Effective Implementation Of Strategic Initiatives Nov 2009

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  • TITLE:
  • this is the Agenda, day 1
  • This is the agenda day 2
  • This is the agenda day 2
  • Effective Implementation Of Strategic Initiatives Nov 2009

    1. 1. Effective Implementation of Strategic Initiatives Seminar Workshop 27 th & 28 th October 2009 Kuala Lumpur, Malaysia Presenter: Mr Geer Iseke Director & Principal Consultant Iseke Consulting Limited [email_address] +64-21-654-987
    2. 2. Iseke Consulting – Geer Iseke <ul><li>Background and Experience </li></ul><ul><ul><li>10 years working in Information technology roles – operations, systems, product mgt, systems engineering, sales & marketing </li></ul></ul><ul><ul><li>10 years working in General Management roles in Financial services – customer service, sales & distribution </li></ul></ul><ul><ul><li>5 years working in Senior executive roles - strategy, planning, change, corporate development, M&A </li></ul></ul><ul><ul><li>5 years working in consulting, advice and programme/project management – business & IT strategy, change management, leading strategic initiatives </li></ul></ul><ul><li>Industries and Places </li></ul><ul><ul><li>Banking, Life Insurance, Investment Management, Information technology </li></ul></ul><ul><ul><li>Transportation, Distribution, Infrastructure, Services </li></ul></ul><ul><ul><li>New Zealand, Australia, Singapore </li></ul></ul><ul><li>My goals and desired outcomes from this seminar </li></ul><ul><ul><li>Interactive learning and sharing (between us all) </li></ul></ul><ul><ul><li>Pragmatic style – been there, done that (just ask the questions) </li></ul></ul><ul><ul><li>Fast paced, high value, outcome oriented content (stop me if you need explanation) </li></ul></ul>
    3. 3. Seminar Objectives – we will cover…. <ul><li>Best practices in strategic planning approaches and key outcomes </li></ul><ul><li>The business strategy continuum – rolling life cycles, iterations and refinements </li></ul><ul><li>Realigning corporate strategies to enable successful strategic execution </li></ul><ul><li>Understanding the strategic execution framework </li></ul><ul><li>Strategic techniques to develop a strong strategic execution capability </li></ul><ul><li>Linking strategic planning to strategic execution </li></ul><ul><li>Development of the strategic execution roadmap </li></ul><ul><li>The role of Strategic Portfolio Project Management (SPPM) </li></ul><ul><li>Managing business change associated with successful strategic execution </li></ul>
    4. 4. Agenda <ul><li>Day 1 – Strategic Planning, getting ready for Strategy Execution </li></ul><ul><ul><li>Session 1 - The 70,000 ft View of Strategic Planning & Execution </li></ul></ul><ul><ul><li>(BREAK) </li></ul></ul><ul><ul><li>Session 2 - Understanding Strategic Planning approach & outcome </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><ul><li>Practical Workshop: Developing Strategic Goals and Objectives </li></ul></ul></ul><ul><ul><li>(LUNCH) </li></ul></ul><ul><ul><li>Session 3 - Understanding the Strategic Execution framework </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><li>Session 4 - Identifying The Strategic Initiatives, Planning Execution </li></ul></ul><ul><ul><li>(BREAK) </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><ul><li>Practical Workshop: Developing a Strategic Execution Balanced Scorecard </li></ul></ul></ul>
    5. 5. Agenda contd <ul><li>Day 2 – Strategic Execution, managing the initiatives implementation </li></ul><ul><ul><li>Session 5 – Developing the Strategic Portfolio Implementation Plan </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><li>(BREAK) </li></ul></ul><ul><ul><li>Session 6 – Strategic Portfolio Project Management (SPPM) </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><li>(LUNCH) </li></ul></ul><ul><ul><ul><li>Practical Workshop: Developing a Strategic Portfolio Roadmap </li></ul></ul></ul><ul><ul><li>Session 7 – Strategic Business Change Management </li></ul></ul><ul><ul><ul><li>Case Studies </li></ul></ul></ul><ul><ul><li>(BREAK) </li></ul></ul><ul><ul><li>Session 8 – Wrap up, Bringing Strategic Execution into Final Focus </li></ul></ul>
    6. 6. Session 1 The 70,000 ft overview of Strategic Planning and Execution
    7. 7. What is Strategic Planning – Vision, Mission, Values? <ul><li>Strategic planning: </li></ul><ul><ul><li>An organization’s process of defining it’s strategy or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people </li></ul></ul><ul><li>Vision: </li></ul><ul><ul><li>Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. </li></ul></ul><ul><ul><li>Vision is a long term view, sometimes describing a view of how the organization would like the world in which it operates to be. </li></ul></ul><ul><ul><li>For example a charity working with the poor might have a vision statement which read &quot;A world without poverty“, Microsoft had one that said “&quot;A personal computer in every home running Microsoft software.&quot; </li></ul></ul><ul><li>Mission: </li></ul><ul><ul><li>Defines the fundamental purpose of an organization or an enterprise, basically describing why it exists and what it does to achieve its Vision. </li></ul></ul><ul><ul><li>A corporate Mission can last for many years, or for the life of the organization. </li></ul></ul><ul><ul><li>It is not an objective with a timeline, but rather the overall goal that is accomplished over the years as objectives are achieved that are aligned with the corporate mission. </li></ul></ul><ul><li>Values: </li></ul><ul><ul><li>Beliefs that are shared among the key stakeholders (customers, colleagues, communities) of an organization. </li></ul></ul><ul><ul><li>Values drive an organization's culture and priorities. </li></ul></ul>
    8. 8. The Process of strategic and business planning <ul><li>The planning process can be simply defined as follows: </li></ul>Vision Goals Define the vision and set a mission statement with hierarchy of goals and objectives, set against Values Analysis conducted according to the desired goals Actions Formulate Initiatives and processes to be taken to attain these goals KPI’s Monitor and get feedback from implemented processes to fully control the operation Objectives Strategic 3-5 year horizon Budgets Tactical 12-18 month horizon Changes Repeat Annually Initiatives Initiatives Initiatives Initiatives Planning Execution
    9. 9. The Road to Here………. <ul><li>50 years ago strategy was taught as part of general management curriculum in business schools </li></ul><ul><li>It was seen as the most important duty of the Chief Executive </li></ul><ul><li>Back then, the strategy process had breadth, but not much rigor! </li></ul><ul><li>Tools for reviewing the external environment, such as the ubiquitous SWOT, were simple, but not that effective </li></ul><ul><li>Over the following 2-3 decades the tools were refined and a whole industry developed around strategy: </li></ul><ul><ul><li>Frameworks were developed – 7-S, growth-share matrix, et al </li></ul></ul><ul><ul><li>Corporate Planning departments emerged </li></ul></ul><ul><ul><li>Formal systems and standards were developed </li></ul></ul><ul><ul><li>Consulting firms offered services and solutions </li></ul></ul><ul><li>It has been a heady period and the strategy toolkit is far richer – but while it gained depth, strategic planning has lost breadth </li></ul><ul><li>The process has become more about formulation vs implementation and getting the idea right at the outset vs living with a strategy over time! </li></ul><ul><li>Let’s review some of the key aspects of strategy formulation </li></ul>
    10. 10. Strategic Planning today & tomorrow <ul><li>At many top business schools, general management departments have been replaced by strategy groups of experts focused on analysis and economics </li></ul><ul><li>In terms of analytical precision, strategic planning has made big gains, but in terms of organisational outcomes it has not </li></ul><ul><li>The senior executives greatest opportunity to outwit the competition is not only watching over strategy day in and day out, but also their greatest opportunity to shape the business itself </li></ul><ul><li>Competitive advantage is essential to strategy, but today it is recognised that if you cannot implement the strategy, then it is only an academic exercise </li></ul>Planning Lead Strategy Execution Lead Strategy The Past & Current The Future
    11. 11. A Missing Dimension… <ul><li>Over the past few decades, strategy has become a plan that positions the company in its external landscape – that doesn’t appear to be enough. </li></ul><ul><li>Strategy should also guide the development of the company – its identity and purpose – over time. </li></ul>Fostering competitive advantages and developing the company through time Ongoing Activity Defending an established Strategy through time Everyday, continuous, unending Time Frame Intense period of formulation, followed By prolonged period of implementation Organic process that is adaptive, Holistic, and open-minded Form Unchanging plan that derives from an analytical, left-brain exercise CEO as chief strategist; the job cannot be outsourced Leadership The CEO and strategy consultants Creation of value Goal A long-term sustainable competitive edge What is Missing: Strategy as a Dynamic Process The Prevailing Approach: Strategy as a set Solution
    12. 12. Setting the bar at the right height for success <ul><li>How much planning is good enough? - Balancing the “head” and “heart” and avoiding “paralysis through analysis” </li></ul><ul><li>Often the answer is self evident, many of the stakeholders know the direction and dynamics involved – confusion comes when the competitive and market forces change! </li></ul><ul><li>KI S S principle – question is what is simple? the “Elevator Pitch” test </li></ul><ul><ul><li>Can you describe the essence of your business strategy in less than a minute (ie the time it takes for an elevator to go from bottom to top floor) </li></ul></ul><ul><li>Another aspect that often seems to be forgotten is the need to develop SMART strategic goals: </li></ul><ul><ul><li>S pecific </li></ul></ul><ul><ul><li>M easurable </li></ul></ul><ul><ul><li>A chievable </li></ul></ul><ul><ul><li>R esourced </li></ul></ul><ul><ul><li>T ime Bound </li></ul></ul>
    13. 13. What is strategic execution? <ul><li>What a company is doing – its de facto strategy- can be summed up by identifying the group of projects in which it invests </li></ul><ul><li>There are typically three types of strategic project investments: </li></ul><ul><ul><li>Working in the business </li></ul></ul><ul><ul><li>Working on the business </li></ul></ul><ul><ul><li>Working to transform the business </li></ul></ul><ul><li>Strategic projects can be grouped into programmes, which can be grouped into portfolios – each Strategic Project Portfolio is aligned to a Strategic Goal </li></ul>Strategy Portfolio Engagement Programme Project Operations Transition Synthesis <ul><li>Strategic Execution project leadership – 3 phases: </li></ul><ul><ul><li>Engagement – engage the strategy via the project investment stream </li></ul></ul><ul><ul><li>Synthesis – monitor and continuously align the project work with strategy </li></ul></ul><ul><ul><li>Transition – transfer projects crisply into operations to reap the benefits </li></ul></ul>
    14. 14. Who is in control of strategic commitments? <ul><li>There are many examples of how corporate strategy is not only identified, but also executed by those who you would think wouldn’t be – not by the CEO and senior executive, rather by senior management and staff. </li></ul><ul><li>Much of this comes about due to a mis-match of resource, process, understanding, communication and execution. </li></ul><ul><li>Strategic commitments tend to get made in two ways , through: </li></ul><ul><ul><li>Organisational structures, where: </li></ul></ul><ul><ul><ul><li>Knowledge is dispersed </li></ul></ul></ul><ul><ul><ul><li>Power is dispersed </li></ul></ul></ul><ul><ul><ul><li>Roles determine perspectives </li></ul></ul></ul><ul><ul><li>Decision making processes, where: </li></ul></ul><ul><ul><ul><li>Processes span multiple levels but activities proceed on parallel, independent tracks </li></ul></ul></ul><ul><ul><ul><li>Processes are iterative </li></ul></ul></ul>
