The ESM 5.0 is the official Balanced Scorecard software designed and managed by the creators of the Balanced Scorecard and authors of dozens of management consulting books, Drs. Kaplan and Norton. No other software application incorporates their latest methodology steps and templates required to design healthy Balanced Scorecards and strategy maps.

The ESM 5.0 is the only application that has the core meeting view interface to present the right level of strategic information to leadership. At the end of the day effective strategic decision making is at the heart of what organisations are trying to achieve.

Enhanced PBR Charting Library
Select from a core set of PBR web charting measures for faster measure chart construction

Ownership Permissions
Multi select accountable users for ownership to action items and email reminders

Additional User Restrictions on Sensitive Strategic Information
Restrict user access by strategic element

New Copy Forward Capabilities
Copy forward data for one strategic element or for the entire scorecard reporting period

Improved Resources
Updated help area with reference guides, 20 eLearning courses (additional fee), community room, and best practice library browsing

8,000 line item objective/measure library
Our consultants have compiled the most inclusive library of best practice objectives and measures by industry and function

Other enhancements include:
• Assign, view and sort actions items by strategic element (theme, objective, measure, initiative, milestone)
• Addition of performance status indicators for action items
• Ability to assign action items and driver measures to analysts and other user roles
• Automatic email generation that is defined by client administrators
• Additional custom report center fields
• New layout options in Meeting View, including split measure report charts
• Improved PDF report generation for a crisper export
• LDAP support for local installs
• Enhanced cross browser support

Contact us today to learn more about this very affordable tool and arrange a no obligation demonstration. 045862832 or info@framewks.com

“Anything less than a high performing workforce challenges a company’s survival – and for firms who compete on the basis of their workforce’s capabilities, this can spell disaster. All too often these firms end up downsizing in the hope of improving financial performance.”

In their book The Workforce Scorecard; Managing Human Capital to Execute Strategy,  Huselid, Becker and Beatty introduce the idea of Workforce Success and the Workforce Scorecard. Workforce Success is measured in terms of success in driving the firm’s strategy as distinct from its operational performance. Like Kaplan and Norton’s Balanced Scorecard, the Workforce Scorecard focuses measurement on a specific type of performance, strategy execution and specifically focuses on the strategic performance of employees.

The execution of strategy is central to any organisation’s success.  By some accounts, less than 10% of firms succeed in translating the aspirations described in their strategy into reality. In their October Harvard Business Review article, “The Office of Strategy Management”, the Balanced Scorecard creators, Kaplan and Norton, begin by saying: “Most companies have ambitious plans for growth. Few ever realise them. Why is there a persistent gap between ambition and performance? The gap arises, we believe from a disconnect between strategy formulation and strategy execution.”

Kaplan and Norton’s research shows that, on average, 95% of a company’s employees are unaware of, or do not understand, its strategy. Says Kaplan and Norton: “If the employees who are closest to the customers and who operate the processes that create value are unaware of the strategy, they surely cannot help the organisation implement it effectively”

Designed to work in tandem with a firm’s Balanced Scorecard and HR Scorecard, the Workforce Scorecard is intended to provide the executive team members with timely and strategically relevant insight into workforce performance and the leading indicators of that performance.

Traditional approaches to workforce performance and HR management strive to reduce costs, with little regard for fulfilling strategy requirements. But this limits a company’s potential. Firms need to look beyond costs – success requires recognising the specific role played by every member in the workplace in executing strategy.

But how does a company get from here to there?

To begin with, firms must have a strategy.  While most firms claim to have this already in place, for many there is a significant gap between the goals of the strategy and the day to day actions that deliver the strategy. A strategy describes how a firm will create financial success by meeting the needs of its target customers. Strategy involves a deep understanding of customers, their needs, and how to profitably meet those needs.

Secondly, to manage strategy you must be able to describe it. The best-known approaches to describe and manage strategy are Strategy Mapping and The Balanced Scorecard, the latter is recognised by the Harvard Business Review as one of the most important management ideas in the last 75 years.

