4 Barriers to Strategic Implementation How many companies successfully execute strategy? What percentage of the work force understand the strategy? The Vision Barrier What percentage of managers have incentives linked to strategy? The People Barrier How much time does the executive teams spend discussing strategy per month? The Management Barrier What percentage of organizations link budgets to strategy? The Resource Barrier
4 Barriers to Strategic Implementation 90% of companies fail to execute strategy Source: Kaplan & Norton & Bridges Only 5% of the workforce understand the strategy The Vision Barrier Only 25% of managers have incentives linked to strategy The People Barrier 85% of executive teams spend less than 1 hour per month discussing strategy The Management Barrier 60% of organizations don’t link budgets to strategy The Resource Barrier
The Problem: The Strategic Management Process Is Missing in Most Organizations Strategic Learning Loop Initiatives & Programs test the hypotheses Output (Results) reporting Management Control Loop funding Input (Resources) update the strategy PERFORMANCE STRATEGY BALANCED SCORECARD BUDGET Can you imagine a war based on annual budget? “Sorry colonel, you will have to wait until January for reinforcements. That’s when we get our new budget. ” Or an operation...?
Agenda <ul><li>The Vision Thing </li></ul><ul><li>Introduction to Balanced Scorecard (BSC) </li></ul><ul><li>Introduction to Strategy Maps </li></ul><ul><li>The Numbers Quandary </li></ul><ul><li>Running the Numbers </li></ul><ul><li>How People Respond to Change </li></ul><ul><li>What it means to You </li></ul>Day One Deliverables
CORPORATE LESSON I A little bird was flying south for the winter. As the frozen bird lay there in the pile of cow dung, it began to realise how warm it was. The dung was actually thawing him out! He lay there all warm and happy, and soon began to sing for joy. Following the sound, the cat discovered the bird under the pile of cow dung, and promptly dug him out and ate him! A passing cat heard the bird singing and came to investigate. It was so cold, the bird froze and fell to the ground in a large field. While it was lying there, a cow came by... and dropped some dung on it.
CORPORATE LESSON I 1) Not everyone who drops shit on you is your enemy. 2) Not everyone who gets you out of shit is your friend. 3) And when you're in deep shit, keep your mouth shut! Moral of the story:
Customer Internal Financial Maximum return of assets Profitable Growth Customer Loyalty Seamless Cross Group Delivery of Services Understand Drivers Service Effectiveness of Customer Value Market-Driven Skills Development Process Learning Objective Measurement Target Initiative <ul><li>Seamless Cross Group Delivery of Service </li></ul><ul><li>Promised Delivery % </li></ul><ul><li>97% </li></ul><ul><li>Service Dispatch Automation </li></ul>
What gets measured gets focused upon, so we need to make sure the measures are correct! Warning…
<ul><li>EXAMPLE #1: Chicken Efficiency </li></ul><ul><li>A fast food chain give lip service to many objectives. </li></ul><ul><li>What senior management watched most rigorously was how much cooked chicken in its restaurants was thrown away (“chicken efficiency.”) </li></ul><ul><li>What happened? </li></ul>Moral: A measurement may be good on paper but you need to ask what behavior it will drive Selecting the right measures is not easy… What happens if we focus on one particular metric?
<ul><li>EXAMPLE #2: Call Centre </li></ul><ul><li>A call centre for an airline segments its customers and has a separate line for its most important customers </li></ul><ul><li>The line automatically disconnects after 59 min! </li></ul><ul><li>Why, because the call centers, managers compensation is penalized for calls over 60 min. Also key customers who were kept waiting an hour were angry when their call was finally answered so CSOs would avoid the calls and a vicious circle was started </li></ul>Moral: Don’t focus your measurement on how long it takes to answer a call but on the outcome of answering customers’ enquiries and customer satisfaction. If customers are dissatisfied with your service, one reason may be the length of time to answer the call Selecting the right measures is not easy…
<ul><li>EXAMPLE #3: The Manufacturer </li></ul><ul><li>Managers of an automatic components manufacturer, reached the company’s quality measures by reclassifying as acceptable certain flaws that would have caused a part to be rejected in the past. </li></ul>Moral: The measures drove behaviors that lowered standards not improved them. Selecting the right measures is not easy…
STRATEGY If you fold a large piece of paper over once and then fold it over again and again, until you have folded the original paper 50 times. How tall do you think the stack will be?
The real answer is that it would be approximately the distance to the sun – some 17,770,000 miles tall! Key Message In complicated decision making some form of analysis can compliment your intuition. Such analysis helps you bring to the surface those factors that are usually operating below the level of conscious thought.
After just three opening moves by a player on the chessboard how many possible different positions are there?
The total number of possible different moves in a single game of chess is more than the number of seconds that have elapsed since the big bang created the universe. 9 million positions are possible! This is because chess is a mathematical infinite game.
CORPORATE LESSON II The turkey pecked at a lump of dung and found that it actually gave him enough strength to reach the first branch of the tree. The next day, after eating more dung, he reached the second branch. Finally after a fortnight, there he was proudly perched at the top of the tree Soon he was spotted by a farmer Who promptly shot the turkey out of the tree. " I would love to be able to get to the top of that tree ," sighed the turkey, " but I haven't got the energy .” A turkey was chatting with a bull. " Well, why don't you nibble on some of my droppings?" replied the bull. They're packed with nutrients."
CORPORATE LESSON II Moral of the story: Bullshit might get you to the top, but it won't keep you there.
A woman buys a $78 necklace at a jewelry store. She gives the jeweler a check for $100. Because he does not have the $22 change on hand, he goes to another merchant next door. There he exchanges the woman’s check for $100 in cash. He returns and gives the woman the necklace and her change. Later the check bounces and he must make it good to the other merchant. He originally paid $39 for the necklace. What is his total out of pocket expenses?
“ Get your facts first and then you can distort them as much as you please.” Mark Twain
Double Agents switch partly because they are called to arms far too often and on too many occasions for failed attempts.
<ul><li>“ You can divide any workforce into three categories: </li></ul><ul><li>people who are engaged (loyal and productive) </li></ul><ul><li>those who are not engaged (just putting in time), </li></ul><ul><li>those who are actively disengaged (unhappy and spreading discontent). </li></ul><ul><li>U.S. workers are 26 percent engaged, 55 percent not engaged, and 19 percent actively disengaged. </li></ul><ul><li>Marcus Buckingham </li></ul>
In Applebee’s casual dinning segment of the restaurant business, where they have high turnover, they measure the staff turnover of the top 20% of performers, the middle 60% and the bottom 20%. Managers are rewarded for their success in retaining the top 80% and not penalized when the bottom 20 performer leaves the company.
Draw the bell curve for your department and explain its shape to a partner.
“ Mavericks – support the people who support you ”
“ Some where in your organization, groups of people are already doing things differently and better . To create lasting change, find these areas of positive deviance and fan the flames” Richard Pascale & Jerry Sternin “ Your Companies Secret Chang Agents” HBR STRATEGY
Mottos “ It is easier to ask forgiveness than it is to ask for permission” “ Safety in numbers” “ Status Quo” “ After all is said and done, more is said than done” Groupies Saboteurs Double Agents Mavericks
CORPORATE LESSON III So, the rabbit sat on the ground below the crow, and rested. A crow was sitting on a tree, doing nothing all day. A small rabbit saw the crow, and asked him, " Can I also sit like you and do nothing all day long?” The crow answered: " Sure, why not .” All of a sudden, a fox appeared, Jumped on the rabbit... and ate it.
CORPORATE LESSON III Moral of the story is…. To be sitting and doing nothing you must be sitting very, very high up.