    15. 15. In summary, <ul><li>There is no “one set way” to undertake Strategic Planning! </li></ul><ul><li>The key aspect that everyone will agree is that whilst organisations might be (in general) good at strategic planning, they are poor at strategic execution. </li></ul><ul><li>The global business landscape is littered with expensive, well intended strategies that failed in the execution phase. </li></ul><ul><li>Corporations spend about $100 billion a year (pre economic adjustment) on management consulting and training, most of it aimed at brilliant strategy. </li></ul><ul><li>Business schools unleash throngs of aspiring strategists and big-picture thinkers into the corporate world each year. </li></ul><ul><li>Yet studies have shown that less than 10% of effectively formulated strategies carry through to successful implementation – so something like 90% of companies fail to execute strategies effectively. </li></ul>
    16. 16. Session 1 Case Studies <ul><li>Intel Corp, USA – Whos’ in control of strategy? </li></ul><ul><li>Knight Ridder, USA – Customers decisions </li></ul><ul><li>Ryan Air, UK – The CEO as Chief Strategist </li></ul>
    17. 17. Case Study: Intel Corp – Who’s in Control? <ul><li>A leader can announce a strategy to become global, change core technologies, or open new markets, but the strategy will only be realised if its in line with pattern of resource allocation made at every level of the organisation </li></ul><ul><li>Intel’s exit from the memory business: </li></ul><ul><ul><li>Legend has it that Andy Grove and Gordon Moore were talking strategically about what business Intel should be in. </li></ul></ul><ul><ul><li>On Grove asking the question “what would they do if Intel were a company they just acquired”?, Moore answered “get out of memory!”. </li></ul></ul><ul><ul><li>It turned out, though, that Intel’s revenues from memory were by this time only 4% of it’s total sales. </li></ul></ul><ul><ul><li>Intel’s lower-level managers had already exited the business – what Intel hadn’t done is shut down the flow of research funding into memory (which was eating up 30% of the research budget). </li></ul></ul><ul><ul><li>Nor had Intel announced it’s “exit” to the outside world. </li></ul></ul><ul><ul><li>At Intel, the exit from memory took place over time, because the managers in manufacturing responded to a directive from Finance: Allocate plant space so as to maximise gross margin per wafer square inch. </li></ul></ul><ul><ul><li>Memory and microprocessors used the same silicon wafers, so as competitive conditions worsened in memory, the rule took Intel right out of the memory business. </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>Because knowledge and power span organisational levels, managers at each level are likely to have an impact on strategy. </li></ul></ul><ul><ul><li>External forces can also have a strong effect on how resources are allocated, and in turn, how strategy evolves – the most powerful are the companies best customers and the capital markets. </li></ul></ul><ul><ul><li>Strategic decisions are critically affected not just by senior corporate managers, but also by midlevel managers, their teams. </li></ul></ul><ul><ul><li>The left and the right hand of Intel’s executive were not synchronised – on one hand, 30% of research money was being allocated to memory, while on the other hand only 4% of total sales came from memory – clearly senior managers were not in control! </li></ul></ul><ul><ul><li>But in the end the corporate culture was self correcting. </li></ul></ul>
    18. 18. Case Study: Knight Ridder – Customer’s decisions <ul><li>Customer decisions can play a huge role in real strategy formation, particularly in businesses with a few very powerful customers. Companies that stay close to their best customers give them a virtual veto on product development and distribution. </li></ul><ul><li>Knight Ridder’s (USA’s 2 nd largest newspaper publisher) strategy to enter the internet business: </li></ul><ul><ul><li>In 1995, Tony Ridder recognised the internet was going to have a dramatic affect on his newspaper company. </li></ul></ul><ul><ul><li>Accordingly, he redirected corporate strategy to focus on the internet, presented annual reports that discussed plans for new media, and moved headquarters from Miami to San Jose. </li></ul></ul><ul><ul><li>Despite these bold efforts to change corporate strategy, the realised strategy continued to be largely controlled by existing advertising customers in the newspaper business. </li></ul></ul><ul><ul><li>Every day, sales reps had the choice of selling a $40k print display ad to their existing print customers or promoting a $2k online ad that was unfamiliar, even uninteresting to these same advertisers – and every day the reps made the logical choice to sell traditional print ads. </li></ul></ul><ul><ul><li>Knight Ridder and other newspaper companies have been largely unsuccessful in tapping into this new and evolving revenue stream. </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>Customers can exert major influences on the sales force - they can capture the resource allocation process, and in effect, it’s strategy. </li></ul></ul><ul><ul><li>Management need to think through the strategic issues, develop scenarios and test them before implementing strategic initiatives that change the resource allocation and processes. </li></ul></ul>
    19. 19. Case Study: Ryan Air – The CEO as Chief Strategist <ul><li>In most popular portrayals, the strategists job seems finished once a carefully articulated strategy has been made ready for implementation. </li></ul><ul><li>Then comes the arduous task of determining how to implement the strategy – and what to do when the competition reacts? </li></ul><ul><li>Sometimes, this clarity requires not only the CEO to redefine the strategy, but also to lead the implementation. </li></ul><ul><li>Ryan Air proves a case in point: </li></ul><ul><ul><li>During it’s early years, the Irish Airline entered the Dublin-London market with full service priced at less that half the fares of the incumbents British Airways and Aer Lingus. </li></ul></ul><ul><ul><li>Ryan Airs leaders didn’t anticipate the ferocity with which its competitors would respond. When the resulting fare war brought Ryan Air to its knees, its CEO and executive didn’t simply urge the airline to try harder. </li></ul></ul><ul><ul><li>Lead by the CEO, they revamped the strategy and transformed the company into a no-frills player with a low-cost business model. </li></ul></ul><ul><ul><li>As Michael O’Leary, CEO since 1994, has said: “Yes, Aer Lingus attacked us, but we exposed ourselves and given the circumstances, it required leadership and commitment to reposition ourselves” </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>When confronted by significant challenges, the CEO must recognise the strategic significance of issues being raised and opportunities being contemplated. </li></ul></ul><ul><ul><li>The CEO needs to see them through the lens of the whole, even as those with narrower responsibilities may be seeing the same issues parochially. </li></ul></ul><ul><ul><li>While faithfully translating purpose into practice, the CEO must also remain open to the idea that the purpose itself may need change. </li></ul></ul><ul><ul><li>The judgements made at these moments of transition can make or break a leader or a company. </li></ul></ul><ul><ul><li>The change and execution leadership must come from the very top </li></ul></ul>
    20. 20. Session 2 Understanding Strategic Planning approaches and key outcomes
    21. 21. Choosing between 2 nd best vs ideal strategies <ul><li>Is a 2 nd best strategy good enough? Yes, if it can be implemented better! </li></ul><ul><li>Many organisation attempt for perfect world (ideal) strategies, but: </li></ul><ul><ul><li>World is changing around them – competition, regulation, leadership </li></ul></ul><ul><ul><li>Experience curve takes affect (ie we know more about something the longer we are involved with it) </li></ul></ul><ul><ul><li>Pareto principle 80/20 rules apply – problem solving, change management </li></ul></ul><ul><li>A brilliant strategy may put you on the competitive map - but only solid execution keeps you there </li></ul><ul><li>2 nd best strategies are identified through: </li></ul><ul><ul><li>Strategic scenario analysis – identifying different strategic scenarios based on changing future </li></ul></ul><ul><ul><li>Execution capability – understanding core competencies, not attempting to do more than the organisation is capable </li></ul></ul><ul><li>No prescribed approach for developing 2 nd best strategies - just an accepted principle amongst executive that you don’t “bite off more than you can chew!” </li></ul>
    22. 22. Alternative Views of Strategy <ul><li>The Implicit Strategy Model of the Past two decades: </li></ul><ul><ul><li>One ideal competitive position in the industry </li></ul></ul><ul><ul><li>Benchmarking of all activities and achieve best proactive </li></ul></ul><ul><ul><li>Aggressive outsourcing and partnering to gain efficiencies </li></ul></ul><ul><ul><li>Advantages rest on a few key success factors, critical resources, core competencies </li></ul></ul><ul><ul><li>Flexibility and rapid response to all competitive and market changes </li></ul></ul><ul><li>Sustainable Competitive Advantage model: </li></ul><ul><ul><li>Unique competitive position for the company </li></ul></ul><ul><ul><li>Activities tailored to strategy </li></ul></ul><ul><ul><li>Clear trade-offs and choices vis-à-vis competitors </li></ul></ul><ul><ul><li>Competitive advantage arises from fit across activities </li></ul></ul><ul><ul><li>Sustainability comes from the activity system, not the parts </li></ul></ul><ul><ul><li>Operational effectiveness a given </li></ul></ul>What is Strategy, Michael Porter, HBR Nov-Dec 1996
    23. 23. Hidden Flaws in Strategies <ul><li>The business world remains littered with examples of bad strategies </li></ul><ul><ul><li>Flawed analysis, excessive ambition, greed and other corporate vices </li></ul></ul><ul><ul><li>Key contributing factor that affects every strategist – the Human Brain </li></ul></ul><ul><li>Flaw 1 – Overconfidence </li></ul><ul><ul><li>Humans are programmed to feel over confident, particularly over estimating </li></ul></ul><ul><ul><ul><li>Test strategies under wide range of scenarios </li></ul></ul></ul><ul><ul><ul><li>Build more flexibility and options into your strategy </li></ul></ul></ul><ul><li>Flaw 2 – Mental accounting </li></ul><ul><ul><li>“ The inclination to categorise and treat money differently depending on where it comes from, where it is kept and how it is spent” Richard Thaler, pioneer in Behavioural Economics </li></ul></ul><ul><ul><ul><li>treating every investment $ exactly as it is, whatever the category or opportunity </li></ul></ul></ul><ul><li>Flaw 3 – The Status Quo bias </li></ul><ul><ul><li>People would rather leave things as they are – aversion to failure and loss </li></ul></ul><ul><ul><ul><li>Adopt a radical view of all portfolio decisions – view all businesses as “up for sale” </li></ul></ul></ul><ul><ul><ul><li>Subject status quo decisions to a risk analysis as rigorous as change options receive - most strategists are good at identifying the risks of new strategies but not so good at seeing the risks of failing to change </li></ul></ul></ul>Hidden Flaws in Strategy, Charles Roxburgh, McKinsey Quarterly, 2003 Issues 2
    24. 24. Hidden Flaws in Strategies <ul><li>Flaw 4 – Anchoring </li></ul><ul><ul><li>Human Brain tends to fix itself to something it knows – good for negotiating, bad for expectations (on price or outcome) </li></ul></ul><ul><ul><ul><li>Don’t be influenced by the anchoring tactics of others, take a long historical perspective – put trends in the context of last 20-30 years, not last 2-3 years! </li></ul></ul></ul><ul><li>Flaw 5 – Sunk-cost effect </li></ul><ul><ul><li>Other wise known as “throwing good money after bad”, often seen in project overruns - Don’t be swayed by loss aversion (rather spend $5m more to complete than write-off $20m now) </li></ul></ul><ul><ul><ul><li>Apply the full rigor of investment analysis to incremental investments </li></ul></ul></ul><ul><ul><ul><li>Be prepared to kill strategic experiments early </li></ul></ul></ul><ul><ul><ul><li>Use “gated funding” approach for strategic investments </li></ul></ul></ul><ul><li>Flaw 6 – The Herding Instinct </li></ul><ul><ul><li>The desire to conform to behaviour and opinions of others, “Me-too” strategies </li></ul></ul><ul><li>Flaws 7 – Misestimating future hedonic states </li></ul><ul><ul><li>People are bad at estimating how much pleasure or pain they will feel if their circumstances change dramatically </li></ul></ul><ul><ul><ul><li>In takeovers, adopt dispassionate and unemotional views </li></ul></ul></ul><ul><ul><ul><li>Keep things in perspective, don’t overreact to apparently deadly strategic threats </li></ul></ul></ul><ul><li>And the deadliest flaw of all – a failure to recognise the pragmatism required for execution when developing the strategy </li></ul>
