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Now that the Execution Premium book by Drs. Kaplan and Norton has been out in the market for a number of years, let's take a look at the benefits that can be realized through the XPP implementation in your organizaiton. Let's take it a couple stages at a time. Stage 1 and 2 looked at Develop the Strategy and Translate the Strategy. Now let's look at stages 3 and 4: Align the Organization With the Strategy and 5: Plan Operations. In these stages, the strategy has been clarified with scorecards and strategy maps at the enterprise level so now they need to be cascaded down into the business and support areas to ensure vertical alignment. Individuals might employ personal Balanced Scorecards and development plans to link the performance review process with the strategy. A communication program around the strategy is also paramount. The organization can begin to link strategy to key processes, driver models, and dashboards. Rolling forecasts and dynamic resource allocation are often found around the operational planning step.
STAGE 3: ALIGN THE ORGANIZATION WITH THE STRATEGY
- Defines the corporate role so that organizational units receive strategic guidance & direction
- Cascades strategy maps and scorecards to ensure organizational alignment to the strategy
- Leverages synergies between corporate, SBU, shared services, and other units to ensure alignment
- Communicates the strategy so that everyone understands his/her role in executing it
- Aligns team and individual goals and incentives to ensure the behavioral changes required for success
STAGE 4: PLAN OPERATIONS
- Identifies critical processes required to execute the strategy
- Establishes cross-functional business teams to drive performance across organizational boundaries
- Develops rolling forecasts and dynamic resource allocation to link strategy and operations
- Implements driver based planning to identify the critical levers of performance
- Creates operational dashboards that identify the key performance indicators that drive performance
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM Development Team,
ESM Features,
ESM General Information,
ESM Tips and Tricks,
Initiative Management,
Innovation,
Operational Reporting,
Personal Balanced Scorecard,
Reporting,
Risk Management,
Software as a Service,
Strategy Maps,
Sustainability
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Posted
9/7/11
@ 2:25 PM
by ESM Team ESM Team
Judging from recent interviews and articles, it appears Balanced Scorecard co-creator Bob Kaplan’s new favorite case study is Volkswagen Brazil. In particular, he is impressed with the company's ability to communicate strategy to its 22,000 employees.
Kaplan is particularly charmed by a Volkswagen robot that roams the corporate premises and “talks” to employees about strategy. Giga, who has the face of a VW Beetle’s hood and wheels as feet, makes star appearances at employee gatherings and also shows up in comic strips to affirm strategic goals for employees.
This thoughtful and creative approach to strategy communications humanizes the idea of strategy, makes it fun and accessible, and gets people talking about it. It has also contributed to a cultural change inside the company, which, in turn, enabled a major financial turnaround.
For companies that can't afford to build a robot, there is a less expensive and more interactive approach available—if interactivity is measured by the vibrancy of human-to-human, rather than human-to-robot, dialogue. With the right selection of social media tools, you can leverage your corporate intranet (or a 3rd party platform) and raise strategy communications to a whole new level. Let’s look at some of the more common social media tools to see how they can be used in the strategy communication process:
Blogs… for Strategy Execution
According to Wikipedia, “Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video.” If the purpose of your strategy communication intranet is to communicate strategy, you don’t want to let every employee blog on it (just as you wouldn’t let every employee on stage at a company meeting to discuss strategy). Only your CEO and other executives responsible for communicating strategic objectives should launch a blog series under the banner of strategy communications. Depending on how “young-at-heart” your executives are, they may create and post the blogs themselves. More likely, your communications department will manage the operations of the blog. For example, if an executive is more comfortable speaking than writing, your communication team can film him and post the video entries as a video blog.
Online Discussions…for Strategy Execution
Company employees can comment on executive blogs, but the primary purpose of the strategy blog is for leaders to broadcast the message to the field. An online discussion forum is different. Discussion forums are inherently a more democratic, interactive form of exchange. There is an expectation that the person who begins the discussion will carefully listen to responses and continue to engage as the discussion unfolds. The best discussions begin with an honest question and an appeal for help. These forum discussions are the perfect complement to a more structured application for Balanced Scorecard creation and control.
