productivity viewed in the context of strategy - jpc.com.jm · pdf filestrategy and execution...

Productivity viewed in the context of Strategy

Robert C. WynterStrategic Alignment Limited

November 12, 2009

Copyright Robert C. Wynter –

November 2009

Productivity Let us analyze JPC’s view that “productivity

is the most sustainable means for a country to achieve economic growth and improve the competitiveness and living standards of its citizens”

Usually defined as output/input

Output not always clear

We may well produce the wrong thing very well

What for example, is the output of JPC? Of MLSS?


November 2009

Productivity

Low Productivity Symptom

Usual Blame and Response has got

us nowhere

Solutions

DissatisfactionBottom LineGrowth

WorkersResources

Governance LeadershipStrategy

Flawless ExecutionCopyright Robert C. Wynter –

November 2009

Value Creation

The fundamental purpose of any organization


November 2009

How do Private Sector Organizations create value for their shareholders?

SHAREHOLDERS

Corporate SBU’s Customers

Goods & Services

Profits

Capital

Revenue


November 2009

How does a Public Body create value?

CITIZENS

Central Government

Public Sector Bodies

Customers

Quality Goods & Services

Legislation, Policies, Budgetary Support and

Oversight

RevenuePolicy Implementation


November 2009

Profit vs. Not-for-Profit

Expend Resources

Earn Revenue

Make a Profit

Raise Funds

Achieve a Mandate

Cover Expenses


November 2009

Private Sector Performance

=(1 – 1/Efficiency x 1/Price Recovery) x Asset Utilization X Equity Leverage

Net Profit(NP) = Output Value (Voutput) – Input Value (Vinput)

= Qoutput X Poutput – Qinput X Pinput

ROE = NP = NP X Voutput X Assets

Equity Voutput Assets Equity

ROE = QoPo – QiPi X Voutput X Assets

QoPo Assets Equity

ROE = (1 - Qi X Pi) X Voutput X Assets

( Qo Po) Assets Equity


November 2009

Factors affecting Private sector performance

1. Efficiency How well we convert inputs to outputs

2. Price Recovery How well we create value for customers

3. Asset Utilization How well we utilize assets (tangible/non)

4. Leveraging How well we leverage equity


November 2009

Public Sector Performance

=(1 – 1/Efficiency x 1/Price Recovery) x Asset Utilization X Subv. Leverage

Value Added (VA) = Output Value (Voutput) – Input Value (Vinput)

= Qoutput X Poutput – Qinput X Pinput

ROVA = VA = VA X Voutput X Assets

Gov.Sub Voutput Assets Gov.Sub

ROVA = QoPo – QiPi X Voutput X Assets

QoPo Assets Gov.Sub

ROVA = (1 - Qi X Pi) X Voutput X Assets

( Qo Po) Assets Gov.Sub


November 2009

Factors affecting public sector performance

1. Efficency How well we convert inputs to outputs

2. Price Recovery How well we create value for customers

3. Asset Utilization How well we utilize assets (tangible/non)

4. Leveraging How well we leverage subvention


November 2009

1212

Time

Performance

VISION

The Performance Gap

Current

Performance

PerformanceGap


November 2009

How do we close the performance gap?

… by successful articulating, translating and executing strategy

1313Copyright Robert C. Wynter –

November 2009

Strategy Defined

• Closing the organization’s value gap is the essence of strategy

• A strategy is an integrated set of choices that position a firm, in an industry, to earn superior returns over the long term


November 2009

Strategy and Execution

STRATEGIC THINKING

FLAWLESS EXECUTION

VISIONARTICULATION

ALIGNING ORGANIZATION TO

STRATEGY

SUCCESS

LEADERSHIP MOBILIZATION


November 2009

Misaligned Organization JPC Role

Promoting and facilitating productivity enhancement at the national, sectoral, industry and enterprise level

Mission ….by providing productivity policy advice, expertise and

information to private and public sector organizations……

What we do Public Education & Awareness

Productivity Research & Measurement

Benchmarking and Best Practices

Productivity Assistance and Training


November 2009

Considerations in making strategic choices

Strategic Choices

How can our organization

deliver on the customer value proposition?

What is our customer

value proposition?

What is the portfolio and timing of

initiatives that we need to execute?

What intangible assets do we

need to deliver on our customer value proposition?

What will our economic model look

like?

These choices must be seen as an integrated, mutually reinforcing setCopyright Robert C. Wynter –

November 2009

Performance gap must be decomposed into discrete sources of value creation

Improve organizational performance

Revenue Growth Productivity Improvement

•New sources of revenue: new products, customers, markets

•Improve profitability of existing customers

•Reduce cash expenses•Eliminate errors & waste•More efficient

•Manage capacity from existing assets•Incremental investment in capacity to eliminate bottlenecks

Expand Business

Opportunities

Grow from

existing base

Improve Efficiency

Improve Asset

Utilization

100 % points

X4 % points.X3 % pointsX2 % pointsX1 % points

InnovationOperational Excellence

Capital Allocation

Customer Intimacy


November 2009

Customer Value Proposition

What do we promise to deliver to our

customers each and every time?

