Execute That Strategy!

All the gear and no idea is an observation often made of golfers and no doubt competitors in many other sports.

As a golfer, I like to buy the latest golf clubs, clothes and gizmos most of which are a waste of money in getting me around the course in the lowest score that befits my handicap.  A better investment would be lessons to improve my swing, but that involves changing old habits, practice and learning new skills.  Much easier to buy the latest hit it further club!

“Our problem is not about the strategy itself…but our execution of it.” Tony Hayward CEO BP-10/2007 – BP Sets Out its Agenda to Close Performance Gap with Rivals

Golfers also complain of inconsistency, the ability to put all elements of the game together and to improve year on year.  What amateurs also forget is a game plan that links a strategy for improvement, with golfing skills and abilities.

This is no different from an organisation’s ability to link their strategic objectives with a game plan to achieve them.  Organisation’s usually have all the gear in terms of KPIs, smart goals, vision and mission statements, performance reviews and 1-2-1 meetings.   However, they usually have  no idea in terms of pulling it all together with a process that consistently and systemically links together the strategy with the implementation elements.  These implementation elements being the individuals that do the work.

If your organisation has no idea, then you are far from alone as “…surveys over the past two decades indicate that 60-80% of companies fall far short of the targets expressed in their strategic plans” Kaplan & Norton – The Execution Premium.   Kaplan & Norton’s research also shows that companies using a formal system for implementing strategy consistently outperform their peers.  The result of having no idea is to fail, year on year, to achieve the strategic objectives and realise the benefits of enhanced capabilities and improved financial performance. This perennial failure to bridge the gap between strategy and execution becomes an implicit acceptance of failure, resulting in organisations not expecting to achieve their strategic objectives.

So what can be done to play consistently and improve your handicap?

The first thing is to recognise that you need help in developing strategy execution management as a core competency of the organisation.  Why should you be any good at it if you have not been trained and taken lessons from the pro?  – Far easier to avoid any change and carry-on with the old habits of failure.

Strategy Execution Management is a process, driven by the leadership team, that engages personnel at all levels so that they understand the strategy, their part in achieving it and what is expected of them.  Managers discuss these expectations with their subordinates for inclusion in a performance agreement.  It is key that individuals produce their own performance agreements and they are not written and imposed on them by their managers.  Performance Agreements integrate the day job activities with the goals and new activities required to support the strategic initiatives.  The goals describe what success and failure looks like and the strategic initiatives that they support.

These Performance Agreements provide the basis for management of an individual’s performance.  This management is done through regular (6-12 times a year) progress meetings held between a manager and subordinate, to evaluate performance and progress in achieving the goals.  The role of the manager is to help an individual to be successful in their day job and deliver the goals.  This is a joint enterprise and so may identify areas of weak performance requiring additional support or training. As progress meetings are held on a regular basis, the reasons for under-performance can be dealt with while there is still time to do something about it.

Pulling it all together needs a structured process and system support, which is why BluePlate Consulting has complemented their business architecting approach by being appointed the UK partner for the KeyneLink Strategy Execution Management system that has been successfully implemented in over 700 clients in North America over the past 15 years.  Keynelink is part process and part roadmap with cloud based system support. Talk to your pro Jeff Herman at BluePlate Consulting.

The Mediation Experience

Blue-plate successfully provided support to a client business owner engaged in a lengthy dispute with the estate of a deceased partner.  Blue-plate’s intervention arose from observing the frustrations being experienced by the client, dealing not only with their emotional grief at the sudden loss of a long standing friend and colleague, but also trying to manage the business and probate issues.  These issues required dealing with the solicitors and valuers acting for each party, key man insurers and the seemingly irrational and intransigent strategy of the former partner’s estate.

Management consultants are not usually engaged in these probate disputes and, therefore, Blue‑plate’s experience may be of help to those involved in similar situations; especially with regard to working with the other professional parties.   Blue-plate provided a valuable mentor, interlocutor and commercial role working collaboratively with the client’s solicitor and valuer.  In particular:

