The Glue

The Overthinking Paradox

I was sitting with a senior executive the other day who has been quite opposed to the implementation of a strategy execution system, when I suddenly realized why she has been so reluctant.

First, let me explain that she's incredibly brilliant, very experienced, and tempered by the realities of her industry. So, when we sat down to start brainstorming potential measures for their top-level scorecard, she became very twisted in mental conundrums and frustrated when asked to identify possible customer-focused measurements.

Here are the issues she was struggling with:

1. We should be defining the actual outcomes to which their organization contributes. But they only play a contributing role to the outcomes -- so why measure them? Most will remain unachieved, making them meaningless.
2. We should be defining key outputs. But, again, many needed outputs were not capable of being measured due to external forces resisting such measurement (think of this organization as an internal support/staff division with a line division that won't cooperate).
3. The top-level strategic goals are illogical and thus impossible to align to. They produce products and services that individually impact all of the strategic goals, so artificially categorizing them is only for external political/public consumption and not helpful to her.
4. Management 'knows' how things are going, so why waste time counting things when that time could be spent on producing products.

Top 10 Reasons Strategies Fail To Be Executed

Why do our best laid plans so often go awry?

Turning strategy into reality is never easy -- which is compounded when that strategy is up against an existing, strong culture or status quo. While there is no perfect, fool-proof model for implementing strategy effectively, there are some common pitfalls that can be avoided to get yourself on the right path.

Here are the top reasons why strategic implementations fail:

1. The goal is not clear
High-level, "pie in the sky" goals won't resonate with staff. Goals need to connect staff and leaders to their “purpose.”  To do so, look at the F.O.R. --  what is the “frame of reference” for your team, department, and overall organization? For the teams, remember that one person’s ceiling is another person’s floor, so goals must always be communicated in a way that accommodates each individual's F.O.R. Can the staff understand the “why” behind its pursuit?

2. The goal doesn’t create a “call to action”
Does the stated goal create yawns? Or is it something that staff and leaders can rally behind? Top-level goals need be aligned with the mission, vision, and values of the organization and should provoke passion, as well as a common belief that reaching the goal will create tremendous value for the organization, the community, and/or the staff.

3. The so-called "strategic" goals turn into a long grocery list
Years ago, I was the director of business development for a rehab hospital. The CEO had me assemble a “book” of all of our goals and initiatives. Unfortunately, we had way too many goals, no true focus, and we stumbled trying to do it all. Prioritizing is the key -- focus on a select few and tackle them really well. Then, and only then, move the next most important goals onto your list.

4. The plan does not "tune into" WIIFM
I once worked with a physician executive consultant who told me that physicians’ favorite radio station is WIIFM  -- “what’s in it for me?”  If a strategic plan does not connect to personal/professional goals and have meaning to the work-lives of the staff, they won’t commit. Be sure to "tune in to the station" and be able to tell everyone what is in it for them.

Strategy Execution is a Change Process - Part II

In this series of posts, I am viewing a Strategy Execution implementation through a Change Management lens.

For those needing a review, I'm comparing the ESE concepts against Kotter's latest installment, where he outlined the eight "Stages of Change."  They include:

1. - Sense of Urgency
2. - Guiding Coalition
3. - Developing a Vision
4. - Communicating the Vision
5. - Empowering Employees
6. - Short Term Wins
7. - Consolidating Wins
8. - Anchoring in the Culture

In my last post (part 1) I wrote about Sense of Urgency. So now let's discuss the Guiding Coalition. It represents the vertically integrated people who will ensure that the project succeeds, even in the tougher times. First let's talk about 'who.'

At the top, the Coalition needs a top-echelon senior executive who thoroughly understands the journey, possesses the credibility to lead the team, and has budgetary control.  This is frequently labeled the Sponsor. Often, senior executives without the requisite power base lead coalitions to an unsuccessful ending, as their perceived power and influence prove limited and insufficient to overcome the obstacles. The Sponsor doesn't need to be that involved, but they do need to be the lead 'general' constantly clearing battlefield for the team.

