Local Business Development Program 2011 Build Your Business … · 2011-07-12 · Objectives...

Local Business Development Program 2011

Build Your Business To The Next Level

Workshop 3

12 July 2011, Negara Brunei Darussalam

1

An event by Proudly partnered by


8:30am

9:00am

Arrival & Registration of participants

Welcoming Remarks

9:15am • Recap Context; Lessons and issues

• Recap group work case studies

• Work-through Strategy Map & Balanced Scorecard (BSC) for case studies

• Process: Innovation, Customer Engagement, Marketing & Sales

10.45am Coffee Break

11.00am • Process: Marketing & Sales, Fulfilment (Production, Delivery, Customer Service)

2

12:30pm Networking Lunch

1:30pm Conversation

2:00pm • Learning & Growth: HR Competencies, Knowledge & Technology Assets, Culture

• Review Resultant Strategy Maps & Balanced Scorecards

• Key Business Indicators

• Overview of other business considerations

• Financial Models

• Productivity

• Risk Management & Business Continuity Management

5:00pm Workshop concludes

Recap Context; Lessons and Issues

3

Recap ContextProgram and Workshops Overview


Workshop 1: Appreciate your current performance and decide

where you want to go

4

Workshop 2: Understand and attract your target customers

Workshop 3: Build your business capabilities to deliver, and

delight customers

Recap Context

• Introductions

• Ground rules– Participate & have fun

– Do not judge questions

– There is no wrong answer– There is no wrong answer

– Ask, ask & ask. If you still do not understand …

– Be honest with ourselves … (e.g. data)

– Keep checking to what you wish to achieve from the workshop –

PreW1 Doc1

• what are the top 3 things I have learnt

• what are the 2 or 3 things I will do differently in your business

5

Objectives

Financial perspective

“If we succeed, how will we

look to our shareholders?

•Profitability growth

•Growth of XX%

•More XX customers

•Shareholder value

•Service

Recap Balanced Scorecard – Basics

Organization Vision & Mission




Measures Targets Initiatives

What Strategy must

achieve & are key

to its success

How success will

be measured &

tracked

Level of perf or

improvement

rate needed

Key action

programs

required

6

Customer perspective

“To achieve our vision, how

must we look to our customers?

•Service

•Quality

•Price

Internal Process perspective

“To satisfy our shareholders &

customers, what mgt processes must

we excel at?

•Cycle time

•Productivity

•Cost

Organization learning perspective

“To achieve our vision, how must our

organization learn & improve?

(People, Infrastructure, Culture)

•Staff alignment

•Continuous learning

•Intellectual assets





“To satisfy our shareholders &

customers, what mgt processes must

we excel at?





Recap Balanced ScorecardSome Indicators of Good Scorecard

1. Executive Involvement

– Strategic decision makers must validate & own the strategy &

relevant measures

2. Cause & Effect relationships

– Every objective selected should be part of a chain of cause & effect

linkages that represent the strategy

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linkages that represent the strategy

3. Balance between Outcome & Leading measures

– This is to facilitate anticipatory management

4. Financial linkage

– Every objective can ultimately be related to financial results

5. Linkage of Initiatives & Measures

– Each initiative should be based on a gap between As-Is & target

Recap Group Work Case Studies

1. A financier believes that your Nasi __tok business can fly and has

asked your team to put together a proposal

2. Brunei Darussalam has the potential to become a major gaharu

producer and even a gaharu commercial hub if steps are taken to

encourage the commercial planting of "pokok keras" (woodchips).

8

encourage the commercial planting of "pokok keras" (woodchips).

Brunei's gaharu is one of the most expensive in the world.

3. Provision of oil & gas related products, equipment and services – A

financier believes that your business can fly given the opportunities

that are coming up in the region and has asked your team to put

together a proposal

Recap Group Work Case StudiesSWOT Analysis

Strengths

1.

2.

3.

Weaknesses

1.

2.

3.

