GB2363223A

GB2363223A - Analysis method

Info

Publication number: GB2363223A
Application number: GB0026109A
Authority: GB
Inventors: Margaret Mary Kenny; Graham Kevin Keeny
Original assignee: STRATEGIC FACTORS Pty Ltd
Current assignee: STRATEGIC FACTORS Pty Ltd
Priority date: 1999-10-25
Filing date: 2000-10-25
Publication date: 2001-12-12
Also published as: CA2324120A1; DE10052894A1; GB0026109D0

Abstract

An analysis method, includes determining key stakeholders of an entity 12, and determining, independently, objectives for an entity based on each key stakeholder 14, and strategic factors for each key stakeholder 16.

Description

2363223 AN ANALYSIS METHOD The present invention relates to an analysis

method and a system and computer 5 program for executing the method.

Strategic analysis of entities, such as business, commercial or government organisations, has proved to be of critical importance in determining the performance of an entity. Various analysis systems and methods have been developed which define and 10 operate on parameters of an entity, normally in a sequential manner, to generate tools for use by the entity. For example, most management systems reside on top of accounting systems or other systems of an organisation to gather relevant data for analysis externally. Most systems also execute only one of three measurement components and are operated on separately without direct links or references between the components. The three 15 components are strategic analysis, strategy formulation, and performance measurement. The three components are also treated as different areas of operation and are normally controlled by different personnel. It is desired to provide more efficient and accurate, or at least a useful alternative, analysis method and system.

20 In accordance with the present invention there is provided an analysis method, including:

determining key stakeholders of an entity; and determining, independently, objectives for an entity based on each key stakeholder, and strategic factors for each key stakeholder.

Preferably, the method further includes determining behavioural outcomes required by the entity from each key stakeholder, and translating said behavioural outcomes into said objectives.

30 Preferably the method includes generating key performance indicators from said objectives, and generating targets based on said key performance indicators. Preferably the method further includes generating a strategy for said entity. Preferably said strategy includes positions for each strategic factor based on said targets. A strategy may be generated for each key stakeholder.

5 Advantageously, the method may include generating key performance indicators from said strategic factors. The method may then include generating for each key stakeholder targets on said key performance indicators.

Advantageously determining said objectives and said strategic factors, as well as 10 related steps, may be executed in parallel.

The present invention also provides an analysis method, which includes:

recording leading indicators based on outcomes for a key stakeholder required of an entity; 15 recording current indicators based on the outcomes required by the entity from the key stakeholder; and reporting results periodically for the leading and current indicators for the entity.

Advantageously, the current indicators for a key stakeholder may be related to or 20 based on the leading indicators for the key stakeholder. Also, the leading indicators of a key stakeholder may be related to or based on the current indicators of at least one other key stakeholder.

The present invention also provides a system for executing the steps of the above 25 methods. The present invention also provides a computer program including code for executing the steps of the above methods.

Preferred embodiments of the present invention are hereinafter described, by way of example only, with reference to the accompanying drawings, wherein:

30 Figure I is a block diagram of an analysis system connected to a communications network; I Figure 2 is a flow diagram of a first preferred embodiment of an analysis method; Figure 3 is a second preferred embodiment of an analysis method; Figure 4 is a third preferred embodiment of an analysis method; Figure 5 is a flow diagram of steps of the method of Figure 4; and 5 Figures 6 to 13 are displays generated by interfaces of the system.

The analysis methods described below can be executed on a computer system 2, as shown in Figure 1. The computer system 2 may comprise standard hardware, such as a PC, workstation or distributed computers connected using a communications network, such as 10 a LAN or the Internet. The system may include hardware components, such as ASICs, developed specifically to execute all or part of the steps of the method. All or part of the steps of the method may also be executed by computer program code stored on a storage media 4 of the computer system 2 in one or a number of different locations. The computer system 2 may be accessed directly to execute the analysis methods or can be accessed 15 remotely via a communications network 6, such as the Internet, using an interactive terminal 8, such as a desktop PC, a laptop or mobile phone.

