Strategy Execution Management – turning ideas into action

January 27, 2010

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 KeyneLinkTM a strategy-driven execution management system that integrates an organisation’s strategy, vision and values with the daily activities of its people.  KeyneLinkTMprovides 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. KeyneLinkTM 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 KeyneLinkTM 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?

November 23, 2009

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!

October 12, 2009

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


Strategy-Driven Execution Management

October 8, 2009

Blue-Plate Consulting has been appointed the first UK partner of Keyne Insight of Bloomington, Indiana, USA, for their KeyneLinkTM strategy-driven execution management system.

We’re delighted to be able to introduce KeyneLinkTM to the UK.  Our experience and numerous research studies show that around 80% of strategic initiatives under-deliver because of poor execution.  KeyneLinkTM is a unique, low-cost, web-based and easy to implement management system that bridges the gap between strategy and execution.

Superior strategy execution requires a system, not a series of diverse projects performed in different parts of the organization.  KeyneLinkTM enables management to define, monitor and manage individual responsibilities and accountabilities for execution at all levels throughout the organisation.

KeyneLinkTM is now being used by clients across private, public and voluntary sector organisations in North America, including the Department of Defense.


Catch Up? Coach Up!

April 30, 2009

To be the best, finance people need good coaching.

There are some areas where increasing performance demands are easier to see than others.  Take English soccer for example.  The Premier League is today regarded as the best in the world.  And increasing standards can be seen in the lower divisions too.  Watching a game last week in the Championship, the old second division, it was faster, more skilful and more entertaining than most top-tier games were 20 years ago.

It struck me that same is true of accounting and finance, though perhaps the changes are not so visible.  Accountants don’t have to juggle a ball like Ronaldo, but they do have to juggle increasingly complex sets of rules and regulations, systems and applications, technical tools and the like.  They don’t usually need the emotional resilience needed to come from 3-nil down at half-time to win on penalties, but it would be wrong to underestimate the stresses of working under constant and sometimes extreme time pressure, where errors can have serious consequences.  And now, more than ever, accountants need to be team players, able to contribute to the game plan and adjust it on the fly, to cover defence solidly, support attacks with flair and help control the game from midfield.

I don’t want to overwork the comparison, but there is a serious point here.  Football’s advances have been made with the support of increasing numbers of expert coaches focusing on every aspect of player performance: ball-play; physical strength and endurance; emotional and psychological strength; and team play and tactics.  Accountants have mostly had to do without such support.

A recent report from the ACCA shows that accountants are beginning to catch up, but still have some way to go.  Traditional forms of training are usually best for developing basic technical knowledge and skills.  But for a rising accountant, such core knowledge and skills are taken as read.  What is harder to teach in a classroom is how those skills can be applied creatively to solve complex, situation-specific challenges.  These challenges punctuate our well-controlled routines and test not only technical know-how, but often ethical, organisational and political skills too.  These are the situations where effective coaching can be most effective.  Traditionally, coaching has happened almost by accident, as a by-product of other interactions.  But conscious, skilled coaching can strengthen and accelerate learning and development, generate better decisions, and permanently raise the standard of performance of individuals and teams.

The challenges of developing emotional skill sets among accountants are famously, and not entirely without justification, judged considerable.  Let’s face it, we’re all, to some extent, congenital technocrats and not always comfortable with our own, never mind others’ emotions.  Yet it is almost impossible to succeed as a first-level supervisor, never mind as a senior manager, without developing good “people” skills, and these become more important, the more senior we become.  If the key to dealing well with others is to deal well with ourselves, this is where a different form of coaching is invaluable: one which accelerates and deepens our understanding of how we operate in given situations, and how we interact with our colleagues.

It is also increasingly the case that accountants have to be active team players, engaged with and contributing to all aspects of the business.  The FD cannot be “the one who says no”.  The challenge is to help make strategy possible by finding the best ways to finance new developments, manage the financial risks, and maximise the returns from existing business.  The current recession places even more emphasis on this role: there are enormous opportunities out there, but capturing them  will require real financial strength and ingenuity – the markets and the banks will no longer look kindly on proposals built on hopes and aspirations, or on clever manipulations.  And again, the challenges of getting accountants into this position are best met through skilled and experienced coaching.

If we expect finance people to perform at the highest level then, just like top-class footballers, they’re going to need expert coaching and development at all levels and covering all aspects of their game, and particularly for the emerging challenges in dealing more effectively both with people and relationships, and with roles that require them to be at the very heart of business strategy development and execution.  In my next pieces, I’ll follow-up with some thoughts on how best this can be achieved and, critically for us finance types, some thoughts on defining and measuring the benefits.

Gerry Quinn


Accountants the New Carbon Counters?

April 21, 2009

There Is No Accounting For Carbon

They are often patronisingly labelled bean counters by those who envy the charisma and exciting lifestyles of accountants.  However, carbon counter could become the new label as accountants face up to the challenge of accounting for sustainability in greenhouse gas emissions within their organisations’ management and financial reporting systems.

