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.

2 ©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?

AppendixStrategy Map and Balanced Scorecard


Introductions

Adani Enterprise

>

>

>

CustomerLab

> Muhamed Munner

> Ramesh Saraph


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

Measurement and

Reporting

Alignmentand

Communication

Enterprise-wide Strategic

Management

Corporate Governance and

External Reporting

Harvard Business Review:

“The Balanced Scorecard — Measures that Drive Performance” January - February 1992

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.“

1992 20001996 2004

“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

1993

“Measuring the Strategic Readiness of Intangible Assets” March 2004

Alignment


The Balanced Scorecard Collaborative helps organizations achieve dramatic results.

BSCol Facts

• Founded October 1998 by creators 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 Events and PublicationsBSCol Events and Publications

• 1.2 million direct mailings/year

• 2.5K del/yr in 40 global events

• 2.5K global BSR subscribers

Certified Software ApplicationsCertified Software Applications

• Cognos• Corvu• Crystal• FiberFlex• QPR• In-Phase• Panorama

• Oracle• Peoplesoft• SAP• SAS• Hyperion• Procos• Pro Dacapo• Vision Grupo

BSCol On-line MembersBSCol On-line Members

• 65,000 members

• 128,000 sessions / Month

• Unsubscribe Rate = 0.3%

Books & ArticlesBooks & Articles

• 350,000 copies sold

• 21 language translations

• 10,000 article reprints


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

Balanced Scorecard Hall of Fame

Saatchi & Saatchi UK Ministry of DefenceUK Ministry of DefenceRoyal Norwegian Air ForceRoyal Norwegian Air Force

National Reconnaissance OfficeNational Reconnaissance Office

Financial ServicesFinancial Services

Commercial Vehicle Business UnitCommercial Vehicle Business Unit

Engineering PolymersEngineering Polymers

Information and Communication Mobile

North AmericaMarketing & Refining

Human ResourcesHuman Resources Property & CasualtyProperty & Casualty


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

Saatchi & Saatchi

99% merged asset retention

3 years

#1 in growth & profitability

3 years

Customer satisfaction = 70%

Public Official award3 years

#1 in customer satisfaction33% reduction in cost/case

3 years

450% increase in # of customersBest on-line bank

3 years

+ $2b value

3 years

Least cost producer

3-5 years

9% increase in revenues

33% increase in net income2 years

Last to first in profits

$1.2b increase in cash flow

100% increase in ROI

2-5 years

Increase in customer satisfaction

Increase in market revenue index

2 years

+ $3b value

2-5 years

+ $7b value

5 years


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 far-reaching 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.


Objectives for Today

> Confirm Understanding of Adani Group Situation and Needs

> Review Proposed Project Approach

> Agree on Next Steps and Timing


Today’s Agenda






Why work with CustomerLab

Appendix

Strategy Map and Balanced Scorecard


Bridging the Gap between Strategy and Results: Strategy Focused Organization

MISSIONWhy we exist

VISIONWhat we want to be

STRATEGYOur game plan

RESULTS

SatisfiedSHAREHOLDERS

Delighted CUSTOMERS

Efficient and Effective

PROCESSES

Motivated & Prepared

WORKFORCE

TRANSLATE THE CORPORATE STRATEGYDefine key priorities necessary for implementation

ALIGN THE ORGANIZATIONIdentify priorities for business units and support functions

MANAGE STRATEGY AS A CONTINUAL PROCESSIntegrate strategy into the management system

MAKE STRATEGY EVERYONE’S JOBPrepare and motivate people to execute

MOBILIZE THROUGH EXECUTIVE LEADERSHIPCreate and sustain the strategic agenda


Breaking Down the Barriers – The Principles of a Strategy-Focused Organization

1.1. TRANSLATETRANSLATE STRATEGYSTRATEGY

4. CONTINUAL 4. CONTINUAL PROCESSPROCESS

2. ORGANIZATION 2. ORGANIZATION ALIGNMENTALIGNMENT

3. EVERYONE’S 3. EVERYONE’S JOBJOB

5. EXECUTIVE 5. EXECUTIVE LEADERSHIPLEADERSHIP

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

Mission / Vision Strategy Maps Balanced Scorecard Targets Initiatives

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

Corporate Role Corporate - SBU SBU - Shared Services External Partners

Strategic Awareness Goal Alignment Linked Incentives

BALANCED SCORECARD


A successful Balanced

Scorecard program

starts with a

recognition that it is

not a “metrics”

project, it’s a “change”

process.

