Stretch Targets

Description

• 

  Quantifiable goals set for Key Performance Indicators, that challenge the organisation to strive to attain (and even surpass) the objectives established in its (Confirmed) Business Vision.

Client Value

• Stretch targets convey to the organisation the degree of change that must occur as a result of the BPI effort and help to build enthusiasm for the initiative throughout the organisation.
• Not setting performance targets or setting targets that “stretch” the organisation can result in “under engineering” of processes and a situation where the new performance of redesigned processes are insufficient to allow the organisation to achieve its (Confirmed) Business Vision. “Low-ambition” targets do not challenge the design team sufficiently and, as a result, lead simply to “optimising” the existing situation instead of coming up with radically new ways of doing business.

Approach

The task is to establish quantifiable targets for Key Performance Indicators previously identified, the size of the gap between the stretch target and the current performance and to validate these goals with Senior management.

1. Conduct a workshop to establish Stretch Targets and timeframes for each of the Key Performance Indicators
1. Develop targets and timeframes for each measure.
2. These improvement objectives and the time frames for their achievement must be aggressive, extending the reach of the organisation. A good rule is “if you’re comfortable with the objec­tive, you haven’t set it high enough.”  The degree of aggressiveness or “stretch” may vary depending on the type of BPI planned. Good performance improvement objectives can be characterised as:
1. Driven by what the customer perceives, and by the overall business direction as expressed through (Confirmed) Business Vision and Critical Success Factors
2. Clearly defining the level of improvement expected (incremental, significant, or dramatic) in non-financial performance (e.g., speed, service quality) and financial areas.
3. Stretching the organisation (without being unrealistic), given the organisation's commitment to, and capacity for, change.
2. Validate and build consensus for the targets
1. This activity is best accomplished in a workshop setting where the expectation for stretch goals can be determined, and consensus on the relative weight of each performance objective can be established.

Guidelines

Problems/Solutions

• Because the performance improvement objectives must be attainable in the eyes of those who must implement them, the project team should help participants comprehend the links between performance improvement objectives and the functional-, process-, and job-levels within an organisa­tion.
• In some cases, workshop participants may be reluctant to set true stretch objectives.  This reluctance can be interpreted as resistance to making a commitment  for change.  Address these issues with project sponsor(s) as soon as they arise

Tactics/Helpful Hints

• Sponsors must take the lead in setting objec­tives to strengthen and show ownership of the project.
• It is important that the performance improvement objectives for each measure (e.g. customer satis­faction, business process productivity, organisational learning, and financial improvement) have stretch objectives set that are challenging yet attainable.

Resources/Timing

• Interviews and workshops should include a cross-section of participants with functional, pro­cess and job-specific experience.

Key Performance Indicators

Description

• A comprehensive set of performance indicators selected to gauge the success of the BPI project in achieving or contributing to the (Confirmed) Business Vision. They are used to express the performance gap between the current (“As-is”) status and the future (“To-be”) status of the selected Critical Success Factors.

Client Value

• Performance improvement objec­tives provide a basis for tracking, measuring and managing progress toward Critical Success Factors and represent the basis for developing design goals (Stretch Targets).
• They also provide the basis for selecting the correct processes for the BPI project—those whose improvement will have significant impact on the Critical Success Factors.

Approach

• Conduct interviews or workshops with selected senior managers to establish performance indicators for each Critical Success Factor.
• Develop two to four performance indicators for each of the Critical Success Factors (drawing, as appropriate, upon the Critical Success Factors specification summary).  Sound performance improvement measures/indicators are quantifiable, are taken from the perspective of the “end-customer” and are directly linked to Critical Success Factors. In some cases, a Key Performance Indicator can relate to several business processes.

Guidelines

Tactics/Helpful Hints

• No more than two to four performance indicators should be assigned for each of the Critical Success Factors .  The task in this early project stage is to assess the current performance relative to the Critical Success Factors, not to build a new management information system. Existing management information is usually insufficient for this purpose and sometimes often fails to measure client-oriented Critical Success Factors (e.g. the length of time between new product releases).  It may therefore be necessary to introduce to the organisation new ways of measuring performance.
• If the Balanced Business Scorecard technique is being employed from the outset, it should be introduced to the organisation early on, to allow sufficient time to reorient current performance management systems that may be changing significantly at later stages of the BPI project.

