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Navigating the Hazards of your Strategic Journey

By Wayne McVeigh; Mitchell Franklin, CPA; and Vickie Crocker
May 1, 2019
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If employing a strategy map makes it sound as if you’re heading out on a trip, that’s because in many ways it’s exactly what you’re doing. To successfully lead your organization in executing your strategic plan, don’t plan to travel alone. Strategy execution is a long road trip across the continent, leading everyone to a destination.

 

The travel goals of this analogous trip are clear: We plan to get there within a minimal number of days; we have our travel budget established; we have the route mapped out; we know where we will make overnight stops along the way. There are pitfalls that may occur along such a long trip. When developing and implementing strategic plans—whether at a Fortune 500 global corporation or within one department—the same obstacles can derail your strategic journey.

 

STRESS-TEST YOUR PLAN

 

This isn’t about developing your strategic plan—the balanced scorecard is a powerful tool for that (see Figure 1 for an overview of the balanced scorecard methodology)—but rather about the strategy management tools and techniques that can be used to ensure success of the plan once it’s developed. In other words, you’ve already created your trip itinerary. Now you want to make sure you avoid potential detours and that nothing breaks down along the way. You can begin by conducting a stress test of your plan. Answering the following questions will help.

 

Did you consider your customers thoroughly? Critically evaluate your current customers to ensure they’re the proper targets to achieve your strategic goals. Know what you want those customers to say about your company when you have executed your strategic plan and achieved your goals. Another key exercise is to identify the major strategic shifts required over the planning horizon. This perspective will contribute to a focused plan.

 

Do you know your competitive advantages and how to leverage them toward achieving your strategic goals? The ability to adapt to changing conditions may be a key differentiator or strategic advantage. Scenario planning is a useful tool to assist in evaluating your organization’s ability to respond to changing conditions. It’s particularly effective when strategizing how to respond to a variety of potential changes, such as changes in government policy, industry regulations, and the dynamic competitive landscape.

 

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As an example, we know of one organization that engaged with a strategy consultant to lead the executive team through a two-day scenario-planning exercise. The exercise focused on how nimble the organization was. In particular, it explored how the organization would respond to major changes in the competitive landscape as a result of mergers and acquisitions. The management team was challenged as to how they would respond to significant changes to the current regulatory environment.

 

In another example, a business unit was one of the lowest performers within a global company. The business unit was sound. It had outstanding expertise, high-quality services, and good employee engagement with highly skilled staff, but growth was stagnant while other units showed double-digit growth. The head of the unit conducted a three-day strategy planning session with team members to determine where they would focus their efforts to drive growth. Within their services market, they were in a large group of other companies, all far behind the industry’s leader.

 

Instead of focusing on how to compete and overcome the market leader, they defined a focused strategy to build and market the unit’s services to clearly differentiate it from those trailing the leader of the pack. They defined clear initiatives where they would prioritize budget investments to build the resources required for new service offerings and successful differentiation. This strategy led to the company’s breakout performance, after which it was (and is still today) viewed as the primary competitor to the market leader.

 

Do you know the gaps in basic requirements you have to close to achieve your goals? Some areas to consider (see “Strategy Requirement Gaps” at end of article for more details) include:

 

  • Processes,
  • Capabilities of your employees,
  • Culture required for success, and
  • Other resources (technology, equipment, facilities, etc.).

 

These gaps are often identified as part of mapping out the strategic shifts required from the business. A result of this analysis typically includes identifying strategic initiatives needed to close success factor gaps. A benefit of tying initiatives to the balanced scorecard is the ability to assess the cause-and-effect impact on key metrics of your business.

 

How do you determine whether your plan is working? If you don’t check your journey along the way, you can get lost, arrive late, or even miss your planned arrival altogether. Check your strategy journey and ensure you’re on course. Monitor the progress of your strategic initiatives to confirm they’re delivering the intended improvements.

 

How often will you check your plan? The timing of your checks on the leading indicators is important but also unique to your organization. If they are too infrequent, you can miss an opportunity to course correct and get your strategy back on track.

 

Have you clearly communicated your plan to all employees? When leaders develop a vision and map out their journey, they’ve gone through their own internal conversation: Where do we want to take this organization? Why? How? When? With and by whom? They work through the various considerations and arrive at the decisions.

 

Once they get to their decision points, a common assumption is that everyone else will “get it.” But employees must make the same individual journey in thought—considering options relevant to them, as well as why, how, when, and who—and decide for themselves whether to actively engage in their piece of the strategy.

 

Getting them all to do their part of the strategic plan will take communication and support. Leaders very often take this task lightly even if they understand that communication is important. Ensure that you have a true communications expert allocated to your strategy along with the right resources commensurate to the scope of your strategic plans. These experts will analyze the stakeholders of the strategy—everyone impacted—and consider what they need to know and when the right actions need to be taken.

