SFO Blog - Helping You Build Your Company into a Strategy Focused Organization

On Failure, Success, and Business (Canadian Style)

There was a provocative op/ed piece in The Globe and Mail newspaper last Monday. In it, Amanda Lang, Senior Business Correspondent for CBC News wrote that Canadians need to allow their kids to learn how to fail (read the article here). More specifically, Lang explored the idea that avoiding failure is a fundamental feature of Canadian culture that, in part, explains the chronically underwhelming levels of productivity in Canadian businesses. She suggests that the Canadian cultural traits of politeness, collaboration, valuing the collective over the individual, and celebrating participation over winning may be translating into behaviour that is focused on avoiding failure.

At the end of the article, Lang argues that unless we Canadians become comfortable with failure, and come to terms with the idea that there really is life after failure, business in the Great White North will never rise to the next level and fulfill its potential for extraordinary success in a global economy.

 

Lang’s article got me wondering – Are Canadians really uncomfortable with failure and are we programmed culturally to avoid failure at all costs?

It’s tempting to agree with her argument. You don’t have to look very far to see this effect in action – just watch Dragon’s Den (the Canadian version of Shark Tank). How many times have you seen the dragons fail to invest in a seemingly good business idea because the entrepreneur has a failure under their belt? And while you could argue that a television show doesn’t necessarily provide a real window on the investing climate in Canada, I would bet that it isn’t too far off. It seems that failure just isn’t something many of us Canadians want to be associated with.

 

But – is it really as simple as this?

I would argue that it’s actually a bit more complicated. In fact, I suspect that the real problem is in the Canadian relationship with the double-edged sword of success and failure.

 

The Canadian Perspective on Success

One way of defining success is to take an outcome-based approach and think of it as the state of reaching an intended objective - anything less is considered a failure. As a Canadian, I think that I can fairly say that we are, as a population, notoriously uncomfortable with success defined in this way. And setting BHAGS, achieving them, and leading in a global world (in other words, achieving large scale success) makes us almost squeamish.

Here’s an example. Just look at our collective discomfort with the “Own the Podium” sport development programme. Its primary objective is to put record numbers of Canadian athletes on the top of the podium in international sports competitions. The programme invests in those athletes with the highest potential for winning and regularly makes, and re-allocates, funding based on the “ROI” on the athlete development investment.

Aggressively pursuing success in this way just doesn’t feel “Canadian” to many. In fact, as a population, we tend to suffer from what is known as “tall poppy syndrome” - a social phenomenon in which people of genuine merit are resented, attacked, cut down, or criticized because their talents or achievements elevate them above or distinguish them from the group. Wildly successful individuals and companies that achieve stretch performance objectives and noteworthy results are often on the receiving end of envious comments and ridicule for having the audacity to dream big and actually succeed on the world stage. Given this environment, there is actually a big incentive to avoid being visibly successful from an outcome achievement perspective.

While Canada does have globally successful companies, it’s often a very well kept secret. Some might think that this is just good old Canadian modesty in action – I often wonder whether it’s an effort, unconscious or not, on the part of company leaders to be an invisible tall poppy.    

As a direct result of our collective uneasiness with outcome-based success, Canadian culture has gravitated to a perspective that feels a little more comfortable (and less risky). That is, while we acknowledge the outcome-focused all or nothing approach to success, we have, as a group, settled into believing that putting in a good effort and making progress, even if the intended outcome isn’t fully achieved, is an equally relevant form of success. Taking this approach allows us, as individuals and a group, to feel that we are experiencing success without having to commit, invest, and go big. That is, we appear to have created our own low risk road to success.    

 

The Canadian Perspective on Failure

People who take the outcome-based approach to success naturally define failure as not reaching their intended objective. When you define it this way, failure can be frequent and that hurts. No one (not just Canucks) likes to put their heart and soul into something that has a high risk of failure. But many people do just that because they have learned to get up time and time again after failure for the chance to taste success.

But what about Canadians who seem to take that process-based approach to assessing success versus failure?  I suspect that, as a population, we define failure more harshly – not just as not winning. I worry that we in fact equate failure with the worst possible, most extreme outcome - losing it all financially and/or emotionally. I know many individuals, entrepreneurs, and business leaders who actually see it this way. Most of us have never experienced losing everything and, as a result, we don’t have the faith that we could ever start over from a zero situation. We are generally petrified of “failure” – who wouldn’t be when you look at it like this?

And while we have all heard stories about those who arrived on our shores with almost nothing, only to achieve impressive financial success, this type of “American Dream” is not generally part of the Canadian cultural identity or the story we tell ourselves. In the end, I believe that the fear of losing big drives people and businesses into a risk-avoidance mindset that translates into hesitance to put it all on the line in an effort to achieve exceptional results and returns.

 

Could it be that the real problem in Canadian business is that we unconsciously fear, and therefore avoid, both outcome-based success and our collective definition of failure?  I think that it could be. Ironically, as we strive to achieve our process-based approach to success, avoiding the risk of achieving massive success and standing out from the crowd, we are also able to avoid the risk of significant loss. This “up the middle” approach could explain why many Canadian companies achieve incremental improvement and only modest levels of productivity, growth, and success.

 

In other words, could it be that being pretty good is just fine with us as a population and business community?

 

To be more successful in a global world, I believe that Canadian business would do well to adopt a new relationship with success and failure. Here are five steps executives and business leaders can take to assess and, if indicated, change mindsets:

 

1. Honestly assess organizational attitudes about success and failure. If required, begin a process of shifting core values to create more positive attitudes about outcome-based success and a healthier definition of failure.

 

2. Evaluate company goals, and performance objectives and targets. Are you settling for pretty good and incremental improvement? Why? If you are setting BHAG’s, are they big enough? Why or why not? Adjusting performance goals and targets alone won’t cut it – you’ve got to adjust mindsets as well.

 

3. Examine corporate behaviours. Do you lop off your tall poppies or do you support and celebrate achievers and achievements? Why or why not? How does the approach to tall poppies inside your organization impact the drive to make your company a tall poppy in your industry and in the global marketplace? What do you do to cultivate and invest in your tall poppies? What should you be doing more of?

 

4. How does your organization define and handle failure? Create an environment where failure isn’t necessarily the worst possible outcome and don’t jump to punishing failure as a first response. Change the focus to learning from failure and avoiding repeat mistakes. Build resilience in the face of failure – create organizational capability to recover and strive for success again.

 

5. Focus on risk mitigation and smart risk-taking rather than risk avoidance. This opens your organization up to more opportunities for creative thinking and problem solving, innovation, and quantum leaps in performance.

 

Unfortunately, as Amanda Lang suggests in her article, being satisfied with year over year incremental improvements is causing Canadian businesses to leave lots of opportunity on the table – opportunity that is being lost incrementally over time.

 

It’s time for a change.

Agree or disagree - what's your take? Does Canadian business have a challenge when it comes to achieving success and what do you think is the root cause? Please comment and add your thoughts.

Do you think that businesses in other countries face similar challenges? What are they and what do you think the solution is? Please share your thoughts.

The Essentials of a Great Balanced Scorecard Report

I frequently get asked for examples of really effective balanced scorecard reports. It seems that many people are unsatisfied with their initial attempts at balanced scorecard reporting. The usual complaints I hear about BSC reports include: “it doesn’t help us focus on what’s important”; “there’s still too much information in the report”; “it’s not easy to read and/or understand”; “it doesn’t include the “right” information”; and “it’s just plain ugly to look at”.

While there are lots of other areas of dissatisfaction, these are the main ones.

 

The key to creating a better BSC report is to rethink the idea of a results report all together. It is essential to start with the purpose of a BSC report first and then, with this in mind, create a new “style” of report that fits optimally with that purpose.

The biggest mistake I think people make when designing their BSC report is to assume that the format of the typical financial or MIS report will work for BSC results reporting. In almost all cases, if you think about the objective of the typical financial report versus a BSC report, you will not come up with the same answer. This should tell you something about the need to design a better BSC report.

 

So let’s take a closer look at the various purposes of the balanced scorecard and talk about the elements of a BSC report that align with/support them.

Measure and assess strategic objective health in “real time” – supporting BSC report elements: a color-coded strategy map; access to strategic objective definitions and “owner” names (i.e. accountability information); color-coded results data; results data versus performance targets (i.e. graphs, tables, trend charts, etc.); results commentary; and historical performance results data

 

Actively manage and improve the execution of your strategic objectives – supporting BSC report elements: a color-coded strategy map; results commentary including root cause analysis and corrective action plans; active links to root cause operational information; active links to critical business documents such as project charters and progress reports and process management information; active links to accountability information (i.e. who in your organization has accountability for various aligned strategic and operational elements of the business); and active links to internal discussion forums (including information on and ideas for improvement)

 

Evaluate and manage the progress and effectiveness of your business strategy – supporting BSC report elements: a color-coded strategy map; results data versus performance targets; results commentary; active links to internal discussion forums; active links to key internal information and external environment/market/industry and customer/stakeholder information and feedback, and information sites 

 

A catalyst for discovery, learning, problem solving, and the refinement of both operations and strategy on an ongoing basis/adjust and refine your business strategy as required – supporting BSC report elements: a color-coded strategy map; results commentary including root cause analysis and corrective action plans; active links to root cause operational information; and active links to discussion forums and relevant documents

 

A communication vehicle – What are key the elements of great communications? They are focused on the information needs of the audience so they give the audience the information they need, when they need it, in the format they need/want it in. They feature clear and focused messages. And, they are easy to understand. A great BSC report keeps all of these elements in mind by being uncluttered and easy to read/navigate and understand, and by presenting information to unique users in a way that works for them.