• As mentor, spending time with the client explaining the terminology and issues contained with the legal, insurance and valuation issues. For a client without the background or previous experience of dealing with similar issues, confusion and misunderstanding is inevitable from the outset.  This is especially true, where the quality of reports and correspondence is generally poor in terms of being clear and concise.
• As interlocutor with the other parties, where the involvement of a solicitor may compromise them or generate a more guarded approach. Part of this was in the mediation dispute resolution process.  This was a one day process, facilitated by a trained mediator and convened in a mediation suite, to resolve matters between the parties.  During the day, Blue-plate provided financial and commercial expertise as part of this process.  Although agreement was not reached during the mediation day, a settlement was reached shortly after in a face to face meeting between the client, Blue-plate and a representative of the deceased partner’s estate.
• Commercially being able to more fully appraise the valuer in terms of the past and forecast business performance and the circumstances giving rise to the key man insurance policy value. At the time the insurance was incepted, the valuation was based on what the partners could afford in premiums at that point in time, and not on a professional valuation of the business.  This was a crucial distinction because of the deterioration in the business in the subsequent years.  In addition, suggesting approaches that could hasten the process to an eventual settlement.

 

During this entire process, Blue-plate ensured that as part of the team, any advice and guidance given was shared collaboratively with the client’s solicitor.  This ensured further confusion was avoided and the client became rationally and emotionally prepared for a settlement that was regarded as fair to both parties and precluded a further costly legal process.

Negotiating a good deal with the Government!

Blue-plate had the recent experience of supporting a client’s bid team in responding to a Cabinet Office Invitation To Negotiate (ITN) in respect of a large scale outsourcing contract.  An ITN response is developed in dialogue with the Cabinet Office to enable them to select a preferred supplier offering the best  win-win sustainable deal for the UK Government. This was a new experience for Blue‑plate and the lessons learned for future ITN’s included:

• Understanding the Government’s objectives – The need to fully appreciate the Government’s objectives for the contract both commercially and politically.  These objectives will be set-out in the ITN but will need to be fully explored and clarified during the face to face dialogue sessions.  A consensus understanding within the bid team helps to prioritise the requirements and how they can be managed within the context of a commercial response.  The political drivers may be less transparent but will surface during the dialogue sessions and provide a deeper understanding of the context for the ITN.  As well as the financial objectives of reducing costs, accessing private sector capital and expertise, the Government will also be keen to avoid the political risk that may arise from direct accountability for any consequent organisational restructuring and selecting a supplier with a tarnished brand.
• Obtaining early clarity and agreement to the strategic fit and risk appetite – At an early stage in the response process, the bid team must manage their own internal stakeholders, governance and oversight processes for the bid.  A key element will be to ensure that the risks and potential range of the up-front investment costs are fully appreciated at the outset, in order to avoid the embarrassment of cold feet during the later phases of dialogue.
• An integrated response – There will be a number of workstreams and subject matter experts engaging with the Cabinet Office concerning the various aspects of the response and contractual terms and conditions.  These workstreams may include legal and commercial operations, technology, human resources, finance.  An overall bid and project manager will be required to co-ordinate activities and  ensure that the right hand knows what the left hand is doing; especially when working at pace to tight drop dead dates.
• Resources – make sure that the right set of capabilities and resources are available throughout the process, taking account of holidays and other contingencies.
• Clarity not word count – make it easy for the Cabinet Office to understand the response in relation to the exam question.  Keep the language simple in good English and well signposted as to the flow and key points.
• Negotiate – Last but not least is to take advantage of the opportunity to negotiate the best deal.  The Cabinet Office will be keen to understand a bidder’s commercial drivers and to accommodate them where sensible and possible to do so.  The Cabinet Office team in dealing with a number of bidders can quickly spot common concerns that they may address directly with each bidder or in revising the ITN.  The best deal does not mean the cheapest price but will be a mix of price, political risk, supplier brand, quality and confidence that the supplier can deliver over the long term.

Bloomington, Luxembourg and No Change in 800 years

May 2013 Newsletter

All change at the FSA

From April 1^st the Financial Services Authority was no more, having been split between the Prudential Regulation Authority and the Financial Conduct Authority.  Read more about what has changed and will it work to prevent more PPI scandals at The New Regulators are No Joke

Foreign travel

Bloomington Indiana

I had the pleasure of attending a KeyneInsight (www.keyneinsight.com)  Strategy Execution Management workshop in Bloomington Indiana.  After negotiating trains, planes and automobiles in getting to Bloomington from the UK, much was learned from the experience of other Keynelink distributors including, the benefits to Keynelink clients of:

• a complete audit trail and details of performance progress meetings held between a manager and their subordinates. Such information has been successfully used in defence of legal actions taken by disgruntled employees.
• leadership and management development, for example.