Executive Leadership: The BSC Creates the Agenda for Change

In This Context Leaders Must:

Create the climate for changeUnfreeze the organizationShow the need for change

Create the vision and strategy

Clarify strategy with the BSCCreate the Leadership TeamBreak down functional biasFoster “advocates”

Change the culture

1


• Profitability• Growth • Shareholder Value

The Strategy

• Price• Service• Quality

• Market Innovation• Continuous Learning

• Intellectual Assets

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

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

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

“To achieve our vision, how must our organization learn and improve?”

• Cycle Time• Productivity• Cost

Financial Perspective

Customer Perspective

Internal Perspective

Learning & Growth PerspectiveThe BSC is comprised of themes, objectives, measures, targets, and initiatives.

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

Translate Strategy: The BSC Translates Strategy into the Four Perspective Framework

2

Outcomes

Drivers


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

1. A Corporate Scorecard defines overall

strategic priorities.

3. Each Shared Service Unit develops a plan and BSC for “best

practice” sharing to create synergies across SBU's.

Organization Alignment: Cascade the BSC to Business & Support Units

CORPORATE

BUSINESS UNITS

SBU1

xxx

xxx

SBU2

xxx

SBU3

xxx

CORPORATE SCORECARD(Shared Strategic Agenda)Theme Measure

1. Aggressive Growth xxx

2. Customer Loyalty xxx

3. Speed and Flexibility xxx

4. Customer Intimacy xxx

5. Operational Excellence xxx

6. Right Skills xxx

7. Accountability Culture xxx

SHARED SERVICE UNITS


• Finance

• Marketing

• IT

• Sales

• General Services

• Human Resources

• Organizational Development

3


Performance Management Processes Are Essential for Moving Strategy from the Top to the Bottom.

CORP

SBU

The Strategy–Focused Workforce

• EDUCATION

• PERSONAL GOAL ALIGNMENT

• BALANCED PAYCHECKS

Everyone’s Job: From the Boardroom to the Front Line

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

Bottom-Up Process to Internalize andExecute the Strategy

4


Strategic Learning Loop

Initiatives & Programs

Test the Hypotheses

Output(Results)

ReportingManagement Control LoopFunding

Input(Resources)

Update the Strategy

PERFORMANCE

STRATEGIC PLANNING

BALANCED SCORECARD

BUDGETING PROCESS

Planning

Governance

Budgeting

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

5


Today’s Agenda






Why work with CustomerLab?



Our Understanding of the Current Situation at Adani Group

> 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.

> Significant expertise in Global Trading

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

> Communication of Adani Group Vision and Mission

Challenges:

> 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

> Too many initiatives, need for effective of follow-through

Success:


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

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

> 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


Objectives and Scope

Establish a shared understanding if your strategy through background analysis and executive interviews

> 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

BSCol will work with the Adani Enterprise leadership team to:


Today’s Agenda






Why CustomerLab?



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


Project Deliverables

Work StreamsI. SFO Assessment and

Benchmarking

II. Training Program on Mapping Strategy

III. Strategy Map and Balanced Scorecard Development

IV. Monthly Review Meetings

DeliverablesAssessment report of the strategic

management process

Roadmap for implementation

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

Governing monthly strategic review meetings

Meetings focused on strategic issues

Actionable recommendations


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

3.6

2.5

2.5

3.0

3.5

4.0

BSCol Assessment

3.63.4Make Strategy a

Continuous Process

3.73.2Make Strategy

Everyone’s Job

3.3Align the Organization

to Strategy

4.03.9Translate Strategy Into

Operational Terms

4.13.9Mobilize Change

Through Executive Leadership

BSCol Breakthrough Results ProfileSurveyBest Practice

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

3.6

2.5

2.5

3.0

3.5

4.0

BSCol Assessment

3.63.4Make Strategy a

Continuous Process

3.73.2Make Strategy

Everyone’s Job

3.3Align the Organization

to Strategy

4.03.9Translate Strategy Into

Operational Terms

4.13.9Mobilize Change

Through Executive Leadership

BSCol Breakthrough Results ProfileSurveyBest Practice


Clear Direction & Priorities

Executive Sponsorship

Clear Case for Change

Engaged Leadership Team

New Way of Managing

Change Agent Identified


2 3 4 51

Strengths

Strength 1

Strength 2

Strength 3

Quote(s)