    25. 25. The Strategy Continuum <ul><li>Strategy definition is part of a continuum – major strategic planning sessions conducted annually, reviewed half yearly, etc </li></ul><ul><li>Much of the strategic implementation started is abandoned or changed within 12 months due to the impact of: </li></ul><ul><ul><li>Review and refining of the strategy – ie goals and priorities change </li></ul></ul><ul><ul><li>Management “merry go round” – ie leadership and management changes </li></ul></ul><ul><ul><li>External factors – regulatory, economic and competitive changes </li></ul></ul>Strategic Planning Model Planning Cycle Year 1 Year 2 Year 3 Year 4 Year 5 Strategic Planning Cycle Define Implement Refine Implement Implement Review Refine Review Define Refine Review Implement @ ICL 2008
    26. 26. How to improve strategic planning <ul><li>It can be a frustrating exercise, but there are ways to improve value </li></ul><ul><li>There are five emergent ideas that can be used for improvement: </li></ul><ul><ul><li>Start with the issues: </li></ul></ul><ul><ul><ul><li>Deliberately and thoughtfully identify and discuss the strategic issues that will have the greatest impact on future business performance </li></ul></ul></ul><ul><ul><ul><li>Use a bottom-up rather than top-down process to gain internal consensus </li></ul></ul></ul><ul><ul><li>Bring together the right people: </li></ul></ul><ul><ul><ul><li>Strategic conversations will have little impact if they only involve strategic planners from the BU and Corp levels – those who carry out strategy should also develop it! </li></ul></ul></ul><ul><ul><ul><li>The CEO, aided by members of the executive, should lead the BU strategic reviews </li></ul></ul></ul><ul><ul><li>Adapt planning cycles to the need of the business: </li></ul></ul><ul><ul><ul><li>Issues based strategic planning is resource and time intensive – managers need to focus on executing last years major initiatives – move to alternating BU to biennial </li></ul></ul></ul><ul><ul><li>Implement a strategic-performance-management system: </li></ul></ul><ul><ul><ul><li>Many companies (30-40%) fail to execute the strategy </li></ul></ul></ul><ul><ul><ul><li>Assign accountabilities for initiatives, make their progress transparent, group into portfolios (by strategic goal) </li></ul></ul></ul><ul><ul><li>Integrate human resources systems into the plan: </li></ul></ul><ul><ul><ul><li>Successful planning and implementation depends on how managers are evaluated and compensated – link them to the progress and outcomes of strategic initiatives </li></ul></ul></ul><ul><li>But the most important aspect for improvement is to determine where you want to be in 2-3 years and layout a roadmap for how you are going to get there - incorporate Portfolio Project techniques into the planning process. </li></ul>How to improve strategic planning, Rene Dye, McKinsey Quarterly 2007 Issue 3
    27. 27. Hierarchy of Company Statements <ul><li>Organisational directions comes in several forms </li></ul><ul><li>The Mission Statement is the loftiest guiding light and least specific </li></ul><ul><li>As you work down the hierarchy the statements become more concrete, practical and ultimately unique </li></ul>Can you Say What Your Strategy Is, David Collis, HBR April 2008 MISSION Why we exist VALUES What we believe in How we will behave VISION What we want to be STRATEGY What our competitive game plan will be BALANCED SCORECARD How we will monitor the implementation of the plan Strategy Statement OBJECTIVE = Ends SCOPE = Domain ADVANTAGE = Means Strategic Execution PROJECT = Tasks, Deliverables VALUE = Benefits RESOURCES = People, $$
    28. 28. Strategic Goals and Objectives <ul><li>The discussion here is about wording, not about the content or intent. </li></ul><ul><li>The wording of goals should facilitate the development of objectives and initiatives – action oriented, verbs. Often starting with the word “ To ……” </li></ul><ul><li>Goals are the broad, primary  quantitative  results that management seeks to achieve in the plan.   </li></ul><ul><li>These goals can include specific financial performance results that you seek to achieve, such as higher revenues or higher profits (e.g. “To Increase Sales by 20%&quot;).  They can also include goals to increase the energy level in the company (e.g. &quot;Improve leadership & direction&quot;). </li></ul><ul><li>For each Strategic Goal, there are Strategic Objectives, followed by a number of Strategic Initiatives (or Actions): </li></ul><ul><ul><li>Example Strategic Goal: “ To Increase Global Sales by 20% in Year 1 &quot;   Example Strategic Objective:    “Redesign Training Curriculum on Sales and Customer Service within 6 months .&quot;  </li></ul></ul><ul><ul><li>Example Strategic Initiative: “Implement new sales processes, CRM system and sales capability” </li></ul></ul>30% X <ul><li>Strategic goals could be worded as Stretch goals </li></ul><ul><ul><li>A stretch is a goal or challenge that is significantly beyond the organisation’s current performance level. </li></ul></ul>
    29. 29. Strategic Themes <ul><li>Strategy consists of complimentary Strategic Themes, which: </li></ul><ul><ul><li>enable sequencing of strategic change and focus, can be parallel and complimentary </li></ul></ul><ul><ul><li>deal with conflicting priorities of long-term vs short-term profitability </li></ul></ul><ul><ul><li>reflect what the management team believes must be done to succeed </li></ul></ul><ul><ul><li>provide pillars for the segmenting the strategy into general categories:, ie </li></ul></ul><ul><ul><ul><li>Build the Franchise (Financial perspective) </li></ul></ul></ul><ul><ul><ul><li>Increase Customer Value (Customer perspective) </li></ul></ul></ul><ul><ul><ul><li>Achieve Operational Excellence (Process perspective) </li></ul></ul></ul><ul><ul><ul><li>Be a Good Corporate Citizen (Community perspective) </li></ul></ul></ul><ul><ul><li>generally deliver benefits over different periods of time </li></ul></ul><ul><li>Example : A Utility company defined four strategic themes as it prepared for deregulation, consolidating it’s core businesses and moving into a more customer focused business model: </li></ul><ul><li>Theme 4: </li></ul><ul><li>“ Pubic Trust” </li></ul><ul><li>Maintain public support </li></ul><ul><li>Theme 3: </li></ul><ul><li>“ Secure the </li></ul><ul><li>Base” </li></ul><ul><li>Manage assets and investments to improve cash flow </li></ul><ul><li>Effective governance </li></ul><ul><li>Theme 2: </li></ul><ul><li>“ Increased </li></ul><ul><li>Customer Focus” </li></ul><ul><li>Service excellence </li></ul><ul><li>Value-added solutions </li></ul><ul><li>Theme 1: </li></ul><ul><li>“ Grow the </li></ul><ul><li>Business” </li></ul><ul><li>Margins in the emerging markets </li></ul><ul><li>Profitable growth in new markets </li></ul>Be a Good Corporate Citizen Achieve Operational Excellence Increase Customer Value Build the Franchise
    30. 30. Strategy Maps <ul><li>The key to developing the right strategy which is a strong candidate for successful execution, is to ensure that people in the company can understand it. </li></ul><ul><li>This can be accomplished through the translation of the strategy into a strategy map, built around strategic themes, and an associated Balanced Scorecard </li></ul><ul><li>This includes the crucial but perplexing processes by which intangible assets will be converted into tangible outcomes. </li></ul><ul><li>Strategy maps describe the process of value creation through a series of cause-and-effect linkages among objectives using the four Balances Scorecard perspectives: </li></ul><ul><ul><li>The ultimate goal of an organisation is to create long-term value for shareholders (private sector) or stakeholders (public sector) </li></ul></ul><ul><ul><li>Organisation value is created by satisfying customer value propositions </li></ul></ul><ul><ul><li>Internal processes create and deliver the value that satisfies customers, and they also contribute to the financial perspective’s productivity objectives </li></ul></ul><ul><ul><li>Intangible assets (people, technology and culture) drive performance improvements in the critical processes that deliver value to customers and stakeholders. </li></ul></ul>
    31. 31. Example Strategy map
    32. 32. Strategy Translation process <ul><li>Strategic themes split a strategy into several distinct value-creating processes, which allows targets and measures to be created for each </li></ul><ul><li>The Strategy map provides a way to express the strategy </li></ul><ul><li>The Balanced Scorecard provides a framework to provide measures and targets </li></ul><ul><li>The diagram below shows how this translation occurs: </li></ul>The Execution Premium, Robert Kaplan & David Norton, 2008 <ul><li>Balanced Scorecard </li></ul><ul><ul><li>Measures </li></ul></ul><ul><ul><li>Targets </li></ul></ul><ul><ul><li>Gaps </li></ul></ul>Lower level objectives and targets are not aligned with the higher-level goals To convert strategic direction statements into measures and targets that can be linked to the management system Select Measures and Targets How do we measure our strategy? <ul><li>Strategy map (cause and effect) </li></ul><ul><li>Strategic objectives </li></ul>Typical strategies are built by different groups in different parts of the organisation. They are not integrated To develop a comprehensive integrated model of the strategy that pulls together the many diverse components of the plan Create the Strategy Map How do we express our strategy? Enabling Tools Barriers Objective Strategy Translation Process
    33. 33. In summary, <ul><li>Developing the right (ie appropriate and implementable) Strategic Goals and Objectives is a CSF of good planning approach and outcomes </li></ul><ul><li>Developing a “project” change based thinking and culture will help in the development of a strategic plan that can ultimately be successfully implemented </li></ul><ul><li>Leadership needs to be clear, concise and directional in order to align each activity and project investment to the espoused strategy </li></ul><ul><li>Strategic Themes and Scorecards are critical components of successful execution </li></ul><ul><li>Strategy Maps can help to communicate what the strategy is in terms of actions and deliverables, and can act as guidance during execution </li></ul><ul><li>Effective strategy consists of choosing to do the right things. Effective execution means doing those things right – strategic execution results from executing the right set of strategic projects in the right way </li></ul><ul><li>Strategy makers can only align the strategy with the execution by working with and through project leaders in the execution process </li></ul>
    34. 34. Session 2 Case Studies <ul><li>Theseus - Strategies Change over Time </li></ul><ul><li>Du Pont – Mapping a Strategic Theme </li></ul><ul><li>South West Airlines – Using Strategy Maps </li></ul>
    35. 35. Case Study: Theseus – Strategies change over time <ul><li>Great companies evolve and change, so do great strategies </li></ul><ul><li>This is not to say that continuity has no value, not to say that great resources and great advantages aren’t built over the long term </li></ul><ul><li>We acknowledge that the world, both inside and outside the organisation, changes in both big discontinuous changes but also in frequent smaller ones as well </li></ul><ul><li>An ancient Greek legend provides a powerful metaphor for this process: </li></ul><ul><ul><li>According to the legend, the ship that the hero Theseus sailed back to Athens after slaying the Minotaur in Crete was rebuilt over time, plank by plank </li></ul></ul><ul><ul><li>As each plank decayed, it was replaced by another, until every plank in the ship had been changed </li></ul></ul><ul><ul><li>Was it then the same ship? If not, at what point – with which plank – did the ship’s identity shift? </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>This metaphor captures the evolution of most companies </li></ul></ul><ul><ul><li>Corporate identities are changing not only in cataclysmic restructurings and grand pronouncements but also by decision after decision, year after year, captain after captain </li></ul></ul><ul><ul><li>An organic conception of strategy recognises that whatever constitutes strategic advantage will eventually change </li></ul></ul><ul><ul><li>Theseus’s boat had provided him with great advantage, but it needed to change to survive! </li></ul></ul>
