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Alignment Report  (X-­‐ray)     Avrora  Software  A/S   September  25,  2013       Table  of  contents:   Summary  ........................................................................................................................................................  2   Sources  of  Financial  Performance  .......................................................................................................  3   Comment  ...................................................................................................................................................  3   Value  Proposition  –  TODAY  ....................................................................................................................  4   Comment  ...................................................................................................................................................  4   Value  Proposition  –  FUTURE  .................................................................................................................  5   Comment  ...................................................................................................................................................  5   The  Market  Situation  .................................................................................................................................  6   Comment  ...................................................................................................................................................  6   Achieving  alignment  and  strategic  consistency  ............................................................................  7   Global  Process  .........................................................................................................................................  7   Deliverables  ..............................................................................................................................................  7   Time  Schedule  .........................................................................................................................................  8   Methods  and  Legal  Notes  ........................................................................................................................  9   Methods  ......................................................................................................................................................  9   The  six  sources  for  financial  performance  .............................................................................  9   The  Value  Proposition  TODAY  and  TOMORROW  ...............................................................  9   The  Market  Situation  .......................................................................................................................  9   Productivity  potential  .....................................................................................................................  9   Legal  Notes  ............................................................................................................................................  10   The  ValueMaker  Productivity  Potential  Research  Project  .....................................................  11   The  objectives  of  the  Research  Project  ......................................................................................  11   Partners  in  the  research  project  ...................................................................................................  11   Conflict  of  interest  .................................................................  Error!  Bookmark  not  defined.           Number  of  questionnaires  submitted:   10   Number  of  respondents:   7   Response  rate:   70%  

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Summary The  average  levels  of  alignment  are  shown  in  Table  1  below.     Table  1.  Average  alignment  in  the  group  of  respondents    

The table  is  listing  how  each  member  of  the  group  is  aligned  with  the  answers   provided  by  the  person  indicating  that  he/she  is  the  CEO.     With  a  total  average  degree  of  alignment  of  67%  the  company  reaches  a  score  of  C:     Cat.   Interval   Label   A   90-­‐100%   Well  aligned   B   80-­‐89%   Almost  aligned   C   60-­‐79%   Misaligned   D   40-­‐59%   Very  Misaligned   E   20-­‐39%   Extremely  misaligned   F   0-­‐19%   Completely  misaligned     The  lowest  degree  of  alignment  (57%)  is  found  in  the  perception  of  how  the   company  is  going  to  serve  its’  customers  in  the  FUTURE.  The  highest  degree  of   alignment  (75%)  is  found  in  the  perception  of  how  the  company  is  serving  its’   customers  TODAY  and  the  Market  Situation,  although  this  level  is  also  in  the  C   category  labeled  “Misaligned”.     Increasing  the  level  of  alignment  in  the  group  represents  a  productivity   improvement  potential  of  approximately  33%.     The  following  persons  were  invited  to  participate,  but  didn’t  respond  within  the   deadline:  Andy  Torrence,  Mary  Bogatti  and  Tony  Svensson     The  responses  of  the  missing  respondents  could  pull  the  average  state  of  alignment   in  both  a  positive  and  a  negative  direction.  They  will  however  have  no  impact  on  the   current  level  of  alignment  in  the  group  surveyed.  

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Sources of  Financial  Performance   The  levels  of  alignment  on  the  sources  of  financial  performance  are  shown  in  Table  2   below.     Table  2.  Alignment  on  the  priority  of  the  six  sources  for  financial  performance    

  The  level  of  alignment  on  the  Sources  for  Growth  questions  is  on  average  70%.   There  are  some  fundamental  levels  of  misalignment  in  the  group.  

Comment

Each source  of  financial  performance  has  a  specific  set  of  associated  action  items.  It   is  not  possible  to  pursue  all  six  sources  simultaneously.       Example:  It  is  not  realistic  to  have  an  ambition  of  penetrating  new  markets  and   having  to  reduce  cost  at  the  same  time.  It  is  not  realistic  to  have  an  ambition  of   pursuing  new  customers  and  having  to  reduce  cost  at  the  same  time.  It  is  not   realistic  to  have  an  ambition  of  developing  new  products  and  having  to  reduce  cost   at  the  same  time.     A  management  team,  which  is  having  different  set  of  priorities,  will  be  pulling  the   company  in  different  directions.      

