the strategy execution source Balanced Scorecard Report september–october 2010 : vol 12 no 5 Dealing with Dilemmas: Redefining Strategy By Frank Buytendijk, Vice President and Fellow, Oracle Corporation, and author, Dealing with Dilemmas (Wiley, 2010) For most organizations, strategy involves multiple dilemmas. Focus on customer value at the expense of profits. Aim for long-term financial performance and you impair short-term performance. Organizations view these big (and risky) strategic choices as being inevitable. Not so, says the author. Eschew choice; seek, not compromise, but synthesis. A portfolio of strategic options gives organizations the greatest flexibility and adaptability. And scenario-based strategy maps can help create these options. Strategy making is by nature fraught with dilemmas. Investments to ensure long- term performance may impair short-term results. Economies of scale in the back office may limit sales flexibility in the front office. Supporting one information technology (IT) initiative may exhaust resources available to put toward another equally worthwhile initiative. Dilemmas can be found in any complex organization, notes Bill Fitzsimmons, chief accounting officer of Atlanta-based Cox Communications. He has a straightforward definition of a dilemma: a multidimensional problem, much like most issues that reach the executive level. If it did not have multiple angles, it would not have—or should not have—reached the C-suite. Heidi Melin, chief marketing officer at the California telepresence company Polycom, emphasizes the difficulty of choice presented by such a decision. A dilemma, she observes, is a problem that makes you stop and think. A dilemma represents a fork in the road where the decision you make will have great impact. 1 Western management culture abhors dilemmas. Dilemmas put managers on the spot; whatever choice they make, they cannot win. Dilemmas don’t fit with the Western focus on immediate solutions, where management lives by the 80/20 rule and our action-oriented thinking is that “any decision is better than no decision.” Moreover, dilemmas don’t square with the universal fascination with corporate heroes. People can’t get enough of heroic stories, of larger-than-life CEOs who make big, bold deci- sions and single-handedly turn companies around—or who, like Apple’s Steve Jobs, turn around entire industries. Not everyone has Jobs’s Midas touch, though. Fred Goodwin, the former CEO of Royal Bank of Scotland, made a few too many bold choices in his acquisition strategy. Wendelin Wiedeking, former CEO of Porsche, went from riches back to rags trying to acquire the much larger Volkswagen Group. also in this issue: Building Performance Excellence Around a Unified Management System at USAMMA ........................ 6 Beyond the OSM: Strategy Execution Champions Help Foster Strategy Execution Capability ............ 10 From Civil Service to Customer Focus: How Public Sector Organizations Energize Their Workforce Around Strategy ............... 14 join us! Register to join Kaplan & Norton’s Palladium Execution Premium Community (XPC), the premier online destination for strategy and performance management and Balanced Scorecard practitioners, and receive the free monthly BSC Online news- letter. Learn best practices, participate in peer networking, learn about upcoming events, and get practical know-how from thought leaders and leading practitioners. Learn more and become a member at www.thepalladiumgroup.com/xpc. also available Check out the latest BSR Reader, Kaplan and Norton on Strategy Management. This eight-article collection features analysis, historical perspectives, and essays by Robert Kaplan and David Norton on their strategy management philosophy, a philosophy inspired by system dynamics. For details and to order, visit web.hbr.org and search “BSR Reader.” continued on the following page 1 Comments from Bill Fitzsimmons and Heidi Melin from F. Buytendijk, Dealing with Dilemmas (Wiley, 2010), p. 4.
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t h e s t r a t e g y e x e c u t i o n s o u r c eBalanced Scorecard Report
september–october 2010 : vol 12 no 5
Dealing with Dilemmas: Redefining StrategyBy Frank Buytendijk, Vice President and Fellow, Oracle
Corporation, and author, Dealing with Dilemmas (Wiley, 2010)
For most organizations, strategy involves multiple dilemmas.
Focus on customer value at the expense of profits. Aim for long-term
financial performance and you impair short-term performance.
Organizations view these big (and risky) strategic choices as being
inevitable. Not so, says the author. Eschew choice; seek, not
compromise, but synthesis. A portfolio of strategic options gives
organizations the greatest flexibility and adaptability. And
scenario-based strategy maps can help create these options.
Strategy making is by nature fraught with dilemmas. Investments to ensure long-
term performance may impair short-term results. Economies of scale in the back
office may limit sales flexibility in the front office. Supporting one information
technology (IT) initiative may exhaust resources available to put toward another
equally worthwhile initiative.
Dilemmas can be found in any complex organization, notes Bill Fitzsimmons, chief
accounting officer of Atlanta-based Cox Communications. He has a straightforward
definition of a dilemma: a multidimensional problem, much like most issues that
reach the executive level. If it did not have multiple angles, it would not have—or
should not have—reached the C-suite. Heidi Melin, chief marketing officer at the
California telepresence company Polycom, emphasizes the difficulty of choice
presented by such a decision. A dilemma, she observes, is a problem that makes
you stop and think. A dilemma represents a fork in the road where the decision you
make will have great impact.1
Western management culture abhors dilemmas. Dilemmas put managers on the spot;
whatever choice they make, they cannot win. Dilemmas don’t fit with the Western
focus on immediate solutions, where management lives by the 80/20 rule and our
action-oriented thinking is that “any decision is better than no decision.” Moreover,
dilemmas don’t square with the universal fascination with corporate heroes. People
can’t get enough of heroic stories, of larger-than-life CEOs who make big, bold deci-
sions and single-handedly turn companies around—or who, like Apple’s Steve Jobs,
turn around entire industries. Not everyone has Jobs’s Midas touch, though. Fred
Goodwin, the former CEO of Royal Bank of Scotland, made a few too many bold choices
in his acquisition strategy. Wendelin Wiedeking, former CEO of Porsche, went from
riches back to rags trying to acquire the much larger Volkswagen Group.
1 Comments from Bill Fitzsimmons and Heidi Melin from F. Buytendijk, Dealing with Dilemmas (Wiley, 2010), p. 4.
Strategy Is About Creating OptionsBy defining strategy as “making those
big, bold choices,” we set ourselves up
for failure. This way of thinking actually
creates the dilemmas we are trying to
prevent. The more strategic and far-
reaching these choices are, the more
they are bound to reveal conflicting
stakeholder requirements or conflicts
between the long and the short term.
Is making either-or choices really what
strategy is about?
Strategy is supposed to be a blueprint
for an organization’s future success. But
the one thing we know about the future
is that it will most likely be different
from the present. Do we really believe
that with analytical rigor we can foresee
the future? How are we supposed to
make the right choices today to affect
performance tomorrow? And is it wise
to make choices that may limit our flex-
ibility to respond to tomorrow’s needs?
The real issue at hand is how to deal
with an unknown future. Strategy has to
align itself to an inherently fluid exter-
nal environment. It must therefore be
flexible enough that it can be changed
constantly and adapted to shifting
internal, as well as external, conditions.
