BenchMarking Overview - totten.net

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17 févr. 2014 (il y a 3 années et 3 mois)

74 vue(s)

Benchmarking for
Best Practices

Gemini Consulting



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Objectives


To review how world
-
class companies use benchmarking


To introduce Gemini Consulting’s approach to benchmarking


To review a real case example

and the benefits that benchmarking can
provide to our clients

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Agenda


The Value of Benchmarking


Overview of Gemini Benchmarking Activities


Benchmarking for Best Practices


Benefits of Benchmarking

Case Examples


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Benchmarking Deals with
Uncovering
and
Implementing

Best Demonstrated Practices

A kicker box is always the same width

7.30. It grows vertically. If the text is
one line, it is centered within the kicker; if more than one line, it is flush left.
Use 14 Point Bold Italic type with punctuation.

“The search for industry best practices that lead to superior performance”


Robert C. Camp

“A surveyor’s marker of previously determined position . . . used as a reference
point . . . standard by which something can be measured or judged”

Webster’s Dictionary

“Benchmarking is the continuous process of measuring products, services,
and practices against the toughest competitors or those companies recognized
as industry leaders”

David T. Kearns, Xerox

Benchmarking establishes how much a company needs to improve to be at
world
-
class levels and is a critical component of the process for getting
there.

BENCHMARKING

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60% to 70% of the Largest U.S. Companies Now Have Some
Form of a Benchmarking Program in Place

Benchmarking’s popularity is partially driven by the fact that U.S. companies
must benchmark to win a Malcolm Baldrige National Quality A

U.S. companies must benchmark to be considered for a Malcolm Baldrige
National Quality Award.


Many major companies initiated benchmarking programs in the 1980s:

-
Motorola

-

General Motors

-

Pepsico


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Oryx

-

First Chicago

-

Weyerhaeuser

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Alcoa

-

General Electric

-

Xerox


Certain companies are perceived to be “best in class” along specific dimensions:


Kellogg



Motorola



Xerox



IRS


Alcoa



Leading Japanese
manufacturers


Domino’s Pizza



L.L. Bean



American Express


Du

Pont


General Electric



Milliken


Improving supply chain



Shortening cycle time from
order receipt to delivery


Boosting productivity in
logistics and distribution


Improving billing procedures


Improving safety


Managing organizational
processes


Cross
-
functional processes

Benchmark Target

Focus

Benchmarking Company

BENCHMARKING

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Example: Xerox Used Benchmarking to Face New Market
Entrants from Japan


Issues faced during 1980s


Xerox lost market share to
Japanese competitors


“We did not understand the
severity of the competition

.

.

.
we were arrogant to think that
no one could do anything
better than we could”



David Kearns, Xerox
Chairman

BENCHMARKING


Benchmarking process



Addressed most functions in
value chain:

-
R&D

-
Manufacturing and QA

-
Marketing and product
management

-
Salesforce

-
Logistics and purchasing




Selected best
-
in
-
class
regardless of industry, e.g.:

-
Drug wholesalers

-
Appliance manufacturer

-
Catalogue retailers


Benefits Achieved





Suppliers reduced by
70%



Manufacturing costs
cut by 50%


Quality problems cut
by 60%


Accelerated cycle time


Increased market
share

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Example: GE Believes That Its Own Managers Have Much
to Learn from Other Companies


GE scanned companies to find those that achieved faster, sustainable
growth:

-
Screening out direct competitors and noncomparable companies

-
Selecting a few best
-
in
-
class examples: AMP, Ford, HP, Amex


Benchmarking centered on process and management practices, not just
functions:

-
Emphasizing approaches to optimizing processes (e.g., product introduction, partnering with
suppliers)

-
Helping GE focus on
how

to get things done


GE is using the findings to fine
-
tune its change process:

-
It has now turned its benchmarking learnings into training seminars

BENCHMARKING

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Benchmarking Affords Companies the Opportunity to Make
Step Changes in Their Work Processes