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Value Proposition  –  TODAY   The  levels  of  alignment  on  the  Value  Proposition  TODAY  are  shown  in  Table  3   below.     Table  3.  Alignment  on  the  value  proposition  of  the  company  TODAY1    

The average  level  of  alignment  in  the  group  is  75%.  The  group  must  be  considered   “Misaligned”  on  how  to  provide  value  to  the  customers  TODAY.  

Comment There  is  a  very  strong  relationship  between  a  company’s  value  proposition  and  the   areas  requiring  management  focus.  Misalignment  in  a  team  on  the  question  of  value   proposition  will  cause  the  individual  team  member  to  use  resources,  which  are  not   synchronized  with  the  overall  direction  of  the  company.     Example:  A  high  focus  on  product  leadership  requires  focus  on  product  development   and  innovation,  which  is  not  the  case  if  the  primary  focus  is  on  customer  intimacy.  A   vendor  will  typically  have  a  focus  on  Product  Leadership,  while  a  reseller  will  focus   on  customer  intimacy  and  a  distributor  on  Operational  Excellence.        

                                                                                                              1  The  percentages  for  the  CEO  show  how  he/she  is  assigning  priority  to  the  three  value  elements  in  the  value  

proposition TODAY.  The  percentages  are  calculated  using  a  value  of  10  for  the  1st  priority,  5  for  the  2nd  priority   and  1  for  the  3rd  priority  in  the  5  times  3  sets  of  questions  asked.  The  degree  of  alignment  is  calculated  using  the   same  scoring  system.  

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Value Proposition  –  FUTURE   The  levels  of  alignment  on  the  Value  Proposition  in  the  FUTURE  are  shown  in  Table   4  below.     Table  4.  Alignment  on  the  value  proposition  of  the  company  in  the  FUTURE2    

The average  level  of  alignment  in  the  group  is  57%,  which  is  a  category  D  score.  The   group  must  be  considered  “Very  Misaligned”  on  how  to  provide  value  to  the   customers  in  the  FUTURE.  

Comment There  is  a  very  strong  relationship  between  a  company’s  value  proposition  and  the   areas  requiring  management  focus.  Misalignment  in  a  team  on  the  question  of  value   proposition  will  cause  the  individual  team  member  to  use  resources,  which  are  not   synchronized  with  overall  direction  of  the  company.     Example:  Primary  focus  on  operational  excellence  requires  attention  to  internal   operational  processes  and  vendor  performance  in  order  to  manage  levels  of  quality,   average  manufacturing  cost  and  competitive  pricing.  A  product  leadership  position   provides  the  company  a  price  premium  taking  the  pressure  off  manufacturing  cost,   however  innovation  then  becomes  highly  critical.  A  Customer  Intimacy  biased  value   proposition  requires  focus  on  individual  customer  relationships,  but  then  eases  the   focus  on  innovation  and  operational  process.      

                                                                                                              2  The  percentages  for  the  CEO  show  how  he/she  is  assigning  priority  to  the  three  value  elements  in  the  value  

proposition TODAY.  The  percentages  are  calculated  using  a  value  of  10  for  the  1st  priority,  5  for  the  2nd  priority   and  1  for  the  3rd  priority  in  the  5  times  3  sets  of  questions  asked.  The  degree  of  alignment  is  calculated  using  the   same  scoring  system.  

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The Market  Situation   The  levels  of  alignment  on  the  perception  of  the  market  situation  are  shown  in  Table   5  below.     Table  5.  Alignment  on  the  levels  of  alignment  on  the  perception  of  the  market   situation3  

The average  level  of  alignment  in  the  group  is  75%.  The  group  must  be  considered   misaligned  on  the  perception  of  the  market  situation.  

Comment The  market  situation  and  the  development  in  the  company’s  market  share  is   determining  for  the  initiatives  and  actions  required  to  move  the  company  forward.   Misalignment  on  the  perception  of  the  market  situation  will  cause  managers  to   spend  energy  and  allocate  resources  to  activities,  which  are  addressing  conflicting   purposes.     Example:  The  management  focus  (and  skills)  of  a  company  with  decreasing  market   share  should  be  completely  different  from  a  situation  with  increasing  market  share.      

                                                                                                              3  The  scoring  used  is:  Increase  Substantially:  5,  Increase:  4,  Stay  the  same:  3,  Decrease:  2  and  Decrease   Substantially:  1.  The  Market  Share  is  the  actual  share  the  last  12  months  over  the  previous  12  months.  

