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.

 

The Four Foundations that Should Frame Every Business Strategy

If you look closely at the inner workings of successful companies, you quickly come to the realization that truly solid market-leading organizations and business strategies are built on four critical foundations: a set of core values; a mission or purpose statement; a timed vision statement; and a clearly articulated customer or stakeholder value proposition.

While this list won’t represent a new insight or a “rocket-science” approach to business strategy for many of you, it still surprises me how many companies seem content to cherry pick from this list of the four essentials and how they rarely incorporate all four elements into their business strategy. By not taking steps to incorporate all four foundations in their strategic thinking process, organizations are setting themselves up to sub-optimize their business strategy and strategy execution results.

Let’s take a closer look at each of these important foundational elements and talk about how they fit into the strategy picture.

 

Core Values

Core values represent the basic, shared beliefs that govern individual and group behavior in any organization. They both define and represent the way things get done and, as a result, form the foundation for the strategic objectives in a company’s business strategy and on its strategy map. Every action an organization takes should be in absolute alignment with its stated core values. In fact, the difference between successful and unsuccessful organizations is that the successful ones actually live up to their values all the time in everything they do. It is important to note that a company’s core values ideally remain stable over time.

Because you want your employees to put your core values into action every day, you need to keep your list of core values to a short, focused one – three to five core value maximum is usually a good number. In addition, it’s not just good enough to simply identify your organization’s core values. You should also write a clear behavioural definition for each value – that is, what it is and what it looks like in action. This is often a missing piece in company core values statements. By defining your core values in actionable terms, you make it much easier for your employees to make decisions and behave in ways that are in complete alignment with the company’s core values.

Successful organizations take their use of core values even further and build the expectation that employees will act in alignment with core values into the performance management process. They go so far as to include an assessment of employees’ performance against core values behaviour standards as part of performance review discussions. Taking this approach (1) communicates the importance of a company’s core values; (2) supports the requirement to align individual actions with core values at all times; and (3) evaluates and rewards behaviour and performance that is aligned with values and helps move the organization forward.

Imperative: It’s not good enough to go through the motions of creating a list of organizational core values. To achieve real business success, it is critical to take the time to identify and define core values and then ensure that they are put into action by all employees at all levels of your organization every day.

 

Mission

An organization’s mission defines why it exists, describes what business it is in and the contribution it makes, and states the value it adds to either society or the corporation it operates within. A good mission statement communicates the purpose of an organization and, importantly, it aligns with the organization’s core values. Mission statements endure over time and do not change unless a change in organizational direction results in a change in the nature of your organization’s purpose.

A winning mission statement is short, inspirational, and lofty – companies should always be striving to deliver on and achieve their purpose however they never actually get there. A typical mission statement says a lot and provides direction in broad terms but still leaves room for creative thinking about how to take action and actually achieve the mission or purpose.

Here are some sample mission statements that I particularly like:

3M - To solve unsolved problems innovatively.

Merck - To preserve and improve human life.

St. Mary’s Duluth Clinic Health System - Bringing the soul and science of healing to the people we serve.

Mary Kay Cosmetics - To give unlimited opportunity to women.

Many people believe that mission statements only apply for public sector and non-profit organizations largely because their ultimate purpose is to do good for society. The thinking is that, in the private sector, the ultimate goal is to make money/a profit – full stop. And while the making money bit is true, smart for-profit organizations realize that making money isn’t a purpose that truly inspires customers and employees. Most progressive thinking companies believe that if they focus on achieving an inspirational purpose that adds real value, the money, and if they plan right, the profits will follow.

Imperative: As you can see from the mission statements provided above, even private sector organizations today take the time to define an ultimate purpose for their company. By ensuring that its core values and mission are aligned, a company is setting the stage for the development of a more coherent business strategy.

 

Vision

An organization’s vision is built on its core values and is an extension of its mission. A vision should include a clear timeframe (often a three to five year horizon) and acts as a signpost on the journey to achieving the mission. It paints a clear and measurable picture of what a company wants to achieve by a defined point in the future. As a result, a vision provides an organization with a tangible way of assessing its strategic progress over a specific time period.

A vision stretches the organization’s capabilities and image of itself and it clarifies the direction of the organization. In addition, a clear vision helps all of a company’s stakeholders understand why and how they can support the organization as it strives to achieve these specific goals and objectives. Because they are time-limited, vision statements change after the vision period has been completed.

Imperative: Because an organization never achieves its mission, a time-limited vision offers the ability to assess progress on the mission journey against some clear measures of performance. The thinking goes that if the progress measures included within the vision have been set in the context of the mission (and, by extension, the values), achievement of the vision implies forward progress in the achievement of an organization’s mission.