Opportunities Opportunities that are good fit to

strengths of the business

Overcome weaknesses to pursue

strategies

List SWOT components & match appropriate strategies for your business

Opportunities

1.

2.

3.

strengths of the business strategies

Threats

1.

2.

3.

Use strengths to mitigate (external)

threats

Work out plan to prevent

weaknesses from making business

highly susceptible to threats

9

Recap Group Work Case StudiesVision Statement Components

From inputs in slide on SWOT , populate the following table, starting with the

column on the left. This is an iterative exercise

1. We will exploit

our key strengths

2. To take the

following action

3. So that we will

achieve the

following goals

4. And the

following financial

goals

e.g. strong network;

track record / brand

e.g. Participate the new

regional project with ...

e.g. Grow a new offshore

revenue stream to reduce

Group revenue of $10m

and profit of $2m by

10

track record / brand

name in the niche area

regional project with ... revenue stream to reduce

reliance on …

and profit of $2m by

2013

1.

2.

3.

4.

5.

1.

2.

3.

4.

5.

1.

2.

3.

4.

5.

1.

2.

3.

4.

5.

Recap Group Work Case StudiesExploring Adjacencies

New Channels

New Geographies New Value Chain Steps• Forward integration

• Backward integration

• Sell capability outside

New Businesses• New-to-world needs

New Products• Next generation

• Support services

• Complements

• New to world

New Customer Segments• Microsegmentation of current

segments

• Unpenetrated segments

• New segments

New Channels• Distribution

• Indirect

• Internet

• New-to-world needs

• New substitutes

• New models

Recap Group Work Case StudiesBusiness Model – Example of Considerations

Conceptualize Design Manufacture

Marketing

& Sales

Customers

Distribute

E-commerce

Vision of The Biz

Retail Customers

12

& SalesE-commerce

Events

Source

Franchise

Rapport

Cust FeedbackTerms

Good Products

Good Cust Experience

Customers

Franchisees

Business ModelSome Options & Considerations

High

Franchising

Joint Venture

Subsidiary

Risk

Control

Low

HighLow

Distributor

Agent

Licensor

Franchising


8:30am

9:00am


Welcoming Remarks







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1:30pm Conversation






• Productivity



Strategy Map & Balanced Scorecard

15

Explicit understanding of who your customer is; why he buys from you.

1. List your products & services – what they are & what they do, i.e. your business as seen by the customer

2. Define possible Market Segments for your products & services

3. Estimate for each Product /Service-Target Market segment, possible (a) Revenue; (b) Volume; (c) Margins

4. Decide on Primary target market & Secondary markets

Clarify Your Product & Service Offerings; Target Customers

(2) Target Market

(1) Products/Services

(3)

Who are your competitors?

Can you identify a niche?

Who else could be your customers?

16

(3)

Objectives




•Grow Profit

•More retail Customers

•More ____ partners

•Higher VA per staff

•Good & fast service

Group Case Study 1 – Food : Retail +


• Incr in 3 yrs

• Incr in 3 yrs

• Nos in 3 yrs

• Incr in 3 yrs

•___%

•___%

•__ nos

•From__to _

•Rating •__

What Strategy must

achieve & are key

to its success

How success will

be measured &

tracked

Level of perf or

improvement

rate needed

Key action

programs

required

More ______Partners

Higher profit

Higher VA perstaff

More RetailCustomers

Fin

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•Good & fast service

•Tasty & healthy

•Value for Money


“To satisfy our shareholders & customers,

what mgt processes must we excel at?