An analysis method 10, as shown in Figure 2, is used to generate a strategy for an entity. The entity may be any business, organisation (government or private), firm, 20 company, department or business unit, or individual. The method begins at step 12 at which key stakeholders for the entity are determined. The key stakeholders are other entities on whom the entity, which is the subject of the analysis, depends for success. Examples include customers, employees, owners, suppliers, individuals, a marketing department or government officials, such as a Minister or Secretary of State. The key 25 stakeholders may be determined on the basis of the type of entity being analysed or in response to selections made by a user of the method or a combination of both. The method then enters two parallel analysis streams 14, 18, 20 and 22, and 16, as shown in Figure 2.

In the first stream, at step 14, a set of behavioural outcomes are determined, being 30 those which are required by the entity from each key stakeholder. Examples include:

(i) to get potential customers to become current customers; (ii) to get current suppliers to supply products that meet specifications;

(iii) to get current employees to innovate; and (iv) to get distributors to deliver in full and on time.

5 The behavioural outcomes can be generated based on a predetermined relationship between the type of entity and the key stakeholders determined at step 12. Determination can be executed with or without input from or selection by a user. - In the first stream, at step 18, the behavioural outcomes are translated into 10 objectives for the entity. The objectives dictate matters to be performed by the key stakeholders and which can be assessed by the entity. For example, the behavioural outcome "to get potential customers to become current customers" translates to the objective "to increase customer base and grow revenue". The behavioural outcome "to get current suppliers to supply products that meet specifications" translates to the objective "to

15 increase compliance to specifications".

Once the objectives are determined, measures are assigned to the objectives, at step 20, to produce key performance indicators for the objectives. A key performance indicator (KPI) is a measure based, in this instance, on an objective. For example, if the objective is 20 to increase the customer base and grow revenue, a KPI may be dollar revenue from new customers. Following generation of the KPIs in step 20, targets are generated on the KPIs at step 22. The targets specify values for the KPIs such as dollar amounts for revenue, figures for customer numbers and percentages for compliance and customer satisfaction.

For example, a target may be one million dollars revenue for new customers.

In the second stream, strategic factors are generated, at step 16, for each key stakeholder. The strategic factors are factors which the entity needs to master in order to achieve success. They are also the decision criteria used by the key stakeholders to assess an entity's performance. Unlike objectives, performance on strategic factors is undertaken 30 by the entity and assessed by the key stakeholders. The strategic factors vary depending on the type of key stakeholder, e.g. customers, employees, owners or principals. For example, in the case of the customers of a convenience store, the strategic factors are: location, hours of operation, customer service, range of goods, store presentation, and price. For the example of employees of a fund manager, the strategic factors are: rewards, working conditions, organisation reputation, job security, leadership, and personal and professional 5 growth.

The method 10 concludes at step 24 by generating a strategy for each key stakeholder to meet the targets. The strategy includes position values for each strategic factor generated at step 16, and the position values are generated based on the targets 10 established in step 22. For example, if a target is "reduce absenteeism by 10 percent" and two strategic factors are "rewards" and "working conditions" then position values are assigned to these two strategic factors to achieve the target. The position values may be selected from a number of different alternatives for each strategic factor or selected by the system. For instance, the position value assigned to "rewards" may be "increase to 15 benchmark level (to be determined)", "introduce new rewards system", or "increase salary by 5 percent" (i.e. more of a target value) and the position value assigned to "working conditions" may be "decrease to benchmark level (to be determined)" or "decrease hours by 3 percent" (i.e. more of a target value).

20 The strategy generated by the analysis method 10 is particularly advantageous as it defffies clear strategic factor position values for each stakeholder and the method is able to arrive at the strategy values by parallel streams which consider separately the perspective of the entity and the key stakeholders.