Weaknesses

Weakness 1

Weakness 2

Weakness 3

Quote(s)

Clear Direction & Priorities




New Way of Managing



2 3 4 51

Strengths

Strength 1

Strength 2

Strength 3

Quote(s)

Weaknesses

Weakness 1

Weakness 2

Weakness 3

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


Fin

anci

al Pers

pect

ive

Mark

ets

/C

ust

om

er

Pers

pect

ive

Inte

rnal

Pro

cess

Pers

pect

ive

Peop

le

Pers

pect

ive

ContentDelivery Relationship RelationshipDelivery

F1: Support Corporate’s Overall Financial Performance

F2: Grow new business:

Increase revenue from new products, customers, and markets

F3: Grow current business:

Increase revenue from existing customers

F4: Drive margins

Optimize resources and grow EBITDA

C1: Make the testing process easy and

secure

C2: Present content in new and innovative

ways

C3: Build trusted, lasting partnerships throughout the world

C4: Make the testing administration

process easy and cost effective

C5: Develop mutually profitable partnerships

I1: Anticipate and understand market

and customer needs

I2: Identify, evaluate, and execute new

business development opportunities

I3: Implement new capabilities that

change the value of our testing solutions

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

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

P2: Lead a rigorous employee assessment and development

process

P3: Build employee engagement with customers

Financial Performance

Markets and Customers Solutions Operations

People

Customer Value Proposition (Clients and Candidates) Channel Value Proposition

Completed Strategy Map with Key Themes and Objectives Across four Perspectives

EXAMPLE


OBJECTIVE KPI Targets


F1 Support Corporate Overall Financial Performance M1 Total Revenue Growth 10% increase per quarter

F2Grow new business: Increase revenue from new products, customers, and markets

M2 Revenue from New Markets K1 25%

F3 Grow current business: Increase revenue from existing customers M3 Revenue from Existing Markets K2 75%

F4 Drive margins: Optimize resources and grow EBITDA M4 EBITDA Growth

K3 5% increase per quarter

K4


C1 Make the testing process easy and secure

M5 Candidate Satisfaction (Ease of Use) 4.0 on 5.0 scale

M6 Security-Related Incidents (#) 10% decrease on prior year

C2 Present content in new and innovative ways M7 Client Migration to MRB/GAR K2 TBD

C3 Build trusted, lasting partnerships throughout the world M8 Client Contract Renewal 80%

C4 Make the testing administration process easy and cost effective M9 Level I Helpdesk Calls and Costs K3 20% volume increase with zero change

in cost

C5 Develop mutually profitable partnerships

M10 Tests Delivered Through Non-Traditional Channels K4 15%

M11 Royalties Paid Per Site 10%

M12 Fees Paid Per Test Delivered TBD

…Associated Key Performance IndicatorsEXAMPLE


ID Strategic Initiative F1 F2 F3 F4 C1 C2 C3 C4 C5 I1 I2 I3 I4 I5 I6 P1 P2 P3

K1HSP Testing Market Expansion

K2 Internet-Based Testing

K3 CCO

K4 Channel Optimization

K5 Fargo Services Integration

K6 Launch BOZ Initiatives

Sup

port

Cor

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Per

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…and an Initiative Alignment Matrix.EXAMPLE


Together with an Effective plan to Implement the Balanced Scorecard Across the Organization.

