Las 4 Perspectiva de Un Sistema de Negocio

1Copyright: Tommie Johansson 2007

TALLER: TALLER: LAS 4 PERSPECTIVAS DE UN SISTEMA DE LAS 4 PERSPECTIVAS DE UN SISTEMA DE

NEGOCIO: PROCESOS, PERSONAL, SERVICIONEGOCIO: PROCESOS, PERSONAL, SERVICIO A CLIENTES Y ASPECTOS FINANCIEROS.A CLIENTES Y ASPECTOS FINANCIEROS.

TOMMIE TOMMIE JOHANSSONJOHANSSON

JUAN JUAN MILLMILLNN


Las 4 perspectivas - procesos, personal, servicio a cliente y aspectosfinancieros de un sistema de negocio

Based on the Balance Scorecard and applied to the ISO 9000 family of standards

Tommie J. JohanssonSuecia


Breakthroughs in performance...

{ It cannot be accomplished only by monitoring and controlling financial measures of past performance

{ Reliance on summery financial performance measures are hindering organizationsabilities to create future economic value.

... require major change... require major changess, and that includes, and that includeschanges in the measurement and managementchanges in the measurement and managementsystems used by an organization.systems used by an organization.


Why important?

oThe information age requires new capabilities for competitive success.

oThe information age requires new capabilities for competitive success.

o develop customer relationshipso introduce innovative products/serviceso customized high quality products/serviceso low costs and short lead timeso mobilize employee skills and motivationo deploy information technology


Balanced Scorecard

{ Measures the organizations performance across four perspectives:z financialz customerz internal business processesz learning and growth (personnel)

{ Measures the organizations performance across four perspectives:z financialz customerz internal business processesz learning and growth (personnel)


Internal and external perspectives

FinancialFinancial CustomersCustomers

ProcessesProcesses

PersonnelPersonnel


The balance between

{ short and long term objectives{ financial and non-financial measures{ outcome indicators and performance

drivers{ external and internal performance

perspective


Financial Perspective

Financial measures are valuable in summarizingthe readily measurable economic consequencesof actions already taken.

Financial performance measures indicate whether a companys strategy, implementation and execution are contributing to bottom-line improvement. (see ISO 10014)

Financial measures are valuable in summarizingthe readily measurable economic consequencesof actions already taken.

Financial performance measures indicate whether a companys strategy, implementation and execution are contributing to bottom-line improvement. (see ISO 10014)


Customer Perspective

Management identifies the customers and market segments in which the organization will compete and the measures of performance in these segments.

The customer perspective enables managers to articulate the customer and market-basedstrategy that will deliver superior futurefinancial returns

Management identifies the customers and market segments in which the organization will compete and the measures of performance in these segments.

The customer perspective enables managers to articulate the customer and market-basedstrategy that will deliver superior futurefinancial returns


Internal Business Process Perspective

In this perspective, management identify the critical internal business processes in which the organization must excel.These processes enable the organization to:

In this perspective, management identify the critical internal business processes in which the organization must excel.These processes enable the organization to:

{ deliver the value that will attract and retain customers,

{ satisfy owners expectations of excellent financial returns


Learning and Growth Perspective

This perspective identifies the infrastructurethat the organization must build to create long-term growth and improvement.Organizational learning and growth come fromthree principal sources:

o People, systems and company culture.The far most important resource in the organization is Competence (see ISO 10015)

This perspective identifies the infrastructurethat the organization must build to create long-term growth and improvement.Organizational learning and growth come fromthree principal sources:

o People, systems and company culture.The far most important resource in the organization is Competence (see ISO 10015)


The framework of a Business Management system


Linking the measures to the strategy

{ Cause-and-Effect relationships{ Outcomes and Performance drivers{ Linkage to the financial perspective


Cause and Effect Relationship (ex)

Employeescompetence

On-timedelivery

Return oncapital

Processquality

Processcycle timeProcess

cycle time

Customerloyalty

FinancialFinancial

CustomerCustomer

Internal Business ProcessInternal Business Process

Learning and growthLearning and growth


Outcomes and Performance drivers

The outcome measures are more generic and tend to be laglag indicators (operational), such as Profitability, Customer satisfaction, Employee turnover etc.The performance drivers, the leadlead indicators (strategic), tend to be unique for an organization and reflects the strategy, such as Cycle time, Defect rates, strategic competence etc.A good business system should have a mix of Outcome measures and Performance drivers.