What happens when, instead of think-
ing of strategy as making choices and
commitments, we see it as creating
a portfolio of options? Options, as
opposed to choices, do not limit our
flexibility in the future; rather, they
create strategic flexibility. (Obviously,
these options should not be random;
they should be structured around a
company’s strategic themes, such as
growth by acquisition [or, conversely,
organic growth], creating a greener
way of working, entering [or exiting]
certain markets, or specific go-to-market
strategies.) The traditional view is that
the more uncertain (i.e., the riskier) an
investment, the more you need to tem-
per its expected return. But if instead
of focusing on making bet-the-farm
choices, you focus on creating manage-
rial flexibility, risk actually becomes an
instrument of value creation.
Uncertainty, when seen this way, does
not depress the value of any single
investment but may, in fact, amplify
the value of investments in general.
Strategy, with its focus on the future, is
characterized by uncertainty. The more
uncertain the future, the more valuable
flexibility and adaptiveness are as core
strategic competencies.
The idea is not as esoteric as it sounds.
In fact, it is already practiced in a
number of areas, particularly in product
strategy. For instance, financial institu-
tions are following the automotive
industry and moving from a strategy of
standardized, off-the-shelf products to
one of product components and partial
products. Based on the customer risk
profile or specific customer require-
ments, product components can be
combined into a uniquely tailored
product, such as customized financing
for a mortgage.
Jack de Kreij, CFO and member of the
board of Vopak, the global warehousing
and transshipment company, empha-
sizes portfolio thinking. His company
changed its strategy drastically in
2003. Instead of pursuing value chain
integration, offering full services for
certain chemicals and oils, it decided to
focus on warehousing and transship-
ment for a wider range of products and
industries. The investments needed to
achieve this goal would lead to many
more reuse options than investments
in separate steps in the value chain.
Almost paradoxically, it is Vopak’s less-
industry-specific focus that enables the
company to create the most—and the
best—options for growth.2
The notion that strategy should create
options does not at all conflict with
established definitions of strategy. This
idea supports the definition of strategy
as a plan of action designed to achieve a
particular goal. The goal stays the same;
the plan of action just becomes clearer
over time because, from the start,
you’ve built flexibility into the plan. The
details will unfold while you are on the
road, allowing you to avoid unexpected
roadblocks and discover previously
unknown shortcuts.
This does not mean that you do not
need a strategy or that you must jump
on every opportunity that arises. Creat-
ing options does not equal opportu-
nistic behavior. The strategic goals still
need to be clear. You need to ensure you
make it to your goal and that you do so
in an efficient manner. Some options
help us reach the goal; others divert us
from that focus. What is different is the
way the strategy formulation process
is structured and how the strategy is
2 b a l a n c e d s c o r e c a r d r e p o r t
FIGURE 1: SIX STRATEGY DILEMMAS
If we contrast, rather than link, the four BSC perspectives, we see six fundamental strategy dilemmas that are common to all organizations.
2 Ibid., p. 19.
Value vs. profit Financial/Customer Customer value or profit maximization?
Top down vs. bottom up Financial/Process Zero-based or resource-based view of the firm?
Optimize vs. innovate Learning & Growth/ Also known as exploitation Process vs. exploration
Listen vs. lead Customer/ Innovate through listening to Learning & Growth customer requirements or by creating new demand?
Inside out vs. outside in Customer/Process Who leads? Back office or front office?
Long term vs. short term Learning & Growth/ Long-term business performance Financial or short-term financial results?
dilemma bsc perspectives description
3s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
described. Instead of the traditional
clear separation between strategy
formulation, strategy execution, and
performance measurement, the process
needs to be based on continuous feed-
back, testing, and learning. In that way,
choices do not turn into dilemmas.
The former prime minister of Bavaria,
Edmund Stoiber, emphasized the
importance of a sound strategic decision-
making process. Dilemmas, he noted,
can also arise through bad decision
making. Dilemmas can be the conse-
quences of decisions that are not well
thought through. When far-reaching
decisions are made, the consequences
for all stakeholders should be clear; if
not, irreversible damage may be done.3
A Practical ApproachThe idea of using options-based strate-
gies as a means of creating greater
strategic agility is not new, but it has
yet to be placed into a practical frame-
work. The strategic dilemmas that
businesses confront have been
researched individually, not holistically.
To my knowledge, no study thus far
has linked the reconciliation of dilem-
mas in general to strategic decision
making in a practical way.
Applying the Balanced Scorecard and
strategy maps in a new way can help
improve not only strategy measurement
and management but also strategy for-
mulation. The original 1992 conception
of the Balanced Scorecard showed the
four perspectives surrounding the
strategic vision and objectives. Later,
Robert Kaplan and David Norton mor-
phed this into a strategy map in which
the perspectives were linked in cause-
and-effect relationships.
However, if instead of linking the four
perspectives, we contrast them, six
fundamental dilemmas common to all
organizations unfold. (See Figure 1.) There
is a dilemma between the customer
and the financial perspectives: the
choice of value versus profit. A focus
on customer value may be at odds with
profit maximization. Another dilemma
exists between the customer and
process perspectives: inside out versus
outside in. This dilemma represents the
classic battle between the back office
and the front office that many organiza-
tions know all too well. Between the
learning and growth and financial per-
spectives we have the long-term versus
short-term dilemma, where investing in
future growth doesn’t usually pay back
in the current or following quarter.
After researching these six dilemmas
by conducting an extensive literature
study and a global survey, as well as
producing high-profile case studies, I’ve
found that all these dilemmas can be
fundamentally reconciled, leading to
real business improvements. When a
fundamental contradiction is elimi-
nated, the business model jumps to a
new level and, if executed well, yields
competitive advantage.
Figure 2 shows how organizations
worldwide are coping with the six di-
lemmas, based on a global survey of 580
respondents from multiple industries.4
The six dilemmas are listed from top to
bottom, showing, from left to right, the
different “states” an organization can
be in: stuck, neutral, bias (left or right),
or stretch. Stuck means the organiza-
tion scores low on both sides of the
dilemma. This is the worst situation; you
can neither optimize nor innovate, nor
can you control for the short term or
the long term. Respondents scored the
worst in these two dilemmas. Neutral
means organizations do OK, but lack
competitive differentiation.
A bias one way or the other (to the
left-hand or the right-hand side of the
dilemma) means that the organization
scores relatively high on one side but
low on the other. There is a natural
preference for inside-out thinking, for
example, or for profit maximization, and
the other side of the dilemma is often
an afterthought. Indeed, the inside-out
stuck
0% 20% 40% 60% 80% 100%
neutral bias left bias right stretch
Value/Profit
Top down/Bottom up
Optimization/Innovation
Listen/Lead
Inside out/Outside in
Long term/Short term
FIGURE 2: HOW ORGANIZATIONS DEAL WITH THEIR DILEMMAS IN PRACTICE
From left to right, the five strategic states an organization can be in when dealing with a dilemma: stuck, neutral, biased (to the left side of the dilemma), biased (to the right side of the dilemma), and strategic stretch. The bars represent the percentage of organizations reporting to be in any given state, by dilemma.