ActiveStrategy Goes Mobile (And Gets Blogged by Wall Street Journal)

At our annual Client Conference last week, we demonstrated the very first enterprise performance management application for the iPhone.

This is the first ActiveStrategy product optimized to run natively on a mobile device. So why did we pick the iPhone?  There are several key reasons:

1. The user-friendly, large display shows our Dashboards and Scorecards far better than any other mobile device can.
2. Since this will be a native app on the iPhone (versus an application optimized for a web-enabled mobile device), executives can view it anywhere -- even offline. Since so many of our users are high-level executives who tend to be on-the-go, they can prep for business reviews anywhere -- even at 30,000 feet.
3. Apple recently announced their enterprise roadmap, which we believe is going to make it a far more viable option for business users in the very near future.
4. Everyone loves the iPhone. We wouldn't be surprised if a few executives out there are just looking for a reason to tell their IT shop to support them. So this can be their reason!

How to Measure the Hard to Measure: Part 3 - Strategies for Too Many Measures

In my last post on How to Measure the Hard to Measure, I focused on strategies for narrowing large quantities of measures down to the critical few for a Balanced Scorecard. Here are some approaches to consider with this issue:

One approach is to use a measure that focuses on HOW MANY of the child measures actually hit their targets.  Now, rather than having a green indicator that hides the red performance of one of 10 child measures we talked about earlier, we would actually see that 9 out of 10 of the children met their goal. That might give me a better feel for what is going on and at the very least makes me feel more comfortable that I'm not missing anything if the measure stoplight is green (this approach is called "percent of measures which achieved target" in ActiveStrategy Enterprise).

Strategy Execution is a Change Process - Part I

In this series of posts, I will be viewing a Strategy Execution implementation through a Change Management lens.

For those versed in change, most will have read Kotter's books.  In his latest installment, he outlined the eight "Stages of Change."  They include:

1. - Sense of Urgency
2. - Guiding Coalition
3. - Developing a Vision
4. - Communicating the Vision
5. - Empowering Employees
6. - Short Term Wins
7. - Consolidating Wins
8. - Anchoring in the Culture

So, let's tackle number one.  In the Strategy Execution Journey, the first step is gaining executive buy-in and support.  Unless you're in an organization where the top executive has been possessed by the force for change, this can be tricky.  Many consultants, myself included, preach the concept of identifying and leveraging an organization's 'burning platform.'  However, Kotter makes what I believe is an important distinction. 

How to Measure the Hard to Measure: Part 2 - Large Quantities of Measures

In my previous Part 1 post on measures, I discussed Measuring Project-based Objectives. This time I'll talk about how to deal with the omnipresent problem of too many measures.

Ideally, Strategy Execution projects include a lot of time of figuring out what critical few objectives are important to an organization and picking a few measures. Sometimes, however, there are industry standard measurement frameworks that are designed to make it easier to compare performance across different organizations.  These frameworks serve a great purpose and can really help define focus in an organization. But if you are not careful, you may find that the sum of the parts is not really a useful tool to help get the results you are looking for.

Take HEDIS, (Health Plan Employer Data and Information Set) for example. This is a set of more than 60 measures (the number changes with new releases) that indicates everything from how fast a health plan answers a phone to how well they screen their members for cancer.  It's a great tool for businesses to compare health plans and many health plans work hard to improve their numbers.  There are lots of other examples of such frameworks in hospitals, IT Organizations, Government and many other categories and the dangers we are talking about apply to them as well.

In an ideal world, the HEDIS measures might be sprinkled across many different scorecards in the organization -- owned by those accountable for them.  So the director of the call center might own the two or three metrics related to that, the Chief of Cardiology Standards might own the few related to heart treatment, etc.  Invariably, though, top executives want a single number that tells them "how we are doing on our HEDIS measures."

Identifying Strategic Outcomes

I have been receiving some great feedback on my new book, Executing Your Strategy, and I wanted to share an important related idea that I believe we tend overlook in the process of developing effective strategy maps: arriving at clearly stated, agreed upon outcomes is critical.

