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Alasdair Macnab, FCMA, CGMA, director of corporate services for the Royal Botanic Garden Edinburgh, has adapted the Balanced Scorecard to create a new way of measuring the HR and financial costs of meeting strategic objectives. In this article he shares how his innovative approach, coupled with the Executive Strategy Manager, enable strategic objective budgeting. The system he has built offers insight into the input costs for each objective on the scorecard which can then be juxtaposed with the achievement of the objectives, realized through the associated measure performance.
Read the article at: http://www.cgma.org/Magazine/Features/Pages/Strategic-Objective-Costing.aspx
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Posted
2/8/12
@ 2:51 PM
by ESM Team ESM Team
Drs. Kaplan and Norton recently shared with us the future of the most powerful management concept of the past 75 years (according to Harvard Business School). As published in the CGMA inaugural issue a few days ago, the gurus lay out five key guidelines for this framework in the future:
1. Collaborate with external constituents, such as key suppliers, customers and alliance partners, to develop a strategy map that describes and communicates the strategic relationship; once developed, the map and scorecard are used to govern and guide the relationship.
2. Realize that cities and provinces, and even nations, around the world are using our framework for describing and communicating strategies for competitive advantage, and then successfully implementing their visions with our strategy execution system.
3. Use the strategy map as a jumping-off point for risk management, especially the identification and management of strategic risks.
4. Use the strategy map as a central change management tool.
5. Expand the role for analytics in the strategy execution system.
Read more at:
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
Decision Making,
ESM General Information,
Initiative Management,
Innovation,
Operational Reporting,
Reporting,
Risk Management,
Strategy Maps,
Sustainability
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Posted
2/8/12
@ 2:48 PM
by ESM Team ESM Team
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
|
Posted
9/7/11
@ 2:25 PM
by ESM Team ESM Team
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 of 6: Develop the Strategy and Translate the Strategy. These stages are where the organization performs S.W.O.T. analysis, Gap and shift statements, identifies key overarching strategies, clarifies the mission and vision and key risks. Then the strategy is developed into Balanced Scorecards and strategy maps. Typically an Office of Strategy Management (OSM) or other like group/individual is tapped to manage the strategy implementation and execution.
STAGE 1: DEVELOP THE STRATEGY
- Defines how shareholder value will be created to achieve new levels of performance
- Identifies required changes from current to future state so the organization understands it
- Quantifies vision, values, mission, objectives, and risks so they are measurable
- Analyzes strengths, weaknesses, opportunities, and threats to determine course of action
- Formulates strategy so that the entire organization can execute it
STAGE 2: TRANSLATE THE STRATEGY
- Clarifies strategy with a strategy map to produce a one-page action plan that works
- Develops a Balanced Scorecard to specify objectives, targets, measures, and initiatives
- Identifies key risk indicators that must be managed to avoid failure to execute
- Focuses on initiatives with the greatest impact to accelerate time to results
- Allocates resources dynamically to produce the most effective outcomes
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Balanced Scorecard,
BSC Hall of Fame,
Business Leadership,
Client Success,
Competitive Advantage,
ESM Features,
Initiative Management,
Innovation,
Operational Reporting,
Personal Balanced Scorecard,
Reporting,
Strategy Maps,
Sustainability
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Posted
8/31/11
@ 3:19 PM
by ESM Team ESM Team
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
Implementing a platform for strategy management is an ongoing struggle for business enterprises. In the mid 1990’s, research cited that 80-90% of businesses fail to execute their strategies. Organizations then realized the need for a strategy management system. In the year 2006, a survey conducted by Palladium indicated that 54% of businesses have a formal management process for strategy in place and 70% of those businesses outperformed their peers.
Despite the progress enterprises have made in formalizing strategy methods, several barriers exist in the different business silos. Barriers include the strategy framework, management processes, technology, and people (HR, IT, and Finance). To overcome these barriers, organizations can utilize a strategy map as a holistic framework, where various strategic approaches can be incorporated into the strategy management structure. Ultimately, a standardized strategy management process should be a part of the enterprise's infrastructure.