 

The messages, the content creator(s), the message deliverer, the timing, the venue or medium, and the collateral (if required or valuable) will all be defined in the communications plan. More doesn’t mean better. The right message at the right time can be something as simple as a single statement to a small group or individual. As with anything, the more you invest in the planning, the better the quality of the results (see “Focused Investment in Strategy Communications” at the end of the article).

 

GET EMPLOYEE ALIGNMENT

 

Employees want to see progress and share in the successes while they continue to contribute to the strategic journey. Highly engaged employees are key for successful strategy execution. The first step in helping them to make their personal decision to go on the strategy journey is to share findings with employees, letting them know how their efforts are contributing when successful. Specificity around what is and isn’t working will help them course correct.

 

Involve the leader of every element critical to your success to ensure buy-in from the beginning, just as you would involve your traveling companions in planning your trip. Communicate the part in the process that every employee in your company plays, the steps in the process, and the timeline of the process.

 

Alignment takes on multiple dimensions. We have spent some time discussing the importance of strong linkages between the planning steps to help facilitate alignment. We found that it was exceptionally valuable to leverage the strategy map as a communications tool. Strategy maps are an extremely effective way to articulate an organization’s outlook as it grows and increases its global presence and footprint. In our experience, it was common to find a strategy map displayed in employee cubicles across the enterprise (regardless of the business unit or geographic region).

 

A strategy map is a visualization of the organization’s key strategic objectives (see Figure 2). It depicts the foundational relationships among four key perspectives:

 

  • It starts with the financial perspective and the company’s long-term financial objectives.
  • The financial perspective links to customer perspective and the company’s value proposition and key customer objectives.
  • From there, it links to the internal (operational) perspective and key internal business processes that are essential to delivering on the customer objectives.
  • The financial, customer, and internal perspectives are all built on the learning and growth perspectives with employee objectives to enable the most effective workforce.

 

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The adoption of strategy maps is a fundamental element in the successful execution of a strategic plan. Strategy maps provide directional guidance for employees. Develop maps that will ensure clear guidance to keep employees on course. Focus on select key strategic objectives for each perspective. This is particularly critical at the enterprise level. It’s all about clear alignment and focus.

 

The enterprise strategy map will typically drive the formulation and linkage to business-unit strategy maps. Care should be taken as to how far down the organization strategy maps are cascaded. It’s our experience that a better practice may be to limit the process of cascading strategy map development to one level below the enterprise level (i.e., the business-unit level). A delicate balance exists between the need to have strategy maps at multiple levels in the organization vs. the additional effort expended and the diluted focus on the enterprise objectives.

 

Utilize strategic “themes” for each perspective. An example for the customer perspective might be “superior service experience” or “be the preferred provider for our customer.” In the case of a highly decentralized organization that employs a matrix management approach, perhaps the internal perspective theme might be “operate with one voice.” The strategic theme for each of the four perspectives helps bring vaious perspectives to life and provides a common language that business units can link to when developing their own strategy maps.

 

The balanced scorecard is closely connected to the strategy map. The balanced scorecard helps facilitate the linkage and alignment between the strategic objectives and the key metrics of the business. In essence, it’s the quantitative representation of the strategic objectives. It helps articulate clearly how to measure and assess whether your journey was successful.

 

Anchoring your communications consistently around your strategy map will ensure greater awareness and alignment of all employees to your strategy. Additionally, when employees see performance monitored and understand where and how they impact the organization’s performance, they’re more likely to take the desired or corrective actions to contribute to company success.

 

MANAGE INITIATIVES

 

It’s critical to build on the organization’s existing processes and establish a focused initiative management process. The addition of an initiative management process plays a key role in not only strengthening the overall planning process but also streamlining the budget process by reducing rework and the amount of budget iterations required. Requiring the organization to identify and articulate the key strategic initiatives enables the organization to have a healthy debate regarding priorities and funding.

 

In our experience, from an overall planning process standpoint, it was beneficial for this initiative discussion to occur early in the planning process before organization budgeting efforts commenced. Initial discussion and feedback on overall priorities helped facilitate business unit planning. Subsequent budget review and discussions focused more on final reviews of funding requirements for agreed-upon initiatives along with execution risks. This mitigated the typical budget review approach, which focuses on a laundry list of proposed initiatives, budget rework, and ultimate frustration with the process.

 

Another area of focus is to shift the budget development paradigm from a resource-driven build-up approach to a metric-driven build-up approach. The use of metrics to drive the budget development process certainly isn’t a new concept. It simplifies the amount of effort expended in building the budget and provides the additional benefit of increasing alignment with the balanced scorecard and the key metrics of the business.

