Execution Excellence: Making Strategy Work Using the Balanced Scorecard

Praise for EXECUTION EXCELLENCE

"Execution Excellence is a very clear roadmap for any manager serious about improving performance with a team. Sanjiv has decades of experience solving problems with real–world companies and the challenges they face. This is a superb summary of his learning, communicated in concise, specific and easy to understand steps. I highly recommend it."
RON SANDERS, President, Warner Bros. Worldwide Home Entertainment

"This book is full of sensible, practical advice on how to improve your business using the powerful tools of the Balanced Scorecard. Businesses of all types can see how to achieve their goals more effectively and quickly if they adopt the techniques shown here. Read and prosper!"
JON MOULTON, Founder and Managing Partner, Better Capital

"Sanjiv certainly did not disappoint. The book is certainly a compendium of incredible experience he has had as a Consultant in different circumstances. It makes for extremely interesting reading. It is full of substance with practical and implementable suggestions and explains in an incredibly simple and straight forward manner how a tool like the Balance Scorecard can help in terms of framing and implementing business strategy in today′s complex and multi dimensional business world."
AKHIL GUPTA, Vice Chairman, Bharti Enterprises

"If you ever wondered how great generals manage their troops, this is your chance. Sanjiv is the general when it comes to implementing the BSC, having seen him in board rooms. If you are passionate about execution, then this is your back pocket guide. If you want more, read between the lines."
SALEH LOOTAH, Chairman, Ssl Holdings, Former Board Member, Dubai Islamic Bank

"Sanjiv′s thirty year experience in helping firms drive enterprise and individual performance, and bringing alignment between these components comes clearly through in this book. The insights are practical, global, and across industry sectors. A must read!"
LEENA NAIR, Chief Hr Officer, Unilever

Preface xv

Acknowledgments xvii

I THE REALWORLD OF STRATEGY 1

1 The Global Business Environment in Today s Flat World: News Flows Faster than Water! 3

So Where Do We Go from Here? 5

What Does That Mean? 5

2 The Evolving Role of Strategy: Is Strategy Dead? 7

Blue–Sky Strategy 8

Back–to–Basics Strategy 8

3 Strategy Formulation: Building a Strategy that Works 11

External Assessment 12

Internal Assessment 12

4 Strategy Execution: It s All About the Implementation 17

5 The Business Planning Process: Don t Let the Process Overrun You 19

Ownership 21

II INTRODUCING THE BALANCED SCORECARD 23

6 Introducing the Balanced Scorecard: Circa 1992 and Still Going Strong 25

History 25

Basic BSC Framework 26

Design 29

Implementation 30

Cascades 30

Individual BSC 30

Using the BSC to Formulate Strategy 31

7 Challenges in Implementing the Balanced Scorecard Successfully: Time to Put on a Helmet! 33

General Challenges 33

Design Challenges 35

Implementation Challenges 37

III CHALLENGES IN BALANCED SCORECARD DESIGN 41

8 Designing the Strategy Map: Keep It Lite 43

Introduction 43

Design Methodology 44

Strategy Map Design Components 45

Impact of Industry Customization and Support Functions on Strategy Map Design 49

Strategy Map Design for Nonprofit and Government Organizations 52

The Concept of the Linkage Model 52

Designing a Lite Version of a Strategy Map for Board Reporting: Strategic Themes 54

