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Lifecycle Lifecycle Performance Performance Professionals Professionals Sigma measures a given process by its average performance and the standard deviation (or variation) of this performance, aiming to reduce the occurrence of defects in a given process to a level of “Six Sigma” outside the norm; no more than 3.4 times per million. Standards of Performance: Mutually agreed upon criteria used to describe how WELL an employee must perform, written to reduce subjective judgment. Strategy: Strategy is the way an organization seeks to achieve its vision and mission. It is a forward-looking statement about an organization’s planned use of resources and deployment capabilities. Strategy becomes real when it is associated with: 1) a concrete set of goals and objectives; and 2) a method involving people, resources and processes. Strategic Management System - Describes the use of the Balanced Scorecard in aligning an organization's short-term actions with strategy. The Strategic Management System is often accomplished by cascading the Balanced Scorecard to all levels of the organization, aligning budgets and business plans to strategy, and using the Scorecard as a feedback and learning mechanism. Strategic Resource Allocation - The process of aligning budgets with strategy by using the Balanced Scorecard to make resource allocation decisions. Using this method, budgets are based on the initiatives necessary to achieve Balanced Scorecard targets. Strategy map: A specific version of a strategy plan that adheres to the Balanced Scorecard methodology. Strategy maps depict objectives in multiple perspectives with corresponding cause and effect linkages. Strategy plan: A visual representation of an organization’s strategy and the objectives that must be met to effectively reach its mission. A strategy plan can be used to communicate, motivate and align the organization to ensure successful execution. Supply Chain - The supply chain represents the flow of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Many organizations are looking to supply chain optimization as a means of gaining significant competitive advantages. The Internal Process Perspective of the Balanced Scorecard often contains performance measures pertaining to supply chain performance. Target: A target is the defining standard of success, to be achieved over a specified time period, for the key performance indicators associated with a © 2009 Lifecycle-performance-pros.com All rights reserved 72
Lifecycle Lifecycle Performance Performance Professionals Professionals particular strategic objective. Providing context to make results meaningful, targets represent the organization’s “stretch goals.” Theme: Descriptive statement representing a major component of a strategy, as articulated at the highest level in the Vision. Most strategies can be represented in three to five themes. Themes are most often drawn from an organization’s internal processes or the customer value proposition, but may also be drawn from key financial goals. The key is that themes represent vertically linked groupings of objectives across several scorecard perspectives (at a minimum, Customer and Internal). Themes are often stated as catchy phrases or “buzz” words that are easy for the organization to remember and internalize. Example: “Top Innovator,” “Customer Intimate,” “Operationally Excellent” “Processes/Tools,” “Thinking,” “Content,” “Pipeline” (I/T Organization). Threshold: A means of describing and/or depicting the performance gap in easily understandable terms. Examples of threshold methods include “lettergrade” (A/B/C/D/F) and “traffic-light” (green/yellow/red). Values: Representing an organization’s deeply-held and enduring beliefs, an organization’s values openly declare how it expects everyone to behave and are often embedded in its vision. Value proposition or discipline: Describes how an organization intends to differentiate itself in the marketplace and what particular value it will deliver to customers. Many organizations choose one of three “value disciplines” ― operational excellence, product leadership, or customer intimacy ― articulated by Treacy and Wiersema in “The Discipline of Market Leaders.” Vision: A concise statement defining an organization’s long-term direction, the vision is a summary statement of what the organization ultimately intends to become five, 10 or even 15 years into the future. It is the organization’s long-term “dream,” what it constantly strives to achieve. A powerful vision provides everyone in the organization with a shared mental framework that helps give form to the often abstract future that lies ahead. Effective visions provide a word picture of what the organization intends ultimately to become - which may be five, ten, or fifteen years in the future. This statement should not be abstract - it should contain as concrete a picture of the desired state as possible, and also provide the basis for formulating strategies and objectives. “Wobble” test: A litmus test used to determine whether a given objective is truly necessary to achieving organizational mission; if an objective can be dropped from the strategy plan and the organization can still reach your mission, then the objective is not necessary and should be excluded. © 2009 Lifecycle-performance-pros.com All rights reserved 73
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