Transcription
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D“However beautiful the strategy, youshould occasionally look at the result.”Winston Churchill 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R utionStrategy Execution and the Balanced Scorecard:The Three Imperatives of Strategy ExecutionHoward Rohm, Co-Founder and CEOBalanced Scorecard Institute,the Strategy Management GroupApril 2016 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DStrategy Execution: Leading and CommunicatingEffectively to Get Important Things Done in aClimate of Teamwork, Continuous Improvement,and Change“Only 9% of companies are rated excellent at execution.”(PMI Pulse of the Profession: The High Cost of Low Performance, February 2014) 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DTopics What are the Imperatives of Strategy Execution? How can a Balanced Scorecard improve StrategyExecution? Practical Tips for improving Strategy Executionwww.balancedscorecard.org 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D“Strategy Management” Includes Strategy Executionas a Distinct Phase That is Part of a Continuous Process BalancedStrategic Plan Strategic FocusStrategy Aligned Strategic &Operational Plans Aligned People,Processes, TechnologyStrategic12FormulationAlignment4 Focus onResults ContinuousImprovementStrategy3ExecutionPerformance Analysis& Evaluation 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe Balanced Scorecard Has Evolved From a PerformanceMeasurement Tool to a Complete Strategic Management System21st Century Strategic Balanced Scorecard Management System (BSI 2010)“Strategy Formulation, Strategic Alignment, and Strategy Execution”Integrated Strategic Planning & Management System (BSI 1997)“Holistically align an organization for high performance”Strategy Measurement/Management (K&N 1995)“Strategy focus, measurement & execution”KPI (Key Performance Indicator) Scorecard (Kaplan & Norton 1992)“A balanced set of measures” 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe BSC Has Characteristics That Support Strategy Execution The discipline associated with using an integrated framework for managing strategy Consistent definitions of terms that mean the same thing throughout the organization The use of cross-functional teams to develop and implement the scorecard system Individual and collective accountability for results built into the process Transformation and change management built into the process Performance information shared and widely available to better inform decision making Team and individual empowerment to continuously improve processes Prioritization of strategic initiatives to focus on the most important things A heavy emphasis on outcomes, results and accomplishments Creation of a performance culture Deeper conversations, leading to more encompassing discussions of situations and options 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe Three Imperatives of Strategy Execution: Leadership intent, clearly communicated and acted upon Aligned people, processes and systems A Performance Culture focused on continuous improvement and results 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThree Strategy Execution Imperatives Leadership intent, clearly communicated and acted uponLeadership challenges affecting strategy execution include: Strategy doesn’t seem very important to someleaders they seem more concerned with operationsand projects Leaders are not engaged in the strategy leadershipprocess Responsibility for strategy is delegated to a strategicplanning office—typically this is a support office withoutdirect line responsibility for results Poor communications and poor channels forcommunication lead to strategy being poorlyunderstood below the senior management team level 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DLeadership Intent Clearly Communicated and Acted UponSource: Adapted from “Ladder of Communication Effectiveness”, HAINES CENTRE for STRATEGIC MANAGEMENT, 2005 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DLeader Behaviors “Walk the talk” Get the right people in the right jobs Communicate the change journey and removeng obstacles Build a “coalition of the willing” to achieve the organization’s shared visionof the future Communicate and translate vision into strategy and action—the “why” and“how” of the business case Build employee buy-in and support for the change journey Align employees and processes to strategy 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DExample: Clearly Communicating Strategy at an Internet BankMissionVisionCustomer Value PropositionOrganization Enablers and ChallengesPerspectivesStrategic ResultsOrganizationalCapacityTheme:Innovation ThroughTechnologyTheme:Service ExcellenceInternal ProcessTheme:Strategic PartneringCustomer/ StakeholderTheme:Operational ExcellenceFinancial/ StewardshipEngaged Leadership – Interactive Communications – Core ValuesTheme: InnovationThrough TechnologyStrategic Objectives: Increase revenues fromonline banking Improve ease of accessfor customers Reduce errors Strengthen on-line, 24/7capability to accessbanking services Increase use of newtechnology 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe BSC Enables Strategy Execution Through Leadership Discipline andCommunication ClarityLeaders EngagedTeam and Transformation Culture EstablishedStrategy Focus SustainedStrategy Results Discussed and Acted UponProject Management EmphasizedObstacles Removed 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThree Strategy Execution Imperatives Aligned people, processes, and systemsAlignment challenges affecting strategy execution include : Lack of employee involvement Complaints about not knowing what is going on Unstructured, poorly run meetings Quality problems and missed deadlines Little teamwork and collaboration Too many initiatives being pursued Processes that might be aligned within departments, but are misalignedwhen looking across multiple departments 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DAligned People “30% of managers cite failure to coordinate across units as theirgreatest challenge to executing their company's strategy.”