Performance Management & Strategy Execution Blog: The Glue

Balanced Scorecard Basics: Initiatives vs. Objectives

A common area of confusion is the distinction between Initiatives and Objectives and how they each relate to a Balanced Scorecard. Here's a basic primer:

Initiatives (a.k.a. improvement projects ) have defined start and end dates (typically less than one year) and dedicated resources (people, budget, time). Examples of initiatives are "Implement customer retention program" and "Analyze cause of defect rates."

Objectives are brief verb-noun statements that describe a specific goal of your strategic plan. Objectives are more likely to span multiple years, as long as they still reflect your most recent strategic plan and SWOT Analysis (a review of your current Strengths, Weaknesses, Opportunities, and Threats). Examples are "Improve customer satisfaction" or "Reduce costs in manufacturing."

 

Balanced Scorecard-Based Business Reviews - What To Look For

As discussed in Building Accountability into a Balanced Scorecard Framework, scorecard-based business reviews are an absolutely essential part of Enterprise Strategy Execution or any meaningful performance framework, for that matter. These monthly “events” keep the attention and focus on performance like nothing else can.

Business reviews definitely evolve and mature as an organization runs them for several months or years. Their content, the depth of analysis, and the amount of improvement they deliver all grow with time and experience. Here are some guidelines for what you should aim to achieve at each level of “business review maturity.”

A good initial business review should focus on the following fundamental areas:

1. Are the right objectives, measures, and targets on the scorecard?
2. Do you have data and, if not, when will you have it?
3. If you do have data and it is trending poorly or missing targets, what are you doing about it?
4. What action items can we capture from this review to make the next one better?

 

Scorecards vs. Dashboards: Why Terminology Matters

It’s amazing how much has been written about the differences between scorecards and dashboards. It’s also amazing how much confusion still remains. I googled “scorecard vs. dashboard” and looked at the top three results:

• The Data Management Group talks about dashboards being used for real-time operational data and scorecards being used for aligned goals as part of a corporate management system.
• Manage by Walking Around has an entry on the difference between the two and points to the excellent definitions by Tom Gonzalez. Basically scorecard=strategic goals and results, dashboard=operational data and reports=raw data.
• The ActiveStrategy website has a page talking about what a Balanced Scorecard is, what a dashboard might be, and how you can link them. It also defines elements of a Balanced Scorecard.

There is general agreement among those who ponder these things on what the terms should mean and I doubt that anyone would argue with the Gonzalez definitions. But within any given company starting their own  "Strategy Execution journey" (or scorecard/dashboard implementation), there is usually little common terminology and lots of confusion.

Building Accountability into a Balanced Scorecard Framework

The keys to driving improved business results in any organization are:

1. Having a strategy that has laser-like focus
2. Aligning all employees’ to that focus
3. Improving the business processes that specifically target high-impact areas of the strategy
4. Having a way to make employees do what they said they would do

Another word for "making employees do what they said they would do” is accountability, which can be elusive. What I have found is that holding people accountable requires clear expectations, strong leadership, and an event where they must discuss their performance with their boss. This event is a monthly scorecard-based business review and it should be held at all levels. Since this event (a scorecard-based business review) can lead to either positive recognition for a job well done or embarrassment for lack of performance, people usually opt for the first option. In order to be prepared for and look good in this monthly meeting, people focus on improving their performance (as shown on their scorecards). 

Getting Executive "Buy In" for Strategy Execution

At the heart of it, Enterprise Strategy Execution (ESE) means managing an organization differently. In most businesses, "strategy" is owned by and almost protected by the C-suite. It is rarely well communicated to the masses, let alone deployed. By contrast, ESE is about enabling people at all levels to take ownership for their piece of the strategy. For many executives, this requires a pretty big leap of faith. They must trust that letting go of some of the control (or at least the perception of control) will pay back dividends.

