In order to improve the capability of dynamic management and execution monitoring, CCAFM has constructed" Scenario Based Strategy Planning Information System" and "Enterprise Strategy Implementation Assurance Information System", which could provide "all in one information solution, integrating project designing and systematic implementation.
The strategy management advisory service at CCAFM includes strategy development planning, strategy implementation assurance system, business model construction and improvement.
The professional information system includes "Strategy Cycling Planning Information System" and "Strategy implementation assurance information system".
The Challenge of Enterprises Strategy Management
1. The first embarrassment---planning slower than changing
The modern enterprises have recognized the importance of strategy. However, many enterprises have encountered such embarrassment when conducting strategy planning and implementation: The strategy cost too much (human resource, materials, etc), mostly could not bear the market testing. Most of strategies could not be suitable for the current environment, when less half process implemented.
Then, how to establish the adaptation mechanism of strategy in the changing market environment.
2. The second embarrassment-Left the strategy, without implementation.How many middle-level management could describe the core content of enterprise strategy and instruct the daily operation decision with it? How about the grassroots staff?
It is regretted that the strategy usually stays on the paper or mystification, just becoming the slogan in the top level management and core advisory (usually include the external consultant)level. The ordinary staffs are hardly to connect the daily work with the strategy of enterprise. The strategy, only could be the decoration, staying on the paper, hanging on the wall for showing?
3. The third embarrassment---the deviation during implementation process: a miss is as good as a mile.
During the dynamic market environment, many enterprises originally hoping instruct operation goal with the strategy target, Can be recognized between the actual performance and corporate strategic objectives more or less deviation. However, these deviations are caused by some apparent reasonable reasons.
The real performance could be far away from the original strategy year by year. The strategy target could only be a slogan, neither for instruction of actual operation, nor for performance evaluation. Are the deviation unavoidable between the strategy and the implementation process? How we could treat and manage the deviation may appear?
The traditional static strategy management method is unable to meet the need of modern enterprises in the adaption of industry, enterprise and environment.
1. The industry adaption
The static strategy planning does not adapt to the new industry and the industry in critical changing situation.
The static strategy management method is suitable for industries with simple influence factors, and following some regular development paths. These methods are not suitable for some new industries facing high uncertain external environment and industry structure changing instantly, meanwhile, play little effect for some traditional industries in critical adjustment period.
2. The enterprise adaption
Static strategic planning does not reflect the ability of internal resources, changes in business strategies.
The static strategy planning and management methods, on the basis of internal steady simple resource capability, conduct the analysis and management activities. Because of the frequent application of modern finance tools, the complexity and variability of enterprise structure and resource capability have increased greatly. Therefore, the adaption foundation of enterprise strategy has been changed relatively.
3. The adaption of environment
With the influence of market globalization and enterprise multi-nationalization, the external environments of enterprises have been changing increasingly, which have brought great influence for static strategy environment analysis method.
The establishment of static strategy planning is usually based on the prediction and hypothesis of external environment. Once the prediction deviation or the changing of hypothesis, the adaption of strategy could be affected. The fast changing feature of the current economic trend has made the operation environment vary increasingly. The traditional methods of strategic planning assumptions of the analysis can not meet the needs of enterprise development.
Strategy Management New Thought at CCAFM
Many new industries and new business models have appeared with the economic development. The strategy management at these enterprises need new thinking method and planning logic to adapt the feature of specific fields.
The economic and industry environment of domestic enterprises are becoming more complex and variable. The strategy in these situations need to be more predictable, orientable, meanwhile, more flexible.
The diversification of resource and tools for the enterprise development, which have increased the possibility of high speed development, even leap growth. The effective strategy management must spare enough development space based on the identification of enterprises core resource and capability.
The influencing factors of enterprise development become more complex and variable increasingly. Enterprises must recognize and deal with these varieties during the strategy implementation process, timely discover and correct derivation between the planning and real implementation to ensure the effectiveness of the strategy.
