

Complaints about Performance Management Systems

• Different Standards• Surprise• Subjective• No linkage• No differentiation• No support

*The rest are ‘people’ problems… to be dealt with in another time

What is Performance Appraisal used for?

Reward?

Discipline?

Development?

Motivation?

Promotion?

Monitor?

No wonder our employees are

confused!

What is Performance Measurement used for?

Reward?

Discipline?

Development?

Motivation?

Promotion?

Monitor?

Behavior-based

Knowledge/Skill based

Results-based

Trait-based

Which system should we use?

Managing Performance = Managing Expectations

What’s YOUR expectation?

Activity based

MBO Standards

A Excellent

B Good

C Average

D Poor

E Useless

MBO Standards

A Excellent

B Good

C Average Good

D Poor

E Useless

MBO Standards

A Excellent Excellent

B Good Very Good

C Average Good

D Poor Not Good

E Useless Commit Suicide

Sample KPIs for Each Market Discipline





Customer Intimacy



focus

Customer Intimacy



focus

Product Leadership



teams• Pipeline

Product Leadership



teams• Pipeline

Competency Target Setting

1. Initiative

2. Teamwork

3. Problem Solving

4. Leadership

5. Integrity

What’s the problem here?

Competency Target Setting

Initiative

1. Minimize problems quickly without needing to be asked

2. Seeks personal growth and professional self-development

3. Doing more than is required/expected in a job

4. Seeks new and improved solutions and approaches to completing assignments

5. Looks for opportunities to help others and team

Competency Standards

3 Meets behavioral standards consistently. Is a good role model for others.

2 Meets behavioral standards some of the time. Needs improvement.

1 Does not meet behavioral standards. Require counseling or disciplinary actions.

END NOTES

Which Company?

American Customer Satisfaction Index (ACSI) • 64 out of100-point scale: lower than IRS (Tax)• 2nd last among 30 companies surveyed• Lowest 5% among 223 companies surveyed• Bottom 5% of all measured private sector

companies

• 500 million customers2010 American Customer Satisfaction Index (ACSI)

E-Business Report

http://www.foreseeresults.com/research-white-papers/ACSI-e-business-report-2010.shtml

Which Company?

American Customer Satisfaction Index (ACSI) • 64 out of100-point scale: lower than IRS (Tax)• 2nd last among 30 companies surveyed• Lowest 5% among 223 companies surveyed• Bottom 5% of all measured private sector

companies

• 500 million customers

2010 American Customer Satisfaction Index (ACSI) E-Business Report

http://www.foreseeresults.com/research-white-papers/ACSI-e-business-report-2010.shtml

Popularly Unpopular

Popularity

≠

Affection

Don’t forget…

“The business of business is Business”

Thank You.

soft copy of slides: http://totallyunrelatedrandomanddebatable.

blogspot.com/

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