The Strategy Map helps organisations create causal links between financial and customer results, and the activities and competencies that drive the results. In other words, causal links are created between intended results and the drivers of those results. The drivers are the activities and assets of the organisation.

Creating workforce success is ultimately based on a deep understanding of the drivers of the strategy and how human capital, an intangible asset, drives value.  Most organisations have not systematically analysed how and where human capital drives value.

The term “human capital” implies an asset with a flow of benefits greater than the cost of those assets. Those benefits take the form of workforce results and the workforce behaviours (what people do) which execute strategy.  Employee skills and subsequent employee behaviours have a market value based on what they are worth to other companies, but their strategic value is based on the role they play in executing the firm’s strategy.

For a workforce to be a legitimate source of competitive advantage, and not just a cost to be minimised, the HR management system must be configured in a way that optimises workforce performance. This involves learning how to align, manage and measure intangible assets.

A well configured HR management system will optimise workforce performance and the contribution of human capital by addressing these challenges.

Let’s take a closer look at what is involved:

Alignment: Once the drivers of the strategy are defined, the roles that have a direct influence on the priority drivers are identified. We call these jobs “Strategic Job Families”. Some jobs are more strategic and therefore more valuable because of their direct influence on the drivers of the strategy. These may not be high skilled jobs; in fact, it is often the case that subtle changes and tailored management of relatively low skilled jobs can deliver immediate tangible results when aligned to impact the drivers of the strategy.

Readiness:  Readiness is analogous to liquidity – the higher the state of readiness, the faster intangible assets contribute to generating cash and achieving intended outcomes. Building readiness involves identifying the drivers of the strategy, the strategic job families that deliver the strategy and the competencies, culture, mind set of the workforce that underpin the target level of performance. Human Capital Readiness is a measure derived from the assessment of the organisation’s human capital against the demands of the strategy.

Derived Value:  Workforce success is measured by the success of the workforce to impact the drivers of the strategy such as the number of new customer accounts or the reduction in re work.  Workforce success is measured in terms of results, that is, it is not the activity that counts, but the impact of the activity on the drivers of the strategy and organisational outcomes.

Interdependence:  This is possibly one of the most important challenges. Intangible assets do not have value in isolation, they must be bundled. It is useful to think in terms of portfolios or clusters of intangible assets. Intangible assets must be managed and aligned in ways that deliver maximum impact.

Traditional HR systems may inhibit alignment and the transforming of human capital into tangible results.

For several years we worked with unions and management within a large engineering maintenance facility. Attracting and retaining target customers required delivery of a new value proposition which involved significantly improving turnaround time for the maintenance work, lowering costs while meeting quality and safety standards.

Using the Balanced Scorecard supported by a driver based analysis,  management were able to establish that more broadly skilled workers in the components’ section could diagnose faults more efficiently than other employees. These employees reduced repair time as a result of faster fault diagnosis and reduced overall material costs because they used less materials.

An appropriate initiative would have been to up-skill all employees for this critical role.  Further, as the value of their efforts was now transparent, it would be possible to align incentive compensation to achievement of business results.
.
Traditional classification structures (based on time served and qualifications) made it impossible to pay employees enough to incentivize them to up-skill. Employees within the work cell challenged the rates given to ‘higher skilled’ jobs elsewhere in the facility and claimed equivalency. This raised fundamental questions about how the remuneration system worked.

To address such barriers, organisations need to be prepared to have differentiated workforce strategies.

We must not shy away from the need to drive high performance workplaces.  The process begins by identifying those work areas and people that most significantly impact the strategy. Ultimately high wages will be driven more by how well the competencies of employees and the organisation of the workforce are aligned with the strategy, and how well the intangible value of human capital is converted into tangible economic value. Higher skill does not always mean more value just as driving down wages does not deliver a more productive workforce in the long run.

