This document discusses how companies can effectively execute their strategies through linking strategic projects and initiatives to strategic priorities and performance metrics. It recommends using a balanced scorecard approach and project portfolio management software together to 1) ensure the right projects are prioritized and resources are allocated based on strategic goals, 2) track and measure project performance based on both financial and non-financial metrics, and 3) clearly define how each project supports strategic objectives. It also emphasizes the importance of effective communication of the strategy and linking employee compensation to achievement of strategic goals and metrics.

1. A Balanced
Approach to
Delivering the
Strategy
Part 2

2. 2 | Oracle HBR Campaign Brochure
The Right Tools Bind
Execution to Strategy
Through the roller coaster ride of the global
economy, the disruptive power of the internet
and prevailing winds of globalization, a top
priority among senior executives remains
remarkably constant. Executing on strategy is
nearly always among their top concerns.
Even during the depths of the financial crisis in 2008, independent business
research association The Conference Board found executing a strategy
was the top priority in its annual CEO survey.
The constant presence of these concerns
is all the more remarkable since there are
proven tools to tackle them. By using a formal
system to link execution to strategy based on
a range of business performance measures
and software to track a portfolio of projects
designed to execute the strategy, businesses
can achieve a breakthrough in performance.

3. A Balanced Approach to Delivering the Strategy | 3

4. 4 | A Balanced Approach to Delivering the Strategy
Planning Projects from
Strategic Priorities
By having a strong grip on strategic projects
across a global organization, business
leaders can ensure the right projects are
getting the right resources, and measure
their success according to criteria that
reflect strategic priorities. Exploiting software
designed to track a global portfolio of projects
and initiatives can help businesses achieve
breakthrough performance.
Robert Kaplan, the Harvard Business School professor who jointly developed
the balanced scorecard (BSC), a widely adopted tool for measuring business
performance, says: “As new projects are being planned, there are two critical
resources: money and personnel. The finance function will know about the
money end of the story, but Project Portfolio Management software can identify
the current commitments of key people to existing projects and therefore as
new projects are being proposed for the strategy, business leaders know the
availability of people to execute the strategy. The software keeps track of the
existing and projected demands on project personnel. Without such knowledge,
the organization can take on and fund a portfolio of projects and then later
realize it does not have the right people available to implement them.”
The balanced scorecard and a six-stage system
Professor Kaplan worked with consultant David Norton to develop the
balanced scorecard system of measuring business performance during
the 1990s. This method, adopted across the globe by firms including
Statoil, Merck, Cisco, Mapfre, City of Barcelona, Infosys and VW do
Brasil, captures aspects of performance beyond traditional budgetary and
financial measures. Working with CEOs, Kaplan and Norton refined the tool
to apply to company strategy; this means measuring non-financial factors
such as product innovation and/or customer relationships.

5. Oracle HBR Campaign Brochure | 5A Balanced Approach to Delivering the Strategy | 5
Kaplan and Norton’s six-stage system for integrating
strategy and execution
1. Develop the strategy by assessing your mission, values and vision. Analyze external
competition, economy and environment. Use SWOT analysis and then choose your
differentiating strategy.
2. Plan the strategy using strategy maps and balanced scorecards; set stretch targets for the
measures and select the portfolio of strategic initiatives.
3. Align the organization with strategy by ensuring organizational units and employees are
aligned with strategy map objectives and BSC measures.
4. Plan operations using tools such as quality and process management, re-engineering,
process dashboards, rolling forecasts, activity-based costing, resource capacity planning and
dynamic budgeting.
5. Monitor and learn about problems, barriers and challenges. Monthly or quarterly review
meetings help executives tackle strategic issues using the same data.
6. Test and adapt the strategy using internal operational data and new external environmental
and competitive data.
In 2008, at the height of the financial crisis, Kaplan and Norton
launched a six-stage system for integrating strategy planning
and operational execution using the balanced scorecard. This
involves creating strategy maps to plan the strategic execution
and how it will be interpreted in project performance metrics.

6. 6 | A Balanced Approach to Delivering the Strategy
Complementing the
Balanced Scorecard
with PPM Software
The balanced scorecard offers an array of
performance metrics to evaluate the impact of
each project. Without this balanced approach
project performance would be judged only
in financial terms, such as cost and rate
of return, Professor Kaplan says. The BSC
nonfinancial metrics can be incorporated into
the criteria for assessment in project portfolio
management software.
“Not all projects have a specific financial return and payback. Some are
designed to enhance performance on nonfinancial balanced scorecard
metrics, such as customer loyalty, improvement in the innovation cycle or
managing supplier relationships. The project can be valued because of its
impact on critical performance variables on the balanced scorecard. The
financial impact comes through the cause and effect linkages on the balanced
scorecard measures underlying the strategy,” Professor Kaplan says.
These softer objectives from the balance scorecard measures can be built
into project portfolio management software. “For every project you would
have clear definition of not only what the project is but the expected results
it will deliver. Each project should be improving at least one objective on the
strategy map or KPIs on the balanced scorecard.”
That way, people working on a project not only have a clear idea of its
progress, but can see where it fits within the strategy of the organization.
“It elevates projects from being something operational to being a central
component in strategy execution,” Professor Kaplan says.