 

Customer Value Proposition

An organization’s customer value proposition (CVP) is the combination of benefits it is going to provide to its customer. In other words, it is the big promise it makes to its customer that differentiates it from its competitors in the market place.

The key to success with customer value propositions is to leverage your understanding of your target customer AND the value propositions of your competitors to differentiate your company in the eyes of your target customer.

There are three classic customer value propositions that vary slightly based on the business sector but generally revolve around the same three ideas of value creation:

Operational excellence (leading to lowest price/cost for our products and services)

Product or Service leadership (by continuously updating products and services to keep them on the cutting edge)

Customer/Stakeholder intimacy (customizing our products and services to meet each customer’s/stakeholder’s unique needs)

Successful organizations (1) can clearly state their CVP and (2) every employee in the organization knows what it is. In addition, a company’s CVP, mission, vision, and core values must all be in alignment if it hopes to define and execute a successful business strategy.

Imperative: A company’s customer value proposition is the fourth fundamental for strategy success. Unfortunately, making the effort to define a clear and differentiating CVP is the most frequently skipped element in the strategy creation process, regardless of sector. I think this is largely due to the fact that developing a CVP requires multiple steps, a complex thought process, and the willingness to make a bet on a focused customer strategy – all of which can be daunting in a competitive marketplace. Even when companies do define a CVP, they rarely take the step of creating a customized CVP statement that is clearly communicated and understood across their organization. While better than not defining a CVP at all, failing to follow through in this way can also result in the sub-optimization of strategy development and execution success.

 

Once they have been defined, the four foundational elements of core values, mission, vision, and customer value proposition should be arranged on the strategy map in this way.

With the four foundations in place, they can be leveraged to define the value creating business strategy an organization is going to execute to satisfy its target customer or stakeholder and achieve its mission/purpose and identify the strategic objectives that populate the strategy map. Practically, strategic objectives are identified by keeping the four foundations top of mind as these questions are answered in the following order (in the case of a for-profit company):

Financial: How must we perform financially and what returns must we deliver to our shareholders?

Customer: What must we do for our customers and what benefits/big promise must we deliver so that they reward us with their business and loyalty?

Internal Process: What processes must we excel at to give our customers what they what, need, and expect from us?

Organizational Capabilities: What skills, capabilities, people, culture, technology, tools, and infrastructure must we have access to/in place to execute our processes and deliver our customer promise/value proposition?

    

There are four foundations that are essential for building a sound and solid business strategy: core values, mission, vision, and customer value proposition. By keeping these four elements in mind while answering the critical questions outlined above, companies are virtually guaranteed of creating a business strategy that is aligned with their core values, is geared to delivering their differentiating big customer promise, and gets the company moving on a path to mission and vision achievement.

 

Though simple enough in concept, in my experience, companies frequently fail to follow through on defining the four foundations. As a result, organizations that actually make the effort to complete this work find that they are able to lead and win in their selected markets more easily than they might have imagined.

 

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.

  

Walking the Simplicity-Complexity Tightrope in Strategy Mapping

It’s not unusual to hear people voice concerns about the complexity that seems to be associated with strategy maps – in fact, I’ve heard remarks to this effect at least three times in the past week alone. I think many organizations dismiss using the strategy map for just this reason – we have come to think of strategy maps as a complex mess of colors, bubbles (aka. strategic objectives), and arrows that go all over the place looking like spaghetti or the web of a crazed spider!

It’s too bad because organizations that don’t leverage the strategy map as a core component in their strategic plan are missing a huge opportunity. A good strategy map is a multi-purpose communication and business management tool that: draws out the business model business leaders believe will deliver the organization’s value proposition; highlights the key business drivers and priorities for the upcoming planning period; translates the business strategy into action so that staff at all levels of the organization can execute the strategy locally in a way that contributes to moving the business forward; and it provides employees with a guide for consistent, strategy-focused decision making.

It’s really a shame that such a powerful tool is dismissed by many organizations based on the misconception that strategy maps are inherently complex. The truth is that strategy maps don’t have to be an overly complex mess - it just seems to me that we have made them that way. I believe that the key to solving this problem is for organizations to balance the ying and yang of simplicity and complexity in their strategy mapping efforts rather than choosing one over the other.

How can this be done?

The key is to walk the simplicity-complexity tightrope in strategy mapping by (1) being sure that, in a drive for simplicity, you don’t reduce your strategy map’s ability to do all four of the things listed above well, and (2) ensuring that the level of complexity in your strategy map doesn’t obscure its power as a communication and management tool.