3 Ibid., p. 5.
4 Global “Dealing with Dilemmas” Survey from F. Buytendijk, Dealing with Dilemmas (Wiley, 2010).
By defining strategy as “making those big, bold choices,” we set
ourselves up for failure. This way of thinking actually creates the
dilemmas we are trying to prevent.
4 b a l a n c e d s c o r e c a r d r e p o r t
approach and a profit focus are the
two most common biases. The goal is
to achieve strategic stretch, where the
organization has found a way to do
both, such as listening to its customers
while leading them at the same time. It’s
neither a balance nor a compromise, but
instead a true reconciliation—in other
words, a synthesis.
The ability to achieve strategic stretch
on any given dilemma is no trivial mat-
ter. Deeper analysis of the data revealed
that only 20% of respondents said
they achieve strategic stretch on one
dilemma, and fewer than 5% are able
to achieve stretch on three dilemmas.
Companies that are stuck or neutral in
four or five of the dilemmas are much
more likely to have a bias toward value,
leading customers, and preferring an
outside-in approach. These three biases
are connected to the customer perspec-
tive of the BSC. This shows that “putting
the customer first” is not automatically
the right thing to do. The key to success
is to reconcile the customer focus with
a focus on your company’s strategic
objectives.
Organizations that had average scores
and that were either neutral or stuck
in three or four dilemmas tend to have
a bias for inside-out thinking and lead-
ing the customer, as well as a profit
orientation. These are the companies
that are driven from the inside, with
a focus on their own objectives. They
change when necessary but do not
really drive change. The biases existing
in the top one-third of companies—
which scored stuck or neutral in two or
fewer dilemmas—seem to be toward
innovation, a long-term view, and an
outside-in approach. These biases are
largely connected with the learning and
growth perspective—worrying about
tomorrow’s performance.
Balancing long-term business perfor-
mance and short-term financial results
seems to be key to sustainable success.
The logic is obvious. An organization
needs to be successful in the short term
in order to invest in the long term. At
the same time, however, this is one of
the hardest dilemmas organizations
face. Almost 40% of respondents were
strategically stuck here. We can achieve
synthesis when faced with this dilemma
through the use of existing methodolo-
gies, in this case strategy maps—but we
need to apply them in a new way.
Scenario-Based Strategy MapsOne way to create a more thorough
and adaptive strategy is to combine
scenario analysis with strategy manage-
ment techniques—namely, the strategy
map.5 Strategy maps are intended to
be predictive—to show how decisions
made in the present could impact future
results. This is done by linking leading
and lagging indicators. Empirical data
and statistical techniques are used to
discover and test these relationships.
However, the strategy map’s causal
model does not reflect the evolution of
strategy over time. For one thing, sta-
tistical techniques are valid only when
sufficient data are available. Moreover,
data, by definition, describe results
from the past. Given that all we can
truly predict about the future is that it
will most likely be different from the
present, it’s reasonable to question the
predictive value of correlations found in
data describing the past. Put in stronger
terms, one could even argue that vali-
dating a strategy map with the use of
past data, by definition, invalidates it.
But using scenario planning and strat-
egy mapping in tandem represents a
substantial step forward in creating
more “future proof” strategies. Specifi-
cally, you create a strategy map for each
scenario based on its unique assump-
tions and details. Strategic objectives
that are common across all or most
scenarios can be considered strategic
imperatives. Those that are not common
but that are still essential to progress
can be called strategic options. Let’s see
how this works in practice.
Case Example: Tier 1 TalentTier 1 Talent (T1T) is a hypothetical
temp agency and recruitment firm that
specializes in IT staff. The company
structured its strategic objectives using
a strategy map and created three sce-
narios to support its customer intimacy
strategy. “Steady as she goes” predicts
a market in which things stay as they
are, with modest but stable growth.
“Networked world” assumes that many
IT professionals become self-employed
and move from project to project. “Cost,
cost, cost,” the third scenario, foresees
a downturn in which job mobility de-
creases and IT outsourcing grows. T1T’s
strategic objectives must be compared
across all scenarios to distinguish its
strategic imperatives from its strategic
options.
5 Over time, the Balanced Scorecard and strategy maps have grown from a strategy measurement system to a strategy management system, and now to a strategy execution system. Adding scenario analysis takes strategy maps back “upstream,” giving them an additional application as a strategy formulation system.
The ability to achieve strategic stretch on any given dilemma is
no trivial matter. Deeper analysis of the data revealed that only
20% of respondents said they achieve strategic stretch on one
dilemma, and fewer than 5% are able to achieve stretch on three
dilemmas.
5s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
• One of T1T’s internal process objec-
tives is to invest heavily in a “matching
system” that pairs job descriptions
and résumés. This objective appears
in scenario 1 (“Steady as she goes”)
and is even more important in the
growth scenario (“Networked world”).
In scenario 3, the downturn scenario,
the matching system is important for
differentiating the company from its
competitors. Thus, the strategic objec-
tive to invest further in the system and
its process is a strategic imperative.
• A new idea that might emerge from
T1T’s scenario exercise is investing in
university relationships. When busi-
ness is booming, such relationships are
an ideal source of new candidates for
junior-level positions. If the downturn
scenario becomes a reality, building
such supplier relations is equally im-
portant in distinguishing the company
from its competition with better (and
less costly) personnel. Although not
originally part of its strategy, building
university relationships is an objective
that qualifies as a strategic imperative.
• Besides its staffing business, T1T also
has a small and profitable consulting
division. If business is booming, that
business should be closed so the com-
pany can focus on recruitment. But
if business goes south, the company
will need all the profit it can get. In
that case, expanding the consulting
business becomes a strategic option.
It doesn’t hurt to keep the consultancy
going while it is profitable. But, if
necessary, it can be discontinued.
• The company recently launched an
innovation initiative to develop new
services, an undertaking that seems
worthwhile in any circumstances.
However, in the “Networked world”
scenario, management’s attention and
resources must go toward fulfilling
demand. And in the “Cost, cost, cost”
scenario, there is no money for innova-
tion. As counterintuitive as it sounds,
T1T decides to moderate its invest-
ments in the innovation program.
These are just a few of the strategic objec-
tives across the four perspectives of T1T’s
Balanced Scorecard. However, positioning
them in terms of scenarios and options
leads to an entirely different—and more
future proof—Balanced Scorecard.