–  the power of having visibility of whether and how the key strategic initiatives are being supported and progressed throughout the organisation.

–  promoting regular conversations between managers and their subordinates.

• turnarounds – where Keynelink is a key enabler in supporting a successful turnaround

Luxembourg

Luxembourg is a less complex trip than Bloomington and resulted in an enthusiastic response from a Life Assurer for Keynelink to support their current performance management system in providing:

• Transparent structure and process

– clear alignment with strategic objectives and values

– consistent process discipline

– comprehensive metrics to maintain alignment

• System support and data repository

– dynamic, fully-operationalised role definitions

– audit trail of issues

• support for development of excellent management practice
• evidence for contentious actions

High School

A similarly enthusiastic local high school wants a speedy implementation of Keynelink to support the management of support staff in performance appraisal system, culture change and provide the Head and Senior Management Team with transparency on progress with the strategic initiatives and individual performance.

Every organisation has a Strategy Execution Management “system”

…most don’t work and look something like this…

 

What does yours look like?

Target Operating Models

A recent project generated some new thinking in applying private sector target operating model concepts to a consumer protection focused public sector regulator subject to major change.  The top 5 lessons learned included:

1. The customer value proposition through which a commercial strategy is operationalised must be considered in terms of the regulatory lifecycle; being the types of interactions that the regulator will have with the regulated community and the consumer.
2. Strategy encompasses not only the governing regulations but also more importantly the way in which the regulations are to be applied.  It is this regulatory approach which is operationalised through the design of the target operating model and the regulator’s risk appetite and available resources.
3. Think process not silo’d functions.  This is no different from a commercial TOM but the challenge is in how any new powers and the regulatory approach will be supported in a seamless way across the organisation and its boundaries.
4. The relationships with other members of the regulatory family must also be considered and coordinated.
5. Complete focus on protecting the interests of the consumer while fairly balancing the costs and impact on the regulated community.

Rules for the Conduct of Life

In a ceremony dating back to the 13th century, new Freeman of the City of London are presented with a Freedom certificate and a small red book of Rules for the Conduct of Life. The rules are for the use of “such Freemen of London as take apprentices”. Rule XXVI states that

“Where you are not able to finish a business without the help of others, call in speedily such persons to your assistance as are fit to be employed in it. The more hands are employed, the more work is done; provided they are managed in such good order as not to be a hindrance to one another.”

Regards

Jeff Herman

Execution Management vs. Performance Management

by Kelly Nelsen, Ph.D.

Performance management generally refers to measuring past performance and making an adjustment or two in order to increase performance next time. In the workplace, you perform to some standard, and your boss measures your performance to see if it met the standard.  Based upon the results of that measurement, you adjust your performance (or the standard) as necessary in order to meet it the next time around.  At its essence, it’s nothing more than an employee appraisal process that the human resources department typically owns.

Execution management is a bit different.  Execution is the act of doing something, and when you manage execution, you’re focused on managing an act rather than a result. That’s not to say that execution management is or should be about micro-management – far from it.  But shouldn’t management be about leading, guiding, and motivating people to greatness rather than simply judging them at the end?

Shouldn’t management be about leading, guiding, and motivating people to greatness rather than simply judging them at the end?

The Way Sports Teams Do It

Organizations usually set goals at the beginning of the year and then look at them again at the end of the year to see if they were met. Based upon this annual review, adjustments are then made for the coming year. But what if a football coach managed its players this way? The coach would set a goal at the beginning of the season to win 15 out of 16 games, let’s say, but only at the end of the season would he look back and discover that they only won six. That would be one sure way of getting fired as a coach, wouldn’t it? Instead, the players are coached throughout the game, and the game itself is reviewed in detail at its conclusion. This way, players can make adjustments as they go. Shouldn’t organizations work that way, too? Shouldn’t they practice execution management the same way that sports teams do?

Driven by Strategy

It’s not enough to manage the execution of individuals in an organization; rather, individuals’ activities need to be driven by the organization’s strategy and goals. Just as the individual football players’ activities are driven by the team’s, management’s, and owner’s goals, so must individual employees’ activities be driven by higher-level goals and strategies.