So, let’s talk about the two PRIMARY sources of complexity in strategy maps: strategic objectives and cause and effect arrows.

 

Strategic Objectives

The most obvious reason why a strategy map gets labeled as “too complex” is due to the number of strategic objectives on it.

I have met many people who believe that anything other than a streamlined strategy map is too complex. These folks dream of a strategy map with 8 or fewer strategic objectives on it. Unfortunately, unless you run a very simple business, I believe that this goal is unrealistic for most companies.  In my experience, I haven’t seen any real working strategy maps that are this streamlined – even in organizations I would call mature strategy map and balanced scorecard users.

As a rule of thumb, a manageable number of strategic objectives for a strategy map is between 12 and 20 (4 – 5 per strategy map perspective). It is quite usual for your first draft strategy map to include a very high number of strategic objectives (often more than 24). Your goal through an iterative process is to reduce this number by repeatedly asking the specific question associated with each strategy map perspective and then working hard to come up with a focused set of answers (translated into strategic objectives) that provide the most high value responses to each question.

The four questions by perspective are:

Financial: What financial results must we achieve to be successful in the eyes of our shareholders? (private sector); To achieve our mission and vision, how must we use our financial resources and how must we appear to our funders? (public sector)

Customer/Stakeholder: To achieve our financial performance results, want must we deliver to our customers? (private sector); To achieve our mission and vision, what must we do for our stakeholders? (public sector)

Internal Process: To satisfy our customers/stakeholders, what business processes must we excel at? (both sectors)

Organizational Capabilities: To deliver to customer/stakeholder expectations, what skills and capabilities, culture, tools, and technologies must we have? (both sectors)     

The goal in answering these questions isn’t to include absolutely everything your company does – this is where the road to overly complex strategy maps begins. The key is to identify the vital few elements in your business that will make a real difference in contributing to success. When answering the four questions above, it’s critical to keep your responses focused on the question and limited to the most important drivers. A precise approach will allow you to meet the goal of 4 – 5 (maximum) strategic objectives per perspective.

It’s important to mention that, over time, as you gain more experience using your strategy map and gather deeper insights into what really drives results in your business, you and your colleagues will probably be able to streamline your strategy map further. It’s important, however, to respect the inherent complexity in your business and not try to streamline it so much that you limit the ability of your strategy map to make its contribution to business success.

Another reason why I see strategy maps getting labeled complex is as a result of the wording of the strategic objectives themselves. As a general rule, the best strategic objective names are short (3 – 5 words maximum), descriptive, and begin with a verb. The shorter the name, the less real estate each strategic objective takes up on your strategy map. It’s a small thing but don’t underestimate its impact on reducing the perception of complexity for your strategy map. Also, short, snappy strategic objective names are more memorable – making it more likely that employees and stakeholders will be able to remember the key elements of your business strategy.

         

Cause and Effect Arrows

There is no doubt that cause and effect arrows are the number one contributor to the complexity stigma given to strategy maps! They can be so confusing that many organizations choose to leave the cause and effect arrows off of their strategy map. This is a short-sighted solution to the cause and effect arrow problem because mapping and testing the cause and effect relationships in your business is perhaps the most valuable contribution your strategy map will make to the current and future success of your business.

The problem is that most organizations don’t know where to draw the line when it comes to cause and effect arrows. They begin mapping out the relationships between strategic objectives and, before they know it, they have a mess of arrows on their hands.

The key to success with drawing cause and effect arrows is to map out the direct and most critical relationships ONLY. By avoiding the indirect relationships, it becomes easier to simplify your strategy map while also demonstrating the complex inter-relationships that exist in your business.

 

Unnecessary complexity is a real problem with strategy maps. The solution, however, isn’t to go overboard and over simplify your strategy map. Doing this ignores the true complexity of your business and reduces the ability of your strategy map to deliver on all its promises as a powerful communication and business management tool.

The key to success is to walk the simplicity-complexity tightrope so that your strategy map depicts the complexity of your business accurately but in a straightforward and understandable way.

This can be achieved by including a focused set of concisely named strategic objectives, and a limited number of cause and effect arrows, that is restricted to direct cause and effect relationships only, arranged in an aesthetically pleasing way on your strategy map (don’t underestimate the value of a “pretty” strategy map in reducing the perception of complexity!).

 

As a closing thought, I will mention that, even when a strategy map does a great job of balancing the simplicity-complexity tradeoff, some people may still try to label it as too complex. More specifically, you’ll hear them say that there is no way that someone looking at it on their own could understand it.

