CASE STUDY http://www.epmreview.com/Resources/Case-Studies/Saatchi-Saatchi-Worldwide.html SUMMARY One of the world’s leading creative organizations, Saatchi & Saatchi provides solutions to leading clients like Carlsberg, General Mills, Lexus, Procter & Gamble, Sony Ericsson and Visa International. In 1997, Saatchi & Saatchi was close to bankruptcy. A new senior management team was appointed to engineer a turnaround. The senior team presented to stakeholders a new vision and a detailed strategic blueprint for recovery, with very ambitious targets for a 3-year timeframe. With survival at stake, the group had only one chance to make the plan work. The Worldwide Director’s visits to offices across the world revealed that there was no commonality of purpose or cohesion of identity. At this time, the group’s CFO discovered the Balanced Scorecard at a presentation made by Dr. Kaplan and felt it could be the right tool for the group’s strategy implementation efforts. The top team was convinced and Renaissance Worldwide, headed by Dr. Norton, was appointed as program consultant. A Balanced Scorecard Steering Committee, reporting to the executive management team, was appointed. From the outset, the organization ensured that the scorecarding initiative, named CompaSS, was kept simple. A highly focused and simple Strategy Map was developed first. The Steering Committee also evolved RASCI, a process to define the roles of different groups. Once the Corporate-level CompaSS was in place, global rollout to the over 45 business units followed. The scorecard also served as a strategic communications tool, sending clear signals about what the group wanted to achieve and what it wanted people to contribute. Management of the units were trained and provided ongoing support to manage with the scorecard. As the management wanted to build a strategy-focused organization, CompaSS had a role in critical aspects like performance planning, communication, organizational culture, budgeting and feedback processes. In short, the scorecard became an essential tool for managing the organization, from setting priorities to allocating resources to managing performance. Saatchi & Saatchi Worldwide Headquartered in New York City, and with annual billings topping $US 7 billion, Saatchi & Saatchi is one of the world’s leading creating organizations. The corporation has more than 7,000 employees in 84 countries. Services range from communication and marketing strategy, advertising scripts for production, consumer research and forecasting, among others. Its impressive client list includes household names such as Carlsberg, General Mills, Lexus, Procter & Gamble, Sony Ericsson and Visa International. The organization positions itself not as an advertising agency, but as an ‘ideas company’. The ‘purpose’ of this ideas company is captured in three statements: - Our Inspirational Dream: To be revered as the hothouse for world changing ideas that create sustainable growth for our clients. - Our Focus: To fill the world with Lovemarks. Lovemarks are super-developed brands that inspire loyalty beyond reason. The relationship Lovemarks have with the people who buy them is not built on function, but on emotion....and function. - Our Spirit: Nothing is Impossible, One Team One Dream. Since 1997, the Balanced Scorecard has been central to implementing the purpose, or vision, of Saatchi & Saatchi. In this case study we focus mainly on the early years of scorecard usage in the corporation, and what was one of the truly great balanced scorecard success stories.
A Classic Burning Platform In September 2000, the Paris, France, Headquartered Publicis Groupe SA purchased Saatchi & Saatchi for close on $2.5 billion. Equating to about 4.5 times Saatchi & Saatchi‟s then net worth, the purchase price is remarkable in that just three years earlier the corporation was teetering on the brink of bankruptcy. Experiencing a classic burning platform due to over-extension through acquisition throughout the 1980s, coupled with severe financial pressures in the recession of the early 1990s, turnaround started with the appointment of a new senior management team in the mid-1990s. Bob Seelert became chairman and he appointed Kevin Roberts as CEO Worldwide, and Bill Cochrane as CFO Worldwide. They still hold these positions and were, as a team, catalytic for the scorecard implementation that was to follow. Setting Stretch Targets First though was the requirement for significant organizational restructuring and cost reduction. A key trigger for this was the December 1997 de-merger of Saatchi & Saatchi from Cordiant Communications. With Saatchi & Saatchi now on its own, the senior team presented to its stakeholders a detailed strategic blueprint for recovery, which included the following three very ambitious targets with a timeframe of three years. - Growing the revenue base better than the market - Converting 30% of that incremental revenue to operation profit - Doubling its earnings per share These goals were to support the new vision: „To be revered as the hothouse for world-clanging creating ideas that transform our clients‟ businesses, brands and reputations.