    36. 36. Case Study: Du Pont – Mapping a Strategic Theme <ul><li>Du Pont’s Engineering Polymer division needed to lift its game on strategic outcomes – they were not achieving the corporate synergies that they wanted </li></ul><ul><li>Much of this was related to their structure but they did not want to change the existing structures as tinkering and realigning authority, responsibility and decision rights would not produce the magic required to achieve the synergies, so: </li></ul><ul><ul><li>The corporate executives used the tools of strategic themes and balanced scorecards to guide the decentralised units in their search for local gains as they identified ways for them to contribute to corporate objectives </li></ul></ul><ul><ul><li>They created a corporate strategy map that consisted of five different distinct themes, each represented by a vertical chain of cause-and-effect relationships that spans the four balanced scorecard perspectives. </li></ul></ul><ul><ul><li>For instance, the financial objective for the theme of operational excellence is to minimise operating cost, which will require optimising asset utilisation at the process level, which in turn requires integration with a new sales model, described in Learning & Growth </li></ul></ul>Strategic Themes <ul><li>Use discipline process for NBD </li></ul><ul><li>Develop selling skills </li></ul><ul><li>Develop organisational skill sets </li></ul><ul><li>Develop IT platform to grow business without incr infrastructure </li></ul><ul><li>Develop appropriate sales model and dedicated assets </li></ul>Create organisational readiness Learning & Growth <ul><li>Evaluate and pursue M&A options to expand </li></ul><ul><li>Select NBD concepts from within EP organisation </li></ul><ul><li>Commodity selling & account mgt </li></ul><ul><li>Speciality opportunity selection </li></ul><ul><li>Consulting & program mgt </li></ul><ul><li>Define & implement application mgt process </li></ul><ul><li>Understand customer needs and align capabilities </li></ul><ul><li>Implement order entry and execution </li></ul><ul><li>Optimise asset utilisation </li></ul><ul><li>Drive polymer process robustness </li></ul><ul><li>Achieve best –in-class compound costs </li></ul>Cross-sell the product line Process <ul><li>Provide value chain with break through value </li></ul><ul><li>Match value delivered with cost services </li></ul><ul><li>Deliver the right offering at the right price </li></ul><ul><li>Improve productivity and growth in my value chain </li></ul><ul><li>Deliver to promise </li></ul><ul><li>Execute transactions with low cost / high reliability </li></ul><ul><li>Meet my specs with quality & consistency </li></ul><ul><li>Offer me the lowest price for my needs </li></ul>Increase share of customers financial transactions Customer <ul><li>Improve sales and margin via application mgt process </li></ul>Product Portfolio <ul><li>Optimise profit by customer category </li></ul>Customer Management <ul><li>Achieve extraordinary results </li></ul><ul><li>Improve transaction cost </li></ul><ul><li>Minimise operating cost </li></ul>Increase revenues and margins Financial New Business Designs Supply-Service Order-Cash Operational Excellence Strategy Map Perspective
    37. 37. Case Study: Southwest Airlines – using Strategy maps <ul><li>A strategy or activity map clarifies strategic objectives and helps a company understand which projects are essential for execution Michael Porter’s activity systems maps and Kaplan/Norton’s strategy maps provide enormously useful ways to depict how a given enterprises creates value in the marketplace </li></ul><ul><li>Southwest Airlines is one the rare companies able to maintain profitability almost continuously in a notoriously difficult industry – by using strategy maps to help them identify key elements in their activity system, which translates into potential projects for strategic execution </li></ul><ul><ul><li>This figure shows the array of aligned activities that Southwest performs to generate value </li></ul></ul><ul><ul><li>The darker circles represent Southwest’s hi-order strategic offering; the others are activities or investments tailored to deliver it </li></ul></ul><ul><ul><li>From the founder to the top management to the most recent hire, people at Southwest understand how they generate value and they consistently did so better than their competition </li></ul></ul><ul><ul><li>When a company has this level of strategic clarity, the choice of projects and programmes for the strategic investment portfolio becomes much more obvious. </li></ul></ul><ul><ul><li>For example the map immediately tells where not to invest: </li></ul></ul><ul><ul><ul><li>Do not evaluate in-flight meal service </li></ul></ul></ul><ul><ul><ul><li>Do not create a seat assignment system </li></ul></ul></ul><ul><ul><ul><li>Do not work on connecting to other airlines </li></ul></ul></ul><ul><ul><ul><li>Do not create an incentive system for travel agents </li></ul></ul></ul><ul><ul><li>The map also tells us the sort of things Southwest should do, for instance projects to enhance: </li></ul></ul><ul><ul><ul><li>Ground crew productivity </li></ul></ul></ul><ul><ul><ul><li>Aircraft utilisation </li></ul></ul></ul><ul><ul><ul><li>Turnaround time </li></ul></ul></ul><ul><ul><ul><li>Usage of ticket machines and internet purchase </li></ul></ul></ul><ul><ul><ul><li>Cost effectiveness </li></ul></ul></ul>Limited Passenger services Frequent, Reliable departures Lean, highly Productive Ground and Gate crews High aircraft utilisation Short-haul Point-to-point routes between midsize cities and secondary airports Very low ticket prices No seat assignments No meals No baggage transfers No connections With other airlines “ Southwest, the low-fare airline” High level of employee stock ownership Flexible union contracts High compensation of employees 15-minute gate turnarounds Automatic ticketing machines Standardised Fleet of 737 aircraft Limited use of travel agents Executing Your Strategies, Mark Morgan, et al 2007
    38. 38. Practical Workshop-Strategic Goals, Objectives, Metrics <ul><li>Workshop Objective: </li></ul><ul><ul><li>Help you determine whether your organisation needs improvements to better align the capability of identify strategic goals, objectives and metrics to maximise strategic initiatives </li></ul></ul><ul><li>Approach: </li></ul><ul><ul><li>An introduction to a simple process to link strategic outcomes to project outputs - connecting goal to metric, to strategy, to deliverable </li></ul></ul><ul><ul><li>A series of rating tools, that can be administered informally or formally, to determine whether your organisation needs investments to improve capability of identifying Strategy, Goals and Metrics that facilitate execution. They will measure: </li></ul></ul><ul><ul><ul><li>Goal-setting </li></ul></ul></ul><ul><ul><ul><li>Measurements (Metrics) </li></ul></ul></ul><ul><ul><ul><li>Strategy Connected to Vision </li></ul></ul></ul><ul><ul><ul><li>Organisation Culture </li></ul></ul></ul><ul><ul><ul><li>Organisation Structure </li></ul></ul></ul><ul><ul><ul><li>Strategy effectiveness </li></ul></ul></ul>
    39. 39. Practical Workshop-Strategic Goals, Objectives, Metrics <ul><li>An introduction to a simple process to link strategic outcomes to project outputs - connecting goal to metric, to strategy, to deliverable </li></ul><ul><li>The table below can be used to help teams of leaders get a handle on alignment within the vision imperative – it will help the executive determine: </li></ul><ul><ul><li>The strategic outcome they are looking for </li></ul></ul><ul><ul><li>The links to the overall organisational strategy </li></ul></ul><ul><ul><li>How the outcomes are to be measured </li></ul></ul><ul><ul><li>How to articulate a simple high-level description of the strategy for getting to the outcome </li></ul></ul><ul><ul><li>Which indicators to use to measure progress towards the outcome </li></ul></ul><ul><ul><li>The tangible work product in terms of project outputs that must be created to reach the outcome </li></ul></ul>Executing Your Strategies, Mark Morgan, et al 2007 What does the customer think? Does he or she agree with what we think our outcome and measurements are? Customer validation: Broad and simple – the “path”; how will we reach the outcome? Strategy path What things will tell us whether we are making progress towards reaching the outcomes? Leading indicators Hard, tangible things we deliver along the way, plus the final end-state outcome How will we know we have reached the outcome? You don’t measure the strategy – you measure the outcome Which aspect of overall company strategy will this outcome help us reach? This is the future outcome, stated as if it has already occurred Deliverables or project outputs Measurement and target value for measure Linkage to overall strategy or question Goal or strategic outcome
    40. 40. 1. Measuring Goal-setting <ul><li>Measure your organisations goal-setting ability </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – The organisation is lost in space, and individuals are making choices for the organisation on whatever basis they choose </li></ul><ul><li>Between 3 and 6 – There is a mix of individual and organisational goal clarity advantage </li></ul><ul><li>Above 6 – The organisation is reaching goal clarity </li></ul>Average Score: Goals are selected on the basis of affirmative topics that emphasise what the organisation wants more of Goals are created in a way that makes it clear whether they are reached or not Goals in the organisation provide clarity about both outputs and outcomes for the organisation Our systems provide information on goals, including who is accountable for meeting them Management exhibits discipline and resolve in achieving goals There is an organised and defined process for setting goals Our organisation sets clear goals for the near-term (1-5 years) that are supported by our strategy and the way we measure performance
    41. 41. 2. Measuring Measurements <ul><li>Measure your organisations ability to measure </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – Measurements are too vague to help deliver strategy </li></ul><ul><li>Between 3 and 6 – Measurements are present but ineffective </li></ul><ul><li>Above 6 – The organisation can navigate well </li></ul>Average Score: Metrics for the organisation measure the leading-indicator aspects that are central to the business model The organisation’s scorecard is built on lead indicators and uses lag indicators for historical purposes We know how to measure the right things to predict success and avoid pitfalls; we understand the key performance factors for the organisation Managers and leaders clearly articulate the measures of the business and how individual and business measurements relate Measurements are created in a well-developed process that makes who, what, how, how much, and when easy to understand Our measurement of the business are consistent with the way people are measured and are clearly connected to our strategy
    42. 42. 3. Measuring Strategy Connected to Vision <ul><li>Measure your organisations ability to measure </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – Measurements are too vague to help deliver strategy </li></ul><ul><li>Between 3 and 6 – Measurements are present but ineffective </li></ul><ul><li>Above 6 – The organisation can navigate well </li></ul>Average Score: Metrics for the organisation measure the leading-indicator aspects that are central to the business model The organisation’s scorecard is built on lead indicators and uses lag indicators for historical purposes We know how to measure the right things to predict success and avoid pitfalls; we understand the key performance factors for the organisation Managers and leaders clearly articulate the measures of the business and how individual and business measurements relate Measurements are created in a well-developed process that makes who, what, how, how much, and when easy to understand Our measurement of the business are consistent with the way people are measured and are clearly connected to our strategy