While I don’t agree that this is the case with a well done strategy map, I will concede that it could happen in a situation where someone doesn’t know how to read and use a strategy map. Either way, I strongly recommend that an employee’s or stakeholder’s first encounter with your strategy map should be a guided experience. Ideally, all employees and stakeholders should have the strategy map revealed to them as part of a communication process focused on sharing your organization’s “strategy story”. By talking through your strategy map gradually and in a logical sequence, employees and stakeholders will have no problem understanding your strategy map and, ideally, seeing how they fit into the picture.

 

Have you been hesitant to use a strategy map in your organization because you have been worried that it is a complex tool?

If you create your strategy map following these guidelines while placing an emphasis on focus while still respecting the true complexity in your business, I am confident that your strategy map will walk the simplicity-complexity tightrope effectively and successfully.   

 

Why Focusing on Your Target Customer and Defining Your Value Proposition Isn’t Enough for Business Success

Have you identified your company’s target customer yet?

Based on all I’ve been reading lately, your organization is behind the eight ball in this economy if you haven’t. In all honesty, there is nothing special about the current business environment that makes identifying your target customer more critical today than at any other time. It actually turns out that the power in the marketplace has been shifting for some time to the customer and, incidentally, their service expectations have been rising. Essentially, knowing who your target customer is has been a requirement for some time but it feels like it has turned into a business imperative in a tough, and suddenly tight, economy and marketplace.

Identifying your target customer gives your company someone (or a group of someones) to focus on. It gives you someone to get to know really well, allowing you to develop an intimate understanding of their evolving wants, needs, and expectations. With this information, you can identify and create products and services that will suit your target customer AND you can design a customer experience that will appeal to them on an emotional level. In other words, knowing who your target customer is allows you to gain a comprehensive understanding of what they value.

At a basic level, customer value can be looked at as a simple plus-minus equation. On the plus side are all the benefits your product or service and customer experience provide to your customer. On the minus side are the costs to the customer that are associated with using your products or services and interfacing with your company. Costs include money, time spent/wasted, and other intangible, non-monetary costs. Benefits include the product and service features that your customer is looking for as well as other benefits you deliver that exceed your customers’ basic service expectations. When the benefits offered by your product, service, and customer experience outweigh the costs in the eyes of your customer, you meet or exceed customer expectations and add value. When, however, costs outweigh the benefits, you fall short of customer expectations and your company destroys value for your customer. Customers are usually attracted to companies and products/services that provide value and are generally repelled by companies and products/services that destroy value – no real surprise here.         

However, here’s something that’s important to remember: Value is defined by your customer. That is, perceived benefits and costs are in the eyes of the customer – not yours.

Not surprisingly, different target customers buy based on different perspectives of the cost-benefit tradeoff. For example, some are looking for great products that offer high levels of quality for a low price while others want to receive a consistent product and/or service experience at a predictable (often low) price. Some customers are willing to pay a premium price just to look cool or have a first run or limited edition product or experience while others want to buy from a company that really understands them and can fulfill a variety of needs by offering a one stop shop model. Identifying your target customer and really understanding them positions you and your company to hone in on their perspective on value. And, with this understanding, you can craft your customer value proposition – the combination of benefits you are going to provide to your customer.

As you likely know, there are three classic customer value propositions. While there have recently been suggestions that there are additional value propositions (including market or niche creators/new market leadership such as seen with Cirque du Soleil), let’s stick with the big three: Operational Excellent; Product Leadership; and Customer Intimacy.

 

Operational Excellence: Companies adopting this value proposition focus on delivering exceptional levels of quality, price, and ease of purchase and they put together an offering that represents an attractive combination of these three elements. They have a reputation for executing reliably and with consistency, usually providing their customers with low prices and expedient, dependable service.

 

Product Leadership:  Companies pursuing this value proposition excel at creating new products that are on the leading edge and are highly desirable. Often, successful companies in this category seem to create and market products that the customer wants before they know they want it (often said about Apple’s products). The focus is on product innovations (not incremental improvements) that explode existing paradigms and boundaries and these companies consistently provide their customers with the newest and most innovative products and/or services, often at a premium price.     

 

Customer Intimacy: Companies with this value proposition build close bonds with individual customers within the customer group. Customer-intimate companies leverage their knowledge of what their individual customers’ needs and pain points are to create customized solutions, often at very reasonable prices. The hallmark of these companies is giving the customer more than they expect and going above and beyond to provide customers with a total solution. As a result of their focus on the individual customer and their relationship with them, these companies enjoy high levels of customer loyalty.  