Most organisations struggle to align human capital because they don’t know how to describe their strategy and have not developed plausible cause and effect models which demonstrate the indirect impact of human capital on value creation. As a result there is a persistent gap between the work of individuals and teams, and an organisation’s strategy. Addressing this gap is a key lever to improving labour productivity and achieving workforce success.

Tools like the Balance Scorecard, the HR Scorecard and the Workforce Scorecard now make this achievable. Line managers and HR professional have a critical role to play in creating high performance workplaces and driving workforce success. Nothing stands still and organisations must learn to align the individuals with the strategy.

Dale Pearce is Managing Director of Frameworks Ltd.  Frameworks. Frameworks is an affiliate of Kaplan and Norton’s  Palladium Company.
64 21 482 856

A recent Harvard Business Review Article stated that how business really gets done bears little connection to the strategy crafted at Corporate Headquarters.  Rather, strategy is crafted step by step, and the execution of strategy happens day to day as managers make decisions around people, programs, policies and facilities.

Given that fact, it would seem to make sense that senior managers spend less time actually formulating the strategy and more time thinking about the processes of enable executing the strategy – in particular optimal resource allocation.

The question becomes: do you have the tools, processes and systems in place to optimize resource allocation capabilities?

The capacity of an organisation to leverage resource allocation capabilities depends on the design and application of four key processes typically owned by finance:

•    Planning and Budgeting
•    Forecasting
•    Initiative Management
•    Performance monitoring and analysis

Despite increasing efforts of organisations to improve these core capabilities, Palladium Group surveys show that 63% of executives actually think they have significant opportunity to improve their resource allocation capabilities.

Even worse, most organisations suffer breakdowns around these key processes.

Breakdowns including misapplied resources, lack of focus on strategic priorities, gamesmanship in the processes themselves, protracted cycles, inadequate understanding and monitoring of key business drivers and an inability to be more dynamic around their prioritization and allocation of resources around their planning process.

Three fundamental issues or barriers inhibit these organisations from leveraging these processes to achieve optimal resource allocation:

1.    Visibility - Executives and managers lack visibility into current and future performance
2.    Focus: Failure to focus on the key levers of performance and strategic drivers
3.    Responsiveness:  Slow or poor responsiveness limits an organisations ability to more frequently allocate or re allocated resources

Given these challenges what can organisations do?  Leading organisations are embracing new ways of thinking.  In particular a more holistic and integrated way of planning and reporting.

In this model strategy management, and operational management (including financial management) are two distinct management processes but they are linked and connected in key areas.

These same organisations are decomposing the traditional budget process.  The traditional budget process typically has its founcdation focused around resource allocation.  By decomposing it they can understand the true purposes and then map leading practices and tools and frameworks to the underlying business requirements that budgeting process use to serve.

These leading practices include strategy maps, balanced scorecards, driver based planning and modeling, rolling forecasts and causal analysis.

Underpinning all of this integrated framework is a deep command of the underlying business model in the form of performance models (driver models). In addition to the leading practices around processes these same leading organisations are realising the  importance of an enabling analytic information architecture and technology that ensures the right information is readily available, consistent and shared across the organisation.  Leading organisations are turning data into information assets.

Finally, these progressive organisations realize that their journey to improve these processes and optimize resource allocation is just that, it is a journey.  They start first by doing a deeper dive around their current state, what are the business requirements, what are the issues and what is the desired end state. How do we want these processes to look anf perform in the future.

They then create an articulate, prioritized road map to get there.  A master blue print.

By improving visibility around current and future performance, sharpening your focus around key performance drivers and improving responsiveness in the form of speed and agility, organisations can optimize their core business process and  sharpen their capability to optimize resource allocation that can lead to more efficient and sustainable strategy execution.