Does the idea of keeping your options
open sound too much like “postponing
decision making,” going with the flow,
and being reactive, rather than being
proactive in the face of change? On the
contrary; I would say it involves much
more thought than traditional strategy
formulation, because it requires
uncovering the deeper truth of what
Drucker called the “theory of the
business.” The theory of the business is
a strategic framework, and an organiza-
tion’s strategic framework describes its
assumptions about its environment
(e.g., society, the market, the customer,
and technology), assumptions about
its unique mission (how it achieves
meaningful results and makes a
difference), and assumptions about its
core competencies (where the organiza-
tion must excel to achieve and maintain
leadership). To the layman’s ears, the
word “theory” may sound static, but it
means nothing other than “the best
possible understanding of reality that
we have.” And in business, that is a
highly dynamic process.
Continue the dialogueSee a video in which Frank describes Dealing
with Dilemmas at
www.thepalladiumgroup.com/buytendijk
Reprint #B1009A
Frank Buytendijk, a VP and
fellow at Oracle Corp., is also
a visiting fellow at Cranfield
University School of Manage-
ment and a former Gartner
Research VP. His research and
publications focus on strategy,
organizational behavior, and
performance management.
His latest book, Dealing with
Dilemmas (Wiley, 2010), argues
that traditional management
practices actually cause many
of the dilemmas executives
face and offers practical advice
on how to fundamentally
resolve business dilemmas.
For more information, visit
www.frankbuytendijk.com.
To learn moreBSC cocreator David Norton wrote about
how strategy maps in conjunction with a
management system are the key to achieving
agility and strategic adaptability in changing
economic times. See “How a Management
System Helps You Cope with a Recession,”
BSR May–June 2009 (Reprint #B0905A).
6 b a l a n c e d s c o r e c a r d r e p o r t
1 Centrally managed programs are pre-positioned in strategic locations worldwide (on land and on board ship), ready for immediate deployment if a new conflict erupts.
2 AMEDD first created a scorecard in late 2000/early 2001. See “To learn more,” p. 9, for further information about AMEDD’s BSC. Also, in 2004 the Army won entry into the Palladium BSC Hall of Fame.
CASE
The care that U.S. Army soldiers receive
is not just due to top-quality medical
professionals and the latest technology.
It’s as much due to an integrated, well-
oiled management system that merges
medical training, new technologies, and
evolving techniques with a formidable
medical infrastructure and an advanced
supply chain of materiel. Behind the
scenes, commanders and their direct
reports oversee the management of
people, processes, and other resources,
as well as the strategy management
and operational improvement efforts
that steadily raise performance to
higher levels of excellence.
The U.S. Army Medical Materiel Agency
(USAMMA) is a relatively small (and “tier
3”) organization within the “tier 1” U.S.
Army Medical Command (USAMEDCOM).
With a procurement budget of half a
billion dollars and a workforce of 400
military, civilian, and defense con-
tractor personnel, USAMMA provides
military forces with medical logistics
support and solutions for war prepara-
tion, combat deployment, and home-
land defense. Its support ranges from
emergency medical care to preventive
care, and from combat stress control to
veterinary care for the military’s canine
and equine members.
Headquartered at Fort Detrick in
Frederick, Md., under the control of
the tier 2 U.S. Army Medical Research
and Materiel Command (USAMRMC),
USAMMA acquires, equips, and sustains
medical sets and equipment and over-
sees centrally managed programs.1 It
has three medical maintenance depots
and storage operations in the U.S. as
well as storage operations throughout
Asia and Europe. Medical sets (kits) in-
clude everything from medics’ aid bags
and chemical-biological-agent detec-
tion tools to mobile combat support
hospitals.
To support its mission and future
plans—and ensure continuous improve-
ment in management and operations—
USAMMA’s leaders implemented a
program of performance excellence,
with the Balanced Scorecard (BSC) and
strategy map at its heart. The program
employs such elements as Lean Six
Sigma, ISO 9000, Baldrige, and other
quality methodologies. Organizational
excellence means more than the
effective use of taxpayer dollars; it’s a
matter of saving lives (and limbs).
The BSC in the U.S. Army
The BSC is not new to the U.S. Army;
it was adopted at the topmost level
around 2000. USAMMA began experi-
menting with it in 2001, at about the
time parent AMEDD adopted it.2 At that
time, though, its use at tier 3 subordi-
nate levels was not strictly mandated.
Users’ scorecards and strategy maps
were not aligned to the high-level Army
Medicine scorecard, and emphasis on
the BSC program fluctuated throughout
the rotation of AMEDD’s subsequent
commanding generals. The effort was
revived in 2007, when Lt. Gen. Eric
Schoomaker, a BSC advocate, assumed
command of USAMEDCOM (and was
also appointed the Army Surgeon
General). USAMMA had its first practical
strategy map in 2007, and by the time
of its first strategy review meeting
in early 2008, a real-time, technology-
automated BSC. It is currently refining
its third-generation BSC.
USAMMA’s recent drive for organiza-
tional excellence is in large part the
work of its Deputy Commander for
Support, John Lapham, a USAMMA pro-
fessional since 1991 and a retired army
officer of 21 years. Lapham, who holds a
PhD in organizational leadership, is the
Building Performance Excellence Around a Unified Management System at USAMMABy Michael Brazukas, Managing Director, Palladium Group, Inc.
Change doesn’t happen easily in organizations, particularly public
sector institutions. Size, bureaucracy, regulation, and the lack of
competition favor inertia. In military organizations, cyclic leader-
ship changes make it hard for management systems to get traction.
Yet at the U.S. Army Medical Materiel Agency (USAMMA), one of 80
subordinate command organizations within the U.S. Army Medical
Department [AMEDD]), traction is happening. The agency’s pursuit
of operational excellence is a model of rigor and continuous,
institutionalized improvement. At its heart: a governance frame-
work that includes one of the most disciplined approaches to the
strategy review meeting you’ll find anywhere.
With the renewed dedication to the BSC came the recognition
that the BSC system could integrate strategy management with
USAMMA’s quality programs for optimal effect.
7s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
de facto chief management officer and
chief learning officer for the agency.
Among the many areas he oversees are
finance, strategy and quality, informa-
tion technology (IT), contracts manage-
ment, organizational learning, and
compliance.
Establishing a System of Strategic Governance
Quality management and process im-
provement were practiced well before
USAMMA adopted the BSC. In fact, the
army has mandated the use of Lean Six
Sigma since 2004 and has encouraged
other continuous improvement efforts
such as ISO certification and the Army
Performance Improvement Criteria
(a Baldrige-modeled program). But with
the renewed dedication to the BSC came
the recognition that the BSC system
could integrate strategy management
with USAMMA’s quality programs for
optimal effect. “We realized if we’re
going to do a Lean Six Sigma or other
process initiative,” says Lapham,
“it should be based on some gap or
opportunity we identified in strategic
planning.”
By June 2008, USAMMA’s leadership
team—the commander, the deputy
commander for operations, and the
deputy commander for support—
decided to build a strategic governance
model based on the nine Office of
Strategy Management (OSM) roles.