 

It is important to note that while successful companies will choose one of the big three as their primary customer value proposition, they do not exclude the other two in their operations. They will, however, perform at threshold levels only on these subordinate value propositions because they realize that some of the elements in the individual value propositions are in direct conflict with each other. Determining their leading customer value proposition allows for easier prioritization of work efforts and more focused decision-making – translating into a real ability to deliver on the primary drivers of customer value.    

The key to success with customer value propositions is to leverage your understanding of your target customer AND the value propositions of your competitors to differentiate your company in the eyes of your target customer. To do this you can either choose to adopt a different customer value proposition from your competitors OR excel on different attributes within a shared value proposition – these are the two primary ways to differentiate your company in a competitive marketplace.   

 

While knowing your target customer and adopting a compelling customer value proposition are critical for business success, these two things alone are not enough. In fact, it turns out that, besides identifying a target customer to satisfy, excelling on a specific dimension of value and delivering a compelling value proposition, and performing at threshold levels on other customer-defined standards of value, to achieve sustained business success, you must deliver and improve the value you provide year after year on an ongoing basis. The only way to do this, and successfully deliver on your promised value to your customer, is to build and implement an operating model that is fully aligned with your customer value proposition.

Interestingly, the elements of a company’s operating model have a lot in common with many of the balanced scorecard’s perspectives. These elements include the organization structure and peoples’ skills and capabilities, the company’s culture, the nature of strategic information technologies, the types of management systems employed, and the range of business processes implemented. The elements of the operating model have synergies with the learning and growth/organizational capabilities and internal processes perspectives on the balanced scorecard (hold this thought).

The key to success when implementing a specific customer value proposition is to ensure that it is supported by the appropriate operating model. So, what is the right operating model for a given value proposition?

 

Operational Excellence: This value proposition features highly centralized functions with the most skilled resources residing at the core of the organization and a command and control approach to management. The organization is very disciplined and process focused with conformity with defined cost and quality specifications being highly valued. Information technology features integrated, transactional systems that support business processes that are focused on delivering products on a predictable service cycle using standardized assets. The operating model in operationally excellent organizations is built on conformity to standards and specifications rather than flexibility and is designed to deliver predictable levels of performance and profitability.

 

Product Leadership: This value proposition features a more fluid organizational structure where ad hoc teams are formed and then re-formed and high skill levels reside throughout the organization. Management is comfortable with risk and it rewards the innovation capacity of individuals within teams. Experimentation and out of the box thinking are musts and the culture is built around going for broke and playing to win. Information technologies are focused on enabling communication, co-creation, and knowledge sharing, and key business processes include invention, research and development, commercialization, and marketing. The operating model of product leaders is dynamic and agile so that new ideas are created, tested, and commercialized and profit is realized as quickly as possible.

 

Customer Intimacy: This value proposition features client-focused teams with high skill levels residing as close to the customer as possible. Management is focused on deepening the relationship with the customer and expanding wallet-share. Customization to customer specifications is the force driving company-client interactions and employees are experts at learning about the needs of their clients. Information technologies are focused on the customer and feature the ability to integrate relevant internal and external information in one knowledge hub. Key business processes are flexible and responsive and are focused in the areas of customer acquisition and relationship development, and custom solution generation. The operating model of customer-intimate organizations is client-specific and customer-focused, is geared to supporting maximum solution customization, and is focused on the lifetime value and profitability of each client relationship.

 

With the obvious synergies between the elements of a company’s operating model and the classic balanced scorecard perspectives, it is easy to see how the strategy map (which leverages the balanced scorecard perspectives) becomes the best tool for formulating, displaying, and communicating the operating model associated with a company’s primary customer value proposition. When you think of it in this way, strategy map use becomes as critical to success as defining your target customer and your primary customer value proposition.

Popular thinking about the foundations for business success is currently focused on the need to define a company’s ideal customer and the customer value proposition. However, actually delivering on that customer value proposition isn’t as easy as making a public statement of your current value proposition. Success requires an aligned operating model that is specifically designed to deliver the differentiating elements of your primary customer value proposition.

A best practice approach for success includes (1) clearly identifying your target customer; (2) identifying your primary customer value proposition and determining which specific attributes to excel on to achieve differentiation in the market place; and (3) creating a strategy map that clearly defines and lays out the operating model required to deliver that specific customer value proposition.

With all three components in place, and a approach dedicated to keeping them relevant to customer and market needs in an evolving environment, your company will be well positioned for business success over the long term.

 

Why does your customer buy from you? Why do your employees think your customer buys from you? Are the answers the same? Is your current operating model helping you exceed customer expectations?