25 A second analysis method 30, as shown in Figure 3, is used to establish targets based on strategic factors, as well as on the objectives for the entity. The method 30 is the same as the first analysis method 10 except a step 32 is added to the second processing stream, and step 34 replaces steps 22 and 24. In step 32 measures are assigned to the strategic factors to produce KPIs for these strategic factors. For example, if the strategic 30 factor is product range, then the KPIs may be percentage rating against a product range benchmark, and percentage satisfaction with product range based on a current customer survey.

Following generation of the KPIs at step 32, KPI targets are generated at step 34 by 5 assigning, for example, dollar or percentage figures to the KPIs of steps 20 and 32. The KPI targets provided at step 34 are based on both strategic factors and objectives. For example, a target may be a 90% satisfaction with the product range based on a current customer survey.

10 The analysis method 30 is particularly advantageous as it provides clear targets based on KPIs which allow an entity to clearly monitor performance and success, and also uses an efficient parallel analysis.

The methods 10 and 30 can also be combined by adding step 24 to the second 15 method 30 to also generate a strategy, if desired.

A third analysis method 50, as shown in Figure 4, is executed by a reporting computer program of the system 2 that is able to report results on the performance of an entity over a desired period of time on a regular basis. The method 50 may produce, for 20 example, daily, monthly or yearly results. The method is based on the steps 52 and 54 of recording and storing indicators after a key stakeholder has first been selected at step 51. The indicators in the first step 52 are based on the outcomes for the key stakeholder and required from the entity. The indicators are therefore similar to and can be related to the strategic factors determined in step 16 of the previous methods and can in fact be, if 25 desired, the key performance indicators of step 32, which are readily susceptible to measurement and can be tracked effectively. The indicators are measures and metrics, such as lead time in number of days, capital growth in dollars, salary in dollars, percent satisfaction, etc. The measurements obtained for the indicators can be reported as results for leading indicators for the entity at step 56.

At step 54, indicators are recorded and stored that are based on the outcomes required by the entity from the key stakeholder. The measures stored can be reported as results for current indicators for the entity at step 58. Again, these indicators are those which can be tracked over a period of time efficiently and measured. The indicators are 5 therefore related to the outcomes determined at step 14 and can in fact be, if desired, the key performance indicators of step 20 of the previous methods which are readily susceptible to measurement and can be tracked effectively. The current indicators may therefore be such measures as revenue in dollars, fimds provided in dollars, percentage of orders in full and on time, etc.

The leading indicators and the current indicators can be allocated targets and the results reported at steps 56 and 58 compare the actual measured results to the corresponding targets. The results reported at steps 56 and 58 can be done so over a period of time to show a number of results for each indicator.

The third analysis method 50 can also be configured to advantageously have a distinct relationship between the leading and current indicators for different key stakeholders. Significantly, the current indicators of one key stakeholder can be used to determine the leading indicators of another key stakeholder. This is illustrated in the 20 example of Figure 5. For example, the method 50 may execute the steps as shown in Figure 5 where the leading indicators for employees determined at step 60 are used as a basis for determining the current indicators for employees at step 62. The current indicators at step 62 can then be used to determine leading indicators for customers at step 64, suppliers at step 66 and for owners at step 72. The leading indicators of step 66 are 25 subsequently used to determine the current indicators for suppliers of step 68. The current indicators of step 68 can then also be used to determine the leading indicators for customers at step 64 and owners at step 72. The leading indicators for customers are used to determine the current indicators for customers, at step 70. These indicators can then be used to determine the leading indicators for owners at step 72 which in turn can be used to 30 determine the current indicators for owners at step 74. The use of a set of indicators to derive another set of indicators may be a one to one, one to many or many to one relationship between indicators of the sets.

