LECTURE 1: STRATEGY IMPLEMENTATION
- Strategy needs coherence of:
o People, leadership, structure, incentives, supporting activities, culture
- Implementation is complex because of:
o Interactions between elements
o Number of elements
- Strategic planning = process of deciding on the programs that the organization will undertake and on
approximate number of resources that will be allocated to each program over the next years
o Not about formulation but about implementation
READING – FROM STRATEGY TO IMPLEMENTATION
- Strategy creation = thinking, analysis, planning at the top level
- Strategy implementation = doing, execution, goal-achieving in entire organization
- Alignment occurs when structure, system, people and incentives all reinforce strategic goals
- Check list for success:
o People have the skills
o Reward systems aligned with goals
o Business units organized to support
o Daily activities support strategy
o Company culture aligned
READING – MANKINS & STEELE (TURNING GREAT STRATEGY INTO GREAT
PERFORMANCE)
- Performance fails because: gap strategy and performance
o Inadequate resources
o Poor communication
o And clear accountabilities
§ Leaders often pull the wrong levers
- Venetian blinds = performance projections are high, results fall short, creates an unreliable forecast
which decouples strategy from resource allocation à negative spiral
- 7 Rules for closing the gap
o Keep it simple = describe what the company will and won’t do
o Debate assumptions, not forecasts = focus on real performance not forecast
o Use framework = establish common language (reports) so all departments measure strategy
the same
o Discuss resource deployments early = ask how fast + when resources are needed
o Identify priorities = make few key strategic actions to focus on
o Monitor performance = real time tracking for midcourse correction
o Reward execution ability = hire + develop managers who can execute a top priority and
reward them
- Cultural multiplier effect = when companies link strategy to performance, this creates victorious
circle where top talent is attracted and boosts performance and reputation
,LECTURE 2: PERFORMANCE MEASUREMENTS
- Strategy implementation = execute + keep track of goal achievement
- Performance measurement systems:
o Diagnostic control systems = show earlier performance
§ Need to be:
• Adaptable
• Deliver rapid target information à communicate information
• Make sure all dashboards are aligned
§ Dashboards, cockpits = like cars dashboard (groups relevant indicators)
§ Quality improvement systems = PDCA, Six Sigma
§ Balanced scorecard/strategy map
- How to draw a scorecard:
o Define objective = mission, objectives, small number with deadline and can be measured
o Identify KSFs = variables that drive performance à detailed actions of strategy
§ Output is a grid of objectives
o Characters of KPIs
§ Based on KSFs, follow results, must look beyond financial and non-financial
measures
§ Input indicators = measure assets + resources (R&D or quality of input)
§ Process indicators = measure efficiency or productivity (units produced)
o Setting targets = represents performance you want to see (min, moderate, stretch)
o Things to avoid = to few or too many indicators, unaligned metrics, overly aggressive,
manipulation
- Balanced scorecard is a loop of four processes:
o Translating the vision = clarifying vision
o Communicating + linking = communicate + setting goals + link rewards to performance
o Business planning = set targets + align incentives + allocate resources + milestones
o Feedback and learning = shared vision + strategically feedback + facilitate review
o 4 perspectives of bsc:
§ Financial = what do stakeholders expect
§ Customer = how does organization appear to customer
§ Learning growth = how will organization sustain ability to change
§ Internal processes = how to improve quality of main processes
- Lagging indicators = show results
- Leading indicators = linked to performance drivers
- Cause effect relationships in dashboards are necessary
- Relationships in bsc:
o Financial is ultimate goal à customer satisfaction shapes performance à depends on
organizational internal process à relying on learning and growth
- Strategy map = what drives value and do you must invest in (based on bsc)
, READING – MEASURING PERFORMANCE
- 3 types of KPIs:
o Input = measure assets + resources (R&D)
o Output = measure results of activities (ROI)
o Process = measure efficiency of process (Days to deliver)
- Ranges of KPIs:
o Min = starting point for confidence
o Moderate = real goal
o Stretch = raises the bar
- Complications:
o Unaligned metrics = measuring things that do not support strategy
o Data manipulation = gaming the system
o Knee jerk interventions = overreacting to a single performance
READING – KAPLAN & NORTON (USING THE BSC)
- 4 perspectives
o Financial = how to appear to shareholders
o Customer = how appear to customer
o Internal business process = to satisfy shareholder + customer what should we execute at
o Learning & growth = to achieve vision how to sustain ability to change and improve
- 4 processes to turn BSC into system
o Translating the vision = managers agree on operational measures
o Communication linking = every employee understands overall goal
o Business planning = strategic planning + budgeting
o Feedback + learning = strategic feedback systems to steer
- Traditional learning = single loop = only checking financial metrics and fix them
- Strategic learning = double loop = test hypothesis of strategy, when process targets are reached but
financial fail, maybe strategy is flawed
- Link incentives and rewards to BSC systems and strategy