Unique Benefits of this Training Seminar

* Benefit from the only training in the world endorsed by Drs. Robert Kaplan and David Norton
* Take away a tangible process of translating strategy for your organisation
* Leverage Strategy-Focused Organisation Best Practice research
* Learn from best practice case studies from actual Strategy Map/BSC designs and implementations

SEE OUR EVENTS PAGE FOR MORE DETAILS

A new book due in August by Kaplan and David P. Norton aims to make strategy a continual process. The Execution Premium: Linking Strategy to Operations for Competitive Advantage (HBS Press) shows managers how to weave organizational principles into a more effective management system that respects the differences between strategy and operations yet integrates them in a powerful way. Kaplan and Norton introduced the Balanced Scorecard, a performance measurement system, in 1992. The Execution Premium is their fifth book as coauthors.

Kaplan recently explained the ideas behind The Execution Premium and how they bridge the common divide between strategy and operations.

Q: What particular issues around execution need to be better addressed in business?
A: There are two key issues. First is leadership. Without strong visionary leadership, strategy will not be executed effectively.
The second key issue is to recognize that strategy and operations (or tactics) are both important but different. The normal course of events is for companies to focus on day-to-day operations and short-term problem solving. Management meetings focus on fighting fires and fixing problems. Often little time and few resources are committed to strategic issues.
We don’t advocate abandoning an intense focus on operations and their improvement. But we do advocate that planning strategy, not just describing it, is important. The senior management team needs to have regular, probably monthly, meetings that focus only on strategy. We describe in the book the different roles, frequencies, participants, and agendas for operational review meetings and strategy review meetings.
We open the book with a great quote often but perhaps inaccuratelyattributed to Sun Tzu in The Art of War: “Strategy without tactics is the long road to victory; tactics without strategy is the noise before defeat.” This quote highlights the importance of integrating strategy and operations, a central theme in our strategy execution system.

Q: What are typical challenges and pitfalls when linking strategy with operations? Why is a formal strategy execution system valuable?
A: One challenge or pitfall is that few companies align their operational improvement activities to strategic priorities.
Many companies today are practicing Total Quality Management, Six Sigma, or other continuous improvement activities. But these are done across the organization with no sense of priorities or impact from process improvements. Consequently, much effort does not show up in tangible results.
Companies need a formal process for using strategic objectives to set priorities for where operational improvements can have the largest impact on strategy execution. We note that quality and process improvement programs are like teaching people how to fish. Strategy maps and scorecards teach people where to fish.
Another pitfall occurs when budgeting and financial planning are done separately from strategic planning. We advocate that the operational plan and budget be driven from the revenue targets in the strategic plan. In The Execution Premium, we describe how a time-driven activity-based cost model provides the previously missing link between the revenue growth targets in a strategic plan and the authorization for spending to supply the quantities of resource capacity that are necessary to fulfill the sales and production needs of the strategic plan. Without this coupling, operational plans either provide too little or too much capacity for the strategic plan.
A third challenge is that most management meetings get consumed with discussions about short-term operational and tactical issues. It is important to meet to discuss and solve operational problems. But companies err when they devote all
their time together for fire-fighting and coping with near-term issues. The formal strategy execution system schedules strategy review meetings at a different time
from operational review meetings. In that way, each meeting has its own frequency, agenda, information system, and participation, as best meets the goals for that meeting.