    43. 43. 4. Measuring Organisational Culture <ul><li>Measure your organisation’s culture </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – Culture is a competitive disadvantage and is a blocker to getting strategy executed </li></ul><ul><li>Between 3 and 6 – Culture is not likely to be in the way, but is not a competitive advantage </li></ul><ul><li>Above 6 – Culture is becoming a competitive advantage </li></ul>The subcultures within structural areas of the organisation are complimentary to the overall culture of the organisation Average Score: Our culture is a competitive advantage for us because of the way it attracts and motivates people with the skills we need The artefacts of our culture (processes, language, rituals, stories, physical environment) are consistent with and supportive of our strategy The type of information that flows in the organisation keeps our culture alive and strong Managers and leaders are active in shaping the culture of the organisation in effective ways Our business practices are designed in such a way that they support our culture and make our jobs easier Our company culture as it is today is well suited to carry out our strategy and works well with our structure
    44. 44. 5. Measuring Organisational Structure <ul><li>Measure your organisation’s structure </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – Structural misalignment is slowing things down and is an impediment to execution </li></ul><ul><li>Between 3 and 6 – Structure is creating some problems that could be one of the fastest ways to improve strategic execution </li></ul><ul><li>Above 6 – Structure is one of the things that sets your organisation apart and makes it effective </li></ul>The measurements in organisational units are consistent with the way the overall organisational metrics are set We resolve disputes across organisational boundaries quickly and in a fashion that creates sustainable agreements Average Score: There is cooperation between organisational units that supports the execution of strategy Because of our structure, people know how they relate to organisationally to the strategy Our information systems breakdown organisational barriers by openly sharing information across business boundaries Our structure is created through a well-defined business process that takes into account strategy and culture The way we organise ourselves makes doing our jobs and executing our strategy easier Managers and leaders of the organisation design the organisation to optimise business performance
    45. 45. 6. Measuring Strategy effectiveness <ul><li>Measure your strategies effectiveness within your organisation </li></ul><ul><li>On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true) </li></ul>Rating (1-10) <ul><li>Interpretation of average score: </li></ul><ul><li>Below 3 – The strategy is at great risk of failure </li></ul><ul><li>Between 3 and 6 – There are significant issues to be addressed in the nature of the organisation, and if not addressed, they will slow down execution </li></ul><ul><li>Above 6 – The effectiveness and nature of the organisation is an advantage to execution </li></ul>We know how to best organise to execute our strategy, and the necessary reorganisation can be done without cultural conflict Our strategy can be executed, given our culture, with a reasonable level of organisational change Average Score: Our strategy drives coherent action People in the organisation get a clear sense of what they can do to support the strategy Our strategy is developed on a very strong fact and information based foundation Managers and leaders support and act in alignment with the strategy Our strategy is created in a systematic way, and changes to it are made clear to the organisation The strategy of the organisation is clear and well understood by people throughout the organisation
    46. 46. Session 3 Understanding the Strategic Execution Framework
    47. 47. What is strategy execution? <ul><li>Most executives retreat to the offsite or Boardroom where they plan the Next Big Thing, leaving the grunt work of execution to the lower echelons </li></ul><ul><li>But many executives now realise they lack a systematic approach for identifying and implementing the right array of actions to deliver on their promises – not only are they being pressured to execute as promised, but also demonstrate how they will invest to deliver </li></ul><ul><li>What a company is doing – its de facto strategy – can be summed up by identifying the group of projects in which it invests </li></ul><ul><li>In fact for the strategy to become reality it must be converted into packets of work we call projects – and these projects must be managed under portfolios of change work that should match the themes in the strategy </li></ul><ul><li>The project – the lowly project – is the true traction point for strategic execution. A company’s project portfolio drives it’s future value and is the agent of change </li></ul><ul><li>Simply put, strategic execution requires tightly aligning the project portfolio to the corporate strategy, in what is called the engagement domain – where the objectives of the strategy meet the constraints of resources </li></ul>Strategy Portfolio Engagement
    48. 48. Understanding Strategic Portfolio Management <ul><li>Strategic execution results from executing the right set of strategic projects in the right way </li></ul><ul><li>It lies at the crossroads of corporate leadership and project portfolio management – the place where the organisation’s purpose, vision and culture translate into performance and results </li></ul><ul><li>Project portfolio management is always on (whether executives at the top recognise it or not) – everywhere, people must make thousands of small project investment decisions every day </li></ul><ul><li>Without clear leadership that aligns each activity and every project investment to the strategy, individuals will use other decision rules in choosing what to work on: </li></ul><ul><ul><li>first in, first out; last in, first out; loudest demand; squeakiest wheel; boss’s whim; best guess; easiest; most politically correct; quickest to promotion; wild guess </li></ul></ul>Strategy Portfolio Engagement Programme Project Operations Transition Synthesis <ul><li>Strategic Execution portfolio management </li></ul><ul><ul><li>Engagement – engage the strategy via the project investment stream </li></ul></ul><ul><ul><li>Synthesis – monitor and continuously align the project work with strategy </li></ul></ul><ul><ul><li>Transition – transfer projects crisply into operations to reap the benefits </li></ul></ul>
    49. 49. Business and Technology strategy alignment <ul><li>Strategy Alignment is an iterative process ensuring strategies are complimentary and synergetic, that action plans are realistic and feasible and opportunities are uncovered – for Strategic execution, it incorporates Portfolio Alignment </li></ul>Corporate Strategy Transformation Business Domain Input SBU 1 SBU 2 SBU 3 SBU Business Plans SBU 1 SBU 2 SBU 3 Architecture & Process Impact Business Requirements Technology Roadmap Solutions / Projects Corporate IT Strategies Technology Domain SBU 1 SBU 2 SBU 3 Enterprise-wide Technology Principles Technology Business Plans SBU 1 SBU 2 SBU 3 Enterprise-wide Technology Strategies Architecture Investment Roadmaps Projects & Roadmaps Principles, Architecture, Strategies Planning Alignment Process Portfolio Alignment Process
    50. 50. Strategic Execution Framework <ul><li>Six aspects (domains) that make up the Strategic Execution Framework </li></ul><ul><ul><li>Ideation – Clarify and communicate identity, purpose and long-range intention </li></ul></ul><ul><ul><li>Nature – Align the organisation’s strategy, culture and structure </li></ul></ul><ul><ul><li>Vision – Translate long-range intention into clear goals, metrics and strategy </li></ul></ul><ul><ul><li>Engagement – Engage the strategy via the project investment stream </li></ul></ul><ul><ul><li>Synthesis – Monitor and continuously align project work with strategy </li></ul></ul><ul><ul><li>Transition – Transfer projects crisply into operations to reap the benefits </li></ul></ul><ul><li>Navigating the Strategic execution Framework does not require a step-by-step, sequential journey though the six domains </li></ul><ul><li>The engagement domain is pivotal – it links the strategy with the portfolio of projects to be executed </li></ul>Executing Your Strategies, Mark Morgan, et al 2007 Strategy Portfolio Transition Synthesis Nature Ideation Vision Making Strategy Executing Strategy Engagement Engaging
    51. 51. Navigating the six SEF imperatives <ul><li>The strategy making domain – where individuals and organisations decide which are the right things to do through: </li></ul><ul><ul><li>Ideation </li></ul></ul><ul><ul><li>Vision </li></ul></ul><ul><ul><li>Nature </li></ul></ul>Nature Ideation Vision Making Strategy Strategy Portfolio Transition Synthesis Engagement Executing Strategy Engaging <ul><li>The project leadership domains (engagement and executing) - where the focus is on doing things right , specifically: </li></ul><ul><ul><li>Engagement </li></ul></ul><ul><ul><li>Synthesis </li></ul></ul><ul><ul><li>Transition </li></ul></ul>
    52. 52. Engagement capability in a changing world <ul><li>Typically, projects and allocation of resources fall into three types: </li></ul><ul><ul><li>Working in the business </li></ul></ul><ul><ul><li>Working on the business </li></ul></ul><ul><ul><li>Working to transform the business </li></ul></ul><ul><li>Engagement between strategy and portfolio imperatives is not an event, it is a process and needs to be monitored, reviewed and revised (in a active way) </li></ul><ul><li>Companies attempting to achieve the engagement imperative may need project investments to develop their capacity to choose and endow the right projects within a changing world </li></ul><ul><li>Some critical engagement capabilities are: </li></ul><ul><li>Selection criteria development </li></ul><ul><li>Portfolio & project “hopper” design </li></ul><ul><ul><li>Scoring model development </li></ul></ul><ul><ul><li>Prioritisation process design </li></ul></ul><ul><ul><li>End-to-end governance design </li></ul></ul><ul><ul><li>Strategic execution office </li></ul></ul><ul><ul><li>Resource pool creation </li></ul></ul><ul><li>Portfolio process design </li></ul><ul><li>Enterprise planning processes </li></ul><ul><li>Portfolio management education </li></ul><ul><li>Portfolio/ project registry </li></ul><ul><li>Execution capability education </li></ul><ul><li>Tools, templates and processes </li></ul>
    53. 53. Engaging in the right projects <ul><li>There are five critical challenges as part of this process: </li></ul><ul><ul><li>Deciding how to proceed </li></ul></ul><ul><ul><li>Indentifying the project and programmes that will convert strategy into action </li></ul></ul><ul><ul><li>Developing criteria for prioritising project investment decisions </li></ul></ul><ul><ul><li>Dealing with an overload of qualified projects </li></ul></ul><ul><ul><li>Reshaping the project portfolio as circumstance change </li></ul></ul><ul><li>Project priority decisions often require trade-offs between improving or enhancing an existing process and building a new one to support the transformation of the company. </li></ul><ul><li>Designing strategy around available resources is probably not the best way to drive innovation and change </li></ul><ul><li>Strategies that collectively require resources far in excess of capacity of the organisation are doomed from the outset </li></ul><ul><li>The steps required to accomplishing the engagement imperative: </li></ul><ul><ul><li>Establish the governance /sponsorship environment </li></ul></ul><ul><ul><li>Match projects with resources </li></ul></ul><ul><ul><li>Monitor and reshape the portfolio as circumstances evolve </li></ul></ul>
