In many organizations strategy is seen as something that gets done by top executives alone, behind closed doors. Unfortunately, what happens behind those closed doors is often less exalted than the rumor mill would suggest. Instead of the high-powered war-rooms believed to be taking place, off-site meetings about strategy are frequently just goal-setting sessions, or analyses of which goals failed to get reached over the last year. They are very rarely detailed planning sessions that leave the participants with the tools and certainty that this year’s goals WILL get accomplished.
Even more problematic is the fact that when there are real plans in place, they are almost never shared with or understood by anyone beneath the top executive team. That means that for those who will actually be executing the strategy, it is mysterious, and may only be suggested by a set of sales targets for the quarter or the year and a great deal of pressure from on-high to meet those targets.
When a strategy is really extraordinary, and has within it the necessities that will lead to certain fulfillment, it is most leveraged by teaching it to EVERYONE and measuring its execution through everyone. That way, people know why they’re doing what they’re doing, how their actions relate to the overall organizational goals, and how they can best serve the strategic aims of the organization. An educated workforce is the best tool to execute a strategy. When great strategy is well-executed the organization makes its goals,whether they are revenue, profit, sales, turnover or stock value.
The complete process of inventing and executing strategy is multi-stage and long-term. The steps :
Vision–>Research and Analysis–>Strategy Map–>Strategy Shared–> Balanced Scorecard–>Strategic Alignment–>Ongoing Measurement, Correction, Revision
When everyone knows and understands the strategy, it gets accomplished.
Goal setting is a neglected part of most organizations’ management. Goals get set, yes–but they are set as mere extrapolations from the past.
For example, it is common for the next year’s revenue goals to simply be the same as last year’s plus some arbitrary percentage. On the one hand, this seems like a natural way to set goals because, after all, improvement is the point. But when the goals are simply a function of doing the same thing slightly better each year, they have no basis in real thinking or strategic vision.
A different way to approach goal setting is to begin with the long-range vision of the organization: What kind of organization will this be in thirty years? And if that gets accomplsihed, what will the financial report say? When those questions are answered boldly and creatively, then the goals for next year can be deduced from that long-range vision.
The goals are not then arbitrary or incremental–they are essential and intrinsic to the fulfillment of the long-term vision.
Conventional strategic planning often consists of a S.W.O.T. (Strengths, Weakness, Opportunities and Threats) analysis and then a list of initiatives that need to be done to accomplish the goals of the organization. This conventional approach usually manifests in a book that must be read from start to finish to be understood. It can’t be permanently displayed in any useful way and most people in the organization couldn’t understand it if they read it, although mostly they don’t get an opportunity to read it anyway.
This is an over-simplification, but not so much of one as to contradict the essential point here.
If nothing else happened in the course of business other than working on those initiatives, that might be a reasonable approach. Since lots of things happen to interrupt and detour that process, and many more complexities arise on a day-to-day basis, as well as many more people being needed to work on the strategy, a more robust approach is needed.
Strategy mapping is a multi-dimensional, logic-based, diagrammatic approach to planning the accomplishment of goals. It is based on several key assumptions:
Everyone who understands the strategy can work toward it. Anyone who doesn’t understand is probably not working on it.
In order to be readily understood, strategy needs to be diagrammed, and articulated in a way that is intuitive and transparent.
All strategy is based on hypotheses about cause and effect. For example, to strategize winning a football game against a very strong passing team I hypothesize that if we can prevent them from passing our chances of winning increase. Our strategy ought to include an initiative that impedes the other team passing, such as fanatically guarding all prospective receivers and tackling the quarter-back as fast as possible.
Strategy starts from the financial goals and gets designed backward through successive layers of depth or “perspectives”. Those perspectives are Financial, Value Proposition, Operations and Processes an finally, People (including capacities, competencies, technology, culture, values and organizational development.
Strategy gets executed in the opposite order, starting with people and is ultimately measured by financial results.
Consistent with these premises, strategy mapping starts from the financial goals and is built “backwards”, it is easily understood as a flowchart displaying cause and effect relationships, it is measurable at each moment of its execution and accomplishment, and it can be understood by anyone in the organization. Mapping one’s strategy is as vital to business as a blueprint is to building a skyscraper.
The Devero Group endorses and is expert in this methodology.