Under Lapham, three to four near-full-
time personnel run the agency’s OSM
(called “OSM-Q”; the “Q” is for “quality
programs”), preparing agendas and
coordinating data collection, initia-
tive reporting, and analysis to support
strategy review and refresh activities.
They orchestrate the strategy review
meetings (SRMs), provide feedback, and
coordinate and issue strategic commu-
nications, as well as provide technical
expertise and counsel for quality man-
agement endeavors. In
addition, the OSM-Q supports USAM-
MA’s participation in external manage-
ment forums and efforts within the
army and the military.
Leaders adapted the SRM calendar to
the existing command structure to
create a more efficient, more powerful
program of strategy reviews, each with
its own specific areas of focus. (See
Figure 1.)
• Once a month, directors, project man-
agers, and division chiefs (principal
managers) review strategic objectives,
measures and targets, and initiatives
• Every six weeks, the principal manag-
ers report to their bosses (the deputy
commanders) on strategic objective
performance and supporting activities.
• Once every quarter, the commander
and deputy commanders (i.e., the
governance council) hold their SRM,
in which they assess overall perfor-
mance. Separately, the USAMMA com-
mander reports on his agency’s perfor-
mance to the USAMRMC commander
and key staff; and at yet another SRM,
the USAMMA commander and select
agency members report to the Army
Medical Logistics Enterprise, a matrix
group spanning key Army Medicine
logistics entities.
Sustaining Meeting Rigor Through “Rules of Engagement”
USAMMA’s leaders created guidelines
called “Rules of Engagement” to extract
the most value from SRMs. These
guidelines urge careful preparation for
the meetings and describe the purpose
of the discussions, delineating which
items should be discussed (e.g., the
performance of objectives, not of indi-
vidual measures).
The Rules of Engagement stipulate
that meetings follow a prescribed
schedule—to the quarter hour—to
ensure that over the three or four
hours, participants adhere to strategic
priorities. Following an initial update
on key objectives, participants provide
status reports (exception reporting,
to use time efficiently). The meeting
room, with its large U-shaped table,
is designed to promote interaction
and open discussion. Everyone faces a
large screen that displays a live view of
the automated BSC, and participants
navigate through the BSC, analyzing
performance area by area and mak-
ing recommendations. Over time, the
focus of discussions has shifted from
strategic direction and measurements
to strategic initiatives (“Are we focusing
on the right ones? Are we making the
FIGURE 1: USAMMA’S NEW STRATEGIC GOVERNANCE FRAMEWORK
This schematic shows the frequency and type of meetings, by level of command, along with their focus. DCO = deputy commander of operations; DCS = deputy commander of support (Lapham); and DfA = deputy for acquisition.
right resource allocation decisions?”).
At the agency’s recent strategy re-
newal meeting, leaders decided to add
changes to the strategy map and BSC to
SRM agendas.
Process Mapping and Management
In the late 1990s, USAMMA’s leaders
realized that formalizing process
management would be important for
dealing with an increasingly complex
work environment that demanded
greater accountability. In fact, USAMMA
considers process management, map-
ping, and improvement to be part of
strategy management implementation.
“If you don’t process map,” says Lapham,
“you don’t get to the core of how to
measure the right things, design new
ones, or fix what’s broken. Just docu-
menting them isn’t enough.” USAMMA’s
ISO 9000 activities established process
mapping for maintenance operations,
and the move to Lean Six Sigma requires
even more rigor. Teams have spent an
average of three months developing
the process maps of individual sup-
port functions. This effort, still under
way, will expand process mapping and
management to all key processes; its
completion is expected by late 2010 or
early 2011.
USAMMA’s process maps are “essential-
ly flow charts at different levels,”
according to Lapham. “They indicate
how you get from point A to point B,
and who does what in what order.” For
example, an equipment maintenance
process map would describe how to
inspect equipment, how to turn it in if
something is malfunctioning, and how
to procure replacement equipment.
A process map can be as specific or as
broad as is needed, but putting into
place upstream process metrics (early
warning systems) as well as results
measures is essential. Once you’ve iden-
tified metrics that control for time, cost,
and quality, says Lapham, you align
them to the higher-level BSC measures
to create dashboards, which in turn
allows you to manage the strategically
important operational-level processes.
b a l a n c e d s c o r e c a r d r e p o r t8
Another example of making change happen (fast) in a government organizationAccelerating the Execution Premium Process at the Department of the Interior’s Office of Inspector General
The U.S. Department of the Interior (DOI) protects America’s natural resources
and cultural heritage and supplies energy to the country. Within its oversight are
the National Park Service, the U.S. Fish & Wildlife Service, the Bureau of Indian
Affairs, the Bureau of Land Management, the Minerals Management Service, and
the U.S. Geological Survey. The department’s Office of Inspector General (OIG), an
independent oversight body, audits, investigates, and evaluates DOI programs
and activities.
DOI’s OIG, like other OIGs, historically has uncovered fraud and mismanagement
most often after it has been committed. The office’s new leadership team, which
took control in 2009, wanted to be more proactive and prevent fraud before it took
place. To achieve this goal, leaders sought a more transparent and collaborative
approach to management. Acting Inspector General Mary Kendall also wanted the
OIG to be better able to identify high-risk, high-impact programs, thus enabling it to
apply its limited resources (a $49 million budget and staff of 285) more effectively.
The Kaplan-Norton management system and Execution Premium Process (XPP)
seemed to be the answer for facilitating this proactive, strategy-focused, and
balanced approach.
Rather than allow the Deepwater Horizon oil rig accident
to derail the new strategy management program, OIG
leaders reinforced the importance of completing the
strategy implementation.
In February, Kendall and Chief of Staff Steve Hardgrove began implementing the
XPP. Within five months, the OIG had developed a change agenda, strategy map,
and BSC. In June, it held its first quarterly strategy review meeting (SRM). A Strategy
Management Office is already in place.
How did OIG do all this so quickly? Motivation was a big factor. Besides that, five
teams worked in parallel: the leadership team; a core team; a development team,
which hammered out the strategy map; a validation team, which obtained bottom-
up feedback and buy in; and a measurement team. The teams achieved a major
implementation milestone nearly every week, with one team creating output and
another reviewing and editing it.
Following the April 22 Deepwater Horizon oil rig accident, the Department of
Justice requested that the OIG lead a multiagency investigation; at the same time,
DOI Secretary Salazar requested an in-depth internal review. Rather than allow
the catastrophe and the requested work to derail the new strategy management
program, OIG leaders reinforced the importance of completing the strategy
implementation. “All the elements on our strategy map came together on the local
and regional level,” says Hardgrove, emphasizing that cross-functionality and
communication “were a requirement for [a proper response to] this accident.” The
incident “forced a total blend” of OIG’s audit and investigation sides. “Because
senior staff was thinking more strategically in planning, when the spill occurred,”
OIG was able to devote its regional resources to it. “Now, more than ever,” he adds,
“we need to remain disciplined and focused on our core strategy.”
