Do you have an objective to hit?

One of my favorite fairy tales from when I was a boy is Winnie-the-Pooh. He was once asked “where should we go?”. “I don’t know he replied”. And then they ended up being there.

I see the same pattern with annual reports. It amazes me how companies with weak/no defined objectives and targets are writing their reports as they have had clear objectives and targets all through the year.

This made me do this cartoon. Companies with no objectives and targets are always reaching their goals. It is like they are “shooting the arrow” and see where it hits and define this as the objective/target.

Is your company shooting first and paint after, or do you have a target and a bulls eye to hit before you shoot?

I will leave it up to self-examination.

Strategic Communication

We all know from our own marriages how difficult communication can be! There are structural differences in the male and female brains, which make us misunderstand messages.

I once heard a story on how difficult communication can be between two countries. This story is from 1979 and is about the Egypt-Israel Peace Treaty. If today, you ask an Egyptian if they are at “peace” with Israel, they would claim “yes”. The word peace for an Egyptian means “we will not harm our neighbors”.

If you turn to an Israelite and ask if Israel has achieved “peace” with Egypt, he would most probably say “no”. The reason for this is that the word “peace” (shalom) for an Israelite means more than not harming/fighting with your neighbor. It encompasses qualities like brotherhood, love and joy. So this warm, loving friendship is contained in the word “peace” for an Israelite.

So words have different meanings based on language, history, background, education and so on. I see the same when I challenge businesses. When I challenge statements like “we should be the best in banking”, different individuals put different meanings to this. What is “best”? What do we mean by “banking”? Do we mean “the best”, or just among the best? Should we be the best in all areas of banking, or just in certain areas? I think it is important to do this kind of exercise and clarify our strategic communication.

If you are not sure what is meant by your company’s strategy – please ask for clarification. If you are a manager – you can never over communicate strategy.

A Wake Up Call for Catalytic Mechanisms

Last night, around 2 am, my wife and I were awakened from our slumber by a beeping sound. It probably took two or three beeps to register, then we were both awake, and irritated enough, to realize it was repeating in a pattern. This wasn’t some rogue electronic device chirping out a random message, but an annoying and consistent message, requiring attention. Groggy as we were, we soon realized the culprit: a smoke detector battery that needed, no it demanded, to be changed. Have you ever noticed these things always decide to go off in the middle of the night?

After the inevitable waiting game, each of us hoping the other would take care of it, we gave in, stumbled out of bed, and went in search of the incessant beeping. On the way down the hall a thought slowly began to make its way into my consciousness, no small feat considering both my brain and body were protesting this unwanted intrusion into my sleep. The thought became clearer and more resonant until I said out loud, “This is a catalytic mechanism.” My wife responded with about as much enthusiasm as a marble statue of her might, so I repeated my somnolent insight: “This is a catalytic mechanism. The smoke detector!” The beeping continued but I was oblivious now, totally absorbed by my stunning discovery. As we located the beep and my wife secured a fresh battery, I continued: “The smoke detector going off like that forced us into action. There was really no alternative – we had to get up and change it or suffer the negative consequences, in this case being robbed of a good night’s rest.”

Of course catalytic mechanisms don’t just apply to late night battery changes. Jim Collins, who originally wrote about this topic several years ago, believes they are crucial for any organization that wants to move beyond bureaucratic exercises in pursuit of their goals, and described them as the ‘crucial link between objectives and performance.’[i] They can take many forms but the common denominator is a process or procedure that forces people to take direct action in pursuit of an important objective. Collins cites the case of Granite Rock, a California company that supplies materials and products to the construction industry. When you think of a rock company, and really who isn’t constantly doing that, I doubt you conjure up images of world-class customer service. But service at a level exceeding what you might expect at Nordstrom was exactly what the leaders of Granite Rock proposed to achieve. To do that they could have written vision statements, created an exciting communication campaign, or devised some complex service initiative, but in the end they chose one simple process; short pay. At the bottom of every invoice the company issued appeared a note reading: “If you are not satisfied for any reason, don’t pay us for it. Simply scratch out the line item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance.” This is a truly catalytic mechanism. Any time a customer chooses not to pay the entire invoice amount it propels Granite Rock into action, digging deep to discover why the customer chose not to fully pay, and doing everything in their power to fix the problem to ensure it doesn’t happen again. Employees are provided with a crystal clear signal that anything less than world-class service won’t be tolerated.

