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

Telling Your Strategy Story and Making it “Stick”

While having a strategy map is a massive step forward in aligning your organization with your strategy, it’s only a start. You need to share it with your entire workforce and the best way to do this is to tell your company’s strategy story. 

While your strategy map can ultimately stand alone in communicating your strategy, it’s never a good idea to introduce it to your employees in anything other than a forum that enables an interactive, two-way dialogue. Anything less sub-optimizes the traction your strategy (and strategy map) gets in your organization. This isn’t because your strategy map is too complicated for your employees to understand - it’s because an interactive discussion session allows you to share and explore your strategy with them.

So, why focus on communicating your strategy in the form of a story?

It’s because stories are “sticky” (an idea initially proposed by Malcolm Gladwell in his book “The Tipping Point” and then discussed in more depth by Chip and Dan Heath in “Made to Stick”) - they speak to people, stay in their minds almost word for word long after they are heard, and can be easily shared from person to person.

This is exactly what you want for your strategy so it’s to your advantage to translate it into a strategy story that will stick with your employees. 

In his book “All Marketers Are Liars”, Seth Godin outlines the “must have” features of a great, sticky story - it needs to: be authentic and consistent with everything else related to the story and your company; make a bold and exceptional promise; be trusted and credible and/or come from a respected source; share a subtle idea or concept quickly (following the “less is more” principle); appeal to the senses and emotions; and reinforce what people already believe. Additional principles from the Heath brothers include: being simple but profound; creating interest and curiosity; and providing concrete images and suggesting human actions.

 

To maximize impact, your company’s strategy story must include ALL of these features.

 

To share your strategy story begin by discussing your company’s core values – these are the foundation of your organization and strategy so take your time with them.

Next outline your mission and vision. Talk about these elements with passion and excitement so that your company’s purpose and ultimate destination come to life.

With these critical components of your strategy clarified, move on to discussing your customer value proposition. An engaging conversation about what your company does for your customers and how you make them feel is compelling for your employees.

From there, talk about the actions that will give the customer what they want and achieve the mission and vision. Leveraging the strategy map, the best approach is to begin at the top with the financial perspective. Start by summarizing the overall objective of this perspective (i.e. to achieve profitable growth through optimizing cost structures, growing revenues through new customers or by getting existing customers to buy more from us or by expanding into new markets, etc.) and then use the financial strategic objectives to discuss concrete examples of how the company can achieve its overall financial objectives. Move down the strategy map taking the same approach to reviewing perspectives.

The key to getting at the action-oriented details of your strategy is to engage employees in a discussion about the strategic objectives on the strategy map.  As you progress through your strategy story, also be sure to discuss and explore the cause and effect relationships between overall business objectives and specific strategic objectives – this helps make your strategy story coherent for your employees.

 

Sharing your strategy story should take 10 - 15 minutes or so. The key is to communicate the high level customer and business objectives and then engage employees in a guided conversation where they discover the critical sub-objectives in your strategy that produce desired results.  Sharing your strategy story in this way allows it to gain maximum traction with your employees.

Let’s take a closer look at why this is the case.

 

Sticky Principle 1 - Be Authentic and Consistent: A great strategy story resonates with people and is aligned with what you value as an organization. In addition, a great strategy story fits together via cause and effect in a way that makes sense and is easy understand and explain – that is, it “flows”.

 

Sticky Principle 2 - Reinforce What People Already Believe: Your employees already want to achieve your customer and business objectives and they believe that they can – your strategy story supports these desires, and provides employees with more information about and insight into the plan to get there. 

 

Sticky Principle 3 - Be Trusted and Credible: The person telling your strategy story must be respected by the audience and the story itself must have credibility by clearly demonstrating the delivery of value. Having a company leader tell the story is great but hearing the strategy story told with conviction by a peer gives your strategy story an even higher credibility rating with your employees.

 

Sticky Principle 4 - Be Subtle and Quick/Simple but Profound: What is more simple and profound than having your strategy outlined clearly on just one page?    

 

Sticky Principle 5 - Create Interest and Curiosity: Delivering your strategy story as an engaging two-way dialogue, not a presentation, creates interest and piques curiosity.

 

Sticky Principle 6 - Provide Concrete Images and Suggest Action: A great strategy story provides concrete images of what the strategy looks like in action and paints a clear picture of the impact it will have on customers and the business. With the help of your strategy map, you can do just this. Also, engaging employees in a two-way dialogue builds action right into the telling of your strategy story.

 

Sticky Principle 7 - Make a Bold and Exceptional Promise: A truly great customer and business strategy is full of stretch goals and audacious promises for the customer, employees, and the business itself.

 

Sticky Principle 8 - Appeal to the Senses and Emotions: As you paint a clear picture of what your strategy entails, and the results it will deliver for your customers, employees, and other stakeholders, work hard to engage the senses. Share your company’s strategy story with pride and enthusiasm and let your passion for the impact your company has on others stir the emotions of your employees.  

Be sure to continually create the ideal conditions for every telling of your strategy story. Craft a strategy story that includes all of these features and share it in engaging situations and ways so that it is memorable for your employees. Also, train ALL of your employees (not just your managers) to share your strategy story with others and give them the resources they need to do the job well.

 

Taking these important steps will ensure that the idea that is your strategy story is sticky and spreads throughout your company on an ongoing basis.