‟ The corporation had an ambitious vision and even more ambitious stretch targets. But the trick would be to deliver on its goals, which would require a rapid implementation of its new strategy. And given the high failure rates of strategy implementation, coupled with the corporation‟s precarious financial position, this would not be without a significant risk of failure. As Paul Melter, Worldwide Director, CompaSS (as the company brands its Balanced Scorecard), explains: “We didn‟t have the luxury of getting it wrong. We had one shot and the clock was ticking.” Choosing the Balanced Scorecard After spending about three months on the road during late 1997 visiting the majority of the organization‟s 45+ globally dispersed agencies, Kevin Roberts realized that although great work was being done, each location was essentially working on its own agenda. Simply put, there was no commonality of purpose or cohesion of identity – not surprising as the organization had grown through acquisition. Roberts therefore realized that he required a management tool that would help communicate and make operational the new vision in a commonly understood process and language. A few months later that tool presented itself when the CFO, Bill Cochrane, attended an executive seminar at Harvard Business School. One of the guest lecturers was Professor Robert Kaplan, who introduced the assembled delegates to the Balanced Scorecard. Melter recalls: “On hearing Dr. Kaplan speak, Bill Cochrane knew immediately that the scorecard was the ideal tool for our strategy implementation efforts.” With the top team collectively championing the scorecard effort, Renaissance Worldwide (the president of which was Dr. David Norton) was appointed as consultant to the program. A Balanced Scorecard Steering Committee to lead the scorecard program was appointed, comprising three representatives from Renaissance and three from Saatchi & Saatchi – Paul Melter and colleagues from client services and strategic planning. The committee had to report to the executive management team on a weekly basis.
Creating the Strategy Map The corporate level CompaSS was built in a three month period from September to November 1998. The corporate Strategy Map that was used until 2003 is shown in Figure 1. Note that despite the pressure that the organization was under at the time it first created the scorecard, and the complexities of managing a global organization, the Strategy Map is remarkably simple, comprising just 12 strategic objectives. The simplicity was purposeful, says Melter: “A Strategy Map should show the critical few objectives that will make the difference in delivering to the strategy. And these should be strategic objectives, not operational. Too many Strategy Maps include both.”
RASCIs From the steering committee evolved a process of setting out RASCIs – an acronym for Responsible, Approval, Support, Consult and Inform. According to Melter: “The „A‟ was Kevin Roberts, as he was the one that would give the final approval to our work. As for the „Rs‟ – we first identified a theme owner for each perspective (therefore responsible for that perspective). For Finance it was Bill Cochrane, for Client it was a Senior Executive/Regional Director from Asia. For Product and Process it was another Senior Executive/Regional Director from Australia, and for People and Culture, it was another Senior Executive/Regional Director from China. Melter goes on to say that these „Rs‟ then worked with the steering committee to choose objectives that would eventually be essential links in the Strategy Map, which was then
presented to Roberts for approval. He adds that having just one „A‟ and just one „R‟ for each perspective was vital for taking out any bottlenecks and ensuring the process moved rapidly. From here, further „Rs‟, typically CEOs from agencies around the global network, were assigned responsibility for detailing how specific objectives would be achieved, such as identifying the key measures. These „Rs‟ also worked closely with the steering committee in delivering to this task. R- Local CEOs A- Kevin Roberts S- Support (those who worked with the CEOs during the „real work‟ providing analysis/data. C- Steering Committee I- People who needed to know about decisions but did not necessarily need to be involved in the decision-making process and therefore could be informed after the fact. Global Rollout With the Corporate level CompaSS in place, the next process step was global rollout to the 45+ business units. Keeping with the goal of commonality of purpose and the desire to keep the scorecard simple and focused, devolved Strategy Maps are essentially the same as at the corporate level. Melter states: “There might be some tweaking to capture important local objectives and measures but we can take the regional map and overlay it onto the corporate map.” Importantly, the corporate map defined the performance conversations with the regions. As Melter explains: ”We will say to regional CEOs, “Here is the corporate scorecard. As you can see, our customer focus is to build permanently infatuated clients. We expect you to do the same, so what are you doing to make this happen? What initiatives are in place? How are you measuring this? So by using the scorecard as a strategic communications tool nobody can be in any doubt as to what we want to achieve as an organization and the contributions we expect from our people.” Responsibility for CompaSS performance within each unit ultimately lies with the local CEOM just as at the corporate level the performance „buck‟ stops with Kevin Roberts. And the unwavering commitment of Roberts and the other members of the executive team largely ensures getting local CEO buy-in, as