It takes courage to initiate a catalytic mechanism because a well-constructed version will possess sharp teeth and produce legitimate consequences for the organization should they consistently fall short. The upside, however, is worth the risk. A catalytic mechanism has the power to motivate entire organizations, wow customers, and create sustainable results. I encourage you to look at your own strategy and strategic objectives through the prism of a catalytic mechanism. What process could you put in place that would force you to move beyond the corporate rhetoric and turn your dreams into reality? What’s beeping in your world?

 

Getting Your Board on Board

In a wide-ranging discussion I recently held with the senior strategy officer of a midsized organization the conversation eventually made its way to their Board of Directors. I asked how involved the Board had been in their Balanced Scorecard. “Not at all” this person replied. That response didn’t come as a great surprise to me as most organizations choose, rightly, to create strategy and their Balanced Scorecard themselves, seeking Board insight and approval afterwards. But what came next did surprise me, a great deal.  I asked: “Did your Board receive any training on the Balanced Scorecard so they could use it effectively to gauge your strategy execution?” With no hesitation this executive responded, “No. They would think that was beneath them.” As someone who makes their living facilitating, writing, and speaking it’s not often I’m unable to mount a reply to a comment, but this shocking response rendered me speechless. Let’s review one primary responsibility of any Board to see why no member should ever consider Scorecard training “beneath them.”

Boards serve multiple functions, but perhaps their chief responsibility is approving and monitoring enterprise strategy. As noted above, the Board typically doesn’t engage in creating the organization’s strategy, that’s the province of the senior executive team, led by the chief executive officer. However, to fulfill their oversight role, Boards they must understand and approve the strategy, then continually monitor management’s execution efforts. Based on the findings of a study performed by global consulting firm McKinsey, effective monitoring is often easier said than done. The researchers discovered that a whopping forty-four percent of directors don’t fully understand the drivers of value for the organization on whose Board they sit. Without that knowledge it’s impossible to provide meaningful insights and advice, the very reason members were selected in the first place. Enter the Balanced Scorecard.

Around the globe, thousands of organizations have turned to the Balanced Scorecard (and other measurement-related systems) to isolate the value-creating mechanisms of their strategy by identifying measures that translate strategy into meaningful action. One of the many benefits of using the Balanced Scorecard is providing the Board with powerful metrics that distill the essence of the organization’s strategy and clearly indicate what drives value for customers and shareholders alike. Armed with that knowledge, Board members can draw on their substantial reserves of knowledge and experience to actively participate and provide the counsel every management team requires. But as any practitioner will tell you, the Scorecard is more than an ad-hoc collection of measures scattered across four perspectives. The true value of the framework lies in the ability to connect the measures in a strategic narrative, understanding how they weave together, across the related perspectives. For a director to contribute meaningfully to an organization’s strategic dialog, they must first understand the intricacies and subtleties of the Scorecard model. If to them a Scorecard is simply a group of bucketed metrics, they will never derive the benefits possible from the tool, and are likely to squander much of their own potential value to the organization. Any Board member who takes their responsibility to the organization seriously, and respects their fiduciary duties, should never consider Scorecard training beneath them. To the contrary, they should encourage and embrace the lessons, as they will allow them to better serve their vital role in corporate governance.

What is implementation?

What is implementation?

 The success of your performance management implementation involves more than choosing the right software.  You also require the right implementation.  But what is implementation?

With Corporater EPM Suite, customers license an out-of-the-box solution.  This means there is no development involved with the implementation.  Implementation consists of configuring the solution to meet customer requirements, and it occurs through a series of menu-driven activities.  Since there is no development involved, it eliminates development risks.  The solution is already in proven use with hundreds of customers.  There is no risk of running out of project development hours with a half-developed solution.  There is no need to maintain a separate IT development infrastructure, and the additional attention required for testing and acceptance.