Private Groups Collaboration…for Strategy Execution
You might not be ready to communicate the strategy to the entire organization. For example, Scott Nadler describes ERM’s strategic communication program in stages, starting with a private discussion between a dozen executive insiders, then to a group of 40, and finally to all 3,000 at the company. The access rights to your online collaboration space should mirror this off-line reality. For example, you might choose to launch a private group for the 40 people inside your own intranet or as a private subgroup in a more public community such as Palladium XPC.
In summary, you have a great new set of inexpensive social tools to help you communicate strategy. If they are deployed carelessly, they will be a waste of time and a distraction. However, with the right matching of specific social tools and oversight to keep the discussions focused, you will find an effective new communication program. This channel will only become more powerful – even transformative -- as more “digital natives” come into the organization.
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Following an informal survey of speaking with ESM users, I found that about half of you are not maximizing the capability of action items in the ESM.
Action Items are meant to be the actions that an organization records as they make decisions during a strategy review meeting. Action Items are a very flexible way of capturing the follow up items from a reporting meeting. These items can be assigned to individuals and to categories. When someone is assigned an action item, they are sent an email reminding them of their action item. They can be sorted and exported to excel instantly for use offline as necessary. With the proper level of access, a user can add action items right on the screen. When completed, an action item can be marked complete, which allows for another level of flexibility within the application.
For organizations that utilize the "My ESM" feature should also consider assigning users to action items so that each action can be tracked by its owner(s) under an "open" and "completed" section. Action items can be entered into the ESM during a review meeting and once assigned to the user(s), will display within My ESM. While users can complete this step by selecting the action item and bookmarking it in their My ESM, client administrators can perform this function through the manage access page under permissions and security.
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Several of our product experts recently returned from Palladium’s 2010 Americas Summit, held this year in La Jolla, CA. It was a great conference – strong attendance, great speakers, and considerable insight to be gained from both the case studies presented, and personal conversation.
As our experts provided attendees with live demos, they recount numerous occurrences of present clients passing by, and joining in to offer first-hand testimonials. Thanks to them, and to all of you, for being such being such strong proponents of ESM. Hearing the stories of your successes is valuable to those looking for more information, and also makes us truly proud to be a supporting part of your strategy management programs.
Recurrent obstacles identified by attendees we spoke with included 1) employee engagement and 2) effective communication of strategy and strategic performance. As indicated in the third step of the XPP, Alignment requires organizations to align business units AND employees alike to the strategy. In doing so, they often times overlook the most critical component of alignment– communication. Communication is paramount in a Strategy-Focused Organization to develop buy-in and commitment to the strategy at an individual level.
Over the last decade, ESM has made addressing this commonly shared weakness a priority. In continually improving the product to support evolving need, two new features were released this month: a second generation release of ESM’s Personal Balanced Scorecard component – PBSC 2.0, as well as a capability for integrating ESM with SharePoint.
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Despite its value, most organizations' written, objective-level performance analysis is generally not very good. Most performance analysis does not explain the data, discuss its underlying causes and implications, or integrate it into a broader discussion of strategic performance and environmental trends. My recent reading of strategy review reports of a handful of Palladium Balanced Scorecard Hall of Fame for Executing Strategy® organizations proved to me that even exemplars of strategy execution sometimes fall short in their written performance analysis, thus missing valuable opportunities.
Fortunately, this problem can be remedied. Writing insightful, actionable performance analysis is a skill that can be learned. Through Palladium's work guiding dozens of organizations in strategy reporting, we've identified several common pitfalls in performance analysis that performance analysis writers need to learn to avoid.
Pitfall 1: Focusing Only on the Measure Data, without Explaining or Interpreting
Often, performance analysis merely regurgitates what the data already show, or simply explains the components of the corresponding measure(s). What good does that do? Analysis writers need to dig deeper for more contextual data that might explain the performance. What is the reason for the last period's measure performance? How do we explain any period to period trends? What does the measure's outcome tell you about the performance of its corresponding objective?
