COMMUNICATIONThe Office of

Strategy Management

Article By: Robert S. Kaplan &

David P. Norton

Published: October, 2005 Presenter:

Saif Ullah(FA15-ES-0017)

MS – MAJU, Karachi

IntroductionMost companies have ambitious plans for growth. Few ever realize them!!

• Book: Profit from the Core• Sample: 1,854 global large corporations• Period: Year 1988 to 1998• Findings:

90% org. had detailed strategic plans with much higher targets 88% failed to achieve profitable growth

• Reason: Disconnection between strategy formulation and strategy execution 95% of employees do not know or do not understand company’s

strategy

If employees who create value are unaware of strategy, they surely can not help the organization implement it effectively!

Communication Problem:

Traditional Approach to Strategic Management

• 2nd Quarter End: Process Starts; CEO & Executives meet to clarify strategic vision and update strategy. Similar process followed by business & functional level

• 3rd Quarter: Finance Comes in; finalizing corporate and unit budgets

• 4th Quarter: HR conducts employees’ annual performance reviews

Problems in Traditional Approach

• Activities performed in isolation of enterprise strategy• 67% business units not aligned with corporate strategy• 60% organizations’ financial budget not linked to

strategic priorities• Compensation of 70% middle managers and 90%+

employees has not link with strategy implementation• Periodic management meetings, corporate

communication, and knowledge management are similarly not focused on strategy execution.

How to Remove Communication Gap.Office of Strategy Management (OSM):

• Establish OSM: New unit at corporate level• Tasks Performed by OSM:

Communicating corporate strategyTranslating enterprise-level plans into the plans of various units

and departmentsExecuting strategic initiatives to deliver on the grand planAligning employees’ competency development plans, and their

personal goals and incentives, with strategic objectives.Ensuring that company’s strategy must be tested and adapted

to stay abreast of the changing competitionFacilitating & integrating processes for strategy execution

What Good OSM Do..??• Create & Manage Scorecard• Align the Organization• Review Strategy• Develop Strategy• Communicate Strategy• Manage Strategic Initiative• Integrate strategic priorities with other support functions

Planning and BudgetingHuman Resource AlignmentKnowledge Management

Create & Manage Scorecard• Users have achieved performance breakthroughs, using

Balanced Scorecard & associated tools.

Create & Manager Scorecard

Align the Organization

Review Strategy

Develop Strategy

Communicate Strategy

Manage Strategic Initiative

Integrate strategic priorities with other support functions

Planning and Budgeting

Human Resource Alignment

Knowledge Management Strategy

OSM Approach to Strategic Management• 2nd Quarter Beginning: OSM

starts to plan strategy and update the enterprise scorecard & align organization with the enterprise goals.

• 3rd Quarter End: OSM coordinate with finance to bring unit-level plans and budgets in line with strategy

• 4th Quarter Beginning : OSM work with HR on aligning the competency development and incentives of employees with scorecard objectives

Benefits, Positioning & Staffing OSM• Benefits

Control and learning Reviewing and communicating strategy Managing initiatives, and sharing best practices

• Positioning Executing strategy involves making changes

that only a CEO can empower OSM will be most effective when it has direct

access to the CEO

• Staffing Fully functioning OSM should not need more

than six to eight full-time-equivalent positions to cope with its activities

The End