•Turnaround time





•Rating

•Ranking

•Ranking

•__

•#__

•#__

•__% in __ •__%

Tasty & healthy

Good ______Terms

Value forMoney

Good _______MechanismC

ust

om

er

Inte

rna

lLe

arn

ing

Fast turnaround

Good & fastservice

RecruitPartners

Expand Retailterritory

Objectives

•Grow Profit

•More manufacturers


•Competitive price, terms

Group Case Study 2 – Ingredient: Supplier +


• Incr in 3 yrs

• Nos in 3 yrs

• Incr in 3 yrs

•___%

•__ nos

•From__to _

•Ranking •__

What Strategy must

achieve & are key

to its success

How success will

be measured &

tracked

Level of perf or

improvement

rate needed

Key action

programs

required

MoreManufacturers

Higher profit

Higher VA perstaff

More RetailCustomers

Fin

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•Competitive price, terms •Ranking •__Green

CompetitivePrice & Terms

ReliableserviceC

ust

om

er

Inte

rna

lLe

arn

ing

Quality reports

Good, consistentquality

Lead generation & conversion

Replacementprog

Effective extraction

Objectives

•Grow Profit

•More locations

•More prods & Services


•Competitive price, terms

Group Case Study 3 – Oil & Gas Products & Services Supplier


• Incr in 3 yrs

• Nos in 3 yrs

• _____

• Incr in 3 yrs

•___%

•__ nos

•_____

•From__to _

•Ranking •__

What Strategy must

achieve & are key

to its success

How success will

be measured &

tracked

Level of perf or

improvement

rate needed

Key action

programs

required

MoreLocations

Higher profit

Higher VA perstaff

More Products&Sevices

Fin

an

cia

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isio

n

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•Competitive price, terms •Ranking •__CompetitivePrice & Terms

ReliableserviceC

ust

om

er

Inte

rna

lLe

arn

ing

Good, consistentquality

Clustering

Balanced ScorecardFinancial Perspective

Vision &

Mission

Financial

If we succeed, how will we look to our shareholders?

• Normally key result indicator (KRI) of performance – on

which the company will be measured by shareholders and

management

• Establish the “financial gap” that will clarify the magnitude

of change required

• Determine how we plan to close the “financial gap”

20

Customer

Process

Learning

• Determine how we plan to close the “financial gap”

Balanced ScorecardFinancial / Customer Perspectives

Vision &

Mission

Financial

To achieve our vision & financial goals, how must we look to our customers (targeted)?

(Who are they? Where are they? How do they think & behave?)

• What is our value proposition in serving them?

• What do we understand by customer satisfaction?

• Customer value means value to the customer, & value of the customer to the company

21

Customer

Process

Learning

customer to the company

• Identify the drivers of loyalty: How do we attract, retain & deepen relationship with customers in the targeted segments

• How will the company differentiate itself in the eyes of the customer?

Generic model

Value Proposition = (Prod/Svc Attributes) + Image + Relationship(Functionality, (Visual.Quality Emotional)Price, Time)

Purchase Decision Chain Dynamics

Decision Process Conscious Mind Unconscious Mind

1 Awareness Knowledge of Co, product names

& few basic facts

General impressions & feelings

about the Co & products.

•Do I like them or not?

Ads & Marketing

communication

2 Purchase

motivation

Functional needs recognised.

Rational case for purchase begins

to take shape

Emotional needs sense of

“I want”, “I need” & “I should”

Ads & Marketing

communication

3 Product Product meets functional needs. “Feels right”. Expectation of Sales3 Product

acceptance

Product meets functional needs.

Rational case for purchase grows

“Feels right”. Expectation of

emotional gratification.

Attraction > avoidance.

The real decision is made

Sales

4 Brand

preference

Product is better for me than

alternatives.

Rational case for purchase made

I like this one better than the

alternatives & I feel good about

the way things are done

Sales

5 Purchase

transaction

Purchase conditions & activities

are acceptable / worth the effort

Transaction is comfortable.

If annoying, it is worth it

Customer Service

6 Customer

satisfaction

Product, service, company, live up

to functional expectations

Emotional gratifications live up to

or exceed expectations

Customer Service

22

Balanced ScorecardInternal Process Perspective

Vision &

Mission

Financial

To satisfy our shareholders & customers, what processes must we excel at?

• What are the core business processes?

