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Yes – Your Organization DOES Need a Mission Statement

Interestingly, the topic of mission statements, and whether organizations need them, came up several times last week. First there were debates in a few of the LinkedIn groups I belong to and then a Master’s student in the strategy mapping class I was leading at the University of Waterloo challenged me on the relevance of mission statements. More specifically, he referred to thoughts from Guy Kawasaki advocating for mantras (defined by Kawasaki as a 3 - 4 word phrase that helps employees truly understand why the organization exists) versus missions.

 

So what was going on here I wondered? Why the sudden backlash against mission statements? Here’s my take on it all.

 

First, let’s agree on what a mission statement is. A mission is a statement of an organization’s purpose – what business it is in, what impact it hopes to make on the lives of the people the company touches, and the (unique) value it brings to the world and society. When I work with clients to help them create their mission statement, I tell them that it should be short (7 words or less is ideal because you want employees to be able to remember your mission), inspirational, and aspirational. Your mission should be something that your organization is always striving to achieve realizing that you’ll never “get there”. In addition, your mission should endure for as long as your organization is in the business you are in.

In my view, a mission statement is for everyone, not just employees. Your mission is your commitment to the world about who you are and the contribution you are striving to make by existing. Most importantly, a mission is an important guide for company leaders and employees during difficult times. A clear and well understood mission (supported by solid core values) can make it easy to know exactly what doing the right thing in a tough situation actually looks like. For example, a clear mission and strong core values made the decision to pull all its product off store shelves an obvious response for Johnson & Johnson during the Tylenol scare in the 1980’s.

 

Now whether you want to adopt my view on what a mission statement is or whether you want to call it a mantra as Guy Kawasaki suggests, I really don’t care that much. However, a key imperative is that your mission/mantra must be short so that everyone can remember at a moment’s notice what the company is here to do and relate it to/apply it in the work they are doing, including the business decisions they are making, every day.

A common understanding of your company’s mission across your organization lays the foundation for consistency in action and your customer’s/stakeholder’s experience of your organization (two keys to long-term business success). For these reasons alone, every organization absolutely does need a mission statement.

This includes private sector companies where the pursuit of profits/profitable business growth is a key business goal. In these cases, a mission statement, as I defined it earlier, serves as an important anchor that helps keep for-profit organizations from crossing over to the dark side of seeking financial gains at all costs.

 

However, what I think was driving the spike in talk about whether or not organizations need mission statements has more to do with the misunderstanding many business leaders have about the real way to use mission statements in their organization and the disconnect in many companies between the mission statement/purpose of the organization and day to day action.

 

Here’s the thing.

 

If your mission statement is just some collection of words posted on the wall that employees don’t feel connected to and can’t remember then you may as well not even take the time to create one. A mission statement is meant to be lived by everyone in the organization from the executive level to the front lines. If it isn’t inspirational, doesn’t convey passion and emotion, and doesn’t drive aligned action, your mission statement is dead in the water. Your mission statement has to reach out and grab the hearts of your employees and everyone who is touched by your company.

 

How can you do this? By involving employees and stakeholders in the process of creating and living your mission statement – that’s how!

 

Some people will tell you that a mission statement shouldn’t be created by committee. They suggest that writing an organization’s mission statement should be the job of the chief executive after receiving input and advice from others. Now, every organization is different but I have to say that my preference is to include a broad, representative group of employees in the mission statement development process. In my experience, when the work includes a review of the outlook for the business environment and the needs and expectations of stakeholders, and a discussion of the unique value the company provides to customers and stakeholders, employees will do a wonderful job of creating a remarkable mission statement. In fact, I have found that when you have them work with the backdrop of the discussion outlined above, small sub-groups of employees will come up with remarkably similar and equally powerful mission statements. By having everyone, including executives, work together to create a mission statement for your company that leverages the ideas coming from any sub-group work, the outcome is always an emotionally charged, clear, and concise statement of the organization’s purpose that everyone can get behind and put into action every day without reservation.

 

While getting employees involved in the mission creation process sets the stage for real mission implementation, there are some additional steps business leaders must take to ensure that the mission statement reaches its potential and has the maximum impact on their organization. Everyone needs to feel and live your company’s mission passionately every day and they need a little help to do just that!

 

First, when introducing your organization’s mission to others don’t just say the words, tell a story.

Who does your company serve and what benefit do they receive from interacting with your organization? How does this make them feel? How does an individual employee put your company’s mission into action through their work and how does it feel to play a part in delivering your organization’s purpose everyday?

Better yet, help everyone in your organization participate in telling this story. While hearing your mission translated into a story will help it stick in people’s minds, hearing the story from a peer and being able to tell the story themselves makes your mission that much more salient and memorable for your employees.

 

Next, bring your organization’s mission into everyday business conversations wherever it makes sense. Add a discussion about the alignment of an impending decision with your company’s mission into the decision-making process. Have a conversation with employees about how the work of their team supports the organization’s mission. And train managers and supervisors how to recognize, and remark on, the actions individual employees take that demonstrate the mission in action.

 

These are just a few of the ways I have seen companies tear their mission statements off of the wall and bring them to life in a way that has a real impact on employees and stakeholders alike.   

 

Call it a mission or a mantra, your company must clearly define and communicate its purpose and value to society in a short, memorable, and compelling way that touches the heart of everyone who is associated with your organization. Your mission should be developed through a collaborative process that enables many people to blend evidence, emotion, and dialogue together to reveal the soul of your company. Only when your mission is shared as an ongoing story does it come alive, serving as a compass that helps your organization put your mission into action, living your purpose every day.

     

In the end, your company’s mission statement/purpose plays a key role in bringing your business strategy to life, moving your organization forward in a positive and valuable way – and that’s the reason why your company absolutely needs a mission statement.

 

Definitions are the “Rosetta Stone” of Your Strategy

One of the biggest problems with traditional strategic plans/planning documents is that they are written at too high a level. That is, they include a list of high level strategic direction statements supported by an often longer list of goals and objectives. While these elements of the plan make sense and sound logical, the real problem is that when they get back to their every day work, employees don’t know (1) whether and/or how any of these directions and goals relate to them and their work, and (2) how they can make a real contribution that will count and actually move the business and strategy forward. The primary barrier getting in the way here is that the traditional strategic plan doesn’t effectively “operationalize” strategy. That is, it is operating at a high level and doesn’t do a good job of translating strategy into meaningful, actionable terms.