 

This is an excerpt from my forthcoming book Business Results Revolution: 3 Critical Questions and the Conversations That Transform Business Performance Every Day  Like what you’ve read? Please let me know. To add your name to the pre-order list for my book, just make your request via the comments section below or email me at sandy@jetrichardson.ca 

 

The Real Value of Strategy Map “Weighting” for Business

The issue of strategy map weighting has raised its ugly head again recently in some LinkedIn balanced scorecard and strategy forums.

And while the topic itself isn’t ugly, some of the exchanges have been. While some commentators have declared strategy map weighting “stupid”, I want to encourage practitioners not to throw an important concept out without further exploration and discussion because, in my experience, when applied in a specific way with a specific objective in mind, the idea of strategy map “weighting” can address a critical problem I see in 100% of the clients I work with – a lack of prioritization in organizational work effort, resource allocation, and operational and strategic decision-making.

First, let’s talk about the concept of weighting from a historical and technical perspective because it’s always good to know where we’ve been.

 

Weighting and the Balanced Scorecard

Back in the 1990’s when the balanced scorecard was new and we all thought that it was a performance measurement framework and activity, weighting your balanced scorecard indicators was very much in vogue. Balanced scorecard weighting was generally done in an effort to calculate an overall score for balanced scorecard performance. I even saw some executives being incented on increasing the overall balanced scorecard score for their organization over time because an improving score was considered evidence that the business unit’s overall performance capabilities were improving. At that time, we weren’t thinking about what “improvement” really meant (or whether increasing your overall balanced scorecard was even a good indicator of progress in the first place!). In the early days the concept of keeping score and improving on that score was seen as the primary goal of balanced scorecard utilization. Needless to say, the understanding and use of the balanced scorecard by many practitioners was formative and immature at that time!

In order to calculate an overall balanced scorecard score, everything needed to be given a weighting. The easiest approach was to begin by weighting the four balanced scorecard perspectives by allocating 100% over the various perspectives. From there the percentage given to a perspective was allocated amongst the indicators housed within the perspective (back in the 1990’s, it was rare to see strategic objectives included on a balanced scorecard). Weighting was often applied based on an unscientific assessment of the relative contribution of various perspectives and indicators to business performance results. Sometimes, thought was given to the concept of cause and effect in the balanced scorecard and greater weighting was applied in the “lower” perspectives and their associated indicators but let’s be honest - cause and effect was a new concept back then and we were still figuring out what the idea really meant in practice. Back then I saw weighting being applied to gap areas (i.e. opportunities for improvement), perspectives and indicators that had the highest external visibility, and a whole host of other, opinion-based/subjective reasons.

 

As our use of the balanced scorecard has matured, much has changed. The use of balanced scorecard “weighting” is rarely suggested these days because we generally use the balanced scorecard as a performance management tool that uses measures as indicators of organizational performance. That is, they are not diagnostic and, when approaching it as an internal strategy management tool, the balanced scorecard is best used as a facilitator of organizational analysis, dialogue, action, and change.

With this change in mindset, the concept of rolling up overall balanced scorecard performance into a score no longer makes much sense. Furthermore, the idea of weighting an indicator’s contribution to the color coding of the strategic objective it supports (assuming that you have progressed to including strategic objectives on your balanced scorecard) doesn’t add value to the role of the balanced scorecard as a performance management tool. In fact, in this context, balanced scorecard weighting can actually get in the way. That’s because weighting one indicator’s contribution significantly over another can actually mask areas of underperformance when looking at strategy execution capabilities and strategic progress.

As a result, I usually advise weighting all balanced scorecard indicators equally in relation to their contribution to their associated strategic objective unless there is fact-based evidence or a very clear business rationale to do otherwise. For example, 100% weighting is given in the case of just one indicator, 50% is given to each in the case of two indicators, etc. – you see what I mean. In my experience, there is rarely a clear rationale to approach weighting otherwise.

The only time that the balanced scorecard and/or balanced scorecard indicators may be weighted is when it is being used for the purpose of incentive compensation. There are lots of different factors that go into weighting a balanced scorecard for incentive compensation purposes – some of them related to areas of strategic focus and some of them related to the financials associated with the probability and size of the potential payout. Incentive compensation and indicator weighting is a complex topic best left to another discussion.

 

So, where are we now when it comes to balanced scorecard weighting? Generally, it really comes down to purpose. And, when the balanced scorecard is being used for the purposes of internal strategy management, weighting is generally not applicable because it just doesn’t make sense or add value.

 

Weighting and Strategy Maps

As you know, strategy maps were a later evolution in the balanced scorecard story. And while they were formally introduced to the world in 2001 and then again, more thoroughly, in 2004, many of us practitioners actually started creating our own strategy maps as early as the late 1990’s. Strategy maps were the missing link for many of us in building the bridge between strategy creation and execution and in maximizing the power of the balanced scorecard as a strategy management tool.  

By the time strategy maps came into greater use, our understanding of the relationship between the purpose of strategy management tools, cause and effect relationships, and weighting concepts had matured. As a result, strategy map weighting in the old sense was never a part of the package – it just wasn’t seen as relevant.

 

However, some practitioners did bring the concept of weighting back into play after we started using strategy maps with our clients but in a different way for a different reason and here’s why.

If you are an experienced practitioner, you know that, no matter how much you try to focus on “the vital few”, most initial strategy maps begin with upwards of 24 strategic objectives. While in theory we want to keep a company’s strategy map focused, reality is much messier. Many organizations just aren’t sure what their true value drivers are and/or organizational leaders can’t come to consensus on them. As a result, they are afraid to leave many business objectives off of their strategy map. And, no matter how much you want organizations to develop their strategy map based on hard evidence, most companies just don’t have the cause and effect data available to map out a sure-fire value chain (they need a draft strategy map and balanced scorecard to start testing this out!). As a result, most companies begin with a strategy map with a high number of strategic objectives.

