Marcus Evans Business Process Improvement & Transformation Conference KL, March 2012 Improving your business operations by meeting your company’s objective, mission and current business landscape • Re-energising your company’s mission by developing a strategic improvement plan that aligns with its objective • Establishing business imperative, defining vision and targets, realising the targets and fine-tuning your upcoming business transformation needs • Measuring the effectiveness of your business processes to see how you can improve your margins

1. IMPROVING YOUR BUSINESS
OPERATIONS BY MEETING YOUR
COMPANY’S OBJECTIVE, MISSION
AND CURRENT BUSINESS
LANDSCAPE
Case Study, Concepts and Debatable Ideas
Kenny Ong
Takaful Ikhlas Sdn Bhd

2. The World Today…
13th April 2009
•Two Domino’s employees
•YouTube
•Apology from Domino’s after
48 hours
•1 million hits
•Twitter: questions on silence
•LinkedIn: suggestions by users
in forum
BusinessWeek, May 4, 2009

3. TAKAFUL IKHLAS CORPORATE PROFILE
• Shareholder : MNRB Holdings Berhad (100%)
• Established Date : 18 September 2002
• Operational since : 2 July 2003
• Takaful Model : Al-Wakalah
• Business Portfolio : General and Family Takaful
• Number Products : More than 90
• Number of Participants : More than 1,800,000
• Number of Agents : More than 6,000
• Number of Staff : 490
• Regional Offices : 11
• Paid Up Capital : RM295 million

4. TISB Medical/Health (EB/GHS) Solution
EASY ACCESS TO CARE
CLIENT PANEL CLINICS
•Panel of 2000 clinics •Processing Bills
nationwide •Payment
•All major hospitals recognises •Appointment and
our GLs removal
•Policies & Procedures
•Appointment & management of
•Tracking Entitlements
medical panel TISB •Issues & Complaints
•Overcharging & Abuse
1st CLASS SERVICE •MC Verification
•Benefit & Procedure briefing
Panel GP Clinics
•Help Desk
•Tri-annual Cost & Utilization Specialist
Referral
Report & Hospitals
•Benchmarking SPECIALIST & HOSPITALS
•Analysis & Recommendations Employees •Issuance of GL
•Hosp. Bank
EMPLOYEES & DEPENDANT Guarantee/Deposit
• Claims Submission •Appointment and removal
PEACE OF MIND • Tracking of eligibility •Tracking Entitlements
•24/7 LOG Issuance • Enquiries & Complaints •Processing Bills
•Cashless Admission • Employee benefit materials •Payment
•Comments • Unions •Hospital Reports
• Abuse of benefits

5. Contents
• Re-energising your company’s mission by
developing a strategic improvement plan that
aligns with its objective
• Establishing business imperatives, defining
vision and targets, realising the targets and fine-
tuning your upcoming business transformation
needs
• Measuring the effectiveness of your business
processes to see how you can improve your
margins

6. In Other Words…
↑ Focus
↓ Complexity

7. Intro

8. “…in the past 18 months, we have heard
that profit is more important than
revenue, quality is more important that
profit, people are more important than
profit, customers are more important than
our people, big customers are more
important than small customers, and that
growth is the key to our success. No
wonder our performance is inconsistent"
CEO, Anonymous

9. Before we start…
In the old days of HR…
• Average training hours per staff
• % of staff attending training
• # of training programs
• % of training programs conducted
• Training needs analysis conducted
• Competency models developed
• Training budget as % of payroll
What’s wrong with this picture?

10. Before we start…
Moral of the story…
2. Innovation:
– Business models
– Products
– Services
3. Market Leadership
4. Competitive differentiation
Get the picture?

11. Understanding Your Business Model
and Strategy
Focus on the Business Strategy and
Business Direction first

15. The McPlaybook*
Make it easy to eat Make it easy to prepare
• 50% drive-thru • High Turnover
• Meals held in one • Tasks simple to learn
hand & repeat
Make it quick Make what customers want
• “Fast Food” • Prowls market for new
• Tests new products products
for Cooking Times • Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007

16. What is the Business Model?
•Google
•Tata Nano USP
Market
Profit Model
Discipline

17. Business Model: USP
Unique Selling Proposition (USP)
=
Targeted Customer
=
Core Buying Purpose/ Customer Value
Proposition/ Job To Be Done (JBTD)

18. Business Model: USP
“The Product is Not the Product”
• What is the customer really buying?
• What is the “Core Buying Purpose”?