 

So – a great BSC report contains certain information elements presented in a logical order that is designed to help focus the viewer on layers of information that progress from the high level to greater amounts of detail. This approach helps viewers focus their attention more easily. However, a great BSC report must also be flexible to individual user preferences.

 

Here are some of the “must have” elements for a BSC report to be GREAT in my mind:

A “color-coded”* strategy map – I feel strongly that your BSC report should start here. Your balanced scorecard is all about your business strategy and measuring and managing strategic objective health - a color-coded strategy map gives you an overview of how each strategic objective is doing based on the performance of the associated balanced scorecard indicators. Further review of balanced scorecard results should proceed from there.

Some companies like to guide viewers from their strategy map and have them progress to the next level of detail/information following certain criteria. For example, they might look at all strategic objectives performing in the red and/or yellow zones; or they might look at all priority strategic objectives performing in the red and/or yellow zones; etc. Whatever criteria your organization chooses to use, your BSC report should guide your viewer to the next level of information and detail  in a focused way.

* just a reminder – a certain percentage of your viewer population is color blind. Rather than color-code performance results (strategic objectives and BSC indicators), consider using icons instead of colors to give viewers a quick way of assessing whether performance is under, at, or above target.

 

BSC indicators and their strategic objective – When your viewer looks at a BSC indicator, they should always be able to see the context for that indicator or where it fits in relation to the business strategy. Including strategic objectives in your balanced scorecard hierarchy keeps that relationship front and center.

 

Strategic objective and BSC indicator definitions – It is easier for viewers to make sense of what they are looking at, as well as the implications of certain performance results, when they can access strategic objective and indicator definitions. Make them easily accessible to your viewer.

 

Color-coded BSC indicator results – Before your viewer even sees results data, let them see color (or a performance icon). Color gives your viewer important information quickly and allows them to decide whether they want to go to the next level of detail of indicator performance results to investigate further.

 

BSC indicator performance data – Performance results should always include an actual result and a comparator. If you are using multiple comparators, your BSC report should allow viewers to see actual results versus their preferred comparator with just a click. Performance results should be available either by measurement period or in a year to date format – viewers should be able to toggle between views. Last but not least, results data should be available in your viewer’s preferred display style – for example, graphs, trend charts, table, etc. Graphical presentation should always be your starting point because it’s just easier for your viewer to assess performance quickly when there’s a picture involved. More detail oriented viewers can switch to a table presentation, for example, if they prefer.

 

Embed results commentary and other relevant information with indicator results data – Your BSC is meant to convey strategic information. “Information” is a combination of data, analysis and commentary, and other relevant documents. It is critical for learning and improvement that your BSC report present your viewers with a combination of data, commentary, and other relevant information, where available, for each indicator.

 

Other – A great BSC report is dynamic, is easily customizable to viewer preferences and needs, and “remembers” a viewer’s unique preferences from report to report.

 

By now, I’m sure that you are wondering how the typical BSC report can do this. The answer is that, in my opinion, it can’t.

 

The way we traditionally think of a “report” just isn’t conducive to great balanced scorecard reporting primarily because it’s static. And while you might be able include some of the elements outlined above in a traditional BSC report, you will never be able to give your viewer the ability to interact with the traditional BSC report in a way that is customized and meaningful to them (not without a great deal of time and effort that is). This is a critical limitation because having this ability is critical for really engaging your viewers/employees and stakeholders with your business strategy.

 

In fact, a great BSC “report” isn’t a report at all! A great BSC report is a dynamic interface on, for example, a computer, tablet, or mobile device that provides viewers with access to a defined suite of important strategic information that is presented in a way that helps the viewer navigate from high level information to detailed information while ALSO allowing them to have a customized experience with that strategic information.

 

However, your balanced scorecard report isn’t just a tool for displaying business performance results – it’s ultimately a vehicle for engaging your viewers/employees and stakeholders with your business strategy and getting them involved in the strategic conversation. Most importantly, a great BSC report facilitates the best use of the balanced scorecard within your organization and allows you take full advantage of the power of the balanced scorecard.

 

Organization’s that are truly committed to getting the most out of their balanced scorecard must rethink their approach to balanced scorecard reporting and make the transition to a dynamic type of “report” (like the ones provided by BSC software applications). To make the most impact, this new type of report must be accessible by all users and give individual viewers the option to quickly and easily customize their view of strategic information so that they can interact with it on their own terms and then participate in the process of shaping and executing your business strategy, on an ongoing basis.   

 

Using Social Media Tools to Super-Charge Your Strategy Execution and Business Performance Management Investments

The use of social media and social networking tools is exploding outside, and more recently, inside the business world. A few years ago, many business leaders were wary of using social media and networking tools in their company – they couldn’t really see the applications. Generally, the feeling was that things like Facebook and Twitter were for socializing outside of work and keeping up with your group of personal friends. And blogging and Wikipedia were simply interesting and potentially useful external information sources.

It didn’t take long, however, for savvy business leaders to see that you could transfer the concept of connecting with your friends to connecting with your company’s “friends” – AKA customers! Once people made this leap, we started seeing Facebook fan pages for companies and began hearing about businesses using Twitter to connect in “real-time” with their customers. Some leading companies were even able to harness social media for innovative and profitable marketing campaigns; to drive customer traffic to their businesses; to dialogue with customers about new products that will meet their needs; and to respond to customer inquiries pro-actively and quickly. These are just some of the examples we have all heard about. The best part is that social media and social media tools allow companies to get really innovative about how they connect with their customers.

 

With this experience under our collective belts, the time is right for business leaders to take the next leap and think about how social media and networking tools can help them connect with their company’s “internal friends” – employees, business partners, and suppliers. More specifically, there is a huge opportunity for companies like yours to leverage these powerful tools to connect with the other key players in the equation that drives business success, and get them intimately involved in designing and implementing your organization’s strategy for success.

If you’re going to take the time to make investments in strategy creation, execution, and management and change the way your organization works to produce better business performance results and sustainable success, why not consider taking action to multiply your efforts? Let’s look at the four key ways that social media and social networking tools can do this for you and your company.      

 

Supporting Better Strategy Communications

It is impossible to execute your business strategy if your stakeholders, including your employees, business partners, and suppliers, don’t know about/understand it. Not surprisingly, this is where communication comes in. The first thing that always astounds me is that so many companies don’t have a cohesive, formalized, and adequately funded strategy communication plan. So if you don’t have one, you need one. A good strategy communication plan addresses the communications required before, during, and after your strategy launch. A clear plan for ongoing strategy communications is absolutely critical for strategy execution success – don’t assume that after you launch, everything will take care of itself. Ongoing communications keep your strategy vibrant and alive in the minds of your stakeholders.

When companies do have a strategy communication plan, the next problem I see is what I call a “flat” plan – one that includes few, and possibly dated, approaches to, and vehicles for, communication. Do your communications revolve primarily around emails, town hall meetings, and hidden updates on your intra and internet? If this describes your approach then it is almost guaranteed that you are sub-optimizing your investment in strategy communications. What you need is a better balance (i.e. in face to face versus electronic modes; in long and detailed versus short and quick communication methods; etc) - this is where social media tools come in.

If, for example, your favorite communication method is email you should think again. I know some people who easily get 150+ emails each and every day and I expect that it’s the same for your employees, suppliers, and business partners. No wonder communications via email never get to these people! Short, targeted messages that are prioritized and customized based on each audience’s information needs, sent via Twitter and/or by instant messaging, have greater impact and are more likely to get through to busy, distracted people.

Many people prefer to watch their information rather than read it. Posting short and informative videos on a YouTube-like platform can help get key messages across to your target audience better and faster. While face to face interaction is a critical must in strategy communications, town halls can be replaced with web conferences, Skype sessions, and online chats from time to time. These alternatives are particularly useful when time, distance, and availability to participate make face to face communications challenging.

I could go on but I think you get the idea. Leveraging social media tools, blending them thoughtfully with other communication vehicles, and using the best combination of communication modes and content to get your messages out will only serve to enhance the uptake and effectiveness of your strategy communication (and execution) efforts.

 

Creating Two-Way Dialogue and Building Employee Engagement

While effective one-way strategy communications are good, two-way communication and dialogue are even better! You know that you have really moved your strategy management efforts forward and that your strategy has become the “way we work” (a key goal for strategy execution success) when your employees, business partners, and suppliers are talking about your business strategy with you and with each other. Until now, there weren’t many effective ways of getting the conversation going. And while some organizations have been able to facilitate excellent conversations of this type in group meetings, many more meaningful strategy conversations go on between colleagues as sidebar conversations. Unfortunately, these never filter up and throughout the organization. Essentially, most strategy conversations that happen throughout an organization go unleveraged and most employees don’t get the opportunity to benefit from the great discussions that happen in group meetings they can’t attend.