When this happens, a strategy map can magnify a critical business problem – the failure to establish business priorities.

 

This is one of the biggest business problems today – the struggle to identify and focus on a few relevant strategic imperatives in the context of the bigger, long-term picture. Many organizations strive to put equal effort on all strategic objectives at the same time and end up achieving mediocre success in all areas. Unfortunately, a strategy map with 24 strategic objectives can cripple an organization that avoids making prioritizing decisions – no business can successfully work on 24 key strategic objectives simultaneously.

I personally saw many clients struggle with this challenge so, some years ago, I, and several of my colleagues, brought back the old idea of weighting and applied it to strategy mapping but in a new way – to identify subsets of strategic objectives having different levels of strategic priority over a period of time. Taking this approach has given strategy map users a way of identifying a few critical strategic imperatives in their business in a thoughtful and manageable way.

 

When I get my clients to do strategy map “weighting” or prioritization, I get them to ask this question: “Where should we put relatively greater work effort and priority over the next X months (usually 12 – 18 months)?” With this question in mind, participants apply weighting in a way that technically looks similar to the old balanced scorecard weighting approach – the key difference is in the question and purpose behind the weighting exercise.

Strategy map prioritization is an interesting exercise. There is almost always a 50/50 split in the approach participants take to applying their relative weightings. Half of the participants are guaranteed to leverage cause and effect concepts and select strategic objectives with the biggest performance gaps (current state versus vision state) lower down in the strategy map hierarchy. Others will select gap areas that represent high visibility outcomes (usually in the internal process, customer, and financial perspectives). The main thing the different approaches seem to have in common is that they focus on performance gap areas.

Talking about their different approaches to strategy map prioritization always allows members of an organization to really explore cause and effect concepts and come to consensus on (1) the way they want to think about the way their business works to produce results; and (2) where the most critical strategic gaps are in the business. The usual result is agreement on four to six strategic objectives that have clearly higher weighting or priority over the other strategic objectives on an organization’s strategy map over a defined period of time. And while all objectives will get some attention over the time period in question, members of the organization reach agreement that, when a decision must be made regarding work effort and the allocation of time and resources, the top four to six priorities will win out over the other objectives.

 

Strategy map prioritization is not a theoretical exercise – it’s a very practical one. Once they have weighted/prioritized their strategy map, my clients have used the weighting in many ways: to create multiple tiers of projects with tier 1 projects having the highest priority in budgeting and resource allocation; to evaluate and prioritize projects and work requests (i.e. work aligned with the top strategic objectives gets priority over other work); to evaluate the importance and impact of balanced scorecard results and to prioritize resulting corrective active plans; and in defining and weighting decision-making criteria. These are just a few examples.

The beauty of strategy map weightings is that they can be changed as required based on business conditions and learnings. Most importantly, this information provides guidance to managers and employees about prioritization decisions in their day to day work.

As my thinking about prioritization concepts has evolved, I have progressed on from having my clients weight the entire strategy map to having a fact-based discussion that asks each participant to identify the top three or four priority strategic objectives for the defined period of time. I have found that this more focused approach enables the same discussion and learning points and gets clients to the same result without the complexity of assigning weightings. And while there are a few downsides to this approach, the result is still the identification of relative work priorities for an organization within the context of all the strategic objectives on their strategy map and, most importantly, better, more successful strategy execution over the long term.

 

When considering weighting in the context of both the balanced scorecard and the strategy map it is important to avoid thinking about these concepts in purely black and white terms. However, over time, we have learned that some purposes and concepts just don’t go together in the case of some tools and we need to keep this information in mind as we move forward.

For example, the concept of strategy management and performance scoring are not a good match - they actually work at cross purposes. In contrast, the concept of strategy management and weighting for work prioritization appear to be in harmony because they share a common objective: excellence in strategy execution.

 

It is wiser, in my opinion, to think more deeply about the purpose of the tool in question and the purpose of a specific or associated activity. Taking this approach will set a better stage for the future evolution and practical application of strategy management tools in business.

 

Break Out of the Output Measurement Rut NOW!

I was recently teaching a class of Master’s students about the fundamentals of the balanced scorecard and the essentials of indicator selection when I was asked a great question: “Why do we seem to focus on output measures when we are measuring things in business?”

Before exploring this question, let’s take a quick look at the nature of, and options in, performance measurement.

 

Remember the good old days when we talked about leading and lagging indicators? We’ve come a long way since then and, while many people still talk about leading and lagging indicators, the thinking about this concept has changed a bit. Today, the concept of leading and lagging refers to the performance associated with a specific strategic objective itself rather than in relation to other strategic objectives on the strategy map or indicators on the balanced scorecard. As a result of this change in thinking, I actually prefer to characterize indicators as either predictors of future performance and results or indicators of past performance (often in the form of output and outcome measures).

The key is to remember that, for most strategic objectives on your strategy map, performance (and improvement) is generated through the execution of business processes. And while some strategic objectives may be achieved by completing strategic projects, most of the work that moves your business forward strategically over the long term is completed through the execution of business processes.

Looking at your business in these terms and linking business processes with strategic objectives allows you to make an interesting shift in thinking about alternatives for measurement when considering possible indicators for a strategic objective and your balanced scorecard.

Any business process owner you meet will tell you that there are actually four measurement opportunities when working with and managing business process performance: inputs, in-process, outputs, and outcomes.