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Achieving alignment  and  strategic  consistency   What  is  the  next  step  after  performing  the  X-­‐ray  alignment  test?     TBK  Consult  recommends  a  swift  and  lean  process  with  the  following  objectives:     1. Review  the  X-­‐ray  report  and  ensure  full  alignment  of  the  key  strategic  issues   2. Map  the  perception  of  importance  and  performance  on  the  15  key   management  areas   3. Review  the  perception  maps  and  ensure  alignment  on  strategy  execution   4. Define  those  actions  which  will  yield  the  highest  return  in  the  short  run  and   in  the  long  run     TBK  Consult  will  provide  a  senior  Strategy  Consultant  who  will  facilitate  and  guide   the  management  team  through  the  process  and  assist  by  the  interpretation  of  the   outcome  including  the  definition  of  an  action  plan.  

Global Process The  strategy  review  process  can  be  illustrated  as  follows:   Alignement  Survey   (X-­‐ray)  

Full questionnaire   (1  hour)  

Strategy dekinition   (1/2  day)  

Workshop (1  day)  

Deliverables

TBK Consult  facilitates  the  process  and  the  workshops  and  documents  the  decisions   made  during  the  project.     TBK  Consult  delivers  the  following  documents:     § Preliminary  alignment  report  (PDF  format  before  the  ½-­‐day  workshop  (the   X-­‐ray  report)  and  PPT  format  at  the  ½-­‐day  workshop)   §

A PDF  report  to  each  participant  with  his/her  answers  to  the  perception  of   importance  and  performance  on  the  15  key  management  areas  

§

A PDF  report  to  the  leading  manager  with  all  answers  from  the  full   perception  survey  

§

A PDF  report  with  the  main  results  and  conclusion  from  the  full  perception   survey  

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Time Schedule  

TBK Consult  currently  needs  6  weeks  lead-­‐time  from  the  project  has  been  awarded   to  TBK  Consult  till  we  can  begin  the  activities.         The  time  schedule  is  illustrated  in  the  Gant  chart  shown  below.     Activity/Weeks 0       1   2   3   Project  assigned  to  TBK   Preliminary  alignment  survey   ½  day  workshop   Full  questionnaire   1-­‐day  workshop  

 

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Methods and  Legal  Notes     Methods   The  methods  used  in  this  report  are  based  on  simple  statistical  principles.    The   respondents  have  been  asked  a  series  of  questions.  Each  answer  is  assigned  a  value.   The  answer  provided  by  the  person  who  has  identified  himself  as  the  CEO  is  used  as   the  reference  point  for  calculating  the  deviation,  which  are  interpreted  as   misalignment.  The  same  answer  is  assigned  the  same  value  for  all  respondents.   Separate  scoring  systems  are  used  for  the  different  section  of  questions,  as  they   need  different  types  of  answers.   The  six  sources  for  financial  performance   A  simple  priority  rating  from  1-­‐6  has  been  used.  The  difference  has  been  calculated   as  the  absolute  difference  to  the  rating  provided  by  the  CEO.   The  Value  Proposition  TODAY  and  TOMORROW   Five  sets  of  three  questions  have  been  asked  to  calculate  the  composition  of  the   three  value  elements  of  a  value  proposition.  A  simple  ranking  from  1-­‐3  has   generated  values  of  10,  5  and  1.  The  sum  of  the  values  has  been  used  to  calculate  the   actual  value  proposition  TODAY  and  in  the  FUTURE.     The  Market  Situation   A  scale  from  1-­‐5  has  been  used  for  rating  the  four  Market  Situation  questions.   Increase  Substantially:  5,  Increase:  4,  Stay  the  Same:  3,  Decrease:  2  and  Decrease   Substantially:  1.  The  difference  between  “5  and  4”  and  “2  and  1”  may  be  subject  to   interpretation.    However,  we  believe  that  a  group  of  people  working  closely  together   on  a  daily  basis  should  demonstrate  the  ability  to  judge  fundamental  changes  in  the   environment  fairly  consistently.     Productivity  potential   We  genuinely  believe  that  the  potential  productivity  gain  in  improving  the  level  of   alignment  is  exponential  with  no  real  maximum  from  alignment  level  0  to  alignment   level  100.  For  calculation  purposes  we  define  the  maximum  potential  as  100%      A  total  improvement  of  50%  is   assumed  attainable  below  80%   alignment,  while  improving   from  80%  to  100%  is  assumed   releasing  the  remaining  50%.     The  productivity  improvement   potential  estimation  is  based  on   common  sense  considerations   and  has  currently  not  been   validated  by  scientific  research.    