Critical Success Factors

Description

• Description of what an organisation must excel in—in the eyes of  the customer—to realise the (Confirmed) Business Vision.   Critical Success Factors are the means by which the general corporate vision is translated into concrete, measurable guidelines that can be acted upon. They are not always defined for the overall enterprise, but can be defined for any business functional or process area of responsibil­ity that is sponsoring a BPI effort.
• Critical Success Factors are always oriented towards the needs of the “end-customer” of the organisation. This perspective yields the maximum possible degree of performance improvement for the BPI initiative.
• However, for some organisations, Critical Success Factors must also take into consideration additional factors such as the needs/constraints of stakeholders which must be weighed against customer desires.  Similarly, Critical Success Factors may need to be developed in organisations that have made a strategic decision to adopt a “balanced” view to management.  In such circumstances, additional factors such as financial performance, business process performance and organisational learning are also considered.

Business Value

• Critical Success Factors bridge between the company vision and its actual implementation within the organisation.  Linking Critical Success Factors to the (Confirmed) Business Vision, helps the BPI program serve a strategic business purpose rather than degenerating to “yet another trendy management exercise”.
• If the company vision is not in alignment with customer-oriented Critical Success Factors then the improved processes may not support the achievement of that vision.

Approach

To develop Critical Success Factors a first draft is developed up front by the consultant to serve as a baseline through the remainder of the development process. A final set of Critical Success Factors is determined, with the consequences of each factor clearly identified (e.g. on a Critical Success Factors Specification Sheet).and the consequences are analysed using the Critical Success Factor specification sheet.

1. Review the (Confirmed) Business Vision and Holistic Business Model to identify potential “strawman” Critical Success Factors.
2. Conduct interviews with selected senior managers who represent different functions/processes within the organisation.  Using the strawman as a starting point, formulate into a series of statements or short paragraphs the Critical Success Factors for the organisation.
1. The project team often have to challenge initially-proposed Critical Success Factors by asking the following question: “What must we do extremely well to make the clients of our competitors come over and stay?”
3. Conduct a workshop with senior management to obtain consensus and buy-in for the Critical Success Factors and their impacts.
1. During the workshop, it is important to ensure that participants recognise and understand the anticipated impact on the organisation of each of the Critical Success Factors being proposed.  Executives’ initial thinking on these issues can be focused by identifying ways to measure the success of the Critical Success Factors (i.e. Key Performance Indicators), as well as the consequences for people, information technology and business processes.  Identifying expectations regarding the timeframe for achieving success in these areas establishes the degree to which the leadership team is “on the same wavelength”.
4. Validate the finalised Critical Success Factors with selected external or internal customers to ensure a “reality check” on management’s proposals. (Customer Profiling)

Guidelines

Problems/Solutions

• Managers have a tendency to propose as Critical Success Factors issues that may at one time been critical to success but which are now taken for granted within the industry (e.g., “safety” in the airline industry).  Such factors need to be weighed into decisions made at all points of the BPI exercise.  Thus, they should not form the “cornerstone” of a set of Critical Success Factors intended to set the organisation apart from the competition.
• Organisations and Project Team Members often confuse Critical Success Factors with the quantitative results they wish to achieve from the BPI project. For example the following statements are all “desired results” (i.e. Stretch Targets) but are not Critical Success Factors:
• “Revenue will increase by 100%”
• “Cost will be reduced by 50%”
• “Customer complaints will be reduced to 1 in 1000 transactions within 2 years”
• These statements do not describe ways to satisfy the customer or provide clear directions. Instead, ask: “How are we as a company going to achieve these results?” or “What do we have to do to make these results happen?”.
• Where possible, validate the (Confirmed) Business Vision and Critical Success Factors with the organisation’s own external customers.  Be aware that while organisations typically claim they know what their customers want, all-too-often they do not.  In reality, even those departments having frequent customer contact (e.g. Sales, Marketing, customer Service) are preoccupied with day-to-day internal operational problems, leaving little time to reflect on the broader issues of strategy and future orientation.
• It is easy for the project team members to lose control of this part of the exercise.  Participants are often senior company executives who have fixed ideas and must therefore be led through a structured process to evoke new perspectives.  Team members must take care not to over contribute in workshop sessions, as senior management must ultimately buy into and take ownership of the Critical Success Factors.

Tactics/Helpful Hints

• Critical Success Factors are typically expressed as a series of three to five descriptive statements or paragraphs.  It is often beneficial to phrase these statements in the following format: “We must be able to ……”.  Critical Success Factors should be expressed using a level of language that reflects the organisation’s own words, ideas and beliefs.
• The organisation’s progress towards the realisation of the stated Critical Success Factors should be measurable.