The Strategy and Implementation Assurance Solution at CCAFM Advisory
According to the environment feature of modern enterprises, the dynamic strategy management system developed and implemented by CCAFM, could provide practical strategy management system through the establishment of dynamic response mechanism to the external and internal environment factors.
To solve the problems during the strategy implementation process, the strategy implementation assurance system, lining with the strategy target deconstruction, process control and result feedback, connect the strategy target with daily operation activities closely, to ensure the accomplishment of strategy target.
Dynamic strategy management system:
Scenario analysis--Emphasizing the game relationship between the planning and environment
Flexible planning--- Based on the possibility of various scenarios, establish the relative strategy planning target and method, adjust the strategy planning flexibility.
Dynamic adjustment---Summary the strategy implementation process regularly, correct the deviation happened in the process of implementation
Strategy implementation assurance system
Organization Assurance----Correct the organization and controlling model according to the strategy position and development direction
Target deconstruction---Through the strategy map, the system decomposes the strategy target into the specific position, to ensure the implementation of strategy.
Process monitoring---According to the strategy decomposed variable, conduct process tracking through budget and management report, timely recognize and correct the deviation.
Evaluation and feedback---Connect the result of strategy deconstruction variable implementation with the performance evaluation, instruct the next plan.
Dynamic Strategy Management System
Be similar with the traditional strategy management, the dynamic strategy management system begin with strategy analysis of environment and internal factors to conduct strategy planning. The dynamic strategy management system has fully considerred the game relationship of the external environment uncertainty and enterprise strategy planning, which could play critical role for the truly dynamic strategy planning.
The dynamic monitoring and adjustment during the strategy implementation process is the necessary mechanism of the strategy truly movement.
The typical characters of CCAFM dynamic strategy management system includes the following: driven by external and internal strategy influencing factors, ensuring the valid path selection during the enterprise development, circulating correction and improvement mechanism.
The start of dynamic strategy management----Strategy scenario analysis
The aim of strategy scenario analysis is to identify and analyse the uncertain factors, which may bring critical influence for the strategy implementation, analysing the possible changing direction and make relative measure.
Conduct strategy planning on the adequate analysis basis:
Firstly define the enterprise value system, which includes enterprise mission, vision, strategy target and the core capabilities. The enterprise value system is the motive power and basic principle of strategy planning and every decision.
With the guidance of value system, the strategy planning could decide the enterprise strategy based on the strategy analysis, what business to engage, who is the competition rival, how to compete, what steps should be taken
Further, establish the position strategy to support the enterprise operation strategy, guide the internal resource capability improvement on the basis of operation strategy.
The hierarchy of the enterprise strategy planning and main contents
According to the covering scope, the strategy planning includes enterprises(or group)strategy and business strategy, solving relative problems.
The enterprises or group strategy decide the value position, business combination selection, strategy development position of different business, the strategy requirement and target of main management post and position of controlling models for different businesses. The enterprise strategy planning is selection process of doing what, not to do, how to do and the accomplishment level.
Business strategy is the process of specific strategy selection of sub-business in the internal enterprise business combination, deciding the total business operational target and capability building target. On the basis of enterprise strategy, business strategy could further define the business operation target and basic methods, analyse the accomplishment risk of enterprise strategy during the business operational process.
Strategy Rolling Planning and dynamic adjustment
At the stage of dynamic strategy planning stipulation, the total strategy position and basic development idea could be Illustrated. The detail strategy method and step targets could be decomposed description. The measure and specific target of the planning in the later stage only be conducted the directive estimation.
Through the staged evaluation and analysis of the strategy environment and the actual implementation process, combining with the actual practice, the next specific measure and target could be conducted necessary adjustment and correction.
The strategy dynamic adjustment mechanism establishs the response action to the external environment and the staged implementation situation during the strategy carrying out process, avoiding the failure of strategy because of "out of date". Ensuring the enterprises strategy, the dynamic adjustment mechanism could supplement the necessary flexibility for the establishment of strategy target and measure, make the dynamic correction of strategy measure and stage target during the implementation process to ensure the accomplishment of the final strategy target. Through the regularly feedback and evaluation, the mechanism could provide the chance to discuss and improve the strategy planning to decrease the strategy risk.
