One of my favorite fairy tales from when I was a boy is Winnie-the-Pooh. He was once asked “where should we go?”. “I don’t know he replied”. And then they ended up being there.

I see the same pattern with annual reports. It amazes me how companies with weak/no defined objectives and targets are writing their reports as they have had clear objectives and targets all through the year.

This made me do this cartoon. Companies with no objectives and targets are always reaching their goals. It is like they are “shooting the arrow” and see where it hits and define this as the objective/target.

Is your company shooting first and paint after, or do you have a target and a bulls eye to hit before you shoot?

I will leave it up to self-examination.

I once heard a story on how difficult communication can be between two countries. This story is from 1979 and is about the Egypt-Israel Peace Treaty. If today, you ask an Egyptian if they are at “peace” with Israel, they would claim “yes”. The word peace for an Egyptian means “we will not harm our neighbors”.

If you turn to an Israelite and ask if Israel has achieved “peace” with Egypt, he would most probably say “no”. The reason for this is that the word “peace” (shalom) for an Israelite means more than not harming/fighting with your neighbor. It encompasses qualities like brotherhood, love and joy. So this warm, loving friendship is contained in the word “peace” for an Israelite.

So words have different meanings based on language, history, background, education and so on. I see the same when I challenge businesses. When I challenge statements like “we should be the best in banking”, different individuals put different meanings to this. What is “best”? What do we mean by “banking”? Do we mean “the best”, or just among the best? Should we be the best in all areas of banking, or just in certain areas? I think it is important to do this kind of exercise and clarify our strategic communication.

If you are not sure what is meant by your company’s strategy – please ask for clarification. If you are a manager – you can never over communicate strategy.

After the inevitable waiting game, each of us hoping the other would take care of it, we gave in, stumbled out of bed, and went in search of the incessant beeping. On the way down the hall a thought slowly began to make its way into my consciousness, no small feat considering both my brain and body were protesting this unwanted intrusion into my sleep. The thought became clearer and more resonant until I said out loud, “This is a catalytic mechanism.” My wife responded with about as much enthusiasm as a marble statue of her might, so I repeated my somnolent insight: “This is a catalytic mechanism. The smoke detector!” The beeping continued but I was oblivious now, totally absorbed by my stunning discovery. As we located the beep and my wife secured a fresh battery, I continued: “The smoke detector going off like that forced us into action. There was really no alternative – we had to get up and change it or suffer the negative consequences, in this case being robbed of a good night’s rest.”

Of course catalytic mechanisms don’t just apply to late night battery changes. Jim Collins, who originally wrote about this topic several years ago, believes they are crucial for any organization that wants to move beyond bureaucratic exercises in pursuit of their goals, and described them as the ‘crucial link between objectives and performance.’[i] They can take many forms but the common denominator is a process or procedure that forces people to take direct action in pursuit of an important objective. Collins cites the case of Granite Rock, a California company that supplies materials and products to the construction industry. When you think of a rock company, and really who isn’t constantly doing that, I doubt you conjure up images of world-class customer service. But service at a level exceeding what you might expect at Nordstrom was exactly what the leaders of Granite Rock proposed to achieve. To do that they could have written vision statements, created an exciting communication campaign, or devised some complex service initiative, but in the end they chose one simple process; short pay. At the bottom of every invoice the company issued appeared a note reading: “If you are not satisfied for any reason, don’t pay us for it. Simply scratch out the line item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance.” This is a truly catalytic mechanism. Any time a customer chooses not to pay the entire invoice amount it propels Granite Rock into action, digging deep to discover why the customer chose not to fully pay, and doing everything in their power to fix the problem to ensure it doesn’t happen again. Employees are provided with a crystal clear signal that anything less than world-class service won’t be tolerated.

It takes courage to initiate a catalytic mechanism because a well-constructed version will possess sharp teeth and produce legitimate consequences for the organization should they consistently fall short. The upside, however, is worth the risk. A catalytic mechanism has the power to motivate entire organizations, wow customers, and create sustainable results. I encourage you to look at your own strategy and strategic objectives through the prism of a catalytic mechanism. What process could you put in place that would force you to move beyond the corporate rhetoric and turn your dreams into reality? What’s beeping in your world?

Boards serve multiple functions, but perhaps their chief responsibility is approving and monitoring enterprise strategy. As noted above, the Board typically doesn’t engage in creating the organization’s strategy, that’s the province of the senior executive team, led by the chief executive officer. However, to fulfill their oversight role, Boards they must understand and approve the strategy, then continually monitor management’s execution efforts. Based on the findings of a study performed by global consulting firm McKinsey, effective monitoring is often easier said than done. The researchers discovered that a whopping forty-four percent of directors don’t fully understand the drivers of value for the organization on whose Board they sit. Without that knowledge it’s impossible to provide meaningful insights and advice, the very reason members were selected in the first place. Enter the Balanced Scorecard.

Around the globe, thousands of organizations have turned to the Balanced Scorecard (and other measurement-related systems) to isolate the value-creating mechanisms of their strategy by identifying measures that translate strategy into meaningful action. One of the many benefits of using the Balanced Scorecard is providing the Board with powerful metrics that distill the essence of the organization’s strategy and clearly indicate what drives value for customers and shareholders alike. Armed with that knowledge, Board members can draw on their substantial reserves of knowledge and experience to actively participate and provide the counsel every management team requires. But as any practitioner will tell you, the Scorecard is more than an ad-hoc collection of measures scattered across four perspectives. The true value of the framework lies in the ability to connect the measures in a strategic narrative, understanding how they weave together, across the related perspectives. For a director to contribute meaningfully to an organization’s strategic dialog, they must first understand the intricacies and subtleties of the Scorecard model. If to them a Scorecard is simply a group of bucketed metrics, they will never derive the benefits possible from the tool, and are likely to squander much of their own potential value to the organization. Any Board member who takes their responsibility to the organization seriously, and respects their fiduciary duties, should never consider Scorecard training beneath them. To the contrary, they should encourage and embrace the lessons, as they will allow them to better serve their vital role in corporate governance.

