How to Maximize Your Success

7/31/2019 How to Maximize Your Success

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How To Maximize Your Success with Strategic Alignment

As requested, weve got a short issue this time. And weve made it even easier to speed -read witha picture.

The time has come to combine all Top 5 Success Factors into an integrated system to maximize

your success, a system we call Strategic Alignment. Strategic Alignment is best illustrated withthis diagram:

Here you see the Top 5 Success Factors arranged in what looks like the crosshairs of a rifle or aradar screen. The point is to demonstrate that all factors are aligned, with Operations (what we doall day) in the center. But actually it does not matter how you position the 5 factors, since all areinterrelated and important. Heres how this concept can help you:

1. Your organization functions as a system, a whole which is greater than the sum of its parts,

whether you want it to or not. All the parts are connected and interdependent. If somethinghappens to one, it affects the others, and so forth. You cannot work on one of these SuccessFactors effectively without acknowledging its linkages with the others. For example, StrategicFocus should be developed with the input of your People and Customers, among otherconstituents.

2. For optimum success, it is essential to have these factors aligned. Most importantly yourpeople must be aligned with what customers want and need. Operations should be designed toproduce value for customers. Strategy is the overarching big plan, but unless it is aligned withyour financial condition, you will have problems. If you reflect on this diagram and think about therelationships between each pair of Success Factors, you begin to see how this can be a guide to

action.

3. In developing your strategic plans, this Strategic Alignment diagram can serve as a valuablereminder to be sure you have all the key factors covered. I once worked with a client group whohad a lot of ideas which we began putting on the board. Then we sorted the ideas into the 5Success Factors and found out that there was not one single point related to the organizationspeople! Some of them were participating in the meeting, but no one voiced how important it wasto include people/staff development/training in the strategic plan. A correlary of this is, everything


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you manage or control can be put under one of these 5 Success Factors if you understand themadequately.

4. When you go to implement a plan of any kind, you run into the problem that certain issues orresponsibilities affect everybody and cannot be neatly pigeonholed into an existing functionaldepartment like manufacturing, sales or service. In industry it is increasingly common to deal with

these problems through organizing cross-functional teams representing different areas of thecompany.One great way to do this is to divide your people up into 5 teams, one for each Success Factor.

If you have enough people, consider posting a sign-up sheet in the break room or on your intranetand let people sign up for what they are interested in. If youre a nonprofit, mix up boardmembers, staff and volunteers on the 5 teams so they can work together on broad issues.

However you organize, make sure you have these 5 bases covered. The Strategic Focus (orStrategic Management) committee can include the chairs of the other 4 groups plus the CEO, or itcan be a group unto itself. Again this framework helps ensure that everything important getscovered and that there is a group already in place for every cross-functional or large problemwhich comes up.

As Albert Einstein said, "Everything should be as simple as possible, but no simpler." Strategic

Alignment is just such a system--about as simple as you can get, but (or should we say therefore)very powerful.

I am indebted to a really great book, The Power of Alignment* for some of these concepts. Alsohighly relevant and really good is The Balanced Scorecard* Ive mentioned before. Both are wellgrounded in research and practice.


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Strategic Planning

"Organizations need a new kind of management systemone

explicitly designed to manage strategy, not tactics.Organizations today need a language for communicating

strategy as well as processes and systems that help themimplement strategy and gain feedback about their strategy.

Success comes from having strategy become everyones

everyday job."Kaplan & Norton, The Balanced Scorecard

Balanced Scorecard

The Business Scorecard is a process by which vision and strategy can drivebusiness planning. A primary goal is to envision objectives which can be

measured. The approach was devised by Robert Kaplan and David Norton in anumber of articles published in the Harvard Business Review between 1992 and

1996. As the approach was widely adopted and gained the momentum of a

movement within management practice, Robert S. Kaplan and David P. Nortonthen authored two important books :

The Balanced Scorecard: Translating Strategy into Action (Boston: Harvard

Business School Press, 2000)

The Strategy-Focused Organization: How Balanced Scorecard CompaniesThrive in the New Business Environment (Boston: Harvard Business School

Press, 2001)

It is a integrative framework that:

Communicates strategy so that everyone understands the objectives and their role inthem;

Aligns resources to focus on the key drivers of strategy; and Monitors the execution of strategy by tracking measurable results.

"The balanced scorecard retains traditional financial measures.

But financial measures tell the story of past events, an

adequate story for industrial age companies for whichinvestments in long-term capabilities and customer

relationships were not critical for success. These financial


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measures are inadequate, however, for guiding and evaluatingthe journey that information age companies must make to

create future value through investment in customers, suppliers,

employees, processes, technology, and innovation."Kaplan & Norton, The Balanced Scorecard

The Balanced Scorecard methodology typically communicates strategy across the four

perspectives:

1. Financial: What financial returns are required by investors?2. Customer: What do our customers want?3. Internal Process: What do we need to do to deliver?4. Learning and Growth. How do we sustain the business?