Inputs are the things that trigger or start a business process moving. In-process measures are measures of things you observe while a business process is running. Outputs are the things produced immediately after a business process has been completed. And outcomes are the results achieved through, or impacts of, running a business process.

 

Here’s an example in action - let’s take a business process we can all relate to: Employee Recruitment

What triggers the recruitment process (input)? A vacancy or new position.

What do we see while the recruitment process is running (in-process)? Job postings, application and resume submissions, and candidate interviews.

What is the result of recruitment process (output)? A new, qualified employee in place in the open position quickly.

What is the impact of running the recruitment process (outcome)? Expanded organizational capability and capacity.

These are just some examples of the range of measurement opportunities/measures that could become indicators for a strategic objective such as “Attract Qualified Employees with Strategic Skill Sets”.

 

Generally, input and in-process measures translate into indicators that are predictive of future performance while outputs and outcomes are measures of completed activities and past performance. While you can’t change past results, predictive measures give you feedback early in a process and offer you the opportunity to take action, if indicated, to produce a better result by the time that process has finished running. 

It turns out that if you look at most of the measures used in business, they tend to be of the output variety. Some people believe that we tend to measure outcomes but that usually isn’t the case at all. This is largely because outcomes can be very difficult to measure. For example, measuring the outcome of employee development activities requires assessing the acquisition of knowledge and skills, and the application of these new learnings in the work place. This often involves measuring knowledge and application gap closure and assessing the value realized by the business through the acquisition and application of this new knowledge (something close to an ROI measure that can be notoriously difficult to measure when we are talking about the intangible aspects of the business). Measuring an outcome such as this, while critically important, can be difficult (often due to the complexity associated with the time lag and other factors that can come into play between the time of output and outcome measurement) and very costly.

While measuring outcomes is often considered the “gold standard” in results measurement, most organizations seem to settle for measuring outputs like % attendance at, or completion of, scheduled training programs (in the case of an employee training and development strategic objective) because they are readily available.

 

So, with all this in mind, let’s go back to our original question: “Why do we seem to focus on output measures when we are measuring things in business?”          

 

I believe that the primary reasons are because they are usually readily available, are easy to get, are recognized as evidence of the success of our business processes, and are generally accepted as the best measures of performance in business today. And while we would like to measure the impact of and/or the value of our business processes in moving our business forward, outcome measures can be difficult and expensive to get.

 

In a nutshell, output measures are usually cheap and easy.

 

Now, don’t get me wrong, if an existing output measure is the best indicator to select based on the definition of a strategic objective, by all means, use it on your balanced scorecard. However, be sure to remember that a balanced scorecard is not balanced unless it includes some combination of predictive indicators and indicators of past performance. This imperative often means exploring and adding some predictive input and in-process measures to your balanced scorecard indicator set.

 

I think that the real reason why we tend to focus on output indictors is because they are our best, most direct evidence of what has been produced by a process. That is, we ran XYZ process and output A was the result. Often, it feels like a huge leap of faith to measure an input or in-process measure in lieu of an output measure. Many people wonder “How can we be sure that this input measure is a good predictor of a future result (an output or outcome)?” I understand that concern because the answer is you don’t really know for sure without some experience and lots of data – data that most organizations just don’t have the time and resources to collect. And, without those causal relationships quantified, many organizations are afraid to replace output indicators with the predictive ones.

A practical way of adopting predictive indicators in your balanced scorecard is to create an index that includes a predictive indicator and an indicator of past performance that are both relevant to the strategic objective in question. Taking this approach allows you to (1) see whether there really is a relationship between your selected indicators (sometimes you think that there will be a relationship and it turns out that this just isn’t the case), and (2) build an understanding of the nature and strength of that relationship. In the best case scenarios, taking action on an underperforming predictive indicator and then seeing that you were able to prevent significant underperformance on the associated indicator of past performance can give you good insight into the practical value of a selected predictive indicator. Once you have developed this confidence, choosing to include predictive indicators, in lieu of output indicators, on your balanced scorecard doesn’t feel like such a gamble.

 

Output indicators are often the default and/or preferred type of measure for many balanced scorecards. Unfortunately, a focus on output measures alone severely limits your ability to leverage the balanced scorecard the way it was meant to be leveraged.

Is your balanced scorecard currently populated with output indicators? If it is, you aren’t alone.

Take the time to restore the “balance” in your balanced scorecard and increase its power. Simply look at the business processes that support each strategic objective on your strategy map, identify candidate input and in-process measures, and consider replacing some output indicators with predictive ones. Making this move will allow your balanced scorecard indicator set to help you produce even better business performance results and move your strategy forward more quickly and effectively.

 

Why Your Employees Don’t Care About Your Business Strategy

A problem I hear frequently from business leaders is that they can’t get their employees interested in, or engaged with, their company’s business strategy. They say that their employees don’t seem to care. When I ask them why they feel this way, they cite lack of interest in participating in strategy information sessions and results sharing town halls, poor uptake of business update newsletters, and failure to look at balanced scorecard results reports as just some of the examples of low levels of employee engagement and interest in the strategy of the company. 

Unfortunately, many business leaders take this apparent lack of employee engagement as a sign that their employees aren’t really committed to the company or that they don’t care about the company and what it takes to be successful. Sadly, this attitude about employees is common in many companies today - many executives have come to the conclusion that employees just don’t want to get engaged.