What should you expect during implementation?  Before we get to that question, we should discuss a few issues.  Most customers need to balance a few factors, such as cost, resource availability, speed of implementation, knowledge transfer, and scope of the implementation.  Customers can manage cost by participating in the implementation process, and gain the added benefit of additional knowledge transfer.  This is dependent upon the customer’s own resource availability.  Other customers may choose that the complete project is delivered by the implementation team.  What is the intended scope of the implementation?  Shall it be staged in multiple phases, based on business units or functionality?  Or shall it be launched upon completion?

There are no set answers to any of these questions.  Performance management by its very nature is a dynamic set of management processes that need to change over time.  The implementation is of a “living solution” that will undergo iterations over time.  Strategic review cycles and annual planning may mean that some metrics or initiatives will be retired and replaced over time.  Initiatives and activities by their very nature are time-limited in their duration.  Many organizations choose to roll-out the solution organizationally, perhaps starting with a few top-level business units.  They add lower levels at later stages.  Some choose to start with high level data, maybe manually entered at the start, then connect to source systems at a later stage.  While it may be quick to implement in this manner, it loses the benefit of including historical data.

There are many issues to sort out before planning the scope of the implementation.  Corporater implementation experts can assist you in making the decisions that best fit your needs.  At a high level, the implementation is broken down into the following categories of activities:

Readiness Phase

This step involves clarifying the scope of the implementation.  It answers the questions asked above.  What is the scope of the work, what are the roles and resources required from both the implementation team and the customer?  In larger projects these may be clearly outlined in project plans and related documents.

Design Phase

Most customers are already at a stage of readiness regarding their performance management model, meaning that they have a clear understanding of the metrics they intend to report, how they are to be organized, etc.  What is often missing is a clearly defined set of targets, performance thresholds (for setting the status gauges), how they want the measures to be visualized (by charts, graphs, tables, etc.), rules for handling comments, workflow notifications, and other ‘details’ needed to fully leverage the solution.  The design phase clarifies all of these requirements.  Customers need to supply the information of the KPI and initiative metadata (what information they need captured and reported by KPIs), and provide input into the layout of the scorecard, objective, KPI, and initiative pages and reports.  This stage also consists of structuring the organizational and data models, so that the system can by logically navigated, and data can be properly viewed at each business unit.

Configuration Phase

Configuration consists of entering the scorecard and dashboard structures.  Corporater EPM Suite offers a templating system that makes it very easy to reuse common elements throughout the system without having to maintain each element independently.  Configuration is the menu-driven process of setting up the solution so that it displays and manages information as specified in the design phase.  If integration with source systems is also involved, it is connected and configured at this stage.

Testing Phase

In a perfect world, there would be no need for testing the system.  In a practical sense, testing occurs concurrently with the configuration phase.  It is the process of verifying that the solution reports the right information to the right business units, and that the solution is configured as specified in the design phase.  Customer acceptance occurs as a part of this stage.

Training

The best customer training occurs as the solution owner (or super user) participates in the configuration process.  This type of on-the-job training gives the added benefit of training on the actual customer business case— in the actual solution.  This is real-world training— not classroom training.  The customer benefits from the repetitive nature of building multiple KPIs, configuring several charts, graphs, tables, etc.  The super user then has a comprehensive understanding of how everything has been configured, and understands the business logic of the solution.  Classroom-style training is also available.  End-users generally require very little training, since the solution is intuitive to use, and end-users do not need to understand how to configure the solution.  They need to know how to navigate through the system through a web browser.  End-user training generally is conducted by the super users or other customer resources.

Summary

In a future post I will discuss project management.  Overall, there is generally little need to treat implementation as a “project.”  In fact, I don’t even like the word “implementation” as it applies to Corporater EPM Suite.  Implementation is not like an IT project.  As a solution to be run and managed by business users, it primarily requires the engagement and resources of business users.  The biggest “risk” we generally encounter is that customers start to truly understand the full potential of the solution once they start using it, and the project scope increases.  They gain a wider vision of how it can be used to solve other reporting problems, and expand how they use it.  At its core, this risk only speaks to how flexible and full-featured the solution is.

Copyright 2012, Corporater, Inc. All Rights Reserved. www.corporater.com | Privacy Policy | Contact Us

Corporater Inc. is a leading provider of Enterprise Performance Management Software solutions including Balanced Scorecard Software, Strategy Maps, Dashboards, KPIs, Action Plans, Forms, ETL tools and Surveys.