Q: Given the proliferation of tools, how should management choose the right one to formulate strategy and improve operations?
A: We don’t have a preferred position on strategy formulation methodologies. We have seen each approach lead to success in different circumstances. If, for example, the company has low capital utilization, then some use of a value-based management approach would help to define a financial strategy. If the company does not have a distinctive brand or market presence, a focus on identifying an attractive customer segment, such as through Harvard University professor Michael Porter’s positioning framework, W. Chan Kim and Renee Mauborgne’s Blue Ocean approach, or C. K. Prahalad and V. Ramaswany’s customer co-creation process might prove most relevant.
If the company has distinctive capabilities in important business processes--operations management, customer data mining, or product features and innovation--that are superior to or not possessed by competitors, then the resource-based view and identification of core competencies are effective frameworks for strategy formulation. If the company has a great human capital base, with skilled, experienced, and highly motivated employees, then striving to create a learning organization and encouraging emergent strategies to be proposed can identify promising new strategic approaches.
While we are agnostic with respect to which strategy methodology a company uses to arrive at its strategy, we do believe that creating a strategy map and scorecard for that strategy is the logical and proven next step for putting the strategy into action. That is why we have placed strategy analysis and formulation as Stage 1 of our management system, with planning and translating the strategy as Stage 2.
We take the same position with the various operational improvement methodologies. We don’t want to be caught debating the relative merits and shortcomings of TQM, Six Sigma, lean management, and reengineering. We do believe, however, that these methodologies are most effectively applied to the strategic processes identified in a company’s strategy map and scorecard. That is why we place planning operations in Stage 4 of the management system, downstream from the Stage 2 processes of translating and planning the strategy.
You can’t focus on the critical processes for improvement until they have been identified in the strategic planning and translation stage.

Q: What is an Office of Strategy Management, and why is it necessary in a company?
A: The OSM is analogous to a military general’s chief of staff. The general is responsible and accountable for developing the strategy to win wars and battles. But a general almost always has a chief-of-staff, often several ranks junior, who leverages the general’s time and attention. The chief-of-staff does not create strategy or operational tactics and has no authority or accountability for its execution. A chief-of-staff schedules the general’s meetings, ensures that the appropriate people show up at the meeting, attends and takes notes at the meeting, and follows up after the meeting to ensure that the actions decided upon are carried out. The chief-of-staff leverages the general’s time by making sure that all the information, people, and follow-up are in place for the general’s strategy and tactics to be effectively executed. We recommend that a similar, but expanded, set of tasks be carried out by a small cadre of professionals to orchestrate the various strategy management processes for the executive team.
The Office of Strategy Management has multiple roles and responsibilities. First, as an architect, the OSM designs and embeds any missing strategy and operational management processes into the six-stage strategy execution system. The OSM ensures that all the planning, execution, and feedback processes are in place, and that they are linked together in a closed loop system.
The OSM also serves as the process owner for several strategy and operational management processes, such as those to develop the strategy, translate the strategy, and orchestrate the senior management strategy review meetings. Many of these processes are new to the organization. Since they cross existing business and functional organizational lines, it is natural for the OSM to be their owner. Assigning responsibilities for their execution to the OSM fills a gap in management practice without infringing on the current responsibilities of any existing department or function.
Finally, the OSM is the integrator of many existing activities. This aspect is challenging because organizational and functional units already have primary responsibility for processes such as budgeting, communications, human resources planning and performance management, IT planning, initiative management, and
best practice sharing. The OSM must work with the existing owners of these processes to ensure they become aligned to the strategy.