Unlike performance management, execution management is owned by senior executives. It starts with defining the strategy and continues with the execution of it. While the purpose of performance management is to determine how well employees are performing for succession planning, training, merit raises, and the like, the purpose of execution management is to successfully carry out the strategic plan in order to realize the organization’s vision. Because strategic plans are identified at the highest levels in an organization, execution management is the ultimate responsibility of the executive team. Performance management, on the other hand, is typically the ultimate responsibility of Human Resources.

If you want a system that merely looks at past performance of employees to see if they deserve a raise or a bonus, a simple performance measurement system will do. But if you want to manage the successful execution of your strategic plan, take a look at Keyne Insight’s strategy execution management system at http://www.keyneinsight.com.

Kelly Nelsen, Ph.D., is the CEO of Keyne Insight

Jethro- The First Management Consultant!

It should be no surprise that management consultants, looking to the bible for guidance and inspiration can take pride in Jethro.  Jethro was the father-in-law of Moses, and is arguably the first management consultant!

To wildly paraphrase Exodux 18,  Jethro counselled that Moses would  wear himself out if he continued trying to do everything himself.  He advised Moses not to sweat the small stuff, which should be delegated to men with the right qualities and motivations.  After being trained and shown what to do, such men should then be allowed to get on with the job; referring only the big issues to Moses.  Jethro also explained the benefits of this approach in Moses being able to live a long and happy life.

Arguably, not much has changed in the world of consulting over the past 5,000 years. Jethro’s consulting and mentoring skills  are as relevant today as they were at the time of Moses.   Jethro, correctly:

1. Observed the situation

“…Moses sat to judge the people: and the people stood by Moses from the morning unto the evening”

2. Recognised there was a  problem

“..what you are doing is not good.  You will surely wear away, both you and this people with you:  for this thing is too heavy for you and you are not able to do it alone”.

3. Recommended a solution

“ teach them ordinances and laws, and show them what to do and how to do it”

“find the best men, such as fear God, men of truth, hating covetousness; and place these people in charge, to be rulers of thousands, and rulers of hundreds, rulers of fifties, and rulers of tens”

4. Advised how to implement effectively and efficiently

“And let them judge the people at all seasons: and it shall be, that every great matter they shall bring to you, but every small matter they shall judge..”

5. And explained the benefits

“so shall it be easier for you, and they shall bear the burden with you.”

I am sure that there is a lot more to learn from the bible, but in the world of management consulting has anything fundamentally changed since Jethro?

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Strategy Execution Management – turning ideas into action

It is a sad fact that most strategies fail to get fully executed despite the recognition and attention paid to change management in facilitating the transition from good ideas into action.

“Our problem is not about the strategy itself, but our execution of it.” Tony Hayward CEO BP (10/2007-BP sets out its Agenda to Close Performance Gap with Rivals)

“The change will not be in our fundamental strategy – we think that strategy is sound – but in our execution.” Benjamin Rosen, Chairman Compaq, 1999.

A McKinsey study in 2007 “How to improve strategic planning” identified five ideas to improve the strategic-planning process, which comprised:

• Start with the issues, anticipate the big challenges and emergent trends rather than a focus on data driven processes such as budgets and financial forecasts
• Bring together the right people, that is those who are the most knowledgeable and influential, able to stimulate and challenge accepted thinking with honest open discussions about difficult issues
• Adapt planning cycles to the needs of each business, get away from a time consuming annual process to a planning cycle that fits the needs of the business which may be only every two to three years.
• Implement a strategic-performance management system, that assigns accountability for initiatives and make their progress more transparent.
• Integrate human-resources systems into the strategic plan, by tying the evaluation and compensation of managers to the progress of new initiatives.

The development of an organisation’s strategy is often a tense, intense and exciting process, an opportunity to vent frustrations, put cards on the table and tell it how it is.  Rationally, a strategic review may be undertaken because of competitive and financial pressures and the whole panoply of business guru strategic models can be deployed along with the input from market research, workshops and facilitation from consultants and subject matter experts.  Awaydays, metaphors of burning platforms, project codewords and the utmost secrecy all add to the buzz and excitement. The CEO and Board may set out the aspiration to become an agile learning organization, capable of adapting to changing circumstances and customer demands.  Seemingly, the hard and exhausting intellectual work has now been completed, but the difficult practical work in executing the strategy and realizing its benefits must now begin as the strategy is unveiled for conversion into plans, KPIs and communication programmes.