For more information on Strategy Mapping, its rationale, results and process, please read The Strategy-Focused Organization by Robert Kaplan and David Norton (available from Harvard Business School Press or at Amazon.com )
The biggest problem in business today is that most strategies don’t get executed. Thinking up great ideas is a lot easier than implementing them.
One component of that problem is that strategy is difficult to articulate, and therefore it is difficult to measure. Without a means of measurement it is impossible to find out whether the strategy is being implemented or not, whether the strategy is sound or not, and whether the results are being produced.
The balanced scorecard is a methodology that allows for measuring all of those components at every level of the organization. By designing metrics that address each component piece of the strategy, and which are then linked to specific job families and individual accomplishments, the strategy in all of its component pieces can be measured.
Equally as important is to link the evaluation of employees to the strategy to ensure that employees are spending their energies on areas that will forward the organization’s strategy, and that they are compensated for those results. It is just as important to be able to determine when employees are weak in their strategic activities, to link that weakness to compensation as well, and to be able to use that information for training, development or personnel change decisions.
The creation of balanced scorecards and their relationship to performance evaluation and compensation is a complex undertaking. This approach requires the expertise of strategists like The Devero Group, often working hand-in-glove with a technology professional (either the client’s own I.T. team or a strategic partner of ours)to seamlessly integrate the newly invented metrics into the performance and compensation system.
Maximizing human capital is the most vital part of any organization (unless it is an entirely robotic organization). The balanced scorecard and its holistic integration is the state-of-the-art in accomplishing that goal. For more information on The Balanced Scorecard please visit The Balanced Scorecard Collaborative
Is Your Organization Aligned?
Does everyone in your organization understand your vision, core values and strategy?
Do the core values drive both behavior and strategic results?
Is ethical behavior a foregone conclusion?
Is each employee making the right choice about how best to spend his time?
Does everyone understand how everyone else fits into the big picture?
Do individual results produce strategic results for the organization?
Will you exceed your measurable goals this year?
If you answered no to even one of these questions you may not have full alignment in your organization. One of the keys to unprecedented results is complete alignment between every level of the organization, conceptually and behaviorally. That means having a strategy that is clear, logical and well-articulated, sharing, measuring and reinforcing it effectively and ensuring that the core values of the organization are strategic and alive in every moment of business life.
There are lasting and profound structural, conceptual and process-driven means to accomplish real alignment. Without it, success may happen, with it success will happen, every time.
In The V-Zone : Values-Based Organization Building
With the rash of business scandals that have recently been revealed, it’s easy to see how ethical violations can undermine an organization. One way to avert those kind of problems to is to build core values into every moment of business life.
Perhaps equally as importantly, bringing core values to life can be an irreplaceable strategic tool for an organization. The V-Zone is a mode of operating, a way of conducting business that allows for the continuous improvement of core values’ expression–and results in improved results, decreased violations, better employee morale and overall business success.
It isn’t easy to get in The V-Zone–in fact, it is a complex and long-term undertaking. But if you are building an organization too last, that will perform well consistently over the long-term and that will be able to compete for market-share, public good will, employees and leadership, The V-Zone is the right destination.
Contact The Devero Group to find out how to proceed in building your organization’s core values into the very fabric of day-to-day operations and into the hearts and minds of all of your employees.
The Strategy-Focused HR Department
Most business leaders are troubled about Human Resources– that is, they are troubled about how to deal with their human capital and they are also troubled about how and whether their HR department adds to their bottom line. Traditional HR departments have not been called upon to weigh in on issues relating to the bottom line of the organization. But as productivity demands increase, the same pressure that is on every other department is on HR as well.
In other words, how can HR departments become leaders in returning on the investment (ROI)? Smart HR leaders are looking for ways to become integral to the process of building value for their organization–value that is measurable and critical.
The strategic HR department is not an accidental occurrence. The Devero Group regularly works with senior organizational executives and their HR leaders to reinvent HR departments as drivers of value. The methodology ties into the thinking behind strategy mapping and the balanced scorecard, but is designed for the specialized functional areas of HR in maximizing human capital, building strategic alignment, driving core values, and providing personnel support.
The days of HR departments whose only purpose is to deliver payroll envelopes and track sick days are long gone. If you are an HR leader committed to driving greater value to your organization, contact The Devero Group for more information.
Financial Analysis, Auditing Services
Operational Analysis, Improvement