The strategy mapping process should focus explicitly on identifying required, but unmet, stakeholder outcomes. Since this result is so crucial to an organization’s strategic success, it is equally important to review all the supporting decision processes and information surrounding outcome identification and selection.

Understanding who the strategically determined stakeholders are and the important opportunities for improving their satisfaction enables the process to move from ambiguous outcome statements (e.g. “… to be the global leader”) to tangible and assignable actions directed toward that end (e.g. “…to achieve 35% global market share within two years”). Once outcomes have been so clearly defined, the organization may begin sorting out the key drivers and value creating activities that are most likely to achieve the final outcomes.

Who Owns Strategy Execution?

Who owns a strategy execution management system?  Is it the project manager driving a scorecard software implementation?  Is it the executive champion who is trying to transform his organization?  Is it the internal or outside consultant working to develop the scorecards and install a new business review process? 

The only owner who really matters in the grand scheme is the top executive.  He or she must realize that the strategy execution system is not an 'IT project.'  It is not something owned by the finance folks or the performance improvement team or the VP of Quality.  Strategy execution is the method, process, and system through which the top executive will ensure delivery on his or her primary responsibility.  As a dear colleague often says to people who state the obvious, "Duh."

Though this should seem as plain as day, this ownership isn't always clear or distinct when strategy execution projects begin.  Often, I see them progress in the following stages.

 

Why There's No Hurrying a Strategy Map

I recently ran a Strategy Map development session with a group of senior executives in the public sector.  What I love about these sessions is that no two are ever alike.  The mix of group dynamics, expectations of executives, constraints, and history (i.e. baggage) make for a true adventure every time.

No matter what the session, however, there are always two underlying constants:

1. the session must be run at a certain pace
2. the team must progress thoroughly through a specific mental process

Regarding the pace, I've learned as a facilitator of many such sessions that you simply can't hurry cathartic discussions around strategic issues.  People need to talk, debate, argue, and 'air it out.'  This can sometimes be problematic, as the alloted schedule for the mapping session might not provide sufficient time to move through all of the steps.  But if the group feels hurried, they will rebel against the facilitator.  They will also not buy-in to the final product if they feel they were pushed to produce something that doesn't fully and honestly reflect the strategic situation. 

What usually happens is that the group realizes they need to take the time the process requires, regardless of how long that will be, to work through their issues.  It could be three hours or it could be two days.

If You Really Want to Execute Strategy, Improve Your Business Reviews

I wrote a couple of blog posts last year about what a good structured Business Review should be (and what it should not be). Now I want to delve a bit deeper into why good Business Reviews are so critical to achieving your desired strategic business outcomes.

To move an organization from an under-performing one to an overachieving one, the culture of the organization must change. The behaviors that occur today in the organization (possibly including chaotic fire-fighting, working on low-priority issues, poor cross-functional communication, etc.) must evolve into more performance-based, strategically-aligned behaviors. Otherwise results will remain the same...mediocre.

So how do you change a culture? There is a four-step model for doing that, as follows:

Step 1: Identify the new behaviors that the new culture must have to drive improved results

Step 2: Establish processes, systems, and structures that, if followed, will drive those new behaviors

Step 3: Train, coach, and mentor employees on the proper use of those new processes, systems, and structures

Step 4: Reward and reinforce the new behaviors on an ongoing basis

Leadership Buy-In & Strategy Execution

When studying what makes or breaks an Enterprise Strategy Execution effort, it initially appears to come down to two factors:

1. the need for a sound and compelling strategy that differentiates an organization
2. the right mix of execution methodologies, performance reviews, and accountability 

However, upon further scrutiny, it becomes clear that leadership buy-in is really the essential piece. Without it, nothing within a culture will truly change. And "Business As Usual" is the antithesis of Enterprise Strategy Execution.

Since I've seen plenty of leaders who don't step up to drive Strategy Execution, let’s discuss why this happens. Why don't they "buy-in" to this proven performance-driving methodology, when they are the ones charged with ensuring that the organization improves results?