To avoid business failure, you must be confident that your company can deliver. Interested in testing your company’s current capabilities quickly and accurately?

Find out how you can by simply clicking here.

 

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

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

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

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

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

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

 

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

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

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

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

 

 

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

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

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

 

 

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6. Formalize and recognize strategy management accountabilities

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

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

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

8. Build your business strategy into your decision making processes

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

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

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

 

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

The 7 “Must Have” Elements That Will Unleash the Potential of Your Strategy Map

The strategy map is a powerful picture that truly paints a thousand words about your business strategy.

Now, I’m going to assume that you know what a strategy map is, however, to see a definition please click here and, to look at some sample strategy maps, just click here.

Despite its simplicity and power potential, the strategy map is largely forgotten, or is sub-optimized, by many organizations. Why is this the case? Why would organizations not take advantage of a powerful and proven business planning and performance management tool? Here are a few of the most typical reasons:

● They don’t fully understand the role of the strategy map in strategy development and execution,

● Strategy mapping looks and feels complicated and they don’t know where to start,

● They don’t know how to actually do strategy mapping, and

● There aren’t a lot of examples of good strategy maps available for reference and learning.

In some cases, organizations have tried creating and using a strategy map for their company but they have not realized the power and value promised by strategy maps proponents like me. When this happens, they abandon their strategy map, and the concept, as another failed business performance management fad.

I suspect that the primary root cause problem driving both the strategy map adoption and sub-optimization issues is that little guidance has been widely available to practitioners on how to create a functional (i.e. one that works the way it can and should work) strategy map effectively and efficiently.

So let’s take a step towards eliminating this problem by reviewing the 7 key elements that will help your strategy map live up to its potential to deliver powerful results for your organization.   

1. Define your primary customer or stakeholder value proposition and build it into your strategy map

What is the MAIN benefit your customer or stakeholders receive from using your organization’s products and/or services? What is your big promise to your customer or stakeholder and why should they select you over your competitors or alternate service providers? This is your company’s value proposition (VP).

Is it cool, bleeding-edge products (think Apple)? Is it the fact that you have created a new market that never existed before (think Cirque du Soleil)? Is it the low prices you offer (think Walmart)? Is it the customized customer experience you provide where you really know each customer and give them service that anticipates their every need (think a 5 star hotel chain)? Or is it because you have re-defined an existing market space (think Starbucks)?

How did you answer these questions? The most applicable question gives you an idea of your customer or stakeholder VP.

Usual VP’s include: Low Price Leadership (Walmart), Product Innovation Leadership (Apple), New Market Leadership (Cirque), Customer Intimacy Leadership (hotel), and Niche Market Leadership (Starbucks). The most successful organizations focus on just one VP (however, they do tend to keep their eye on a secondary VP to remain competitive in the overall market place). Being clear on your customer/stakeholder VP allows you to create a focused set of strategic objectives on your strategy map.  In addition, a good strategy map places your primary customer or stakeholder benefit in the top strategic objective in the customer/stakeholder perspective of your strategy map. Doing this puts your customer/stakeholder VP front and centre in your business strategy and keeps it in the minds of your employees every day.    

 

2. Name your strategy map perspectives in a meaningful way and arrange them in a hierarchy that makes sense for the “flow” of your business

What perspectives will you use on your strategy map? The best advice is to always begin with the four classic balanced scorecard perspectives - a proven framework that has been validated by thousands of organizations. These perspectives are, however, flexible and can be customized (changed or added to) to meet the unique needs (e.g. language and culture) of your organization. This makes your strategy map more “relatable” for staff members (important for strategy map adoption and use!).   

Your organization must also decide how the perspectives should be oriented on your strategy map – that is, the relative position of each perspective (and the strategic objectives) in your organization’s value chain. This orientation must make sense within the context of your organization’s business and how it must work or “flow” to deliver results and achieve your mission and vision.

Bottom line? Your goal here is to decide which strategy map format makes the most sense and will work best for your organization and then just start working with it.

 

3. Include your mission, vision, and values on your strategy map

Your business strategy isn’t complete without your organization’s core value, mission, and vision. Your core values are the foundation of everything you do while your mission and vision define your future destination – without them, the value chain outlined by your strategic objectives really have no context. Need I say more?