The strategy map is one of the tools that have been developed to solve this problem. By identifying the strategy-focused value chain that runs throughout the entire organization, and expressing these elements in terms of the action-oriented strategic objectives that must work in an integrated way to achieve desired business results, deliver the customer or stakeholder value proposition, and achieve the organization’s mission and vision, the strategy map does an excellent job at helping employees begin to “see” (1) what the strategy looks like in action across the organization and, more importantly, in their own job, and (2) how they can personally contribute to (first) strategy execution and (ultimately) strategy formulation/re-formulation.

However, while a strategy map alone is a vast improvement over the traditional strategic plan, with its three to five word strategic objectives and one word core values your organization still runs the risk that action and strategy execution will be sub-optimized. This isn’t because employees can’t imagine the action required to execute the strategy – it’s because there is still a lot of room for mis-interpretation of which actions will bring the strategy to life and actually produce the desired results in a way that that is consistent with the values of the organization.

 

Here’s the problem: while some strategy-based action is better than none at all, action that has sub-optimized alignment with your strategy can actually get you and your organization into trouble. Here’s what I mean. For example, if you and I are fellow employees and we have different interpretations of what “Teamwork” (in the case of a typical core value) or “Optimize Operational Efficiencies” (a possible strategic objective) mean and look like in action, we will behave differently and, almost certainly, make different business decisions based on our individual understanding of these elements of our company’s strategy. In the best case scenario, we end up sub-optimizing our efforts and reducing organizational efficiencies because own actions don’t quite dovetail together. In a worst case situation, you and I make business decisions based on our personal understanding of the business strategy that don’t quite fit with the intent of the company’s strategy and the big picture, which ends up costing the company time, resources, hard dollars, and even lost customers.

 

The solution to this problem is to take your strategy map to another, deeper level by creating short definitions for both the core values and strategic objectives that are included on it. The secret is that once you create these definitions, you’ll discover that they play such a pivotal role in the successful execution of your business strategy every day that you’ll wonder how you ever could have done without them.

 

Let’s start with discussing the nature of the definitions for your organization’s core values.

Why do organizations create core values in the first place? The primary reason is to establish behavioral norms for the group/employees. Core values set the standards and boundaries of acceptable behavior for employees and communicate to your other stakeholders what they can expect when dealing with your organization. Great core value definitions take the time to really describe what living a specific core value actually looks like in action. They provide more information about what we mean when we use terms like “Innovation”, “Customer-Centered”, or “Entrepreneurial” (just some examples of the core values I often see in organizations I work with) AND they provide some examples of the behavior we would observe when someone is putting that core value into action.

Here are a few examples of some core values definitions:

Integrity: Acting with integrity means that we are honest and trustworthy in every interaction we have with our partners, stakeholders, and each other. It also means that we are who we say we are and do what we say we are going to do. Integrity means that each of us aspires to always do the right thing, even when it's difficult to do so. We act with integrity by always ensuring transparency, confidentiality, and discretion so that we can maintain the trust and confidence of our stakeholders. 

Respect: We will treat everyone with fairness, courtesy, and consideration in everything we do and take the people we work with for who they are.  We value the diversity of each individual we encounter throughout our day and understand the unique nature of the individual experience, journey, and motivations. As a result, we make sure that we listen to everyone we meet with openness and compassion.

The beauty of these definitions is that they make each core value much clearer. When you read them do you have a much better understanding of what they truly mean, what’s involved, and what it looks like to live each value? A great definition makes this abundantly clear to everyone.

 

Strategic objective definitions work in a similar way. Each definition provides more specificity about what a strategic objective really is about (including what’s in play and, often more importantly, what isn’t) AND it talks about the unique contribution each specific strategic objective makes in the context of the overall business strategy. This second part of the definition plays a particularly important role in engaging the hearts and minds of your employees (who are the people who really make your strategic objectives happen) with your business strategy.

Here are a few examples of some strategic objective definitions:

Collaborate & Partner to Advance Goals: We work closely with a variety of internal and external partners to create and share common goals, understand what needs to be done to achieve those goals, and determine who has accountability to do what. Having this level of clarity and collaboration builds high levels of synergy and buy in amongst partners, accelerates the cycle of innovation, and facilitates deeper investment in our organization and our overall mission.

Strive for Continuous Improvement & Innovation: We are never satisfied with the status quo and, by pushing the boundaries and looking beyond the way we currently work, we dare to step out of our comfort zone.  We challenge ourselves in everything we do and actively seek learning opportunities. By constantly searching for new and better ways of doing things and achieving our goals, we demonstrate that we are forward-thinking thought leaders in our field.

 

Usually your core values and strategic objective definitions exist in a companion document that sits beside your strategy map and can be used as required for just some of the important purposes outlined below.

 

When you are just starting out sharing your strategy story with your employees and stakeholders, definitions will help build consistent understanding of the real meaning of your strategy map (and what it looks like in action). As people become familiar with your strategy map, they will gradually need to refer to these definitions less frequently however, until they do, the definitions play a critical role in building an aligned organization and culture.

 

Core values definitions can be used to develop the behavioral elements and performance thresholds used in your employee development and performance management processes. The best company recognition programs reward employees for demonstrating behaviors aligned with core values – this is difficult to do without clear definitions.  

 

Strategic objective definitions are a tool your organization will use again and again when it comes to selecting, evaluating, and replacing your balanced scorecard indicators. In your quest to select the one or two indicators that best represent the intent behind each strategic objective on your strategy map, you’ll quickly discover that well written strategic objective definitions are your best friend.

 

Good strategic objective definitions are essential if you are going to leverage your strategy map in your business decision making criteria and processes. Have an ad hoc work request or new business opportunity and need a consistent approach to evaluating it in the context of relative value to your business strategy? Clear strategic objective definitions are a critical tool supporting your decision making process.

 

Most importantly, good core values and strategic objective definitions help shorten the learning curve for new employees, helping them understand your business strategy and organizational cultural imperatives and expected behaviors faster than most traditional onboarding processes. With the support of well written definitions, your strategy map can help new employees fit into your organization better and make meaningful business contributions more quickly and effectively – which is a win-win for both your new employee and your company.

 

And this is just a short list of the critical ways definitions can make a difference in your organization.

The bottom line is that core values and strategic objective definitions play a powerful and pivotal role in the successful execution and refinement of your business strategy and in building a strategy-focused culture and organization in your company. They help translate your strategy into actionable terms and give your employees the “dictionary” they need to bring your strategy to life and into play everyday effortlessly, effectively and, most importantly, in a way that maximizes the impact on your business strategy and the results your company achieves.