All of the analysis methods 10, 30 and 50 are able to operate on an entity which, as 5 mentioned previously, may be any component within an organisation. For example, the entity may be a department, a state office, or an individual. Instead of obtaining initial measures at the bottom of a organisation's hierarchy and then building up through the hierarchy, the analysis methods allow measures for entities to be linked in an upwards and downwards fashion, or even horizontally, as desired. It has proven particularly efficient to 10 use the methods to cascade downwards through an organisation's hierarchy and be able to integrate various components of an organisation, such as partners and suppliers, in a relationship structure which is meaningful, cohesive, and readily susceptible to analysis.

For example, analysis may begin with the Chief Executive Officer (CEO) of a company and then cross linked downwards through the organisation's structure to the organisation's 15 different departments and ultimately to individual employees in the organisation.

All of the variables used in the methods 10, 30 and 50, such as key stakeholders, behavioural outcomes, objectives, strategic factors, targets, position, key performance indicators (KPIs), and leading and current indicators are maintained and defined in a 20 database 4 of the analysis system 2 and values are assigned based on data held in the system for various types of the variables. The parameters and values are assigned to the variables and can also be adjusted, if desired, by users of the analysis system. Other variations are also possible. For example, data for the key stakeholders may be held in a separate database with their leading and current indicators, together with actual periodic 25 results and give desired targets for those results. The system and methods 10, 30 and 50 are particularly advantageous as they provide an efficient architecture for clearly evaluating an entity.

To illustrate execution of the analysis methods, the analysis system 2 is described 30 below operating on an example entity, being the Sydney Health Service. The organisation has a hierarchical structure and the system 2 allows the entities of that structure to be treated independently and the relationship between them displayed. For example, as shown in Figure 6, the organisation has a marketing department and a finance and administration department that are essentially separate entities, while the retail store is an entity within the marketing department and a retail sales assistant is an entity within the 5 retailstore.

Stakeholders for the organisation are also entered into the database with a hierarchical relationship between them. For example, as shown in Figure 7, the right-hand side of the screen provides a list of examples of key stakeholders that can be used to 10 formulate key stakeholders defined on the left-hand side of the screen for the database 4. Selected key stakeholders can be dragged from the right-hand side of screen into the lefthand side of the screen or vice versa to adjust the key stakeholders and their relationships for the organisation. Once the key stakeholders are defined, for each key stakeholder behavioural outcomes can be selected, and then the system is able to link these outcomes 15 into objectives and assign measures to the objectives, as shown in Figure 8. Similarly, and in parallel, strategic factors can be determined for each key stakeholder, outcomes defined for the factors and then measures assigned to the factors, as shown in Figure 8. The measures can be designated as KPIs.

20 A display convention is adopted by the system 2, whereby key stakeholders are designated by a blue circle icon, behavioural outcomes and objectives, that can be used to form current indicators, are designated by a yellow diamond icon. Strategic factors and any defined outcomes, that can be used to form leading indicators, are represented by a green diamond icon. Any measures that are assigned and that can be used to produce KPIs 25 are assigned blue triangle icons. This notation is particularly useful in defining linkages between the various parameters of the analysis system. For example, Figure 9 shows an interface of the system which allows the linkages between the key stakeholders and their strategic factors, objectives and measures to be readily displayed and the linkages shown.

The linkages can then be displayed for any given entity within the organisation, for 30 example the key stakeholders of the marketing department are displayed in the interface of Figure 10. This interface allows objectives on behavioural outcomes, measures and strategic factors to be selected, ie the ticked items, and transferred to another entity, in this case the retail store. Once the items are selected they are automatically linked in the database 4 for the entity maintained by the database 4. The details associated with particular measures can also be displayed using the system, as shown in Figure 11, where 5 details for a selected measure 'S revenue, retaiP are accessed from the database. The interface shows the objective and behavioural outcomes that the measure is based on and how the measure is derived by adding up, or aggregating, through the hierarchy of an entity. In other words, all of the measures of the entities in the linked hierarchy can be added up according to the links. The measurement interval for the measure can also be 10 selected, such as monthly, and the entities used to derive the measure and their linkages, are displayed. For instance the example shows how individual retail stores and retail sales assistants of the entity are linked.

