Introduction to Strategy Deployment

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The paper explains what is meant by Strategy Deployment, distinguishing between the aspects of alignment and engagement. It anchors the theory and practice in both Strategic Thinking and Lean Thinking

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  • Thanks Mike to share it. Very helpful.
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  • Thanks Mike
    As you know we have used this process very effectively with you.
    The key is the cascading across the business of the strategy to get people emotionally involved.We have used insights and small group discussions to do this.
    Regards,
    Chris, Merck Consumer Healthcare
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  • helpful
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Introduction to Strategy Deployment

  1. 1. Strategy Deployment Introduction Contents This document is one of a collection that sets out what our business is and how we go about our work, which can be found in the The Acid Test................................................................................... 2 Learning Resources on www.sapartners.com. It builds on The Lean Business Model and explains what we mean by Strategy Alignment and Engagement ............................................................. 2 Deployment and how it how it is implemented. Lean Business Model....................................................................... 4 The particular approach that we adopt draws on three sources: Articulating Strategy......................................................................... 4 The best of Lean, with its origins in Policy Deployment and Hoshin Kanri Deployment Process ........................................................................ 5 Good practice in Strategic Management, in particular the “Design School” of Strategic Management The Business Cockpit ...................................................................... 7 Selected parts of the Leadership and Change Management domains. Deploying to the Next Level ............................................................. 8 Implementation of Strategy Deployment can be further enhanced by The Link to Continuous Improvement............................................... 9 use of best of breed software, developed by S A Partners and our Allies, known as The Business Hub. Software for the Business Cockpit.................................................. 10 Next Steps ..................................................................................... 10 © S A Partners 1993-2009
  2. 2. The Acid Test cover at the times when there is most demand. We measure the percentage of enquiries closed on first response and response time to closure” The starting point for developing understanding of strategy deployment is to consider in any organisation what would happen if you went to speak to someone in any function, at the lowest level and asked the following questions: Alignment and Engagement So this idea of Strategy Deployment is about alignment and What is the plan for this business over the next few years? engagement – What are you doing to contribute to this plan that will make a alignment so that the focus is only on the right things that support difference? the strategic direction Would they be able to answer the first question? If so, would they be engagement so that personal energy and initiative are brought to able to answer the second question? If they cannot answer both the day to day tasks and their improvement or indeed to new how do we expect to implement the strategy effectively? things. Clearly the answers will be in terms that are relevant to the people The diagram shows the frame in which deployment takes place. being asked, not in management speak. So if an important element It is not unusual to find organisations that are quite well aligned but of the strategy is about customer service, it might go something like: very passive (not engaged). In this case the challenge is to secure that engagement so that the organisation moves from focused to The person in the despatch bay will say something like “I get the idea of customer service to make the business successful. We Alignment & know turn round time is important and we make sure we complete Engagement Aligned Focused Performing Constrained Rewarding the despatch list before we finish. Come and look at our performance charts. You can see the levels of performance, our For the organisation ? new targets and the problems that we are currently working on.” For the people The operator in customer support might say “We have a central Alignment role in the success of the business here in Customer Support. We ? ? understand that the customers who contact us want a complete What is Current response quickly. So we aim to deal with as many of the queries Reality? ? as we can ourselves and when we have to involve others we make Latent Chaotic What should be sure we monitor progress and chase it to a conclusion. We are our intentions? Scattered Confusing Liberating working on some improvement activities to make sure everyone is Passive Engaged trained in more topics and to work out a better way of providing Engagement Page 2 of 10 © S A Partners 1993-2009
  3. 3. truly performing at its potential. As this change occurs, the people in face into the challenge of both aligning and engaging people at the organisation become more energised, moving from a feeling of the same time. being constrained to being rewarded (in an intrinsic sense) for their contribution. Example We have found numbers of businesses in which there are high levels of engagement but weak alignment. In one large international group, Insights is a global learning and development company working in this engagement emanated from the brand and the very cohesive partnership with leading organisations across the world. It delivers corporate culture. The business was absolutely buzzing. People transformational learning solutions that help its clients improve their found it liberating because they were following their interests but the effectiveness in five key areas: individuals, teams, organisations, business was suffering because there was insufficient focus on the sales and leadership. strategic priorities. The organisation was full of talented people not working together effectively and resources were dissipated. As part “We have a very people-focused culture both because of our values of a wider strategic change programme, the Deployment task in this and because of the industry in which we work. We strive to balance case was to channel the energy and secure performance against the our purpose - Igniting Corporate