 

4. Write clear definitions for each strategic objective that provide more depth and greater understanding

Let’s say your strategy map has a strategic objective like this one: “Put Quality and Safety First Every Day” This objective alone says so much (“Quality and safety are a priority for our organization at all times in everything we do!”) while still saying so little (“What do we REALLY mean by quality and safety anyway?”). Your strategy map is full of paradoxes like this! Strategic objective definitions are short 1 -2 sentence statements that bring clarity to each objective. They help establish a common understanding of the essential elements of the objective including what it is/what’s included and what it isn’t. Quite simply, strategic objective definitions make it easier for stakeholders and employees to grasp your strategy, understand what it looks like in action, make aligned work decisions, and take appropriate steps to move your strategy forward.

 

5. Include cause and effect arrows on your strategy map

Cause and effect arrows show the relationships between the strategic objectives on your strategy map. Whether you realize it or not, everyone in an organization has their own ideas about how the key components of your business (i.e. the strategic objectives on your strategy map) work together (i.e. the cause and effect relationships) to produce performance results  – this is called the “theory of how your business works”. Most of the time, these theories are not in alignment. Successful organizations take the time to jointly develop and validate their theory of how their business works so they can make targeted investments (even intangibles like employee training and development) that will produce predictable business performance results. That is, they actively identify and then manage the results drivers in their business.

The cause and effect arrows on your strategy map help your organization get on the same page about the drivers in your business and develop the ability to run your organization effectively and efficiently and produce desired business results reliably.  Having this capability will put you way ahead of your competitors! 

 

6. Focus and prioritize

Successful strategy execution requires focus and prioritization and your strategy map should help you do just that. First, to achieve focus, you must limit your strategic objectives to a “vital few” set – including only the key elements of the value chain. Strategy maps that do not focus on the vital few are difficult to understand and put into action, making it likely that it will fail within the organization.

Prioritization involves deciding which components of your value   creation strategy your organization will focus on over a defined period of time.  A prioritized strategy map helps your organization focus its efforts today without jeopardizing the long term achievement of your business strategy because, while increased work effort and resources will be applied to priority strategic objectives (usually three to five strategic objectives) over the defined time period, the remaining strategic objectives will not be ignored. Strategic objective prioritization helps managers and employees achieve focus in their work efforts and maintain strategic priorities in the face of changing, and often challenging, operational demands – making the strategy map a very important business decision-making tool.  

 

7. Keep it dynamic and fresh

A great strategy map, at its best, provides your company with an axis around which strategic business discussions, decisions, and activities can revolve. It offers a two-way communication and management tool (and process) that provides you with a framework for business management that is also sensitive to feedback about the success and validity of your business strategy (and the opportunities for improvement). Your strategy map should be designed to be dynamic, changing as required to accurately reflect the current thinking on the elements of the business strategy and the cause and effect relationships between them. A strategy map that remains static over time looses its value, making it irrelevant and no longer useful for strategy implementation and management.

 

Most successful organizations have included these 7 “must have” elements in their strategy mapping efforts and are, as we speak, harnessing the power of the strategy map to successfully execute their business strategy and achieve targeted business performance results.

Are you?

To access more information about strategy maps and strategy mapping, check out the JETrichardson website here

FOCUSING on Strategy Creation to Achieve Strategy Execution Excellence

For quite some time now, the focus of discussion on blogs and in newsletters and articles in the business performance management domain has been on the continued problems organizations experience with strategy execution. In fact, many recent informal polls suggest that this is one of the top issues concerning executives and business leaders in all sectors and industries. As a result, many of today’s performance management solutions focus on building strategy execution excellence in organizations.

While there is no doubt that companies can take certain steps to define and/or improve their strategy execution process and capabilities, it is important not to do this in isolation. I am always surprised to see that we tend to assume that (1) the strategy execution problem isn’t related to the strategy creation process and (2) that, generally, businesses are very good at formulating sound and executable business strategies and strategic plans.

Unfortunately, there are critical flaws in this line of thinking. First, the strategy creation and strategy execution processes exist and operate in a two-way relationship that looks something like this:

What this relationship means is that the strategy making process, the information it creates, and the outputs it produces all have a direct impact on the capability of the strategy execution process including the quality of the information it creates and the results it produces (and vice versa). Basically, if you don’t have a high functioning strategy creation process producing a great business strategy that is understandable and actionable then you are handicapping your strategy execution process right from the start.

And this brings me to flawed thought two. I’m not sure that we should assume that our companies and organizations have a high level of capability when it comes to the strategy creation process. Sure, organizations produce strategic plans on a regular basis but again and again I see them using the same sub-optimal process to produce a strategic plan that is short-sighted and virtually impossible for employees (the people who will make or break the implementation of your business strategy) to understand and take appropriate action on.