 

For these important reasons, your core values and strategic objective definitions are the essential and invaluable “Rosetta stone” of your company’s business strategy.

 

Is your strategy map supported by core values and strategic objective definitions? If not, take steps today to add definitions to your company’s arsenal.             

 

Why it’s Time to Retire the Annual Strategic Planning Event

We’ve been doing it in business for quite some time and it’s quite possible that your organization has just gone through it recently in the run up to the end of the fiscal year and the beginning of the next. You know what I’m talking about - the annual planning event. That yearly ritual senior executives and their organizations go through, often over the summer months, to re-define the business strategy moving forward for the next three years or so.

However, while we have settled into this approach to “doing strategy”, we’ve become blind to, or have just decided to tolerate, the problems associated with it. For example, many people will point to the fact that strategic plans created this way are often stale when the time comes around to finally execute them. This is a fair comment because many annual strategic planning exercises can take as long as 6 months to get through – it’s no wonder that the plans they produce feel a little behind the times when you finally get around to putting them into action.

Another problem is that this approach can suck up significant organizational resources for an extended period of time getting in the way of the work that keeps your company operating, satisfying your customers or stakeholders, and producing the business performance results you want. In fact, what gets started is this weird effect where companies and their key resources (i.e. senior executives, business unit heads, and department leaders) spend 6 months of the year overly focused on strategy with the remaining 6 months spent focusing on the “doing” part of the business. Have you noticed this in organizations that take the annual approach to strategic planning? I think that if you were honest, you’d agree that this isn’t too far from the truth. All I know is that when I worked in the corporate world, everyone was relieved when strategic planning was finished so that they could get back to the backlog of everyday work that sat on the backburner while the focus was on strategy. The impact of this is that strategy rarely gets discussed through those 6 “off” months and, when it does, it’s usually because some KPI has gone off the rails and an element of the business is in crisis mode.

 

Basically, the annual approach to strategic planning has a real risk of producing a business strategy that has increasingly lower levels of relevancy to the external and internal business environment over time, and it breeds an organizational culture that sees strategy making as a project that gets in the way of business operations and an activity/event that is disconnected from strategy execution. This is a recipe for strategy and business performance sub-optimization, which leads to business results that are uneven and often underwhelming over the long-term.

 

While the drivers of these outcomes are related to the problems I outlined above, they are not, in my opinion, the true root cause problem. The real foundational problem is that the annual approach to strategic planning turns a process that needs to operate like a continuous feedback loop into an event-based linear process – one that has minimal opportunities for input and almost zero potential for fine tuning along the way.

The reality is that the annual approach to strategy demands that the strategic plan that gets created once a year must be virtually perfect in its design so that it can hold up over the upcoming year. I believe that this need for perfection is just one of the reasons why so much time is spent during the annual strategic planning “event”. However, seeking perfection in anything that includes as many moving parts as a business does is impractical and virtually impossible.

 

So here’s the thinking behind my assertion that strategic planning (and strategy management) needs to work like a feedback loop:

The external business environment changes (the economy and technology are just two areas we seem to be acutely aware of right now), as do your customers/stakeholders and their needs and expectations, and your competitors, other players, and partners in your marketplace. Your internal environment is changing as well. Your employees, their skills, your organizational culture, and the capability of your processes and equipment change over time, often at different rates, and not always in a way that positively impacts your organization.

The truth is that your company is a living system existing in a changeable environment. Nothing is static – the entire ecosystem that your business operates in is dynamic. As a result, your business strategy must be adaptable if it’s going to stay relevant as a roadmap for moving forward and making the progress you want to achieve.

The solution? Break free from the sub-optimal annual planning event and embrace the “thermostat approach” to managing your strategy!

 

The Thermostat Approach to Strategy

With this new approach to strategy you don’t do away with strategic planning – you simply move from a mindset where you talk about strategy on an annual basis to one where you focus on strategy making and execution (aka. strategy managment) when required and/or, at minimum, on a quarterly basis. Essentially, any time a change occurs in either the internal or external environment, an organizational discussion occurs to assimilate and analyze the change, explore its impact on strategy and/or the best response, and determine what changes to the strategy are required (if necessary). Sources of this feedback can include your business performance metrics or balanced scorecard, customer/stakeholder feedback, competitive intelligence, and economic trends and projections (just to name a few).

However, even without the stimulus of a change, this new approach to strategy requires a quarterly check on actual conditions and performance versus the conditions and performance outlined in your business strategy. Doing this regular maintenance on your strategy gives you the opportunity to apply strategic learnings and improve your strategic plan in a responsive (or even pro-active) way that will almost certainly enhance the quality and value of your strategic plan as a roadmap for your company’s ongoing success.  

 

The objective of the quarterly strategy execution/strategic plan review meeting is to ask and answer six critical questions: How have our strategic objectives been performing over the past quarter?; What have we learned?; What are the implications for strategy execution?; Are we moving forward/Are we moving in the right direction?; What are our key strategic issues?; and Are any changes in direction/strategy required?. Basically, over, at minimum, four 2 -3 hour discussions held during the course of the year, you keep your company’s strategy current and relevant in an evolving business and operating environment.

It actually turns out that companies that change to the thermostat approach to strategy management often spend less time on strategy formulation/refinement AND considerably more time on strategy execution and management than those that take the annual approach to strategic planning. In fact, the overall time spent on strategy often decreases with this new approach, however, the time that is spent on strategy is higher in quality and of greater value because it translates more reliably into the achievement of consistently better business results.

 

It is important to note that if you are going to make a successful change to the thermostat approach to strategy management, you must also make similar changes in the business management processes that support the execution of your strategy. These include your budgeting, KPI target setting, individual performance goal setting and management, and human capital management processes. You will only be able to achieve the maximum benefits of this new approach to strategy formulation, execution, and management once you make these additional process changes.

 

The biggest benefit of changing to the thermostat approach to strategy is the creation of a strategy-focused culture in your organization – one where everyone is so engaged with your business strategy that they are making day to day work decisions that work with, not against, where you are trying to go and the business performance results you are trying to achieve. You reach this goal with this approach because strategy making, execution, and management combine to become an ongoing business process and feedback loop rather than an event. You also get there because more people from across your company get involved with your strategy through their contributions in the various feedback loops and discussion opportunities that exist.