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However, to  avoid  being  accused  for  applying  a  bias  in  the  conclusions  in  this  report   we  have  used  a  linear  relationship  between  degree  of  alignment  and  productivity   potential.  

Legal Notes   TBK  Consult  and  our  partner  ValueMaker  own  the  right  to  the  data  provided  and  can   use  the  data  for  research,  reporting,  sales  and  marketing  purposes  in  so  far  as  the   identity  of  the  company  and  the  individual  respondent  is  not  compromised.     The  report  is  based  on  the  data  as  the  respondents  have  provided  them.  Invitation   has  been  submitted  to  a  list  of  persons,  which  has  been  provided  by  the  companies   participating  in  the  survey.  The  deadline  for  answering  the  questionnaire  has  been   set  to  six  working  days  from  the  day  of  submission.  Notifications  have  been   submitted  to  non-­‐respondents  on  the  3rd  day  and  on  the  5th  day.  The  survey  has   been  closed  on  the  6th  day  and  the  report  generated.     The  report  has  been  manually  generated  based  on  the  survey  data.  ValueMaker  and   TBK  Consult  assumes  no  other  responsible  for  any  errors  made  than  to  correct  these   and  re-­‐issue  the  report.        

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The ValueMaker  Productivity  Potential  Research  Project   Based  on  more  than  175  alignment-­‐consulting  projects  in  the  period  2009-­‐13,  TBK   Consult  and  ValueMaker  have  observed  substantial  degrees  of  misalignment  in  all   type  of  companies  and  between  companies  and  their  strategic  partners  (such  as   resellers,  implementation  and  service  partners).       Misalignment  is  defined  as  substantial  unrecognized  differences  in  the   perception  of  management  priorities  and  strategic  elements  in  a  management   team.         The  degree  of  misalignment  has  been  a  surprise  for  top  management  in  all  of  the   alignment  consulting  projects  conducted  and  the  identification  of  the  status  has   enabled  immediate  improvement  initiatives.  Even  in  situations  where  organizations   had  recently  completed  a  strategy  definition  process  did  we  register  substantial   levels  of  misalignment.     Misalignment  represents  an  immediate  source  for  the  release  of  organizational   energy  and  productivity.  Moving  the  differences  in  the  perception  of  management   priorities  and  strategic  elements  in  a  management  team  from  being  unrecognized  to   being  recognized  enables  a  process  of  aligning  conflicting  activities  and  pursue  more   optimal  allocation  of  attention  and  resources.  The  release  of  energy  and  productivity   bound  by  misalignment  requires  very  little  investment  and  can  normally  be  utilized   using  the  organizations  existing  resources.  Fixing  misalignment  probably  represents   the  most  immediate  opportunity  for  rapid  productivity  improvement  in  any   organization.  

The objectives  of  the  Research  Project  

The objectives  of  the  research  project  are  as  follows:     1. To  test  if  the  combination  of  web  based  survey  platforms  and  balanced   scorecard  principles  can  provide  a  reliable,  inexpensive  and  fast  “x-­‐ray”  of   organizational  misalignment   2. To  test  if  misalignment  is  a  common  phenomenon  in  most  companies.4     3. To  test  the  degree  of  misalignment  in  the  average  organization   4. To  identify  ways  of  measuring  the  relationship  between  misalignment  and  a   productivity  improvement  potential  

Partners in  the  research  project   The  research  project  is  defined  and  managed  by  TBK  Consult  and  ValueMaker.   Invitations  to  participate  in  the  research  project  are  distributed  by  ValueMaker  and   their  partners.  ValueMaker  provides  the  basic  survey  frameworks  while  the   partners  under  the  supervision  of  ValueMaker  generate  the  individual  reports.                                                                                                                       4  The  results  from  the  175+  projects  may  have  been  biased  by  the  suspicion  of  management  that  the   organizations  did  suffer  from  degrees  of  misalignment.  

The ValueMaker  Alignement  Check  

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Profile for TBK Consult

ValuePerform X-ray Report  

Example report of company productivity potential

ValuePerform X-ray Report  

Example report of company productivity potential

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