Performance measurement in general, and the Balanced Scorecard in particular, attempts to

address a key management concern: companies often fail to turn strategy into action. The

Balanced Scorecard is a business management concept that transforms both financial and non-financial data into a detailed roadmap that helps an enterprise measure performance and meet

both near and long-term objectives.


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Balanced Scorecard Issues & Metrics
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The task is to define Objectives, Measures, Targets and Initiatives (performance indicators) in

each of these Scorecard areas.

Example Scorecard Issues Affecting Organizational Strategy

Employees:

Develop Corporate Culture(values, relationships, behavior)

Service mapping to improveemployee satisfaction

Salary, Benefits & Retention Communications Development & Training

Customers:

Product Positioning &Branding

Market Support Channels to Market Channels Support Customer Support &

Training

Operations:

Administration Marketing & Sales Operations Business Process Mapping &

Optimization

Inventory & Manufacturing Credit & Collections Supply Chain

Financial:

Develop PerformanceMetrics

Manage Burn Rate Reduce Risk Accounting & Audits

Leading & Lagging Indicators

A "Lead Indicator" is an in-process measureit is predictive. A "Lag Indicator" is a measure of results, outputs and outcomes it provides an

accurate snap-shot in time.

The following table is a small sampling of lag & lead indicators to illustrate therelationship between objectives and measurement/ feedback.

The lists of potential KPIs is quite extensive, and the selection must be tailored to aspecific business process and environment.

Additional discussion of this topic can be found in the sections "KPI, Metrics &Dashboard", and in"Meaningful Metrics".

Strategic Objectives Strategic Measurements

Lag Indicators

(snap-shot in time)

Lead Indicators

(predictive)
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Financial Perspective: In addition to key financial data (revenue, expenses, profit and loss,

etc.), risk assessment and cost-benefit data apply to this category. Timely and accurate data,

specific to each product and service, may be essential for a clear financial picture.

F1: Improve Returns Return on Investment Revenue Mix

F2: Broaden Revenue Mix Revenue GrowthF3: Reduce Cost Structure Deposit Service Cost Change

Customer Perspective: If customers are not satisfied, they will eventually find other suppliers

that will meet their needs. Poor performance from this perspective is thus a leading indicator of

future decline even though the current financial picture may look good.

C1: Increase Customer

Satisfaction with Our Products &People

Share of Segment Depth of Relation

C2: Increase Satisfaction Afterthe Sale

Customer Retention Satisfaction Survey

Internal Business Process Perspective: Metrics based on this perspective allow managers to

know how well their business is running, and whether its products and services conform tocustomers requirements (the mission). In addition to the strategic management process, two

kinds of business processes may be identified: (a) mission-oriented processes, and (b) support

processes. Support processes are often repetitive in nature and thus easier to measure andbenchmark using generic metrics. Mission-oriented metrics are unique and have to be precisely

defined and validated.

I1: Understand our Customer Product Development Cycle

Hours with Customer

I2: Create Innovative Products New Product Revenue

I3: Cross-Sell Products Cross-Sell Ratio

I4: Shift Customers to Cost-

Effective Channels

Channel Mix Change

I5: Minimize Operational

Problems

Service Error Rate

I6: Responsive Service Request Fulfillment Time

Learning & Growth Perspective: In a knowledge-worker organization, people (the only

repository of knowledge) are the main resource. In the current environment of rapid

technological change, it is essential for knowledge workers to be continuous learners. Learning is

more than training. Metrics (related to training, performance support, knowledge management,technology infrastructure supporting communication and collaboration, corporate culture, core

competencies and innovation) guide managers in focusing budget decisions where it can have themost impact in supporting the organization's ability to change and grow.

L1: Develop Strategic Skills Strategic Job Coverage Ratio

L2: Provide Strategic Info Employee Satisfaction Strategic Info Availability

Ratio


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L3: Align Personal Goals Revenue per Employee Personal Goals Alignment

(%)

Balanced Scorecard Strategy Map

The following graphic illustrates the approach to mapping objectives in the Balanced Scorecard

approach. These relationships show how alignment and integration can be achieved.

Linked Scorecards

The following graphic illustrates a comprehensive use of Scorecards at levels across theenterprise as an instrument to establish alignment and integration.
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Balanced Scorecard as a Centerpiece of Strategy

The following graphic illustrates how the Balanced Scorecard can be used as a centerpiece tostrategy. Note how the the relationships are portrayed between: Mission, Vision, Values,Strategy, and Performance Milestones.

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How to Maximize Your Success