Armed with the assumption that low employee engagement is an employee attitude problem, the usual solution is to push more, and harder, from the top in the quest to “fix” employees/the employee problem. Not surprisingly, the actual result achieved by these actions is exactly the opposite of the desired outcome. That is, it causes erosion in real employee engagement levels and reduced employee loyalty to the company.

 

Have you ever considered that employees don’t engage with a company’s strategy because they aren’t given the opportunity to engage in, and with, the strategy in a meaningful way in the first place?

And that many employees only APPEAR not to care while they actually really do and management just isn’t giving them a fair chance to show it?

 

Most of the employees I have met in my career have truly wished to contribute to the success of their organization and, when asked, have been more than happy to participate in a dedicated way in their company’s strategy creation, execution, and management processes. In my experience, the barrier to making this a reality isn’t usually employees at all. In fact, the problem is often a systemic one with the organization, and business leaders themselves, putting significant obstacles in the way of employee engagement with the business strategy.

What are these systemic barriers? Let’s look at the four top reasons why companies have trouble getting their employees truly excited about, and involved with, business strategy.     

 

 

Employees Don’t Know What the Business Strategy Is

You’ve heard this one before – only 5% of the workforce in the majority of organizations understands their company’s business strategy. This means that only a fraction of the employees in any given company understand what the business strategy is, what it really means, what it looks like in action, and why (and how) executing the strategy will drive business success - all despite the fact that many organizations hold splashy strategy launch events for their employees and produce beautiful materials that communicate their business strategy.

Despite these efforts, there’s still a disconnect. The primary disconnect for most employees is in the “what it really means” and “what it looks like in action” parts of the equation outlined above. The problem is that most strategies and strategic plans I’ve seen are written at a very high level. They include strategic direction statements like “Focus on Quality Operations” or “Excel at Innovation” and that’s it. While it sounds good and people nod their heads when they hear them, when employees go back to their front line work, you realize that what it means to “focus on quality operations” means different things to different people.

The problem is that a statement like “focus on quality operations” actually doesn’t tell you anything about what the company really means or hopes to achieve through a focus on a specific strategic direction and this leads to a lack of clarity about what it looks like in action. And while many strategic plans include lists of initiatives that support various strategic directions, these lists are actually not very effective in helping most employees see what “focusing on quality operations” looks like in action in their job. This leads us to the next barrier….     

 

 

Employees Can’t See Themselves in the Strategy

If the only way your employees can see the strategy “in action” is through the initiatives that align with each strategic direction, they will only be able to “see themselves in the strategy” if their work includes completing one of the identified strategic initiatives.

In reality, the work of most employees involves completing business processes, not working on strategic initiatives. Actually, most of the work that will contribute to the successful execution of a company’s strategy occurs through business processes. If a company hasn’t mapped its business processes with its business strategy, it is missing an opportunity to demonstrate how to put the strategy into action, and how employees fit in and contribute.

An employee’s work is important to them and they see doing their work as their way of contributing to company success. If employees don’t see how their day to day work (via the business processes they work on/in) fits in with, and contributes to, the business strategy, they can’t see themselves in the strategy. When employees can’t see themselves in the business strategy, the strategy just doesn’t register with them and, as a result, they don’t feel like the strategy has a direct relationship to their work.

Employees see their work as important and when the business strategy doesn’t connect with the real work they do, employees conclude that the business strategy doesn’t relate to/doesn’t concern them.           

 

 

Employees are Incented to Focus on Operations ONLY

Many business leaders and managers believe that employees should focus on their work alone - that is, they don’t need to understand the business and that the work of other departments is just a distraction. In fact, many organizations go so far as to use employee goal and incentive compensation plans to focus employees on operational performance exclusively. In the worst case scenario, this focus on operational results is misaligned with strategic goals and results, negatively impacting the achievement of strategic objectives.

Companies that focus their employees on operational matters only are placing significant limitations on the ability of their organization to achieve business success. For example, when employees don’t understand how the business works, as well as the strategic goals of the organization, they are at greater risk of making operational decisions that have a detrimental impact of the overall success of the company. In contrast, when employees understand the strategic priorities of the entire business and how all parts of the business need to work together to achieve success, they realize that operational decisions made in one part of the company have an impact in other business units and departments and they make these decisions accordingly.

Helping employees understand the relationship between operations and the strategic objectives of the organization allows employees to make more informed day to day business decisions and that always translates into better strategic performance overall. 

 

 

No One Asks Employees Their Opinion or Gives Them the Chance to Participate in the Strategy Creation and Management Process

Why is strategy making and improvement so often considered to be the sole domain of executives and business leaders? Why does the strategic planning and execution process tend to rely on numbers and data almost to the exclusion of the insights and wisdom of the people who are close to the action and the customer (i.e. the employees)?

The unfortunate fact is that the traditional approach to strategic planning and strategy management used by so many companies almost always unfolds in exactly this way with limited involvement by, and input from, a broad range of employees

Many organizations don’t even bother to engage their employees in the strategy making process while others make the offer and then complain that their employees don’t take them up on it. Unfortunately, in many of these cases, organizations don’t take the necessary steps to help their employees participate in strategy making and management activities. Not releasing employees from front line work and not making time for participation in strategic discussions part of every employee’s job are just two examples of the real barriers that prevent employee engagement with a company’s business strategy.

Not tapping into the knowledge and wisdom of a company’s employees during the strategy creation process is short sighted and can be expensive. For example, most customer facing employees can tell executives exactly what the company’s customers need and expect and how the company is doing at fulfilling them. Want to know more about the competition and the trends in the industry? A crack sales force can tell business leaders everything they need to know. With this much inhouse knowledge at hand, why spend the time and money on customer focus groups and analysis by consultants? However, many companies insist of doing just this.