Program Schedule

Q4

Mobilization PhaseClear Direction & Priorities




New Way of Managing


Q1 KEY ACTIVITIES Q5Q3Q2

Alignment PhaseClearly 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 PhaseRegular Strategy Review

Reporting System

Links to Budgets & Strategy

Links to Strategic Investments

Links to HR & IT Planning

Links to Governance Process

Strategic Management Capability

EXAMPLE


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

• Proven Methodology

•Structured Templates

•Process Management

•Multimedia Coaching

•Custom Presentations

•XML Export

• Multimedia Content

•Self-Check Questions

•Extensive Curriculum

•Integrated Case Studies

•End of Lesson Exams

•Reports Tracking Organization’s eLearning Progress

•Familiar Design Center look and feel

•Information directly populated from Design Center

•Interactive Strategy Map

•Online Graphs and Comments

•Customizable color coding for status indicators

•Easy report printouts and customizable PDFs

• 130+ BSR Articles

•35+ Case Studies

•35+ Example Strategy Maps

•100+ Conference Presentations

•75+ Video and Audio Executive Interviews

•25+ Strategy Management Best Practices Explained


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

> Participate in selected interviews and workshops

> Dedicate resources necessary to complete the BSC project

> Champion the BSC in the organization

> Take responsibility for timeliness and quality of deliverables

> Provide project leadership and guidance

> Conduct discussions and planning meetings

> Lead executive workshops

Core Team:

> Participate in the all aspects of BSC project

> Provide perspectives on the company strategy to support BSC development

> Review and refine BSC objectives and themes

> Review and refine KPI’s

> Drive initiative inventory

> Assist in initiative mapping

> Assist in developing the implementation plan

> Facilitate all aspects of the project

> Draft BSC architecture (themes) and Strategy Map (objectives)

> Draft BSC (objectives, KPI’s and initiatives)

> Facilitate initiative mapping

> Draft implementation plan

> Provide BSC expertise in the ongoing use of the BSC as a management tool


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 1: SFO Assessment and Benchmarking

Step 2: Training in Strategy Mapping

Step 3: Develop Corporate Strategy Map / BSC

Step 4: Facilitate Monthly Review Meetings ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲

Step 0: Kick Off


Today’s Agenda






Why CustomerLab



Next Steps ….


Today’s Agenda






Why CustomerLab?



Why CustomerLab…..

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


Today’s Agenda






Why CustomerLab?



What is a Balanced Scorecard?

At the highest conceptual level, the Balanced Scorecard is

a framework that helps organizations translate

strategy into operational objectives that

drive both behavior and performance.


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

Internal Perspective


Learning & Growth Perspective


Return on Investment

Reputation

Sources of Growth Sources of Productivity

+ +

“Build the Brand”

“Make the Sale”

“Deliver the Product”

“Service Exceptionally”

Productivity Strategy

The economic model of key levers driving financial performance

The identification of targeted customer segments and their value proposition

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

The intangible assets necessary to drive performance

HumanCapital

InformationCapital

OrganizationCapital

ImageRelationshipProduct Service

1

2

3

4

Revenue Strategy


A strategy map uses four perspectives to describe cause and effect relationship between strategic objectives

Financial

To succeed financially, howshould we appear to ourshareholders?

Customer

To achieve our vision, howshould we appear to ourcustomers? What is the value proposition?

Internal Business Process

To satisfy our shareholdersand customers, at what businessprocesses must we excel?

Learning and Growth

To achieve our vision, howwill we sustain our abilityto change and improve?

Strategic Theme: Revenue Growth

Improve Returns

Broaden Revenue Mix

Increase Customer Confidence in Our

Advice

Develop New

Products

Understand Customer Segments

Cross-Sell the Product

Line

Develop Strategic Skills

Align Personal Goals

Increase Employee Productivity

Access to Strategic Information


Measures and targets are identified and communicated for each objective to motivate members of the organization

• Cross-Sell the full range of financial products.

Objective

• Share of customers with two or more products.

Measure(s)

• 40% Year 1 • 45% Year 2• 50% Year 3

Target(s)

• Customer Information System

Initiative(s)