• What are the elements that must be done well to enhance customer value proposition

• Focus on essential disciplines e.g. Marketing, Lead generation, Lead conversion, Client fulfillment, Financial

Vision &

Mission

23

Customer

Process

Learning

generation, Lead conversion, Client fulfillment, Financial

• One view of Generic Value Chain

Create

Service

Offering

Develop

Prods /

Services

Sell

Prods /

Services

Provide

Cust

Service

Optimizati

on,

Distributio

n &

Execution

Identify

Cust

Needs &

Wants

Satisfy

Cust

Needs

&

Wants

Innovation Cycle Operations CyclePost-Service

Cycle

Balanced ScorecardInternal Process Perspective

Administrative, finance

infrastructure

Administrative,

finance infrastructureLegal, accounting, financial management

Human resources

management

Personnel, recruitment, training, staff

planning, etc.

Product & technology

development

Product & process design, production engineering, market

testing, R&D

ProcurementSupplier management, funding, subcontracting, Su

pp

ort

Act

ivit

ies

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Procurementspecification

Inbound

LogisticsOperation

Outbound

Logistics

Sales &

MarketingServicing

Examples:

Receiving; raw

materials

control, supply schedules

Examples:

Manufacturing

; packaging;

production control; QC;

maintenance

Examples:

Order

handling;

dispatch; delivering;

invoicing

Examples:

CRM; order

taking;

promotion; sales analysis;

market research

Examples:

Warranty;

maintenance

Pri

ma

ry A

ctiv

itie

s

Adapted from Porter’s Value Chain


8:30am

9:00am


Welcoming Remarks







25


1:30pm Conversation






• Productivity



Balanced ScorecardLearning & Growth Perspective

Vision &

Mission

Financial

To achieve our vision & mission, how must our organization learn & improve?

• Often overlooked

• Represent enablers of the other three perspectives

• “Soft” measures can drive “hard” results

• Typical Learning & Growth Objectives

Vision &

Mission

26

Customer

Process

Learning

Employee

Competencies

Knowledge &

Technology Assets

Climate for Action

• Leverage core

competencies

• Develop & retain

key people

• Increase employee

satisfaction

• Drive productivity

• Leverage

technologies

• Capture best

practices

• Seek & protect IP

• Ensure strategic info

is available

• Set accountability /

empowerment

• Create line-of-sight to

objectives

• Encourage cross-

functional learning

• Comp & Ben that

promotes desired

behaviour

2 Recruitment & Selection

(Differentiation, Targeting)

Competency & Performance Requirements

Balanced ScorecardHR Capabilities & Linkage to Balanced Scorecard

1 Manpower Planning(Identify reqts & bridge gaps)

Vision & Mission

Financial

Customer

Process

Learning

• Business performance is achieved when systems leverage talent to make their best contribution.

• Do your business and talent systems communicate?

• Performance management connects the business plan implementation with talent management

• The right PMS affects all areas of talent management. If inappropriate, the effect can be adverse

6 Career Management (Alignment)

Perform

4 Perf Management(Improvement, Progress)

3 Comp & Benefits(Rewards, recognition)

5 Learning & Dev(Development, capabilities)

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Learning

Balanced ScorecardHR Capabilities & Climate for Action – For Discussion

• Matrix of Jack Welch at GE used when evaluating his teams.

• Nicknamed “Neutron Jack” for his often rash and emotionally-devoid

decisions, he was also widely regarded as one of their very best evaluators

and developers of talent.

Re

sult

s /

Pe

rfo

rma

nce

F H

28

Re

sult

s /

Pe

rfo

rma

nce

F H

F C

Adherence to Values

Balanced ScorecardClimate for Action

76% 6%

Majority of

Businesses

High

Performance

Business

• Attendance mindset

• Entitlement mindset

• Business mindset

• Engaged / involved

• Financial and business literacy

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Balanced ScorecardClimate for Action

Rigid

culture

Flexible

culture -

Adaptive

166% Sales 682%

30

166% Sales 682%

74% Stock value 901%

35% Staff numbers 282%

1% Net Income 756%

Some Key Business Indicators

• “Fact-free” decision making

• Keep an eye on ratios in addition to busying yourself with the other important

things Profitability (How well mgt controls expenses & use assets to make profits)