Q: What is the role of leadership in sound execution?
A: While not an explicit part of any of the six strategy execution stages (described below), executive leadership pervades every stage of the management system. Throughout The Execution Premium, we describe organizations that have successfully implemented their strategies. They operate in varied regions and industries, including manufacturing, financial services, consumer services, nonprofit, educational, and public sector. Their strategies differ; some produce low-cost commodity products and services, others deliver complete solutions to their customer, and still others innovate with high-technology products. About the only common element all these diverse successful strategy implementers have in common is exceptional and visionary leadership. In every example, the unit’s CEO led the case for change and understood the importance of communicating the vision and strategy to every employee. Without such strong leadership at the top, even the comprehensive management system we introduce in this book cannot deliver breakthrough performance.
In fact, leadership is so important to the strategy management system that we make a rather bold claim that leadership is both necessary and sufficient for successful strategy execution. The necessary condition comes from our experience with the more than one hundred enterprises around the world who have become members of the Balanced Scorecard Hall of Fame. In every instance, the CEO of the organizational unit implementing the new strategy management system led the processes to develop the strategy and oversee its implementation. No organization reporting success with the strategy management system had an unengaged or passive leader.
For Stage 1, the CEO leads the change agenda and drives it from the top to reinforce the mission, values and vision. Leadership sets the ambitious vision and stretch targets. In Stage 2, the executive leader validates the strategy map as an expression of the strategy articulated in Stage 1 and challenges the organization with stretch targets that take all employees outside their comfort zones. In Stage 3, leadership drives alignment of organizational units and is essential for communicating vision, values, and strategy to all employees. Leadership, in Stage 4, supports the cross-organizational unit process improvements. In Stage 5, the leader’s openness and skill in running the strategy management review meeting determines its effectiveness for fine-tuning the strategy throughout the year. And in
Stage 6 the leader must allow even a well-formulated and executed strategy to be challenged in light of new external circumstances, data collected about the performance of the existing strategy, and new suggestions from employees throughout the organization. Being willing to welcome and subject existing business strategies to fact-based challenges is one of the hallmarks of effective leadership.
Our sufficiency claim, however, is even bolder. The management processes we describe in The Execution Premium give an effective leader a framework for effective strategy execution. None of the six stages in the management system is simple or brief. But collectively, the management processes in the six stages provide leaders with a comprehensive, proven system for managing the development, planning, implementation, review, and adaptation of their strategies.
We believe that our 18 years of observation and work with enterprises in all sectors and regions of the world has led to an emerging science of strategy execution. Each of the six stages in the strategy management system is doable, especially when guided by a senior strategy management office. The one component we cannot provide a blueprint for is visionary and effective leadership. That is why we have come to believe that executive leadership is now both necessary and sufficient for successful strategy implementation.

Q: You have written four other books touching on the Balanced Scorecard (BSC). How has your thinking and your work with this innovation evolved along the way?
A: Our thinking has really evolved from performance measurement, the focus of our first Harvard Business Review article and the first half of the original Balanced Scorecard book, to using the BSC as the cornerstone of a comprehensive management system to help enterprises execute their strategies. We learned early that the BSC was much more than just a better performance measurement system; it can become the basis for a new strategy management system.
Our second book, The Strategy-Focused Organization, identified the five principles we saw successful companies using with the BSC for strategy management: Mobilize, Translate, Align, Motivate, and Govern. In the next three books, including our most recent book, The Execution Premium, we went into more depth in these principles. Strategy Maps focused on principle #2, translate. We described and illustrated how strategy maps and scorecards could be customized to many different strategies. The fourth book, Alignment, described principle #3, how to create and capture corporate synergies through vertical and
horizontal alignment of business and support units. The fourth book also contained material on principle #4, aligning and motivating employees for strategy execution in their business or support units.
Our most recent book started out as an in-depth articulation of principle #5, governing to make strategy a continual process." But along the way, my coauthor Dave Norton and I realized that this book was really a synthesis of all our prior work. It encapsulates the latest development in the other four strategy-focused organization principles and integrates them into a comprehensive closed-loop management system that links strategy and operations. Beyond integrating all our prior work, the new book also integrates a wide range of other proven management tools, including mission and vision statements, strategy formulation, target-setting, dynamic budgeting and resource allocation, process improvement, quality methodologies (Six Sigma, lean management, catchball), dashboards, the learning organization, analytics, and emergent strategies.

Q: What’s next for you?
A: I have recently become sensitive to a gap in our strategy map/BSC framework by not paying sufficient attention to enterprise risk management (ERM). Obviously, many large financial institutions, despite having risk management departments, have suffered massive losses from failure to understand the risks they took on. All companies, not just financial ones, need to have better methods to assess and monitor their risks. Quantifying financial, operating, technological, and strategic risk is far from trivial, and much needs to be learned to make enterprise risk management more effective. Risk management also requires effective systems for internal control, management control, and governance.
ERM objectives and metrics could certainly have a home in the financial BSC perspective for increasing and sustain shareholder value, along with the traditional objectives of revenue growth and productivity improvements. And companies should have objectives in the process perspective to manage and mitigate the risks associated with their strategies. I am persuaded that embedding risk management objectives in strategy maps and scorecards should be a high priority for where increases in knowledge and professional expertise could add substantial value to an organization. And reviews of a company’s risk position should be part of the monthly strategy review meetings. I plan to spend some time in the next few years exploring this issue and hoping to make some progress.