Linkage to Financials

It is easy to become pre-occupied with such objectives as quality, cycle time, innovation andemployee empowerment for their own sake.

These objectives must be linked to outcomes that directly influence customers and that deliver future financial performance (ISO 10014).

It is easy to become pre-occupied with such objectives as quality, cycle time, innovation andemployee empowerment for their own sake.

These objectives must be linked to outcomes that directly influence customers and that deliver future financial performance (ISO 10014).


The model


Model of a process-based QMS

Continual improvement of thequality management system

CustomersCustomers

Requirements

SatisfactionMeasurement.analysis andimprovement

ResourceManagement

Managementresponsibility

Productrealization Product

INPUT OUTPUT


The 4 perspectives and ISO 9001

PeoplePeople

ProcessesProcesses

FinancialFinancial CustomersCustomers

ISO 9001, clause 6ISO 10015

ISO 9001, clause 7

ISO 9001, clause 7.2and 8.2.1ISO 9001 ?

ISO 10014


People perspective

is mainly about linking the need for competence to the business plan and to manage knowledge


People

{ Employees competence{ Information systems capabilities{ Motivation and empowerment{ ISO 10015:1999 (2006)


Lead

Core employee measures LagResultsResults Core

Measures

EmployeeRetention

EmployeeProductivity

EmployeeSatisfaction

TechnologyInfrastructure

Climate forAction

EmployeesCompetence

Enablers


ISO 10015:1999 & 2006

Quality Management - Guidelines for training


Quality management - Guidelines for training

Changes may require an organization to analyze itscompetence-related needs.

This standard provides guidance that can help an organization and their personnel when addressing issues related to training.

ISO 1001

5ISO

10015


Linking Competence

Business planBusiness plan

HumanHumanresourcesresources

Technicalresources

Financialresources

Otherresources

CompetenceCompetence RemunerationOthers

TrainingTrainingneedsneeds

Otherneeds


ISO 9001:2000

6. Resource Management6.2 Human resources

Competence, awareness and trainingThe organization shalla) Determine the necessary competence for personnel

performing work affecting product quality,b) Provide training or take other actions to satisfy

these needs,c) Evaluate the effectiveness of the actions taken,d) e) Maintain appropriate records of education,

training, skills and experience.


Definitions: (from ISO 10015)

CompetenceCompetence - application of knowledge,skills and behaviours in performance

Training Training - process to provide and developknowledge, skills and behaviors to meet requirements


Scope of ISO 10015

These guidelines cover the development, implementation, maintenance and improvement ofstrategies and systems for training that affect thequality of the products supplied by an organization.

This standard applies to all types of organizations.

ISO 1001

5ISO

10015


Training: a four-stage process

1Define

training needs 2Design and

plan training

3Provide for

training

4Evaluate training

outcomes

MONITOR


1. Defining training needs

#1 Defining the needs of the organization#2 Defining and analyzing competence requirements#3 Reviewing competence#4 Defining competence gaps#5 Identify solutions to close the competence gaps

Output: Document - Training needs specification

(part of the Training Plan specification)


Purpose of this stage

The purpose of this stage should be to define: the gaps between existing and required competence; the training needed by employees.