But the biggest reason why the thermostat approach to strategy works is because it makes your business strategy a relevant roadmap and decision-making tool that employees at all levels of your organization can use to achieve success in their own work that contributes to the success of the overall company.

 

Though current business conditions demand that your organization becomes more agile if it is going to survive and thrive over the long-term, this isn’t the most compelling reason for retiring the annual approach to strategic planning. The benefits of changing from a strategy event to a continuous strategy process will be transformational for your organization, giving it the ability to actually achieve the strategic goals for your company. This should be the REAL motivator that prompts you to take the leap to this new approach to strategic planning and strategy management for your organization.

     

Why "Big Data" Scares Me

Is it just me or is talk of “big data” suddenly everywhere these days? It kind of reminds me of a few years ago when everything was about “the cloud”. I’m still trying to figure out what exactly that was all about and whether I’ve missed the boat on something that is critical for my business and personal life. Sometimes it’s really hard to get beyond the tech-talk and discover the practical, value-added applications of any given solution.

Since measurement is a critical part of my life, I couldn’t help but perk up my ears when I first heard the term “big data”. Since then, it seems as though big data is being discussed everywhere. It wasn’t long before I just had to find out what big data really is and, more importantly, why anyone would/should want it.

My search took me much deeper into the tech world than I commonly like to go so, in an effort to spare you the trouble, here’s what I found out:

 

What is "Big Data"?

While “big data” refers to large amounts of data, there are additional attributes that cause data to be categorized using this terminology. Experts have come to classify big data using the “3V’s” (though some people argue that there are actually 4V’s): volume, velocity, and variety.

 

Volume

Big data involves huge amounts of information. The attraction of large data sets is that they give you the ability to develop better understanding of certain aspects of your business (for example, customer behavior) and stronger statistical models with better predictive power. As well as leveraging more data points, big data gives you the opportunity to include more contributing factors in the modeling process – theoretically giving you more robust predictive models. However, the volume of data in these data sets poses a problem for conventional IT platforms. While they may have the capacity to store large amounts of data, the problem is that they don’t have the capacity to process it. As a result, if you are going to play with big data, you need a new IT platform that enables the processing of a huge data load.

 

Velocity

Velocity refers to the speed at which data flows into an organization. While handling fast moving data has been a reality for some time in certain industries (e.g. stock trading), the ability to make quick sense of large sets of fluctuating data hasn’t been widely available. However, this is on the verge of changing. This is good news for industries where, for example, being able to make sense of customer buying behavior and adjusting the range of products available to the customer tomorrow rather than next season represents a significant competitive advantage. Essentially, big data is fast and readily available data. While many existing platforms allow you to stream data into bulk storage for later processing, big data platforms provide a speedy feedback loop, shortening the time from data point creation to business decision. This matters because the faster the feedback loop, the greater the potential for operational and strategic high performance.

 

Variety

As you know, data rarely comes to you in a format that your IT systems can handle. Usually data needs to be put into an organized format – by fields and according to formatting “rules”. An unfortunate by-product of this data transfer process is a loss of data – some of it just gets thrown out for one reason or another. The act of cleaning data in this way means that you may get rid of something that is important without knowing that it’s important (and, because it is lost, you’ll never have a way of discovering that it is in fact important). When you are looking at big data sets, a common feature is that the data sources are extremely varied. This means that data points are coming in in different formats (e.g. text, video/graphic, data points, etc.) and most of it won’t fit nicely into your data analysis application – not without a lot of work that is. Big data processing platforms can handle and make use of all of the unstructured data in a big data set – nothing gets lost because there’s no translation. Being able to eliminate the risk of missing out on previously unknown important data is a critical benefit of big data processing platforms.

 

Basically “big data” refers to large sets of fast moving data that exist in a variety of formats.

 

Big data also involves new processing platforms that can integrate all the data included in the large data set to create more robust predictive models and provide you with insights faster so that you can make better business decisions more quickly. The touted business benefit of big data is that it can enable better, faster fact-based business decisions at all levels of an organization, thus offering any company that uses big data the opportunity to transform greater insights into better customer/stakeholder service and/or a competitive advantage in the marketplace.

 

All of this sounds great “in theory” but I’ll be honest, I feel like I’ve seen this movie before. In recent memory, I personally saw it in the early days of CRM, and I see it regularly with the balanced scorecard. That is, we get confused thinking that we are implementing a tool or, worse, an IT solution – full stop. Just sort out the IT infrastructure requirements to support the platform, map the data inputs, design the results reports, and flip the switch on the application. Why are we always surprised when things don’t turn out the way we expected? I can predict how this big data thing will turn out for many of the companies that adopt it – a few years from now they’ll wonder why the promised ROI on their big data investment never materialized.

Sorry to be so negative but this is what really scares me about the “big data” frenzy – organizations will jump into the deep end without putting all the essentials for success in place before diving in. Some will swim but many will end up sinking.

 

The Key to Success with Big Data

As it is with any good IT project, it’s important to begin by defining a question or business problem you think big data could help you with. To maximize impact, be sure to ask a critical question that is directly related to your key business value drivers or your key differentiator in the marketplace. It’s also important to make sure that your question relates directly to your primary customer value proposition and supporting business model. For example, if your primary CVP is operational excellence, you might want to leverage big data to discover ways to drive more operational efficiencies across your organization and deliver a more consistent customer experience at every interface with your company. On the other hand, if your primary CVP is customer intimacy, you might want to leverage big data to develop deeper insights into the buying behaviors and preferences of individual clients and customer groups to pro-actively present new targeted product offerings to them at a time that maximizes the chance of purchase. Whatever your big business question is, it’s important to figure this out before plunging ahead with big data.

Since big data requires new IT platforms, there’s the whole matter of selecting the right one(s). This must be driven by a variety of factors including business requirements, budget, the existing (and vision for) IT environment, etc. The key to success is to ensure that IT and the business collaborate fully during the spec development, platform selection and infrastructure implementation processes. It is critical that the business doesn’t abdicate its responsibility to participate in this entire process AND it is equally critical that IT balances the business question with the technical aspects of this process. A breakdown at this stage of the project is the root cause of countless system implementations that have failed to live up to expectations.

Getting the most out of big data requires an investment in new organizational skills and capabilities. More that building fluency in data analytics, companies that wish to play with big data must develop and/or hire people who are skilled in data science. Writer Edd Dumbill describes data science as an emerging discipline that combines math with programming and scientific instinct. Success with big data requires the willingness to develop (and/or buy) this capability and then provide these employees with the supports they need to produce the insights you want to get from big data.