What is implementation?

 The success of your performance management implementation involves more than choosing the right software.  You also require the right implementation.  But what is implementation?

With Corporater EPM Suite, customers license an out-of-the-box solution.  This means there is no development involved with the implementation.  Implementation consists of configuring the solution to meet customer requirements, and it occurs through a series of menu-driven activities.  Since there is no development involved, it eliminates development risks.  The solution is already in proven use with hundreds of customers.  There is no risk of running out of project development hours with a half-developed solution.  There is no need to maintain a separate IT development infrastructure, and the additional attention required for testing and acceptance.

What should you expect during implementation?  Before we get to that question, we should discuss a few issues.  Most customers need to balance a few factors, such as cost, resource availability, speed of implementation, knowledge transfer, and scope of the implementation.  Customers can manage cost by participating in the implementation process, and gain the added benefit of additional knowledge transfer.  This is dependent upon the customer’s own resource availability.  Other customers may choose that the complete project is delivered by the implementation team.  What is the intended scope of the implementation?  Shall it be staged in multiple phases, based on business units or functionality?  Or shall it be launched upon completion?

There are no set answers to any of these questions.  Performance management by its very nature is a dynamic set of management processes that need to change over time.  The implementation is of a “living solution” that will undergo iterations over time.  Strategic review cycles and annual planning may mean that some metrics or initiatives will be retired and replaced over time.  Initiatives and activities by their very nature are time-limited in their duration.  Many organizations choose to roll-out the solution organizationally, perhaps starting with a few top-level business units.  They add lower levels at later stages.  Some choose to start with high level data, maybe manually entered at the start, then connect to source systems at a later stage.  While it may be quick to implement in this manner, it loses the benefit of including historical data.

There are many issues to sort out before planning the scope of the implementation.  Corporater implementation experts can assist you in making the decisions that best fit your needs.  At a high level, the implementation is broken down into the following categories of activities:

Readiness Phase

This step involves clarifying the scope of the implementation.  It answers the questions asked above.  What is the scope of the work, what are the roles and resources required from both the implementation team and the customer?  In larger projects these may be clearly outlined in project plans and related documents.

Design Phase

Most customers are already at a stage of readiness regarding their performance management model, meaning that they have a clear understanding of the metrics they intend to report, how they are to be organized, etc.  What is often missing is a clearly defined set of targets, performance thresholds (for setting the status gauges), how they want the measures to be visualized (by charts, graphs, tables, etc.), rules for handling comments, workflow notifications, and other ‘details’ needed to fully leverage the solution.  The design phase clarifies all of these requirements.  Customers need to supply the information of the KPI and initiative metadata (what information they need captured and reported by KPIs), and provide input into the layout of the scorecard, objective, KPI, and initiative pages and reports.  This stage also consists of structuring the organizational and data models, so that the system can by logically navigated, and data can be properly viewed at each business unit.

Configuration Phase

Configuration consists of entering the scorecard and dashboard structures.  Corporater EPM Suite offers a templating system that makes it very easy to reuse common elements throughout the system without having to maintain each element independently.  Configuration is the menu-driven process of setting up the solution so that it displays and manages information as specified in the design phase.  If integration with source systems is also involved, it is connected and configured at this stage.

Testing Phase

In a perfect world, there would be no need for testing the system.  In a practical sense, testing occurs concurrently with the configuration phase.  It is the process of verifying that the solution reports the right information to the right business units, and that the solution is configured as specified in the design phase.  Customer acceptance occurs as a part of this stage.

Training

The best customer training occurs as the solution owner (or super user) participates in the configuration process.  This type of on-the-job training gives the added benefit of training on the actual customer business case— in the actual solution.  This is real-world training— not classroom training.  The customer benefits from the repetitive nature of building multiple KPIs, configuring several charts, graphs, tables, etc.  The super user then has a comprehensive understanding of how everything has been configured, and understands the business logic of the solution.  Classroom-style training is also available.  End-users generally require very little training, since the solution is intuitive to use, and end-users do not need to understand how to configure the solution.  They need to know how to navigate through the system through a web browser.  End-user training generally is conducted by the super users or other customer resources.

Summary

In a future post I will discuss project management.  Overall, there is generally little need to treat implementation as a “project.”  In fact, I don’t even like the word “implementation” as it applies to Corporater EPM Suite.  Implementation is not like an IT project.  As a solution to be run and managed by business users, it primarily requires the engagement and resources of business users.  The biggest “risk” we generally encounter is that customers start to truly understand the full potential of the solution once they start using it, and the project scope increases.  They gain a wider vision of how it can be used to solve other reporting problems, and expand how they use it.  At its core, this risk only speaks to how flexible and full-featured the solution is.

However, in most cases I find the opposite actually occurs – leaders are too quiet in the workshop. They sit back, a pensive look their constant companion, nod a lot, laugh when appropriate, but rarely offer their point of view. The desire to draw out the opinions of their team, seeking a broad spectrum of views is undoubtedly valuable and to be commended, but ultimately their reticence is at least as problematic as taking the meeting hostage by controlling the flow of dialog.