19. Business Model: USP
1. Insufficient WEALTH
2. Insufficient ACCESS
3. Insufficient SKILL
4. Insufficient TIME

20. Business Model: Profit Model
Revenue
Assets Cost
Cash
Margin
Flow

21. Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers
Internal
Process
Learning & Growth

22. What is the Business Model?
USP
Market
Profit Model
Discipline

23. Market Discipline
Product "They are the most innovative" •LV
Leadership "Constantly renewing and creative"
"Always on the leading edge"
•Air Asia Operational
•Ramly Customer
Intimacy
Excellence "Exactly what I need"
"A great deal!"
Customized products
Excellent/attractive price
Personalized communications
Minimal acquisition cost and "They're very responsive"
hassle
Preferential service and
Lowest overall cost of flexibility
ownership Recommends what I need
"A no-hassles firm" "I'm very loyal to them"
Convenience and speed Helps us to be a success
Reliable product and
service

24. Alignment & Consistency:
Market Disciplines
Product Leadership
(best product)
Eg. Google
Tata Nano
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

25. Alignment & Consistency:
Market Disciplines
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

26. Alignment & Consistency:
Market Disciplines
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

27. Alignment & Consistency:
Disciplines, Priorities, and KPIs
Operational Product Leadership Customer Intimacy
Excellence
• New, state of the • Management by
• Competitive price art products or Fact
• services
Error free, • Easy to do
reliable • Risk takers business with
• Fast (on • Meet volatile • Have it your way
demand) customer needs (customization)
• Simple • Fast concept-to- • Market segments
• counter of one
Responsive
• Never satisfied - • Proactive,
• Consistent
obsolete own and flexible
information for
competitors'
all • Relationship and
products
• consultative
Transactional
• Learning selling
• 'Once and Done' organization
• Cross selling

28. Alignment & Consistency:
Market Disciplines
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

29. Alignment & Consistency
Apple powerful Product Leadership
products, premium (best product)
pricing, limited range
Still Doing
well in
Acer super lean HP well-balanced
2009/2011
cost structure, portfolio, mass
aggressive pricing customization
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)

30. ALIGNING YOUR ORGANIZATION
TO THE BUSINESS MODEL

31. Strategy: Disciplines, Priorities, and
KPIs
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

32. Strategy: Disciplines, Priorities, and KPIs
Operational Product Leadership Customer Intimacy
Excellence
• New, state of the • Management by
• Competitive price art products or Fact
• services
Error free, • Easy to do
reliable • Risk takers business with
• Fast (on • Meet volatile • Have it your way
demand) customer needs (customization)
• Simple • Fast concept-to- • Market segments
• counter of one
Responsive
• • Never satisfied - • Proactive,
Consistent
obsolete own and flexible
information for
competitors'
all • Relationship and
products
• consultative
Transactional
• Learning selling
• 'Once and Done' organization
• Cross selling

33. Strategy: Value Disciplines
• Operational Excellence
• Move know-how from top performing
units to others
• Benchmark against best in class
• Ensure operations training for all
employees
• Use disciplines like TQM for continuous
learning to reduce costs and improve
quality

34. Strategy: Value Disciplines
• Customer Intimacy
• Capture knowledge about customers
• Understand customer needs
• Empower front line employees
• Ensure that everyone knows the
customer
• Make company knowledge available to
customers

35. Strategy: Value Disciplines
• Product Leadership
• Reduce time to market
• Commercialize new products fast
• Ensure that ideas flow
• Reuse what other parts of the company
have already learned
• Ensure there are multiple sources of
funding