Most importantly (and most neglected in my opinion) is the leadership will to create the culture and mindset required to understand, communicate, and take action on the results of the analysis of big data. It is critical not to underestimate the investment required to develop an openness to listen to what data is telling you, talk about learnings across your organization in a productive way, leverage insights to look at problems in new and innovative ways, and to take unexpected and possibly counter-intuitive actions. Even if an organization does everything else right, a failure to do the hard work related to culture change will still translate into a sub-optimized big data investment.

 

 

The proponents of big data like to talk about the big benefits that are possible. What company wouldn’t want to get on board an opportunity to play their industry’s version of Moneyball? As an executive, you’d be crazy not to be tempted. Unfortunately, history is littered with IT trends and solutions that didn’t deliver – sometimes because the IT platform didn’t perform as expected or wasn’t as user friendly as advertised. However, in my experience, it’s a lack of attention to the success factors outlined above that usually brings these initiatives down.

And this is what really scares me about “big data”. Adopting big data is going to be a big investment for any company that chooses to go this route and based on past evidence, the risk is high that it will not end well for most of them.

 

Is your company thinking about going the big data route? Before you do, (1) be sure to take the time to clarify the business reason for adopting big data, and (2) be sure that you really understand, and can commit to, the non-IT, organizational investments that will be required to achieve success. With these in mind, take the time to re-assess the full costs and benefits of big data for your organization. If you take this approach to evaluating the opportunity big data may offer to your company, you’ll have a better chance of actually realizing the benefits you expect to get for your big data investment.

 

How to Pitch the Decision-Maker: On Adopting the Balanced Scorecard in Your Organization

This is still the biggest question I get from people who have discovered the balanced scorecard and want to introduce this powerful tool in their organization. Sometimes they simply want to get their organization using measurement to obtain performance results feedback. However, sometimes their challenge is a bit bigger - they want their business leaders to take a second look at the way they actually use business performance results in their company.

Regardless for their reason for wanting to implement the balanced scorecard in their organization, these folks need to focus on pitching their decision-maker on the balanced scorecard by helping them see how the balanced scorecard can solve significant business problems and enable the achievement of critical top and bottom line business results.

 

However, before pitching the balanced scorecard to decision-makers, it’s critical that you yourself are clear on what the balanced scorecard is – and isn’t. Many people believe that the balanced scorecard is just a measurement tool, however, this couldn’t be further from the truth. While measurement is one of the roles of the balanced scorecard, it’s almost a disguise it wears to achieve its real purpose and deliver its real value to any organization that adopts it. What I mean is that the balanced scorecard is actually a strategy management system and philosophy that uses measurement as the catalyst for organizational dialogue, discovery and learning, targeted improvement, the forward acceleration of value proposition delivery, the development of loyal customers/stakeholders, and the achievement of desired business performance results and outcomes.

The balanced scorecard is a powerful communication tool that highlights to everyone what’s important in relation to your business strategy (after all, as they say, what gets measured gets done!). It also provides your organization with a valuable repository for information about its strategy, and enables knowledge and best practice creation and sharing. The balanced scorecard is focused on a company’s business strategy so it requires some sort of recognized strategy to serve as the foundation for the indicators included in it. Equally important is the fact that the balanced scorecard isn’t a diagnostic tool. Its purpose is to provide you with an early warning when something has changed in the strategy management system and stimulate further investigation and organizational dialogue about what’s going on and what, if anything, needs to happen next to maintain forward strategic progress.

The most often overlooked aspect of the balanced scorecard though is its philosophy element. The balanced scorecard offers organizations a new approach to strategy, business, and organizational management. In fact, for balanced scorecard adoption to be successful and have its greatest impact on organizational performance, customer/stakeholder results, and business outcomes, business leaders must be prepared to manage in a way that engages others in a dialogue about the business and how to move forward, and actively supports employees in participating in that discussion. The balanced scorecard should be a catalyst for business leaders, employees, and, in some organizations, stakeholders, to collaborate and co-create the business strategy. Finally, successful balanced scorecard use requires business leaders to engage in a more dynamic strategy management process that is focused on measuring and talking about what’s relevant, accepting the truth of the situation based on what performance results and dialogue are telling them, and then using that information to learn and improve their business strategy as needed.

 Is this what your decision-maker thinks the balanced scorecard is?

If not, your first step in pitching the balanced scorecard is to engage your decision-maker in a discussion about the real purpose of the balanced scorecard. And while your company’s initial purpose behind adopting the balanced scorecard may be to bring a little more measurement discipline into the mix, it’s important to open your decision-makers eyes up to where the balanced scorecard can really take your organization. Why? Because the real promise of the balanced scorecard can only be achieved if your organization goes the extra mile and implements (and uses) the balanced scorecard the way it was meant to be used.

I believe that much of the dissatisfaction many business leaders feel about the balanced scorecard happens because it ultimately underdelivers and underwhelms. That is, decision-makers get sold on the powerful benefits of an optimized balanced scorecard and then they are disappointed that these results don’t materialize. In my experience, this usually happens because the decision-maker’s definition of the balanced scorecard was "measurement tool or report". Here’s the thing - a simple measurement tool alone absolutely cannot deliver the transformational business results you are probably going to pitch to your decision-maker. As a result, it’s important that you make sure that you and your decision-maker are on the same page about what the balanced scorecard is, AND the management commitment required to achieve the promised results, before you have a discussion about the business problems the balanced scorecard typically solves and the results it can enable.  

Getting through this first step in the pitching process is absolutely critical and, based on my experience, unless your organization measures absolutely nothing today (and could therefore benefit from adopting the balanced scorecard for its measurement aspects alone), don’t proceed with your balanced scorecard pitch until your decision-maker sees its true potential and accepts that the balanced scorecard is a strategy management system (not just a measurement tool and report). Your decision-maker doesn’t need to fully understand what is going to be required of them to fully implement the balanced scorecard - it’s hard for them to fully appreciate what this commitment looks like until they are actually in it. The key is that they need to be open to the balanced scorecard being something bigger than they might have previously thought.  

What if you can’t get your decision-maker to get on board with the big picture definition of the balanced scorecard?