I know there may be many reasons, but let’s talk about the top three, as I see it:

1. They DON’T personally feel the pain from the company's “burning platform” (i.e. a lingering high-level organizational problem that significantly hinders current or future performance)
2. They DO feel the pain of a burning platform, but don’t understand that Strategy Execution is the solution 
3. They DO feel the pain of the burning platform and realize they need to execute strategy better, but just don’t know how to do that

Your Top 2 Strategy Execution Challenges for 2008

Thanks to those of you who voted in our first poll, which asked "What is the single biggest challenge that impacts your organization's ability to execute strategy effectively?"

The results (shown below), indicate that the 2 biggest problems are:

1. A lack of focus (too many competing objectives, initiatives, projects)
2. Too much "fire fighting” to rise above the chaos

In my opinion, these two issues are different sides of the same problem, which is the lack of a disciplined management framework that prioritizes and focuses on the critical few objectives and initiatives in order to make progress toward your long term vision (which, in turn reduces inefficiencies, chaos, and stress.)

Book Review of "Executing Your Strategy"

As anyone who works on strategy execution knows, there are a host of books (some scholarly and some not so much) on the topic of Strategy Execution. Just this past month, Harvard Business School Press released a new book entitled, “Executing Your Strategy” co-written by Mark Morgan, Raymond Elliot Levitt, and William Malek (who has been a guest contributor to The Glue).

With all of the titles focused on better strategy execution, it’s easy to wonder if there is anything new left to be written that is worthy of close study. In this case, I found it to contain some true insights in its focus and message.

How to Measure the Hard to Measure: Part 1 - Project-based Objectives

If you are a frequent reader of The Glue, you know that we constantly espouse the importance of linking and monitoring strategic projects to the business objectives they support.  So, to "Improve Claims Resolution" we might link the "Implement Automatic Claims Adjudication System" project and include a review of its status in our business reviews.  Straightforward, makes sense, and gets results.

Typically in this situation one would have the accountable owner of the project make frequent, brief, and to-the-point status reports. Ideally, their reports would consist of:

• the timing, budget, and quality status of the project (red=late, over budget, below quality, etc.)
• Highlights of milestones completed on time
• What is late, why, and what we are doing about it
• Potential upcoming problems

There are times, however, when completing the project is really viewed as a business objective in and of itself.  One example of a project as a business objective is when a project is so big and strategic to an organization across so many different levels, that its completion is viewed as a top level strategic objective.  A huge, transformational, IT project that touches many parts of operations might be an example.  Completion of a integration plan after a merger might be another.

How to Measure the Hard to Measure: Introduction

A basic tenant of Strategy Execution is the old saw: "if you can't measure it, you can't improve it."  I'd generally agree that if you can't put real numbers behind something and don't review accountability and performance on a regular basis, you probably won't get optimal performance improvement.

It is pretty straightforward to measure things like revenue, savings, turnover, and the like. It's also not rocket science to find and measure leading or driving indicators of these high-level lagging indicators.

But in complex organizations, there are many important business objectives with measures that are not immediately apparent. In this series of posts, I'll take a look at some best practices for some difficult-to-measure scenarios. 

I'm also looking for feedback on any specific instances that you readers might have that we could discuss, so please add a comment below to pose a question or idea of your own.

Here is what is on tap for this series:

• project based objectives
• indices composed of many measures
• daily measurements
• influence within an organization
• internal customer satisfaction
• the "best" vs. "everyone is very good"

Let me know if you have other topics you think we should cover.

When Executing Strategy Avoid the Extremes?

Tom Davenport posted an interesting question on his blog last month.  Basically he argued that the two poles of the Strategy Execution world are:

• Strategic Engineering -  the top down articulation of objectives and measures by management, cascading to lower levels and ensuring systems and processes are in place to get the results you want
• Strategic Anarchy - get management out of the way and let people do what they know the business needs.  Encourage loose organization, social networks, decentralization of control, etc.

The question posed in his post is, is there a midpoint that gets the best results? In our work with clients, we have seen these two approaches employed to some degree in tandem in many companies. 