36. Strategy: Value Disciplines
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

37. Strategy: Value Disciplines
Product Leadership
(best product)
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

38. Alignment: 4-Wheels Model
Business
Model
Person
Structure
Strategic
Planning
Culture
Leadership
Resources

39. Alignment: Framework
Culture • Focus point
• Alignment
• Quality
• Innovation & Differentiation
• Risk taking
• Performance Management
• Corporate obsession
• Decision making

40. Alignment: Framework
Structure • Org Structure
• Job Design
• C&B
• Policies & procedures
• Decision making
• Job fit
• Management Systems
• BSC and KPIs
• Decentralized & Empower

41. Strategy: Framework
Leadership • Role modeling
• Vision/Mission/Philosophy
• Leadership Style
• Delegation & Empowerment
• C&B, Promotions
• Sense of Urgency
• Speak regularly about Performance

42. Strategy: Framework
• Recognition
Person • Recruitment
• Training
• Profit sharing
• Values
• Motivation
• Self Efficacy
• Awareness
• Useful Competencies
• Career aspirations
• Attribution (control)

43. Strategy: Framework
Enablers
Resources • Technology
• Equipment
Funding
• Materials • CAPEX
• Human • OPEX
• Intellectual
Property
• Partners
• Property

44. Alignment: 4-Wheels Model
Business
Model
Person
Structure
Strategic
Planning
Culture
Leadership
Resources

45. Strategy + BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process Investment
Operational Product Customer
Strategy
Excellence Leadership Intimacy
Learning & Growth

46. Aligning Budget and Resources to
Business and Organization Goals
The art and science of allocating and
aligning Resources to strategic plans

47. Alignment: 4-Wheels Model
Business
Model
Person
Structure
Strategic
Planning
Culture
Leadership
Resources

48. Strategy: Framework
Enablers
Resources • Technology
• Equipment
Funding
• Materials • CAPEX
• Human • OPEX
• Intellectual
Property
• Partners
• Property

49. Each Discipline Requires
Different Priorities & Resources
Organization, jobs,
skills
Culture, values,
norms Operationa Product Customer
l Leadership Intimacy
Information and
systems Excellenc
e
Management
systems

50. Each Discipline Requires
Different Priorities & Resources
Operational Excellence
Organization, • Central authority, low level of empowerment
jobs, skills • High skills at the core of the organization
• Disciplined Teamwork
Culture, values,
norms • Process, product- driven
• Conformance, 'one size fits all' mindset
Information and • Integrated, low cost transaction systems
systems • The system is the process
Management • Command and control
systems • Quality management

51. Each Discipline Requires
Different Priorities & Resources
Product Leadership
Organization, jobs,•Ad hoc, organic and cellular
skills •High skills abound in loose-knit structures
Culture, values, •Concept, future-driven
norms •Experimentation and 'out of the box' mindset
Information and
•Person-to-person communications systems
systems •Technologies enabling cooperation
Management •Rewarding individuals' innovative capacity
systems •Risk and exposure management
•Product Life Cycle profitability

52. Each Discipline Requires
Different Priorities & Resources
Customer Intimacy
Organization, jobs,• Empowerment close to point of customer
skills contact
• High skills in the field and front-line
Culture, values,
norms • Customer-driven
• Variation and 'have it your way' mindset
Information and
systems • Strong customer databases, linking internal
and external information
• Strong analytical tools
Management
systems • Customer equity measures like life time value
• Satisfaction and share management
• Focus on ‘Share of Wallet’

53. Budgeting vs. Priorities
Example: Business Situation vs. R&D Priorities
Upturn Flat Downturn
Fight Complacency Innovation Sales
Sharpen Edge Acquire Cash Flow
Keep Momentum Profits
Conquer Build momentum
NPD Cycle Time Focused on
Improve Top 15%
‘Breakthrough’
Improve Edge revenue-generating
JV, In-source, Out- products
Extensions source
Counter Competitor
↓ R&D, ↑Sales
Eliminate bottom 20%

54. Activity Grid to determine
budget priorities
Increase (↑) Create (+)
What are features/ What are features/
activities/services to activities/services to
increase? introduce?
Reduce (↓ ) Eliminate (-)
What are features/ What are features/
activities/services to activities/services to
reduce? eliminate?
1. Manage conflicts where limited resources should go
2. Solve problem of compounding activities & resources