Pitfall #2: Omitting Qualitative Information
Numbers are concrete, and objective, and therefore make people more comfortable and confident. But they don't tell the whole story. And they can indeed mislead, whether inadvertently or not (think of all the ways statistics can be presented to support any side of an argument). Qualitative information can often reveal the reasons behind the numbers better than the deepest dive into the detailed data can. It would seem self-evident that qualitative information is a critical element for understanding what drives performance. Yet far too often, such information is absent in written analysis.
Pitfall #3: Ignoring the Reasons for the Performance Result
Sometimes all the analysis in the world won't yield a definitive explanation for a performance result. Yet even when there is no certain answer, it is always better to offer a hypothesis than to forgo explanation altogether. For decision makers, there is little that is more unsatisfying than to ask “Why” and be told “I have no idea.” Offering a thoughtful educated guess will at least get the conversation started.
Pitfall #4: Avoiding Any Discussion of Risk
No one likes to be the messenger of bad news, but addressing risk openly and accurately is the key to avoiding unexpected declines in performance and greater risk. Even in our age of heightened risk awareness, risk and strategy are still often viewed as separate areas, one involving all that could go wrong, and the other, all that an organization hopes for. In reality, the two are inextricably linked. The strategy represents a hypothesis of the way the business operates and what activities are crucial to attain the ultimate desired outcome. Each strategic objective is achieved by successfully managing its performance drivers. Since it's a given that there are specific risks that can impede each performance driver; why would such risks not be part of the strategic conversation?
Pitfall #5: Focusing on Details at the Expense of the Bigger Picture
For any number of reasons, performance analysis writers often delve into one aspect of an objective’s performance, overlooking the objective-level view. In fact, it is not uncommon for performance analysis to not even indicate whether the objective is being achieved. Writers must step back from all of the quantitative and qualitative data they have collected and approach objective-level performance analysis by first drafting a summary statement about the objective's overall performance.
To read the full length article, log into the ESM, select Resources: Libraries: BSR: Complete Issues: and select the following issues.
David McMillan, “Five Pitfalls of Writing Performance Analysis,” Balanced Scorecard Report, November – December 2010
…or…
David McMillan, with Barnaby Donlon, “How to Write Performance Analysis That Truly Enhances Decision Making,” Balanced Scorecard Report, November – December 2008
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The ESM team is hard at work innovating, designing and building ESM 6. This effort began in February 2010 and will continue through to Beta launch in early 2012. Through our recent surveys, direct client requests, and guidance from Drs. Kaplan and Norton and Palladium’s strategy consulting experts, we’ve compiled over 200 potential enhancements to include in this release.
As our developers share these new enhancements with the larger ESM team, we get more and more excited about where the ESM community is pushing the application. After all, it is you, the client, who’s advancing our application as you use it in your organization and provide us with feedback.
Some of the latest features to be built include automatic status indicator roll up across the scorecard. For example, milestone performance status indicator can impact the overall initiative status indicator, which in turn impacts objective performance status indicator. Objective status indicators can also automatically set based off of cascaded objectives and underlying measures. Measure can be automatically set by either data roll up or status color roll up. Objectives then roll up into perspectives and themes and then ultimately into an overall scorecard performance. It will be up to you if you activate this feature and just how far you want automatic status color setting to go in your organization.
We’ve also seen a new measure charting interface, allowing for unlimited data series, data calculations between columns, and multiple charts that can be displayed against the same measure data set. We will enable much more complex data roll up since different underlying measure series can feed into various higher level measures. For example, historically ESM required final calculated numbers such as a target, actual, variance, and forecast. With ESM 6, if desired, those raw data calculations can be done right in ESM or sourced in from data sources or data bases. We will also enable period groups for month to date, quarter to date and year to date summary series. Our measure charting enhancements should remove any restrictions users have felt in the past with complex measure calculations, roll up, and visual charting.
As we continue our development efforts we look forward to sharing our development efforts with you.
