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!