I personally would say “do not pass go” because, if you do, there’s a high probability that it’s going to end badly with the disappointment I outlined earlier. Some people would suggest starting by implementing the balanced scorecard as a measurement system and then trying to bring decision-makers along in their thinking over time with balanced scorecard use. The problem with this approach is that if you initially pitched the optimum balanced scorecard benefits, they will not materialize without implementing the balanced scorecard as a strategy management system and philosophy. When the promised results don’t materialize, your decision-maker will be less inclined to get on board with investing more time and effort into the balanced scorecard - and there is actually a high degree of risk that they will walk away from it seeing the balanced scorecard as another failed business management tool that didn’t deliver.  

 

Now, in an effort to help your decision-maker understand the difference in the results achieved with the different balanced scorecard definitions, you will probably want to talk them through the benefits of the balanced scorecard, the typical business problems it helps solve, and the key business impacts realized with proper use. Here are just a few examples of the elements you might want to highlight in this discussion:      

Balanced Scorecard Benefit #1: It keeps your organization always focused on, and investing in, the things that really move your business strategy forward

Balanced Scorecard Benefit #2: It gives you information that helps validate, and adjust if necessary, your theory about how your business works to deliver business results (allowing you to make targeted investments that will produce the desired results) 

Balanced Scorecard Benefit #3: It enables your organization to be more agile and responsive/competitive in your market place (by allowing you to identify changes early and giving you the information you need to improve or adjust your operations and/or business strategy as required and quickly)  

 

Sample Business Problems Addressed:

Wasted $$ on inappropriate capital expenditures and other purchases and investments (benefits #1 + #2)

Misallocation of resources (i.e. time, people, $$) (all benefits)

Slow decision-making = lost business opportunities (benefits #1 + #2)

Poor customer/stakeholder actions and decisions = lost customers/poor stakeholder satisfaction and support (all benefits)

Old actions/doing the same things the same old way isn’t producing the same results anymore = under-performance on key performance indicators in all areas (i.e. people, process performance, customer/stakeholder outcomes, financial results) (benefit #3)

Root cause problems are not clearly identified (benefit #3)

 

 

Sample Business Impacts/C-Suite Metrics Impacted with Balanced Scorecard Use:

ROA, ROE, Earnings, Budget Performance, Net Profit, Sales Revenues, Funds Raised, Operating Costs, Organizational Efficiency/Productivity, Stakeholder Satisfaction

 

However, be sure to use these examples to illustrate the impact of using a balanced scorecard with the expanded (true) definition. In some instances, I have contrasted these results with what can be achieved by only using the balanced scorecard as a results reporting tool. This approach can be very powerful in making a decision-maker become more open to exploring an alternate definition of the balanced scorecard.

 

The balanced scorecard has been existence as a management tool for some time now. This means that (1) many people are aware of it and (2) they have developed their own perspective on what it is. Interestingly, you’ll find that there is a high degree of variability in the perspectives of business leaders regarding the definition of the balanced scorecard. Unfortunately, some of those definitions are limiting, seeing the balanced scorecard as just a measurement tool and this limited view hampers the ability of the balanced scorecard to deliver to its potential. As a result, when you are pitching the balanced scorecard to a decision-maker, your first goal must be to discover how they define the balanced scorecard and, if necessary, invest the effort required to optimize their definition of the balanced scorecard before trying to sell them on the benefits of balanced scorecard adoption.

Taking this step is critical for ensuring that when you successfully persuade your decision-maker and organization to adopt the balanced scorecard, it lives up to its potential and exceeds their performance expectations.    

 

You're Just Too Serious About Strategy

Is strategy and strategy execution serious stuff in your organization? Would you say that it’s TOO serious? If you answered “yes” then you and your organization are not alone. Sometimes I think that we just take all this strategy stuff much too seriously and I wonder if this is where the seeds for peoples’ dislike for all things strategy are sown.

An attention to strategy is critical for the progress and success of any organization and I know how hard it can be to get people to engage in strategy activities and talk. However, I think that taking a hyper-serious approach to strategy formulation, execution, and management actually limits the attractiveness of your strategy and strategy activities to employees at all levels of your organization – including your executives. Besides, taking the straight-faced approach to business strategy may actually be making it harder for your company to achieve the performance results you desire!

 

So, what exactly do I mean when I talk about being “too serious” about strategy?

First of all, let me be clear that I do believe that the content related to a company’s strategy is serious business – even if you are in the entertainment/fun business. However, I think that as business and strategy leaders, we often think that we must bring the same level of seriousness to our strategy processes. It’s almost as though we think that the strategy we create and execute will not be serious enough, be taken seriously, be effective enough, or produce high performance results unless it is supported by equally serious process. However, based on my experiences both as a strategy manager in a corporate environment and as a consulting strategy advisor, I’m not at all convinced that this is actually the case – regardless of the type of business you are in. In fact, I have come to think that it's quite the opposite

 

Essentially, I believe that strategy gets too serious when we take an element of playfulness out of the strategy formulation, execution, and management process.  

 

Yes – playfulness. Let me explain what I mean.

 

In my experience, bringing an element of play and light-heartedness into the strategy formulation process creates an environment that is more conducive to information sharing, creative thinking, and idea generation. This, in turn, results in the development of higher quality, more innovative strategic insights. A planning environment that is playful is open and is conducive to building trust – just the right conditions for maximum employee and executive participation and engagement in the planning process. However, I want to be very clear that your expectations for the strategy created in this type of environment shouldn’t be lowered just because an element of play has been added into the mix. In fact, leaders I work with are often surprised to find that the result is a better quality, more effective business strategy BECAUSE of the environment created and process used when playfulness is involved, not despite it.

Smart strategy managers bring an element of play into the strategy formulation process by including non-strategy related “warm up” activities and small team discussion and creation activities into the process. By highlighting collaboration (e.g. small team work) and including light-hearted, friendly competition (small teams will "compete" with each other to produce higher quality work even without you encouraging it), entertainment (e.g. relevant funny videos and appropriate banter and jokes), and rewards (e.g. visible rewards like strategy-themed buttons, pens, USB's, and zipper pulls can provide participants with a real reminder and tangible evidence of their strategic knowledge and contribution on an ongoing basis) into the process, it’s easy to make strategic planning, and most importantly the environment, fun and playful, preparing participants to seriously think about strategy.     

 

Once the business strategy has been defined, the strategy implementation, execution, and management process offers lots of opportunities to add playfulness into the mix. The key is to be creative and focus on playful elements that work with your organizational culture and appeal to the fun side of your employees’ nature. Here are some real-life ideas. 

