Leveraging Strategy for Sustainable Business Results

Leveraging Strategy for Sustainable Business Results

A modest and quietly spoken CEO of a fast growing FMCG I am working with in SE Asia recently bemoaned the fact that all functions in his business were not pulling in the same direction and this was starting to limit the growth rate for his business.  It was clear from our discussion that this company has a clear Mission, Vision, Core Values and Strategy. 

The problem seemed to be poor strategy alignment and the lack of a cascading strategy throughout the organisation. It is a common CEO lamentation globally but especially in the fast growing SE Asia region where rapid growth is leading to many first time management problems for young CEOs.

When a company is growing at a rapid pace it is a challenge for the Board and the Executive Officers to ensure all the areas of the business are functioning efficiently.  One reason is that rapid growth drawers on a lot of resources and, despite scaling, it means time for focus and strategy alignment is difficult or not deemed important.

What is not new to business as a possible solution to this problem is the Balanced Scorecard which was developed by Kaplan and Norton in the early 1990s.  Plenty of information and data can be obtained on this well-known and loved toolset at the Balanced Scorecard Institute and many textbooks with related titles.

What remains a challenge for a lot of fast growing businesses is the implementation and the strategy alignment across business functions and through the levels in the organization.  Just because there is a strategy and a plan does not mean there is buy-in and adoption by the key stakeholders.

At its core the Balanced Scorecard attempts to paint a picture from four perspectives of the company strategy by leveraging the investment in intangible assets within the organization.  Specifically, the four perspectives which shape the Scorecard are:

·         Financial,

·         Customer,

·         Internal Processes and

·         Learning and Growth. 

But just a minute.  You have a strategy and you gave a presentation at an “all-hands” for the recent yearly company kick off.  Why is that the company remains dysfunctional or underperforming?

A leveraged strategy will involve a clearly thought out implementation plan that addresses the company strategy and meets the requirements in a focused coordinated manner for each of the 4 perspectives.

Here are some steps that can lead to a successful, leveraged strategy:

Step 1: Agree on the Company Mission, Vision and Strategy.  This sounds easy but not always done well.  A loose start creates a weak foundation on which to leverage.

Step 2: Agree the strategic objectives for each of the 4 perspectives.  The things that must be done, and by omission the things that do not need to be done.  Unstated objectives are just as important because strategy implementation often falters on “busy work” rather than critical work required to execute the strategic imperatives. 

The strategic objectives should be aligned with their respective perspective and, ideally be structured into a “cause and effect” schematic.  When positioned on one page with your Mission, Vision and Values it will form a powerful communication tool.

Step 3: Put on your “sales hat”.  Communicate and sell!  You now have a strong message that can be communicated to all members in the organization.  The audience may differ and so should the message but, in my experience, this type of clear direction and context is always well received if delivered with confidence and in a plausible manner.

Intelligent people always appreciate understanding the context in which they are working and why they are focused on certain things and not others.  In the end you need to motivate and excite the teams. 

“You will be successful if your staff believe that the strategic plan will transform their unique capabilities….”

You will be successful if your staff believe that the strategic plan will transform their unique capabilities and infrastructure into opportunities that differentiate them from the competition and generate the necessary revenues.

Step 4: Establish performance measures and targets and agree strategic initiatives.  This is the concrete part of the project and where pet projects can either be championed or sacrificed.  It is also where the key criteria are established against which progress is measured month by month and throughout the year in the business reviews.  It should include a mixture of lead and lagging indicators.

Step 5: Communicate and sell to each division and level! 

·         What are the strategic initiatives?

·         What are the measures of success which matter? 

·         Why are the targets set where they are?

·         How does it fit with the Mission?

·         What do you expect of each leader, of each functional body in the organisation?

Step 6: Incorporate the Scorecard into the regular business reviews.  This is the critical loop back to the strategy and what makes the strategy real and alive.

When carefully implemented this process will help companies effectively execute and leverage their strategies.  Strategy impact will be leveraged because all key stakeholders will be pulling in the one direction.

One aspect of this will be a well-crafted internal communication plan which features a strong plausible message to convince all parts of the organization that the strategy and the various components are in the best interest of everyone.  It should enable you to sell the strategy and the objectives in a way that will inspire and motivate.

A second benefit will be tangible and credible measurement of progress that is being made on how the intangible assets are being used to execute the strategy.

Lastly, the Scorecard can be used to overlay on strategic management in areas such as budgeting and compliance.

In conclusion: Having a strategy and a budget is not enough.  As CEO, you need an implementation plan that builds in key measures and targets into the regular business reviews and is understood and executed across all functional groups.  You need a leveraged strategy to deliver sustainable business results.


Balanced Scorecard Institute

Balanced Score Card Evolution by Paul R. Niven - 2014