9s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
Integrating and Improving Financial
Planning
One of USAMMA’s major process im-
provement initiatives—and strategic
priorities—is redesigning its portion of
the Planning, Programming, Budgeting,
and Execution (PPBE) process. The PPBE
is the Department of Defense process
for linking strategy and budgeting. Plan-
ning, done at the highest level, involves
multiyear forecasts. In Programming,
leaders develop the financial require-
ments to support the major endeavors
(programs or sets of projects) identi-
fied in the Planning phase. Budgeting
is where reality enters—where the
ideal goals must be reconciled with the
realities of fiscal constraints, including
allocation changes that occur year to
year.
Such a long time horizon, during which
fiscal realities are subject to change,
makes initiative planning a tremendous
challenge for subordinate agencies.
Five or more years is longer than the
average military person’s tenure at
USAMMA, and the long-range Planning,
Programming, Budgeting efforts occur
as previously planned projects are be-
ing executed. A further complication:
money is allocated to various accounts
intended for certain categories, and
special appropriations sometimes fall
outside the current requirements or
priorities. So funding inputs do not
necessarily match USAMMA’s actual
operational needs.
Besides its “mission dollars” (the fund-
ing USAMMA receives to conduct its
core activities), USAMMA has discretion-
ary funds—its “management money”—
that it uses to execute its performance
excellence program. Until recently,
USAMMA lacked systematic procedures
for maximizing its discretionary dollars.
Lapham knew that applying discretion-
ary dollars to performance excellence
initiatives would enable USAMMA to op-
timize its mission dollars and improve
organizational quality.
Today, the agency’s automated BSC
and strategy map help leaders see
the ramifications of how they apply
discretionary money—for example, in
initiative portfolio management. The
automated system also helps manage
contract vendors. “Instead of constantly
changing underperforming suppliers,
which we can’t always do, for policy or
regulatory reasons, we can manage that
relationship better—or bring the sup-
plier into the fold,” explains Lapham.
USAMMA’s PPBE approach and best use
of discretionary dollars will also help
it optimize its IT budget. Although IT
is funded through core dollars, those
funds don’t fully cover the internal
systems USAMMA must design for itself
for future needs.
Benchmarking with Baldrige
To gauge how well the organization is
performing—and to identify important
performance gaps—USAMMA decided
in late 2009 to conduct its first internal
assessment using the Malcolm Baldrige
National Quality Award criteria. To
ensure the assessment was performed
objectively and to exact standards,
USAMMA relied on a third-party adviser
to create an organizational profile and
an in-depth assessment for every aspect
of its operations, based on the seven
Baldrige categories.
The exercise revealed three perfor-
mance gaps: customer focus and infor-
mation sharing processes, process maps
and measurements (that is, having man-
agement control systems that make
use of the maps and measures), and
management of product data and in-
formation. None, according to Lapham,
was surprising; the meticulous exami-
nation offered “a detailed confirmation
of what we believed we knew.” These
assessment and feedback processes are
now part of USAMMA’s process improve-
ment strategy. The baseline from this
initial assessment provided important
input into USAMMA’s recent annual
strategy refresh.
Extending the View, Embedding the Approach
USAMMA’s performance management
system is, Lapham notes, a work in
progress. As operational processes are
modeled and improved, the agency is
establishing operational dashboards to
monitor performance and results,
including continuous improvements.
The organization is at a pivotal point in
its integrated strategy implementation
path, moving from “project” to “way
of life.” To institutionalize strategy
management and its governance
system—and to safeguard it from the
vagaries of recurring leadership change
every two years—USAMMA is focusing
intently on bolstering the processes,
technologies, and cultural commitment
that will firmly establish this perfor-
mance system for future longevity.
Reprint #B1009B
Michael Brazukas, a managing
director, is based in Palladium’s
Washington, D.C., office. He
is responsible for Palladium’s
government, military, and
mission-based organization
business.
Continue the dialogueMichael Brazukas is leading discussions online
in the private executive forums of XPC. Visit
www.thepalladiumgroup.com/bsr/brazukas.
To learn moreBSR has published several articles on the
BSC and strategy implementation at military
organizations worldwide; consult the BSR
Index, available free via download at web.hbr.
org/se/index.php. Articles on implementa-
tions within the U.S. Army include
“It’s in the Army Now: The U.S. Army’s
Scorecard-Based Transformation,” BSR
September–October 2003 (Reprint #B0309B);
and “Mobilizing for Well-Being: The Army
Medical Department’s BSC Transformation,
BSR May–June 2003 (Reprint #B0305C).
Lapham knew that applying discretionary dollars to performance
excellence initiatives would enable USAMMA to optimize its
mission dollars and improve organizational quality.
In these times of global economic turbu-
lence and constant change, the ability
to implement and execute strategy—
and, most important, sustain it—takes
on new significance.
As Robert Kaplan and David Norton
have written extensively, the Office of
Strategy Management (OSM) is a key
mechanism for implementing strategy—
not merely through its architect/process
custodian/integrator role but also in a
larger sense by helping organizations
adapt strategy to environmental chang-
es, shifting customer requirements, and
evolving organizational capabilities.
However, the OSM cannot fulfill these
roles by itself. Even large, well-staffed
OSMs lack the ability to penetrate and
execute in each business area and SBU.
The most daunting organizational chal-
lenges require human intervention and
action at every level. We believe that
organizations need a network of people
who can act as the “arms” of the OSM,
endowing each area or SBU with the
ability to unlock execution capacity and
ensure the strategy’s sustainability.
Our solution: strategy execution
champions (SECs). A network of SECs
augments the OSM’s ability to support
every aspect of strategy management.
These individuals are, in effect, the
engine within each business area that
generates the energy needed to fulfill
business goals.
Strategy execution champions are
drawn from throughout the organiza-
tion—from key functional areas such
as strategic planning, finance, and IT,
as well as from business lines. Some
SECs are subject matter experts; others,
group heads, are expert in or account-
able for the operations, performance,
and business management of their
given area. Along with the OSM, they
offer long-term guidance and support,
and create a shared vision of success.
By overseeing the appropriate imple-
mentation of the strategy within their
own areas (and, as a network, collec-
tively across the enterprise), they help
the OSM fulfill its role. And by contribut-
ing to making the strategy sustainable
within their own areas, they contribute
to making it sustainable at the organi-
zational level.
In some companies, the role of SEC is
already being performed by someone
in each area. But it is usually not a
formalized role, one with established
processes and procedures necessary to
support the OSM. At Grupo Modelo, we
instituted an SEC team to help us moni-
tor strategy execution at all levels of the
38,000-person company. Without it, the
task would have been virtually impos-
sible. Today, we are building networks
of SECs for several clients.
