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Improving Business Performance by aligning Strategy and Organisation Capability. Contents. 1. Organisation Capability. 2. Capability and Performance. 3. Installation Process. 4. Benefits. Organisation Capabilities.

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contents
Contents

1

Organisation Capability

2

Capability and Performance

3

Installation Process

4

Benefits

organisation capabilities
Organisation Capabilities
  • Organisation capabilities are those collective abilities a company requires to execute its business strategy
  • Organisation capabilities are combinations of:
      • Processes & Systems
      • Assets
      • People competencies
      • Structures
      • Measures
      • Culture
  • Misalignment between business strategy and capability invariably destroys value
      • Capabilities help bridge the gap between strategy and implementation by focusing resources and efforts on those actions that count the most
organisation capability and strategy
Organisation Capability and Strategy

Strategic

Position

Strategies

Capability Platform

Unique combinations of processes, systems,

people competencies, assets, structures, measures and culture required to realise strategies and

meet performance objectives

organisation capability and strategy5
Organisation Capability and Strategy

Higher Value Strategy

Strategy

New Capabilities

Existing Capability Platform

A higher value strategy will require a

different capability platform, achieved

through a systematic design and

installation process

contents6
Contents

1

Organisation Capability

2

Capability and Performance

3

Installation Process

4

Benefits

capability and performance
Capability and Performance
  • Realising full value from strategy requires ‘good management’
    • Sound technical-, functional- and people-decisions
    • The right organisation capabilities
  • Misaligned capabilities invariably manifest as:
    • Failure to meet plan
    • Higher than planned cost
    • Unplanned bottlenecks and compromised capacity
capability and performance cont
Capability and performance (cont.)
  • Specific factors which typically cap value creation include:
    • Failure to manage the organisation as a total system
    • Lack of integrated planning and a robust management operating system
    • Sub-optimum cost strategies
    • Frontline inefficiencies
    • Fragmented individual performance management
    • Lack of a rigorous approach to problem-solving
    • Lack of balance between people, output and improvement work
contents9
Contents

1

Organisation Capability

2

Capability and Performance

3

Installation Process

4

Benefits

3 an integrated approach is followed to build the requisite capability and realise full value
3. An integrated approach is followed to build the requisite capability and realise full value

Manage the Project and the Change

(Design criteria, Transformation Plan)

  • Align the Organisation to the Strategy
  • Core Process
  • Operational Processes
  • Management Structure
  • Implementation
    • Service levels
    • Operating systems
    • Work of the role
    • Leadership principles
  • Install a Management
  • Operating System
  • Forecasting
  • Reconciliation
  • Gap-closing
  • Alignment
  • Improve high-value Processes
  • Define Projects
  • Target improvement of
  • costs and volume
  • Install an Individual Performance Management System
  • Cascading the plan, Roles,
  • Accountabilities, Reviews,
  • Development

Transfer the Process Improvement

Capability

  • Optimise the Frontline
  • Operating efficiencies
  • Operations structure
  • Supervisor competencies
  • Improvement Method
project and change management
Project- and Change Management

Process Objectives:

  • Develop a shared picture of the future
  • Agree on the design criteria and objectives
  • Position the project to achieve this sustainably
  • Install a strategic management process
  • Shape and develop the culture
  • Manage the dynamics of the change process

Deliverables:

  • Shared view of the future
  • Requisite transformation plan
  • Strategic management process
  • Coaching process to implement the outcomes
project and change management process
Project and Change Management Process
  • Project Set-up
  • Strategic Management Process
  • Shared Picture of the Future
  • Design Criteria
  • Future Organisation State
  • Transformation Plan and Process
  • Communications Plan
  • Criteria
  • Timeframes
  • Process & Feedback
  • Stakeholders
  • Change Management
  • Establish conditions for
  • effective change
  • Integration of actions
  • Coaching of employees
  • Symbols of change
aligning the organisation to the strategy
Aligning the Organisation to the Strategy

Process Objectives:

  • Improve the operating capability and operating performance of the core process to meet current and future performance objectives

Deliverables:

