Every organization approaches the structuring of corporate measurement frameworks in slightly different ways. The corporate structure, size and industry all come into play. What is important to consider when choosing whether to maintain a single corporate scorecard or a more complex set of cascaded scorecards is the applicability of the measures to teams of employees. What is the cut-off when line of sight between the employee and the measures seems to become weak?
Organizations with a diverse focus will often have cascaded scorecards that translate how each division are expected to contribute to the overall corporate strategy. While smaller and more homogenously focused organizations may use fewer layers of cascaded scorecards. The simple test is when you are unable to provide meaningful team specific results.
Here’s what is important in terms of outcomes, choose your own adventure in how you go about accomplishing that:
– Make strategy everyone’s job – every employee should contribute to a measure
– Link incentives to contribution to HOW you NEED them to CONTRIBUTE for the strategy to succeed
– Use measures and targets to describe the journey you’re on
– Base your operational improvements targeted directly from the strategy map
– Don’t be scared to set challenging performance gaps, but focus your effort
Leadership is the key to overcoming resistance to change or anxiety associated with tough targets. Leaders set the tone on what seems like can be accomplished.
Someone asked me yesterday “So how do we drive employee engagement? What causes that to happen?”
Off the cuff, my answer focused on 4 things:
1) having a compelling vision and
2) truly effective leadership
3) clarity of what is unacceptable about the current state
4) an idea of how you’re going to get there.
Aside from change management 101, it’s also important that you create processes that break through the operational focus that pulls people away from strategic considerations. You want your people engaged in their operational functions, but while keeping the strategic context in mind. This is most effectively achieved through a combination of leadership and process.
Here’s a practical way to work through the alignment process:
Company builds the strategy -> Communicate your positioning/growth/client experience strategies
Determine what corporate improvements drive your strategy -> Build a strategy map
Which measures most effectively speak to each objective? -> Built a scorecard
Where would improvement have the greatest supportive impact on strategy? -> Prioritize stretch/maintain targets
Determine which teams impact each measure -> Link performance/incentive management
Maintain accountability for results -> Reporting, strategy reviews, performance plan reviews
Test whether the theory held and adjust for the coming cycle -> Tweak the system and do it again
One of the most critical jobs of the C suite is to see industry trends coming, and to reposition the organization for greater or sustained success in the future. This is the basic function of strategic management.
The challenges are in this order:
• Correctly interpreting where the environment is leading
• Theorizing an effective competitive position based on:
———o The unique competencies and positioning of the organization
———o Competitive dynamics, likely competitor stratagems
———o The ability to guide or create new opportunities or markets
• Managing the change and achieving implementation success
• Correctly balancing the innovation and optimization cycles (S curve jumps)
You could argue that any of these three are the most challenging. Regardless of where your organization struggles most, basically every business model and product in the world has a lifecycle. The world changes, you must too. Inevitably, someone always gets left behind. There will always be the last company to make buggy whips.
To avoid being “that guy”, the answer is to look to your strategy management cycle and honestly audit your capabilities against the 4 points above.
1) Are you skilled at “seeing it coming?”
2) Does your organization gain ground over time, or are you losing relevance?
3) How quickly can you turn a strategic decision into an operational reality and a customer experience?
4) Are you optimizing your product lifecycle management or is it on auto pilot?
Don’t be that guy.
On a summer’s evening in 1988, an explosion shook the structure of an oil drilling platform off the coast of Scotland. Over 120 crew members and rescuers perished in a horrific catastrophe. Only 60 some people survived. The rig superintendent, Andy Mochan remembers being woken up by the tremendous force of the explosion and the subsequent alarms. The only way out was to immediately jump 150 feet into the freezing north sea waters, and risk hypothermia. He did not hesitate, because in his own words “It was jump or fry”.
When at a recent conference in Boston, I heard a facilitated discussion on what the most effective way is to motivate employees to face significant change head-on. While the responses appeared to line up with the personalities of the individuals, and to some degree the industries as well, the response that stuck out most in my mind was that of Michael Treacy, who essentially described the burning platform scenario. Granted, some leaders prefer to lead from the ideal of opportunity based motivation, while others seek to maintain a very blunt and honest view of the risk of inaction.
Whichever your style, motivating change, and building a cogent case for change requires three things:
1. Dissatisfaction with the current state (burning platform or a big opportunity)
2. A clear and compelling vision (a demonstration of bold and insightful leadership)
3. Agreement on the first steps to get there (a logical first step that everyone can agree on)
Now the questions to ask yourself are 1) What is your style, and is it working, and 2) do you see these three elements in how you communication direction to your team or employees?
If your employees don’t know why you’re working to change, and exactly what it is that you need to change, it’s difficult to get behind you.
Consider building a case for change by working through the following, and then creating a table that defines the specific shifts that your business plan should address:
What are the current strategically important problems we face today? (Reference: risk your ERM register)
What are the current strategically important opportunities we have?
What are the anticipated strategic problems we will likely face if we do not change?
What are the anticipated strategic opportunities we will miss if we do not change?
? Based on the answers to the questions above, list the 5-7 key attributes that represent the areas of the organization that are strategically important to change
? For each attribute, describe the current state and the future/desired state
? Based on the list of attributes, force rank them in terms of strategic importance to the organization