Social media tools can play a critical role in (1) getting two-way dialogue going; and (2) getting more people aware of, and involved in, the conversations. For example, online groups, discussion forums, and chat rooms can facilitate more frequent and broader conversations about strategy and strategy execution between people from across your organization while also capturing these conversations in a format that can be shared, searched, and leveraged as part of a company’s strategic learning and strategy re-creation processes. Where appropriate, group discussion meetings can be broadcast over the web and/or video-taped so that non-attendees can either participate virtually in a discussion or benefit from seeing what others are thinking and saying about the business strategy and the opportunities for implementation and improvement (for example). These are just two ways that social media and networking tools can be used to facilitate better two-way, strategy-focused dialogue in, across, and beyond an organization. Best of all, these tools can both enhance the opportunities for employee, supplier, and business partner engagement with the business strategy AND build greater levels of employee engagement.

And why should you care about employee engagement? High levels of employee engagement have been routinely shown to translate into high levels of customer and stakeholder satisfaction and loyalty which, in turn, translates into strategy execution success and better business performance results.           

 

Facilitating Learning and Knowledge Sharing

Let’s be honest. You never get your business strategy right the first time. Plus, things change – your external operating environment, your customers’ needs and expectations, and your internal capabilities. All of this means that your business strategy must be dynamic, agile, and flexible to change. How do you do this?

 

How do you capture the important changes that require a strategic response?

 

How do you funnel customer and operational insights, that could have a meaningful impact on your business strategy, into the strategy refinement process?

 

How do you share knowledge and information about what works best to execute your business strategy, including customer and operational best practices and imperatives, effectively across your organization and with suppliers and business partners? And how do you do this quickly when a key direction or strategic business priority has changed?

  

In most organizations, there is simply no easy way to do these things well. As a result, learnings never get passed along, insights never get shared widely, and opportunities to keep your business strategy relevant and effective in the current environment are lost. All of this costs money and slows down the progress of your business.

Social media and networking tools such as blogs, chat and discussion forums, document and site links, and wikis (a website whose users can add, modify, or delete its content via a web browser using a simplified "markup language" – thanks Wikipedia!) are just a few examples of tools that can help facilitate organizational learning and best practice sharing. Essentially, tools such as these can begin to FINALLY make the concept of knowledge management, as it relates to the essentials of your business strategy, a reality in your organization.      

 

Making Collaboration and Innovation a Reality

If we all waited around for the CEO and senior executive team in any organization to come up with all the best ideas about strategic direction and strategy execution and improvement, businesses would move forward at a snail’s pace! Most successful companies know this and that is why they take action to harness the brainpower of the collective group (including employees, suppliers, and business partners) and get them thinking about, and working together on, meaningful ideas and initiatives that will transform the company strategically.

These companies have found ways to get collaboration and innovation going smoothly across their organization. And while they can and do form innovation teams, they also realize that great collaboration and innovation activities often happen organically - coming and going in a very dynamic way.

In order to remain responsive to the prospect of spontaneous collaboration, these organizations implement such tools as employee profiles, groups, chat rooms and discussion forums, and wikis to facilitate connections and make collaboration easy for everyone. When sanctioned innovative teams leverage these tools in their work as well, the result is optimized collaboration and the generation of new innovations that will move the organization, its business strategy, and performance results, forward in a positive way.    

 

A Final Word on Social Media and Networking Tools

There is no doubt in my mind that companies that choose to leverage social media and networking tools to support their strategy execution and business performance management efforts will see a huge ROI on their investment. However, I must point out that there are some risks associated with social media tool use (a quick search on the topic on the internet yields numerous articles by lawyers on the risks and mitigation strategies organizations should think about when utilizing social media platforms in business). For example, security and privacy concerns related to using external platforms such as Facebook and YouTube should be considered. Also, questions exist about content ownership when using external platforms for business purposes.

However, the good news is that applications that provide secure and highly functional internal social networking platforms are now available (check out: www.igloosoftware.com).

 

I predict that this is just the beginning of a wave that will give early social media tool adopters a huge business advantage. I hope that you will consider catching this wave and riding it now in an effort to realize the benefits - super-charging your strategy execution and business performance management investments!

 

If I Could Set the New Year’s Resolutions for Your Organization, I Would Choose These 3

I read an interesting article in The Globe and Mail (Canada’s national newspaper) last week on setting New Year’s resolutions. It said that evidence shows that more people keep and achieve their resolutions for the upcoming year when someone else sets them for them! I found this really interesting.

It seems that the key pre-requisites for success are (1) that the person setting the resolutions for you knows you and has unique insights into what you could benefit from working on (things that we as individuals often can’t see for ourselves); (2) that the person receiving the resolutions find them reasonable and accept them as being worthy of the effort; and (3) that the person setting the resolutions provide ongoing support and encouragement as the other strives to achieve the resolutions.

It turns out that the two-way accountability that occurs in this situation plays a critical role in the successful achievement of the New Year’s resolutions.

 

Now, I know that many people don’t bother to set resolutions. “They’ll just get broken before the end of January” they say. Others think that using the turn of the year as the trigger for choosing to make a change in behavior is a ridiculous idea. When you think about it, resolutions are really just goals and, by custom, we give our goals a special name at the beginning of the new year – probably to give them greater importance (and to increase the chance that we’ll actually stick with them).

Goals are critical for people AND organizations, no matter what time of the year you choose to set them. Goals give us something to strive for and generally drive us forward, whether it be in our personal lives or in the performance of our companies. Whatever trigger you use to decide to establish goals, and whether you call them resolutions or not, I support anyone who wants to strive for better performance and outcomes through goal-setting.

 

Getting back to the idea promoted by that article I read – I started wondering whether having someone from outside an organization set resolutions or goals could work in the same way as it does in personal situations. I think that it could so I thought that I would make some suggestions for your organization.

Recall that the first pre-requisite for success in this effort is that the person setting the resolutions knows the person, or company, and have unique insights into what they could benefit from working on.

Do I qualify? Maybe…..

Though I may not have the luxury of having personal knowledge of your company, I have worked closely with many organizations over the past year – giving me the chance to notice some similarities in opportunities for improvement across businesses. I have also had lots of conversations with business leaders and colleagues about the critical improvement areas for companies in a variety of industries and sectors. Finally, I have been keeping my eye on the trends in business over the past 12 months and have added these insights into the mix.

Based on what I have observed in, and about, organizations over the past year, here are the goals or resolutions I would make for your organization if you were to invite me to do so.

 

Resolution 1: Break Free from Your Focus on Short-termism

Short-term thinking is a big problem in many organizations. In the private sector, it seems to be driven by the demands of the street and shareholders to see continually improving financial performance quarter after quarter. In the public sector, it is often driven by the election cycle and the term of the existing political administration. For those jurisdictions where there is the chance of frequent government and policy change, many public servants feel that they have no choice but to adopt a short-term view in their work.

While I know that it is important to deliver short-term results in any organization, I never believe that a short-term decision (and result) is worth it if it destroys the long-term value of a company or will severely limit an organization in its efforts to successfully achieve its mission.

You will get no argument from me that there can be serious tensions between short-term and long-term objectives and decisions in any organization. The key to success (and the gist of this suggested resolution) is for business leaders to get back to managing this tension rather than focusing on short-term matters and decisions almost exclusively.

Sometimes short-term decisions will have both short and long-term benefits. More often than not, a short-term objective or decision will have negative consequences in the long-term. In this scenario, tradeoffs are required by business leaders. The key to doing a better job with these tradeoffs is to make both the short and long-term objectives of your organization visible at all times and to place them front and center in the conversation when business decisions are being made. This is called conscious decision-making – making short-term decisions with a full understanding of, and consideration for, their long-term impact on the objectives and direction of your organization.

 

So, here is how you can put this resolution into action:

Do not shy away from managing the tension between short and long-term objectives in your business decision making process by always taking the short-term route. Acknowledge that both the short-term and the long-term need to be actively considered and managed in every key strategic business decision and do it in an informed and transparent way as frequently as possible. Leverage such tools as a weighted strategy map and the balanced scorecard to do this more effectively. Model this behavior to all business leaders in your organization and help them do the same in their business decision making. While you will still find yourself making short-term decisions, you may find that you make different short-term decisions that provide a good short-term result while also benefiting the long-term objectives and prospects of your business.       

 

Resolution 2: Focus on Leading, Not Managing

Are you a manager or a leader? According to a definition offered by about.com, a manager “is a person responsible for planning and directing the work of individuals, monitoring their work, and taking corrective action when necessary.” This definition suggests a top down approach where the manager controls the work of others and that the thinking about what should be done and how to do it is the sole responsibility of the manager. Because of their propensity for action, many managers are very hands-on, controlling or micro-managing every decision the employees on their team make.