Bridging the air gap between strategic plans and execution requires practicable frameworks and toolsets to minimise the risk of strategic failure.  Such a framework has recently been described in Kaplan and Nortons’ recent book, “The Execution Premium – linking strategy to operations for competitive advantage”.  However, although the framework describes the work that is required to implement the strategy, it does not provide a comprehensive management toolset to support it.  No doubt, different tools and approaches can be utilised for different stages of the framework.  One of the few toolsets that is available is KeyneLink^TM a strategy-driven execution management system that integrates an organisation’s strategy, vision and values with the daily activities of its people.  KeyneLink^TMprovides a systemic approach tomanaging an organisation in a way that the McKinsey study identified in the need for a strategic performance management system and that is capable of integrating the HR systems into the strategic plan. KeyneLink^TM is an approach supported by a web-based system that links an individual’s goals and objectives to the strategy.   Progress in the execution of the strategy is managed on a regular basis.  The whole point about KeyneLink^TM is to facilitate regular communication between managers and their subordinates with a focus on explicitly cascading strategic alignment down through an organisation.  This systemic approach beats leaving strategy execution to the vagaries of differing corporate cultures and management styles that bedevil large and even small organisations.  Shouting a strategy from the rooftops doesn’t make it happen!

Jeff Herman

What is Financial Management?

Financial Management (FM) is one of those terms that is so much a part of the common lexicon  of management speak, that the scope and extent of its meaning is overlooked on the misguided assumption that there is a common understanding.  Nothing could be further from the truth as there are probably as many definitions of FM as there are people who use the term.   However, as a practicable consulting aid, Blue-Plate uses the metaphor of a Financial Management pyramid to illustrate one view of the scope of FM, building up from a sold foundation of processes and systems through to planning, forecasting and managing the business activities.   The hygiene factors of  basic record keeping, regulatory and finance function activities are like plumbing,  only appreciated when things go wrong.  What most businesses  increasingly demand are added value timely and accurate performance management information on which to base future plans and to consider options regarding strategic decisions for the effective use of resources.  FM is far too important to be left to the accountants and must be considered in the context of a set of  competences which are completely integrated into an organization’s business processes, systems, structures and human resource strategies.  Like a pyramid, getting to the FM pinnacle can be an exhausting climb!

Jeff Herman

Spreadsheet Modelling- A Reminder!

Blue-Plate consultants often find themselves advising on or building spreadsheet models on behalf of clients. Such models are almost ubiquitous in the financial management arena. Sometimes, however, the advice is more along the lines of “use the systems that already exist within the organisation”, spreadsheets are not always the best solution – but that is another debate. If you use spreadsheets in anger then you already know the rules but this posting intends to act as a reminder on some of the rules we should be following even though it is tempting to take shortcuts:

• Don’t just start building the model, a third of the time should be spent on the specification and design, a third on building and a third on testing.
• Put every variable on a variables sheet, all of them! It may be handy to have a 10% overhead variable just next to the results table so it can be changed quickly but don’t, someone else will come along and miss it.
• And plan for that ‘someone else’ it’s not ‘your’ model for ever, someone else needs to know how it works, including you when you don’t use it for six months! Create a simple flowchart in the front sheet of the model and produce an operating manual – and allow plenty of time for this important activity. If the time is not available then, again, maybe a spreadsheet model is not the most appropriate tool for the job.
• Of course the flowchart will be easy to do because your spreadsheet obeys the principle of having inputs, calculations and results on separate sheets. To be clear on the last point – don’t perform any calculations on your input or results sheets, and it goes without saying that your results sheets are just that, nothing else.
• Don’t have any hard coded values in your formulae – there’s a VAT change coming so just change the standard rate of VAT variable once and every formula that requires the application of VAT looks to that cell or the range name called ‘VAT’.
• VLOOKUP and HLOOKUP are difficult to audit and you can be caught out when you insert a column or row in the source tables at a later date. If you do use them then use the COLUMN or ROW functions to create a dynamic link to the source data or, better still, use a combination of INDEX and MATCH functions.
• Make your timescale dynamic. Have the start period as a variable and have the column headings as functions. And have the start period in the same column on every spreadsheet.

There is lots of guidance on spreadsheet modelling best practice; one of the most widely recognised is the document of the same name by Nick Read and Jonathan Batson published by ICAEW and easily accessible through the internet. You can also call Blue-Plate but whatever you do, obey the rules and don’t take shortcuts – you’ll be rewarded in the long term.

Stephen Lockwood