It’s an inevitable fact of organizational life that we all look to our leaders for cues. Therefore, when in a workshop or meeting, we find the CEO sitting back and offering no guidance or personal insights, other attendees can misinterpret that silence as a signal the chief isn’t engaged in the process. The leap of logic then continues to: If he or she isn’t engaged, then the meeting probably isn’t that important. And culminates with: if it’s not important, why am I here, when there is plenty of ‘real work’ stacked up at my desk right now?

At the end of the day, the CEO is there for a reason – to make the difficult decisions. Taking the counsel of well-informed subordinates, and listening to a diverse array of opinions is sure to lead to better decisions and improved buy-in from everyone, but when push comes to shove leaders must illuminate the organization’s path forward. I’ve had the privilege of seeing brilliant CEOs in action over the years, and one of my favorites was a gentleman who mastered the delicate balance of seeking input from others but always making a firm commitment based on his own knowledge and beliefs. In meetings this man, a brilliant individual by any account, was always attentive, asked seemingly simple questions, showing his vulnerability, but never failed to lend several insightful comments to the discussion. When it was time for a decision to be made he summarized the key points raised to ensure he was accurately portraying the opinions that had been presented, then proceeded to lay out the rationale for his decision. You were free to challenge it of course, constructive conflict was always welcomed, but when it was time for action he accepted responsibility and issued the final word on the subject.

We’re all leaders in some capacity. Lets remember that our challenge in that role is to seek the opinions of others, stimulate dialog on issues, and when the time comes always be willing to step to the forefront, accept responsibility, and perform the leader’s ultimate task – making decisions.

As a Strategy Execution advocate I gave a different speech. I was afraid that they would start stoning me when I referred to Jim Collins’s book “From good to great”. When Jim Collins researched what made companies, “World Class companies” he found something very interesting:

“We found no evidence that good-to-great companies had more or better information than the comparison companies. None.”

When I presented this statement I was glad that I had a body guard with me to protect me! I explained the difference between Strategic Performance Management and Business Intelligence.

So, I concluded the presentation with the following :

• BI tools are not built for Strategic Performance Management. You can try to get a BI tool to help you with your Strategy Execution Process, but it will be an expensive experiment and you will most likely fail
• A specialized tool for Strategic Performance Management is a necessity if you want to work with Strategy Execution in medium or large organizations
• A Strategic Performance Management Suite can add to the benefits of a well working BI platform.
• BI tools can be valuable, but they are cannot help you execute your strategy

Most for profit companies immediately grasp the relevance and importance of making this choice, accustomed as they are to waging strategy wars with their competitors. However, with public sector agencies the notion is often rejected on these seemingly show-stopping grounds: “But our ‘customers’ have no choice, they have to deal with us.” But is that really the case? Do we as customers of government agencies have no choice? I’d suggest it’s not the case, and argue that all customers of government agencies do have a choice.

Recently I worked with a Compliance and Enforcement group within a State government agency. When the question of value propositions was raised the “no choice” flag was quickly raised and the conversation seemingly halted. But one person in the group protested and suggested customers do have a choice; in their case the choice was whether or not to comply with regulations. He argued that in the end customers may decide not to comply with state regulations because the experience or cost of dealing with the authority simply outweighs the burden of any possible penalty.  Based on disappointing encounters in the past, customers may consider the state’s products to be outdated or inefficient, and declare the hassle factor is too high to warrant compliance. The lack of a compelling value proposition translates into substantially less revenue for already depleted State coffers.

This veteran of public service went on to suggest that if government agencies were willing to explore the value proposition idea and choose one, or a balance, that fit their environment, they could transform the customer conversation. Declaring a value proposition means critically examining everything you’re doing through that lens and ensuring all products and processes are consistent with your chosen direction. With products, experiences, and costs transformed, customers will choose to do business with the authority because the benefits now outweigh the costs. If you’re in the public service, I urge you to take a cue from this intrepid colleague, begin assessing your value proposition today, and remember that all customers do have a choice.

The documents were written for communication purposes to various target groups. All documents were structured in different ways, with the main objectives worded and structured differently. Our job was to harmonize various documents and clarify strategy.

I got the inspiration for this cartoon when we sat with all the documents and we pressed on to create harmony. We had to map various documents into a common structure.

I believe that this is not the only organization that has this issue. Probably more managers should go on a “Jungle Safari” and make a clearer expression of their strategy?

I have lately been reading a book about the Renaissance period and how the rulers of Firenze managed to navigate in the political landscape about 500 years ago. It struck me that the management discipline 500 years ago compared to now have not changed much. It is the same concepts and drivers with just new names attached. Modern banking industries saw the light in this time, and management concepts like MBO, BSC, Blue Ocean strategies were practiced. It just did not have the modern names attached.

To position their banks and to prevent war they married their son with the daughter of the “enemy” and made peace. Isn’t this just another way of looking at mergers and acquisitions today?

What I noticed in the book was that they were cleverer to include the “devil factor” in their management philosophy. They managed their businesses/ kingdoms under the fact that all men have a good and a bad side (good and evil). Today’s management literature is written with the view that “people are good and want to do the right things”. But this is not true. So why are the modern management philosophies not factoring in the evilness in people?

We read chapters and books about “strategy alignment”. But when did you last read a chapter about “how to avoid people sabotage your BSC”? or “what to do when employees are refusing to implement strategy”? Management literature takes it for granted that employees get aligned and want to implement strategy. But this is not the fact.