    54. 54. Project Governance & Sponsorship <ul><li>In large measure, the success or failure of the strategic execution depends on how the organisation governs it’s project portfolio. The governance system creates the portfolio management environment, establishing: </li></ul><ul><ul><li>Who will Sponsor the projects </li></ul></ul><ul><ul><li>Who will (and how to) decide which projects to undertake </li></ul></ul><ul><ul><li>Who will identify and assign resources to the projects </li></ul></ul><ul><ul><li>Who will manage each programme and project in the portfolio </li></ul></ul><ul><li>This can be accomplished in many ways, from assigning senior executive sponsorship, to creating a Portfolio Management team or a Portfolio or Programme Management office </li></ul><ul><li>Sponsorship brings critical discipline and support to the process of portfolio management by: </li></ul><ul><ul><li>creating a locus of control, responsibility, and accountability </li></ul></ul><ul><ul><li>coordinating the allocation of resources to the work of portfolio management </li></ul></ul><ul><ul><li>Establishing decision-making capabilities to adjust the portfolio to fit emerging strategic needs </li></ul></ul><ul><li>Good sponsorship brings vision, commitment, accountability and empowerment to the project portfolio environment </li></ul>
    55. 55. Prioritising the Work <ul><li>Which is important – apples or oranges? Neither one. Or both. Or either </li></ul><ul><li>What about product A or product B? There is no way to tell without a structure approach to priorities using categories (or strategic buckets), e.g: </li></ul><ul><ul><li>Regulatory requirements </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Product development </li></ul></ul><ul><ul><li>Branding </li></ul></ul><ul><ul><li>Point of sale / customer management </li></ul></ul><ul><ul><li>Hiring, training and communications </li></ul></ul><ul><li>The criteria for project selection should indicate how each potential project would contribute to the organisation's value proposition and set of value-creating opportunities </li></ul><ul><li>Criteria used to prioritise projects would differ between “working in the business” vs “working on the business” </li></ul><ul><li>Contribution to improvement in key metrics </li></ul><ul><li>Level of reduction in cycle times </li></ul><ul><li>Level of reduction in process costs </li></ul><ul><li>Amount of improvement to customer service level </li></ul><ul><li>Improvement in service or delivery quality </li></ul><ul><li>Resources required </li></ul><ul><li>Dollar value of the project </li></ul><ul><li>Resources required </li></ul><ul><li>Project risk </li></ul><ul><li>Profit margin </li></ul><ul><li>Growth market share </li></ul><ul><li>Lead time to revenue </li></ul>Working on the business Working in the business
    56. 56. Value Delivery and Benefits realisation <ul><li>The value and benefits are the project outcomes expressed in terms of advantages for the organisation </li></ul><ul><li>The core value creation and benefits types are: </li></ul><ul><li>Benefits realisation begins with the choice and design of projects (in the engagement domain) and ends with the verification of outcomes (in the transition domain) – transition is not complete until benefits have been realised </li></ul><ul><li>A continuous learning loop must also exist so that portfolio managers and project managers alike can consciously study the results of their work – and improve future outcomes through the project / portfolio lifecycles </li></ul><ul><li>Revenue </li></ul><ul><li>Productivity </li></ul><ul><li>Profit </li></ul><ul><li>Capacity </li></ul><ul><li>Speed </li></ul><ul><li>Development of operating costs </li></ul><ul><li>Time to market </li></ul><ul><li>Time to benefit </li></ul><ul><li>Product cost </li></ul><ul><li>Product failures </li></ul><ul><li>Service delivery cost </li></ul>Increases in: Decreases in:
    57. 57. In summary, <ul><li>Strategic execution requires a systematic approach for identifying and implementing the right actions / outcomes to deliver on strategic promises </li></ul><ul><li>It will be successful when it executes the right set of strategic projects in the right way - time, order, outcome – through structured and transparent scoping, benefit identification and resourcing </li></ul><ul><li>Portfolio management is a critical component of strategic execution, with the most significant element being the engagement imperative </li></ul><ul><li>Typically there are a large number of projects (both technology and business related) occurring simultaneously across the organisation – the alignment, sequencing and resourcing of those under a strategic portfolio framework </li></ul><ul><li>Developing and implementing the appropriate (right) project governance and sponsorship model will play a large role in the success of strategic execution </li></ul><ul><li>Strategic execution is not easy – if it was, then there would be more good stories than bad and many more organisations would be well down the experience curve </li></ul><ul><li>Managing the lifecycle of strategic planning through execution requires leadership commitment, good processes, and the right people and learnings </li></ul>
    58. 58. Session 3 Case Studies: <ul><li>WiPro – Using the Strategic execution framework (SEF) </li></ul><ul><li>Carlson Hospitality – Chunking the execution portfolio </li></ul>
    59. 59. Case Study: Wipro – Using the SEF <ul><li>Wipro is a $2.4b Bangalore, India based company incorporated in 1945 (as India Vegetable Products Ltd), changing to Wipro Limited in 1984 to mark the widening of it’s product line to include technology services, etc – today Wipro is a global IT services powerhouse </li></ul><ul><li>Chairman Azim Premji and his strategy making team recognised the need for comprehensive change that would create new alignments across the organisation and that these would be far reaching </li></ul><ul><li>A 2005 study (one of many undertaken to drive it’s transformation) revealed that Wipro's ability to grow in the IT solutions market would be directly proportional to it’s ability to create a world-class cadre of strategy-savvy senior programme managers who would need to understand customers strategic needs and the organisational alignments necessary to achieve them so that Wipro could become trusted advisers to helping design IT solutions, so: </li></ul><ul><ul><li>Using the strategic framework, Wipro adopted a comprehensive, systematic approach to its strategic transformation. It needed to change its capability quickly and comprehensively. </li></ul></ul><ul><ul><li>First, it designed a simple framework for communicating the new direction throughout their organisation (summarised by the slogan “from ‘Get it done! to ‘Get the right results!’”). They assessed the differences between their existing programme management capabilities and the desired new profile of senior programme managers (identifying significant differences in business focus, delegating, coaching, change management and risk management, role identification, etc) </li></ul></ul><ul><ul><li>Second, the strategy makers and the project leaders embarked on a series of transformational projects to create the programme management cadre. Al agreed this would involve sustained focus, including comprehensive training, recruiting, compensation, empowerment, processes, governance and accountabilities in order to create a new SEF enable customer partnering capability </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>The Strategic Execution Framework helped guide this significant commitment to investments in what could have remained a hidden project portfolio, which if unaddressed, would certainly have hampered execution </li></ul></ul><ul><ul><li>Executive and senior management were able to make the transition by using a framework to guide the scoping, sequencing and implementation of a broad range of strategic initiatives across Wipro. Once the framework was understood and up and working, success and progress came quickly. </li></ul></ul>
    60. 60. Case Study: Carlson – chunking the execution portfolio <ul><li>Carlson Hospitality Worldwide is a large US based in Minneapolis , Minnesota, operating hotels and restaurants and providing marketing & loyalty programmes . They were started in 1938 with an idea and a $55 loan, today they employ some 160,000 people across 150 countries </li></ul><ul><li>Carlson’s mission is “Building Better relationships ” and Vision is “T o become the most respected private company on earth” </li></ul><ul><li>Carlson uses chunking to break big, expensive projects into smaller, more manageable ones, thereby boosting their chances of receiving approval and funding, but also their success. </li></ul><ul><ul><li>After the Board rejected a $15 million / 2 year implementation business case in 2000 to overhaul the company’s central reservation system, managers broke that one large project into smaller work units called “chunks” – still supporting the strategy - each having standalone benefits and minimal mutual dependencies. By chunking into 5 semi-independent projects, it reduced overall risk such that if one chunk was cancelled, others could still move ahead. The overall cost was slightly higher by 10%, due to the stop/start nature of the chunks, but it allowed implementation and benefits to occur much earlier </li></ul></ul><ul><ul><li>The board soon approved the first chunk. The sequence of chunks was well planned out - even though the projects were independent of each other from benefits – allowing the execution portfolio to be optimised based on sequence of business change, integrating functions and technology enablement </li></ul></ul><ul><ul><li>Ultimately, Carlson's new reservation system was implemented and voted best in the industry – it’s voice recognition chunk alone generated $40 million in annual revenue by 2003 </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>According to Carlson’s CIO Scott Heintzeman, chunking helped them learn constantly and perpetually reassess their work priorities. It reduced risk and focused peoples efforts on each work unit. And because the work effort on each chunk extended no more than 3-6 months, people across IT and the business maintained energy and enthusiasm </li></ul></ul><ul><ul><li>Chunking minimises risk, allows a portfolio to be broken down into more workable and executable projects, allows benefits to be realised earlier and maintain change momentum across the company (compared to one large project that might take 1-2 years, with the benefits only once it is implemented) </li></ul></ul>
    61. 61. Session 4 Identifying the Strategic Initiatives and Planning the Strategic Execution
    62. 62. Strategic Initiatives <ul><li>Newton’s 1st law applied to an organisation, states that an organisation at rest will remain at rest - Newton’s 2 nd law states that a force is needed to accelerate a mass into motion </li></ul><ul><li>Strategic initiatives represent the force that accelerates an organisational mass into action, overcoming inertia and resistance to change </li></ul>Strategic Initiatives are the collections of finite-duration discretionary projects and programmes, outsides the organisations day-to-day operational activities, that are designed to help the organisation achieve it targeted performance <ul><li>Organisations use three processes to manage their portfolios of strategic initiatives: (1) select initiatives, (2) provide resources for them (3) assign accountability for executing them </li></ul>The Execution Premium, Robert Kaplan, HBR press 2008 <ul><li>Executive theme owners </li></ul><ul><li>Theme members </li></ul>Executive team members are generally responsible for managing within functional or business unit silos To establish accountability for the execution of cross-business strategic themes 3. Establish Accountability Who will lead the execution of the strategic initiatives? <ul><li>STRATEX (Strategic Expenditures) </li></ul><ul><li>Prioritised initiatives </li></ul>Cross-business portfolio funding is contrary to hierarchical, departmental structure of the budgeting process To provide a source of funding for strategic initiatives that is separate from the operational budgets 2. Fund the Strategy How do we fund out initiatives? <ul><li>Portfolios of initiatives for each strategic theme </li></ul>Strategic investments are justified on a stand-alone basis in different parts of the organisation To define the portfolio of initiatives needed to close each of the performance gaps 1. Choose Strategic Initiatives What action programmes does our strategy need? Enabling Tools Barriers Objective Initiative Management Process
