Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC)

1. Opportunities & Challenges of Strategy Mapping: The case of All Star Foods Canada (ASFC) Fathi ELLOUMI FOB Research Forum – January 27, 2012

2. If I can’t measure it, I can’t manage it, I can’t improve it. FOB Research Forum – January 27, 2012

3. Motivation • Economic uncertainty and business survival • Why do so many business fail? • 6 out of 10 businesses fail < 4 years (Knaup, 2005) • Poor strategy execution • No viable market • Lack of competitive advantage • Competing Head-to-Head with industry leader • Too much leverage • Undercapitalizing the business • Etc. •  A Map is a Must have! FOB Research Forum – January 27, 2012

4. Question/Objective • How to make vision, mission, and strategy statements meaningful and actionable for employees? • Applying BSC as a strategy mapping tool to ASFC to track and monitor capabilities building for future growth and profitability. • Builds on Kaplan (2000, 2002, 2005, 2009), Kaplan & Norton (2000), Schneiderman (1999, 2001), Arveson (2009), and Atkinson et al. (2012) FOB Research Forum – January 27, 2012

5. Strategy • A strategy accomplishes two principal functions: • Creating a competitive advantage by positioning the company in its external environment with resources to support customers better than its competitors • Having a clear strategy provides clear guidance for how internal resources should be used to gain a competitive advantage in the marketplace (Porter , 1996) FOB Research Forum – January 27, 2012

6. Strategy Map Kaplan & Norton (2000) FOB Research Forum – January 27, 2012

7. Strategy and the BSC (Kaplan & Norton, 2000) • A BSC tells the story of the business unit’s strategy • A BSC identifies and makes explicit the hypotheses about the cause-and-effect relationships between: • Outcome measures in the Financial and Customer perspectives • Performance drivers of those outcomes in the Internal and Learning and Growth perspectives FOB Research Forum – January 27, 2012

8. BSC Objectives • Concise statements that articulate what the organization hopes to accomplish • Action phrases • Tell the story of the strategy through the cause-and-effect relationships Schneiderman (1999) FOB Research Forum – January 27, 2012

9. BSC Objectives • Typical objectives found in each of the four BSC perspectives include: (Atkinson et al., 2012) • Increase revenues through expanded sales to existing customers (Financial perspective) • Become service oriented (Customer perspective) • Achieve excellence in order fulfillment through continuous process improvements (Internal perspective) • Align employee incentives and rewards with the strategy (Learning and Growth perspective) FOB Research Forum – January 27, 2012

10. Measures • Provide specificity and reduce the ambiguity that is inherent in word statements • Specifying exactly how an objective is measured will give employees a clear focus for their improvement efforts • Once the objectives have been translated into measures, managers select targets for each measure Schneiderman (1999, 2001) FOB Research Forum – January 27, 2012

11. Targets and Initiatives • Targets establish the level of performance or rate of improvement required for a measure • Should be set to represent excellent performance • Should, if achieved, place the company as one of the best performers in its industry • Initiatives are the short-term programs and action plans that will help achieve the stretch targets established for its measures Atkinson et al. (2012) FOB Research Forum – January 27, 2012

12. ASFC – the case study • ASFC, Canadian subsidiary of ASF Intl, a large manufacturer of salty snack foods. • Due to disappointing sales growth and financial results ASFC underwent a major restructuring of its senior management team in 2009. • The mandate of the new team was to double the size of Canadian operations and generate pre-tax profit greater than 10% within a five year period. • End 2011. Despite the best efforts of the management team, ASFC is still short of achieving that mandate. FOB Research Forum – January 27, 2012

13. SITUATIONAL ANALYSIS SWOT FOB Research Forum – January 27, 2012

14. ASFC Strategy Gap FOB Research Forum – January 27, 2012

15. ASFC Strategic Alternatives The key issues to be addressed to achieve the mandate: • Identification of a market expansion strategy • Improvement in logistics and distribution networks The key strategic alternatives identified were: • Organic Growth • Amalgamate with SSI • Acquire Deli Snack FOB Research Forum – January 27, 2012

16. ASFC Strategy Map - Financial • Companies generate revenue growth by: • Selling new products • Selling to new customers • Selling in new markets • Increased productivity occurs by: • Lowering direct and indirect expenses • Utilizing their financial and physical assets more efficiently FOB Research Forum – January 27, 2012

17. ASFC Strategy Map - Customer • Identify the targeted customer segments in which the business unit competes and the measures of the business unit’s performance in these targeted segments • This perspective typically includes several common measures of the successful outcomes from a well-formulated and implemented strategy: • Achieve customer satisfaction and loyalty • Acquire new customers • Increase market share • Enhance customer profitability FOB Research Forum – January 27, 2012

18. ASFC Strategy Map - Customer • ASFC value proposition? - the unique mix of product, price, service, relationship, and image offered to the targeted customers • Defines the company’s strategy • Communicates what the company expects to do for its customers better or differently from its competitors • Value propositions used successfully by different companies include: • “Best buy” or lowest total cost • Product innovation and leadership • Complete customer solutions FOB Research Forum – January 27, 2012

19. Be a low cost supplier Provide a speedy, easy purchase Offer appropriate selection Deliver consistent high quality • Price relative to competitors • - Customer’s cost of ownership - # returns; $ value of returns- # & % customer complaints- # health incidents ASFC Value Proposition - # on-time delivery- Customer lead time- % perfect orders - product-mix growth- # new product lines- Product mix range Adapted from Atkinson et al. (2012) FOB Research Forum – January 27, 2012

20. ASFC Strategy Map - Process • How ASFC will: • Create and deliver the value proposition for customers • Achieve the productivity improvements for the financial objectives • ASFC critical processes at which it must excel to achieve its customer, revenue growth, and profitability: • Operating processes: day-to-day processes • Day-to-day processes by which companies produce their existing products and services and deliver them to customers • Customer management processes • Innovation processes to develop new products & processes • Regulatory and social processes to meet regulations/BBP Arveson (2009) FOB Research Forum – January 27, 2012

21. ASFC Strategy Map – Learning & Growth • ASFC objectives for the people, systems, and organizational alignment that create long-term growth and improvement • Define the employee capabilities, skills, technology, and organizational alignment that will contribute to improving performance in the measures selected in the first three perspectives • Identify investments needed to improve the skills of employees, enhance information technology and systems, and align people to the company’s objectives Arveson (2009) FOB Research Forum – January 27, 2012

22. ASFC Strategy Map – Learning & Growth • Develop core competencies and skills • Encourage employees to gain a broader business understanding • Build the level of skills • Develop leadership skills • Provide access to strategic information • Engage and empower employees Arveson (2009) FOB Research Forum – January 27, 2012

23. Connecting the Four Perspectives • A strategy map provides a visual representation of the linkages in the four perspectives of the BSC Return on Investment Financial Perspective Customer Perspective Customer Loyalty On-Time Delivery Process Perspective Process Quality Cycle Time Learning and Growth Perspective Employees’ Process Improvement Skills FOB Research Forum – January 27, 2012

24. Opportunities • The benefits from BSC are realized as the organization integrates its new measurement system into management processes that: • Communicate the strategy to all employees and organizational units • Align employees’ individual objectives and incentives to successful strategy implementation • Integrate the strategy with ongoing management processes FOB Research Forum – January 27, 2012

25. Challenges • Poor organizational process for developing & implementing the scorecard: (Atkinson et al, 2012) • Senior management is NOT committed • Scorecard responsibilities do not filter down • Scorecard is treated as a one-time event • BSC treated as a systems project rather than as a management project FOB Research Forum – January 27, 2012