"6S" Management System---Strategy Implementation Assurance System
Strategy implementation assurance system, beginnning with strategy target decomposing , is a circulating system, consisting with target decompose, process controlling and result evaluation. The system could ensure the implementation of strategy mission in the operational level and finally support the accomplishment of the entire strategy target.
S1---Strategy Deconstruction and Business Unit Position System
Strategy deconstruction and business unit position, the start of strategy implementation assurance system, based on corporate strategy, explains the different business units of responsibility and the value of the contribution.
On the basis of strategy map, the deconstruction of dimension targets in different business unit should consider the following factors: the strategy position of specific business, the current development stage, the development trend of the latest 3 to 5 years, the investment percentage in the business unit, equity share. Design and use enterprise characters target decomposition model to simulate the contribution of each sub-division, the ultimate goal of business. That is the operation target of every business unit.
"Destruction" and "construction" strategic goals positioning system consider business unit value created enterprise institution resources occupied some investment return, meanwhile, respect the object difference in various industries and different development stage, to ensure the fair target requirement.
The strategy target deconstruction and business unit position are not only the tools and measure of target decomposing, but also the effective method to define the enterprise resource distribution and application.
Through the deconstruction of the final strategy target, the development paths of the strategy target(Strategy Map) is defined from the level of finance, operation and internal resource.
The strategy map is the bridge connecting the strategy target, organization unit and post responsibility, also the critical step of the strategy implementation.
1.Describe the strategy accomplishment paths through strategy map
The strategy map is the first step to explain the enterprise strategy target and promote the strategy target transmitted to the operation target.
2.The strategy map could contribute to conduct the strategy deconstruction and strategy implementation
The strategy map describes the connotation of strategy target in different levels and logic relations.
Through the explanation of strategy map, the strategy target is decomposed into the specific performance target, which is descriptive, supervisory and measurable, promoting the establishment of specific practical method and finally connect with organization unit, even the specific post, helping the strategy implementation.
3.The exporting result of strategy map
Variable: the four levels of strategy map contain 15 to 30 connective balanced scorecard variables. The strategy map describes four dimensional index need to be completed before the accomplishment of the entire strategy target. These indexs could define the causality relationships among these critical variables, describe the paths of strategy establishment and accomplishment.
Target value: As a dynamic management work, the target value has added dimension of the time and process. The target value defines the steps should be improved, and the time needed.
Monitoring evaluation foundation: the strategy target become the specific goals connecting with operation management work through the description of strategy map. The further deconstruction of these goals become the foundation of organization budget , the foundation of organization unit and post evaluation.
S2---Budget Management System
The budget management is the important tools, ensuring the scheduled operation and development, revealing the relationships between the foundational operation and the final target through the budget planning and deconstruction.
The design of budget management system includes the following:
1. Budget sheet development
The budget sheet development should reflect the character of specific operation management and the management position for different business units.
The budget sheet could select the critical variables after considering the specific character of business. The depth and detail of different business variables deconstruction are depended on the enterprise management position. The budget deconstruction of strategy core business could cover all the operation processes. The other business may only care about the operational result.
2. The budget planning method and process designing
The budget planning method includes the designing as following: the hierarchy of budget planning, the obtainment of critical variables, budget planning period, organization management assignment and process, and the organization implementation method of budget planning.
On the basis of annual budget, the budget planning could conduct quarterly or monthly cycling budget for parts of variables. This method could make the budget more accurate. The budget could be the effective tools of planning operation.
3. The budget implementation, feedback method and process designing
Mainly solving the following problems: How to monitor and feedback to the budget implementation result. How to analyse or evaluate the implementation deviation.
What is the influence of the budget implementation to the next operation management activities? The budget supplement or adjustment mechanism could increase the budget flexibility. However, the budget management also need to keep enough rigidity and seriousness.
S3---Management report system
The management report is the important information supporting method to ensure the planning control, reflecting the direction and key point of planning control.