Degree of

Improvement

Time

Benchmarking

Improvements

Internal

Improvements

BENCHMARKING

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Benchmarking Also Improves Your Process Performance
and Competitive Advantage


Industry Average


Company Performance


Company Goal


World Class


Key Indicator

(e.g., Accounts Receivable Outstanding)


Industry Average


Company Performance


Company Goal


World Class


1989

1990

1991

1992

1988

Goal

1995

BENCHMARKING

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As a Result, Companies Experience Strong Financial and
Cultural Benefits


Benefits are both financial . . .

-
“Our program resulted in a 32% reduction in operating expenses per well, per day”

Oryx
Energy

-
“[Benchmarking] led to 50% savings in materials movement expense at several plants”

General Motors

-
“We’ve streamlined many functional areas using benchmarking”

First Chicago

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“Product development time was cut by 50% and total costs by over 60%”

Xerox

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“Global benchmarking led to 50% reduction in selected product development cycles”

AT&T


. . . And cultural:

-
Creates organizational understanding and commitment to change

-
Stimulates interfunctional/departmental dialogue and brainstorming

-
Works as a motivational tool to get employees to stretch

-
Broadens view of employees to include best practices of other industries



The Japanese have transformed benchmarking into a long
-
term strategic
weapon by integrating it into their planning processes.

BENCHMARKING

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Agenda


The Value of Benchmarking


Overview of Gemini Benchmarking Activities


Benchmarking for Best Practices


Benefits of Benchmarking

Case Examples


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Gemini Benchmarking Activities Vary According to the
Issues Our Clients Face

GEMINI BENCHMARKING SERVICES




How do they rate in creating value for their
shareholders?



How do they measure along key indices for
a selected function?



What are the competitor costs to perform a
given function? Overall costs?






How do their functions or processes
perform against those of best
-
in
-
class
companies?

Best Results



Strategic benchmarking




Key indices benchmarking




Cost benchmarking




Best Practices



Functional or process benchmarking

Examples of Issues Our Clients Addressed

Examples of Gemini Activities

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Strategic Benchmarking Addresses the External
Stakeholder’s Assessments of a Company’s Performance

GEMINI BENCHMARKING SERVICES

Average

of Peers

Client

Company A

Company B

Company C

Gap with

Average of


Peers

Gap with

Best of


Peers

P/E Ratio or Market/Book Value

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Key Indices Benchmarking Focuses on Key Indices and
Cost Drivers across Competitors

GEMINI BENCHMARKING SERVICES

Client

Company A

Company B

Company C

Company D

Net Sales

$54

$80

$90

$300

$300

Direct Sales Headcount


18


20


22


70


80

Example: Sales per Salesperson

($ Million/Person)

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14 Point Bold Italic type with punctuation.

Cost benchmarking translates cost drivers into cost estimates to assess
economic advantages or disadvantages.

$3.0

$4.0

$4.1

$4.2

$3.8

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Best Practices Benchmarking Compares Practices and Performances of
Specific Value Chain Functions or Processes

GEMINI BENCHMARKING SERVICES

Market

Planning

Technical

Planning

Product/

Service

Structuring

Operations

Product Delivery

• Risk Assessment

• Information

Customer Service

• Service

• Billings

Sales and

Promotion

Best
-
in
-
Class

Support Activities

Example: Telecom Client Value Chain

Pdt/Svc Development

Pdt/Svc Realization

Pdt/Svc Delivery

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Most Current Benchmarking Efforts Center on Best
Practices

GEMINI ACTIVITIES


Provides a scorecard across current
competitors



Shows how efficiently or effectively a
function is performed



Data collection



Indices
-

or cost
-
based



Asks questions



Highlights the “whats” and “hows”




Shows how best
-
in
-
class companies
perform selected functions or processes



Action



Work practices

based



Answers questions

Let’s discuss best practices benchmarking in more detail.