Rather than holding lifeless quarterly results update meetings with employees, transform them into venues where employees can engage with your strategy, and each other, in fun and playful ways. For example, when I was managing strategy at the Canada Life Assurance Co, our meetings became famous for the strategy games we would play. A short information session on an element of our business strategy and/or a review of quarterly performance results and the associated learnings would be followed up with a survivor-style “game show” where department teams could work together to answer questions about our business strategy, perform fun tasks to uncover information about key strategic facts, and leverage their knowledge to win modest prizes.

As another example, rather than simply color-coding our business performance results, we used happy face icons to indicate whether performance was above, at, or below target. Using our happy faces allowed us to slip in fun and unexpected icon expressions from time to time which kept everyone guessing (what will they come up with next?) and entertained.

Finally, by staging our annual results review meeting as a news-style “show” with entertaining interviews with key executive leaders, these meetings became not to be missed entertaining, information-packed, and interactive strategy-focused events for our staff.

These are just a few examples of the creative ways we added fun into the strategy management process in our organization. Yes, it took time, effort, and resources to do these things but the result was that our employees came willingly to events where they were exposed to important elements of our business strategy and what it looked like in action. They received information, interacted with our strategy, and heard from their peers about how they put the business strategy into action in their everyday work.

 

Do your current strategy efforts feel like they are focused on pushing strategy information on an unwilling audience? Are you struggling to engage disinterested employees and executives in strategy conversations? What if you could turn it around and focus your efforts on building fun and playfulness into your strategy processes so that that they attract your employees to your strategy like a magnet? I can tell you that it’s a much better experience for you, your employees, and your organization!

 

Now, one of the concerns you might have about all this fun is that people forget about the strategy once the games are over. (Here’s a little secret – keep the fun and playfulness going! Don’t completely stop – make fun a part of the way you do strategy in your organization). I will tell you that our annual strategy knowledge and capability survey did demonstrate a gradual uptick in employee knowledge of our strategy over time. Would we have seen this increase with regular strategy communications? Perhaps. But I can say with some level of certainty that, as an organization, we had a lot of fun with our strategy over time and it certainly didn’t have a negative impact on the quality of our strategic plan, our employees’ understanding of our business strategy, on the execution of our strategy, or on the achievement of our business results. In fact, we achieved some of our biggest business performance improvements over the same time period.  

 

The key in my mind? Adding playfulness into your strategy processes creates a better environment for good strategic thinking, producing a high quality business strategy. A process that includes fun helps your employees engage with your strategy and each other in an almost effortless way. Making strategy fun draws employees in and brings them to your strategy, providing you with opportunities to educate and engage them further. And finally, adding a touch of play to your strategy events and communication efforts makes your strategy sticky – ensuring that your employees will remember it, increasing the odds that they will actually put it into action on a day to day basis through aligned decision-making and work activities.  

Is your organization too serious about strategy? Adding playfulness into your strategy formulation, execution, and management process has lots of upside. It’s good for your strategy, your employees, your customers or stakeholders, and, ultimately, your business results.

 

What can you do right now to add a little fun into your strategy? Engage your playful side and see what you can come up with!

 

How do you and your organization put fun into your strategy formulation, execution, and management process? Please share your creative ideas with our readers and tell us what impact it’s having on your strategy management efforts, organization, and business performance results! 

 

Assessing Employee Understanding of Your Strategy and Your Organization’s Capability to Execute It

Are you sure that your employees are all on the same page when it comes to answering one of the most critical business questions there is: “Why does our customer do business with us?”?

Oh, and by the way: Is your business model and organization fully aligned with your customer value proposition? and Is your company well positioned to execute your customer and business strategy?

These are just some of the important questions every business must be able to answer if it is going to be successful over the long-term. However, it’s not just good enough to answer these questions, it’s essential to validate the answers and assess the level of organizational alignment with your strategy on an ongoing basis.

 While measuring customer and business performance outcomes is one way of doing this, it’s important to realize that you aren’t getting all the insights you could if you stop your measurement efforts there. When you measure outcomes without also looking at the performance of the drivers of your outcome results, you run the risk of building your business success on a shaky foundation. While there is a chance that your successful customer and business outcomes are a result of solid business practices and organizational behaviors, you just can’t be sure if you limit yourself to measuring outcome success alone. Also, if your outcome results start to slip, and if you’re missing information on the performance of the critical results drivers, you will be hampered in your ability to identify, solve, and eliminate the key organizational problems that are getting in the way of your customer and business success.

To be confident that your company is going to enjoy sustainable customer and business performance results and achieve your targets for profitable growth and market leadership over the long-term, you must be absolutely sure that your employees understand your customer and business strategy and that your organization is optimally positioned to, and fully capable of, executing your strategy.

Assessing whether your employees understand your customer and business strategy includes determining whether they are clear on: who your target customer is; what your primary value proposition is (and how it differentiates your company in the marketplace); the essential elements of your business model that deliver your customer value proposition and competitive advantage (and how they do that); and the role individual employees play in contributing to customer and business performance success.

Assessing your organization’s capability and readiness to execute your customer and business strategy includes looking at: whether your current business model helps, or hinders, the delivery of your customer value proposition; the strength of organizational communication in supporting employee and business performance; the ability of your company’s leaders to lead the organization in strategy execution activities; how business and day to day work are prioritized to focus on the things that deliver the most value; whether your financial resources and employee learning and development investments support the execution of your customer and business strategy; and how your organization uses measurement to assess progress, focus effort and make decisions, learn about what is and isn’t working, and change and improve the way your company works to produce results.

I know. This is a lot of information to evaluate but you need to look at every component outlined here if you want to be sure that your company will achieve customer and business success. And, ideally, you need to know what each and every one of your employees is thinking about in relation to these elements if you want to have confidence that everyone, and everything, is on the same page.

 

The fastest and least resource-intensive approach to getting this comprehensive snapshot is through measurement. However, the measurement I’m talking about here has a different focus from your business performance/balanced scorecard measurement so you need a different measurement approach and vehicle.

I realized that this difference existed many years ago when I was managing our strategy formulation and execution efforts at a large Canadian insurer. So, in addition to our balanced scorecard measurement framework, I introduced a 20 question survey that was sent out to all employees on an annual basis. It included questions on the themes outlined above and we believed that it gave us great insights into the level of organizational alignment with our strategy. Because responses were segmented by regional office, functional team, and employee level, we received excellent feedback on what was, and wasn’t, working and where the points of potential organizational misalignment were. We used this information to modify our overall approach to communication and strategy management and, when indicated, implemented targeted actions to resolve specific issues. I believe that having this capability contributed to improvements in our company’s business performance, customer outcomes, and financial results.