2. Designing and planning training

#1 Defining the constraints#2 Design the training plan

training methods and criteria for selection Training plan specification selection of a training provider

Output:Document - Training plan specificationincl. criteria and methods for evaluation of outcomes



The purpose of this stage should be: design and planning of actions to be taken; definition of the criteria for evaluation and monitoring


Learning Objectives

{ Cognitive (Knowledge)

{ Affective (Attitude)

{ Behavioral (Skills)

{ Business Impact


3. Providing for the training

# Providing support* pre-training support* training support* end-of-training support

Outputs:- Evaluation reports of training outcomes- Reports from interviews with the trainees



The purpose of this stage should be: supporting trainer and trainee; monitoring the quality of the training delivered


4. Evaluating training outcomes

Has the competence gap been closed by the training?Has the competence gap been closed by the training?

#1 In the short term...#2 In the long term...#3 Collect data and prepare evaluation report

Outputs:- up-dated individual training record- evaluation report with description of corrective and preventive actions


Remember ISO 9001/6.2.2 - the organization shall

{ determine the necessary competence

{ provide training or take other actions

{ evaluate the effectiveness of the actions taken



The purpose of this stage should be: to confirm that both organizational and training

objectives have been met;


Kirkpatrick approach, four levelsfor evaluation of training

1. Reaction How trainee reacted to training (subjective) How did trainee feel about the training

Useful in improving instructional techniques, selection of methods etc



1. Reaction2. Learning What trainee knows as a result of the

training What skills, knowledge or attitudes

have changed and by how much

Useful for improving task analysis, knowledge and skills analysis and selection & design of instructional methods



1. Reaction 2. Learning3. Behavior What trainee does differently after

the training Whether trainee applies knowledge &

skills acquired to the job What on-the-job performance

improvements occurred as a result of the training



1. Reaction2. Learning3. Behavior4. Results Whether on-the-job application of the

knowledge & skills acquired during training produced measurable results In the market At the customers In the organization As increased productivity


The 2000 ASTD* state of the industry report

{ 77% used level 1 { 36% 2{ 15% 3{ 8% 4

What does it indicate?

* ASTD American Society for Training and Development


A five level model

{ Since Kirkpatrick established his original model, other theorists (for example Jack Phillips), and indeed Kirkpatrick himself, have referred to a possible fifth level, namely ROI (Return On Investment).


Monitoring and improving the training process

Inputs:- all records from previous stages, and/or- records from an internal quality audit procedure

Output:- action plan defining actions, setting deadlines andassigning responsibilities



To ensure that the training process, as part of To ensure that the training process, as part of the organizationthe organizations quality system, is being s quality system, is being managed and implemented correctly and that the managed and implemented correctly and that the process is effective in meeting organizational and process is effective in meeting organizational and competence requirements.competence requirements.


Linking Competence

Business planBusiness plan

HumanHumanresourcesresources

Technicalresources

Financialresources

Otherresources

CompetenceCompetence RemunerationOthers

Otherneeds

Trainingneeds


Competence acquisition

{ Other needs than trainingz Recruitmentsz Consultantsz Insourcingz Outsourcing z Taking over a companyz Etc


Knowledge Management

Companies must learn to invest in and managebrain-power if they hope to compete in aneconomy where, more than ever, knowledge iswhat we buy and sell.

-Thomas S. Stewart-


Business process perspective

is mainly about reducing costs and continual improvement


Business Process Perspective

{ Time{ Quality{ Cost

{ Conformity{ Non-

conformity{ Efficiency


Total Quality Management

Customerneeds

Customerresults

Externalsupplier

Copyright: Tommie Johansson 2007

Managing the economics of a process

{ all processes within an organization have an economiceconomic effect

{ these effects will be experienced by the customer,customer, the organizationorganization or both

{ the organization can measure the effect as costs of conformityconformity or nonconformitynonconformity

{ the customers will indicate the effect by the level of customer satisfactioncustomer satisfaction

{ reports about costscosts and customer satisfactioncustomer satisfactionshould be analyzed to identify causes of any problem and opportunities for improvementimprovement


The costs of the organization

Cost of conformitycost to fulfill all the stated and implied needs of customers in the absence of failure of the existing process Cost of nonconformity

cost incurred due to failure of the existing process


The ModelStart Identify / Review

processes

Identify process activities

Monitor costs

Produce processcost report

Identify factorsaffecting Cus.Sat.Monitor customersatisfaction

Produce customersatisfaction report

Management review

Identifyopportunities

Improvem.opportunities

identified?