 

In our combined experience, we have witnessed the launch of many initiatives. Without exception, those with robust management, including regular checkpoints and performance measures, had greater success. Even those that failed could be considered successful when the performance measures proved that initial assumptions weren’t valid and the initiative investments could be diverted elsewhere sooner. Those lacking this sort of initiative management generally took two paths:

 

  1. They become ongoing drains of resources—in both personnel and budget funds—that don’t realize any business benefits but are retained due to a lack of transparency in performance measures or assumed value in the status quo.
  2. The initiative fails and the initiative team is disbanded, or worse, reassembled around a similar initiative also lacking in effective performance management.

 

Both of these outcomes are an unnecessary drain on a company’s budget that can be mitigated with performance oversight. The effort of defining the measures of an initiative’s success can be challenging, but it’s worth every minute in the end.

 

CHECK ASSUMPTIONS WITH MEANINGFUL MEASURES

 

You have defined your strategy, you have determined the initiatives that are required to ensure success, and all of your plans are based on assumptions. You believe if you do these things, you will achieve your objectives and realize the business benefits. A common mistake made by leaders is to assume that as long as there is activity, the march toward the objectives is on the correct course. Have you ever been driving, heading toward a destination, and made a wrong turn? Perhaps you wondered as you made the wrong turn, or perhaps you didn’t notice. You lost time and wasted fuel.

 

Similarly, if initiatives and strategic objective actions proceed without a means to check the validity of the assumptions, it can lead to wasted time and effort and impede the achievement of your strategic goals. For your road trip, you can use a map or navigation system and frequently check to confirm you’re on course. It’s critical to develop the same map and checkpoints for your strategy. Finding these measures can often prove to be elusive and confusing.

 

Take time to brainstorm leading indicators. For example, an operational delivery group had an initiative to improve the quality of their feasibility reports. These reports provided analysis of clinical trial study protocols and reported where the study sponsor had the best probability of finding patients to participate, among many other factors. A typical measure people will propose is surveying the recipients of the report and asking if the reports are improved, but this is a poor measure due to the subjective nature of that type of survey question (if you use surveys, design the questions to obtain meaningful and actionable responses). Inquiring after the report is delivered is too late to course correct.

 

For the feasibility report, a thorough brainstorm with the employees who did the analyses and wrote up the reports led to some leading indicators of a successful report: the number of data sets available for the analysis and the number of edits required in the report development life cycle (from draft to final). Additionally, the feasibility team identified indicators for employee performance that were incorporated as employee performance goals. Taking time and getting the right people involved in your brainstorming will prove to be a valuable investment for your strategic journey.

 

Don’t just revisit your planning timeline. Redefine it. Drive home the importance of strategy as a continual process, not just a onetime annual planning retreat. Consider introducing more frequent strategy sessions throughout the year. For example, the review of investments and global initiatives prior to the operational planning and budgeting helps strengthen the alignment with the overall strategy.

 

From a performance monitoring perspective, expand the executive review to include a review of key operational metrics. Where possible, focus on leading vs. lagging indicators. The routine assessment of operational metrics can also help validate your planning assumptions. Routinely review the key operational metrics of your strategic objectives to provide a directional view on whether you’re successfully implementing your overall strategy (see Figure 3). Where performance is lacking, consider how to course correct to bring the objective back on track.

 

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MAKE COURSE CORRECTIONS

 

Most companies have all the ingredients in place for a successful planning process. The challenge rests in avoiding the breakdowns between strategy and operational planning. And just as you wouldn’t try to check the progress of your road trip every minute, checking the leading indicator metrics too frequently can lead to the measures becoming meaningless with distracting noise and decreased productivity. Determine the frequency that will provide timely insight, typically once per month or quarterly at a minimum.

 

Reporting the results of your routine measurement of these indicators using a strategy map scorecard provides a continuous connection to your strategic plan and conveys that it’s a strategic plan, not a single performance indicator. Everyone knows what it’s like to have a young child riding with you on a trip: “Are we there yet? Are we there yet? Are we there yet?” As the child matures and experiences the ups and downs of travel, she or he eventually accepts that trips have fun and not-so-fun parts.

 

Similarly, as your company achieves strategic maturity, leaders and employees mature and learn the value of being informed—knowing when the company succeeds, they share in the success (company growth leads to professional opportunities), and when the company fails, they share in the discomfort and drive to get back on course.

 

ENJOY THE REWARDS

 

Sharing the results of your strategy scorecard with employees builds their ownership in the success or failure. When possible, share the success milestones in some tangible manner, anything from an ice cream social to a pay bonus. Similarly, when encountering setbacks, keeping employees informed enables understanding and acceptance when difficult financial decisions must be made.