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Palladium’s research also involved surveying 101 organizations representing a wide range of industries in order to explore the relationship between their management practices and the performance results they have achieved. Among our most important findings:
IT, if aligned well with strategy, plays a very significant role in determining the ultimate chance of execution success. Integrated, end-to-end software solutions, together with operations governed by robust strategy management systems, constitute a proven method by which organizations and their entire business networks can achieve the Execution Premium. This Palladium white paper reviews the methodology used to align strategy to operations, drills into the three components of operational excellence and walks through how the 6 stage Execution Premium model can help organizations achieve healthy operational alignment. View this and other white papers at Palladium’s white paper site.
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I just came across an excellent account of the Balanced Scorecard effort undergone at the Royal Botanic Garden Edinburgh. In this paper, BSC champion and strategy director, Alasdair Macnab, along with Chris Carr and Falconer Michell from University of Edinburgh tell the implementation story. They focus their research on how the Balanced Scorecard approach can be successfully adopted for nonprofit businesses. The team also reviews why the Executive Strategy Manager was selected as the preferred solution and how it streamlined the data reporting and presentation while providing leadership and employees froma cross the organization critical line of sight into the strategy.
Key findings cited from the paper include:
Just as strategies are specific to an organisation, the balanced scorecard (BSC)/strategy map can and should be adapted to suit an individual organisation to leverage the full power of the BSC system.
• The effort and commitment required from senior management involved in transforming strategy management processes should not be underestimated as individuals/departments will become more accountable for their actions, particularly in the public sector, and resistance to change may be experienced as a consequence.
• If an effective costing system is developed, such as the one described in this report, management will see how their staff are directing their efforts, particularly important in knowledge based organisations.
• With their intimate knowledge of the organisation, the management accountant is well placed to become very involved or direct the transformation process to manage strategy execution leading to improved effectiveness/profitability of the organisation. In this way the management accountant becomes more of a strategic partner to the business.
• The research relates primarily to the practitioner who should find it helpful as the work is based on research subject to academic rigour but is translated into a pragmatic approach via the case study; thereby demonstrating its usefulness to a real organisation.
See:” Implementation of the balanced scorecard and an alternative costing system at the Royal Botanic Garden Edinburgh,” available at the following link:
Access the full report here
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM Development Team,
ESM Features,
ESM General Information,
ESM Tips and Tricks,
Initiative Management,
Operational Reporting,
Reporting,
Risk Management,
Software as a Service,
Strategy Maps,
Sustainability
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Posted
7/22/10
@ 11:43 AM
by ESM Team ESM Team
ESM 5.0 is revamped to deliver the world's largest repository of Kaplan/Norton Strategy Execution assets in an even easier, more reliable interface. You can now browse the extensive compilation of best practice assets, including but not excluded to: interviews, Balanced Scorecard Report articles, conference presentations, profiles, and templates, directly from the Resource Center.
ESM 5.0 now also boasts a refreshed objective and measure library. We've surveyed our consultants in the field for the best practice objectives and measures used in their industries and compiled an easy-to-search database. The ESM objective and measure library provides best practice guidance whether you're creating your first scorecard or refreshing your scorecard midyear. You can search elements by industry, function, and perspective. ESM 5.0 grants you access to the methodology of the world's leading experts and enables you to perfect your management system, maximize your performance, and secure competitive advantage. With ESM 5.0 give clarity to your strategy, align your organization, and make strategy management a core competency to reposition your organization for sustained success in this new economic environment.
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With the launch of ESM 5.0, bookmarking capability has expanded into the My ESM dashboard arena. We'd like to break down the feature for you so that you can gain maximum benefit.
Traditionally, ESM allowed users to bookmark strategic elements and then access those elements in one location for quick editing. ESM 5.0 makes this process simple and more central for the typical ESM end user. If you utilized bookmarks in ESM 4.5, these were copied over to ESM 5.0. If you haven't utilized bookmarks before the ESM 5.0 launch, we encourage you to navigate within the My ESM tab to manage your bookmarks. By selecting the strategic elements you are responsible for updating, you can then view them as a dashboard layout upon log in and via the quick update area, rapidly copy forward all period specific data within the selected strategic elements. Naturally, great care needs to be taken to ensure you are only copying forward data that you are responsible for reporting on. Likewise, you always want to be in the reporting period you are copying data into. This copy forward feature helps users avoid busy work of rekeying in information, especially when there are no changes to an element between a reporting period.