7. “It elevates projects from being something operational to being
a central component in strategy execution.”
A Balanced Approach to Delivering the Strategy | 7

8. 8 | A Balanced Approach to Delivering the Strategy
The Office of Strategic
Management
While existing departments and cross
functional teams are responsible for delivering
the strategy, building a team to organize
strategic decision making and provide data is
essential to its success, Professor Kaplan says.
This “strategy management office” might be manned by people from
existing units such as the strategic planning group, finance, human
resources or the quality control organization. Their seniority may also be
two or three management levels below the C-suite executives. They will be
responsible for scheduling meetings, distributing agendas, and following up
after the meetings. They will also need to provide the data for the meeting.
While members of this team need to be experts in the objectives and
metrics in the strategy execution system, they also need softer skills,
Professor Kaplan says.
“They have to be analytical, but their role is also facilitation and
persuasion. They have to work with business unit and line executives,
listen to them and have some degree of empathy and emotional
intelligence. They have to be able to question and challenge the
executives without evoking defensive behavior.”
An Office for Project Management
Separate from the office of strategy management, businesses need to
create an organization responsible for project management. But the two
teams need to work together, says Professor Kaplan.
“This is a huge opportunity. The two streams of work have been parallel
but not intersecting. We have to get them to converge much more and that
would generate a lot of value for the organization.”

9. Communicating the Plan
Once an organization has a strategy and an
agreed set of metrics to measure performance
against it, they make sure everyone in the
organization understands it.
In 2006, after the arrival of a new CEO, VW Brazil shared its new strategy
and strategy map with employees by putting up posters in every place
of work, running training programs, and creating a logo to represent the
strategic campaign. “They had an amazing communication program,”
Professor Kaplan says.
The South American automotive company had gone through a tough period,
dropping in market share, posting several years of losses and cutting staff.
Through the strategy and its communication, staff were shown the future
was not about cutting the costs, lowering wages or forcing them to work
longer hours. “By being smarter and building better cars, they could see
they could win. That got morale up,” Kaplan says.
In the end employees made 3,000 suggestions of ways the company could
reduce defects, improve health and safety and speed up production. Within
two years, the company got back to number one in the market share, sales
volumes were up 40 per cent and profits skyrocketed.
“This is a huge opportunity. The two streams of work have
been parallel but not intersecting. We have to get them to
converge much more and that would generate a lot of value
for the organization.”

10. 10 | A Balanced Approach to Delivering the Strategy
Pay People
for Performance
Once people understand the strategy, and
how it will be measured, they should also be
rewarded with incentives linked to achieving
targeted performance, Professor Kaplan says.
But first a business must be comfortable with the measures it is using and
be sure the data properly reflects performance.
“If you link pay to the balanced scorecard, people are going to perform to
those measures. They will assume senior executives chose the right ones,”
Professor Kaplan says.
It is best to wait six or nine months after the system goes live to ensure
data and measures are correct before introducing performance related
pay, he says.
Firms also need to be sure they can fund the pay relating to performance.
Strategic metrics such as customer satisfaction may not immediately lead to
improved financial returns. As such these companies would be wise to fund a
bonus pool based on financial performance, but distribute it according to the
balanced scorecard’s nonfinancial customer, process, innovation and people
metrics, Professor Kaplan says.

11. A Balanced Approach to Delivering the Strategy | 11

12. 12 | A Balanced Approach to Delivering the Strategy
Track Projects that
Matter to Strategy
As well as the six-stage system, good communication and well-motivated
staff, businesses need the data to ensure they are on track with their strategy.
So they need to have the software to record a range of business metrics, and
applications to track initiatives designed to achieve strategic goals. “Then you
can start with a visualization of the strategy and cascade down until, within
four or five screens, you’re looking at weekly progress on particular initiatives
designed to implement the strategy,“ Professor Kaplan says. “You get a
clear line of sight from the strategy down to week-by-week performance on
strategic initiatives. It all gets connected.”
Oracle is a leader in project portfolio management software and software
as a service (SaaS) that keep the executive team alert to progress on their
strategic goals on a project-by-project level, without the time-consuming task
of collecting data themselves. Oracle’s Primavera Enterprise Project Portfolio
Management suite of software applications can underpin each stage of
Kaplan and Norton’s six-stage system to help bind execution to strategy.
“Oracle’s Project and Portfolio Management solutions provide valuable
information in each of the six stages of the strategy execution system, in an
integrated way with clear connections from one stage to the next and linking
operational dashboards all the way up through the feedback to executive
teams on strategic initiatives and performance on balanced scorecard
measures,” Professor Kaplan says.
The combination of balanced scorecard, strategy maps and enterprise
project portfolio management provides a solid system for organizations to fully
manage the six-stage strategy execution and operational planning system,
Professor Kaplan says.
“With the balanced scorecard and strategy map, businesses have one
version of the truth, the data they have decided are most relevant to strategy.
In addition, they are updated on all initiatives and projects [according to
BSC measures]. They have the ability to drill deep into the operations of the
organization that ultimately will deliver the strategy,” Professor Kaplan says.

13. Driving performance according to strategy is always going
to be a tough job. There will be challenges along the way.
But with a strong system to bring everyday work in line with
strategy and enterprise software to analyze performance and
broadcast data through the business, firms have the tools to
reach this goal.
A Balanced Approach to Delivering the Strategy | 13

14. Further Information
For more information on Oracle’s
Instantis EnterpriseTrack please visit
http://www.oracle.com/goto/instantis or call
US: 1.800.423.0245
UK: +44 (0) 870 8 768711
Oracle Corporation
World Headquarters
500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
oracle.com
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