Best Results

Best Practices

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Agenda


The Value of Benchmarking


Overview of Gemini Benchmarking Activities


Benchmarking for Best Practices


Benefits of Benchmarking

Case Examples


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Effective Benchmarking Must Avoid Usual Pitfalls

BEST PRACTICES

Independent Initiative

vs.

Integrated with Other
Efforts

Staff Consultant Exercise

vs.

Line Ownership

Unfocused

vs.

CSFs in Value Chain

Cost Comparisons

vs.

Multiple Measures

Data Collection

vs.

Action

Direct Competitor Only

vs.

Best
-
in
-
Class

Gemini Approach
to Benchmarking

Common Errors

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Benchmarking for Best Practices Revolves around
Continuous Improvement

BEST PRACTICES

Plan

Benchmarking is an ongoing cycle, not a one
-
shot process.

Implement
Collect
Analyze

Continuous

Improvement

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Deciding What and Whom to Benchmark

Three questions must be answered . . .


What should be benchmarked?


What are the key performance metrics?


Whom should we benchmark?

. . .

By taking the following steps:


Identify the alternatives


Develop selection criteria


Make the selection

BEST PRACTICES

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In Selecting Functions or Processes, We Consider

Major Opportunities for Change


Which functions represent the greatest percentage of costs?


Which functions add the most value to the customers, shareholders, and
internal organization?


Which functions have the most room for improvement?


Which functions can realistically be improved?

BEST PRACTICES: WHAT

There is no set answer to determining appropriate functions to benchmark.

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For Each Selected Process or Function, We Identify
Activities, Practices, and Metrics

BEST PRACTICES: WHAT

How best
-
in
-
class firms

translate customer

requirements into orders

Number of changes per

order

Order entry

How best
-
in
-
class firms

manage priorities and

scheduling

Number of customer

contracts per producer

Key Activities

Best Practices

Metrics

Functional Example:

Special Orders

Process Example:

Sales Agents

The value
-
added
steps in each
function or process

The way best
-
in
-

class firms perform
those steps

The performance
measurements best
-
in
-
class firms use

Definition



type with punctuation.

A key question: how “deep” do we need to benchmark the selected process
function to extract actionable learnings?

Converting sales calls

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Identifying Whom to Benchmark Against Is
Key

Examples: How to determine best
-
in
-
class analogs for a manufacturer:

BEST PRACTICES: WHO

Process or

Function


Sales support


Order entry


Order tracking


Handling customer
inquiries


Transaction
-
based


Multiple orders from
multiple customers


Combination of
technical products and
services


Orders often
customized per
customer requirements


Direct order PC
maker


Dell Computer

Analogous

Industry

Criteria

Key Activities

Analogous

Industries

Best
-
in
-
class

Firms

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Target Companies Offer Trade
-
offs between
Benchmarking Cost and Returns

Internal

(e.g., other

businesses

of

corporation)

Direct

Competitors

Best
-
in
-
Class

(functional

or process


leaders

from

other

industries)

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Use 14 Point Bold Italic type with punctuation.

The selected examples must be accepted as truly comparable by the
organization.

BEST PRACTICES: WHO

Value/Returns of

Benchmarking

Difficulty/Cost of Benchmarking

Low

High

High

Low

Value and Difficulty of Benchmarking

for Different Types of Companies

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Collecting Data

BEST PRACTICES

Internal

(based on readily
available data)


Reviews


Libraries


Surveys


Internal site visits


Interviews

Secondary


Industry reports


Professional
associations


Seminars


Technical journals


Vendors


Academia


Consultants

Primary Sources


Industry surveys


Focus groups


Industry experts


Customer feedback


Site visits


Exchange of
information


Recent competitor
hires

Easier

More Difficult

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Many Gemini Benchmarking Efforts Have Included