I think that most management philosophies are handing over these questions to the psychologists and let them handle this. But if “evilness” is a part of human nature I think we should also include writings on how to overcome the “dark side of people” in management literature.

Using Reporter we are able to find KPIs of the specified category, then check to see which contain yellow or red statuses.  Once we have the KPIs we search for and display the most recent comments (since current comments are also the most recent).   Once the report is created, it will provide different output each month depending on what KPIs are red or yellow, and depending on when comments were last added.

A different customer had a unique approach to reporting strategic initiatives.  This customer had top-level initiatives that served as the broad strategic categories for their planning purpose.  Beneath the top level, they had up to four levels of sub-initiatives.  At the second level (beneath the top level) they needed operational reports on the progress and status, as well as information regarding each of the nested sub-initiatives.   Their “rule” was that each level 2 initiative should be grouped according to which manager was responsible.  From each level 2 initiative, they wished to view the nested sub-initiatives and associated comments.

How are these rules modeled in the Reporter module?  Quite simply, we ‘find’ the objects that meet our rule criteria, and display them following the ‘rules’ that our customers specify.  In the above example, we start searching for level 2 initiatives that meet our criteria, we organize them following the ‘rules’ and we display the sub-initiatives according to the ‘rules’ governing sub-initiatives.  We do not need to create separate views in the web to display content according to our reporting rules.  This can be particularly useful when preparing reports for team or management meetings, where attendees are related to different business units.  Rather than relying on an organizational view of performance, we can model reports based on the purpose of the meeting, for example, and pull all the relevant information together into one report view.

Every customer, sooner or later, develops rules for how information should be organized and shared.  By modeling these rules directly into reports, the sharing and distribution can easily be automated.

Those non-verbal (and sometimes verbal) cues reflect the undeniable fact that the proposed changes, any changes for that matter, are difficult to bring to life, and most people have been around long enough to see similar efforts come and go. I’ve discussed this phenomenon in a number of posts, including my most recent in which I shared the sobering statistic of change failure rates being as high as sixty percent. To overcome a number like that it’s crucial for organizations implementing change programs to get off to a fast start, generate momentum for the cause, and convert skeptics to advocates. Unfortunately, most miss the mark on this task, and frequently begin their initiatives with long-winded speeches from executives whose delivery and demeanor seem to reflect their own doubt about what’s actually possible.

There’s a place for speeches, posters, and slogan-emblazoned coffee mugs when setting on the path to change, but to really kick start your effort, and win your share of people’s ever dwindling attention, you need to shelve the rhetoric and start with an emotion-inducing, provocative action. It worked for sixteenth century Spanish explorer Hernan Cortes. Facing the increasing possibility of a mutinous crew, he didn’t attempt to hold their loyalty with a fiery speech, instead he took the very provocative step of scuttling his ships, effectively stranding his crew in Mexico. Here are a few somewhat less dramatic, but no less effective, examples of people and organizations that recognized when it comes to igniting a spark of change, actions trump words every time:

A Danish organization, tired of watching customers defect because of frustrating and outdated policies and procedures, vowed to re-engineer the customer experience. Rather than begin the effort with a dry discussion of what was to be done, executives gathered the many volumes of current policies and procedures, stacked them up, and to the delight of assembled employees, threw a torch on the pile. The signal that things were about to change was clear.

The CEO of a midsized company was disappointed because his people weren’t taking advantage of 401(k) matching opportunities, when in fact he knew they could all use the money. He calculated how much they’d left on the table to be close to ten thousand dollars. In a provocative display to jolt them from their inertia, he than stuffed ten thousand dollars in a bag, brought it into a meeting and dumped the cold hard cash on a table. The powerful sight of all the money they’d neglected put his staff on a quick path to action.

A Cedars-Sinai doctor was frustrated that hand-washing levels of other doctors at the hospital remained stuck at eighty percent, despite the fact that everyone knew frequent hand washing was critical in reducing patient infections.  Weary of spouting statistics and exhorting his colleagues to wash up more frequently, he took the creative step of having a sample group press their hands in a mold and then analyzing what they contained. It turns out the doctors’ hands were covered in bacteria. The same doctors who would later be examining a patient were unknowingly harboring an army of germs. Not surprisingly, when this revolting truth was revealed, hygiene rose to nearly one hundred percent, where it remained.

The message here is simple. The next time you’re introducing an important change program put away the memos, speeches, and mouse pads and take a page from the book of the organizations above. All recognized, and benefited from, the wisdom in that old saying: Actions speak louder than words.

Sources:

Paul Niven, “How Well-intentioned Leaders Can Sabotage a Balanced Scorecard Implementation.” Blog post at www.paulniven.com

Dan Heath and Chip Heath, “Passion Provokes Action,” Fast Company, February 2011, pp. 28 – 30.

Have you sometimes been told that you need to be more productive? You need to work harder? You need to be more efficient?

Most people, when they hear these words, think that they need to speed up their work. “The management thinks we are too slow.”

Efficiency and productivity are in most cases not linked to the speed of work. In fact, efficiency and productivity comes from the following:

• Making sure what you contribute towards fulfilling your company’s strategy. (Justified by strategy – adding value)
• What you do – do it right. (Right quality)
• What you do – do it the right way. (Right process)
• Prioritizing initiatives and choosing which ones to do first, second, and which ones to never do. (Project management)
• Making sure what you do can be justified economically. (Financial management)
• Making sure that you have the needed skills to perform the job. (HR management)
• Making sure that what you do is within the acceptable levels of risk. (Risk management)

None of the seven check points on the list above ask you to “run faster”. Hence, the key to productivity and efficiency is actually in making better decisions on key issues like quality, process, projects, financials, HR and risk.