    63. 63. Choosing Strategic Initiatives <ul><li>A strategic plan requires the coordinated management of multiple initiatives across the company, including processes that cross functions and business units </li></ul><ul><li>Initiatives should not be selected in isolation of each other – they should aligned to Strategic Goals and Themes – a portfolio of initiatives should be developed for each Strategic Theme </li></ul><ul><li>The Strategy map is useful for identifying candidate initiatives. Once a list has been identified, the initiatives need to be aligned to Strategic Themes and objectives – Themes with no initiatives should be culled </li></ul>The Execution Premium, Robert Kaplan, HBR press 2008 Meet Regulatory Standards Programmes / Projects Warehouse upgrade X Indentify quality needs X Product development funnel X Financial system restructure X Customer call centre upgrade X <ul><li>Drive Future Value </li></ul><ul><li>Objective 5 </li></ul>X <ul><li>Grow Partner Relationship </li></ul><ul><li>Objective 3 </li></ul><ul><li>Objective 4 </li></ul>X <ul><li>Enhance Service Delivery </li></ul><ul><li>Objective 1 </li></ul><ul><li>Objective 2 </li></ul>Initiative “n” Sales force training Procurement redesign Strategic Themes / Initiative Portfolios Initiative Serving No Themes Theme with no Initiatives
    64. 64. Review and Scoring Initiatives <ul><li>Appoint a designated group to review all new proposal initiatives – proposals should documented using simply template covering </li></ul><ul><ul><li>Description of the initiative </li></ul></ul><ul><ul><li>The strategic theme or objective it is intended to support </li></ul></ul><ul><ul><li>The expected results </li></ul></ul><ul><ul><li>Estimated resources, cost and time requirements </li></ul></ul><ul><li>The group then applies a formal process to evaluate and rank initiatives, screening existing and proposed arriving at a quantitative score </li></ul><ul><li>The process might have three criteria (each company should choose it own criteria and relative weightings), for example: </li></ul><ul><ul><li>Strategic fit and benefit (50% weighting) </li></ul></ul><ul><ul><li>Resource demands (30% weight) </li></ul></ul><ul><ul><li>Organisational capability and Risk (20% weight) </li></ul></ul>Input Candidate projects x 5 x 3 x 2 Output Scored projects Strategic Fit and Benefit <ul><li>Resource Demands </li></ul><ul><li>Cost to implement </li></ul><ul><li>FTEs required </li></ul><ul><li>Duration </li></ul><ul><li>Organisational Capability (Risk) </li></ul><ul><li>Confidence in ability to deliver </li></ul><ul><li>Changes required </li></ul><ul><li>Scoring model: </li></ul><ul><li>Each initiative is ranked against all of the criteria </li></ul><ul><li>The rating is then multiplied by the criterion’s weight </li></ul><ul><li>The scores for the criteria are added together for the total score </li></ul>
    65. 65. Fund the Strategic Initiatives <ul><li>After scoring and ranking all potential initiatives, the group refers all the initiatives and their scores to a leadership team for final discussion, debate and selection – the final approved list contains the critical few strategic initiatives that will funded to drive performance </li></ul><ul><li>Normal OPEX budgets (the traditional management control system) focuses on performance and accountability for responsibility centres and functions </li></ul><ul><li>If funding of strategic initiatives comes from these budgets, the strategy will be put in jeopardy – it will have to compete for resources with departmental operational projects </li></ul><ul><li>Besides OPEX and CAPEX, a strategic expenses category STRATEX should be created to segregate the resources required to implement initiatives that deliver longer term benefits </li></ul><ul><ul><li>OPEX funds the day to day operations of the company (salaries, marketing, travel) </li></ul></ul><ul><ul><li>CAPEX funds tangible assets (plant, property, equipment, systems) </li></ul></ul><ul><ul><li>STRATEX funds intangible assets (that provide long term organisational capabilities) </li></ul></ul><ul><li>STRATEX is discretionary funding, guided by either rule of thumb (5% of sales) and is often treated like CAPEX (amortisatised or depreciated asset) </li></ul><ul><li>A good place to start is to accumulate all the spending on existing initiatives and see what percentage of total spending it represents </li></ul>
    66. 66. Linking Strategy to the Budget through STRATEX <ul><li>STRATEX funding is critical for the portfolios of cross-business initiatives </li></ul><ul><li>It therefore deserves a separate authorised line item in the company budget or financial forecast </li></ul><ul><li>The separate STRATEX line item allows the company to balance long- and short-term considerations in its financial forecasting and operating processes </li></ul>Theme 3 Theme 2 Balanced Scorecard <ul><li>Themes </li></ul><ul><li>Objectives </li></ul><ul><li>Measures </li></ul><ul><li>Targets </li></ul><ul><li>Accountabilities </li></ul>Strategic Initiatives <ul><li>Strategy </li></ul><ul><li>Strategy map </li></ul>Integrated Strategic Plan Rolling Forecast (Budget) <ul><li>$$ % </li></ul><ul><li>Revenue xx 100% </li></ul><ul><li>Direct expense (xx) (40) </li></ul><ul><li>Gross margin xx 60% </li></ul><ul><li>Indirect expense </li></ul><ul><li>- Sales (xx) (10) </li></ul><ul><li>- Prof dev (xx) (5) </li></ul><ul><li>- G+A (xx) (15) </li></ul><ul><li>Contribution xx 30% </li></ul><ul><li>R&D (xx) (5) </li></ul><ul><li>STRATEX (xx) (5) </li></ul><ul><li>EBITDA XX 20% </li></ul><ul><li>ITDA (xx) (5) </li></ul><ul><li>NET INCOME XX 15% </li></ul>Operational Plan / Budget Total Budget $xxx Theme 1 $XX Total Strategic Investment Cost Management <ul><li>OPEX </li></ul>Investment Management <ul><li>CAPEX </li></ul>
    67. 67. Establishing Initiative Accountability <ul><li>The strategy has been divided into several strategic themes, many crossing functions and business units – they do not fall into the existing responsibility of any senior executive </li></ul><ul><li>At this stage the strategic themes are still plans – they do not produce results until the required changes are executed at the operational and process levels </li></ul><ul><li>Companies typically assign 1-2 members of the executive team to be “owners” of each strategic theme, giving these “theme owners” the “night jobs” of overseeing execution in addition to their day jobs as heads of business or functional units </li></ul><ul><li>Each theme owner leads a “theme team” – a collection of individuals drawn from multiple business, regional, and support units – whose job it is to link the theme’s strategic objectives to operational tasks </li></ul><ul><li>Theme team members can be dedicated or part-time – they join the team because of their competencies and process expertise. </li></ul><ul><li>Theme teams do not have authority over functions or businesses – typically they are big thinkers, detailed-orientation coalition builders and hard-charging functional specialists – but they strive to ensure buy-in across the organisation </li></ul>
    68. 68. Developing the Strategic Execution Roadmap <ul><li>Once the Strategic initiatives have been selected, work is undertaken to identify the sequence of implementation – the Strategic Execution Roadmap </li></ul><ul><li>The Strategic Execution Roadmap is an extension of the Strategy map, developed by adding the dimension of time across the themes and determining the linkages and sequence of execution </li></ul><ul><li>Typically some initiatives will be dependent on other initiatives either competing, or at a minimum delivering some changes to operations or processes – the logical order and sequencing is determined by identifying predecessor and successor linkages </li></ul><ul><li>Typically the Roadmap would cover 3-5 years, with reviews every 12 months </li></ul><ul><li>Using the Du Pont case study, the Strategic Initiatives 3 year Roadmap for the Strategic Goal: Maximising Shareholder Value </li></ul>New Business Designs Customer Management Product Portfolio Supply-Service Order-Cash Operational Excellence Year 3 Year 2 Year 1 Strategic Themes Minimise operating costs Improve transaction costs Offer lower prices IT Platform to allow growth Develop selling skills Optimise profit by category Consulting & program mgt Develop discipline processes Provide breakthrough value Implement order entry & Execution application Implement application mgt Develop sales model Improve productivity Drive polymer process robustness Achieve extraordinary results
    69. 69. Identify and Confirm Strategic Initiatives KPIs <ul><li>The KPIs for Strategic Initiatives should be the same as developed for the strategic goal, as defined in the Strategy Map and Balanced Scorecard </li></ul><ul><li>Developing goal/metric clarity is critical: consider the differences between the following customer measures: </li></ul><ul><ul><li>Customer satisfaction : Customers say they got what they wanted </li></ul></ul><ul><ul><li>Customer insistence: Customers insist on buying only from one source </li></ul></ul><ul><ul><li>Customer reference: Customers regularly refer a business to their friends </li></ul></ul><ul><li>Each of these strategic outcome measures can easily translate into an effective initiative project output metric – but each will encourage different behaviour, so how do we choose the right KPI </li></ul><ul><li>One structured approach is to split the goal into component parts of purpose, issue, object and viewpoint: </li></ul><ul><ul><li>Purpose: Increase </li></ul></ul><ul><ul><li>Issue: the rate of </li></ul></ul><ul><ul><li>Object : customer referrals </li></ul></ul><ul><ul><li>Viewpoint : from the sales force perspective </li></ul></ul><ul><li>Next identify the underlying questions relative to the goal. In this instance the question might be: How many sales result from existing customers recommending our company to others? </li></ul><ul><li>Answering the question points to the appropriate metric such as: Percentage of sales transactions from referrals </li></ul>
    70. 70. Translate strategy maps into metrics and projects <ul><li>Translating strategic speak into project parlance and metrics is not easy </li></ul><ul><li>Critical aspect is choosing metrics that align the proposed project outputs with the desired strategic outcomes </li></ul><ul><li>An example from South West Airlines </li></ul>Executing Your Strategies, Mark Morgan, et al 2007 Objectives Measurement Target Initiative <ul><li>Fast ground turnaround </li></ul><ul><li>On-ground time </li></ul><ul><li>On-time departure </li></ul><ul><li>30 minutes </li></ul><ul><li>90% </li></ul><ul><li>Cycle time optimisation </li></ul>Statement of what strategy must achieve and what’s critical to its success How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action initiatives / projects required to achieve objectives Strategic Theme: Operating efficiency Profitability More customers Fewer planes Financial Customer Internal Learning Lowest prices Flight is on time Flight is on time Flight is on time Strategy map: Diagram of the cause-and-effect relationships between strategic objectives
    71. 71. Matching Initiatives with Organisational resources <ul><li>Creating and optimising Initiatives resourcing needs to meld two types of information together to allow hard decisions to be made about what is and is not going to get done: </li></ul><ul><ul><li>Resource needs and timing for the prioritised projects </li></ul></ul><ul><ul><li>Resource capacity and availability over time </li></ul></ul><ul><li>Optimisation requires each project or programme manager to provide the following information for each project and programme: </li></ul><ul><ul><li>Project deliverables </li></ul></ul><ul><ul><li>Success criteria </li></ul></ul><ul><ul><li>Priorities amongst scope, schedule and resources </li></ul></ul><ul><ul><li>High level schedule (Gantt chart) </li></ul></ul><ul><ul><li>Resources required by skill type and approximate timing </li></ul></ul><ul><ul><li>Interdependencies with other project and programmes </li></ul></ul><ul><li>This information should be provided in a standard format template, to ensure it allows for all the relevant information and will allow easier comparisons </li></ul><ul><li>Small portfolios can use spreadsheets to match resources requirements and availability, large portfolios require more sophisticated tools </li></ul><ul><li>The process of identifying and optimising organisational resources does not have to be perfect, but it should be refined as more information becomes available </li></ul>
    72. 72. Project resourcing schedule example