  • ‘As is’ Core Process map and a clearly defined future Core Process map
  • Value Drivers and defined future Operating Capability
  • Key Operating Philosophies (KOPs)
  • Optimum inputs, outputs & operating boundaries
  • Clearly defined core- and enabling work
  • Clearly defined Strategic Operational Units (SOUs)
  • Immediately available cost opportunities
aligning the organisation to the strategy cont
Aligning the Organisation to the Strategy cont.
  • Optimum level III & II Core- and Enabling processes
  • Service Level Agreements
  • Optimum management structure (removal of non-value adding roles)
  • Structure implementation
      • Clear roles, accountabilities & performance indicators
      • Clear leadership principles
manage the total system through the core process
Manage the total system through the Core Process
  • Match market requirements and operating capability
  • Best position bottlenecks
  • Control variance at source to avoid fixing it downstream
  • Determine what is core work and what is not
  • Build the organisation around the requirements of the core process!
value loss can occur across core process
Value-loss can occur across core process

High variability across the process

Misalignment of the core

process capability and the

market (capacity, quality, cost)

Services do not meet the needs of the core

Market

Resourcing

Extraction

Processing

Logistics

Enabling processes

Lack of

horizontal integration

and subsequent sub-optimisation

Ineffective mechanisms

to close gaps in

performance

align the organisation to the core process
Align the organisation to the Core Process

Core Process

Operating Philosophies Boundaries Value Drivers

Inputs Outputs Core Work Service Requirements

Aligned to Core Process

Operating Philosophy

III Processes

II Processes

  • Management Structure
  • Optimum
  • Process-based
  • Accountability & Focus
  • Implementation
  • Work of Role
  • Service Levels
  • Operating Systems
  • Leadership Principles
position roles to address the right complexity of work
Position roles to address the right complexity of work

VI

VI

V

V

M

A

T

C

H

IV

IV

  • Complexity increases:
  • More variables
  • More intangible
  • Results further into
  • the future

III

III

II

II

I

I

Complexity of

problems faced

Complexity of work

optimise how plans are executed at the frontline
Optimise how plans are executed at the frontline

Process Objectives:

  • Aligns operations work to the Core Process requirements
  • Optimise capital, people, work practices and consumables
  • Establish a rigorous operating system to execute plans and address non-conformances
  • Equip teams with the tools to continuously improve processes
  • Establish effective supervision

Deliverables

  • Optimised capital, people, work practices and consumables
  • Efficient operations structure
  • Rigorous, day-to-day operating system
  • Improved processes
  • Supervisory competencies
establish the most efficient way to execute work at the frontline
Establish the most efficient way to execute work at the frontline

Identify the current Processes

Create Task & Equipment Inventory

  • Identify and quantify Improvement Opportunities
  • Work practices
  • Equipment use
  • Consumables
  • Define optimum Operations Structure
  • Operators
  • Teams
  • Supervisors

Establish a rigorous Frontline Operating System

Equip team with a Frontline Improvement Method

Develop Supervisor Competencies

the frontline operating system
The Frontline Operating System

Business Context

Long & Medium Term Plan

Short Term Plan

Reconciliation

&

Gap closing

Reconciliation

Operation

Plan

(volume/quality)

Shift

Management

Shift

Handover

Operation

Report

Process

Management

  • Safety
  • Quality
  • Productivity
  • Resources
  • Issues

Operation

Schedule

  • Task Assignment
  • Performance
  • Monitoring
  • Feedback
  • Checklist

Frontline

Frontline

  • Estimate:
  • Capacity
  • People (hrs)
  • Skills
  • Equipment
  • Materials
  • Information
  • Energy
  • Training

Suppliers

Customers

Input

Control

Process

Control

Output

Control

the frontline improvement method
The Frontline Improvement Method

Training in the Improvement Method

Step 1

Step 2

Step 3

Step 4

Select a process to improve

Inputs

Outputs

  • Follow the Improvement Method
    • Follow process guidelines
    • Use the Improvement Toolbox