How will we differentiate in serving our customers:

PriceQuality of Products & Service Delivery

Availability/AccessSelection/VarietyAfter Sales Service

RelationshipsBrand

What are their

needs?

Who are our

customers?


November 2009

• Skills Relationship building Selling/marketing CommunicatingAnalytical Product knowledgeAdvisory skillsNegotiating skills

• Climate/Culture/Structure Enabling Supportive Innovative Empowering Customer-focusedNon-hierarchical

structure

• TechnologyUser-friendly ReliableAccurateAdequate touch

points Process-enabling

• LeadershipDecisive Inspiring Visionary

What strategic skills, climate, technology and leadership do we need to have in our organization to deliver on our customer value proposition?

Organizational alignment to strategy


November 2009

3 tests of a good strategy

External Consistency – Does the strategy capitalize on

opportunities and neutralize threats in a unique way?

Dynamic Consistency – Does the strategy call for the firm to do today the things it need to do tomorrow to

be successful?Does it accurately anticipate

competitive responses and handle these before they become problems?

Internal Consistency – Do the parts fit

together so the whole is greater than the sum of the parts?


November 2009

Time

ROE

Impact of Strategy Execution

Additional Returns from flawless

Strategy Execution

Expected Returns from Existing and projected normal Operations

CURRENT

REALITY Status Quo


November 2009

Barriers to Strategy Execution

The Vision BarrierOnly 5% of the workforce understand the strategy

The Management Barrier85% of executive teams

spend less than one hour per month discussing strategy

The People BarrierOnly 25% of Managers

have incentives linked to overall strategy

The Resource Barrier60% of organizations do not

link budget to strategy

9 out of 10 companies fail to execute strategy

Today’s Management Systems were designed to meet the needs of stable Industrial Organizations that were changing incrementally

You cannot Manage Strategy with a System Designed for tacticsCopyright Robert C. Wynter –

November 2009

JPC 2015 Vision

The Jamaica Productivity Centre is aproductive and self-sustaining organizationknown for timely, accurate measurement andreporting

The JPC has impacted significantly onNational productivity by enabling anentrenched Productive culture and increasedproductivity


November 2009

JPC Mission The Mission of the JPC is to enhance the productivity

and competitiveness of the Jamaican economy byproviding productivity policy advice, expertise andinformation to government, individuals andorganizations in the private and public sectors.

This will be achieved by being well resourced; byforging strategic partnerships and by our motivatedand competent team leading the process oftransformation to a productivity-conscious culture


November 2009

Core Values

Professionalism

Accountability

Teamwork

Continuous Improvement

Pro-activeness


November 2009

Major Target

National Labour Productivity

US$12,000/worker by 2012

Was US$8,000/worker in 2007

Performance Gap = US$4,000/worker


November 2009

28

Customer Value Proposition

Promise

Responsive to needsReliable, Professional, SoundSatisfied and wanting more

Differentiators

Quality of Service, Information and AdviceRelationshipsAvailability

Needs

DiagnosticsProblem SolvingBest PracticeInformationAdvice

ClientsGovernment, Unions

Private and Public OrganizationsGeneral Public


November 2009

I4. Productivity driven

organizations

Learn

ing

& G

rowth

Int

ern

al

Proc

ess

Don

or/

Cus

tomer

Nation

al

Impa

ctJamaica Productivity Centre - Strategy Map 2009 - 2012

I1. Improved national productivity

I3. Achieve a national

productivity culture

I2. Best practice productivity-driven policies implemented

F1. JPC provides value for money

IP2. Effective planning,

monitoring and reporting

IP5. Broad based relationship

building

LG1. We have a multidisciplinary, self motivated, competent and certified team

LG2. We have easy access to

the right information and tools to do our

jobs

LG3. We have a productivity

driven, learning oriented, sharing, service oriented

culture

IP3. Detailed needs analysis

IP1. Appropriate valuation of

JPC’s impact

LG4. We have vision and mission driven, results oriented and

principle driven leadership

C1. JPC is responsive

to my needs and adds

value to my organization

F2. JPC is compliant to

its operational

plan

C2. JPC enables me to enhance my capacity to improve productivity

C3. JPC provides accurate,

reliable and timely

information and advice

C4. JPC is a well known

thought leader and service

provider in the area of

productivity

IP4. Effective facilitation of productivity improvement

IP7. Comprehensive

research

IP8. Effective Communication

and dissemination

IP9. Cutting edge marketing and

promotion program

IP6. Effective

Policy analysis & advice


November 2009

Practical examples

Mr. Philip Alexander will now share how this is applied at GraceKennedy


November 2009

productivity viewed in the context of strategy - jpc.com.jm · pdf filestrategy and execution...

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