Resources/Timing

• Workshops to determine the (Confirmed) Business Vision and Critical Success Factors are typically facilitated by the Project Manager and a Senior Manager or Strategic Planning specialist (preferably in the client's industry).  Other key project team members may participate in conducting background interviews and as workshop observers.
• The Critical Success Factors are usually defined through a half day/day work­shop with executives. Often this work is conducted at the tail end of workshops to develop a (Confirmed) Business Vision.

Communication Plan

Description

• A comprehensive plan that addresses the key messages, channels, accountability and timing of communication to employees and other stakeholders involved in and affected by the BPI initiative.

Business Value

• A two-way communication plan facilitates the acceptance of BPI related change by those people or groups, internal and external to the organisation, who will be affected.  An effective plan informs and energises the organisation and key stake­holders by providing consistent, appropriate communication of BPI program objec­tives, progress, and results to the organisation and project team. Other benefits include:
• Alleviating unfounded organisation concerns that arise during the BPI effort
• Educating specific constituencies within the organisation on the need for change
• Facilitating early “buy-in” to, and ownership of, the BPI program and associated changes
• The lack of a Communication Plan increases the likelihood that key constituencies within the organisation will get misleading information about the progress of the BPI project, or no information at all.  Loss of project momentum, and of  the credibility of its leaders, can result from poor communication.

Approach

Accountability for the communication plan is agreed upon by the sponsors, who will be heavily involved in its implementation.  Typically, a Communication Plan will be developed for each phase of the initiative. The initial plan is particularly important as it sets stakeholder expectations for subsequent communication plans.

1. Establish a communication task force or team composed of organisation and project team members.
1. Co-develop a project brief with the task force encompassing the steps noted below.
2. Include a member of the appropriate industrial body (e.g., unions, professional associations or workers’ councils), as appropriate.
2. Undertake a stakeholder analysis
1. Identify all internal and external stakeholders.
2. Ascertain their current level of commitment to, and influence over, the change.
3. Chart their respective positions on a Stakeholder Analysis grid
4. Determine the preferred / most effective means of communication to particular individuals and groups represented in the Stakeholder Analysis.
3. Develop a draft Communication Plan outlining objectives and key messages, timing of communication, which communication vehicles will be used and who is accountable for the implementation of  the plan.
1. Ensure that the plan focuses both on the overall BPI initiative and the component elements of the initiative. (This becomes increasingly an issue as the BPI initiative moves into its latter stages.) Include mechanisms for feedback from stakeholders on the effectiveness and adequacy of the communication.
4. Review draft Communication Plan with sponsor(s) and confirm accountability for the various stages.
1. The plan may have significant implications on the way sponsors currently behave, typically requiring them to “walk the talk”.  The provision of mentoring and coaching support to sponsors may be required.
5. Initiate Communication Plan with appropriate supporting communication vehicles, using the team and other appropriate resources identified above to execute the plan, and appropriate presentations and documentation to sat­isfy the information and involvement needs of the various stakeholders.
6. Provide sponsors and change agents with feedback on the implementation of the Communication Plan and review, in conjunction with the task force, the next stages of the plan.

Guidelines

Problems/Solutions

• Common errors of Communication Plans are:
• Over-reliance upon one-way communication, such as large scale briefings,  newsletters and other forms of written communication
• Over-reliance upon high-tech media
• Disregard of the informal and “first-line” level of influence within an organisation, such as supervisors, union representatives and other people that employees tend to approach first for information
• Failure to advertise your efforts
• Belief that telling the message once is enough
• Poor segmentation of the organisation into stakeholders with legitimately different interests,  concerns and needs
• Communicating too late or too early, too much or too little
• Gradual separation of the communication process from the overall BPI initiative which thus produces fragmentation.

Tactics/Helpful Hints

• Involve key organisation personnel to achieve early “buy-in”, ownership, and commitment, and to avoid having the communications program being viewed as unnecessary.
• Monitor the execution of the communication plan and stress the importance of the plan to those who are accountable for its implementation.
• Address all audiences with clear, regular communications, including external stakeholders such as customers, regulators, suppliers, boards of directors and the media/general public as appropriate.
• Utilise organisation’s internal public relations/communications/marketing department for further insight into appropriate communications vehicles (e.g. newsletters and magazine articles) and production assistance.
• Utilise presentation formats that are familiar to the organisation to make it easier for the audience to assimilate information.
• Ensure that audiences are not too large to inhibit good communication.  (Divide into smaller groups if necessary).
• Conduct “previews” with sponsor(s) of the component communication packages to avoid any surprises and to address potential political problems before they arise.