Does this sound like you? Most organizations have too many managers, even at the executive level.

Successful strategy execution and business performance is built on a different model – one where leaders lead. Leading includes: establishing the playing field and boundaries for employees (i.e. what’s in and what’s out in terms of behavior, direction, and work); opening up the lines of communication across the team and organization; facilitating, connecting, and integrating people across the organization; and getting out of the way so that people from all over the company can create innovative ways of putting the business strategy into action and make aligned business decisions that will move your organization forward in the right direction.

Leading in this way requires new skills including looking out, looking in, and looking ahead. It also requires asking “Are we doing the right things right?” and thinking strategically (i.e. thinking about the impact of today’s actions and business decisions on the future of the business). Leading successfully means helping managers and employees at all levels of the organization start thinking in this way and seeing that they are actually able to spend time on this as an expectation of performance (that is, making it a part of their regular work activities).  

 

So, here is how you can put this resolution into action:

First, consciously make the switch from managing to leading behaviors. Every time you catch yourself controlling the work and decisions of those who report to you, stop and take the time to change your approach whenever possible. Next, encourage those managers who report to you to actively become leaders. Model the desired behavior for them and coach them in the fundamentals of leadership. Finally, always ask employees knowledgeable questions, with a focus on strategy, about the fundamentals of proposed decisions and action plans. Test the validity of these decisions and plans and their alignment with strategy, probe on the progress of action plans (and the impact they are having on moving the business forward), and publically praise and recognize employees who engage with the business strategy, model strategic thinking, and lead effectively.    

 

Resolution 3: Look at, and Do, Communications in a New Way

Internal and external communication is a problem for many organizations. Not enough time and/or resources are placed on communications and there is often no clear plan. Limited communication vehicles are used to drive information throughout the organization. Communications are not created within a clear framework of objectives and desired outcomes, are reactive rather than pro-active, do not reach or capture the attention of the intended audience, and are uni-directional in nature. Sub-optimization of communications is the road to sub-optimized business performance.

Your internal and external communications play a critical role in the strategic success of your business. At the very least, it keeps internal and external audiences “in the loop” with what is going on across your organization. In the best case scenarios, your communications both inform and engage audiences so that you are able to engage in two-way conversations and dialogue that move your organization forward further and faster than you ever thought possible. Unleashing the ideas, thoughts, input, and feedback of as many people as possible from inside and outside your company is very powerful and has a transformative effect on the execution of business strategy and the achievement of business performance results.

To “do” communications in this new way, it is critical to develop a solid internal and external communication plan that clearly outlines: communication triggers; messages; target audiences; vehicles; tactics; timing; timelines; spokespeople; and action owners. In addition, the new style of communication leverages such interactive vehicles as social media (e.g. twitter, blogs, videos, and Facebook) and internal business community software. Internal group conversations, wikis, and other collaboration tools are new vehicles that are key in making two-way dialogue a reality.

 

So, here is how you can put this resolution into action:

Begin by assessing the performance/success of past and current communication efforts including an inventory of communication mechanisms, approaches, and infrastructure and then evaluate the capability of each. Determine required communication campaigns including key objectives, calls to action, desired outcomes, and measures of campaign and communication success. Leveraging your knowledge of audience communication needs and preferences, as well as your communication objectives and goals, review and assess possible communication mechanisms and vehicles. With this information, create appropriate communication strategies and develop a comprehensive communication plan. Resource your communication plan (i.e. assign people to implement and manage the plan AND ensure that the plan is supported with the necessary budget) and then execute. Measure impact and adjust the plan as required as you go. Doing this will revolutionize both your organization’s approach to communication, and the success you achieve through it.

 

So, there you have it - my three resolutions for 2012 for your organization (if you would allow me to choose them for you of course!). I hope that you think that they are reasonable and worthy of effort in the upcoming year.

I have kept the list brief so that you will have the opportunity to successfully implement all of them over 2012. Based on my experience, no matter where you currently are on any of these three items, your organization will be further ahead by the end of this New Year (i.e. more effective strategy execution and better business performance results) if you focus on your particular opportunities for improvement in each of these areas.

Just a reminder – be sure to find someone to provide you and your organization with support and encouragement as you strive to achieve these resolutions (it’s a critical part of the success formula).

Here’s to a successful New Year!   

 

Have You SMaC-ed Your Company Yet?

If you haven’t done so already, I would encourage you to get and read Jim Collins’ latest book, Great by Choice, right away. Following on in the tradition of his earlier books, Good to Great, Built to Last, and How the Might Fall, Collins and his colleague Morten Hansen  focus this book on exploring the key attributes that distinguish companies that perform exceptionally well in turbulent times from those that underperform or worse.

 

Referring to these high performing companies as “10X cases”, Collins and Hansen selected 7 companies (Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker) that demonstrated three specific criteria:

1. They sustained spectacular results over a period of 15+ years (ending in 2002) relative to the general stock market and relative to its industry;

2. They achieved these results in a tumultuous environment earmarked by events that were uncontrollable, fast-moving, uncertain, and potentially harmful; and

3. They began their rise to greatness from a position of vulnerability, being young and/or small at the start of the journey in question.

 

In his usual style, Collins also selected comparison peer companies for each of his 10X cases and used these comparisons as the foundation for his analysis. These companies include Genentech (for Amgen), Kirschner (for Biomet), AMD (for Intel), Apple (for Microsoft), Safeco (for Progressive Insurance), PSA (for Southwest Airlines), and United States Surgical Corp (for Stryker).

What the authors found was that, relative to their less successful peer companies, the 10X cases were not: more creative; more visionary; more charismatic; more ambitious; luckier; more risk seeking; more heroic; or more prone to making big, bold moves. That is, both groups showed similar levels on all these attributes.

 

What DID distinguish the 10X cases from their peers was what Collins and Hansen call:

Fanatic Discipline – They demonstrated a relentless, unbending focus on their quest - maintaining constancy of purpose and adherence to a disciplined plan of execution, regardless of changing conditions

Empirical Creativity – They relied on direct observation, conducting practical experiments, and/or engaging directly with evidence rather than opinion, conventional wisdom, authority, and/or untested ideas to generate and make bold, creative moves AND manage risk at the same time.

Productive Paranoia – They maintained hyper-vigilance in good times and in bad, considering the possibility that events could turn against them at any inconvenient moment and they prepared for such an occurrence because they believe with 100% certainty that it will happen.  

Level 5 Ambition/Leadership – 10X leaders channeled their intensity into something larger and more enduring that themselves and their ambition was on a purpose such as building a great company, changing the world, or achieving a great objective that’s not about them.

 

In addition to identifying the attributes of 10X cases, the authors also take the time in this book to discuss, in detail, some of the key supporting tools, activities, and actions that all 10X cases used and/or executed to achieve success. I was particularly interested in one tool called SMaC – a set of durable operating practices/principles that create a replicable and consistent success formula (SMaC stands for specific, methodical, and consistent).

The great thing about the SMac is that it provides an operating code and decision-making tool that helps turn high level strategic concepts into reality. A SMaC acts as a set of principles that are more enduring than tactics, which can change from situation to situation. The exciting thing that Collins and Hansen uncovered about the practices outlined in a SMaC is that they usually stand up over time (in several cases for decades!) and apply across a wide range of circumstances.

A good SMaC is short and precise (often 10 tenets or less), is based on insights about what works that have been generated through the empirical validation, and outlines both what to do and what NOT to do. The clarity that the SMaC provides helps people remain steadfast and focused on the business fundamentals that have been proven to produce results, in good times and in bad.

 

Collins provides examples of the SMaC’s of several 10X companies in his book - you can read them for yourself when you pick up the book. However, just to give you an idea of what a SMac looks like, here are a few example SMaC tenets:

Remain a short-hail carrier, under two hour segments; Stay out of food services; Retain Texas as our #1 priority (Southwest Airlines)

Concentrate on non-standard auto insurance, insuring high-risk drivers whom major insurance companies would likely turn away; Exit any state where regulation makes profitable pricing with superb claims service impossible; Never use loss reserves to manage earnings (Progressive Insurance)

You get the idea.

 

10X cases adhere to their SMac with fanatical discipline but that’s not to say that they aren’t open to modifying it when required. Typically, they use empirical creativity and productive paranoia as key considerations when making the decision to amend their SMaC. However, while 10X cases did make changes to their SMaC, the authors’ research showed that the comparison peer companies changed their recipe for success, on average, four times more frequently than the 10X cases did.   

 

When I read about the SMaC concept, I got very excited about the possibilities. As we all know, a key barrier to strategy execution is the understanding of what the strategy really looks like in action. While this is seen as a critical problem at the frontlines of an organization, I know that this can also be a critical problem at the executive level and in the boardroom. I believe that, when partnered with an organization’s change agenda and strategy map, a SMaC can effectively make a company’s business strategy more actionable and facilitate consistent and aligned decision making at all levels of the organization.