Is proposedimprovement

justified?

Conduct cost /benefit analysesyesyes

yesyes

nono

nono

Plan & implement improvements


Monitoring costs

Savings

Correction

Control

Preventiontime

turn-over

25 - 30%

3 - 5%

1%


Quality Costs

Prevention Control CorrectPrevention Control Correctionionbefore delivery after delivery

instructions manuals training good suppliers

testing inspections proof reading

re-work scrap

repair replace loss of Image!


Customer perspective

is mainly about understanding the customers needs


Monitor Customer Satisfaction

Customer satisfaction can be assessed through:o verbal surveyo written surveyo suggestion processo complaint processo focus groupso comparison studyo reasons for lost saleo other methods


Customer Perspective

o Market shareo Customer acquisitiono Customer retentiono Customer satisfactiono Customer profitabilityo Image and reputationo Trademark protection


Core measures

MarketShare

CustomerAcquisition

CustomerRetention

CustomerProfitability

CustomerSatisfaction

Lead

Lag


Market segmentation

{ Identify the customer objectives in each targeted segment

{ not just choosing what to do - but also choosing what NOT to do


Financial perspective

is mainly about realizing financial and economic benefits of the quality management system


Financial strategy

{ Revenue growth and mix{ Cost reduction{ Productivity improvement{ Asset utilization{ Investment strategy


Financial Perspective

o Revenueo Cash flowo Sales Growtho Cost reductiono Productivity improveo Return-on-capital-employed (ROCE)o ISO 10014:2006


ISO 10014:2006

Quality Management - Guidelines for realizing financial and economic benefits


Guiding stars for the review

Addressing top Addressing top managementmanagementas nonas non--QMQM

expertsexperts Show me the Money

Show me the Show me the MoneyMoney


ISO 10014 aims high

{ To bridge the gap between top management and the quality professionals

{ To assist top management to understand and implement the quality management principles


Differing perspectives the gap

{ Top managements view of operations is highly compressed and expressed in financial terms

{ Quality professionals is routinely unable to translate improvement efforts into financial terminology


Importance of the principles

{ How would it be possible to implement and operate a management system if top management doesnt understand and/or are aware of the principles that are fundamental to lead the organization towards improved performance?


Financial and economic benefits

{ Financial benefit is the result of organizational improvement expressed in monetary form, and realized by cost-effective and motivational management practices within the organization.

{ Economic benefit is generally attained through effective and efficient management of resources and implementation of applicable processes for improving the overall strategic worth and health of the organization.


The scope of ISO 10014

{ This International Standard provides guidelines for realizing financial and economic benefits from the application of management principles developed from the ISO 9000 quality management principles.

{ It is directed to top management of the organization and complements ISO 9004:2000 for performance improvements. It provides examples of achievable benefits and identifies management methods and tools that are available to assist with the achievement of those benefits.

{ This International Standard consists of guidelines and recommendations, and is not intended for certification, regulatory or contractual use.