The top-down strategy execution approach from management uses traditional Strategy Maps, Balanced Scorecards, Briefing Books, and Structured Business Reviews. Its success depends on how well (not how thoroughly) it is engineered and implemented.

How a Balanced Scorecard Changes as You Move Down in the Organization

A Balanced Scorecard is a great tool to communicate the strategic objectives, measures, and initiatives throughout an organization. It assists in providing focus and alignment at all levels and even facilitates daily decision making.

However, the definition of an effective scorecard changes slightly as it is deployed downward, to meet the needs of the individual scorecard owners and the organization.

The reasons and ways that the scorecards change are as follows:

Integrating the Balanced Scorecard with Operating and Capital Budgets

Organizations using a Balanced Scorecard framework to deploy their annual strategic business plans find that with each new fiscal year, the scorecards get better and better, accountability grows in the organization with recurring monthly scorecard reviews, and the scorecards are deployed deeper and deeper into the organization.

But most organizations continue to struggle with how to fully integrate Scorecards with budgets, as well as how to handle having too many non-priority initiatives.

The two issues are closely related.The integration of the budgets is largely a sequence and timing issue, as many organizations are “upside down.”

If an organization’s fiscal year and calendar year are the same, then the budgets will be completed usually by November or early December. In many organizations that haven’t integrated scorecards with the budgets, the scorecards may not even be completed for the next fiscal  year by that time.

So, a re-sequencing must occur over time, as follows:

How Organizational Culture Affects Target Setting

In two previous blogs (Setting Effective Targets & Three More Ways to Set Targets), I talked about the best ways to set targets for performance measures on Balanced Scorecards.

There are also psychological and cultural aspects that impact how an organization sets targets.

If an organization is risk averse or if management tends to look for someone to blame when performance falls short, targets will be predictably less aggressive and easily achievable. This is usually referred to as “sandbagging” and occurs because the penalty for under-achieving a target is so much greater than the risk of being accused of setting soft targets.

On the other hand, organizations that reward real achievement and where missing a stretch target is not punished, but merely analyzed for root causes and addressed, real “stretch” targets are more likely.

If you're in an organization that leans more toward the risk averse culture, how do you encourage employees to set real stretch targets?

First, examine the management style and their reaction to missed targets. If it is punitive in nature, that managerial behavior must change or the employees will never trust management enough to take a risk and set a stretch target.

However, I have seen organizations where the management reaction to missed targets is healthy, yet the targets are still easily achievable for other cultural reasons. Sometimes these reasons are merely perceived, but as we know, perception is reality.

Recognizing Performance Excellence - Congrats to Coral Springs

The entire ActiveStrategy team sends out our hearty congratulations to our client, the City of Coral Springs, who was recently recognized with the prestigious Malcolm Baldrige National Quality Award, the top honor a U.S. company can receive for quality achievement and performance excellence. 

For those not familiar with the Baldrige, this is an extremely comprehensive program that evaluates organizations in these areas: leadership; strategic planning; customer and market focus; measurement, analysis, and knowledge management; human resource focus; process management; and business results.

Coral Springs is one of only five recipients of the 2007 awards and is the first state or local government in the nation to receive the award. This is the first year non-profit organizations could apply for the award, after testing a pilot program in 2006. The awards will be presented at a ceremony in Washington, D.C. early next year.

Coral Springs, located in Broward County, Florida, is also a two-time winner of the Florida Sterling Award, a state program based upon the Baldrige. These awards are a testament to the City's efforts, as well as the significant results achieved, during their ongoing journey toward performance excellence.

This journey began in 1993, when Coral Springs began using a business model that takes customer input and data analysis into consideration before mapping initiatives in the Strategic and Business Plans. The City develops process improvements while comparing results to Fortune 500 businesses and top local governments.

Having worked with many other Baldrige applicants and winners in the past, we know how difficult it is to even receive a site visit, let alone win the award. Keep up the excellence!

Where's the Strategy?

I just turned 40 last week and since I spent much of my birthday thinking about today's blog, it dawned on me that I need a social life.  Nevertheless, here we go...