If you are a client administrator, via the ESM 5.0 client administration interface, you can set up and manage bookmarks for your users. This offers a simple solution to populate the dashboard of executives with critical information that they care about seeing.
While your bookmark view can sit as one of your My ESM dashboards, feel free to build additional views into the strategy via the dashboard page. Standard dashboards can contain any element that exists within your scorecard. Scorecard managers are also able to build scorecard wide dashboards that get applied throughout all the users who have access to the scorecard and viewing rights to the information. Some organizations find the scorecard wide dashboard view incredibly powerful for listing off track agenda items prior to a strategy review meeting.
Be sure to reach out to your ESM account manager with questions or for guidance.
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Accounting for risk has become a hot topic in strategy management over the last year as organizations struggle through annual strategy refreshes in these turbulent times. This has raised the topic of how to address these risks within the balanced scorecard methodology, and ultimately, how to include the management of risk in your ESM implementation.
A strategic risk is the threat or possibility that an action or event will adversely affect the firm's ability to achieve its objectives. These risks are large enough that they should be managed on the strategic level, and in the balanced scorecard that means we need ways of measuring our exposure, assigning scarce resources to mitigation, and periodically reporting on exposure and progress.
Several of my recent clients have struggled with how best to include strategic risks in their monthly strategy review meetings while, as best practices demonstrate, keeping all the information within ESM itself. Based on feedback from those clients and other consultants and members attending Palladium's annual Strategic Risk Conference, we have designed the following approach.
Risk spans the entire scorecard and every theme, so it makes sense to establish a 'Risk' perspective in addition to the traditional perspectives. Into this new perspective go objectives for each risk, ideally prefixed similar to 'Risk 1: Overexposure to currency fluctuations'.
Treating risks as objectives allows us to select measures, establish ownership, align initiatives and report on status just like any other objective. The different perspective serves to keep these separate from traditional objectives. To illustrate the alignment of Risks to Objectives, we use the Cause and Effect functionality in ESM. Each risk objective is listed as a 'Cause' of an objective, this way when you are reporting on the objectives ESM will list out the risks aligned as 'Causes' with a status indicator and link.
This approach allows you to adequately address the impact of risk on your strategy and ensure that you are regularly evaluating your exposure to the most serious dangers. Aligning initiatives demonstrates that effort is being placed on mitigation and that mitigation itself is being regularly reviewed.
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Industry giant Microsoft's Word application has created headaches for software developers seeking integration since its creation. The code used to write the immensely popular Word has a very complex base, and since other applications need to communicate with this code it comes with many complications. The ESM struggles to interact with Word as users who paste from Word to the ESM end up with text corrupted from the attached Word code. To combat this, the ESM has two text editors which translate and clean this code, called SoEditor and FckEditor.
As some ESM users have experienced, MS Word code can give the ESM fits when using the common task of copying and pasting from Word to the ESM. This is particularly true when the text contains lots of formatting, uncommon characters, or multiple languages. The ESM uses the aforementioned text editors in an effort to elminate text corruption. These editors help to scrub any existing code attached to text from other applications. The resulting clean text then fits seamlessly in the ESM without corruption.
The ESM joins other software vendors in their constant battle to maximize compatibility with the complexities of Microsoft Word code. You can read about struggles in the blogosphere with Word integration at the below link. As an end-user driven application, the ESM seeks to create an intuitive user experience. However, this task is ever complicated by the hassles of integrating with Microsoft Word. The ESM will seek further optimization with Word later this summer, when the integration of the popular TinyMCE Editor into the ESM will give users added artillery against text corruption.
Learn more about the struggles of other applications here.