The management report system is the internal system, collecting and analysing the dynamic operation management information. The management report system is the necessary parts and analysis foundation of dynamic monitoring the implementation process of the strategy and budget target.
The management report mainly concern the important information during the report period.
The industrial economy policy is the major business of change? Industry competition way how? Any new competitors appear? What is the development strategy of the competition in this perod? What is the core of the characteristics and main customers suppliers and the mode of operation of the preferences.
How is the operation situation of the core business? How about the performance variable and budget comparing with the same period of the past years? What are the main factors influencing the performance result?
How is the operation effectiveness of the management system during the reporting period? What problems have appeared? Any management improvement method taken?
Other critical problem:
Include the process of critical investment project, critical joint-venture and cooperation project, business model changing situation, the market portion changing, the main customers changing, the management controlling of main risk.
S4---Risk Management and Management Audit System
Risk management and internal management audit system can be monitored from operation and the management level, identify and correct deviation to ensure the healthy development of the enterprise.
Risk Management System could conduct the recognization, quantitification, evaluation of enterprise operation risk, ensure the possible loss within the bearable scope through defining the risk boundary, and control measure, to guarantee the sustaining development.
The risk management system mainly includes:
1. Risk recognition. Every enterprises may face different risk. The first step of risk management is to recognize the main risk and select the relative controlling method.
2. Risk measure and evaluation, conduct quantification and evaluate the risk in the respect of capital and asset through relative model and tools.
3. Risk monitoring Monitor the information relating with risk level. When the risk increased to the warning level or dangerous level, the relative controlling arrangement or controlling methods could be triggered.
Internal management audit is, besides of the enterprise internal finance audit, the audit and evaluation system to the compliance and validness of management system operation. The internal management audit could ensure the validness of management regulation, measure and process, guarantee the reasonable, smoothly, high efficient, security of enterprise operation.
The internal management audit, through the method of report and material selection and review, audit conversation and interactive testing, could analyse the strategy implementation, process management, plan controlling, recognize the possible problems and come up with the improvement suggestions.
S5---Organization Unit Performance Evaluation System
With the guidance of balanced scorecards, we could establish the whole enterprise performance evaluation system. The evaluation of budge variables is one of the important parts. This system could integrate the budget and performance management together.
The business unit performance evaluation system, based on the budget, is the evaluation method of business unit completion and the possible influence to the whole strategy development target. The business unit performance evaluation system should contain the following characters:
1. Strategy oriented
The business unit budget and implementation process provide the foundation of evaluation. However, the critical point of evaluation should be defined based on the strategy development emphasis, reflecting the organization orientation. For example, the scale variable could take more weight than the profit variable during the period of market portion increasing.
2. The reasonable flexibility
The budget is the estimation of future situation. The deviation between the actual situation and budget should be permitted. However, the relative methods should be taken to recognize the external and internal factors influencing the deviation. The evaluation should emphasize the internal influencing factors.
3. Application: the relative main parties
The performance of the whole business unit is the achievement of all the business unit staffs. However, the different posts may bring various effect to the final performance. The supervisor of the business unit play the main responsibility of the business performance. The business unit performance should reflect the individual performance of the core post.
S6---Professional Manager Evaluation and Motivation
The key points of professional manager evaluation:
1. Combination of the results and process
Evaluation of professional managers should consider not actual performance, but also should consider technological factors, that is the process of target finished, in order to avoid the loss of the interests of the enterprise short-term behavior.
2. The combination of qualitative and quantitification
The professional managers should not only be responsible for the finance quantitative variables, but also responsible for the team building and the implementation of enterprise management methods. Therefore, the evaluation of professional manager should combines the "soft and hard variables"
3. Career planning
Professional manager is the backbone of the enterprise management, the key position of the operation between management level, reduce the decision makers also actually engaged in operation management measures. The motivation of professional managers should emphasize long-term career development space and the way of integration of enterprises, target and personal goal, get "win-win" effect, through training and guidance for.
4. The comprehensive motive method
To improve the motivation effect and cost controlling, the motivation of professional managers should contain monetary, position promotion and training, avoiding the simple monetary driven force.