The most common problem I find with strategy execution after the first few months of implementation is: the organization’s balanced scorecard loses its strategic focus and turns into mere reporting.

The ripple effects are these:

1. Extra work for front line staff without the payoff of executive review
2. Executive staff dissatisfaction with the results their scorecard is achieving
3. Diminished alignment of projects to strategic objectives

By making sure you do the following on your balanced scorecard framework, you can prevent these from happening to your organization:

Setting Effective Targets - the Two Best Ways

Setting good targets for strategic measures is a critical part of designing an effective strategy execution or performance excellence framework. These targets (along with your actual performance data, of course), trigger the red, yellow, and green stoplight indicators on Balanced Scorecards. These stoplights determine where you focus your improvement efforts, so bad targets can mean you're allocating critical resources to the wrong areas.

Too often, I find that organizations simply don't know how to set good targets. There are five ways that I have used and some are better than others.

If you consult the Malcolm Baldrige National Quality Award or any state quality award criteria, you will find the two best ways to set targets: benchmarking (or industry comparisons) and customer valid requirements.

We'll start with these two. I'll cover the other three in my next post.

Benchmarking is effective because you are attempting to find the best industry performer in whatever outcome you are measuring and meet or beat their performance. Dr. W. Edwards Deming, the noted quality and productivity guru, was not a big fan of benchmarking because he thought one might be limiting their improvement potential in some way by focusing on what others have achieved.

Three More Ways to Set Targets

Earlier this week I wrote about the two best ways to set targets for performance measures (Benchmarking and using Customer Valid Requirements). As promised, here are three more ways to do it.

The third way to set targets is to look back historically at your performance. If you used to perform better than you do now, strive for that historical target and try to determine what has changed to cause your deteriorated performance and turn it around.

A fourth way to set a target is to determine “what the data shows is possible.” Let me cite an example to help illustrate this method:

Executing Strategy When You're Stuck in the Middle

I recently had a meeting with the CIO of a major IT organization.  Her situation and challenges were very illuminating to me in that she wants to execute her own departmental strategy, yet she is completely dependent upon the strategies of others.  Adding to this challenge, she answers to two separate 'bosses' -- one on a dotted line and one on a hard line basis.

Here's a visual that depicts the basic organizational structure:

The following outlines her challenge and how we proposed to solve it to make headway:

Boss #1: The CIO reports to the head of the functional division that she supports -- on a dotted line basis.

This "Boss #1" is directly responsible for providing services to the organization's external customers. Naturally, the CIO views these as her customers as well and sees her main role, therefore, as serving the needs of this functional division (this division is her internal customer).

BUT (there's always a 'but'), none of the divisional units have clearly outlined objectives or measures.  They typically have long lists of initiatives or action item lists, which might be OK if it weren't for the fact that these lists constantly change and shift in priority levels.

In addition, the top-level division executive does not possess a clear strategic plan with objectives and measures. 

So, at the current juncture, our CIO is left:

    a) guessing at the real needs of her internal customers and

    b) constantly chasing the ever-changing priorities that are communicated from these internal customers. 

Why Top-Down Scorecard Cascading Doesn't Work

Does this sound familiar?
Management thinks of top-down scorecard cascading as a carrot and a stick.
They know best what’s really driving performance and they want accountability for results.

The front line thinks of top-down cascading as just the stick.
It’s another chance for the big brother to watch over their shoulder and they don’t even know what’s really driving performance.

A Balanced Scorecard framework can only deliver results when there’s two-way communication.

During Scorecard cascading (see more on this here), you utilize the top-down process matrix approach as well as the bottom-up SWOT analysis from the individual departments.  I’m not just talking about picking scorecard-level objectives and measures for the front line; I’m also talking about building the leading measures beneath the lagging measures.  This means the leading measures are not prescribed up-front by top management, but created from the bottom up.

Here’s what this gives your organization:

1. The front line can lobby for resources to fix root cause problems using data to prove their story.  This removes the emotional and political influences on resource allocation.
2. The front line is engaged in the routine performance review process.  This is very different than most front line scorecard teams I see that view the Scorecard as a project owned by someone else (the quality department, top management).
3. Top management allows its strategy to become more complete by listening to the voice of the front line, who usually have a good idea of the true drivers of performance.
4. Everyone from the front line to top management can tell you readily what piece of the strategy they own and how that impacts achievement of the top level vision.