55. Budgeting for Investments based
on the ‘BCG Matrix’ principles
Market
Potential
Business Performance

56. Measuring Success
KPIs and PMS

57. Before we start…
Which comes first?
2. Strategies -> KPI?
3. KPI -> Strategies?

58. Before we start…
Which comes first?
• Strategies -> KPI?
• KPI -> Strategies?
•already know our priorities, aware of all
strategy options available
•creating something UNIQUE, INNOVATIVE
and DISRUPTIVE e.g. Air Asia
•conducting a business Turnaround e.g. MAS

59. Before we start…
Which comes first?
• Strategies -> KPI?
• KPI -> Strategies?
•want to find out possible strategies,
•determine our priorities first thru selection of
important KPIs;
•growing through ‘normal’ business, not a
Turnaround.

60. Example: Selection of KPIs for BSC
• Customer satisfaction • Win rate (sales closed/sales contact)
• Customer loyalty • Customer visits to the company
• Market share • Hours spent with customers
• Customer complaints • Marketing cost as a percentage of
• Complaints resolved on first sales
contact • Number of ads placed
• Return rates • Number of proposals made
• Response time per customer • Brand recognition
request • Response rate
• Price relative to competition • Number of trade shows attended
• Total cost to customer • Sales volume
• Average duration of customer • Share of target customer spending
relationship • Sales per channel
• Customers lost • Average customer size
• Customer retention • Customers per employee
• Customer acquisition rates • Customer service expense per
• Percentage of revenue form new customer
customers • Customer profitability
• Number of customers • Frequency (number of sales
• Annual sales per turnover transactions)

61. Wrong KPIs
“What is the moral of
the story?”

62. KPIs and Behavior
Before: “Handle Time” Per Call
• Motivated Call Centre staff to transfer callers,
getting rid of complainers, making them
someone else’s problem
• Callers at 45% chance of being transferred
• 7,000 customers each week suffered transfers 7
times or more

63. KPIs and Behavior
After: “Minutes Per Resolution” of a
problem
• Resolution in ONE CALL become the core goal
• Reduced probability of call transfers from 45% to
18%

64. Cause and Effect
Financial
Revenue Cost Margin Cash Flow Asset
Customers Satisfactio
n
Base Share Gain Positioning Adjacent New
Retention Market Business
Internal
Process Investment
Operational Product Customer
Strategy
Excellence Leadership Intimacy
Learning & Growth
Competencies Information Motivation,
Systems empowerment,
alignment

65. Cause and Effect: An Example
Financial Revenue
Market Value Productivity
Growth
Customers /
Distributors Products/ Channel Target
Services Strategies Markets
Internal Supplier & Department External
Process Alliances Operations Involvement
Learning & Technology
Growth Human Information &
Resources Systems & Intelligence
Processes

66. Sample: Other 1st Level KPIs across industries
Financial Services Retail Telecommunications
•Maximize ARPU •Understand customer •Anticipate and prevent churn
•Minimize Churn behavior related to customer despite compensation
•Mutichannel customer conversion, acquisition, and •Increase number of products
retention per customer
service
•Single view of customer •Turn call center information
•Multichannel customer opportunity to up-sell and
experience cross-sell
•Personalized customer •Increase customer
experience satisfaction and loyalty
Hospitality Travel & Leisure Manufacturing
•Personalized customer •Increase customer loyalty •Single view of customers
experience and preference across supply chain
•Maximize share of wallet •Maximize customer revenue •Zero-error order capture
•Player/customer loyalty •Improve service quality and •Streamline opportunity to
•Multichannel customer efficiency cash processes
service •Capture and close sales •Leverage investment in ERP
opportunities and backoffice systems

67. Sample KPIs for Each Discipline
Operational Product Customer Intimacy
Excellence Leadership
• Price • Marketing • Customer
• Selection Knowledge
• Functionality
• Convenience • Solutions Offered
• Zero Defects • # of Successes • Penetration
• Growth • # of Failures • Customer Data
• Learn from key • Customer-success
users focus
• Interdisciplinary
teams
• Pipeline