Broad Client Participation


Provides oversight and leadership


Updates other executives


Participates in site visits




Coordinate benchmarking effort


Develop plans


Conduct secondary and primary research


Analyze gaps


Help develop implementation recommendations



Provide expert insight into functions and processes


Participate in collecting external data


Participate in gap analysis


Validate benchmarking plan



Participate in site visits


Validate benchmarking plans


Collect internal data


Implement

BEST PRACTICES

Champion





Core Team (full
-
time)





Content Experts
(part
-
time)





Other Participants
(ad hoc)


Client person






2 Gemini consultants


2 client staff people






Several client staff
people


Gemini consultants
and academics




Other team [Gemini
and client] members

Example:

Telecom

Team Member

Role

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Broad client participation usually increases buy
-
in and facilitates the future
change process.

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Analyzing Gaps between Internal and External
Performance Suggests Change Programs

BEST PRACTICES

Try

Harder

Emulate

Leap

Frog

Change

the Process

Four Types of Change Programs

to Meet Best
-
in
-
Class Standards


Vague


Unactionable


Demoralizing


Long
-
run
mediocrity


Band
-
Aid


Dynamic


Creative


Out
-
of
-
industry
(often)


Strategic or
operational
paradigm shift


“Position”
builder

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These Programs and Actions Need to Be

Implemented Quickly and Monitored over Time


Speedy implementation ensures you won’t get left behind


Monitoring allows constant internal and external comparison:

-
Systems must be put in place

-
Someone must own the process


Improvement should be a continuous goal, based on annual recalibrations

BEST PRACTICES

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Agenda


The Value of Benchmarking


Overview of Gemini Benchmarking Activities


Benchmarking for Best Practices


Benefits of Benchmarking

Case Examples:

-
Human Resources Function for a Service Company

-
Corporate Planning Process for an Industrial Company


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A Recent Gemini Assignment Illustrates the Process and
Benefits of Benchmarking


A joint client

Gemini team benchmarked the Human Resources function


Identified potential savings of $31 million (NPV) over the next five years


Recommendations are currently being implemented

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

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Historically, Benchmarking and Competitor Awareness
Had Been a Low Priority at Our Client

Background


“Upper management does not realize the importance of benchmarking”


“It’s unbelievable how little we know about competitors and our
marketplace”


“We don’t even benchmark our competitors, let alone those considered
best
-
in
-
class”

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

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The Benchmarking Team Identified Improvement
Opportunities in Eight Key Activities


Benefits Administration


Outplacement


HR Data


Exempt Staff Employment

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION


Management Employment/Staffing


Management Development/
Succession Planning


Salary and Wage Administration


Communications

Improvement Opportunities



type with punctuation.

We will use staff employment to illustrate the data collection, analysis, and
recommendation phases.

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The Team Visited Four Best
-
in
-
Class Human

Resources Organizations .

.

.


Companies benchmarked:

-
Merck

-
3M

-
GE

-
Xerox


These best
-
in
-
class companies shared three common elements with our
client:

-
A quality orientation

-
The pursuit of a differentiation strategy

-
Recognition of HR’s critical role in implementing strategy


A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

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.

.

. And Conducted In
-
Depth Interviews with Many
Additional Companies

Motorola

American Airlines

MCI

Marriott

The Travelers

Hewlett
-
Packard

United Airlines

IBM

Pepsico

Exxon

PEPCO

Federal Express

DEC


A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

Baldrige winner

Employment

Workforce

Workforce

Workforce

HR status

Employment

Baldrige winner

Management development

Recruiting

Local utility

Baldrige winner

Outplacement




type with punctuation.

Intensive telephone interviewing provided depth and a basis for “apples
-
to
-
apples” comparisons.