The structure and content

{ Based on the 8 quality management principles of ISO 9000:2005

{ Encouraging the process approach to manage an organization

{ Presenting a Self-assessment tool based on the principles

{ Giving examples of methods and tools to realize financial and economic benefits


Quality management principlesISO 9000:2005

a) Customer focusb) Leadershipc) Involvement of peopled) Process approache) System approach to managementf) Continual improvementg) Factual approach to decision makingh) Mutually beneficial supplier

relationship


The way to use the guideline


The self assessment (annex A)

{ Maturity level descriptions 1 to 5z Level 1 immature organization, the

practice is not found or not yet started

z Level 3 approximately 50% occurrence, the practice is commonly found

z Level 5 almost 100% occurrence, the practice is recognized as best-in-class


The self assessment (annex A)

{ Two different levels of assessmentz One initial 24 questions z Comprehensive - ~80 questions


Use of quality management principles

{ The principle quoted{ P D- C A approach for each principle{ A flowchart for each sub-clause


Customer focus

{ Organizations depend on customers for their sustainability. To ensure sustainability, organizations should identify and manage the risk of customer dissatisfaction by understanding and meeting current and future customer needs and expectations.


Customer focus, examples ofachievable benefits and tools


Leadership

{ Leaders, as top management, direct the organization to ensure sustainability, corporate and social responsibility and governance.

{ They should establish unity of purpose, confidence and trust, in a way that balances the needs and expectations of all interested parties.

{ They should create and maintain an environment that encourages involvement of people, learning, innovation and sustainability for achieving the organizations objectives.


Leadership, examples ofachievable benefits and tools


Involvement of people

{ Employees embody the knowledge capital and intellectual resource of an organization.

{ The full involvement of employees enables them to utilize their talents and abilities to contribute to the financial and economic well being of the organization.


Involvement of people, examples ofachievable benefits and tools


Process approach

{ A process is a set of interrelated or interacting activities that transforms inputs into outputs. It is a mechanism that adds value by facilitating the successful operation of an organization.

{ The systematic identification and management of the processes employed within an organization, and particularly the interactions between such processes, is referred to as the process approach.

{ Top management should utilize the processes established in the organization for effective planning and control of its operation.


Process approach, examples ofachievable benefits and tools


System approach to management

{ Organizations consist of complex, interrelated and interacting networks of processes. Because no activity or process exists in isolation, it is beneficial to manage interrelated processes as a single system.

{ The system approach to management facilitates sustainability and adaptation to change.


System approach, examples ofachievable benefits and tools

Achievable Benefits

optimized use of available resources optimized, effective and efficient processes; reduced time to market enhanced organizational performance, credibility

and sustainability


Continual improvement

{ A key factor in successfully sustaining the realization of financial and economic benefits is an effective continual improvement process.

{ This is reliant upon the committement of top management in the application of all eight interrelated management principles.

{ The benefits from the selection and use of the methods and tools identified in clause 5 become evident as added value continual improvement measurements.

{ It is important to take a holistic view of the needs of all interested parties to ensure an organization capable of effective changes for the realization of continual improvement.


Continual improvement

I m p l e m e n t e d A c t i o n s = F I N A N C I A L & E C O N O M I C B E N E F I T SA c h ie v a b le B e n e f i t s

im p r o v e d p r o f i t a b i l i t y im p r o v e d r e v e n u e s im p r o v e d b u d g e ta r y p e r f o rm a n c e r e d u c e d c o s t s im p r o v e d c a s h f lo w im p r o v e d r e tu r n o n i n v e s tm e n t

S o u r c e s o f O p p o r t u n i t i e s f o r I m p r o v e m e n t P l a n s P r o c e s s S t e p s R e v i e w f o r A c t io n

A u d it r e s u lt s

B e n c h m a r k in g o u t p u t s

B r a in s t o rm o u tp u t s

C u s to m e r f e e d b a c k

E x te r n a l f a c to r s- R e g u la t o r y- E m e r g in g t e c h n o lo g ie s- C h a n g e s in t h e m a r k e t p la c e- E n v ir o n m e n t a l / s o c ia l

F in a n c ia l P e r f o rm a n c e H u m a n R e s o u r c e

- A p p r a i s a l , - S a t i s f a c t io n f e e d b a c k - S u g g e s t i o n s

