Beruflich Dokumente
Kultur Dokumente
Flow of Discussion
BPM Thought Lines for Creating a Framework Decision Management - The Universal Driver for BPM
Avoid Eight Traps Liberate from Bounded Rationality Observe Six Cs Follow Boundaries of Corporate Governance
Risk Management - The Other Name for BPM Imperative Measures for CFOs in Executing Decisions Sustainability Management - Key to Long Term BPM A Case Study
When future looks hazy, it is time to go back to basics
Does Business Performance Management mean any one or any combination of the following?
Source: faculty.css.edu/dswenson/web/Powerpoints/ChangeDrivers.ppt
*Innovention =
Innovative and Inventive Value Creation ^ Bryan Dyson, former CEO of Coca Cola
Zone - A Tomorrow BPM is all about making sense of What is happening now and What should happen in forward path Today Zone - B % age Change in Turnover
Conduct trend analysis > Map present position > Fix strategic intent > Initiate Action
Yesterday
XX%
Risks ($ Million )
Organisational goals are best achieved when aligned with individual goals Let us review the results of a case study
G. H. Hofstedes Graph for Employee Behaviour (in the Process of Target Setting)
Zone C Impossible Zone B Difficult Zone A Easy
Management Expectation
A c H i v e m e n t
Employee Performance
Benefits
Parasite
Harms
Parasite Terrorists Martyr Successful Strategy
Martyr
Terrorists
Not be able to suck for long Killed in no time Bleed to death Create a win win-win situation
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Exclusive reliance on financial indicators promotes short term behaviour that sacrifices long term value for short term performance - Porter
Maximise Value = Maximise Utility or Minimise Cost Add value by minimising value destruction Focus on strategic drivers of values Remove sub-optimality in operations Process cross - functional data and use information Work innovatively and use simple solutions Develop superior capabilities effective for both
External, and Internal Environment
The Trend is visible - Sustained value generation skill and not ownership is the ultimate criteria for occupying the Drivers seat
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Integrate strategies to business plans and execution Monitor and control results against pre-planned performance Process cross - functional data and use information Conduct gap analysis and identify root cause for variation Take mid-course corrective action for short term optimisation Make sense out of what has happened and note learning points
Cash is the King - King is he who earns and invests Cash to again earn Cash and the process goes on
Decision Management
The Universal Driver for Performance at All Times
Learning Points Doing what is right is not hard - Knowing what is right is.
Lyndon B Johnson
Once you have made your marks watch out for erasers.
Will Rogers
The story of a kid on a winter morning in a hill town ... Learning Point: Make the best use of environment Crisis is a wonderful opportunity to waste - Remain in a state of readiness
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The best way to avoid all the traps is awareness - Forewarned is forearmed.
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One of the major way-outs is to run through the Risk-based Models Human biases can affect strategic business decisions
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Compare - Alternatives that meet requirements Consider - The what might go wrong factor with each alternative Commit - Take a decision and remain committed through it
Value Judgment
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Corporate Governance
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Economic Value Addition Market Value Addition Sensitivity Analysis Quantification and Measuring of Impacts of Subjective Factors Risk modelling with Certainty Equivalent Approach
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Life Cycle Costing Relational Analysis of Variables (e.g. ROI, ROCE, etc.) Discounted Cash Flow Net Present Value Pay-back Period Sensitivity Analysis Social Cost Benefit Analysis
Economic Rate of Return Domestic Resource Cost
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Risk Management
The other Name of Business Performance Management
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Source: of picture: Big wave surfing en.wikipedia.org
Planning
Cost of Capital
Leadership, Product Profile, Product Image Life Cycle, Business Portfolio, Business Erosion Model, Communication, Org. Structure, Business Alliances Product / Service Pollution Failure GAAP Conversion
Info. Reliability
External Reporting
http://calculators.bizezia.com/versiona/busriskcalc.asp
Score
Culture
Rewards for Entreprenl. Risk Taking 1/2/3/4/5 Executive Resistance to Bad News 1/2/3/4/5 Level of Internal Competition 1/2/3/4/5
Score
Information Management
Transaction Complexity 1/2/3/4/5
= =
Treat every single data and information as strategic asset Throw away Executive Summaries, critically examine details Ring fence talents and human resources handling volume Inculcate the habit of zero tolerance in Corporate Governance
Achievement of Results
1. Reactive 2. Focus on people 3. Direct and correct 4. Inspect in quality 5. Survival of the fittest
COSO Framework
1. Proactive 2. Focus on opportunities 3. Prevent and monitor 4. Build in quality 5. Everyone can contribute
Known
Not Known
Blindness
Unexplored
* Unique strength will lie in knowing what the competitors do not know * Continuous effort will be to move to the unexplored quadrant to achieve a
state of readyness for delivering what the society will ask for tomorrow
The only limit to our realisation of tomorrow will be our doubts of today
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Who will take lead to answer the last question - the CEO, CFO or CXO?