68. B2B/B2G BSC Matching
Customer/Client/
Government BSC
Financial
Revenue Cost Margin Cash Flow Asset
Customers Satisfaction
Your BSC
Base Share Gain Positioning Adjacent New
Retention Market Business
Financial
Revenue Cost Margin Cash Flow Asset
Internal
Process Customers Satisfaction
Investment
Operational Product Customer
Strategy
Excellence Leadership Intimacy Base Share Gain Positioning Adjacent New
Retention Market Business
Learning & Growth
Competencies Information Motivation, Internal
Systems empowerment, Process
Investment
alignment Operational Product Customer
Strategy
Excellence Leadership Intimacy
Learning & Growth
1. Draw your ‘customer’s’ BSC Competencies Information
Systems
Motivation,
empowerment,
alignment
2. Match their CP/IP with your CP
3. Identify IPs that support/conflict

69. Why we hate Performance Appraisals

70. Complaints about Performance
Management Systems
How we de-motivate our own Talent Pool
• Bias
• Different Standards
• Surprise
• Subjective
• No linkage
• No differentiation
• Secretive
• No follow up
• No control
• No support

71. Complaints about Performance
Management Systems
Systems Problem…
• Different Standards
• Surprise
• Subjective
• No linkage
• No differentiation
• No support
*The rest are ‘people’ problems… to be dealt with in
another time

72. What is Performance
Appraisal used for?
Monitor?
Reward?
No wonder our
Discipline?
employees are
Development?
confused!
Motivation?
Promotion?

73. What is Performance
Measurement used for?
Monitor?
Reward?
Discipline?
Development?
Motivation?
Promotion?

74. Which system should we use?
Trait-based
Behavior-based
Knowledge/Skill based
Activity based
Results-based
Managing Performance = Managing Expectations
What’s YOUR expectation?

75. MBO Standards
A Excellent
B Good
C Average
D Poor
E Useless

76. MBO Standards
A Excellent
B Good
C Average Good
D Poor
E Useless

77. MBO Standards
A Excellent Excellent
B Good Very Good
C Average Good
D Poor Not Good
E Useless Commit Suicide

78. Sample KPIs for Each Market Discipline
Operational Product Customer Intimacy
Excellence Leadership
• Price • Marketing • Customer
• Selection Knowledge
• Functionality
• Convenience • Solutions Offered
• Zero Defects • # of Successes • Penetration
• Growth • # of Failures • Customer Data
• Learn from key • Customer-success
users focus
• Interdisciplinary
teams
• Pipeline

79. Competency Target Setting
1. Initiative
2. Teamwork
3. Problem Solving
4. Leadership
5. Integrity
What’s the problem here?

80. Competency Target Setting
Initiative
2. Minimize problems quickly without needing to
be asked
3. Seeks personal growth and professional self-
development
4. Doing more than is required/expected in a job
5. Seeks new and improved solutions and
approaches to completing assignments
6. Looks for opportunities to help others and team

81. Competency Standards
3 Meets behavioral standards consistently. Is a
good role model for others.
2 Meets behavioral standards some of the
time. Needs improvement.
1 Does not meet behavioral standards.
Require counseling or disciplinary actions.

82. END NOTES

83. Which Company?
American Customer Satisfaction Index (ACSI)
• 64 out of100-point scale: lower than IRS (Tax)
• 2nd last among 30 companies surveyed
• Lowest 5% among 223 companies surveyed
• Bottom 5% of all measured private sector
companies
• 500 million customers
2010 American Customer Satisfaction Index (ACSI)
E-Business Report

84. Which Company?
American Customer Satisfaction Index (ACSI)
• 64 out of100-point scale: lower than IRS (Tax)
• 2nd last among 30 companies surveyed
• Lowest 5% among 223 companies surveyed
• Bottom 5% of all measured private sector
companies
• 500 million customers
2010 American Customer Satisfaction Index (ACSI)
E-Business Report

85. Popularly Unpopular
Popularity
≠
Affection

86. Don’t forget…
“The business of
business is Business”

87. Thank You.
soft copy of slides:
http://totallyunrelatedrandomanddebatable.
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