To learn more about how to execute strategy using the strategy management framework and strategy maps, navigate to the BSC Library on My ESM under Resources.
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In the July-August 2008 BSR, Frigo and Barrows' publication indicated that strategy mapping can be used for competitor analysis. The strategy map provides a holistic view of of how operations are linked to organization strategy. Experts in competitive intelligence, Fuld and Chodnowsky, drive this idea further by proposing that the Kaplan-Norton Execution Premium Process (XPP) framework can be utlized in helping organizations gain competitive intelligence. The July-August 2010 BSR article, "Mirror, Mirror: How to Enhance the Execution Premium Process with Competitive Intelligence", Fuld and Chodnowsky propose the concept of mirror strategy maps.
By creating a mirror strategy map of the competition, businesses can acquire the acumen to increase their competitive advantage. Before analyzing the competitor, an external analysis must be conducted to develop a greater understanding of the market and its future direction. For instance, businesses may use the PESTEL (political, economic, social, technological, environmental, and legal) analysis to study the market landscape. Furthermore, an in-depth analysis of industry-specific areas helps the organization generate information on the competition. Researching these areas drives the creation of the mirror strategy map.
When creating the mirror strategy map, analysis of the competition is completed at the operational and strategic level. At the operational level, competitors can be analyzed through strategic measures, such as KPIs (key performance indicators). Benchmarking serves as an important tool in creating the mirror strategy map, by explaining the differences and gaps between the company and its rivals. Additionally, businesses must look at operational and strategic risks. Companies can monitor their operational risks through established key risk indicators (KRIs)-- particular thresholds where the market or competitors pose a threat. At the micro level, studying the KPIs can indicate any potential strategic risks. Strategic risks are also monitored in the overall in market data, which can pinpoint areas of growth and potential threats.
To learn how to fully execute the XPP process in gaining competitive intelligence, please navigate to the BSC Library in My ESM.
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In the July-Aug 2010 BSR report, the article "Unifying Your Far-Flung Workforce Around Your Strategy" highlights the importance of workforce unification in delivering a new company strategy. The strategy cannot be fully executed without all of the employees' committment to action. Not only must the businesses clearly articulate the new strategy to ensure a consistent understanding, but they must motivate the employees to engage in strategy execution. Four recent inductees to the Palladium Balanced Scorecard Hall of Fame for Executing Strategy, share their stories on how they rallied their organizations together to stand behind their new direction. One of the inductees, Grupo Acir, demonstrate their internal transformation to reach their strategic destination.
Grupo Acir is a national radio group based out of Mexico City, Mexico, servicing both the public and private sectors. Recently, new legislation in which resulted in limited political campaign expenditures reduced Grupo Acir's consistent revenue streams from advertising. Their reliance on political advertising had made them vulnerable, thus they had to shift their business strategy. Grupo Acir decided to amp their revenues from commercial advertisers via a new business model, changing their focus to the private sector. They aimed to lower their CPPs (cost to broadcast and ad per 1,000 persons) to justify their premium pricing strategy.
This was a challenge for Group Acir, as their departments worked indepently from one another. First, it was crucial to create a common language in regards to the new strategy. Grupo Acir created an online Strategy Information System to provide information and a standard understanding of the business direction. The mission, vision, and ultimate goals are clearly stated through a corporate level strategy map. In addition to the website, Grupo Acir held an event for employees, where they presented the new mission and vision to the employees.
To further motivate their employees, Grupo Acir altered their compensation system. By using the BSC, Grupo Acir manages employee performance through attitude, skills, and performance of corporate-level strategic objectives. They have also invested in more training in strategic job categories. The categories have experienced the best impact on advancing the strategy.
For access to the full text article, navigate to My ESM >> Resources.
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