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To maximize employee alignment and productivity, it is not sufficient to just change the way compensation is structured – companies need to ensure their employees are plugged in to the strategy, and are aware of how their performance affects it. Travis Manzione's article "Empowering the Individual to Execute Strategy" in the Balanced Scorecard Report discusses the challenges of connecting individual employees to organizational strategy. He also gives advice and provides real-life examples of how workers have been able to build effective Personal Balanced Scorecards that align with the organizational scorecard that covers their area of business.
Users of the Executive Strategy Manager (ESM) who are creating their own targets are only a click or two away from this and a myriad of other articles and resources to help them think about and create the best possible targets for their organization.
Organizations which have been successful in making strategy execution a core competency have turned to the ESM Personal Balanced Scorecard (PBSC) module to implement a strategically-aligned performance management process. As part of the ESM Enterprise Edition the PBSC module enables individuals within organizations to rapidly develop and align personal objectives (including measures and targets) to enterprise and business unit strategic objectives. Realizing the diversity of organizational culture, the PBSC fields can easily be edited to fit your specific needs. The PBSC provides organizational leaders a view of enterprise goals and how they are executed by individuals.
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Many organizations elect to refresh their scorecards with the start of a new year. Regardless of when you do it, there are some considerations you should take into account prior to beginning the process.
If you are still closing out a prior reporting period, such as Q4 2008 or December 2008, you should not refresh your scorecard for 2009 in this same account. Remember that the ESM captures your active/live strategy so if you delete old objectives and measures, that data is gone forever. A better approach is to reach out to your ESM account representative and request to have your scorecards cloned into new accounts so that we can name one 2008 and one 2009. This will then allow you to continue to edit your 2008 performance data and close out on those strategic elements while also freeing up your scorecard for the edits necessary to prepare for 2009. Be sure to lock down unused reporting periods and effectively communicate to end users which scorecard they should go into to accomplish closing out the year versus refreshing the strategy.
Organizations that are complete with their 2008 reporting do not need to create scorecard clones. The process is as simple as creating a scorecard archive through the client administration area prior to refreshing your strategy for the coming year. This archive snapshot will reflect all the strategic elements from that point in time and serve as a reference in the future should you ever wish to look back.
Finally, if you are not making significant changes to your strategy at this time, you can consider things business as usual. Add in the January 2009, Q1 2009, etc reporting period and continue reporting on your scorecard.
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I've had a lot of organizations ask me how to "tell the story of their strategy" using their strategy map in the ESM as their guide. I'd like to provide our ESM community with an example approach that could be adapted for your organization. Once upon a time...
This strategy map tells the story of our strategy over the next 3-5 years. We believe that if we achieve these strategic objectives, we will achieve our strategic destination of becoming a XXX organization. (I often see a top level financial or stakeholder objective here. We regard the lower two perspectives as to what we are putting into the strategy and the top two perspectives as to what we are getting out of the strategy, our outcomes.
In order to achieve our strategic destination, we need to have the right people, skills, and culture (point to L&G perspective) to help us execute on our key internal business processes, organized by the following key themes (point to and say each theme). If we do these things internally, we believe we will successfully execute on our customer objectives--driving the customer outcomes we are looking for. Happy customers become repeat customers which become referrals to increase our customer base. Ultimately, this will drive healthy revenue growth (or the stakeholder outcomes you desire). And we always need to be cognizant of managing our operations (point to financial right side of the map).
Now that I've walked through the high level story of our strategy, allow me to now drill in on the cause and effect logic behind our objectives.
First, we have XXX key objectives that we've called out on our map to signify that they are absolutely critical to our success. Read each objective.
Within Learning and Growth perspective we have the following objectives.....these drive each of our themes internally. Within the first theme we have the following perspectives (work through the theme starting at the bottom and working your way up showing the cause and effect logic). Then do the remaining themes.
Move up to the customer perspective and if they are written in quotes, then say this is through the eyes of the customer. This is what they are looking for from us. Then read each objective.
Finally, present your financial objectives as the ultimate test if you are executing on your strategy.
Speak to how you measure success via measures that sit behind the strategy map (show the full BSC summary tab), with initiatives that are helping you close the gap between your current state and what you are trying to achieve.
