In organizations, does having a Business Driver Matrix bind outcomes based thinking and help plan and control resources that deliver them?

imageRecently, 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
Investors Asset Performance
Product New Business
Consumer Capture / Retention
Presence Market share
Supplier Competitive Reliability
Competitor Competitive Capability
Alliances Growth & Risk
Standards Compliance Disclosure

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
  Market share
  Quality of Process integration and Outcomes
  Sales force capability effectiveness
  Process effectiveness
  Strategy objectives achievement
  Quality of data Integration
  Process outcomes quality
  Process efficiency
  Business Process Efficiency
Investment Return On Investment
Leadership Market Share Growth & Asset Risk
Leads New Business Lead conversion
Product Unit cost
  New Product Cycle Replacement
Profit Expense contribution
  Supply chain effectiveness
  Audit & compliance costs
  Contribution recovery
Retention churn rate
Revenue Item value for sales Unit /channel
  Business Generated
  Margin
  Customer Growth
  Delivery timeliness
  Customer Retention
  Business Growth
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.

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