Recently, I was fortunate to join some senior people from diverse sectors for a strategic planning workshop. This session was sponsored by ZAP Technology and one of the aims of the session was to decide what drives a business and the bases of measures of performance that may be applied.
The outcomes of these types of sessions typically differ in detail, but the fundamental activity motivators have on common thread. That is they are hierarchically driven by internal supply chains activity which are each in turn externally influenced.
In our session a constraint was to link core business process in hierarchical internal supply order and assigning one internal and external driver to each. While client processes may haven more than one supply activity only one external diver would apply. With these constraints interesting leveling discussion pursued. The resulting matrix and how we got there I have found since leads to good debate so now I want to share a some of this.
For example in a product based business, new product development may rank very high in the delivery process that drives revenue generating activity. Whereas a category retail business may have advertising ranked much higher. In a service business alliances may be a very strong influence so marketing and sales campaigns may be the primary enabler.
But when we boil it all down we asked what really generates the business revenue? The combination of enablers in the delivery process will help but our session discussion resolved that it was driven by the outcomes of the planning activity.
To understand this more, the full planning process which most organization take seriously, is ultimately about determining direction, and levels of activity needed to achieve the organization strategic objectives This will also including adequate return to satisfy the investor.
What this does in practical terms is set up and agree goals and incentives to employ and motivate the sales force who then goes out to get the business. This in turn determines and drives delivery process objectives and defines the level resources required to met them in a then more detail resource allocation and budgeting process.
Now back to our session as we extended this thinking through the value chain in our typical business generation and delivery processes As we stepped through it we came up with a matrix of internal performance based measures attached to each process and linked to one external influencers that nay constrain or propel the business.
The following table shows what we came up with as a result after several brainstorming and filtering sessions. Without even considering what industry, the session produced range of external influences that typically drive any business. The table here has some types of sensible measure criteria that distilled out this into this simplified list from the group inputs.
This was the outcome:
|External Driver||Basis of Measure|
|Consumer||Capture / Retention|
|Alliances||Growth & Risk|
We discussed this further we noted that For a high volume business retailer, presence and market share are important. In Hotels and Hostility the driver may be alliances with agents in the travel and tourism industry. A specialist or niche business should rank high their measure of competitive capability to ensure they can maintain advantage they may have in this class of business. Whereas a financial services business selling life insurance may have alliances with banks to bundle insurance with their lending offerings.
It was interesting when I repeated the exercise my self with another group later. this was a more detail outcome that gave a similar but different answer. I will post it here as a reference too.
|Driver||Basis of Measure|
|Asset||Risk based return on investment|
|Capability||Market share on channel product|
|Quality of Process integration and Outcomes|
|Sales force capability effectiveness|
|Strategy objectives achievement|
|Quality of data Integration|
|Process outcomes quality|
|Business Process Efficiency|
|Investment||Return On Investment|
|Leadership||Market Share Growth & Asset Risk|
|Leads||New Business Lead conversion|
|New Product Cycle Replacement|
|Supply chain effectiveness|
|Audit & compliance costs|
|Revenue||Item value for sales Unit /channel|
|Unit cost||Supplier benchmark|
I found this quite useful to springboard ideas to get myself on the understanding page of what drives related process activity in terms of the supply chain relationships inside a business. I hope it is useful for you too.