In addition, employees have unlimited ideas about how to actually execute and improve a company’s business strategy. Unfortunately, most companies don’t tap into this critical resource.

Given the potential associated with employee involvement, and the lack of it in most organizations, is it any wonder that employees chaff at executing a strategy that they didn’t have a part in defining and which may not make sense or be easy to implement given the business realities at the front line of the business?

 

 

In my experience, most employees want to engage with their company by getting involved in strategy creation and execution – they really do care about the work of their company and they want it to be successful. The problem is there are just too many obstacles getting in the way.

How can business leaders increase employee engagement with their company’s business strategy?

(1) Ensure that employees have the opportunity, and are actually able, to participate in meaningful ways in the creation, execution, and management of your business strategy,

(2) Translate your business strategy into action via a strategy map and use it to tell your strategy story and engage employees further with your strategy and what it really means, and

(3) Use your strategy map to help employees see how their work contributes both directly (via business processes and strategic initiatives), and indirectly, to strategy execution success.      

 

In the end, it’s important to get your employees involved and engaged with your company and business strategy because, regardless of which business sector or industry you are in, high levels of employee engagement are good for your customers and stakeholders, your employees, and, ultimately, your business.  

 

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!   

 

Don’t Bet on Strategy Maps and the Balanced Scorecard ALONE Translating into a Prosperous 2012

Are visions of strategy maps, balanced scorecards, and/or any other organizational performance management tool dancing in your head as you plan for a better business year in 2012? While adopting any combination of these tools will probably result in some improvements in operations and business results over the next year, you won’t achieve the transformational organizational shift that translates into sustained levels of exceptional business performance if implementing these tools alone is all that you do.

In fact, at the risk of sounding extremely Grinch-y as we close out 2011, you are actually better off not even starting down the strategy map-balanced scorecard adoption path if you aren’t prepared to go all the way with your commitment. That is, to achieve business success in 2012 and beyond, you need to implement the “new way to manage” - it's required if you want to unleash the full potential of all those business performance management tools we seem to grab onto in our quest to achieve the next level of business performance.

Let’s look at the key elements associated with this “new way" to manage.

 

Engage in Open Communication

Successful organizations are open and communicate their business strategy and objectives clearly, concisely, and completely with all of the internal and external stakeholders including employees at all levels of the organization, their customers, and their business partners. To do this, they get to know the communication preferences of each audience and use numerous communication vehicles to get their messages out. In addition, they focus on building mechanisms that encourage meaningful, two-way communication and dialogue, not one-sided messaging.

This level of communication doesn’t happen by accident – it takes planning, adequate support and resourcing, appropriate funding, and a dedication to focused execution and improvement. If communication in your organization is haphazard or sub-optimized, a new business performance management tool will most likely get lost in your organization. Few people will know it exists, limiting the impact it can have on the performance of your organization.        

 

 

Change the Conversation

What do conversations look like in your organization? What do they focus on?

If you are like most, they revolve around operational matters and fighting today’s crisis. Discussion and decisions are likely top down in nature with senior management determining direction, strategies, and tactics with the expectation that employees will execute them as directed. When you take the time to look at business results, you might find that you and your colleagues debate the accuracy of data, argue about the interpretation of the results, and speculate on whether an unexpected result is a one time occurrence or a trend. If this sounds like your organization, you are not alone.

While successful organizations do deal with operational activities and decisions, and firefighting, they also make sure that they spend adequate time exploring and discussing strategic matters on an ongoing basis. They engage employees at all levels of the organization in an ongoing dialogue about what the organization should be, how it should get there, how it’s doing/performing, and what should be done to improve. They create multiple venues and opportunities for these conversations to take place including business results review sessions where the root cause drivers of performance results and the impact of current performance on the future success of the organization are discussed, and evidence-based corrective action plans are created and debated.

The introduction of a new business performance management tool such as the strategy map or the balanced scorecard offers an organization the opportunity to engage with new business information and stimulate new kinds of conversations across the company. Organizations that introduce these tools without changing the nature of their conversations never reap the full potential the tools were meant to deliver.     

 

 

Set Clear Business Priorities

Success in business is as much about deciding what NOT to do as it is about deciding what to do. This is critical when defining direction and business strategy. And it is equally critical when making business decisions about relative work efforts, resource allocation, and dealing with day to day work demands. Successful organizations determine a small set of strategic priorities and then leverage their business performance management tools to communicate, test and validate, and revise their business priorities. They also use these tools to give employees at all levels of the organization the information they need to make day to day business decisions that align with organizational strategy and strategic priorities.   

If your organization doesn't do a good job today at prioritizing work and decisions, and does not use the introduction of business performance management tools as an opportunity to develop this capability, you will find that implementing any tool puts an additional and unwelcome strain on the overall capacity of your organization. Rather than seeing your business performance management tools as a help, you run the risk that employees will become resentful of them because (1) the tools have added additional strategic considerations to the overall work of the organization; and (2) utilizing the new tools has created additional administrative work for them.

When introducing business performance management tools such as strategy maps and the balanced scorecard, be sure to also take the opportunity to use them to identify and communicate a focused set of business priorities for your organization. These tools were designed to help you do this – wise adopters take advantage of this opportunity to focus the work of their entire workforce and organization.     