Good luck.
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Did you know that the ESM can automatically evaluate the performance of your measures?
The attendees of our webinar on the Target Scheduler do!
Learn how to schedule threshold bands by period, so that when data is manually entered or sourced into the ESM, the performance color for that measure is automatically displayed.
Replay the session at https://breeze.palladiumes.com/p86173230/ or review the Target Scheduler reference guide in the FAQs and Help section of your account.
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Palladium Announces XPA™--Execution Premium Assessment--based on the Kaplan-Norton Strategic Management System
New Tool and Book Based on Close Collaboration between Palladium, Kaplan, and Norton
Palladium Group Inc., the global market leader helping organizations execute their strategies, has announced the Execution Premium Assessment (XPA), the newest offering designed to help companies understand the strategic performance gap between where they are and where they want to be. XPA, the latest tool in an integrated suite from Palladium, is based on more than fifteen years of research by Drs. Robert Kaplan and David Norton, the world's preeminent authorities on strategic performance management, and the best practices of more than 100 high performing organizations.
XPA is a two week process consisting of executive interviews, document reviews and a comprehensive survey that capture's an organization's view of its performance and issues through the lens of execution premium best practices. The survey uses a proprietary algorithm to show the cause and effect relationships between drivers of performance and performance results. In addition, XPA can show organizations how their performance compares to high performing companies globally, and where to focus improvement efforts to maximize near-term results. Insights from the process provide a shared framework integrating the diverse components of the management systems to help the organization clarify strategy, drive performance, and optimize data.
"Palladium's approach to assessment helped us to gain a better understanding of how to close our performance gaps," said John Smith, division senior vice president, Store Development, Collective Brands, Inc. "It enabled us to achieve measureable results."
"Palladium assessment tools provided us with an understanding of where we were and where we needed to be," said Sophie de Villers, vice president, Strategy Management, Canadian Blood Services. "The resulting roadmap put us on the path of translating our strategy into measureable results."
"Industry research and conversations with our clients reveals that execution is the number one challenge for CEOs. XPA will help our clients execute their strategies successfully, allocate resources efficiently, and improve decision making with insight based on data they can trust" says Dr. David B. Friend, Chairman and CEO of Palladium. "The Kaplan-Norton approach is a proven model that helps our clients achieve their own execution premiums."
The Execution Premium: Linking Strategy to Operations for Competitive Advantage (Boston: Harvard Business Press, August 2008) is the most recent in a series of books authored by. Kaplan, a Baker Foundation Professor at Harvard Business School and Chairman of Professional Practice at Palladium, and Norton, Founder and Director of Palladium. The book profiles organizations that have achieved a true execution premium. The premium, evidenced by outcomes such as share price, revenue, profit, customer loyalty, employee engagement, or brand value, is achieved "by doing the right things right." The book describes a six-stage management system that shows organizations how to integrate strategic planning with operational execution. This system serves as the foundation for XPA.
Palladium collaborated closely with Kaplan and Norton in the development of the book through its various education, conference, and research programs. Most of the cases are Palladium clients, representing a variety of business models throughout the world and across multiple industries. The ideas in the book were tested and vetted by these and other organizations that have adopted the Kaplan-Norton approach to strategic performance management. Palladium practitioners contributed practical advice and implementation experience in the use of strategic themes for multiple strategy execution processes, initiative management, driver-based planning, rolling forecasts, and how to link strategy to operational process improvement.
About Palladium Group, Inc. Palladium Group helps its clients link strategy and operations to achieve an execution premium. Palladium's expertise in strategy, finance, and IT--delivered through consulting, education, training, and technology implementation services--help more than 500 clients clarify strategy, drive performance, and optimize data. Palladium has offices throughout North America, Europe, the Middle East, Latin America, Africa, and Asia-Pacific. Palladium's Balanced Scorecard Hall of Fame for Executing Strategy™ recognizes organizations that have achieved an outstanding execution premium.