Spirit - with the growth of a well- specific strategic performance indicators and outcomes. In doing managed, effective business. We adopted all the principles of this teams at various levels developed a much deeper understanding strategy deployment for our businesses after adapting the language of what value they should be adding and reduced the amount of and detailed methods to suit us - in fact we decided to call it interventions that they made at lower levels, giving people more Strategy Engagement, rather than Deployment.quot; space to fulfil their role. These principles are powerful and simple. They require diligence Toughest of all starting points is the enterprise which is both and commitment to apply them, but we found that the flexibility of scattered and passive. So alignment is weak and there is little application and robustness of processes makes them highly energy. Not only does the enterprise fail to realise its latent potential effective. but people are confused. In this example careful thought is required about whether to design deployment interventions that: This approach has helped us significantly in growing our business rapidly. They have helped us triple our revenues and quadruple our are primarily aimed at alignment, for example to achieve some profits in four years, as well as helping us become a serious player much needed performance in selected dimensions on the global stage.” or are primarily designed to engage so that energy is liberated and Andy Lothian, CEO the organisation becomes more innovative, in a sense preparing it for alignment that is effective or Page 3 of 10 © S A Partners 1993-2009
  4. 4. Generating a sense of the starting point through diagnosis and Our Lean Business Model, based on original research into Toyota enquiry and being clear about the route to an aligned and engaged and its supply chain, recognises the essential nature of this and the organisation is vital before leaping into the process and tasks. other four elements of Lean implementation. This is because well conceived and well executed deployment not only aligns the As the Insights example shows, there can be real hard benefits in organisation with strategy, it also allows the Lean Implementation to strong engagement. be integrated into the management process and integrated into all business activities. In other words it enables you to make Lean the way you run the business, not be a project on the side of the Lean Business Model business that grows and fades without becoming self sustaining. It is clear that Strategy Deployment is of relevance to all More detail of The Lean Business Model can be found in the organisations with whatever system of management they adopt. For Learning Resources section of www.sapartners.com. those that embark on a journey of Lean Implementation it is one of the fundamental elements that ensure Lean thinking is applied in appropriate, rather than arbitrary, ways. Articulating Strategy Deployment is more than a challenge if the strategy cannot be Strategy Deployment in clearly articulated, perhaps because it is deep inside the mind of the The Lean Business Model entrepreneurial leader or because it lies inaccessible in complex planning documents. There are many ways of crafting strategy and each leads to differences in the way in which the strategic choices are structured and described. The need is for the strategy to be clear, coherent and compelling. So our initial premise is that the client has a strategy and we work with the leadership team to make these tests for clarity and coherence. If this reveals more than just a clarity problem then we help the client actually form their strategy using a strategic architecture based on the diagram with Vision and Values at the top closely underpinned by strategic Goals (both financial and market). These top level constructs should set the ambition and whet the appetite for the important stakeholders as well as provide just enough focus to give direction. Page 4 of 10 © S A Partners 1993-2009
  5. 5. The next level in the hierarchy provides the real strategic focus Deployment Process where much more specific choices are made about markets, products, resource and people. Together these should be a As with formation of strategy, so in deployment there are many complete and coherent set that underpin the Vision and Values. methods that can be used. Ours is depicted in the diagram. It is has been created to achieve several important outcomes, namely: Strategic Direction Making sure teams fulfil the role they should wherever they are in the organisation Producing deliverables that enable both effective management of A clear articulation of Vision Values today’s business and creation of tomorrow’s business – the result a coherent strategy of implementing the strategy Goals Establishing a joined up management process that is driven by Financial / Market the strategy Finding the chosen balance between alignment of the Strategic Focus organisation and engagement of its people Markets / Products Resources / People There are essentially four phases in the deployment process, starting from ensuring that there is a clear understanding of the givens as inputs. There are always givens; even at the top of a company Critical Success Factors there are givens that arrive from the external world whether from shareholders, credit rating agencies, legislators or, in the public sector, charter and government set targets. In the lowest level in the hierarchy sit the Critical Success Factors. They are the things at which we must excel that are important across The first phase comprises judicious selection of factor analysis tools the organisation; together they will deliver the Vision, Values, Goals to do two things: and Strategic Focus. Establish current reality – what really is the situation now Each of the strategic items may generate measures and targets for Test the strategy for clarity and coherence - are we clear about achievement, often called KPI’s. The starting point in our what the strategy is and does it make sense. methodology is to align these measures round the CSF’s which therefore act as a fulcrum point between formation (or the If the strategy has already set the CSF’s, then the task is to ensure articulation) of a clear strategy and deployment. they are understood before proceeding further. If this has not been done, the CSF’s are created at this point. Page 5 of 10 © S A Partners 1993-2009