Gross Profit Margin = Profitability after COS (Net Sales-COS)/Net Sales

Net Profit Margin = % of sales remains ater expenses NP / Net Sales

Return on Investment = Effectiveness in gen Profit fr Investment NP/Total Assets

Return on Equity =Rate of return owners receive on their

investmentEarnings/ Sh Equity

31

Liquidity (Ability to meet short-term financial obligations)

Current Ratio = Ability to pay current debt Curr Assets/Curr Liab

Quick Ratio (Acid Test) = Ability to conv CA to cash to pay CL (Curr Assets - Inv)/Curr Liab

Working Capital = Cash Flow Curr Assets - Curr Liab

Solvency (Leverage - use of debt to finance operations)

Debt Ratio =Extent to wh total assets are financed

through debtTotal Debt / Total Assets

Efficiency (How quickly resources can be converted to cash or sales)

Inventory Turonver = How fast inv is turned to sales COS / Inventory

Total Asset Turnover =How well total assets used to generate

salesSales / Total Assets

Objectives


Measures Usefulness Computation

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8:30am

9:00am


Welcoming Remarks







33


1:30pm Conversation






• Productivity



Financial Models

-$40,000

-$20,000

$0

$20,000

$40,000

$60,000

Projected Revenue, Net Profit After Tax & Cash Balance

34

Includes risk assessment & mitigation-$80,000

-$60,000

-$40,000

Total revenue NPAT Cash at the end of period

PROFIT & LOSS 2010 2011 2012

Total revenue $13,783 $276,410 $276,410

Total COS $4,925 $92,668 $92,668

Total Gross Trading Profit $8,858 $183,742 $183,742

Total overheads $8,900 $106,800 $112,140

EBITDA -$42 $76,942 $71,602

Tax $0 $11,924 $11,016

NPAT -$608 $58,218 $53,786

GP Margin 64% 66% 66%

NPAT Margin -4% 21% 19%

Estimated breakeven Rev based on

GP Ratio (For Info Only) $14,730 $170,893 $178,926

Productivity is not just about doing things more

efficiently by “doing things right”.

It is also about achieving maximum effectiveness

by “doing the right things”.

ProductivityWhat is Productivity?

Productivity Efficiency

Doing Things Right

Effectiveness

Doing The Right Things

+

+

35

=

ProductivityCommon Productivity Indicators

Source: A Guide to Integrated Management of Productivity Activities (IMPACT),

SPRING Singapore, 2010

ProductivityBusiness Transformation Process

Input (Man,

Materials ,

Machines)

Transformation(Process

Method)

Output(Products,

Services)

Exercise

ProductivityWaste Can Be Found in All Aspects of Work

Input (Man,

Materials ,

Machines)

Transformation(Process

Method)

Output(Products,

Services)

WASTES

• Overproduction

•Waiting Time

•Transport

•Process

•Inventory

•Motion

•Defects

Productivity is a measure of how effectively and

efficiently you have used your resources (e.g. labour

and capital) to generate output (e.g. goods and

services).

ProductivityHow Productivity is measured

Productivity is usually stated as

Productivity =

Input

Output

39

Key Levers of Productivity

Output

÷

Increase sales

Increase output

per unit cost of

production

Key Productivity Levers

40

Input

÷Optimise use of

labour

Optimise use of

capital

Productivity

•Labour

Productivity ($)

(VA / No of staff)

How to Improve Productivity

Productivity =

Input

Output

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Factors Affecting Productivity

Source: A Guide to Integrated Management of Productivity Activities (IMPACT), SPRING Singapore, 2010