For more information on how the ESM helps track your progress over time as reflected in the assessment, visit www.executivestrategymanager.com
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I have an organization who is considering the ESM and wants me to build out some example reporting views with their content. This is a common request that we field with potential ESM clients who already have a scorecard in place. Naturally, they want to see what their reporting environment will look like before they commit to a new application.
Unfortunately, some of the measures they sent over to us really were 3 or 4 measures combined into one chart. This set off the caution light. Simplify, simplify, simplify I say. Leaders spend a few moments reviewing this information in review meetings and the message has to be clear. My immediate recommendation to this prospect was to break up the measure into separate measures that accurately and visually depict the performance on each and capture them under a detail performance page at the objective level.
The ESM is well structured to handle this situation as the Meeting View functionality allows for easy navigation between the hierarchical strategies, be that within a scorecard or between cascaded scorecards in an organization.
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Report Frequently
I am an advocate of holding brief reporting meetings at the end of the first and second month of each quarter (focusing on key initiatives or poor performing areas) and then holding a full strategy review meeting immediately after quarter close.
When it comes to reviewing the data during a reporting meeting, you should work with what you have. If measures are collected quarterly but you report monthly, provide some performance analysis but be sure to mention that it is based off of incomplete data or trends. Likewise, if you collect data monthly but report quarterly, it's ok to report out on all three months during the quarterly review.
Get it Automated The number one reason why Microsoft PowerPoint and Excel fail those who attempt to manage their BSC program in it is because it's a cumbersome process; there is next to no automation.
If you are like many and have data sitting on various databases, you can configure many applications to automatically pull the data right into your BSC reporting system. You'll still need to include performance analysis but the data feeds should reduce you ongoing reporting time commitment.
Go the Extra Mile Every successful scorecarding program that I've seen has had a champion who isn't afraid to put in extra work to ensure the program takes root. This could entail inputting other's performance analysis or measures data or rallying the leadership team to show up to the strategy review meeting. This up front reporting effort will pay off with handsome dividends in the years that follow.
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So you've been reading articles on the BSC Hall of Fame for 7 years now and you're trying to figure out how they do it. How have these organizations been able to go the distance with their strategy management program? Here are some key steps to take to ensure your project survives the transition from development to execution and beyond.
Own it, Share it, Live it One commonality I see with all successful strategy management programs is an emphasis around communicating the Balanced Scorecard and overall strategic destination to all employees in the organization. I see some organizations struggle from one reporting period to another with trying to keep all the scorecard data up to date. When I sit down to discuss their concerns around having to (what seems like to them) continually update their BSC, nine times out of ten I see that there is one, or perhaps two owners for all the themes, objectives, measures and initiatives. These organizations are setting themselves up for failure because the entire scorecarding process cannot efficiently be performed by one person. This structure also conflicts with the natural change management aspect of scorecarding and strategy mapping.
Employees need to be exposed to the strategy. It needs to become part of daily and weekly dialogue. The best way to achieve this is to communicate the strategy through ownership.
The first step a Balanced Scorecard core team needs to take when beginning to report is to pull as many team members into the process as possible by assigning them as "owners" or "analysts" to themes, objectives, measures and initiatives. In order to take this first step, the leadership team needs to be willing to let go of the strategy, to open it up to the organization, and to empower the employees with line of sight into their organization's strategy map and Balanced Scorecard. We are aware that some measures data and other scorecard components can be sensitive and many applications have the flexibility to restrict users from specific areas of the scorecard.
Consider the owner's job responsibility when assigning ownership. Match function with strategic component(objective, measure, initiative) in the ESM to ensure the update can be performed efficiently and intelligently each quarter. The employee doesn't have to be a manager to contribute. In fact, it's very common to see a subordinate employee draft performance analysis and recommendations for a leadership team member. It's okay to have two people who perform similar tasks contributing performance analysis and recommendations to one objective as long as it is coordinated.
A one scorecard organization could reach out to over one hundred employees by assigning ownership out for all its scorecard components (estimate 20-25 objectives, 35-40 measures, 15-25 initiatives and dozens of milestones on any given scorecard). This level of responsibility will begin to drive the communication, understanding, and execution of the strategy.
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