Why Software as a Service Will Change Performance Management

In case you haven't heard, Software as a Service (a.k.a. SaaS, rhymes with Jazz) is the hot new thing in Silicon Valley.  Simply put, this is where a vendor provides access to an application via a secure Internet link and charges on a monthly or quarterly basis (usually by user).  There are lots of technology improvements that differentiated this from the old Application Service Provider (or ASP) model, but the ideas are similar.

For the client this means quicker implementations with less up front investment and lower costs to maintain the application.  It also means quicker results.  With the success of companies like salesforce.com and Netsuite most of the old IT concerns about application and data security are melting away. 

We have used salesforce.com internally since our company's inception, so we're customers of this type of service.  And for our customers, we've always offered our Strategy Execution software application as a monthly or quarterly service.  Based on our experiences and those of our clients, I think there is going to be a huge move to SaaS offerings over the next few years.  Let me illustrate with a tale of two projects...

Overcoming the Question that Kills Balanced Scorecards

If you're leading the development or deployment of a Balanced Scorecard framework, you must be prepared to answer this question when it inevitably comes up: "Does this mean extra work?"

I consider this to be the toughest question that you'll face because, if not answered properly every time it's asked, this question can destroy your Balanced Scorecard framework.

Are you prepared to answer it?

There are five parts of the answer and all five are necessary:

Clockwork Strategy Execution

This past summer, I started working with a client where the project sponsorship for Balanced Scorecards/Strategy Execution resides within the strategic planning function. In this instance, we started our initial discussions around how to provide a better strategic planning automation system.

I’ve been down this path before, and I’ve built and seen just how work-flow intensive and complicated the automation of the planning process can be. Furthermore, I’m convinced that the automation of the planning cycle is somewhat of a low value-add. Planning is about communication, discussion, analysis, disagreement, and hard choices. Applying a coat of technological asphalt over the process isn’t necessarily a good thing.

So, the conversation morphed into one that crossed their functional boundary into that of strategy execution –- which meant we were really talking about the emerging idea of an Office of Strategy Execution. This label hasn’t been openly applied at this client as of yet, but the planning folks are already way down the path of thinking about how to ensure execution occurs (which is clearly beyond their existing functional definition, but the realization of the gap makes it now impossible to ignore). The key is that planners want to see and ensure the results of their plans.

The realization and point I want to make in this posting is that organizations work in clockwork cycles. Appreciating the nuances of these cycles and their inter-related timing is crucial to better strategy execution, wherever it gets its start.

Strategy Execution Grows Up

This week I attended the Ventana Research Connections Conference, where the 2007 Performance Management Leadership Awards were presented.  I'm glad I went, not only because our clients won two of the top three awards, but also because I saw even more evidence that companies are accelerating their understanding of "performance management" -- in fact, I think this maturing trend is becoming a flood.

At our client conferences over the past several years, the discussions and questions have evolved from "how do you do this?" into lively exchanges around much more mature topics, like how to encourage culture change and how to drive/sustain long-term improvement. We now have large organizations sharing best practices from multi-year implementations.  The Ventana folks confirmed during their wrap-up that they are seeing the same things.

Getting Results Fast – An Action-Oriented Balanced Scorecard

Building a Balanced Scorecard framework is tough work. Identifying and gaining agreement on key strategic objectives, measures, and initiatives, and then linking them all together in a meaningful way across an enterprise requires a major effort.

Despite all this expended energy, we sometimes come to the end of a scorecard-building project with a client and feel like the effort has been mostly academic. Yes, it might have provided some new strategic clarity and generated some enthusiasm. But every so often, these efforts stop short of addressing the key things that we know are broken in an organization.  We haven’t managed to address the “elephant in the room,” i.e., the one big, high-priority issue in the organization that everyone knows needs to be fixed, but can't figure how to tackle.