 

Set expectations of what success looks like—not only at the end but along the way. Include that type of messaging in your communications plan. We found that it was critically important to leverage the strategy map as part of the communications plan. Enhancements to the strategy process can be executed using a variety of approaches.

 

In terms of implementing the strategy management process, don’t underestimate the degree of change management involved. It’s critically important that the foundation is established for proper change management to occur. This involves more than just communicating the change. As a member of the executive management team, demonstrate your convictions to the process through your actions and words. This includes maintaining clear alignment with your ultimate objectives.

 

Ensure that changes are fully vetted at the operational level. This can include the use of planning teams that have operational representation, which also will allow for a smoother transition and implementation at the operational level. Planning teams should reflect a cross-section of the organization, including operational leadership and functional roles (corporate, finance, and communications). These teams not only act as ambassadors for the implementation phase but later serve as strategic business partners at the business-unit level. In addition, the functional roles on the team (finance, communications, and corporate) should have a dotted-line responsibility to the corporate strategy group to facilitate linkage to enterprise-wide best practices.

 

Your strategy will entail a significant investment of time and resources. It isn’t unusual to assess enhancements in tools and technology as part of this process. We witnessed the impact of such tools after the COO of one company asked to have each business unit’s operational performance provided to him in a clear, concise manner. This led to the development of performance measures across each area of the balanced scorecard: finance, customers, operations, and other employees.

 

The resulting scorecards were managed with a business analytics application providing centralized reporting of business performance with visualizations, including trends in performance to enable leaders to course correct when performance begins to fall. The success of this executive scorecard led to a corporate IT initiative to develop a data warehouse and a full spectrum of operational analytics that ultimately became one of the company’s business offerings.

 

In our experience, seeing the development and execution against our strategy map helped guide us in creating a cohesive vision. Organizations growing in their sophistication around data analytics have forged a natural linkage to the metrics and measures included on the balanced scorecard. We have witnessed significant shifts in employee engagement, employee retention, double-digit growth, advanced market position, and much more success using the balanced scorecard approach and incorporating the journey checkpoints shared here. A fair, well-executed plan is far more impactful than a great plan that is executed poorly or not at all. The former is a much better journey. Remember, alignment of all those on the journey matters.


Focused Investment in Strategy Communications

 

Working with consultants from a nationally recognized balanced scorecard company, a global pharmaceutical services company defined its company strategy with the balanced scorecard and developed its corporate strategy map. Each business unit within the company then developed its own strategy aligned to the company’s and created business-unit maps.

 

The leaders were fully aligned, but the question was how to align the thousands of employees around the globe. The company’s strategic services group, which had supported the development of the strategy, included expenses for communications within its budget. The group created a detailed communications plan to cascade the strategy to all employees. The plan included:

 

  • A video from one of the company’s executive leaders that was broadcast on the company intranet,
  • An allocation of corporate communication resources, and
  • Communication collateral (e.g., laminated strategy maps, company pens with retractable strategy maps, badge cards with abbreviated strategy maps and company values, and so on).

 

The map also included plans for all leaders—from executives to line managers—to conduct team and one-on-one overviews and discussions. They were to explain the strategy and help employees understand how and where they impacted the strategy and how a successful strategy would impact them. Employee engagement scores reflected a significant increase in awareness of the company’s strategic direction and overall employee engagement, which helped drive double-digit growth for the company.


Strategy Requirement Gaps

 

Processes: Optimizing existing processes involves analysis to find all gaps in efficiency and productivity. This is done most effectively with process optimization experts.

 

Capabilities of your employees: Strategic initiatives often involve new or revised services that may require resources with specific skills and expertise. For example, if you’re developing a technology solution, do your employees have the capabilities to develop, maintain, and continually innovate?

 

Culture required for success: A company’s core culture is the social and psychological environment that defines the beliefs and behaviors and determines how a company’s employees and management interact and handle business transactions. The company culture can enable or prove counterproductive to a strategic plan.

 

Other resources to address: Will you need new technology systems or applications? Will new or updated services require new equipment? Do current facilities support your growth plans?


 

Wayne McVeigh is clinical assistant professor of accounting at the University of North Carolina at Chapel Hill. He can be reached at wayne_mcveigh@kenan-flagler.unc.edu.
Mitchell Franklin, CPA, is the director of undergraduate and graduate accounting programs at LeMoyne College in Syracuse, N.Y. He can be reached at franklma@leymoyne.edu.
Vickie Crocker is currently a senior director in corporate strategy of a global pharmaceutical services company. She can be contacted through LinkedIn.
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