Customer

Financial

Internal

Learning& Growth

Strategic Theme:Revenue Growth

Improve Returns

Broaden Revenue Mix

Increase Customer Confidence in Our Advice

Understand Customer Segments

Develop New

Products

Cross-Sell the Product Line

Increase Employee Productivity

Develop Strategic

Skills

Align Personal

Goals

Access to Strategic

Information

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


Manufacturing Strategy Map F

inan

cial

P

ersp

ecti

veC

ust

om

er

Per

spec

tive

Inte

rnal

P

ersp

ecti

ve

Peo

ple

&

Kn

ow

led

ge

Per

spec

tiv

eF1- Grow Earnings and RONA

F5- Optimize Asset

Utilization

F2- Drive Profitable Volume Growth Globally

Account ManagementProduct Innovation Operational Excellence

C1- Provide Innovative Solutions To Complex

Product Design Problems

C3- Provide Quality Products and Services at Competitive Value

I10- Manage Raw Material Costs and

Improve Yield

F4- Manage Working Capital

F3- Manage Costs

P1- Foster A Culture That Encourages

Risk-Taking

I1- Identify and Develop New or Extended

Products

C2- Tailor Your Approach To My Business Needs

P2- Attract Marketing and Technical Staff

And Ensure They Are Sufficiently Trained

P3- Ensure a Safe, Clean Environmentally

Friendly Workplace

I9- Optimize Cycle Time Performance

I8- Improve Alignment Between Sales Forecasts

And Manufacturing Capacity

P4- Improve Management of

Customer Information

I6- Grow Presence in

China

I7- Increase Metal Sales In

Targeted Accounts

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

Technical Information

I5- Gain US Marketshare

I3- Bring New or Extended Products To

Market Quickly

I2- Identify and Pursue Strategic

Acquisitions

The Balanced Scorecard Is Used to Manage Strategic Performance


Performance Owner: Jeff SchmidMeasure Leader: Meredith Kokko Reporting Frequency: MonthlyINTERNAL PERSPECTIVE

I9– Optimize Cycle Time Performance•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.

= Meets or exceeds target

= < than 95% of target

= < 100% of target, but >= 95% of target

Cycle Time for Alloy Products (Order Entry to Finished Goods)

27

26

28

24.024.0 24.0

18

20

22

24

26

28

30

FY 02 Q203 Q303

Actual Target

Initiatives Supporting I6• Lean Project

Establishes accountability

How are the objective and

measure performing?

Why is the measure

performing as it is?

What are we going to do about it?

What initiatives are aimed at closing performance gaps?


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.

DATE STATUS MILESTONES

Six Sigma Lean Project for Cycle Time Performance (cobalt products)

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

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.

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

The Initiatives that Drive Performance are Aligned with Strategy Establishes accountability

How is the initiative performing?

Is there anything we need to do?


Why the Balanced Scorecard works.

TranslateStrategy

Everyone’s Job

OrganizationAlignment

Translate Strategy

Executive Leadership

Executive Leadership

Continual Process

Organization Alignment

Everyone’s Job

Continual Process

1

2

3

4

5

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

BUSINESS UNITS

SBU1

xxx

xxx

SBU2

xxx

SBU3

xxx

2. Each SBU develops a long-range plan and BSC consistent

with corporate strategic agenda.

CORPORATE SCORECARD(Shared Strategic Agenda)

Theme

1. Aggressive Growth

2. Customer Loyalty

3. Speed and Flexibility

4. Customer Intimacy

5. Operational Excellence

6. Right Skills

7. Accountability Culture

1. A corporate scorecard defines overall

strategic priorities.



• Finance

• Marketing

• IT

• Sales

• General Services

• Human Resources

• Organizational Development

3. Each Shared Service Unit develops a plan and BSC for “best

practice” sharing to create synergies across SBUs.

OrganizationalControl

Loop

StrategicLearning

Loop

TheManagement

Meeting

Team Problem Solving

Follow-upAction

Closing the Loop

Dialogue

External

InsightHarvesting

“Testing Hypotheses and

Capturing Learning”

Results

Performance

Operational Control LoopUpdate the Strategy

Reallocate Priorities

Pioneer’s Balanced ScorecardStrategic Objectives

Financially StrongDelight the ConsumerWin-Win RelationshipSafe & Reliable

Competitive Supplier

Good NeighborQuality

Motivated & Prepared

Return on Capital EmployedMystery Shopper RatingDealer / Pioneer Gross Profit SplitManufacturing Reliability IndexDays Away from Work RateLaid Down Cost vs. Best Competitive Ratable SupplyEnvironmental IndexQuality Index

Strategic Competency Availability

FinancialPerspectiveCustomerPerspectiveInternalPerspectiveLearning PerspectiveThe Strategy Initiatives & ProgramsFinancialCustomerInternalL&G

Strategic Measures

Focuses the Organization Aligns the Organization Adapts the Organization

Documents

061117 Adani Presentation