Unlike double-entry bookkeeping there are no agreed standards, disciplines, measures or policies for carbon counting, reporting and auditing.  As a result, corporate social responsibility and environmental reporting have become marketing opportunities for corporations to flaunt their green credentials without having any material impact on their business operations and competitive position.

Traditional financial reporting details the financial costs but not the associated carbon impacts.  The challenge for accountants is to devise the measures, mechanisms and disciplines to report upon the carbon impact of their organisation’s activities, for example:

  • If a $1m has been spent on travel, what has been the associated carbon emission impacts?
  • If a $1m is forecast to be spent on travel, how can the carbon impacts be mitigated?
  • How do we fully account for all the energy consumed in the production and delivery of a product or service across the whole end to end process?

More Than Just Accounting

Embedding in an organisation the ideas and practices of accounting for sustainability provides a broader challenge than just traditional just accounting.  The energy management aspects encompass a whole range of issues including:

  • Culture – real acceptance by the whole organisation that reducing climate change emissions is not only a public good and socially responsible, but can be compatible with longer term financial stability.  Day to day behaviours and decision making must be guided and informed by publicised standards of corporate ethics and beliefs in climate change sustainability.
  • Physical infrastructure – installation of the equipment to measure and mitigate climate change emissions.  This may encompass the replacement or scrapping of carbon and energy inefficient equipment, the installation of additional metering of energy usage, carbon sequestration and other post emission clean-up technologies.
  • Business case – development of a compelling strategic and financial rationale for any investment required to build the infrastructure and account for sustainability.  Being  cheap and dirty  may no longer be a sustainable business strategy for any organisation, including its suppliers.  The potential material up-front investment must be presented not only in financial terms, but also in a longer term strategic context encompassing the impacts on the organisation’s brand and values.  These non-financial considerations will also need to be expressed in a way that enables a fair evaluation alongside the traditional financial criteria and tools of hurdle rates, payback periods and discounted cash flows.
  • Management systems and processes – the formulation of energy management policies setting out the rationale and commitment to energy management, the objectives in terms of carbon reductions and an implementation plan.  Any such plan must also be supported by processes to monitor energy usage in order that timely management interventions can be made to reduce energy usage and minimise environmental impacts.
  • Financial management information – the development or enhancement of activity based costing systems to attribute the true financial and emission impacts of energy usage to the appropriate products and processes.
  • Procurement – organisational boundaries have become increasingly fuzzy as activities are outsourced and the supply network becomes more integrated in the whole process of product development and the delivery of customer value.  For an organisation to embark upon any programme to become climate change responsible, it must encompass the whole supply network and not get caught out by the inadvertent use of sweat shops and dirty chimneys.
  • Programme management – bringing about any change efficiently and effectively, especially one where the time span is likely to measured in years rather than months, requires a degree of forethought and planning.  The scope of change required to embed and operationalise an energy management policy cuts across an organisation’s functional silos.   A cross-discipline approach is therefore required,  where accountants, engineers, marketers and buyers will need to collaborate and talk a common language.

The Role of Consultants

Consultants, as part of an integrated team with in-house personnel, can play a pivotal role in kick-starting and facilitating the whole process of becoming more energy efficient by:

  • Designing the energy management programme by setting out the objectives, phases, activities, interdependencies, time-frames, roles and responsibilities required to bridge the gap between the current and future states.
  • Programme management to ensure that milestones are met, that activities are properly planned, resourced and carried out and the right balances are struck along the way.
  • Stakeholder management to ensure that all stakeholders are identified, engaged and their expectations actively managed.
  • Facilitating a collaborative and knowledge sharing work environment for those both directly and indirectly involved in the programme.
  • Providing technical expertise not only with regard to the mechanics and techniques of implementing an energy management policy, but also with regard to specific inputs that may be required with regard to, for example, new technologies, management processes and the development of energy management and accounting policies.

The Role of Accountants

An energy management policy can provide a unique opportunity for accountants to expand their influence by engaging with the disparate parts of their organisation in its development and implementation.  Such a policy, having the objective to improve the efficient use of energy consumption and reductions in emissions, will require the monitoring of performance measures and a strategy for interventions to manage the outcomes.   Although energy management is not a new concept, the emphasis has altered from a cost management perspective to one of greenhouse gas  emissions and social responsibility.  In addition, the challenge for accountants is to develop  the skills, competencies and a similar set of generally accepted disciplines and measures that enable greenhouse gas emissions to be accounted for in a way that is comparable with that used for more traditional accounting.


Hello world!

April 21, 2009

Welcome to Blue-Plate Consulting’s ( http://www.blue-plate.co.uk ) blog set-up to informally discuss topics of interest to finance professionals and management consultants.

Blue-Plate Consulting is a consultancy specialising in financial management issues within the public and financial services sectors.

The first blog posting relates to the newly emerging discipline of reporting and accounting for an organisation’s greenhouse gas emissions.

We hope to publish postings on a regular basis, once we have mastered the technology and got into the discipline  of downloading our thoughts to the blogosphere.

Regards

Jeff Herman