So we ask "why not?"  Why not create a set of initiatives that address that big, overwhelming problem?  Why not link these initiatives to the top-level scorecard?  Why not tackle the root of the most important issue troubling the organization?

Most often, it seems that the "elephant" doesn't get addressed because client teams see the scorecard as a tool for long-term strategic alignment and synchronization (which it is, of course), but do not see how to use it to fix more immediate pressing issues (the elephant).

How do you use the scorecard to both ensure strategic alignment and long-term results and also to attack the primary problem(s) confronting the organization right now?

Technology Clarifies Strategy Execution

Last week, ActiveStrategy's seminar series on Enterprise Strategy Execution had a stop in San Francisco. While delivering my 6th of 9 presentations at this 2-day event, something hit me.  Let’s call it a small epiphany (though really it’s something I’ve known all along, but am just now fully embracing).

My focus within ActiveStrategy is on providing consulting support to organizations wishing to pursue better Strategy Execution.  So, my perspective can be rather myopically focused on how to teach and educate executives on the methodologies of strategy execution.  As we all know, just gaining this understanding is a major hurdle and the first part of the change process in the strategy execution evolution or journey.

Though ActiveStrategy is also a software company, I often find myself avoiding references to the software and explaining strategy execution as divorced from software or automation. This has been partly to ensure I'm operating with complete integrity for my clients and partly because I've feared that bringing in a  software discussion might cause confusion, diverting attention away from learning the core, underlying methodology elements, which are the prerequisites to using the software.

Getting Executives Involved & Enthusiastic About Strategy Execution

If you're driving toward Strategy Execution or Performance Excellence within your organization, you know how critical it is to get the executive team to be as passionate as you are about this effort. If you're having trouble building this enthusiasm among members of your senior management team, perhaps the following approach can assist you. I've seen it work wonders.

Once you've held a strategy session to develop your key strategic objectives for the coming year that will live on your scorecard, assign each top level objective to one of the executives on the senior team, making it clear that they will be responsible for identifying and managing the right measures, stretch targets, and cross-functional initiatives to achieve their objective across the organization.

They will be the “Executive Sponsor” for deploying and achieving that objective for the entire organization. Use an Objective Charter to help the executive identify the business case for the objective (why it is important and what problem it is addressing), the measures and targets, the potential initiatives, and the individuals who will lead the initiatives.

Thanks for nothing, Boss.

Of the many things described by the term "Performance Management," one flavor is all about the "human" or "human resources" aspects of getting better results. There are lots of "Human Capital Management" (HCM) vendors, lots of hype, some good blogs, and just maybe some real results. 

Many of these vendors describe their personal goal management modules as "performance management." They may even let you link a goal or two to a list of corporate strategy statements, but be wary of people who have this approach in mind when they discuss performance management.

The HCM approach differs greatly from the "strategy execution" approach to performance that we espouse, which entails a much more rigorous approach to aligning people to corporate strategy.

Yes, I know things like talent management and compensation management (especially) can be really tricky, but from what I'm seeing, most of the action in this Human Capital space is around automating reviews and managing employees' personal goals. And they tend to be fairly simple applications in this regard.

In addition to this skepticism I have about the degree of linkage and strategic alignment most HCM vendors can provide, what I find myself scratching my head about the most is the functionality many of them tout to expedite and automate the employee review process.

How Much Data Do You Need for Strategy Execution?

I love data. There I said it.  I’ve been building warehouse and big systems to move, load, report, compile, assemble, convert, and present data for most of my career. But I have come to learn that when implementing Strategy Execution, too much data can be worse than not enough.

One of the first questions that a Strategy Execution implementation team faces is: How much data will we need?

You really can’t answer this question unless you have been through a good round of strategic planning and have identified your strategic objectives, measures, and targets. 

Even then, you need to make sure your team and your sponsors understand the difference between scorecards, dashboards, and reports or you will be heading into trouble.  We once worked with a manufacturing client that wanted to build a Strategy Execution system, but  ended up with a 40,000 metric assembly line production reporting system. Fun, but not strategic.

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