Resources/Timing

• Enlist the support of internal informal networks to advise on the content and style of communication and to “spread the word”.
• Recognise that communication is an ongoing process and that the plan will require constant refinements and expansions to respond to the increasingly wide impact that a major BPI initiative is likely to have.

Confirmed Business Vision

Description

• Description of the kind of organisation that the company wishes to become in the future. It defines the firm’s strategic objectives and stretches the organisation (i.e. it challenges individ­uals to make the company different from what it is at present).  The BPI exercise should not proceed unless the senior management team reaches consensus on a shared Value Proposition.
• For some organisations, it becomes evident to the project team that the existing Value Proposition stated by management is inadequate or inappropriate and cannot be readily “confirmed”.  In such circumstances, it is necessary to embark on a comprehensive exercise to establish an entirely-new strategic vision for the organisation.

Client Value

• It is necessary to rethink the future direction of the enterprise before major change programs are initiated.  Executives will take ownership, be involved and provide strategic guidelines for the direction and goals of the BPI program.  BPI will only be implemented successfully and carried throughout the whole enterprise when the vision is sufficiently strong to mobilise dramatic change.
• Without a confirmed vision, the BPI project cannot ensure that the Focus Areas chosen for improvement are the ones that need to be changed for the client to remain competitive in its industry.

Approach

To confirm a Value Proposition, current paradigms of senior management must be challenged and perspectives must be broadened to stretch the organisation. The client executive team has to be encouraged to look at their future business from different angles.

1. Design management interview guide.
2. Review and outline competitive environment and business issues (use results from Internal organisational Overview, Business Position, Holistic Business Model).
3. Design a targeted set of questions to identify:
1. What can we sell? (Core Competency/Product/Market Analysis)
2. Where can we sell?
3. What are we actually capable of doing?
4. Customers (How do we add value?) (Strategic Analysis Framework and Value Proposition)
5. Competitors (How can we create an “edge” over competitors?)        
6. Stakeholders (How can we leverage stakeholders’ interest to our advantage?)
7. Assets and Resources (How do we efficiently convert assets to income?)
8. Inter­view key executives to gain shared understanding of the business strategy, mission and vision.
9. Synthesise results and develop content for workshop for confirming the vision.
10. For example:
1. Basis of Competition/Rules: How will we compete? (Five Basic Shared Concepts)
2. Operating Mode: How will we make money?
3. Structural Approach: How will we hold it together?
4. Stakeholder Value: Are we a good buy?
5. Culture: What do I tell my friends?
11. Conduct a workshop with senior management to confirm its Value Proposition.  Depending on the size and nature of the organisation, the tools used in this workshop may range from flipcharts to computer-assisted brainstorming. (Group Vision)
12. At the outset of the workshop discussions, identify the elements of a Value Proposition by asking the leadership team to answer thought-provoking questions such as:
1. Why do we exist?
2. Who are our customers?
3. Who are our key stakeholders?
4. What products and/or services do we (should we) deliver?
5. What do our clients and stakeholders care most about regarding how we deliver these products/services?
13. Reflect the responses back to the group by “filling in blanks” of a paragraph template. This “strawman” format of articulating a Value Proposition and Business Vision (Statement of Direction) promotes discussions on the underlying implications of each phrase.  These statements typically go through several iterations before they are finalised.  Ideally, the final version of the Value Proposition should describe the future state, stretch and inspire the organisation’s thinking and make it clear that new approaches to operating are needed.
14. If all members of the senior management team have not participated in the confirmation / development of a shared Value Proposition, conduct a final presentation/workshop to achieve full awareness and “buy-in”.

Guidelines

Problems/Solutions

• In some organisations, it is not practical to attempt to develop the Value Proposition and Critical Success Factors in a workshop setting (e.g. in extremely large organi­sations or in highly geographically dispersed company).  In these instances, it may be necessary to conduct executive interviews, synthesise results, and circulate draft documents for review.  The consultant is encouraged to attempt some type of group session to validate the results of this task and gain commitment.

Tactics/Helpful Hints

• A powerful Value Proposition inspires and compels change, conveys a feeling of purpose, determines a need for action, and has emotional appeal.
• When the client organisation is part of a larger “parent” company, ensure that the Value Proposition of the client organisation is in line with that of its parent.
• Critical Success Factors can often be developed as an extension to the Value Proposition workshop.

Resources/Timing

• The project manager will need to work closely with the highest levels of executive management.  This implies a need for skills and experience in developing a Value Propositioning and Business Vision and executive education.