Key Levers of Productivity

Output

÷

Increase sales

Increase output

per unit cost of

production

•Sales volume: Sales / Mktg promo

•More high-value goods: Prod mix mgt

•Higher value from existing goods/svcs:

service excellence; branding

• Control cost of materials & services: best

sourcing; demand aggregation; shared

services

Key Productivity Levers Examples

43

Input

÷Optimise use of

labour

Optimise use of

capital

•Improve processes – BPR, Lean Sigma

• Effective labour deployment: Flexi-work

arrangement; job-redesign

• Increase use of higher skilled labour for

high value work: Learning & dev

• Introduce appropriate technology: ICT

application

• Increase level of capital intensity & high-

quality capital: Automation;

mechanisation

Productivity

•Labour

Productivity ($)

(VA / No of staff)

Risk Management

The Dip / Valley of Death

Results

/ V

alu

e o

f C

o The Dip

Types

• Manufacturing

• Sales

• Education

• Risk

• Relationship

• Conceptual

• Ego

Consequence

Major

Moderate

Consequence

Major

Moderate

Clients go tocompetitor due to rate

Increase >x%

Accident –resultant

civil suit >$y

Clients go tocompetitor

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Includes risk assessment & mitigationEffort / Life Cycle

Results

/ V

alu

e o

f C

o

• Ego

• Distribution

High

Minor

Low Medium

LikelihoodHigh

Minor

Low Medium

Likelihood

Accident –resultant

civil suit >$y

competitor due to rate

Increase >x%

Business Continuity Management

What should I do in an emergency?

The Press keep hounding me; What

should I say?

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How do I contact my customers?

should I say?

When can I return to my office?

3.1 Why Do BCM

What if you lose your …?

• Premises

• Equipment

• Staff

• Data

Are you prepared?

BCM Challenges Today Consideration

Non-physical events Planning for non-

physical events

Global operations Coordination, comms,

decision making

Outsourcing, off-shoring

- supplies & services

Supply chain continuity

Are you prepared?

Will your plan work?

Why is BCM important?• Increased threats

• Global nature of threats

• Economic inter-dependency among regions

• Longer supply chains

• Increased outsourcing

• Tighter financial regulation

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Source: Centre for Research on the Epidemiology of Disasters (CRED)

- supplies & services

Technology complexity Speed & confidence in

ICT DR

Regulatory & customer

expectations

Quality management &

performance

management

Recap of LBD program 2011


Workshop 1: Appreciate your current performance and decide

where you want to go

Workshop 2: Understand and attract your target customers

Workshop 3: Build your business capabilities to deliver, and

delight customers

47

Recap of LBD 2011Business Excellence (BE) Frameworks

3. Information

2. Planning

4. People

5.

Pro

cess

es

6.

Cu

sto

me

rs

7.

Re

sult

s

1.

Lea

de

rsh

ip

INNOVATION

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Source: SPRING Singapore

DRIVER SYSTEM RESULTS

LEARNING

Senior executives set

organisational directions

System comprises a set of well-defined

processes for meeting the organisation’s

performance requirements

Results deliver an ever-

improving customer value &

organisational performance

Basis for the 7 characteristics

McKinsey & Company 7-S Model; Tom Peters & Robert Waterman In Search of

Excellence; Malcolm Baldrige National Quality Award; European Foundation for

Quality Management; Singapore Quality Award; Robert Rosen Global Literacies

Malcolm Baldrige National Quality Award

Recap of LBD 2011Business Planning

The Business Plan

1 Introduction

2 About The Biz – Mission, Vision, Values

3 Products & Services

4 The Target Market

4949

Includes risk assessment & mitigation

4 The Target Market

5 Action Plan, including Marketing Plan

6 The Team

7 Financial Model: Assumptions; Scenarios

8 Risk Management & Contingency Planning

9 Exit Strategies

Next Steps

What are the top 3 things I have learnt

1

2

3

What are the 3 things I will do differently in my business?

1

2

3

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Singapore 079314

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Objectives



What Strategy must

achieve & are key

to its success

How success will

be measured &

tracked

Level of perf or

improvement

rate needed

Key action

programs

required

Fin

an

cia

lV

isio

n

52

Cu

sto

me

rIn

tern

al

Lea

rnin

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Local Business Development Program 2011 Build Your Business … · 2011-07-12 · Objectives...

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