(Harvard Business Review. Why Strategy Execution Unravels - and What to Do About It, by Donald Sull, Rebecca Homkes and Charles Sull, March 2015) 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D and Processes erFinishProcessReviseOrderNotifyCustomerof ProblemNoIs OrderReady?Problem NoResolved?YesYesCheck issues: Credit card Complete contact information Product in stockRejectOrderPackageand ShipProductApprove/RejectCharge 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D and Systems FormulateBudgetInput Measures: Funds, FTEsCommunicateStrategyAssess theOrganizationFormulateStrategyStrategic Measures: Outcomes Outputs Risk ChangeManagePersonnelPersonnel Measures: Capacities &Development BehaviorDevelop Operating PlanExecute Strategyand Measure ResultsKPI Reporting & Analysis: A subset of the most importantmeasures for the organization to trackOperationalMeasures: Outputs Process InputsProjectMeasures: Schedule Resource Scope Risk 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D To StrategyStrategy Map/ ObjectivesMeasuresTargetsInitiativesTier 2Dept., Business Units, etc.:Customer Department Business Purpose Department Programs &Products & tegy Map/ ObjectivesTier 1Organization Wide: Mission, Vision, CoreValues etc. Strategic ativesTier 3: Teams (Job Description) andindividuals Objectives, Measures andInitiativesOrganizationalCapacityPersonal ObjectivesMeasuresTargetsInitiativesQuestion: why is this more effectivethan cascading measures or initiatives? 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DExample: Aligned Strategy And Operations in a Manufacturing PlantCascading the corporate scorecard to business units and teamsFinancialExample:CustomerExample:Corporate ProfitabilityOperatingDivisions Customer Operating MarginDivision #1 DirectorSatisfaction Variable CostsManager Variable Costs Mfg. Overhead CustomerRetention On timedelivery QualityTeam # 1 Scrap Rate Labor/ Unit Supply Availability Schedule Adherence 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe BSC Enables Strategy Execution Through AlignmentEmployees AlignedProcesses AlignedOperations, Financial, and Personnel Systems AlignedInitiatives and Measures Aligned 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThree Strategy Execution Imperatives A Performance Culture focused on continuous improvement and resultsCulture challenges affecting strategy execution include : Lack of teamwork and coordination across departments Leaders seem only interested in what happens in theirown functional areas Lack of incentives for performance and desiredbehaviors Ineffective use of performance information to improveprocesses and results Failure to consider resistance to change and take stepsto mitigate it 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DA Performance Culture Uses Performance Information Theme:Theme:Exceptional Customer ServiceTheme:Reliability & ValueShaping Our FutureStrategic Result:Strategic Result:Strategic Result:Consistently exceeding customers’expectationsDependable, quality utility servicesat a reasonable costCapitalize on new opportunities InternalProcessesOrganizationalCapacity Earnings / Employee % satisfied Quality rate Employee satisfaction Earnings / Share % repeat Productivity Employee trained Sales growth / year New accounts added Downtime % cross trained Profit / sales New products added Bottlenecks Cash on hand % of key demographic Time in queue Training hours/employee Sales / prioritycustomer Average spend rate Average inventory Time to purchase Hours lost to injury Missed deadlines Return on equity Computer currencyUnderstand How Organization Capacity and Business Processes “Drive”Customer and Financial Results 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D and Project Management Information“Only 56% of strategic initiatives are successful.”(PMI Pulse of the Profession: The High Cost of Low Performance, February 2014)Candidate Initiatives (example) Marketing campaign Pre-promotion studies Business ProcessReengineering Process improvement TQM proposals Training CoursePolicy analysisR & D effortsBranding studiesWorkflow improvements Scoring CriteriaFilterPrioritized Funded Initiatives (example)1.2.3.4.Branding StudiesWorkflow improvementsMarketing campaignTraining Course, etc.– Budget required– Results anticipated– # objectives covered– Time needed Simple Voting 2 x 2 Matrix Paired Comparison Other 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DExample: “Connecting the Dots” at an Energy Company 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DThe BSC Enables Strategy Execution by Creating a Performance CultureResults and Accomplishment FocusContinuous Improvement FocusPerformance Information Used and UsefulPerformanceRewardedAlignedInitiativesand Measures 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DSummary 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DSummary — Some Practical Tips to Improve Strategy Execution Define governance, and leadership roles and responsibilities for thestrategy effort at all levels of the organization Prioritize and down-select initiatives to get to the few that matter Communicate the strategy throughout the organization Structure periodic review meetings to focus more on strategy andresults, and less on projects and tactics Empower cross-functional teams to continuously improve processes Continue to refine KPIs to get to the most meaningful measures,and to define and measure the drivers of results Incorporate change management early Adopt a project management mentality to get things done 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DManaging Change—the Levers of ChangeVision ActionableStrategy Capabilities Incentives Resources Urgency SuccessVisionLacking ActionableStrategy Capabilities Incentives Resources Urgency ConfusionVision ActionableStrategyLacking Capabilities Incentives Resources Urgency False StartsVision ActionableStrategy CapabilitiesLacking Incentives Resources Urgency AnxietyVision ActionableStrategy Capabilities IncentivesLacking Resources Urgency Restraint,ResistanceVision ActionableStrategy Capabilities Incentives ResourcesLacking Urgency FrustrationVision ActionableStrategy Capabilities Incentives Resources UrgencyLacking ApathySource: Adapted from Performance Breakthroughs, Inc. 1997-2016 Balanced Scorecard Institute.