In a world where the speed of business is increasing, it is important to not just speed up the “hamster wheel”, but to speed up the thinking process and ask these fundamental questions. And if you are honest you will experience increasing efficiency and productivity in you and in your company.

When discussing what I considered to be ‘best practice’ change principles with this client, I provided tip after tip about how to win over those on the front lines, including: using varied communication mediums, getting everyone involved, defining the WIIFM (what’s in it for me) message, and many other nuggets gained from over twenty years in the field. He nodded his head throughout, but when I finished he offered something I think all of us tend to overlook in change management initiatives – the unintentional sabotage of well-intentioned leaders.

People ascend to leadership for many reasons: knowledge of the organization and its markets, the ability to craft a compelling vision, and often through the ability to deftly negotiate office politics. Smart and savvy executives, those who have been around the organizational block more than a few times, not only possess the intellectual skills necessary to lead, but experience has taught them how to run through the organizational minefield relatively unscathed. It is those leaders that may unintentionally sabotage change efforts.

When an organization introduces a new program, it’s not uncommon for these seasoned leaders to dive in headfirst, forge ahead at light speed, and expect everyone below to follow suit. They value speed as paramount, look for quick wins, but see a structured implementation approach as potentially limiting. If problems do arise in the chain of command above them they can maneuver through the organizational obstacle course thanks to experience, knowledge, and power.

In the case of a Balanced Scorecard initiative this need for speed can manifest itself in a leader’s efforts to have just a few individuals craft a Strategy Map for the entire organization, do so in one short meeting, and have the document ready for organizational use the following day. But when velocity of development is the top priority for a Scorecard effort, the product that emerges tends to miss the mark in several ways: its contents don’t reflect the careful thought, debate, and dialog necessary to create a truly strategic document, it can be overly simplistic or conversely unduly complex, and perhaps most importantly it won’t generate the buy-in of those responsible for executing the objectives.

There is little doubt that creating momentum is vital to any change effort, but most initiatives (Balanced Scorecard included) require a certain amount of seasoning and review before being able to serve as a key tool in decision-making. Additionally, the Scorecard, again as with all change programs, requires a steady and structured approach if you hope to achieve optimal benefits from its use. Employees throughout the organization must be able to clearly grasp how the Scorecard fits into the larger context of the organization’s journey; how it helps transform strategy into reality, and guides day-to-day actions they’ll take.

What is most important for results-driven leaders to recognize is that structure serves a valuable purpose not only in guiding the implementation, but also acts as a soothing balm for employees not quite prepared to journey into the unknown represented by the initiative. As with all things, a balanced approach is required when implementing the Scorecard system, one that recognizes both the imperative to get things done quickly and the importance of a well thought-out roadmap for success.

References:

-Haig R. Nalbantian, Richard A. Guzzo, Dave Kierrer, and Jay Doherty, Play to Your Strengths (New York, NY, McGraw-Hill, 2004).

I have now worked 16 years with software systems for Strategy Management/ Performance Management. In my earlier days I worked as a practitioner, but in the last 11 years my role has been that of a CEO of a software company developing Strategy Management solution.

Over these last years I have received hundreds of “Request for Proposal” from various customers.  Many of the RFP documents have good questions, but very few of them really focus on a problem that I am seeing in common among most businesses today -  Deviations or abnormality in structures.

If you are asked about your business, you will most probably say it is very structured. All data, goals etc. can be rolled up and down perfectly would be your answer. But if you look more closely you will find instances where there are deviations. Apparently this is what is causing problems for many businesses while using Strategy/performance management software packages today.

Let me give you some examples:

“This indicator is going to be used for all departments – except one department”

“All limits indicating red, yellow and green should follow this rule – except for this department”

“All numbers should be aggregated up to total group – except for this unit”

“All indicators should have initiatives attached to them – except for these KPI’s”

“All Initiatives should have this specific info attached – except these kind of initiatives”

“All indicators should have a monthly follow up frequency – except this which is a half year”

This list goes on and on!

Here is what causes challenges/ problems in the software implementation process. When these abnormalities come up, the normal reaction of the software vendor is “our system is not made for that exception – but we can fix it”. It is as though the software vendor is very surprised every time these issues come up and from that point onwards the cost starts to spike. Every exception is dealt with but at a high cost element.

So the next time you are looking for a Strategy management software/ performance management software – ask the vendor for how exceptions are dealt with. If they don’t have a good answer – then go on to the next vendor.

You can’t connect the dots looking forward; you can only connect them looking backwards…you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

[Steve Jobs, Stanford commencement speech, June 2005]

How many times have you heard it? Trust your first instinct, don’t change that exam answer. If the distance says 5-wood, but something in you is saying 3-wood, take out the 3-wood. So, if your gut is all knowing, why is there such an emphasis on measurement and analysis in management? Why don’t we just read the tea leaves each morning, and make our biggest decisions that way?

Did you need data to choose your life-partner? How about your alma mater? Was there deep analysis that led you to choose the name of your first-born? Likely, not. But you still can’t tell your board or your leadership team that you need to launch a new service offering, because ‘your gut says so’.

So, what’s the right interplay? Where does analysis stop and instinct begin, or vice versa?

