Strategic Control and

Continuous Improvement

Prof. Niki Lukviarman, SE, MBA, DBA, Akuntan

Establishing Strategic Controls

Premise Control
Strategic Surveillance
Special Alert Control
Implementation Control

The Quality Imperative: Continuous

Improvement to Build Customer Value

Tracks a strategy as it is implemented,

detects problems or changes in its
underlying premises, and makes
necessary adjustments

1. Are we moving in the proper direction?

Are our assumptions about major trends and changes correct?
Should we adjust or abort the strategy?
2. How are we performing?
Are objectives and schedules being met?
Are costs, revenues, and cash flows matching projections?
Do we need to make operational changes?

Strategic Surveillance

Premise Control
Special Alert Control
Implementation Control
Strategy Formulation
Time 1

Time 2

Strategy
Implementation

Time 3

Basic
Characteristics

Implementation
Control

Strategic
Surveillance

Special Alert
Control

Planning
premises and
projections

Key strategic
thrusts and
milestones

Potential
threats and
opportunities
related to the
strategy

Occurrence of
recognizable
but unlikely
events

Degree of focusing
Data Acquisition:

High

High

Low

High

Formalization
Centralization

Medium
Low

High
Medium

Low
Low

High
High

Objects of control

Premise
Control

Basic
Characteristics
Use with:
Environmental
factors
Industry factors
Strategy-specific
factors
Company-specific
factors

Premise
Control

Implementation
Control

Strategic
Surveillance

Special
Alert
Control

Yes

Seldom

Yes

Yes

Yes
No

Seldom
Yes

Yes
Seldom

Yes
Yes

No

Yes

Seldom

Seldom

Premise Control Designed to check systematically

and continuously whether premises on which the
strategy is based are still valid

Strategic Surveillance Designed to monitor a broad

range of events inside and outside the firm that are
likely to affect the course of its strategy

Special Alert Control Thorough, and often rapid,

reconsideration of the firms strategy because of a
sudden, unexpected event

Implementation Control Designed to assess whether

the overall strategy should be changed in light of the
results associated with the incremental actions that
implement the overall strategy

Monitoring
strategic
thrusts

Milestone
reviews

Set standards of performance

Measure actual
performance

Steps involved
in post-action
control systems

Identify deviations from

standards set

Initiate
corrective action

Viewed as a new organizational culture and

way of thinking

Foundations of TQM
Intense focus on customer satisfaction
Accurate measurement of every critical
variable in a businesss operation
Continuous improvement of products,
services, and processes
Work relationships based on trust and
teamwork

Define quality and

customer value
Develop a customer
orientation
Focus on companys
business processes
Develop customer and
supplier partnerships
Take a preventive
approach

Adopt an error-free
attitude
Get the facts first
Encourage all levels of
employees to
participate
Create an atmosphere
of total involvement
Strive for continuous
improvement

External
suppliers

Internal
suppliers
(functions)

Input

Input

Function
(like production)
Seeking:
Quality
Efficiency
Responsiveness

Outputs

External
(ultimate)
customer

Outputs

Other
internal
customers
(activities)

A highly rigorous and analytical approach

to quality and continuous improvement
with an objective to improve profits
through deficit reduction, yield
improvement, improved customer
satisfaction and best-in-class performance

Acute understanding of customers and the

product or service provided
Emphasis on the science of statistics and
measurement
Meticulous and structured training
development
Strict and project-focused methodologies
Reinforcement of the doctrine advocated
by Juran such as top management support
and continuous education

The ISO 9001 standard focuses on achieving customer

satisfaction through
Continuous measurement
Documentation
Assessment
Adjustment

It specifies requirements where an organization

Needs to demonstrate its ability to consistently provide
product and services that meet customer requirements
Aims to enhance customer satisfaction through the

effective application of the system, including processes

for continual improvement of the system and the
assurance of conformation to customer requirements

Intends to provide a clear prescription as to what

companies should measure in order to balance
the financial perspective in implementation and
control of strategic plans
It adapts the TQM ideas of customer-defined quality,
continuous improvement, employee empowerment,
and measurement-based management/feedback
into an expanded methodology that includes
traditional financial data and results
Uses four perspectives: the learning and growth
perspective, the business process perspective,
the customer perspective, and the financial
perspective

Sales
Targets
Margin

COGS/
Sales
Dev. Cost/
Sales

Shareholder
value
creation

ROCE

Economic
Profit

CEO

Inv.
Turnover
Capital
Turnover

Cap.
Utilization
Cash
Turnover

Corporate/Divisional

Functional

Order Size
Customer Mix
Sales/Account
Customer Churn
Rate
Deficit Rates
Cost Per Delivery
Maintenance Cost
New Product Dev.
Time
Indirect/Direct
Labor
Customer
Complaints
Downtime
Accounts Payable
Time
Accounts
Receivable Time

Depts. & Teams