9 Defining Objectives: The Wordsmith s Challenge 55

The Bad Way 55

The Good Way 56

Customer Objectives 58

10 Picking Owners: Four Executives Don t Run a Company 61

Owning the Formulation 61

Owning the Execution 62

How Does Ownership Really Work in a BSC Meeting? 63

BSC Ownership versus Individual Performance Measures 64

11 The Art of Measurement: Lead, Lag, and How Many Are Enough 67

Introduction 67

Financial and Non–financial Measures 68

Lead and Lag Measures 69

Strategic versus Non–strategic Measures 69

Financial Measures 70

Customer Measures 70

Internal Perspective 72

Learning and Growth Measures 73

Measurement Formulas 74

Data Sources 75

What about Missing Data Sources? 76

How Many Are Enough? 76

12 Units and Frequency of Measurement: Stay Honest 79

Units of Measurement 80

Key Milestone Indicators (KMS) 80

Decimals 81

Frequency of Measurement 81

13 Target Setting: Actionable or Aspirational? 83

Target Intensity 83

How Many Targets to Set of Each Kind? 85

Target–Setting Benchmarks 86

Target Calculation 88

14 Initiative Alignment: Are You Overrun with Projects? 89

15 Designing Cascades: Top Down or Bottom Up 93

Introduction 93

The Next Level Cascade: Functional Organization 95

Multi–divisional Structures and Cascades 96

16 Aligning Individual and Enterprise Performance: Unlocking Human Capital 99

Introduction 99

The Right Way 100

Measures 101

Cascading Weights and Measures 102

Bands 103

IV CHALLENGES IN IMPLEMENTATION 105

17 Selecting the Right Balanced Scorecard Coordinator: Not the Audit Team, Please! 107

Introduction 107

The BSC Coordinator 108

Cascade Coordinators 113

18 Get Ready for the First Reporting: Sixty Days to Lift–Off! 115

Introduction 115

Timelines 115

The Accuracy of a Measure 118

You Missed the Start of the Year 118

19 How Should the First Meeting Run? And How Frequently? 121

Introduction 121

Deck Pre–distribution 122

BSC Coordinator s Role 123

The Discussion 124

The Discussion on Initiatives 126

Meeting Closure 128

What about the Cascade Scorecard Meetings? 128

Conclusion 128

20 What About Scorecard Automation? Mobile and Dynamic Scorecards 129

Introduction 129

The Excuse to Automate 129

When to Automate? 130

Components of BSC Automation 131

The Automation Process: The Data Challenge 132

Benefits of BSC Automation 133

21 What Happens After a Meeting? Making Sure the Traction Lasts the Whole Month 135

Introduction 135

Circulation of Post–meeting Deck 136

Follow–up Action 136

Complaining 137

Ensure Cascade Alignment 137

Initiative Action 138

An Unfortunate Case Study: Blowing Up a $5 Billion Company 138

22 The Communication Challenge: It s Like Keys to the Executive Washroom 141

An Unfortunate Case Study: Paper on the Walls 141

Start at the Design Stage 142

At the Reporting Stage 143

Board Reporting 143

Using It to Build a Training Agenda 144

23 What Happens If Performance Does Not Improve? Patience and Speed Go Together 145

Introduction 145

It s Not a Formula 1 Car 145

What If There is No Cause and Effect? 147

Too Many Reds 148

The CEO Is Not Pushing the Agenda 149

The Ownership of the Strategy Is Wrongly Placed 150

24 Running a Best–in–Class Project Management Office: You Can t Do It without a Command Center 153

Everything Is a Project 153

The Evolving Landscape of Project and Program Management 154

The Program Manager s Role 155

An Effective PMO 155

PMO Knowledge Areas 156

PMO Process Groups 159

PMO Maturity Levels 160

PMO Types and Approaches 161

Critical Success Factors to Set Up an Effective PMO 162

Linking the PMO to Strategy through the Balanced Scorecard 163

25 Oops. The Strategy Has Changed: What Happens Now? 167

Introduction 167

Midyear Strategy Change 167

Annual Strategy Review 170

V CONCLUSION 173

26 Conclusion 175

Make Your Strategy Positive 175

Execution Is about Focus 177

Focus and Measurement 178

Ownership 178

Stay on Track 178

Youth Matters 179

Gray Hair Matters 179

Appendix A: Industry and Function Specific Strategy Maps and Scorecards 181

Appendix B: Bank Case Study 227

Appendix C: Textile Company Case Study 235

Appendix D: Travel and Tourism Case Study 245

Appendix E: Illustrative Financial Measures by Industry 255

About the Author 259

Index 261

SANJIV ANAND is the Chairman of Cedar Management Consulting International, a global management consulting firm with over 800 clients and a network of offices worldwide. He is considered a Strategy and Balanced Scorecard thought leader, with more than thirty years of global management consulting experience and 300 Balanced Scorecard designs executed across a wide range of industry sectors. He is a Harvard Business School and NYU Stern Alumnus, and a former YPO Chapter Chair.