The Reaganesque ‘Trust But Verify’ works for us. Use your guts to lead you to a hypothesis. Use your intuition to decide on how best to verify it. Then, go get the data and build the case to win over your peers and bosses. Sooner or later, the decision-makers will need to trust their guts to make the call. After all, even when the evidence is beyond the shadow of a doubt, the decider needs to take a leap of faith when the time comes to choose.

Kathy Kolbe’s ground-breaking work on the Kolbe Index is putting instinct back out front, where it belongs. Her system measures a person’s instinctive method of operation (MO), and identifies the way people take action.

Conation is a term meaning any natural tendency, impulse, striving, or directed effort. It is one of three parts of the mind, along with the affective and cognitive. In short, the cognitive part of the brain measures intelligence, the affective deals with emotions and the conative drives how one acts on those thoughts and feelings.

Kolbe went on to develop a set of theories and constructs that explain how individuals fit best in varied work settings and how the MOs of the people on a team will affect performance. Kolbe’s theory is essentially that you’re not getting the most out of your life, your people, your teams, or your organization, if you don’t feel free to function in your natural operating mode. The theory states that each of us will use one Way of Problem Solving for each of four Key Action-Modes, when we tackle challenges in the way we are most naturally comfortable.

So, where does this leave training, education, functional roles, cultural norms, etc? It seems that, as long as your instincts remain at the top of your decision-making hierarchy, they will lead you to the appropriate training, practice, preparation, role, and organization to perform most naturally and consequently, optimally throughout your life.

We live in a world that assumes that the quality of a decision is directly related to the time and effort that went into making it…We believe that we are always better off gathering as much information as possible and spending as much time as possible in deliberation. We really only trust conscious decision making. But there are moments, particularly in times of stress, when haste does not make waste, when our snap judgments and first impressions can offer a much better means of making sense of the world. The first task of Blink is to convince you of a simple fact: decisions made very quickly can be every bit as good as decisions made cautiously and deliberately.
― Malcolm Gladwell, Blink

So, why is it then that most people (Kolbe estimates more than 80%) seem to be out of touch with their life path, exhausted by their role, and drained by their relationships? Kolbe would say it is largely because ‘Conation’ has quite literally dropped out of the dictionary. MS-Spell-Checker symbolically replaces the word conative with cognitive, just as we are generally taught to put intellect ahead of instinct.

Whether it’s at work or at school, we tend to take a ‘one size fits all’ attitude towards learning and problem-solving, which often interferes with our natural modes. Unfortunately, an overemphasis on cognition isn’t new:

Until the intellect is placed by the community where it belongs; and made subordinate to the sensibility and the will, we shall find that mere sharpness, shrewdness, intellectual power, and success through these, will be placed above those higher qualities in which character consists, and success through them.

Mark Hopkins, President of Williams College ‘An Outline Study of Man’ (1878)

So, on the golf course or in the boardroom, take time out for that critical gut-check, then go and get the data!

Recently I came across a customer that asked for a way to report on the performance of a cross-functional team that was responsible for a set of initiatives. Imagine a set of related initiatives that were driven by a team consisting of members from the IT department, HR, finance, and a few managers from local offices. From an organizational perspective, they would all be from different business units, but they would work toward a common purpose. Most of the time performance reporting is organized organizationally or individually based on what each individual is responsible for.  In this case, we want to show the performance, status, or progress of a set of initiatives, plans, or metrics that are based on group/team membership.

So how do we provide team-based reporting? By assigning users to a “group” we can report on the elements that the group is responsible for. In this customer case, the initiatives themselves were organized by their IDs. To keep it simple, we kept the same ID header in the group name. When then looped through the members of the group, and checked to see if they were responsible for any of the related (by ID) projects.

A similar approach was used by another customer that had many stations what were managed by a set of managers.  Each manager wass responsible for several stations, and managers were reassigned occasionally.  Thus it was important to track who managed what station for a particular period.  Again, this problem was solved by creating a manager ‘group.’  We then created a historical user property on each scorecard to track who the manager was (and when, since it is “historical”).  In our report we cycled through each manager in the group, and generated a table showing the relevant metrics and results.

To summarize, consider creating groups, and cycling through each group member if ever you are in need of a report based on a list of specific users.  By using ‘find’ commands and ‘if’ statements, relevant results can easily be found and organized into a meaningful structure that fits your reporting requirements.

A company has a lot of similarities with a big computer system – difficult to change, long time lapse between releases, continuous threat of small and agile competitors and so on…

Many software companies have developed new agile development methodologies for solving these above issues. Concepts like Scrum, Xtreme Programming etc. can as well be applied to organizations that need to adapt and change fast. I think the “beat of business” really demands that companies be more agile.

Agile strategies also require agile Balanced Scorecard Software. I believe that software vendors basing their Balanced Scorecard solely on Data warehouse technologies will fail to keep up with the speed of change.

I look forward to hearing what the Balanced Scorecard gurus are coming out with in new research results on this topic at the conference this November.

In order to bring about meaningful change, most experts suggest you’ve got to ‘unfreeze’ people’s thinking, make them aware of new truths, institute the necessary changes, and ‘refreeze.’ Sounds a little clinical and Total Recall-“ish” but in reality it’s sound and logical.

This frigid thinking can impact your use of the Balanced Scorecard, a phenomenon I believe is on the rise due to the Scorecard’s popularity and, by business tool standards, enviable tenure. Here is a case in point. Recently I’ve been speaking with a company that adopted the Balanced Scorecard over ten years ago, and have been using it faithfully ever since. The organization turned to the tool in an effort to assist them in executing a new customer-driven strategy, one that required substantial changes to their processes, investments in new technologies, and of course updated skill sets in their employee base.  Like thousands of other organizations they found the Scorecard to be invaluable in paving the way to successfully unlocking the value of their strategy, and as noted above, they’ve been devoted advocates since that time.