 

 

Build New Leadership Capabilities

Leveraging business performance management tools to get the most out of them and make the new way of managing “the way we work” at all levels of an organization is a new skill for many leaders, managers, supervisors, and employees. Managing in the new way often requires a complete change in behaviour from the previous operating and managing style and generally demands new levels of accountability from leaders and employees. Do not assume that simply introducing the strategy map or rolling out cascading balanced scorecards will automatically change the way managers lead and the types of discussions they have with their team members.

Successful organizations make their new expectations for manager and employee behaviour explicit and will then provide everyone with the education, training, and ongoing supports they need to live up to new expectations. In addition, they will offer everyone incentives to manage and work in the new way, including building behavioural and performance expectations into personal goal plans, and basing compensation on success in adopting these new skills and behaviours and building advanced levels of capability in this regard.

Don’t expect the introduction of new business performance management tools to magically transform the way your organization works. To achieve the changes outlined above and make them "the way we work", you must support tool implementation with a formalized programme that builds the appropriate skills and capabilities in every employee in your organization.

    

 

Many organizations implement strategy maps and the balanced scorecard in the hopes that these business performance management tools will provide them with the silver bullet they need to achieve improved business results over the long term. Unfortunately, the landscape is littered with stories about companies that abandoned their selected tool because it failed to perform to expectations and/or deliver the desired business results. In the majority of cases, when you dig deeper into the failure, you discover that the adopting organization simply rolled out the tool while managing in the same old way. Essentially, the sub-optimization of the tool was a result of failing to support it with the behavioural, cultural, and systemic changes required to receive the maximum benefits of business performance management tool utilization.

I think that there is one critical reason why organizations fail to go all the way when implementing a business performance management tool. While some just honestly don’t realize that the new way to manage is a key element of success, I believe that many organizations and business leaders are searching for a quick fix to their problems. Implementing a tool requires action, can be done relatively quickly, and the result is tangible – you can see a new strategy map or balanced scorecard when it is in place and it feels like progress. Culture, behaviour, and organizational systems are more intangible in nature. They can be difficult to change and often leaders are worried that it will take a long time to effect the change (particularly if they are unsure about how to do it). And when the change does happen, you often can’t see it easily (though there are some great assessment tools out there that can help you measure that the change is indeed happening).

Bottom line? Implementing a new business performance management tool is sexy while effecting the required cultural and behavioural change feels like work. However, without these fundamental changes, the business performance management tool you choose to implement will never live up to its potential for you and your organization.

 

Looking for better business performance in 2012?

Go ahead and adopt the business performance management tools that interest and inspire you the most - but also make a commitment to implement the new way to manage across your organization. The maximization of your return on your investment in business performance management and the achievement of sustained performance success in 2012 and beyond are dependent on it.

  

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!

 

When Did Strategy Become a Four Letter Word?

After several meetings and discussions with colleagues and business leaders over the past few weeks, I’ve come to the sobering realization that strategy and, more specifically, strategic planning, has developed a bad name out there. More and more frequently, I seem to receive friendly advice telling me not to use the “S word” because it turns business people off. Just call it something else, or better yet, don’t talk about it at all they say – just convince “them” to do it without naming it strategy/strategic planning.

The unfortunate reality seems to be that, in many cases, executives and business leaders deal with strategy making and management because they know they should but they do so with a hesitation based in a real dislike for the process and the resulting plan (and distractions) it produces.    

Now, for me, someone who feels passionately about the value of strategy formulation and execution in driving higher levels of organizational performance success and more sustainable business results achievement, it’s really confusing, and worrisome, to think that strategy has become a dirty word in our businesses and organizations. So, I began to think about it and found myself wondering: Why is this the case? What is turning business leaders off?

How did strategy become a four letter word?

This is what I came up with.

 

1. Strategic planning can feel like a waste of time

The Problem: In a rapidly changing business environment, strategic plans are often out of date before they are rolled out. When this is the case, it’s easy to start to question the time, effort, expense incurred, and value associated with strategic planning activities. As a result, some organizations are swearing off the 3 – 5 year strategic plan and opting to complete 90 day plans that are really more tactical than strategic.     

The Root Cause of the Problem: The traditional approach to strategic planning no longer works in this dynamic business environment -

● It takes too long (6 months from start to plan production is simply too much time);

● It is too reliant on historical data (which doesn’t really help you move forward in uncharted waters) and doesn’t involve the people who know how the business really works in the strategy creation process;

● The plan it produces, as well as the annual planning cycle approach, aren’t dynamic and agile to change (reducing the relevance of the strategic plan as an effective business management tool) and the plan often ends up sitting on the shelf;

● The strategic plan is often a short to mid-term tactical plan that isn’t guaranteed to move the organization forward towards its long-term business goals; and

● No one in the organization (often including the executives that created the plan) really understands how to implement the strategic plan locally/in their everyday work activities (largely because it is written at a very high level and, though it seems to make sense, it’s unclear what implementation looks like below the corporate or executive level).    

The Turnaround Plan: Changing times require a different approach to strategy creation/formulation – one that works with, rather than against, a dynamic, often unpredictable business environment while still helping to chart a clear and understandable path towards the ultimate business goals of the organization. This new strategic planning process -

● Must be completed in weeks, not months;

● Leverages some data but is more reliant on their interpretation by, and the wisdom and intuition of, a broad range of stakeholders, including employees and key business partners, who participate hands on in the planning process;

● May involve an annual planning event but focuses more on quarterly strategy progress review and refresh/refinement sessions AND has mechanisms to identify, make and incorporate, and communicate required changes in the business strategy quickly, effectively, and efficiently at any time so that the strategic plan is always relevant; and

● Clearly lays out the long-term strategy to achieve the organization’s mission and vision AND both the mid-term (3 – 5 years) and short-term (12 – 18 months) business priorities, within the context of the long-term strategy, in an accessible roadmap format so that all employees and stakeholders understand what the key elements of the strategy are and what they look like in action. 