I am so convinced of the value of the SMaC that I took the opportunity to introduce it a few weeks ago into my strategic planning work with a client. I think that the timing of the SMaC discussion is critical and needs enough fact-based dialogue behind it before the effort is made to create the list. As a result, I placed the SMaC discussion after: a stakeholder needs and SWOT review, the definition of the primary stakeholder value proposition, and a discussion of the organization’s purpose. In fact, I used the development of my client’s SMaC as a platform for further detailing the organization’s purpose. Once the SMaC was created, we were able to test out its robustness by running a few scenarios through the principles and using them to determine whether a go-no go decision, based on the criteria, felt “right”. With the SMaC in hand, it then became very easy for my client to define their change agenda, their 3 year vision statement, their strategy map, and gap closing projects. I found that the SMaC provided my client with a very useful tool for guiding the alignment of those subsequent elements with the overall purpose of the organization.

 While I won’t be able to see how having a SMaC in place affects my client and their strategy execution and business decision-making until some time in the future, the general consensus of the group doing the work was that the SMaC will be a very useful tool moving forward, particularly as leadership faces expected external pressures and difficult strategic and operational decisions.

 

The SMaC concept presented by Collins and Hansen has been road tested in successful organizations. It provides business leaders with an important tool that will help them put their strategy into action AND guide them in evaluating opportunities as they arise and in making strategic business decisions, in good times and in bad, that are consistent with the purpose and vision for their company. The key to success in developing and using a SMaC is to (1) leverage evidenced based insights to create a focused set of ten or less operating principles, (2) follow them with strict discipline, and (3) remain open to making adjustments when, and only when, it is required.

 

Have you SMaC–ed your company yet? If not, I encourage you to pick up Great by Choice and get SMaC-ed today!

 

Why Organizational Alignment Should Matter to You (and how to get it)

After several years of good but not great business performance, perhaps you decided that, this year, it was time for a change. So you drew a line in the sand, declaring that your organization was FINALLY going to achieve stellar business results. However, now, more than half way though the year, it looks as though, yet again, it’s not going to turn out that way. So, what's happened?

A closer look at the levers that really drive better organizational performance and improved business results reveals that, while a clear vision of where your organization is going, an actionable roadmap to get there, and a system of measurement that provides feedback on progress and identifies opportunities for change are all important for success, organizational alignment is the secret ingredient that is often missing for many businesses.

 

What is organizational alignment?

Organizational alignment relates to the degree to which the components of a company are arranged to optimally support the intent, objectives, and goals of the organization (i.e. the business strategy). The components of the organization that must be “aligned” include:

● The work being completed (i.e. key business projects and work processes);

● The goals, skills and capabilities, and the hearts, minds, and behaviors of BOTH the people doing the work AND organizational leaders; and

● The plans (e.g. learning and development/human capital plans), tools and technologies, and resources (including budget dollars) that support the work being completed. 

Organizational alignment is both a process and an outcome. Building and ensuring organizational alignment requires focused action and is an ongoing activity. In addition, the outcome of these organizational alignment efforts - the degree of organizational alignment present - can be assessed in a company at any point in time.

Organizational alignment is BIG and covers a lot of ground - that is why I think many organizations struggle so much with it or just give up on it all together.  

 

 

Why Organization Alignment is Critical for Business Success  
 

 
 

Have you ever watched the rowing eights event at the Olympics? Now, think about the performance of the top teams – what do you see? Look closely and you'll see nine people (including the coxswain) working together in synchrony to achieve their primary goal of crossing the finish line first.

To achieve success, the rowers must stroke at the same pace with the blades of every oar pulling at the same depth in the water. They all know the overall game plan for success and they are ready to respond to the orders of the coxswain (who’s job it is to quarterback the execution of the race strategy and communicate the adjustments that keep the boat on course in changing wind and water conditions) as individuals AND as a cohesive unit. Each member of the team knows what their job is during the race and that they can rely on their coaching, training, boat, and equipment, and the skills, technique, and commitment of their teammates while the race is on.

With all this in place, teams power their boats on a straight course, translating 100% of their effort into the forward movement that moves them closer to their goal. However, when team alignment and cohesion is off, the boat strays off course, essentially wasting time, energy, and the resources that were invested in trying to achieve the goal of winning the race.       

It’s very much the same for an organization. Without alignment, the best strategic plan will never be fully achieved because organizational alignment is the glue that makes strategy execution excellence happen. An aligned organization works together as a unit in a new way (i.e. more efficiently, effectively, and dynamically) on the right things that deliver the greatest business value. An aligned organization gets things done faster, with less effort, and with better results, and is more agile and responsive to changing business conditions.

Ultimately, a high level of organizational alignment is essential for achieving increasingly better business performance results now and in the future!

And THAT is why organizational alignment is so important for your business.

 

 

How You Can Build Organizational Alignment in Your Company

There’s no doubt about it - building organizational alignment is a big job. However, there are just six essential activities that contribute to the organizational alignment process and they must be completed on an ongoing basis as you work to build and raise the level of organizational alignment in your company.

 

(1) Define What Your Strategy is and What it Looks Like in Action

Organizational alignment is built on your business strategy so you must begin here. To be effective, your business strategy must clearly define your primary value proposition, your future results destination, and the values and behaviors that will guide your actions on the journey to business results achievement. While this content is important, it is also critical to describe the actions, in the form of strategic objectives, your company must focus on to get from the present to the future destination. A strategic plan that provides a specific but flexible roadmap for action serves as the guiding star for your organization and its alignment efforts moving forward.  

 

 

(2) Communicate Your Strategy

Your organization/people can’t align with your business strategy if they don’t know what it is. Strategy communications are a critical, ongoing requirement in the drive to build organizational alignment. Communication must be frequent and two-way at all levels of the organization using multiple communication vehicles and a variety of targeted messages. It is important to remember that there is no such thing as over-communication or too much business leader involvement when you are striving to create an aligned organization. 

 

 

(3) Cascade Your Strategy across the Organization

Results-producing action rarely happens at the corporate level of an organization alone – results are usually achieved through the combined contributions of business units, departments, and teams. As a result, it is important to cascade strategy vertically and horizontally across your company and define the local actions and contributions each area of your organization must make to achieve business success. By defining these unique contributions and clarifying the shared ones, your organization will become more integrated, efficient, and successful in executing your business strategy.

 

 

(4) Link All Work Activities with Your Strategy

No organization has the capacity, time, or resources to waste on work that does not support strategic objectives and business success. As a result, it is necessary to take an inventory of key business processes and projects and determine whether they link to and support the elements of your business strategy. Sometimes you will find that work only indirectly supports the completion of strategic objectives – work of this kind is worth continuing because a link with the strategy still exists. However, when non-strategic projects and processes are identified, business leaders must seize the opportunity to stop doing them and re-invest organizational work capacity into more strategic work. Making decisions about the strategic value of the work completed in your organization can make the difference between a more efficient, high performance organization and one that wastes effort unnecessarily.

 

 

(5) Link All Employees with Your Strategy

Work gets done in your organization by people – either through the processes they play a role in and/or the projects they work on. Once business processes and projects have been aligned with your business strategy, it’s an easy next step to link the people who do that work to the strategy through their daily process and project contributions. Alignment at the employee level begins by helping them see how their work links with the business strategy – this makes strategy more meaningful to everyone in your organization. Next, it is important to let employees know what they need to do in their work to contribute to the overall results. Do this by creating individual goal plans that have clear linkages with your business strategy and provide performance guidelines that will help them move the business forward. Finally, give employees the opportunity to generate and share their insights and ideas on local ideas for improvement that could have a big impact on your business strategy. All of this plays a critical role in solidifying organizational alignment at the employee level. 

 

 

(6) Ensure that Necessary Financial and Non-Financial Resources are in Place to Support Your Strategy

Strategic plans usually involve doing something new and/or different. Why do companies expect to make the associated changes when they don’t put adequate resourcing behind the required efforts? New business strategies often require new employee skills and capabilities – this in turn often requires an investment in training, learning, and development. New directions may require new tools, equipment, and technologies and/or new roles and new people - all requiring budget support. Ensuring the alignment of your company’s budget development process, and the budget itself, with your business strategy is a fundamental but often forgotten component of building organizational alignment.

 

 

Organizational alignment can’t be achieved overnight but it doesn’t have to take a long time either. It just requires a solid plan and focused effort.

Chances are good that you have some of the required elements in place right now in your organization so your first step is to conduct an organizational alignment assessment. A good assessment tool will give you an idea of the current level of organizational alignment in your company AND pinpoint key gap areas and/or opportunities for improvement. With this insight in hand, you will then be able to create the targeted action plan you need to improve the level of organizational alignment in your business and get everyone mobbing in the same direction – producing extraordinary business performance results!

 

Is your organization aligned and ready to execute your business strategy? Are you sure? If you would like to be able to answer these important questions quickly and with confidence, click here to find out how.

How to Implement Business Performance Measurement Flawlessly in Any Organization

Business performance measurement is critical for every organization – big or small. From the biggest corporation to the one person shop, without performance measurement, you simply don’t have a handle on whether your organization is working in a way that is moving it forward productively towards its goals. Just as important, you are missing a critical feedback loop that allows you to: learn more about how your organization REALLY works to produce results; identify and explore areas of underperformance; see whether targeted interventions are actually producing the results you want/expect; and pro-actively discover when improvements and/or a change in business direction may be required.

