4 of 4: Managing Strategy Implementation

The previous post covered creating strategic initiatives. This concluding post deals with using a strategic performance management system.

STRATEGIC PERFORMANCE MANAGEMENT SYSTEM (SPMS)

The SPMS is an integrated set of processes used to ensure that strategic objectives are being met consistently and to provide feedback on the effectiveness of the strategy. The system specifies accountabilities, supports decision making and typically leverages technology for data collection and reporting.

SELECTION / DESIGN CONSIDERATIONS

The size and cultural characteristics of an organization play a large role in selecting or designing the appropriate SPMS. Small organizations and “command and control” type cultures may require minimal structure to oversee the implementation and management of strategy. Large or matrixed organizations may benefit from a more defined or rigorous system. To help in this determination, the following questions can be asked:

• How satisfied are we with the general level of awareness throughout the organization regarding our business peformance?
• Is there good alignment about what is causing the performance we are achieving?
• How transparent are the actions we are taking in support of our performance?
• What implementation system is most likely to be supported by leadership?
• Who will manage the strategic performance management system? What are the roles of the operating executives?
• What are our “running rules” for using the system? Are our expectations clear on frequency of reviews, format, performance thresholds / tolerances, corrective action, alignment to other reporting systems?
• Is our current approach both streamlined AND effective?

If the responses to the above questions indicate existing clarity and satisfaction, then the SPMS may be as simple as a consistently scheduled staff meeting using an existing performance report. However, if the organization isn’t satisfied with the existing approach, there are standardized SPMS’s that can be used.

 

Many organizations benefit from a system that supports follow-up actions on strategic issues. While systems that feature the more rigorous aspects of follow-up actions are not always popular, the following quote is good to keep in mind:

EXAMPLES OF SPMS’s

There are a large number of options when it comes to SPMS’s. Two standardized SPMS’s are The Balanced Scorecard and Hoshin Kanri (also called Policy Deployment). In addition, many times companies will develop their own system such as how Emerson Electric used “The President’s Operating Report (POR)” and annual planning conferences as part of their strategic management process. Regardless the systems will typically share the following:

• Demonstrate the linkage between strategy, strategic objectives, initiatives and measures
• Encompass more than just the financial performance dimension (e.g., Marketing, Employee engagement & enrichment, etc.)
• Be central to the performance review by leadership
• Provide feedback on the relative success of the strategy
• Directly linked to compensation systems

THE BALANCED SCORECARD

HOSHIN KANRI / POLICY DEPLOYMENT

COMPANY SPECIFIC SYSTEM – e.g., EMERSON ELECTRIC

NEXT STEPS

To implement the above systems it is best to talk with peer businesses to get additional ideas on possible options. After that, books, seminars, and consultants (internal or external) can play a key role in making it happen.

CONCLUSION

After an organization invests in clarifying the strategy, identifying and prioritizing strategic objectives, and structuring strategic initiatives, a SPMS helps gauge both performance and strategy implementation progress.

COMMENTS

Please share your comments about this post or topic (or previous posts on basic strategy, identifying strategic objectives, prioritizing strategic objectives, or developing strategic initiatives). This concludes the material that was originally planned for this topic of the practical development and implementation of business strategy. Thanks!

3 of 4: Creating Strategic Initiatives

The previous post covered the prioritization of strategic objectives.  This post deals with developing strategic initiatives to underwrite the objectives.

STRATEGIC INITIATIVES 

With a short list of strategic objectives in place, the next step is to develop strategic initiatives.  Strategic initiatives are major activities that resolve key issues required to fulfill strategic objectives, implement a strategy, and achieve the vision of the organization.  Strategic initiatives will likely be broken down further into programs (two or more projects) and projects as needed.

STRATEGIC INITIATIVE CRITERIA 

As plans are framed up to achieve the strategic objectives, use the check list below to ensure that the plans are strategic in nature. 
 

STRATEGIC INITIATIVE COMPONENTS 

While specific strategic plan components can be mixed to suit a given preference, the following four elements represent a good core structure:

The latter three components can be linked together in a chronologic sequence.  These steps provide windows to the implementation progress for the initiative.  It flows as follows:

DEVELOPMENT PROCESS RUNNING RULES

As the team develops initiatives, there are some good “running rules” to use during the development process. 

ASSESSING THE STRATEGIC INITIATIVES 

Once the initiatives are created, and the initiative owners consider them “final”, it is good to take an aggregate look to ensure the initiatives adequately cover current strategic issues and set the stage for future performance.  One check can be to compare the list of initiatives to the list of strategic objectives.  Objectives without support of an initiative should be discussed and scrutinized.   Another check uses a graphical display to compare the initiatives based on execution risk, time horizon until complete implementation, and relative financial reward.  This enables a leadership team to view the collection of initiatives in terms of a three dimension pipeline to the future.  Here is an illustration:

IMPLEMENTATION

With the portfolio of strategic initiatives finalized, the implementation process will involve communicating the initiatives to the organization and tracking the implementation progress.  The tracking of initiatives can be done in tandem with assessing the performance of the strategy using such tools as a Balanced Scorecard, Hoshin Planning, or similar systems.  That will be the topic of the next post. 

COMMENTS

Please share your comments about this post or topic (or previous posts on strategy alternatives, identifying strategic objectives, prioritizing strategic objectives) using this BLOG or send me an email.  Thanks!