Benchmarked

Reason for Inclusion

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The Team Found That World
-
Class Companies Were
Significantly Outperforming Our Client’s HR Practices

HR headcount/jobs filled

1:64

1:107

1:189

1:180

1:150

N/A



Applicant yield

7%

<5%

<5%

10%

12%

6%

<5%


Employment budget per

$920

<$400

$300

$625

$666

N/A

jobs filled

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

Measure

Client

Company

A

Company

B

Company

C

Company

D

Company

E

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We Identified a Variety of Successful HR
Models

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION

Employ

by Major

Site

Applica
-

tions

Screen

Testing

Screen

Interviews

Advertise
-

ments

Referrals

Company

Dis
-

tributed

Services

Cen
-

tralized

Decen
-

tralized

Common

Policies

A

¦

¦

¦

¦

¦

¦

¦

B

¦

¦

¦

¦

¦

¦

¦

C

¦

¦

¦

¦

¦

D

¦

¦

¦

¦

¦

¦

E

¦

¦

¦

¦

¦

¦

F

¦

¦

¦

¦

¦

¦

G

¦

¦

¦

¦

¦

H

¦

¦

¦

¦

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We Recommended Major Changes within the Scope
of a Gemini Transformation Project


Make HR facilitator in hiring process:

-

Manages recruitment channels

-

Keeps applications on file

-
Screens applicants for manager

-
Allows managers to decide who will
work for them



Utilize three major recruitment channels:

-
Advertising/job fairs

-
Employee referrals

-
Site
-
based applications distribution
(centralized processing)



Redesign applicant screening process:

-
Aggressively screen applicants

-
Utilize on
-
site and remote testing



Close several employment offices:

-
Hiring and testing to occur on site or at
job fair locations

A CASE EXAMPLE: HUMAN RESOURCES FUNCTION


Current system is passive, creating unneeded
HR support


New model is consistent with the client’s
notion of empowering managers





Cuts employment office costs


Avoids “perishable inventory” problems


Uses methodologies successfully employed
both inside and outside the client




Eliminates “bricks and mortar” and support
costs of employment
-
related headcount


Moves closer to “best practices” model



Reduces employment overhead:

-
Cuts headcount

-
Reduces corporate facilities costs

Rationale

Recommended Approach

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Aggressive Timeframes Were Set for
Implementation


Develop implementation team


Select and put in place set
-
up team


Begin distribution of applications and
model recruiting sessions

A CASE EXAMPLE


Three months


Four months


Six months



Eight months


Ten months


Phase out employment offices


Complete implementation

Action

Timeframe

(from Benchmarking Date)

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Agenda


The Value of Benchmarking


Overview of Gemini Benchmarking Activities


Benchmarking for Best Practices


Benefits of Benchmarking

Case Examples:

-
Human Resources Function for a Service Company

-
Corporate Planning Process for an Industrial Company


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Another Gemini Assignment Sheds Additional Light

on
the Process and Benefits of Benchmarking


A joint client

Gemini team worked on the planning process for a large
industrial corporation:

-
Two natural work teams (NWTs) looked at the current process

-
A benchmarking team reviewed best practices from other companies


Identified major improvement areas for the corporate and business planning
groups


Recommendations have been and are still being implemented across the
corporation

A CASE EXAMPLE: PLANNING PROCESS



The benchmarking findings energized the group and accelerated change

the NWTs realized that major improvement could be introduced.

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We Visited Several World
-
Class Companies to
Discuss Their Corporate and Business Processes


The benchmarking team visited professionals in more than a dozen U.S.
and European corporations:

-
Half in the natural resources field

-
The other half in diversified industries


These companies met stringent selection criteria:

-
Large size (more than $5 billion in revenues) and organized into several divisions

-
Multinational and well managed (“world class”)

-
Have formal planning processes


Our discussions revolved around:

-
Goals of the planning process

-
Scenario planning and strategy formulation

-
Planning process timetables, strengths, issues, and responsibilities

A CASE EXAMPLE: PLANNING PROCESS

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Findings: Corporate Planning Has Many
Responsibilities

Core responsibilities


Review and oversee planning methodologies and processes


Coordinate and oversee the planning process


Test and challenge divisional plans


Consolidate divisional plans


Run corporate models

Additional responsibilities


Help businesses formulate their strategies and develop plans


Evaluate investment proposals (e.g., M&A opportunities)


Develop macroeconomic and industry
-
specific outlooks


Develop scenarios; coordinate scenario planning


Coordinate and deliver ad hoc studies



Corporate planning is increasingly perceived as an internal consultant, or
“think tank,” organization.