As the ever insightful Seth Godin pointed out in one of his blogs last week (click here), you just aren’t running your organization professionally without a system of measurement in place. To me, if you want to really be, and be seen as, a professional business leader, AND reap the benefits of professional business management, you MUST introduce and/or expand the use of business performance measurement in your organization without delay.

Whether you are thinking of implementing an approach such as the balanced scorecard or another business performance measurement framework in your organization, here are the steps I have learned, through experience, you must go through if you are going to introduce performance measurement within your company both effectively and successfully.

 

(1) Determine your business goals and define your performance measurement philosophy

Before you begin measuring you need to decide what to measure. My advice is to only measure the important stuff because otherwise you just end up measuring what you can whether it adds value or not. Since no business has the time and resources available to measure just for the sake of measuring, the best advice is to start with your business strategy, goals, and objectives – knowing how your organization is doing in relation to these key elements is the basis of good measurement.

It is also important to take the time to think about and discuss your company’s performance measurement philosophy. This includes the purpose of measurement, who will use performance results to do what, how you want to share performance results, and your indicator selection criteria. Taking this step early makes indicator selection and business performance measurement process design decisions easier when they come up later on and in the future.  

 

(2) Select indicators that align with business goals

It seems obvious to tell you to choose indicators that line up with your business strategy and goals but how can you make sure that you actually do this? The key to success is to have a really good understanding of each business objective in terms of what it really is, what’s included and what isn’t, and the outcomes the objective is meant to produce. Once these “definitions” are in place, it becomes much easier to select indicators that relate to your business objectives. Selecting indicators that closely align with your business objectives is the only way to get the feedback you need on progress on those objectives.

 

(3) Define each indicator

Selecting your indicators is just the first step. You must also define each indicator including a word definition and, when applicable, a mathematical calculation. Why? Because it’s the only way to be clear about what is being measured.

Here’s a short story from my past to illustrate:

Revenue – seems clear enough, right? Well I was working in my BU in an insurance company and we had revenue as an indicator on our BSC. The corporation also had a revenue indicator on their BSC however the revenue results on our BSC and for our BU on the corporate BSC were never the same number! Needless to say, the auditors came knocking one day to point out the disconnect. After a little investigation, we discovered that the corporate definition of revenue and our definition of revenue weren’t the same. We got it all sorted out to everyone’s satisfaction but it really brought home the idea that, even with supposedly common indicators, being clear on an indicator’s definition is absolutely critical.

Clear definitions also ensure the consistent production of results that are measuring what you think they are measuring. Indicator definitions also include information about data sources, the frequency of data collection, data consolidation procedures, and data and commentary owners. Essentially, you cannot produce business performance results without clear and full indicator definitions.    

 

(4) Assign one person to oversee your organization’s performance measurement activities

A new business process like business performance measurement won’t gain a foothold in an organization without someone to guide and manage its implementation and use. It’s important to identify the one person in your organization who will take on this accountability and the associated responsibilities. For more information, check out a recent blog post on this topic by clicking here.

 

(5) Spec out and build or buy your performance measurement presentment/reporting tool

Business performance results are no good to any organization unless they are visible and shared. How will your organization do this to the best effect? This question should have been answered in your performance measurement philosophy and should guide you in defining the specifications for your performance measurement results presentment and reporting tool. Once the specs have been created, you must make the decision whether you are going to build or buy a tool that will meet your needs (check out a previous blog post on this topic by clicking here). Just remember that excel isn’t a “free” option and that there are many high quality performance measurement software applications available at every price point. Once the best tool has been identified, it must be implemented in your organization – time for implementation will dictate the timeline for completion of many of the steps outlined below.      

 

(6) Design your business performance results data and commentary collection process

How will data get into your presentment tool? When does it have to be there by? How will commentary owners know whether commentary is required? Who is going to post interim results and by when? What processes does your performance measurement presentment tool/application require? Basically you need to map out the steps that will take you from the start to a fully populated set of business performance results and commentary as well as the accountabilities and timelines for step completion. The result is a process map that can be communicated to, and followed and improved by, everyone participating in the business performance results production process.  

 

(7) Design your performance measurement results review meeting

Once your business performance results are ready, how will you review and discuss them? Will you create a new meeting to do this or re-purpose an existing one? How frequently will they happen and who will attend? What will the standard agenda look like and who will do what at the meeting? Thinking this through, communicating it to participants, and coaching attendees for participation success is a critical step in a successful business performance measurement implementation process.

 

(8) Create data and commentary collection sheets, online forms, and/or repositories (if required)

Once your business performance measurement presentment and reporting tool has been selected and your data and commentary collection processes have been defined, you may have manual data and commentary collection processes that require the creation of data and commentary collection vehicles and tools. Create them now so that they will be ready to share with data and commentary owners. 

 

(9) Identify data and commentary owners, define their role accountabilities, and create role documentation

Who is providing data and commentary for each indicator? What is the role of the data/commentary owner? What do they have to do by when? It is important to ensure that every indicator has at least one data and one commentary owner identified – creating a list helps identify ownership gaps and capacity concerns, and will make managing the data and commentary owner network easier. Role accountabilities will have been defined by the data and commentary collection process – creating clear role documentation for data and commentary owners that tells them what they have to do when helps data and commentary owners play their role in the business performance measurement process flawlessly.

 

(10) Let people know that they are data and commentary owners and provide them with training so that they can play their role

Data and commentary owners cannot play their role unless they know: that they have an accountability, what that accountability requires (including submission requirements and timelines), what tools they have access to (i.e. data and commentary collection tools, root cause analysis tools, etc.), and how to use them. Education and training will take care of this and must be included in your performance measurement implementation process.

 

(11) Decide if you want to collect historical data and, if you do, collect it

Will historical data add value in helping you evaluate the trends in your business results? If so, and if historical data is readily available, you might wish to collect it and then upload it into your results database. If you are going to take this step, do it at this point in the business performance measurement implementation process.   

 

(12) Run a performance results collection process in “slow motion”     

The business performance measurement process introduces many new responsibilities, tools, and requirements to your organization – often with very tight completion timelines. It’s a good idea to do a data and commentary collection trial run on a lengthened timeline before your first real results collection process. Doing this gives everyone the chance to get to know and practice their new roles without time stresses, and tests out both your results collection process and presentment tool. A trial run can often highlight opportunities for improvement that can be incorporated before you officially launch your business performance measurement efforts.  

 

If you follow these 12 steps, I promise you that you and your organization will be ready to start collecting your business performance results in earnest and that the process will run almost perfectly the first time (I hesitate to say absolutely perfectly because, in my experience, something invariable comes up that you hadn’t anticipated, even with your trial run!). The benefit is that, with solid processes in place and some practice under your belts, you and your team will be freed to focus on understanding what your business performance results are telling you about your business and determining required next actions.

Business performance measurement facilitates the transformation of an organization into a flexible high-performance system that excels at: constantly aligning and re-aligning the activities, projects and resources of the organization with its business objectives; understanding how the business really works and what levers produce the desired results reliably; demonstrating agility in the face of an evolving business environment; and consistently achieving business performance results.

And hey – who doesn’t want that anyway?

Follow These Steps to Realize the Value of Your M & A via Strategy Maps and the Balanced Scorecard

Is a merger or acquisition on the horizon for your organization? If it is, you have company. Earlier this year, PwC reported that, in Canada alone, M & A activity in 2010 was at a 5 year high with 3,001 deals worth $155 billion being made (click here to read more). It is projected that M & A activity in Canada, for example, will be even higher in 2011. The PwC report states that because organic growth prospects within North America will remain limited in 2011, many well capitalized corporations and funds may find that M & A is their best, and only, tool for growth over the next while.

Companies regularly enter into mergers and acquisitions to create significant increases in enterprise value, however, this value can only be realized when M & A’s are managed right. Unfortunately, the statistics suggest that organizations with recently transacted deals achieve integration success only 30% of the time (click here to read more). This means that 60 - 70% of M & A’s don’t demonstrate their expected value. This is largely due to the fact that the post-M & A company isn’t adequately integrated and aligned, preventing it from producing results at, or above, anticipated levels.

The primary driver of sub-optimized M & A results is, quite simply, declaring success too early in the process (i.e. when the deal is closed) and then assuming that the expected performance results will be achieved automatically. Taking this approach avoids the reality that successful M & A’s require clearly understood and actionable post-M & A strategic and integration plans (including plans for operations integration and optimization, people/culture integration, and customer care), as well as an approach for performance measurement, learning, and plan adjustment.

While organizations can look very similar at a high level (i.e. they play in the same sector, serve the same or complimentary markets and customers, and produce the same/similar products and services), the customer value proposition, processes, technology platforms, and organizational culture that produce the business results in each company can be very different. Lack of attention to these critical details can translate into staff turnover, loss of institutional and customer knowledge, sub-optimized operational performance and cost structures, and customer acquisition and retention challenges. Sooner than later, all of these problems will show themselves in the company’s top and bottom line financial performance results.