While our survey provided us with great insights and actionable information, it had one serious limitation – it only scratched the surface and didn’t really help us assess whether our employees truly knew and understood our business strategy. For example, when we asked the question: “Does our balanced scorecard help you have a good understanding of our strategy?” we just asked our employees to rate their agreement to the question/statement on a scale from 0 to 5 (with 0 being don’t know, 1 being strongly disagree, and 5 being strongly agree). Most surveys like this take this approach to evaluating responses and this is a big limitation.

The problem is that collecting your employees’ responses this way doesn’t evaluate the quality of their knowledge about your customer and business strategy and this limits your ability to assess the capability of your organization to execute that strategy.

When it comes to knowledge, quality can be defined as being both the correctness of that knowledge and an individual’s confidence in that knowledge. It turns out that when your employees have the correct knowledge about your customer and business strategy AND they are confident that their knowledge is correct, your employees act decisively and in alignment with your strategy.

Confidence should be of high interest to all business leaders because level of confidence is the MOST important factor in translating knowledge into action.

 

The quality of the knowledge employees have about their company’s strategy is one of the factors what separates high growth, market leading companies from the rest.  However, most traditional employee and organizational surveys don’t help you get at this important success factor. Your challenge is to find the best way to answer the question: “Are we sure that our employees and organization are fully aligned with our customer and business strategy?” with the confidence that the responses you are getting from your employees are giving you real insights into the true quality of their knowledge about your strategy.  

 

To find out about the ONLY survey tool available today that helps you assess the quality of your employees’ knowledge about your company’s strategy AND evaluate your organization’s readiness to successfully execute your customer and business strategy, go to http://pranabusiness.com/ 

Keeping the Strategy Conversation Going - Business Performance and Strategy Execution Results Review Meetings

Initial strategy conversations take place in your organization when you share and explore your company’s strategy story with your employees. It is important to keep the strategy conversations going within your organization - the review of business performance results, and the assessment of strategic impact, provides you with the perfect opportunity to do just that.

Business performance measurement data, or your balanced scorecard, provide you with a wealth of information in this regard, however, data alone doesn’t tell you the complete story you need to properly answer the important question “Is our company executing our strategy as planned and is it having the impact we expect?”

 

You really need another layer of information to fully answer this question and this additional content comes from your people.

 

While this added intelligence is initially provided by the root cause analysis and commentary information that accompanies the business performance results presented in your balanced scorecard, this is just a starting point. Richer insights; innovative ideas and go forward action plan options; and decisions about changes in strategic direction can only come from the conversations your business performance results stimulate. Cross-functional discussion and exchange amongst your employees that is focused on the success and impact of your strategy execution investments, and the relevance of your strategy in a changing business environment, is where the ultimate value is for your organization. This is precisely why strategy-focused organizational conversation shouldn’t be an option for your company. The fact is that organizational conversations are essential if you wish to achieve your goals for profitable business growth in the most effective and efficient way.

While strategy conversations can, and should, take place across your organization anywhere, anytime, between anyone in your company, you need to create formal venues where you can orchestrate these discussions.

 

One such opportunity is in regular business performance/balanced scorecard results review meetings. The primary objective of this meeting is to review the “health” of the strategic objectives on your strategy map. This objective enables a discussion of whether your company is executing your customer and business strategy as planned and whether your strategy is truly moving your company forward. Four questions are usually asked and answered in business performance/balanced scorecard meetings:

(1) How are our BSC indicators and strategic initiatives performing versus targets?;

(2) What are our results telling us about the health of our strategic objectives/our customer and business strategy?;

(3) What is our root cause analysis telling us about our critical business issues?; and

(4) What corrective actions are planned, what resources do they require, what impact to we hope they will have by when, and what business risks, or unforeseen business/operational impacts, are associated with our planned actions?

And while there are other questions that you could consider during these meetings, these are the ones you absolutely must cover during your conversations.

 

Not surprisingly, the way you run these meetings is as important as what gets covered. Your goal is to get a healthy, fulsome, no topic off the table type of discussion going that features a healthy exchange of insights and perspectives on what’s going on in your business. In my experience, the best business performance/balanced scorecard meetings happen when they are run as “open meetings” where anyone in the organization can attend and employees with ownership for strategic objective health and business performance results take a hands-on role in leading the conversations.

Running open meetings signals that everyone in your company has a role to play in the successful execution of your customer and business strategy. Open 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 but it just takes creative solutions to get past these hurdles. One example is taking meetings and discussions about business performance results and strategy execution right to the shop floor. Always think: what creative solutions can we employ to make our business performance/balanced scorecard meetings accessible to everyone in your company?     

 

Another important formal venue for organizational conversation occurs during strategy execution progress reviews. Usually held on a quarterly basis, the objective of these meetings is to assess how your strategy is doing and whether anything needs to change. Five important questions should be asked and answered through these reviews:

(1) How have our strategic objectives been performing over the past quarter and what are the implications for strategy execution? (Are we moving forward?);

(2) What are our key strategic issues and what must we do to deal with them?;

(3) Have we got our business model right (is it driving the results we expect it to) or do we need to make changes?;

(4) What, if anything, is changing with our customers, with our competitors, and/or in our market and external operating environment and what impact could/should it have on our customer and business strategy?; and

(5) Is our customer and business strategy having the impact we expect/want or does something need to change?

 

Again, the how of this meeting matters as much as the what. The goal of all strategy execution progress review meetings is to explore the five questions through spirited conversation, discussion, and the honest and open exchange of perceptions, fact-based insights, and ideas. Needless to say, these meetings require the involvement of senior leadership team members, however, you can achieve an even higher quality meeting by driving for openness. For example, why not include the next layer of business leaders as attendees? What about subject matter experts? Business partners? External experts? Your customers? Feeling uneasy with these suggestions? Well, if it makes you feel better, don’t invite everyone to all parts of the meeting.  Just be sure to push the openness barrier where it makes sense.

 

Always remember - having more people in on the strategy conversation on an ongoing basis always produces better results for your company.

Why? Quite simply because organizational conversation is the “grease” that always makes the strategy execution feedback loop turn faster, accelerating your strategy execution success and enabling a more efficient and sustainable cycle of constant improvement in the customer and financial outcomes achieved by your company.  

 

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 [email protected].

 

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.

 

The Essentials of a Great Balanced Scorecard Report

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

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

 

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

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

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

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

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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