Repeat steps 2 - 4

  • Implement the improvements identified, e.g.
  • Safer way to do tasks
  • More efficient work practices
  • Changed procedures, etc.
a method to remove process non conformances identified through the frontline operating system
A method to remove process non-conformances identified through the Frontline Operating System

Non-conformance

Process Performance

Acceptable limits

Actual

Non-conformance

Time

fragmented planning leads to sub optimisation
Fragmented planning leads to sub-optimisation
  • Establish a vertically and horizontally integrated Management Operating System (MOS)
  • Integrate plans across the core process and link long-term objectives to frontline execution
  • Focus on the right timeframes
  • Manage value beyond the budget
  • Create line of sight between parts and overall performance
the planning process is part of the management operating system mos
The Planning Process is part of the Management Operating System (MOS)

Strategic Plan

Reconcile

Integrated

Plan

(Long, Medium, Short)

Frontline

Operating

System

Cascade the

right context

Operational Planning

an integrated management operating system
An integrated Management Operating System

Integrated Planning Process

Reconciliation

Reconciliation

Reconciliation

Reconciliation

Strategic

Planning

Long-term

Planning

Medium-term

Planning

Short-term

Planning

Frontline Daily

Review

Reflected in

Budget

Context

Context

Context

Context

  • Major strategic actions
  • Reviewed quarterly
  • Sets context for LTP
  • Exco
  • 3-5y Rolling plan
  • Major capital
  • Major shuts
  • Reviewed
  • annually
  • Sets context for MTP
  • Exco
  • 18m Rolling plan
  • Forecast & reconciliation
  • Critical performance
  • measures
  • Gap-closing actions
  • Sets context for STP
  • Exco & RM
  • Reviewed
  • monthly
  • 6w Rolling plan
  • Forecast & reconciliation
  • Critical performance
  • measures
  • Schedules
  • Gap-closing actions
  • Sets context for daily
  • review
  • RM & level 3s
  • Daily planning &
  • reconciliation
  • Level 3 & 2s

Exco

Meetings

  • Monday meeting
  • Production temperature
  • Corporate issues
  • Actions and progress
  • Exco

Operational Planning

(proposing objectives to Integrated Planning and executing agreed Medium- & Short-term Plans)

Mine operations Maintenance (Fixed & Mobile) Processes Geology Services Labour Skills

individual performance management system
Individual Performance Management System

Process Objectives:

  • Implement an integrated performance management system to effectively manage the performance of individuals and teams

Deliverables:

  • A system that integrates
    • Cascading of the business plan
    • Roles, Accountabilities, KPAs & KPIs
    • Recruitment and development (management, leadership & specialist competencies)
    • Key policies and procedures
    • Remuneration and reward
individual performance management methodology
Individual Performance Management Methodology

Cascading the Plan

Work of the Role &

aligned KPA’s & KPI’s

Performance Feedback &

Performance Review

Business Context &

Performance Objectives

Scorecards

Reward System

Development System

Recruitment System

process improvement capability
Process Improvement capability

Process Objectives:

  • Develop a process improvement competency in the organisation (DMAIC)
  • Develop the ability to manage the improvement in an ongoing capacity

Deliverables

  • A core of employees trained in a rigorous method for process improvement ready to address more high-value projects
  • A set of tools and mechanisms to manage improvements in an ongoing capacity
  • Formally linked to the Management Operating System
improvement work is linked to each role and to the management operating system mos
Improvement work is linked to each role and to the management operating system (MOS)

Select high-value

projects ($)

Identify &

implement

solutions

Transfer the

DMAIC

capability

Closing gaps in

performance against plan

Integrate into

work of the role

Link to the

Management

Operating

System (MOS)

contents32
Contents

1

Organisation Capability

2

Capability and Performance

3

Installation Process

4

Benefits

4 benefits of the installation
4. Benefits of the installation
  • Business-wide focus on the execution of strategy and closing gaps in performance
  • Significant improvement of current business performance
  • Significant improvement of operational reliability
  • A strategically focused and integrated approach to ongoing performance improvement and capability development
  • A focus on initiatives to develop the capabilities that count the most
  • $ benefits that far exceed the cost