Based on my own personal experience with M & A’s (with both an acquiring company and an acquired company), I have come to see that the key to realizing the value of any M & A activity is to follow these very important steps:

 

(1) Define the business strategy for the post M & A organization and translate it into actionable, operational terms so that ALL employees and stakeholders can quickly understand the objectives of the “new” company

What is the customer value proposition of the post-M & A organization? How is the “new” organization going to work in an integrated way to produce results? How will people in the “new” organization work/what are the organizational values? What skills and capabilities do people need and what role will the organization play in developing its people?

These questions and more must be answered and clearly spelled out for the post-M & A organization. It is important to do this in an acquisition scenario and absolutely critical in the case of a merger where a hybrid entity is the result.

The best tool for translating the post-M & A business strategy into understandable and actionable terms is a strategy map. This one page picture makes the “new” organization’s core/operating values, customer value proposition, and theory of how the organization will work together in an integrated way to produce desired business results clear to all employees – regardless of which organization they came from. When the strategy map for the new organization is created with a clear vision for the new organization, strong leadership guidance, and with participation by employees from both organizations, the result can be the beginning of a cultural shift that translates into the achievement of projected M & A value sooner than expected.

 

 

(2) Create a cascaded integration strategy and plan that is aligned with the post-M & A business strategy and is guided by a time-bound integration vision

Completing a successful integration process will be critical to achieving the post-M & A business strategy – a good approach to ensuring success is to create an aligned integration strategy that defines specific integration objectives and delivers desired results as defined by a time-limited integration vision. By using the business strategy as a guide, a cascaded integration strategy, including objectives related to, for example, key cost realization, customer retention, process optimization, people management, and cultural integration can be defined and diagramed using a strategy map. Producing an aligned integration strategy map gives the organization specific integration objectives to achieve that will contribute to the overall success of the business – not work against it. This is a critical factor in realizing the projected value of a M & A.

Once an integration vision and strategy map have been created, a gap analysis exercise can help define the projects required to successfully execute integration objectives and achieve the integration vision. Typical projects include operational process integration and re-engineering, technology platform integration, targeted customer retention initiatives, customer and employee communications, employee skills and capabilities development, and organizational change management initiatives – all designed to close strategically identified organizational gaps.

 

 

(3) Measure Progress, Impact, and Success, Learn, and Make Required Adjustments Along the Way

 In the post-M & A world, it is critical to measure the execution of both the business strategy and the integration strategy. In my experience, the best tool to do that is the balanced scorecard. With its capabilities as a management tool (and process), a communication vehicle (communicating what’s important and how the organization performing), and a catalyst for learning and improvement, the balanced scorecard allows an organization to make sure that it is taking all the right steps to integrate the organization and ensure that their integration work is translating into the desired business results and value achievement.

While some organizations only measure their financial results post M & A, many will leverage the BSC to keep their eye on the performance of the drivers of both the financial results and their business strategy. Adding an integration balanced scorecard provides organizations with the intelligence they need about the impact of their integration efforts on the business strategy and gives them a set of root cause measures they can explore when the business strategy’s strategic objectives are underperforming.  

 

At the end of the day, successful M & A’s happen when business leaders and organizations: (1) take the time to clearly define and communicate where the new company is going and how business units, functions, and employees must work together in an integrated way to produce results and create value; (2) define the roadmap/action plan to get there; and (3) measure and manage for success in “real time” using an aligned set of strategically relevant indicators.

Leverage proven tools such as the strategy map and the balanced scorecard to ensure true M & A success and to capture the projected value from your M & A activities.

Is Management Capability Holding Your Organization Back from Strategy Execution Success?

I know - this is a rather indelicate question but it's an important one to answer if your organization is ever going to achieve its strategy execution goals and objectives. So let's proceed....

I think that we can agree that strategy execution excellence is elusive for many organizations at any moment in time. When you ask people what gets in the way of strategy execution success, they usually give you a long list of the typical challenges. While I agree that many things go into ensuring that your company actually implements the strategy you envisioned, I believe that it really comes down to three essential elements: content, infrastructure, and management capability.

What I mean by content is you must have an operationalized strategy with the right planning horizon in place (i.e. a long term strategy with aligned medium term goals), ready for implementation, execution, and refinement. An operationalized strategy is one where the actions required to actually bring the strategy to life are clear and obvious to every employee in the organization. There is no doubt in my mind that the strategy map is the best vehicle for clearly communicating a company’s strategy in understandable, action-oriented terms. However, a strategy map isn’t enough to support strategy execution excellence. Smart organizations will also align their business processes, projects, and resources with their business strategy and share that information with employees and other stakeholders. Aligning these key business elements with strategy serves several purposes: it ensures that your strategy is adequately supported (or not!) by core and strategic business activities and the required resources; and it helps employees connect their work directly to the business strategy via the aligned processes and projects they work in and/or contribute to. Translating your strategy into action is the first essential for successful strategy execution.

Strategy execution excellence also requires a robust supporting infrastructure including: assigned roles for the strategy execution and management process; an organizational strategy execution accountability framework; and a defined strategy governance framework.

Every successful strategy focused organization identifies an executive sponsor for their strategy execution and management activities as well as a strategy execution and management process champion or owner. The role of the executive sponsor includes providing greater insight into and new information on the strategy/strategic plan, and playing a strategy communication role between the executive team and the Board. The role of the strategy execution and management process owner includes: steering the performance measurement framework utilization, expansion, and improvement processes; defining strategy and performance management procedures and policies; coaching employees, leaders, managers, supervisors on your strategy; and facilitating enhanced cross-functional organizational integration and team work. These are the minimum roles required for a robust strategy execution and management infrastructure.

Strategy execution success won’t happen without an accountability framework including clear performance expectations that have been embedded in job descriptions and personal performance plans, and adequate resource supports for the fulfillment of these expectations. A variety of roles support the implementation and management of strategy including strategic objective owners, performance indicator data and commentary owners, project and process owners, and functional subject matter experts, with each making specific contributions to the strategy execution and management process.

The final required infrastructure element is a defined strategy governance framework that details: the performance measurement data and commentary collection process and timelines; regular performance measure review meetings (including objectives, agenda, and participants); regular strategy execution review meetings (including objectives, agenda, and participants); and the strategy change process (including strategic objective, strategy map, indicator, and performance target changes). Putting a certain level of formalization around these components of the strategy execution and management infrastructure increases the likelihood that an organization will actually put their strategy into action.

Much has been written about how to overcome the strategy execution challenge by leveraging these first two elements – content and infrastructure. Less time, however, has been spent on the role of management capability and its impact on strategy execution success. In my mind, there are four management capability pillars that must be in place for a company to achieve strategy execution excellence: committed and active leadership; expectations for accountability; living the strategy; and managing in a new way.

 

Committed and Active Leadership

Every recognized leader in your organization must understand, be knowledgeable in, and be committed to your business strategy, and what it takes to achieve it – even when it is difficult and challenging to do so. Successful companies also ensure that “non-sanctioned” organizational leaders (those people who don’t have formal leadership roles but who others look to and take their cues from) share these same attributes. However, this level of leadership commitment doesn’t benefit an organization unless it is visible and demonstrated to others. When leaders at all levels of an organization share their knowledge of the business strategy with others and actively facilitate and model strategy execution excellence, the likelihood of strategy execution success increases significantly.   

 

Expectations for Accountability

Taking the time to link every key strategic action to a person who has responsibility for getting it done (right and on time), and assigning (often shared) accountabilities for results achievement, is an important part of establishing an organization’s accountability framework. However, simply establishing an accountability framework is not enough. It is also critical for management to establish clear expectations for accountability fulfillment and then reward (or penalize) people based on their commitment to accomplishment and actually fulfilling their accountabilities. In other words, being accountable has to truly mean something in your organization for your accountability structure to deliver any real benefits for your strategy execution efforts. Ensuring employee accountability in this way must be a fundamental role and requirement for every manager/leader in your organization.  

 

Living the Strategy

Once your business strategy has been defined, it’s up to management to see that your organization actually lives it. This includes ensuring that the actions the company takes, its priorities, resourcing, and business decisions are always aligned with the values and business strategy of your organization – even when the pressure is on to do otherwise. While it is absolutely critical that the executives in a company exhibit this behavior consistently, strategy execution success can only be achieved when every person in the organization lives the strategy every day. Business leaders play an important role in cascading this imperative throughout the organization. However, people aren’t perfect and misaligned decisions and actions will happen. When it does, it’s important for managers to recognize, acknowledge, and accept that this has happened and then take positive steps to correct the situation. This is what it takes from a management perspective to truly live your business strategy.     

 

Managing in a New Way    

To achieve strategy execution excellence, leaders must manage in a new way – they must actually lead! Leading includes: establishing the playing field and boundaries for employees (i.e. your organizational value and strategy map); opening up the lines of communication across the company; facilitating, connecting, and integrating people across the organization; and then “getting out of the way” so that people from all over the company can create innovative ways of putting the business strategy into action.