Using the measures for each key stakeholder as key performance indicators, targets 15 are assigned, as discussed previously, and results can be determined over measurement periods, so as to produce a scorecard for the entity, as shown in Figure 12, which provides figures for each key stakeholder. The scorecard includes an asterisk to designate the leading indicator measures for each key stakeholder. For example % of results achieved in Performance Agreement" is a leading indicator of 1 revenue, government grants and 20 contracts". The scorecard provides the targets for each KPI and the results on each KPI with an indication in a column, such as a tick or a cross, indicating whether the result achieved the target or not. The date of the last reading for measurements is displayed, together with the measurement interval. In addition, the scorecard display can be adjusted, as shown in Figure 13, to display the outcomes and objectives or the strategic factors and 25 definitions that each relevant key performance indicator is based on.

Many modifications will be apparent to those skilled in the art without departing from the scope of the present invention as herein described with reference to the accompanying drawings.

Claims

1. An analysis method, including:

5 determining key stakeholders of an entity; and determining, independently, objectives for an entity based on each key stakeholder, and strategic factors for each key stakeholder.

2. An analysis method as claimed in claim 1, including determining behavioural 10 outcomes required by the entity from each key stakeholder, and translating said behavioural. outcomes into said objectives.

3. An analysis method as claimed in claim 2, including generating key performance indicators from said objectives, and generating targets based on said key performance 15 indicators.

4. An analysis method as claimed in claim 3, including generating a strategy for said entity based on said targets and said strategic factors.

20 5. An analysis method as claimed in claim 4, wherein said strategy includes positions for each strategic factor based on said targets.

6. An analysis method as claimed in claim 4, including generating a strategy for each key stakeholder.

7. An analysis method as claimed in claim 3, including generating key performance indicators from said strategic factors.

8. An analysis method as claimed in claim 7, including generating for each key 30 stakeholder targets on said key performance indicators.

9. An analysis method as claimed in claim 8, wherein determining said objectives and said strategic factors and the respective key performance indicators is executed in parallel.

10. An analysis method as claimed in claim 3 or 7, wherein said entity includes related 5 entities with respective key stakeholders, and the method includes defining linkages between the entities and aggregating measures for the entities based on the linkages, said measures including said key performance indicators.

11. An analysis method as claimed in claim 10, including determining a measure for a 10 key performance indicator of an entity on the basis of measures obtained for key performance indicators of key stakeholders of child entities within the hierarchy of said entity, as determined by said linkages.

12. An analysis method as claimed in claim 8, including:

15 recording measures of said key performance indicators for said strategic factors as leading indicators; recording measures of said key performance indicators for said objectives as current indicators; and reporting results periodically for the leading and current indicators for the entity.

13. An analysis method as claimed in claim 12, wherein the current indicators for a key stakeholder are related to or based on the leading indicators for the key stakeholder.

14. An analysis method as claimed in claim 12, wherein the leading indicators of a key 25 stakeholder are related to or based on the current indicators of at least one other key stakeholder.

15. An analysis method, which includes:

recording leading indicators based on outcomes for a key stakeholder required of an entity; recording current indicators based on the outcomes required by the entity from the key stakeholder; and reporting results periodically for the leading and current indicators for the entity. 5 16. An analysis method as claimed in claim 15, wherein the current indicators for a key stakeholder may be related to or based on the leading indicators for the key stakeholder.

17. An analysis method as claimed in claim 15, wherein the leading indicators of a key 10 stakeholder may be related to or based on the current indicators of at least one other key stakeholder.

18. An analysis system having components for executing the steps of the analysis method as claimed in any one of the preceding claims.

19. A computer program stored on a computer readable storage medium having code for executing the steps of the analysis method as claimed in any one of claims I to 17.