An Execution Premium is achieved when strategy is properly clarified and linked to operations through the generation of timely, robust, mission-critical information. The Premium, evidenced by outcomes such as an increase in share price, revenue, profit, customer loyalty, employee engagement, or brand value, is achieved “by doing the right things right".

Join us for breakfast in Wellington on the 18th of December 2008 to hear Matt Tice, Managing Director of the Palladium Group in Asia Pacific, as he explore’s Kaplan and Norton’s practical model advancing their previous work whilst integrating the latest management tools by leading experts. Their ideas are so profound that the editors of the Harvard Business Review termed this the ‘unified field theory of management' in the centenary HBR issue.

“The Execution Premium should be of great interest to all executives who have struggled to manage both strategy and operations and balance the tensions between the two. Kaplan & Norton articulate a complete and detailed management system to drive strategy down to grassroots execution." Renée Mauborgne, co-author of Blue Ocean Strategy".

Call Frameworks/Palladium on 045862832 or Dale Pearce on 021482856 for more information.

I recently returned from London where we held our 2008 annual European Balanced Scorecard Summit. Each of our summits features the induction of companies into the Balanced Scorecard Hall of Fame. We had several firsts at the London conference as we inducted the first two companies from Russia, the first Irish company, the first Middle East company, and the first enterprise from France, its Ministry of Defense.
We also noticed a distinct increase in delegates coming from companies in emerging markets, such as Tanzania, Namibia, Cyprus, Iran, Saudi Arabia, and Egypt. It's clear these countries are diversifying beyond their traditional simple manufacturing and agricultural companies into higher-value industries. As these companies march northward on the value chain, their need for more sophisticated management techniques will only increase.

In addition to the induction ceremony, we heard from leaders of world class companies, including Infosys, Old Mutual, BP, Nippon Boehringer, Solvay Pharmaceuticals, and HSBC--all presenting on how they approach strategy and execution, specifically using our Balanced Scorecard (BSC) method.

Sir Terry Leahy, CEO of Tesco, gave one of my--and the audience's-- favorite sessions. He described the challenges of delivering a distinctive and consistent buying experience to consumers in every store when you have more than 400,000 employees in multiple countries. It's a classic concern: How can you keep local store managers and employees engaged in satisfying consumers in their shopping experiences? Extended out a little: How can you keep distributed frontline employees--regardless of industry--engaged with and acting on the company's central strategy?

Leahy explained his approach: "Tesco doesn't want one leader. We want thousands of leaders who take initiative to execute the strategy."

To make this goal a reality, in the early 1990s, Tesco went through a process to clarify its mission, values, and strategy. Based on our first Harvard Business Review BSC article, Tesco communicated its new strategy to its employees via a "steering wheel," a simple symbol and metaphor for a tool intended to drive performance and help employees navigate into the future.

The Tesco steering wheel has four 90 degree arcs, representing the four BSC areas of focus: financial, customer, operations, and employee performance. Every store gets a monthly steering wheel update, a summary of its metrics within each of the four arcs, so that all employees in Tesco's multiple regions and formats get feedback on their performance. Tesco supplements its steering wheel report with "shopping lists" that capture key elements of the strategy in simple forms that employees can follow in their everyday activities. The steering wheel has helped the company stay focused on its strategy even as it experienced rapid growth over the past two decades.