Managing in a new way involves: looking out, looking in, and looking ahead; always asking “Are we doing the right things right?”; and thinking about the impact of today’s actions and business decisions on the future of the business – in other words,  thinking strategically. Managing in a new way means helping employees at all levels of your organization begin thinking in this way and seeing that they have the time to actually spend on this as part of their regular work activities (not as an “add on” to their current job/work). Practically speaking, managing in a new way means asking employees knowledgeable questions, with a focus on strategy, in group forums and one on one situations about the fundamentals of their proposed strategy execution action plans, testing their validity, probing on action plan progress, and facilitating cross-organizational dialogue. 

 

A lot of the discussion I see revolves around the “hardware” required for strategy execution excellence: content and infrastructure. Unfortunately, many organizations limit their strategy execution improvement efforts to these two elements because they are tangible and I think easier (i.e. less emotional) to address. However, experience shows that stopping here is not enough - investments in just the hardware side of the strategy execution excellence equation often deliver sub-optimal results. Not dealing with what is often perceived as the “soft” component of strategy execution excellence – management capability – severely limits the success and impact of your organization’s strategy execution improvement activities.

Smart (and successful!) organizations know that they must take a pro-active approach to ensuring that developing the required management capability fundamentals is a key part of their strategy execution management and improvement plans.

9 Ideas You Can Implement TODAY to Make Your Organization’s Business Strategy “the Way You Work”

One of the primary goals of the strategy management effort in any company should be to create a strategy-focused organization – one where ensuring that everything in the organization (i.e. financial and non-financial resources, projects, work activities, human capital plans, etc.) is aligned with (and delivers on) the business strategy on an ongoing basis is, in a word, an obsession.

Is this the vision for your company’s strategy management efforts?

When you hear this, you might be worried that the emphasis in these organizations is more on the mechanics of achieving alignment with strategy than on the actual business strategy itself. While this is certainly a risk, the key to keeping the focus on the right thing (your dynamic business strategy and results achievement) is to make your strategy the way your organization works. When companies successfully make their strategy “the way they work”, organizational alignment seems to happen effortlessly. However, the truth is that mechanisms for organizational alignment have been created by these companies so that their business strategy framework and business strategy itself have been embedded into as many regular business processes as possible. This is the way that successful organizations make it easy to put their business strategy front and centre every day.

How can your company make your business strategy “the way you work”?

Here are nine things (in no particular order) I implemented when I was quarterbacking my employer’s strategy management efforts to do just that (p.s. the majority of my clients have also successfully implemented some or all of these nine ideas in their organizations so don’t just take my word that they work!).   

1. Make your strategy map into a huge poster and make it visible to everyone

Your strategy map is a very important strategy communication tool so don’t keep it hidden away from your employees! Almost everyone I know blows their strategy map up into a poster and then posts copies everywhere throughout their organization. I haven’t met an employee yet who hasn’t said that their company’s strategy map helped them FINALLY understand what their organization’s business strategy really was – you simply must leverage this powerful outcome! Making your strategy map visible every day to your employees puts your business strategy at the top of everyone’s minds. This opens the door for more consideration of, and discussion about, the value and validity of your company’s strategy throughout your organization.  

2. Ask every employee whether they can see what they do in the strategy map

If your strategy map is doing a good job of telling your strategy story, every one of your employees should be able to “see” their work in your strategy map. Asking each employee this question and then giving them the opportunity to discover and clearly see their role in the successful achievement of your organization’s mission and vision goes a long way towards bringing your business strategy down to the grassroots level where implementation action happens. Engagement with, and ownership of, your business strategy goes up when employees feel connected to it. Take the conversation the next step and help your employees see: (1) that their contribution to strategy achievement goes beyond the strictly functional; and (2) the inter-relationships and organizational integration required to produce the desired business performance results – doing this will increase employee understanding of how your company can achieve business success and the comprehensive role they can play in that success every day.    

3. Stop centralizing the control of your balanced scorecard results review meetings

Who runs your balanced scorecard meetings? If you are like most organizations, your BSC project manager, OSM (Office of Strategy Management) leader/personnel, or Chief Executive does. Why not try this instead – let strategic objective owners or business unit/department owners drive every BSC meeting. Give them basic guidelines on what to discuss (e.g. root cause analysis and suggested corrective action plans for underperforming indicators they are responsible for monitoring) and for how long but let them organize themselves and their team and run their section of each BSC meeting themselves. Nothing builds greater organizational engagement with, and ownership for, your business strategy than demonstrating your confidence in your employees’ ability to successfully execute their strategy management accountabilities in a way that they choose! Also, insisting that owners take responsibility for knowing how their part of the business strategy is working gives them a really good reason to be thinking about your business strategy on a regular basis.     

4. Open your balanced scorecard results review meetings to all employees (and help them get there)

Many organizations limit balanced scorecard meeting attendance to their executive team only. However, running open BSC meetings (where all employees can attend) signals that everyone in your company has a role to play in the successful execution of your business strategy. Open BSC meetings give you an invaluable forum for information exchange, knowledge sharing, and integrated business solution and idea generation. Plus, open meetings help everyone in your organization make time for business strategy as part of their regular job/work activities but only if you actually give employees a way to get to these meetings. This is particularly challenging but important in the case of frontline workers. I have seen lots of creative solutions implemented to get past these hurdles like taking meetings and discussions about BSC results to employees/the shop floor. What creative solutions could you employ to make your BSC meetings accessible to everyone in your company?        

5. Align your employee performance management/appraisal framework and process with your business strategy

Your performance management process is perhaps THE strategy alignment opportunity that has the most meaning to your employees. Since your employees give lots of attention to their personal goal plan, why not add elements of your business strategy to its format (e.g. balanced scorecard perspectives and strategic objectives)? Some of the best solutions I have seen show an employee how their personal goals directly support the achievement of specific strategic objectives. In addition, regular performance management conversations between employees and their manager offer an opportunity to make the discussion of strategy, its relevance to every day work, and the sharing of ideas for strategy improvement a regular work activity for every employee. The result of discussions like these is increased understanding of, and commitment to, the business strategy and high quality, two-way, strategy-focused information and knowledge exchange throughout your organization.         

6. Formalize and recognize strategy management accountabilities

Strategy execution excellence can only be achieved through a network of owners (i.e. strategic objective owners, indicator data and commentary owners, process and project owners, etc.) – they all play a critical role in the success of your strategy management efforts. The first step is to assign these ownership roles throughout your organization but you must take it a step further. You’ve got to formalize these responsibilities by including them in job descriptions and employee goal plans and then including an assessment of the completion of these ownership roles as part of the annual review process. Doing this signals the importance of taking ownership of, and accountability for, your business strategy and securely places it into one of the core management structures in your organization.  

7. Reward and recognize employees for taking action that supports your business strategy

Most organizations have a reward and recognition program in place. These programs play a critical role in re-inforcing desired behavior so why not align your reward criteria with your business strategy? In the best cases I have seen, core values and strategic objectives become the criteria and doing something that supports or impacts these elements of the business strategy is rewarded and recognized via a simple program. When you recognize and share the story of what an employee did, you start breaking down barriers (i.e. what can I do to impact the business strategy from here?) and provide employees with models of putting your strategy in action that they can emulate. The moment that your employees start rewarding and recognizing each other for strategy-supporting actions and behaviors, you will know that you have really made your strategy “the way you work”.  

8. Build your business strategy into your decision making processes

All companies have formal and/or informal decision making processes with some sort of associated criteria for making business decisions. What criteria does your organization use? You might include a risk assessment and/or an evaluation of return on investment. Does alignment with business strategy come into the picture? Organizations that are striving to live their business strategy will include (1) an assessment of alignment with strategic objectives, and (2) an assessment of strategic value as key components of their business decision making criteria. In fact, many will place a relatively high weighting on these two factors alone. Including strategy-based criteria in your business decision making process profoundly changes the way your employees begin to think about what they do because it brings your strategy into every option discussion and decision made throughout your company.   

9. “Talk” about your strategy all the time - forever

In the worst case scenarios, an organization’s strategic plan sits on a shelf gathering dust. To actually achieve strategy execution excellence, your business strategy must be front and centre to the workings of your organization. One of the best ways to do that is to have a solid strategy communication plan, with varying messages and using multiple communication modes, that you implement on an ongoing basis as the way you do business. It is important to realize, however, that what you talk about when I say “strategy” changes over time. The best organizations I have seen start off with the executive leader sharing the business strategy with the organization and then they gradually transition to sharing “homegrown” stories about the strategy in action. Success is achieved when employees put their own spin on your strategy and what it looks like in action, volunteer to share their own strategy in action stories with their peers, and begin discussing their ideas for strategic improvement freely. This is truly an example of making your strategy the way you work.      

 

Making your business strategy the way your organization works doesn’t happen overnight – a good reason to start now! Looking for ways to build your business strategy and business strategy framework into your company sooner than later can help your organization realize the return on its investment in strategy management principles and practices earlier than expected.