How to Learn to Like Strategic Planning Again: Drop the traditional approach to strategic planning and start formulating strategy using a fresher, faster, more dynamic, and agile approach.  

 

2. Strategic planning/formal plans introduce too much structure into the way we work

The Problem: While some people like process and structure, many do not. Strategic planning is a process that often produces a fairly prescriptive plan. As a result, those who have a more spontaneous approach to management can struggle with the rigor demanded by strategic planning.

The Root Cause of the Problem: On the surface, there are many perceived characteristics of strategic planning that seem to turn people off –

● Strategic planning is a deliberate process that is followed by a group of people to produce a certain result – if you dislike following processes, you probably won’t like strategic planning much;

● Strategic planning activities can be highly data driven with little to no opportunity for intuition and insights from a broad range of sources to make their way into the process – this makes strategic planning feel like a clinical process that is disconnected from the day to day realities of the business at the front lines; and

● A documented strategic plan can feel like it limits your options for individual creativity and innovation in your work.

While I see these concerns from time to time, and hear them presented as a rationale for disliking strategic planning, I think that they are really just convenient excuses. What I think is the true root cause driver here is a reluctance to (1) commit to a plan, (2) work together with others to implement the plan, including planning and possibly modifying personal actions based on their impact on others, and (3) be held accountable for one’s part in the successful completion of the plan and the achievement of targeted business results. Working with a strategic plan requires all this of everyone in the organization – no wonder it can feel like a scary proposition that is best to be avoided.  

The Turnaround Plan: Overcoming this particular problem requires a fundamental change in organizational beliefs and attitudes about strategic planning. To achieve this goal, co-operation is required from three sources which must be aligned with, and designed to support, the goal of helping people embrace the strategic planning process and its associated discipline.

Organizational and Management Processes 

● Business leaders, managers, and employees must commit to: adopting a strategic planning process that provides some structure and produces the desired results, follow and improve it moving forward, and stick with it over the long-term;

● Add strategic planning process and discipline to your organization but resist the temptation to go too far - the key is to add just enough structure to ensure that everyone is moving forward together in the same direction but not so much that there isn’t room for innovation and creative thinking, at all levels of the organization, about the best way to implement the strategy and get the organization to its intended goals;

● Management processes must integrate seamlessly with the strategic planning process, and the resulting plan, so that the business strategy (including strategy formulation and execution) becomes just a part of the way the organization works every day;

Supports and Rewards

● The organization must support business leaders, managers, and employees in their efforts to work on and within the strategic plan – this includes facilitating their involvement in the process by giving them the time away from their work to participate, and providing them with back up on the job;

● Business leaders, managers, and employees must be rewarded and recognized when they demonstrate the desired new attitudes and behaviors – this reinforcement helps sustain change across the entire organization; and

Leadership Behaviors

● Business leaders, managers, and employees must walk the talk and model the desired behavior at all times.

How to Learn to Like Strategic Planning Again: Focus on creating an organization, from top to bottom, that embraces the structure strategic planning provides and the commitment it demands.

   

3. The strategy execution failure rate is high

The Problem: Statistics have shown that the majority of organizations fail to actually do what their strategic plan says they’re going to do, so, many think: “Why bother planning in the first place?”

The Root Cause of the Problem: While strategy execution failure is a complex problem, there are typically four critical stumbling blocks that exist in the majority of cases including:

● Lack of employee buy-in for the plan;

● An unclear strategy execution roadmap;

● Unclear ownership accountabilities or no accountability framework; and

● Low levels of organizational alignment with the business strategy (including core processes and strategic projects, human resources and their skills and capabilities, 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) 

The Turnaround Plan: Steps can be taken during the strategic planning process to reduce or prevent strategy execution problems including:

● Involving employees (as members of the strategic planning working team) in a meaningful way in the strategy creation process including making decisions in the key elements of the strategy and what they look like in action;

● As members of the strategic planning working team, help employees play the role of strategy ambassador throughout the organization and involve them in the roll out and implementation of the strategic plan;

● Develop your strategic plan in the form of a strategy execution roadmap that includes key strategic objectives, aligned business processes and strategic projects, and linked performance indicators – aligning processes, projects, and measures with your business strategy effectively links action with the strategy;

● Assign ownership (for strategic objectives, indicator data, indicator commentary, core business processes, and projects) across your organization, including clear responsibilities and target dates, that leverages current work responsibilities intelligently and build a culture of follow through within your organization; and

● Strive for maximum organizational alignment at all levels of the business with the elements of your strategic plan.

How to Learn to Like Strategic Planning Again: Leverage the strategic planning process to set the scene for strategy execution success. 

 

Strategy formulation and execution management are critical activities for any business that wants to achieve maximum organizational performance and sustained business success. The act of collaborating, talking about, and writing down your organization’s goals, and plans to achieve them, has a powerful effect on the amount of time and effort required to reach those goals, reducing them significantly for most companies.

If you want to avoid using the “S word” in your organization, I’ll leave that to you. However, the fact remains that successful companies have made peace with strategy (and the strategy formulation and execution management process) and have embraced it for the invaluable business management tool and process it is.

I believe that the key to success is not to avoid strategy but to adopt it on terms that make sense for your organization so that your business strategy/strategic plan can provide your organziation with all of the benefits it has the potential to deliver.