Four P approach Sustainable Product, Planet, People and Profit
Sustainable Management Direct the course of a company in ways that restore and enhance all forms of capital to generate stakeholders value and contribute to the well-being of current and future generations Integrate environmental, social and governance issues into business strategy Build value by defining, evaluating and reporting on indicators beyond financial performance
Set priorities for Bottom Line - Profit, People, Planet and / or Product
What are the plans, action points, capital and revenue expenditure for Reducing material intensity Utility audit and reducing consumption of power, fuel, steam, water, etc. Optimisation and substitution of raw natural resources Minimising dispersion of toxic substances Green logistics for renewable and used products Recycling of scrap, wastage and spoilage Prolonging product life at minimum differential price Increasing service intensity to reduce frequency
CXOs to ensure viability and growth after absorbing all these expenditure
Financial Criteria Economically sustainable Technologically feasible Operationally viable within life cycle Environmental Criteria Environmentally robust Utility positive Generationally sensitive Capable of continuous learning
but
If I have one Idea and if you have one Idea and we exchange We have two Ideas each Millions saw the apple falling, Newton asked why
This is the foundation of Sustainable Business Performance Management
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The first step to solve a problem is to begin Good beginning is half done Be Clear about your objectives Think twice before you do No risk no gain
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Discount - Revisited
What is Discount Is it lower realisation as compared to the real value delivered through the product and / or service? Types of Discount Volume linked Price linked - Trade discount Keeping parity with movements in international price For members in the channels of distribution Voluntary / discreet - sharing of achieved cost reduction till the same is factored in Price List General Customer specific Time related Off-season for seasonal products and services Speedier collection than credit terms
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Discount Revisited 2
Why is volume related discount given? USP against competition Market penetration Keep the Declared Price List intact for general customers Create price differential for large buyers and make them feel important Induce customers to lift more volumes Book production capacity with commitments from large buyers slab based discounts Trade-off with inventory carrying cost Selling products at the fag end of its life-cycle
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1. Announce Corporate Policy for entering into MOU with large volume customers 2. Announce Standard Terms and Conditions with for financial terms depending upon levels of volume 3. Write Bi-yearly or Yearly MOU with each individual large volume customer may decide some additional / customer specific terms for exceptionally large customers 4. Include terms which will remain constant for the entire year: a) Yearly MOU Discount b) Additional MOU Discount for lifting agreed volume in two consecutive years to be paid at the end of second year c) Interest free credit period d) Consistency Bonus for fulfilling quarterly / monthly commitments e) Any other condition specific to the customer
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1. Announce List Price and revision thereof as and when change is required for all segments of customers in general 2. Announce quarterly rebate for each volume slab This is to keep parity with changes in prices in international market and manage sympathetic medium term volatility 3. Announce additional quarterly discount for lifting above prorated MOU commitment >> switch-on / switch-off depending upon plant level inventory and variations of sales in retail market
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1. Manage month to month volatility in export market and domestic retail market by announcing additional monthly discount for lifting more than 1/12th of MOU quantity >> switch-on / switch-off 2. Respond to customers request for additional rebate for any sudden spike in their demand keep it limited for the specific month/purpose
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At each stage of such decision making be aware of: Net Value Realised, Marginal Cost and Contribution, Level of booking plant capacity, and What is the next plan of competitors
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Further Thoughts
The essence of management lies in dropping the last letter and make it Manage Men! It is still better to drop the last two letters and make it Manage Me!
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Thank You