If your executive team is not fully bought into the idea of ESE, how can you help them make the leap? (Just as importantly, how do you keep them engaged and supportive of ESE for years to come -- especially given the fact that a fairly high proportion of executives seem to have at least a little ADHD? Keeping them bought in is another topic entirely. Watch for more on that.) To get other players on board, here are some ideas.

Can Large Organizations Successfully Implement Balanced Scorecards?

Can large organizations be successful with a BSC? Yes. Absolutely. I've seen success at complex organizations that employ tens of thousands of people. But large organizations, even more so than others, must remember to continually go back to five basic building blocks that make a Balanced Scorecard (BSC) framework successful.

1. Executive Engagement
2. Focus
3. Support
4. Alignment
5. Sustained Results

Regardless if your organization is just starting or has traveled far down its strategy execution journey, if you don’t have all five of these building blocks, your BSC framework will come to a grinding halt. The true measure of success, of course, is contained within that fifth building block, SUSTAINED RESULTS. This is both a building block (you need to show results to maintain momentum) and a measure of the entire framework's effectiveness.  Here is what you should look for in each building block:

Tips on Cascading Scorecards (Remember to Stay Hydrated)

Building your company's top-level Balanced Scorecard (BSC) can be exhausting. Seriously. After standing in front of various opinionated, often distracted groups of executives and managers for hours or days, your feet will hurt, your back will be sore, the smell of whiteboard markers will make you ill, and the effort of forcing a smile and staying ultra-energized will have taken a toll.

And this top-level BSC is just the start. You still have to cascade scorecards down through multiple levels of your complex organizational hierarchy. Facilitating this process is not for wimps. Especially if your organization has a low tolerance for exhaustion. Most do, which is why so many companies fail to execute strategy successfully. It's hard work. It's basically never-ending. And the execution parts are not as engaging for most executives as strategy development is.

So what are some ways that you – the internal evangelist for Strategy Execution – can thwart organizational exhaustion? Create and sustain scorecard momentum? Here are some tips that should help.

What is Enterprise Strategy Execution?

What is Enterprise Strategy Execution?

Enterprise Strategy Execution (ESE) is a more evolved, more holistic, more strategic form of performance excellence or performance management. The goal of ESE is to empower every employee toward achieving the organization’s strategy. To do so, organizations must ingrain a continual, wide-spread focus on the ongoing processes of prioritization, improvement, and control. Your organization plans and deploys strategic objectives during prioritization, while employees and management continually address key performance gaps through the improvement stage, and subsequently lock-in improvement to ensure long-term benefits during control. Each of these stages may be broken down further, as follows.

Introducing "The Glue" - A Strategy Execution Blog

What is "The Glue"?
The Glue is a place for us to share some of the knowledge, tricks, and tips we've learned during the decades we've spent applying Strategy Execution, Balanced Scorecards, strategic performance management, performance improvement, Baldrige criteria, Six Sigma, and other management techniques to hundreds of different organizations. Practical, real-world approaches that "make strategy stick."

Who Should Read It?
This is designed to be a resource for leaders who are currently driving (or are attempting to drive) strategy execution efforts from within their own organizations. We call people like this "internal consultants" because they act like management consultants from within -- convincing, coaching, training, cajoling, and motivating others on the leadership and management teams to join the strategy execution journey.

Who Contributes to The Glue?
Many of the posts will come from ActiveStrategy's Executive Consultants. Collectively, this team has helped a wide array of organizations win the world's most prestigious awards for organizational quality, performance, and alignment to strategy, including three Malcolm Baldrige National Quality Awards, five Baldrige site visits, two Deming Prizes for Organizational Quality, six Florida Sterling Awards, one California CAPE Award, as well as numerous dramatic performance improvements.

We want this to be an open exchange for other practitioners, as well. Guest authors will include other thought leaders, executive consultants, and "internal consultants" from various client organizations. Please join the conversation with questions or comments on how you're "making strategy stick" at your organization. And email us if you'd like to be submit an article as a guest author (info@activestrategy.com).