Fast-forward ten years and the world is a different place, replete with changes that have impacted companies around the globe, including this one. Somewhere along the line their customer-focused strategy gave way to a new commitment to cost leadership, an economic reality in a market that was moving quickly towards commoditization. What they neglected to do was substantially change the Scorecard’s core elements to be consistent with their new direction. So, while they’ve remained committed to the Scorecard, its benefits have waned over the past few years and managers are openly voicing their doubts about the tool’s ongoing efficacy.

This is a company that clearly needs to ‘unfreeze.’ The Scorecard they instituted years ago is no longer a proper representation of the organization’s strategy and there is little wonder that managers, hungry for every strategic advantage good information provides, have lost faith in the tool. To continue benefiting from the framework they’ll have to carefully reconsider how it fits with their new strategy, and how its core elements must be updated in order to reflect current realities. This, of course, may be painful because it will undoubtedly mean selecting new objectives, measures, targets, and initiatives, and in an even more painful step, possibly unhinging mature links between the Scorecard and vital organizational processes such as budgeting, compensation, and employee reviews. However, if the Scorecard is to continue producing benefits, this has to be done.

Occasionally I’ll hear dire predictions about the future of the Balanced Scorecard. “It’s an old model whose time has come and gone” people will say, “It’s so 1997” they’ll cry. But I believe, as I’m sure you do as well, the fundamental principles that underlie the Scorecard framework are indeed timeless and it will continue to guide the strategy execution efforts of enlightened companies for decades to come. We simply need to constantly assess our use of the framework and ensure it reflects the world in which we live and work, avoiding the trap of frozen thinking.

Now if you’ll excuse me, I have to go toothpaste shopping.

Many companies are using their performance management system to control and punish people/ divisions which do not meet their set targets.

Seldom do I hear about celebrating good results. Sales people are probably the ones who get to celebrate for they are likely to have a “gong gong” arrangement to announce when they have won a new contract. But why are we not implementing a more positive approach of defining “celebration rules” as a part of the company’s performance management system? You should go ahead and define which events or what results entitle to an official celebration.

I know for sure how much recognition means to me and others and celebration is a way to award recognition. Let your performance management system contain the celebration rules.

One example of how such a rule could be set up is like this:
If target is achieved —> send an email to the local baker and order a cake for delivery —> send out invitations to people responsible for the achievement of the target

We need to start focusing more on partying, celebrating & recognizing, because I think this is what drives performance. Recognizing facilitates a positive performance culture.

Good luck – and remember too much cake is not healthy!

In the post he says, “Simplifying means making important choices about what’s important, rather than ignoring that question.” I’m sure the last thing he had on his mind when he wrote that was the Balanced Scorecard, but it’s perfectly applicable to that quote. A well-constructed Scorecard should tell the story of the organization’s strategy by outlining the vital objectives and measures that will be used in tracking the firm’s success in executing that strategy. The objectives and measures shouldn’t be plucked randomly from an online list, or chosen during a 30 minute brainstorming session, instead they should reflect careful contemplation of what is absolutely necessary to bring the strategy to life.

One issue I’ve seen with some Scorecard users is a reluctance to embrace the simplicity principle when choosing the Scorecard’s core elements, not because it doesn’t necessarily resonate with them – every head in the room nods when you suggest keeping things simple – but because in the end, it’s just too hard. It’s much easier to choose the first objectives and measures that come to mind and cram your Scorecard with every conceivable outcome, in essence covering all your bases. But of course what is created in those circumstances is not ‘strategic’ at all. Strategy, and the Scorecard that results from it, must reflect carefully reasoned and considered choices, sometimes very difficult ones. Only then can you be certain you’ve chipped away the urgent, the easy, and the readily available in favor of what truly matters. So when creating, or reviewing, your Balanced Scorecard cast a critical eye on the objectives and measures you find and ask yourself this question: “Have we taken the time and energy to move away from the abundant many to the critical few items that truly share our strategic story?” The clarity and simplicity that result will reward you many times over.

If you never take action, you’ll never get any feedback on your attempts, and without feedback, you’ll never grow as a problem-solver…When you do take action, every result is an opportunity to reflect and learn valuable lessons. Even if

what you take away from your assessment seems to be of small consequence, all of these small improvements taken together make a huge difference in the long-term.

— Ken Watanabe, Problem Solving 101

For some reason, the more time we have, the more skills we acquire, the more tools we have at our disposal, the more likely we are to get stuck in our own analysis (paralysis). It’s as if we need a counter-force to thrust us past our own inertias of resistance, to get us out there driving, and away from assessing and analyzing.

This resistance to move forward seems to come from some underlying belief that says that if we have enough data, time, and tools, it’s possible to find the ‘right’ answer or at least avoid the ‘wrong’ one. When in fact, in our experience, there is rarely a silver bullet and similarly there is rarely a fatal pitfall (deathblow).

I’d brashly embraced Sorbetto as a silver bullet. But there is no such thing. Not growing our store count. Not new coffee blends. Not loyalty or value programs. Not healthier foods and drinks. Yes, opportunities to transform Starbucks for profitable, sustainable growth existed everywhere, but no single move, no product, no promotion, and no individual would save the company. Our success would only be won by many. Transforming Starbucks was a complex puzzle we were trying to piece together, where everything we did contributed to the whole. We just had tofocus on the right, relevant things for our partners, for our customers, and for our shareholders, and for our brand.