P r o b le m s o lv in g ( c o r r e c t iv e a c t i o n ) R e c o m m e n d a t io n s f o r im p r o v e m e n t R e s u l t s o f F a i lu r e m o d e s & e f f e c t s

a n a ly s i s ( F M E A ) R e s u l t o f B u s in e s s e x c e ll e n c e

m o d e l B E M R e s u l t s o f b a la n c e d s c o r e c a r d R e s u l t s o f m a n a g e m e n t r e v ie w R e s u l t s o f S ta t i s t i c a l p r o c e s s c o n t r o l

( S P C ) S e lf - a s s e s s m e n t r e s u l t s V a lu e o f g o o d s a n d s e rv ic e s Y ie ld

A c t io n p la n d e v e lo p m e n t

A ll o c a t i o n o f r e s o u r c e s

A p p l i c a t i o n o f a l l p r i n c ip le s a n d s e le c te d t o o l

D a t a a n a ly s i s

I d e n t i f i c a t io n o f a c t io n i t e m s

P r io r i t i s a t io n

R e - c o n d u c t in g s e lf - a s s e s s m e n t a n d e v a lu a t io n s

R e s u l t s e v a lu a t io n

S e lf - a s s e s s m e n t s

S e t a n d c a s c a d e o b je c t iv e s

T r e n d id e n t if ic a t i o n

B u d g e t a l l o c a t i o n s

C a p i t a l e x p e n d i t u r e

C a s h f lo w

C o s t r e d u c t i o n t a r g e t s

P e r f o rm a n c e t a r g e t le v e ls

P r o je c te d s a le s

S t r a te g i c p la n

I n p u t s

O u t p u t

F ig u r e 7


Factual approach to decision making

{ Decisions should, as far as practical, be based on evidence.

{ Knowledge generated from information and data, derived from measurement of processes or acquired from other sources, provides an essential base for enhancing the decision making capability of the organization.

{ Knowledge management is an important element in capturing, protecting and disseminating information.


Factual approach, examples ofachievable benefits and tools

Achievable Benefits

improved cash flow improved return on investment improved effectiveness of decision making optimized use of available resources optimized, effective and efficient processes enhanced organizational performance, credibility

and sustainability


Mutually beneficial supplier relationship

{ Top management should establish supplier partnerships that generate improved and sustained profits for both organizations.

{ Partnership between a supplier and the organization could include cooperative process improvements, information sharing, mutual resolution of problems and product development.


Supplier relationship, examples ofachievable benefits and tools

Achievable Benefits

reduced costs optimized use of available resources improved supply chain performance reduced time to market enhanced organizational performance, credibility and sustainability


Two annexes

A. Self assessment toolz Two simple and effective assessments

B. Methods and toolsz Brief summaries


Business basics

Revenue Revenue Cost = ProfitCost = Profit

Key areas

{ Customer satisfaction{ Better products{ Supplier relations{ Image and reputation

{ Effective processes{ Efficient management{ Strategic competence{ Less problems


The management system

EffectiveEffective

EfficientEfficient

ProfitableProfitable

ISO 9001ISO 9001

ISO 9004ISO 9004

ISO 10014ISO 10014

CustomerCustomersatisfactionsatisfaction

Interested partiesInterested partiessatisfactionsatisfaction

SustainableSustainablecompetitivenesscompetitiveness

BusinessBusinessvisionvision


Most visible benefits

{ Optimization of available resources{ Increased effectiveness{ Improved profitability{ Increased competitiveness{ Improved communication{ Increased support for and confidence

in decisions


To sum up

{ Results are always achieved financially and/or as a degree of customer satisfaction

{ Business processes create the results{ People (competence) are the main

resource and the foundation for process improvement


Sources of information

{ Kaplan R, Norton D: The balanced Scorecard (HBS Press 1996)

{ ISO 9000{ ISO 9001{ ISO 9004{ ISO 10014: Guidelines for realizing

financial and economic benefits{ ISO 10015: Guidelines for training


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Las 4 Perspectiva de Un Sistema de Negocio