  6. 6. During this phase it is inevitable that some Issues arise that may and a strictly limited number chosen to work on so that focus can be need attention and these are captured for later review. maintained, resources allocated and results achieved. There are always more things that can be done than there is capacity to do and The second phase involves choosing measures that align with these early steps in strategy deployment test management ability to strategy and then setting targets for achievement over time. make discriminating choices, especially choices not to do Measures must indicate that success is being achieved and at the something… same time drive behaviours that will lead to success. It is essential to choose carefully, establishing From this flows actions – one time things - Factor Analysis the right measures, not using the parameters Givens - Critical Success to do by individuals - and projects – ISSUES that are easy to measure. At the top of a Factors complex activities involving many steps Problems, business, there are typically a mixture of Opportunities, and several people. This brings strategic measures and the most important Uncertainties, Controversies intentionality to the strategy as it is now operational ones. Each measure must be - Measures both measurable and actionable. - Targets aligned to an element of the strategy. Together Contrast this with variations of strategy the set should include indicators of what may that are: happen in the future. The total number of Issue - Actions measures should be carefully limited so that - Projects Management Cast as statements of intent without Process real focus can be brought to managing clear ways to make it happen performance to a result against these Business plans that are “budgets with measures– quite a different notion from - Business Cockpit words” but no underpinning strategic monitoring huge numbers of parameters and - Deploy to next logic doing little or nothing about it. level Apparently endless lists of things to do without clear priorities Once the measures are agreed then targets must be set at the very least to correspond to the Vision outcomes and for the first year. The final phase of the deployment process does two things. Firstly, Typically, targets are also set for one or two intermediate years but strengthening the management process using the Business Cockpit; often leaving a gap in the later years before the Vision is reached in secondly, follow through into the organisation to decide how and order to avoid a sense of artificial precision. when to deploy to the next level. So in fact this is when deployment truly starts; everything up until now is preparation to ensure that the Not to be forgotten is the job of stopping the measurement of KPI’s leadership team are themselves aligned round an agreed strategy that actually drive the wrong behaviour and clearly have no that is structured in a way that can be deployed. correlation to the CSF’s! Seeing the gaps between current performance and targets generates more Issues to add to the earlier list. The whole list is then assessed Page 6 of 10 © S A Partners 1993-2009
  7. 7. The Business Cockpit Together, these last two quadrants are primarily about creating tomorrow’s business. This is a concept that goes beyond a mere dashboard displaying KPI data. It is the very backbone of a good and Lean management Example process. The diagram sets out the concept with its four quadrants, which are: MCE is a first tier automotive supplier of door lock systems to companies such as Toyota and Honda. Over a two month period bottom right – the top level financial data the leadership team went through the four phase strategy bottom left – the important measures that have been selected from deployment process and then received 3 months of coaching in the deployment for managing to a result use of the cockpit to structure management meetings. Together, these quadrants are primarily about running today’s business The epiphany for the team occurred when they realised that they were operating in a vicious circle in which strategy was ad-hoc, the The Business Cockpit structure was fixed and functional, their was conflict between roles leading to results that were unpredictable and unsatisfactory. Issues Market Action Plans Existing New A host of benefits were attributed to this work by the MCE Jan Feb Mar April Week Number H3 - Breakout Action Plans Status No. Issue Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Move Factory leadership team, including: 1 Move Factory H2 - Develop the Business New 2 Foam Systems Development 3 Cost Reduction 4 Process Improvement Foam Systems Development 5 Upskill Engineering Clear accountabilities for delivering targets. Product 6 Better understanding of Auto Markets Cost Reduction 7 Establish presence in USA 2 8 Develop Project Management Capability 9 Not clear about customer value for 1st Tier Process Improvement Robust and standardised method of running the business New Product Introduction Process not good H1 - Business as Usual 1 10 enough 3 7 Existing Upskill Engineering Existing 12 9/11 setback in Aviation market 4 13 Opportunitysystems moving up market Mechanical to secure cost reduction from 5 6 Better understanding of Auto Markets ensures that it is not reliant on any one leader. 14 supply chain 15 Exchange rate fluctuation 8 Establish presence in USA 16 Opportunities in Furniture market Develop Project Management Capability 17 Vibration problems with product Much less politics and negative conversations. 18 Quality returns Measure & Targets Financials P&L Actual This Month Budget Variance Actual YTD Budget Variance Mindset shift from “reporting data” to “using data to drive improvement” SALES Auto UK 237 258 -21 800 805 -5 Auto Export 598 571 27 1879 1783 96 Other 142 170 -28 477 530 -53 Sales Share Pipeline Cust Perc. Allowances Net Sales DIRECT COSTS 977 -13 985 13 -8 -9 3147 -40 3078 31 69 Much less fire fighting Freeing up Management time to focus on Business Development Materials 483 473 -10 1501 1479 -22 Sub contracts 31 44 13 118 137 19 Labour 101 101 0 323 317 -6 Direct Costs at Standard 615 618 3 1942 1933 -10 and on Continuous Improvement activity without prejudicing day Variances 31 22 -9 97 69 -28 Gross Contribution 331 344 -13 34% 1108 1077 32 35% OVERHEADS Factory Overheads 83 91 8 263 284 21 O.E.E. Cost Emp Sat Lead Time Gross Profit General Overheads One-off events 248 147 254 141 -6 25% -6 0 845 432 37 792 441 53 27% 9 -37 to day operations NET PROFIT 101 113 -12 10% 376 352 24 12% “ It has taken time, however this approach has really worked and top left – the key issues that the business faces, both those that has transformed the way we manage the business” – Simon Cox, are being worked on and the emerging issues that await attention General Manager top right – the action plans or projects and their status which will address the activated issues Page 7 of 10 © S A Partners 1993-2009

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