— Howard Schultz, Onward – How Starbucks Fought for its Life without Losing Its Soul

The key, is in the direction, focus, and momentum as demonstrated by the leadership, and rarely in any one element of a strategic transformation. Clear direction combined with brutal honesty and decisiveness when tactics aren’t working, often carries the day. If the general thrust is set, well communicated, and bought into while organizations are undergoing transformational change, they can weather innumerable missteps on the road to achieving their new state.

So why do we get so tentative when it comes to fumbling in our own business? We’re comfortable with missing an item on the grocery list, or making a wrong turn on the way to the freeway, but when it comes to a strategic misstep in our business, we find the risk difficult to stomach.

Our errors are surely not such awfully solemn things. In a world where we are so certain to incur them in spite of all our caution, a certain lightness of heart seems healthier than this excessive nervousness on their behalf.

— William James, The Will to Believe

Realizing of course that there’s often much more at stake in our business decisions than in our grocery list, the steps and the operator are strikingly similar:

Typical Decision-Making Cycle

We would be greatly benefited in our Strategy Implementation decisions if we incorporated some elements of ‘Fast Chess’. Put as much time and emphasis on the action, assessment, and corrective-action as the initial steps and keep the momentum going.

We just need to train ourselves to stop thinking in terms of a silver bullet or a death-blow, but rather in terms of a symphony of directed activity with some off-notes and keys, coming together into a coordinated concert of results. If we can be ready and listening for those miscues, and quick to make the necessary adjustments, the music will keep coming together.

So why don’t we embrace our errors? Expect them, relish the information and learning that they bring, and take delight in our expanding awareness of our market’s evolution and our role in it.

In a sense, much the same thing could be said of life in general. We can’t know where our next error lurks or whatform it will take, but we can be very sure that it is waiting for us. With [optical] illusions, we look forward to this encounter, since whatever minor price we pay in pride is handily outweighed by curiosity at first and by pleasure afterward. The same will not always be true as we venture past these simple perceptual failures to more complex and consequential mistakes. But nor is the willing embrace of error always beyond us. In fact, this might be the most important thing illusions can teach us: that it is possible, at least some of the time, to find in being wrong a deeper satisfaction than we would have found in being right.

— Kathryn Schulz, Being Wrong: Adventures in the Margin of Error

According to a research published in The Harvard Business Review, “Companies realize only 40 to 60 percent of their strategies’ potential value”.

I think Jeroen De Flander puts it very nicely when he describes the “lost value”.

Knowing that your organization loses between 40 and 60 percent of its strategic potential on the execution highway between the city “strategy” and the city “performance”, is an interesting fact but doesn’t really help solve your problem.

That is why I am happy to see that universities around the world have started focusing on the Strategy Execution process.
These Strategy execution processes should also be supported in Balanced Scorecard Software. Corporater now has a brand new module “Corporater Workflow” which helps companies define their strategy execution rules.

Think its time to realise your company’s full potential? I hope you will contact Corporater and we can assist you in reaching out to good consultants and getting to know software that will really help you execute strategy.

Others start with the question “What are the critical success factors that we need to manage?” This is yet another important question but still not the most important question you can raise.

You should start at the top and ask “What is our strategy?”, “Where are we moving as a company?”, and “What are our strategic objectives?”

Before you have fully arrived at answers to these questions, you should not raise other questions regarding data or KPIs or initiatives.

To underline how important this is, I would like to say this: If I had to choose between a Scorecard with only strategic objectives (no KPIs) and a Scorecard with only KPIs (no objectives), then I would choose the one with objectives.

This is because objectives are what tells you the direction. They tell you what is important and I think that many scorecard projects underestimate the value of good objectives.

Once you have established Objectives, you can build it out with Initiatives and at eventually go on to define the KPIs.

So the best way to begin is to start elaborating on your company’s strategic objectives. Don’t stop before you have clearly decided on some good objectives that reflect what your company wants to achieve.

So my view on this is that Strategic objectives are the vital part – the Kings and the Queens of a Scorecard project, while KPIs are mere subordinates to these objectives.

I have visited several companies in the past and many of them have asked me about how to make their performance management system one that reflects strategy. They all wanted to go from a KPI/ operational focus, to a more strategic focus and asked for help. My advice was to not even think about what they had in their current Performance Management system. Even if they had good data that was hard to collect, they must just leave it all for a while when structuring a Strategic Balanced Scorecard. This process of “emptying your brain of your beloved KPI’s” is hard for many. Here are my steps on how to connect strategy to your performance management system:

1. You need to have a strategy to implement – show me your strategy
2. You need to translate your strategy / structure it
   1. Establish your strategic objectives
   2. Establish your strategy map
   3. Connect your initiatives
3. At the end you see if any of the KPI’s you had in your performance management system can function as an expression of strategic objective achievement or not

Your Strategic objectives decides/ tells you which KPI’s you should use, for the KPI’s should indicate if you can achieve your objectives or not. That is the purpose of the KPI’s in a Strategy focused Performance Management system (Balanced Scorecard).

Some of the KPI’s that you have left out after this process probably represents interesting aspects of performance, but they are not strategically relevant. They might still be important. You can use these KPI’s as additional performance information – but not on the front page of your most important objectives and strategic KPI’s.

So you might find yourself with a lot of extra KPI’s that you haven’t been able to put into this structure. What should you do with the left over KPI’s? Probably send them “down the elevator”. To the KPI grave yard. It’s a quiet, empty place. ☺