Implementing an SEC network provides
multiple benefits for an organization.
Boosts execution capability. Most
OSMs are staffed by a handful of
individuals, many of whom juggle this
responsibility with a “day job.” As a
separate group, the OSM has a limited
ability to engage actively in the imple-
mentation and management of strategy
throughout all areas of the enterprise.
Assigning an SEC to each area or SBU ex-
tends the reach of the OSM. As “locals,”
such individuals have greater autonomy
and freedom of movement within their
business areas than outsiders have.
They are also knowledgeable about
their areas’ needs, so they are better
equipped to identify strategic issues
and raise them credibly with the execu-
tive committee for resolution.
Ensures the sustainability of the
strategy. Formalizing the strategy
management process throughout the
organization helps mitigate the risk
of employees viewing strategy as yet
another project or merely the subject of
an annual meeting. The SEC approach
engages more people, involving them
in specific strategy-related activities
throughout the year that integrate and
synchronize with other key processes.
Improves communication and coop-
eration among business areas and
SBUs. A network of SECs ensures that
the organization’s functional areas
get the representation they need. This
helps uncover critical issues in a timely
manner, improving decision making
and enabling the organization to be
Beyond the OSM: Strategy Execution Champions Help Foster Strategy Execution Capability By Marina Mier y Terán Cuevas, Partner and Director of
Knowledge Management, and Maria José Ortega Moncada,
Partner and Director of Marketing, Ilimite Consulting (Mexico City)
As architect, process custodian, and integrator, the Office of Strat-
egy Management (OSM) plays an instrumental role in enterprise
strategy management. But it can’t do the job alone. And while
cross-functional theme teams perform many on-the-ground
aspects of the strategy management function, there’s yet another
important set of players in strategy management: strategy execu-
tion champions. These individuals, drawn from every key operating
area and SBU across the enterprise, serve as the “arms” of the OSM,
helping execute and sustain the strategy. The authors, former
strategy professionals at 2008 Palladium BSC Hall of Fame winner
Grupo Modelo, discuss this approach—one they are now helping
organizations throughout Latin America implement.
STRATEGY MANAGEMENT OFFICER
b a l a n c e d s c o r e c a r d r e p o r t10
more agile and flexible amid a changing
environment.
Promotes accountability. The presence
of an SEC network reflects the organiza-
tion’s commitment to achieving its stra-
tegic goals. Each SEC assumes responsi-
bility for the Balanced Scorecard within
his or her area and pushes objective and
initiative owners to develop ideas for
constant improvement.
What Do Strategy Execution Champions Do?
In some organizations the OSM is
charged with integrating (in a timely,
sequenced manner) the various business
and operational processes and functions
in order to align operations to strategy.
This is a tremendous responsibility for
what is usually a modestly staffed group.
SECs can provide significant support, in
particular by
• Managing and communicating the
strategy in their respective areas
• Overseeing their respective areas’
strategy-related activities and com-
municating constantly with the local
leadership team about issues related to
strategy management
• Serving as a liaison between the OSM
and their respective areas
• Conducting strategy analysis meetings
• Uncovering strategic challenges, such
as aligning SBU goals with corporate’s
or jump-starting a stalled initiative
Let’s look at SECs’ responsibilities within
specific strategy management processes.
Aiding in the Design of the
Strategy Cycle
Every year, the OSM incorporates any
missing processes into the strategy plan-
ning cycle to improve the alignment of
operations with strategy. SECs support
the OSM in this task by identifying any
such key processes in their respective
areas that may affect the strategy cycle.
Once the cycle is updated, they help
integrate these processes in an orderly
manner and monitor them (and their de-
liverables) throughout the year. Consider,
for example, the individual employee
performance evaluation process; it can
begin only after strategic goals have
have been defined (otherwise employ-
ees’ performance will not be aligned to
the strategy).
Contributing to Strategy Development
Most companies have a department or
area that is responsible for strategic
planning or strategy development. In
some cases, it is the OSM itself. SECs can
enrich the strategic planning process
through their knowledge of their own
areas. Information they provide can help
substantiate the various analyses, inter-
nal and external, used in the planning
process that help validate and define the
organizational strategy.
SECs also play a feedback role, dis-
seminating and promoting the mission,
vision, and values that are the founda-
tion of the new strategy within their
respective areas of the company.
Contributing to Strategic Planning
Once the strategy has been developed
(or updated), the OSM is responsible for
overseeing its translation into opera-
tional terms through the BSC. However,
before the enterprise BSC is finalized,
SECs should point out any concerns
or problems—for example, a missing
objective or misaligned goal—that, if
remedied up front, could help improve
the articulation of strategic objectives
or sharpen key performance indicators.
Such input advances the organization’s
strategy management maturity.
Aligning the Organization
Here’s where SECs play their most active
role—a role we consider a critical suc-
cess factor for strategic alignment.
Once the enterprise BSC is updated, SECs
begin cascading the strategy to their
respective areas. Among their respon-
sibilities is identifying objectives and
indicators that could be shared by two or
more areas. They hold interdepartmental
or inter-unit meetings to validate the
11s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
Strategic Theme Teams vs. Strategy Execution Champions:What’s the Differ-ence?
A strategic theme team is by nature
cross functional; it is responsible
for achieving the goals of a given
strategic theme from the enterprise
strategy map. A strategy execution
champion is responsible for moni-
toring strategy execution within a
given business or functional area or
SBU. Theme teams and SECs work to-
gether to create synergies and close
operational gaps. In that respect,
they complement each other. And we
believe that both roles are necessary.
So how do they differ?
Strategic theme teams view strategy
in terms of theme “blocks.” Gener-
ally, a senior executive is appointed
“owner” of the theme to establish
accountability. A value gap is set for
each strategic theme. Theme teams
develop synergies among multiple
functional areas and SBUs and
conduct cross-functional activities to
accomplish their goals. They organize
their efforts by cascading strategic
themes throughout the organiza-
tion’s strategy maps.
Strategy execution champions view
strategy by functional area. Each SEC
supports his or her area’s director by
monitoring strategy execution at the
local level. SECs are expert in their
areas, which means they can better
understand and manage strategy.
As a result, they are also better
equipped to uncover any stumbling
blocks or other problems related to
strategy execution in their areas.
Finally, having an SEC network
ensures that functional areas are
represented in the OSM.
value proposition of the support areas
and SBUs as well as define how each
area contributes to enterprise strategy.