    73. 73. In summary, <ul><li>After the executive team has translated its strategy into a Strategy map and Balanced scorecard, it must lead a process that selects, funds and assigns accountability for theme-based portfolios of Strategic Initiatives </li></ul><ul><li>Companies use the following process to select and manage their strategic initiative portfolios: </li></ul><ul><ul><li>Choose the strategic initiatives by identifying, ranking strategic initiatives for each theme </li></ul></ul><ul><ul><li>Fund the strategic initiatives portfolio by establishing a strategic expenditures budget </li></ul></ul><ul><ul><li>Establish accountability by selecting theme owners and team to execute the portfolios </li></ul></ul><ul><ul><li>Develop the Strategic Execution Roadmap, based on Strategy map </li></ul></ul><ul><ul><li>Develop the KPIs for each Strategic Initiative, aggregated to the Strategic Theme </li></ul></ul><ul><ul><li>Identified the resources required to optimise execution </li></ul></ul>
    74. 74. Session 4 Case Studies <ul><li>CODASciSys – choosing strategic initiatives / projects </li></ul><ul><li>Goodward Insurance – tuning execution planning </li></ul><ul><li>Serono – making initiative management a competitive advantage </li></ul>
    75. 75. Case Study: CODASciSys – choosing strategic projects <ul><li>CODASciSys are a UK-based IT services provider founded in 1980 and listed on the AIM in 1997 </li></ul><ul><li>In the early 2000’s, the organisation was looking at strategically growing their divisions and possibly acquiring companies to compliment their strengths </li></ul><ul><li>In 2004, CEO Graham Steinsberg wanted to bring managers together to clarify the vision of that the new entity resulting from a revised strategy would look like and have them then develop the strategic implementation plans </li></ul><ul><ul><li>CODASciSys executive had developed the draft strategic plan – this was the starting point and the first thing that the wider management team did was develop a list of strategic opportunities </li></ul></ul><ul><ul><li>From the strategic opportunities identified, a number were chosen that had clear alignment and were easily executable, from these a list of strategic projects were developed linked to strategic themes </li></ul></ul><ul><ul><li>For each of these themes, a list of projects were developed with clear definitions of tasks, milestones and accountabilities </li></ul></ul><ul><ul><li>The projects were grouped into portfolios and then able to be fine tuned with metrics and resources </li></ul></ul><ul><ul><li>All the while managers from across CODASciSys were actively involved in planning much of the detail bottom up. They operated in cross-functional teams , each led by divisional executive </li></ul></ul><ul><ul><li>The CEO spent a lot of his time clarifying and communicating the vision, goals and outcomes rather than directing the development of the strategic execution </li></ul></ul><ul><ul><li>From this came a strategic implementation plan that was then successfully implemented following acquisitions in France, Sweden and Germany during 2004/05 </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>Involving a wider team in the design of the strategy execution plan enables buy-in, clearer outcomes and more pragmatic approach to the scope of projects - As a result of involving management, and build cross-functional teams, the managers began thinking like a team instead of obsessing about whether they would still have a job after an acquisition </li></ul></ul><ul><ul><li>By refine the plan with input from top performers and key stakeholders, they were able to achieve greater buy-in to the strategy and the subsequent execution phases </li></ul></ul>Execute Your Strategy without Killing it, Lauren Keller Johnson, HMU, Dec 2004
    76. 76. Case Study: Goodwood Insurance – tuning execution <ul><li>Consider the experience of a leading insurance company with 7,000 employees we will call Goodwood Insurance - a successful company with strong capital reserves, steady revenue and customer growth </li></ul><ul><li>It’s leadership wanted to further enhance execution to deliver on an ambitious five-year strategic agenda that included aggressive targets in customer growth, revenue increases, and cost reduction which would require a new level of teamwork </li></ul><ul><li>While there were pockets of cross-collaboration across the company, often there was little incentive to do so: Unit A’s goals might require the involvement of Unit B to succeed, but Unit B’s goals might not include supporting Unit A’s effort </li></ul><ul><li>The company had initiated a number of enterprise wide strategic projects over the years, which had been completed on time and budget, but often had to be reworked because stakeholders needs hadn’t been sufficiently taken into account </li></ul><ul><ul><li>To identify the greatest barriers to building a stronger execution culture, Goodwood Insurance gave a diagnostic survey (offered by Booz & Co, www.simulator-orgeffectiveness.com ) to all 7,000 staff </li></ul></ul><ul><ul><li>Through the survey, Goodwood Insurance uncovered impediments to execution in three of the influential organisational traits: (1) Information did not flow freely across organisational boundaries, (2) Important information about competitive environment did not get to headquarter quickly, (3) No one had a good idea of the decisions and actions for which he/she was responsible </li></ul></ul><ul><ul><li>Executives immediately responded by launching a change programme that covered all three areas, by integrated early (often symbolic) changes with long-term initiatives in an effort to build momentum and galvanise participation and ownership – solid improvements have been made in cross-unit collaboration (20-25%), employee satisfaction has increased and high performers are reaching across boundaries to gain broader understanding of the full business </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>Identifying execution impediments across the organisation, then responding to improve them, by engaging with staff can provide insights and collaborative gains </li></ul></ul>The Secrets to Successful Strategy execution, Gary Neilson, et al, HBR June 2008
    77. 77. Case Study: Serono – initiative management advantage <ul><li>Serono, a Switzerland based pharmaceutical firm, is the largest biotechnical company in Europe and the third largest in the world. It is a world leader in reproductive health, with strong market positions in neurology, metabolism and growth, treatment of multiple sclerosis and psoriasis. </li></ul><ul><li>Headquartered in Geneva, Serono employs more than 5,000 people in 45 countries around the world. Since 1999, Serono has had double-digit growth in revenues and income. Annual revenues are three times that of it’s biotechnical peers. </li></ul><ul><li>In 2007, Serono was acquired by Merck and reincorporated as Merck Serono. Prior to this, through a small office named the Office of MTH (“Make Things Happen”), the new CEO Ernesto Bertarelli was looking for ways to create a more nimble, less bureaucratic organisation </li></ul><ul><ul><li>Serono has established a strict criteria for launching a new initiative. Each objective and strategic theme must have at least one initiative that will drive the actions designed to achieve strategic performance. Also, all organisational units and functions must participate in at least one strategic initiative. </li></ul></ul><ul><ul><li>The Executive Committee set priorities among all projects and assigns one of it’s member to sponsor each project approved for funding. The committee also assigns responsibility for each strategic initiative to an executive committee member, who reports monthly on progress and direction of his/her strategic initiative to cross-functional supervisory (steering) committees. </li></ul></ul><ul><ul><li>Serono uses a sophisticated project management system, called the Corporate Strategic Master Plan (CSMP) which is documented in it’s “Yellow Book”. This online system establishes the procedures for monitoring and managing strategic initiatives and projects. The CSMP is updated daily by project managers. </li></ul></ul><ul><ul><li>To streamline the approval and supervisory process, projects are also organised into clusters of 15-20 strategic initiatives that the executive committee reviews at least twice a year. </li></ul></ul><ul><li>What can we learn from this? </li></ul><ul><ul><li>Previously, Serono’s executives most of their time in the operational details of the business. Today, the top management is absolutely capable of distinguishing strategy from operational management. </li></ul></ul><ul><ul><li>The focus and commitment that the CEO and executive have given to the creation and management of strategic initiatives has paid off significantly in terms of growth and competitive advantage. They do not know how they could continue to lead the company without the capability Strategic execution has given them. </li></ul></ul>The Execution Premium, Robert Kaplan/David Norton, 2008
    78. 78. Workshop – alignment through the Balanced Scorecard <ul><li>Workshop Objective: </li></ul><ul><ul><li>Show how to link a Balanced Scorecard to a Strategic map, show the key elements of the Strategy Map and the Balanced Scorecard, then derive Strategic measures, initiatives and budgets </li></ul></ul><ul><li>Approach: </li></ul><ul><ul><li>Show how LowCost Airlines developed their Strategy Map, linked to Balanced Scorecard, linked to Actions Plans </li></ul></ul><ul><ul><li>Show how WellPoint Dental used their Strategy Map to develop a Balanced Scorecard, which linked to strategic execution by identifying the Initiatives necessary to executive the strategy </li></ul></ul>
    79. 79. LowCost Airlines – Strategy Map=>Balanced Scorecard <ul><li>Consider the situation of LowCost Airlines, a generic discount airline with a strategic theme of operational excellence, as illustrated </li></ul><ul><li>The theme’s financial perspective are net income and return on assets. LowCost has also identified two financial metrics - revenue growth and asset utilization (operating fewer planes) - that drive its high-level financial metrics. If LowCost can increase utilization of its air­planes and flight crews, it can earn higher revenues without having to spend more on these expensive resources. </li></ul><ul><li>The theme’s customer perspective expresses LowCost’s value proposition to offer passengers both the lowest prices and the most reliable depar­ture and arrival times in the industry. LowCost measures these customer objectives by benchmarking its prices, on-time departures, and arrival performance against industry best practices. </li></ul><ul><li>The theme’s process perspective is the reduction of ground turnaround time. LowCost uses two measures for this critical process objective: the average time its planes spend on the ground between flights, and the percentage of flights that depart the gate on time. By reducing the time its planes spend on the ground, LowCost enables its planes to depart on time (meeting a key customer ex­pectation) and gets better use of its most expensive resources—airplanes and flight crews. </li></ul><ul><li>The theme’s learning and growth perspective has an objective to train and mo­tivate ground crews for fast ground turnarounds, much like the training of an Indianapolis 500 race car pit crew, which can change four tires in less than fifteen seconds. </li></ul>Balanced Scorecard Measurements Targets <ul><li>Market value </li></ul><ul><li>Seat revenue </li></ul><ul><li>Plane lease costs </li></ul><ul><li>FAA on-time arrival rating </li></ul><ul><li>Customer ranking </li></ul><ul><li>Number of repeat customers </li></ul><ul><li>Number of customers </li></ul><ul><li>On-ground time </li></ul><ul><li>On-time departure </li></ul><ul><li>% ground crew stockholders </li></ul><ul><li>Strategic awareness </li></ul><ul><li>Strategic job readiness </li></ul><ul><li>Information systems availability </li></ul><ul><li>30% CAGR ** </li></ul><ul><li>20% CAGR </li></ul><ul><li>5% CAGR </li></ul><ul><li>#1 </li></ul><ul><li>#1 </li></ul><ul><li>70% </li></ul><ul><li>Increase 12& annual </li></ul><ul><li>30 minutes </li></ul><ul><li>90% </li></ul><ul><li>100% </li></ul><ul><li>100% </li></ul><ul><li>Yr 1 – 0% </li></ul><ul><li>Yr 2 – 90% </li></ul><ul><li>Yr3 – 100% </li></ul><ul><li>100% </li></ul>Strategy Map Theme: Operating Excellence Objectives Ground crew alignment Strategic systems Crew scheduling Strategic bob Ramp agent Fast ground turnaround Attract and retain more customers Profits and RONA * * Return on net assets ** Compound annual growth rate Grow revenues Fewer planes On-time service Lowest prices <u

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