A CASE EXAMPLE: PLANNING PROCESS

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Visits Highlighted That Companies May Have up to

Three Corporate Planning Cycles

A typical planning process









Board approves Operating Plan








Top executives approve Operating Plan







Businesses prepare Operating Plan






Corporate economists revise economic and





industry
-
specific outlooks





Top executives approve Long
-
Range Plan




Corporate Planning tests/challenges Long
-
Range Plan



Businesses develop Long
-
Range Plan


Top executives approve and issue economic and industry
-
specific outlooks

Corporate economists develop economic and industry
-
specific outlooks



Businesses formulate their strategies (at any time during the first half of


the year)

Planning

Cycles

3. Operating

Planning

2. Long
-

Range

Planning

1. Strategy

Formulation

A CASE EXAMPLE: PLANNING PROCESS

J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
1
9
9
2
1
9
9
3
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Findings: Several Corporations Are Modifying Their
Planning Processes


Rely on time
-
consuming, numbers
-
intensive activities










Extrapolate historic performance instead
of “true” strategic thinking














Suffer from top management’s tendency
to “adjust” plans without reviewing
program
-
specific detail



Allow little time for planning

A CASE EXAMPLE: PLANNING PROCESS


Reengineer the planning process to achieve
higher efficiency and effectiveness


Streamline the corporate planning and
business planning organizations


Deemphasize numbers
-
driven nature of
plans



Introduce a strategy formulation cycle
separate from the long
-
range planning
process


Appoint high
-
level planning committees to
focus on major strategic issues


Introduce scenario
-
planning workshops


Eliminate mechanistic approaches to
planning


Decouple long
-
range plans from operating
plans


Encourage top management to overcome its
natural tendency to crunch numbers


Modify the planning schedule (e.g., conduct
strategic planning every two years as
opposed to every year)

Commonly Perceived Weaknesses

How Companies Address Them

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Findings: Companies Increasingly Rely on Outside
Parties for Their Macro
-
Level Assumptions

Interviewees mention several reasons for this trend


“Our corporate economics group was dismantled eight years ago.”

Metal
Co.


“. . . macroeconomic outlooks are bought rather than developed in
-
house.”

Paper Co.


“Our Corporate Economics department engages in high
-
value
-
added
activities such as promoting our company’s image with various
shareholders. We purchase [vendor] economic forecasts, review them, and
modify them as needed.”

Chemical Co.


“It is becoming very expensive for us to maintain our models. . . . We are
constantly looking for more efficient ways of getting the work done.
Outsourcing seems to offer economies of scale for a number of economic
forecasting activities.”

Computer Co.

A CASE EXAMPLE: PLANNING PROCESS

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46

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We Recommended Major Changes, Which the Client
Is Already Implementing




These changes have already been implemented and the client has
experienced that the increased flexibility in its long
-
range plans allows
better, “more strategic” decision making and communications.

Sample of recommendations from benchmarking


Role and responsibility changes:

-
Corporate Planning to test validity of and consolidate divisional plans

-
Businesses to develop stronger, more strategic long
-
range plans, not just budgets


Scenario planning:

-
Corporation to introduce scenario review and sensitivity analysis to major environmental
changes


Outsourcing:

-
Increased use of third
-
party providers (e.g., economic, industry
-
specific think tanks)

A CASE EXAMPLE: PLANNING PROCESS