Melter explains: “Without having the unconditional, unequivocal backing of the senior executive team this will fail. All of the 45+ unit-based CEOs have mentors among the senior executive team and if there‟s a feeling that the CompaSS doesn‟t have to be done this month, or if they believe that there is something more important then it will fade. But our three executive leaders make it clear to all the local unit CEOs that it is a great tool and this is the way we manage the business.” Facilitating the Scorecard Process The management of each unit does receive proper training and ongoing support in how to work with the scorecard. Paul Melter is the full-time CompaSS director and is supported by two fulltime staff. One is involved in managing and developing the scorecard software system and the other is involved in quality control. Melter also has the support of over 40 part-time scorecard champions in the units who are responsible for collecting and collating their own CompaSS and forwarding theses to the centre. Melter elaborates: “By the time I look at the individual CompaSS, it is to see whether it makes sense and if there are any disconnects from strategy. Almost always, I give feedback and discuss the scorecard with the individual unit‟s CEO.” As an important learning, Melter is convinced that in a global organization, responsibility for the scorecard has to be a full time vocation. “I find it difficult to imagine how any large organization can manage the scorecard as a
part-time effort. When we set up the steering committee it was essentially a part-time responsibility. But once CompaSS was being rolled out it had to be fulltime. To do the CompaSS on a quarterly basis, there‟s a great deal of education, training, and logistics that go into the process. “But the job isn‟t over when CompaSS is up and running. Then you get into managing the scorecard as an ongoing program, we are using the scorecard with the aim of building a strategy-focused organization. The scorecard therefore impacts planning, communication, people and culture, budgeting and feedback, as examples. It focuses the discussions of every management meeting. In short, the scorecard is an essential tool in the way we manage our global organization. It is the means for setting priorities and allocating resources.” Overcoming Challenges Despite the undoubted success, there have been challenges along the way. One has been the complexity of reporting the scorecard results from the business units back up to the corporate level in a meaningful fashion. Melter states: “We consolidated the non-financial measured based on assumptions and modeling. You can always aggregate financial data but the way that you aggregate non-financial data is through weighted averages on some measures and straight averages on others based on relevant assumptions and criteria.” Scorecard results are delivered quarterly, and expressed through the “traffic-light” reporting system of green (ahead of target), yellow (meeting target) and red (off target). When green, executives are expected to share best practices for use elsewhere in the organization (thus strengthening the „one team, one dream‟ people and culture objective). Melter adds that when managers were reporting green for people, process and customer but red for financial it highlighted a strategic disconnect that needs to be addressed. Identifying such disconnects is, says Melter, one of the strengths of the scorecard system. However, he recalls that the traffic light system did cause come early concerns. “Nobody wanted to be red because they knew Kevin Roberts would see this. We called it „red status phobia‟ and it had to be overcome. This was achieved by predefining the financial measures based on conditional formatting. Therefore making them either red or green there was rarely ever a yellow status. “We also said that excellent leaders do not see „red‟ as a failing, but as a signal to identify and deliver solutions. It was an opportunity to earn your feathers, which exemplified what becoming a „chief‟ was all about.” Fuller version of usage of the Balanced Scorecard within Saatchi & Saatchi can be found within: Mastering Business in Asia: Succeeding with the Balanced Scorecard: James Creelman & Naresh Makhijani, John Wiley, Asia, 2005 Building a Strategic Balanced Scorecard, James Creelman, Business Intelligence, UK, 2003. Process Management We start with Criteria Six, Process Management. A primary focus here is managing the organization‟s key value creation processes. These are the high level processes that are essential to delivery of council‟s primary strategic document – its Long Term Council Community Plan (LTCCP – see below). Key value processes are determined by the Executive Team and Business Excellence Team (comprising 45 people who lead improvement plans under the seven Baldrige categories). Human Resources As an example for Criteria Five (Human Resources), in 2005 the council introduced a new methodology to measure staff engagement and satisfaction. This looks at environment, health and safety, customer focus and communications. HR General Manager Philippa Jones says: “As with many organizations
looking for high performance we recognize that staff satisfaction, however important, is not enough. We must go beyond that and ensure our staff are fully engaged with our strategic direction. We see a direct correlation between staff engagement and our business results.”
