Bpol -4 Gap Analysis

8/8/2019 Bpol -4 Gap Analysis

1/16

GAP ANALYSISGAP ANALYSISGAP ANALYSISGAP ANALYSIS


2/16

What it is GAP between Promise and Performance;

between where we wanted to be and wherewe are now.

How do we close the gap or should webother about it? Once again common sense, economic logic

and a few skills.

Wowing long-term goals & many a short-term ones. And no link in between.


3/16

Consider Prahalad says strategy gap is real

and often unseen and itthreatens

performance in future, even survival An Oil tanker is navigating its way to

port.Weighs 500,000 tons. For

slowing down from 15 knots, it needs1 hour and 6 miles. Ithas to plan.


4/16

Plan Plan to make things happen. Plan for survival

Plan for retirement!Butas per surveys it is nothappening. Only 33 % of executives take

advantage of electronic decisionsupport system. Atwhat cost?


5/16

Survey In 2001 250 US organizations combined

asset value exceeding $255 billions failed.

More than 25% of the top 100 companiesthat survived lostat least 66% of theirmarket capitalization.

Bystanders or executives. Justhappensor you make ithappen?


6/16

Survey Bain & Co in 2001 surveyed senior

executives from all over the world.

76 % of them said they looked tostrategic planning as atopmanagementtool to improve long-

term performance and to strengthenintegration across the organization.


7/16

Survey In difficulttimes, most of them

trusted the familiar tools.

Strategy in a dictionary sense meansaplan, an approach, a line ofattack.

Strategic planning is all aboutdeciding where to go & how.


8/16

Another Survey Cranfield University School of

Managementand Accenture Joint Reportsays

Atatypical 1 billion $ company, planning &budgeting consume 25000 person-daysannually!Whoop!

Takes on an average 5 months including 4months for financial planning


9/16

Why a Gap between Vision

& Execution The way managementacts to

implement strategic intentions

Traditional processes (e.g.,budgeting, forecasting and reporting)used to implement strategy

Technology systems used to supportthose traditional processes


10/16

The three areas First is the management induced

gap.

1. Management must ensure thatpeople supportthe strategic plan,objectives, tactics etc. Get

feedback.


11/16

Management Induced

Gap2.Communicate the plan. Line managers

& people directly involved in

operations do not do that.Kaplanand Norton, creators of BalancedScore Card, say less than 5% of

the typical workforce understandstheir organizations strategy


12/16

MIG contd.3. Failure to adhere to plan: operational

managers focus more on financial

variances rather than KPI4.Failure to adaptto significant

changes in the environment bounded

rationality


13/16

PROCESS-INDUCED GAP1. The traditional processes used to

implementand monitor strategicachievement create the gap.

2. While reporting managers focus on thebudgetand not on the strategic goals orobjectives.

3. Focus is on yearly profitand not on long-term success.


14/16

Process Induced4. Internally focused. Financially

focused.

Achieve revenue budget. Thats all. Youhad assumed marketwould grow by5% but it grew 15% and you achieved8%.

5. Forecasting issues


15/16

Process- forecasting Forecasting involves two steps:a) Predicting the likely future performance

based on current knowledge and perceived

business environmentb) Evaluating or selecting the alternative

plans to change the predicted outcomeThe ability of the firm to avoid or exploit

the changes is crucial: SouthWestAirlines, BPC. Individual Product life.


16/16

Technology System Induced

Gap the third area Misplaced importance to ERP Traditional systems to supportplanning,

budgeting, forecasting and reportingprocesses. Differenttechnologies used fordifferentprocesses.

Imagine a road. Cities & landscape (KPI), trafficcompetitors), diversion, accident (BP oil spill)

and new roads (opportunities). There arecurves so you cannot see the destination.

Documents

Bpol -4 Gap Analysis