Recently, Tesco added a fifth dimension, community, to the steering wheel report to encourage employees to be excellent citizens in the communities where they work and live. While praising the simplicity of the steering wheel display and its power to communicate to employees, Sir Terry emphasized that it is not easy, requiring extensive consumer research, data collection, and analytics to make sure that the objectives and metrics remain relevant as consumer preferences evolve and competition heats up. But in part because the steering wheel ensures all employees are aware of and can act on the strategy, Tesco has become an engine of social mobility, allowing employees from whatever background or education to advance in the company. Last year, Tesco filled 3,500 management position, 27 directors, 200 store managers, and 8,000 department heads by promoting from within the organization.

How about at your company? Is your company's strategy being adequately communicated to and acted upon by all employees? Can each employee explain the business unit strategy and how he or she contributes each day to implementing the strategy?

More

1.    Develop the Strategy – your organisation must be able to state exactly what business you’re in, identify the key issues you face, and determine how best to compete. Developing the strategy uses an array of strategy tools such as mission, values, and vision (MVV) statements; external competitive, economic, and environmental analyses; methodologies such as Michael Porter’s five forces and competitive positioning framework, the resource-based view of strategy, and blue ocean strategies, as well as scenario planning, dynamic simulations, and war-gaming.

2.    Plan the Strategy – your organisation must be willing to develop strategic objectives, measures, targets, initiatives, and budgets that will ultimately guide action and resource allocation. You’ll need to be able to describe your strategy, measure your plan, identify plans of action, figure out how to fund your initiatives, and decide who will lead the strategy execution process. Planning the strategy uses such tools as strategy maps and Balanced Scorecards, along with targets and strategic initiatives.

3.    Align the Organisation – your organization must be able to link company strategy to the strategies of individual business units while both aligning and motivating employees to optimise strategy execution. You align the organisation with the strategy by cascading strategy maps and Balanced Scorecards to all organisational units, by aligning employees through a formal communications process, and by linking employees’ personal objectives and incentives to strategic objectives.

4.    Plan Operations – your organisation must link long-term strategy with day-to-day operations, aligning strategy with operating plans and budgets while focusing on those process improvements that are most critical to the strategy. Planning operations uses tools such as quality and process management, reengineering, process dashboards, rolling forecasts, activity-based costing, resource capacity planning, and dynamic budgeting.

5.    Monitor and Learn – your organisation must be committed to monitoring performance results once a strategy has been developed, planned and implemented, enabling you to determine if the strategy is being properly executed. It requires monitoring and learning about problems, barriers, and challenges. This process integrates information about operations and strategy into a carefully designed structure of management review meetings.

6.    Test and Adapt – your organisation must also test fundamental strategic assumptions to determine if you, indeed, do have the right strategy. This involves testing and adapting the strategy, using internal operational data and new external environmental and competitive data— thus launching a new cycle of integrated strategy planning and operational execution.

By adopting this fluid, closed-loop system, your chances of achieving an execution premium improve measurably.

The Execution Premium represents years of research, a synthesis of ground-breaking concepts, and case studies of organisations that have achieved a true Execution Premium.   It underscores how organisations using formal strategy execution management consistently outperform their peers.  Kaplan and Norton provide meticulous detail on how any organisation can make strategy a regular part of its business processes.

They describe how companies can establish strong linkages from strategy to operations so that employees’ everyday operational activities support strategic objectives.  They introduce a new framework for management review meetings that clearly separates the operational review meetings, which solve short-term problems and monitor the improvement of key operational processes, from the meetings that review and improve strategy execution.

With the help of the Balanced Scorecard, CCIC migrated to a strategy of operational excellence — a significant shift in strategic focus that also required a big shift in management style. Operational excellence required that CCIC achieve the strategic synergies inherent in its operating units. Corporate’s new role is to achieve results while conserving resources. Leveraging knowledge across the enterprise is part of this new role. One important way CCIC accomplishes this is by identifying and disseminating best practices. When best practices are shown to drive positive BSC results, senior executives help codify best practices and ensure their adaptation enterprisewide. Customer-facing processes are given higher priority in terms of best practice sharing and employee training.