- Strategy needs coherence of:
o People, leadership, structure, incentives, supporting activities, culture
- Implementation is complex because of:
o Interactions between elements
o Number of elements
- Strategic planning = process of deciding on the programs that the organization will undertake and on
approximate number of resources that will be allocated to each program over the next years
o Not about formulation but about implementation
READING – FROM STRATEGY TO IMPLEMENTATION
- Strategy creation = thinking, analysis, planning at the top level
- Strategy implementation = doing, execution, goal-achieving in entire organization
- Alignment occurs when structure, system, people and incentives all reinforce strategic goals
- Check list for success:
o People have the skills
o Reward systems aligned with goals
o Business units organized to support
o Daily activities support strategy
o Company culture aligned
READING – MANKINS & STEELE (TURNING GREAT STRATEGY INTO GREAT
PERFORMANCE)
- Performance fails because: gap strategy and performance
o Inadequate resources
o Poor communication
o And clear accountabilities
§ Leaders often pull the wrong levers
- Venetian blinds = performance projections are high, results fall short, creates an unreliable forecast
which decouples strategy from resource allocation à negative spiral
- 7 Rules for closing the gap
o Keep it simple = describe what the company will and won’t do
o Debate assumptions, not forecasts = focus on real performance not forecast
o Use framework = establish common language (reports) so all departments measure strategy
the same
o Discuss resource deployments early = ask how fast + when resources are needed
o Identify priorities = make few key strategic actions to focus on
o Monitor performance = real time tracking for midcourse correction
o Reward execution ability = hire + develop managers who can execute a top priority and
reward them
- Cultural multiplier effect = when companies link strategy to performance, this creates victorious
circle where top talent is attracted and boosts performance and reputation
,LECTURE 2: PERFORMANCE MEASUREMENTS
- Strategy implementation = execute + keep track of goal achievement
- Performance measurement systems:
o Diagnostic control systems = show earlier performance
§ Need to be:
• Adaptable
• Deliver rapid target information à communicate information
• Make sure all dashboards are aligned
§ Dashboards, cockpits = like cars dashboard (groups relevant indicators)
§ Quality improvement systems = PDCA, Six Sigma
§ Balanced scorecard/strategy map
- How to draw a scorecard:
o Define objective = mission, objectives, small number with deadline and can be measured
o Identify KSFs = variables that drive performance à detailed actions of strategy
§ Output is a grid of objectives
o Characters of KPIs
§ Based on KSFs, follow results, must look beyond financial and non-financial
measures
§ Input indicators = measure assets + resources (R&D or quality of input)
§ Process indicators = measure efficiency or productivity (units produced)
o Setting targets = represents performance you want to see (min, moderate, stretch)
o Things to avoid = to few or too many indicators, unaligned metrics, overly aggressive,
manipulation
- Balanced scorecard is a loop of four processes:
o Translating the vision = clarifying vision
o Communicating + linking = communicate + setting goals + link rewards to performance
o Business planning = set targets + align incentives + allocate resources + milestones
o Feedback and learning = shared vision + strategically feedback + facilitate review
o 4 perspectives of bsc:
§ Financial = what do stakeholders expect
§ Customer = how does organization appear to customer
§ Learning growth = how will organization sustain ability to change
§ Internal processes = how to improve quality of main processes
- Lagging indicators = show results
- Leading indicators = linked to performance drivers
- Cause effect relationships in dashboards are necessary
- Relationships in bsc:
o Financial is ultimate goal à customer satisfaction shapes performance à depends on
organizational internal process à relying on learning and growth
- Strategy map = what drives value and do you must invest in (based on bsc)
, READING – MEASURING PERFORMANCE
- 3 types of KPIs:
o Input = measure assets + resources (R&D)
o Output = measure results of activities (ROI)
o Process = measure efficiency of process (Days to deliver)
- Ranges of KPIs:
o Min = starting point for confidence
o Moderate = real goal
o Stretch = raises the bar
- Complications:
o Unaligned metrics = measuring things that do not support strategy
o Data manipulation = gaming the system
o Knee jerk interventions = overreacting to a single performance
READING – KAPLAN & NORTON (USING THE BSC)
- 4 perspectives
o Financial = how to appear to shareholders
o Customer = how appear to customer
o Internal business process = to satisfy shareholder + customer what should we execute at
o Learning & growth = to achieve vision how to sustain ability to change and improve
- 4 processes to turn BSC into system
o Translating the vision = managers agree on operational measures
o Communication linking = every employee understands overall goal
o Business planning = strategic planning + budgeting
o Feedback + learning = strategic feedback systems to steer
- Traditional learning = single loop = only checking financial metrics and fix them
- Strategic learning = double loop = test hypothesis of strategy, when process targets are reached but
financial fail, maybe strategy is flawed
- Link incentives and rewards to BSC systems and strategy