Frankly, it’s no wonder to me that so many organizations have a strategy execution problem – they are using a flawed strategy creation process that puts strategy execution excellence at risk right out of the gate!

 

A Better Approach to Strategy Creation - The Focused Planning Process

The focused planning process is designed to help you answer all of the questions a good strategic plan should answer: (1) Who are we?, (2) Where are we going and how will we create and deliver value along the way?, (3) How will we get from today to where we are going?, and (4) How will we know that we are moving in the right direction/that we have been successful?. However, it does it in a way that addresses the fatal flaws of the traditional strategic planning process used by most organizations (to read more on these fatal flaws, see another of my blog posts: The Strategy Execution Challenge ). It does this through a better process, focused on creating real strategic content, AND a better approach to executing that process (one that leverages meaningful participation by, and input from, a cross-functional team of employees – not just executives and senior leaders).

The focused planning process is an effective, streamlined five step process that is concentrated on creating a true strategic plan – one that identifies the critical drivers behind the achievement of your mission (the long-term part of a truly strategic plan) and details which sub-drivers or objectives the organization will focus on over the next three to five years to achieve its vision without sacrificing the achievement of its mission (the short-term part of the plan). In addition, the focused planning process is strategy execution “friendly” since it translates your business strategy into actionable terms that every one can understand and relate to quickly and easily. Let’s take a closer look.

Step 1: Understand the Landscape – The goal of this step is to ensure that the planning team enters the focused planning process with a solid understanding of the current situation faced by the organization (both internally and external to the business) as well as important emerging future trends.

Step 2: Define Who We Are, Where We’re Going, and What Success Looks Like – Leveraging the information gathered in step 1, the team works together to create a vision for the future (including your market positioning and customer value proposition). Defining the organization’s core values (shared beliefs and norms of behavior) and its mission (the organization’s ultimate purpose) addresses the “who we are” and “where we’re going” components of this step. Defining a time-limited vision for the organization (a clear and measureable statement of where the organization will be, and look like, by a certain period in time), takes care of the “what success looks like” component of this step.

Step 3: Define the CRITICAL Business Drivers – This step is unique to the focused planning process and is the critical element that separates it from the traditional strategic planning process. Leveraging the information gathered in step 1 and responding to the mission statement created in step 2, the planning team works together to identify the value creating business drivers, or business-critical strategic objectives, the organization must focus on to successfully achieve its mission. Leveraging the strategy map format, this step defines the key elements of the long-term business strategy while also expressing the strategy in operational, action-oriented terms. Applying weighting to the strategy map allows the planning team to select the sub-set of strategic objectives receiving targeted focus over the vision period (i.e. the next 3 to 5 years).    

Step 4: Define the Roadmap to Get from Here to There – Once the business critical strategic objectives have been identified and defined, this step focuses on lining up all current strategic projects and core business processes with them. Doing this helps identify any obvious gaps in business activity. Existing gaps must be addressed with gap-closing strategic projects if the organization hopes to implement its plan and achieve its mission and vision. Completing this alignment exercise also allows the organization to link up its daily business activities (i.e. operational work processes and project activities) with the business strategy, opening the door for employees to see how the work they do every day connects with the key drivers of the business and the strategy. A second stage gap analysis exercise allows the planning team to identify any new/additional gap-closing projects and activities to be completed at various levels of the organization, this defining the roadmap for moving the organization from the current state to the future state.     

Step 5: Define the Framework for “Real Time” Strategy Management – Once the strategy has been established, the organization must define the set of indicators that will allow the organization to measure strategic objective health and manage strategy implementation and mission and vision achievement. It must also define the governance framework (the process and accountabilities for managing strategy on an ongoing, dynamic basis) required to ensure that dynamic and continuous strategy execution and management actually happens. The natural next step in the focused planning process is the creation of cascaded/aligned strategy maps, strategic plans, and balanced scorecards at the business unit, department, team, and individual employee levels.

 

The Focused Planning Process – Providing a Solid Foundation for Strategy Execution Excellence

With the strategy map created in step 3 as its centerpiece, and completed using a cross-functional employee team-steering committee approach, the focused planning approach offers organizations an improved strategy creation process that produces a better output. The result is a truly strategic plan and a strong foundation for strategy execution and management success. The critical difference with the focused planning process is the identification of the value chain, in the form of action-oriented strategic objectives, required to achieve the organization’s mission and vision – presented in the form of a strategy map. By translating the business strategy into actionable terms AND defining strategy management accountabilities, the strategy map makes executing strategy easier than ever before. 

Next blog: The second pillar of strategy execution excellence – the FOCUSED strategy execution process.