ReferencesS T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DAdvance the practice of strategy toachieve superior organizationalperformance.ASP is a non-profit professional society whose mission is tohelp people and organizations succeed through improved strategic thinking,planning, and action. ASP is the only certification program in the world offeringcredentials for strategic planning and management professionals based on arobust Body of Knowledge. 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DUse the Strategic Management Maturity Model to Baseline YourPerformanceMaturity LevelsLevel 5: Continuous ImprovementLevel 4: Managed and FocusedLevel 3: Structure and ProactiveLevel 2: ReactiveLevel 1: Ad hoc and StaticDimensions: LeadershipCulture & ValuesStrategic Thinking & PlanningAlignmentPerformance MeasurementPerformance ManagementProcess ImprovementSustainability 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DYour Presenter 40 years experience as an international speaker, trainer,college professor, facilitator, author, and consultant ASP Board of Directors and Certification Program Pioneer Developer, Nine Steps to Success Balanced Scorecardframework and Balanced Scorecard Institute ProfessionalCertification Program Executive Director, U.S. Foundation for PerformanceMeasurementHoward RohmSMP, BSMP, CPTCo-Founder and PresidentBalanced Scorecard Institute Director of Performance Information Systems, HighlandTechnologies Executive Director, Advanced Nuclear R&D Program, U.S.Department of Energy Management Consultant, Booz Allen & Hamilton Operations Research Analyst, U.S. Atomic Energy Commission Bachelor and Master degrees in Engineering -- Iowa Stateand George Washington University 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R D“It’s a journey not a project.”Download this presentation here:www.balancedscorecard.org/stratex 1997-2016 Balanced Scorecard Institute.
S T R AT E G Y E X E C U T I O N & T H E B A L A N C E D S C O R E C A R DSome Balanced Scorecard Feedback“[The Balanced Scorecard methodology] is like having a playbook on what we should be doing.”--Maureen Lavan, GIS Manager, Greenville Utilities Commission“We have been growing business and developing new products and services that our clients value ever since we startedworking with the Balanced Scorecard! We now run our entire organization around our GREAT strategy maps—every meetinginvolves a discussion around objectives and initiatives”—Joan Wade, Administrator, CESA 6“We decided to take a look at research of the management system and I am convinced this is a methodology for linkingmission, vision with objectives for the benefits of our clients and stakeholders. In other words, it is a tool that will allow us toassess where we are and how we can move forward and where we want to go in the future.-- Israel Hernandez, Assistant Secretary, U.S. Department of Commerce“ a structured, consistent and well directed program on strategy development and implementation. This will definitely have abig positive impact on our management process henceforth.--Kalyebbi B. Magoola—Uganda Revenue Authority“On several occasion we recognized that we were having discussions that would not have been possible in the past. We have avery diverse organization and the organizational alignment that is being created is one of the many benefits we are beginningto see. With shrinking revenue we have hard decision to make on where to allocating limited funding. [The Balanced ScorecardInstitute] will provide us with the information necessary to prioritize requests and provide funding were it can give us the mostbenefit toward achieving our long term strategies and improving our organizational performance.”--David M. Schmit, Director, Arapahoe County Public Works and Development“The process has been invaluable in helping us think strategically about our work, our goals and priorities, and our officeculture”--MaryAnn Monroe, Program director, National Cancer Institute 1997-2016 Balanced Scorecard Institute.
1997-2016 Balanced Scorecard Institute. STRATEGY EXECUTION & THE BALANCED SCORECARD The discipline associated with using an integrated framework for managing strategy Consistent definitions of terms that mean the same thing throughout the organization The use of cross-functional teams to develop and implement the scorecard system Individual and collective accountability for .