SECs also use the strategy map to com-
municate everyone’s contribution to the
strategy, thus helping align the indi-
viduals’ performance to the business’s
goals. Although the individual employee
performance evaluation process is gen-
erally managed by human resources, the
OSM and the SECs are both responsible
for ensuring the alignment of individual
employees to the strategy. Specifically,
SECs should
• Put in place mechanisms that promote
the alignment of individual employees’
performance to strategic objectives;
for example, a performance matrix that
matches strategic objectives and initia-
tives with strategic job positions
• Ensure that the goals listed on individ-
ual employee performance evaluations
conform to the company’s established
goals
• Ensure that incentives are based on
performance
Without well-defined, aligned, and
approved strategic goals, it is difficult
to begin implementing projects and
therefore to measure performance and
progress toward the strategy.
SECs also play an important role in the
goal-setting process. They help
• Ensure that financial strategic goals are
aligned to the budget
• Define targets for all indicators, both
financial and nonfinancial
• Ensure that the goals identified for
their respective areas help advance
enterprise goals
• Define targets for all indicators, both
financial and nonfinancial
• Make sure that goals are appropriately
ambitious and yet achievable
• See that goals do not change constant-
ly so that the organization can gain
stability in its strategy management
process. When adjustments are made,
SECs ensure they are communicated
in advance to the OSM, to maintain
alignment.
Finally, SECs complement the work of
the project management office by ensur-
ing that projects are in fact contributing
to the strategy. They do so by measuring
the projects’ performance against key
performance metrics at strategy review
meetings (SRMs).
Supporting Strategy Review Meetings
At many companies, the OSM is respon-
sible for coordinating the SRMs. This
means that considerable time is taken
up with preparation activities, often at
the expense of performance analysis.
The result: SRMs can end up merely as
performance reporting meetings instead
of forums where new ideas—ones that
might advance performance or the
strategy—can flow freely.
Each SEC should be responsible for
developing and moderating the SRM in
his or her area. In that way, the executive
team can focus exclusively on strategy.
Because SECs promote the sharing of
strategy management best practices
across their areas, we recommend that
the network hold meetings throughout
the year in addition to the calendar-
related, strategy cycle meetings. For
example, every January the organization
may be preparing for individual employ-
ee performance evaluations as well as
getting ready to update the BSC and set
the strategy management cycle calendar
for the year. To ensure that all SECs are
aligned and coordinated in these efforts,
they should convene for a briefing by the
OSM and to coordinate among them-
selves. (See Figure 1.)
Selecting Strategy Execution Champions
What competencies must SECs possess?
Besides having extensive knowledge of
their individual department or area, they
must first and foremost have strategic
vision and leadership and must be
proactive. They should also be results
oriented, persuasive, and adaptable
to change. They should value and
demonstrate teamwork, have strong
interpersonal relationships, show
planning acumen, and possess good
oral and written communication skills.
SECs should be selected by the directors
of each area or SBU and confirmed by
the CEO. In addition to having the appro-
priate knowledge and skills, SECs need
to have authority. Their authority is not
b a l a n c e d s c o r e c a r d r e p o r t12
FIGURE 1: A RECOMMENDED CALENDAR OF MEETINGS FOR STRATEGY EXECUTION CHAMPIONS
Besides participating in strategy review meetings, SECs should hold separate meetings to share information and best practices related to strategy manage-ment events that occur throughout the year.
January meeting • Preparing for employee performance evaluation process • Updating BSCs and shared objectives among areas and units • Setting the new strategy management cycle
March meeting • Developing the annual strategy communication plan
May meeting • Making any necessary adjustments to the individual performance evaluation process
July meeting • Preparing for annual strategy offsite
September meeting • Preparing for budget process
November meeting • Getting ready for workshops to update unit and departmental BSCs • Defining and finalizing strategic goals • Defining and prioritizing strategic initiatives
sample topics for strategy execution champion meetings
13s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
necessarily dependent on their senior-
ity; it’s a matter of their competence—
that they are respected and therefore
credible and influential.
In some companies, some candidates
have the requisite knowledge and
skills but lack the necessary authority.
The result is that operational activi-
ties get done, but decisions are made
slowly. Elsewhere, the SEC may have the
requisite authority (so decisions aren’t
dragged out) but lack the hands-on
skills that allow operational activities
to be carried out promptly.
Because it’s not always possible to
get the right mix of authority and
competencies in every SEC candidate,
it’s a good idea to strengthen the SEC
network by adding one or more people
who can support operational or admin-
istrative activities, such as scheduling
strategy analysis meetings and updat-
ing scorecard data.
How many SECs will you need? That
depends on the nature of your organiza-
tion and on the needs of each area. In
an organization where production is the
core business, there might be three SECs
in the production area and only one
in each other area. In our experience,
though, every area or SBU should have
at least one SEC as well as someone
from her own team who helps the SEC
perform the administrative work.
Before they delve into their new role,
it is important to explain to SECs the
purpose and functions of the SEC
network and their new responsibilities.
Explain the benefits of SEC service, not
only to the company but also to each
of them personally and professionally:
having an integral vision of the orga-
nization and its goals, learning to be
a change agent, getting exposure and
being visible to management, facilitat-
ing decision making, and learning a new
methodology (the BSC).
Address what is generally their biggest
concern: how much of their time this
new role might take. There are several
processes throughout the year during
which they’ll need to support the OSM,
but the main event is SRM development
and follow-up. (See Figure 2.)
A training session is a valuable first
step. Here, you can also address their
questions and concerns and present
them with the tools they will need
to fulfill their new roles, such as the
Balanced Scorecard methodology,
the software used for SRMs, and the
elements of the individual employee
performance process. The CEO should
kick off the program to reflect the high-
est level of support for and sponsorship
of this new role.
With a network of strategy execution
champions to complement your OSM,
you can bolster your organization’s
execution capacity and make strategy
management the critical process it
needs to be.
Continue the dialogueWhat do you think of the concept of strategy
execution champions? Share your thoughts
with other strategy professionals—and your
questions with the authors—at
www.thepalladiumgroup.com/bsr/cuevas.
Reprint #B1009C
Marina Mier y Terán Cuevas
cofounded Ilimite in the fall of
2009. Ilimite’s clients include
Roche Pharma, Hipotecaria
Total, Infonavit, Sociedad Hipo-
tecaria Federal, and Conagua.
She is a former senior manager
of strategy management at
Grupo Modelo, a 2008 Palla-
dium BSC Hall of Fame winner.
To learn moreTwo related articles we recommend: “Building
the Theme Team: A Step-by-Step Guide,” BSR
May–June 2010 (Reprint #B1005D); and “The
Office of Strategy Management: Emerging
Roles and Responsibilities,” BSR July–August
2008 (Reprint #B0807A).
You can also read about Grupo Modelo’s
strategy management program in the Balanced
Scorecard 2009 Hall of Fame Report, available
at web.hbr.org/se/hall-of-fame.php.
13
FIGURE 2: AN INTEGRATED CALENDAR OF SEC MEETINGS
This timeline indicates where the SEC network’s meetings would fall within SRMs and overall strategy management events.
Supporting: Communication Plan | Performance of the Strategic Initiatives
Designing theStrategic Cycle
Aligning theOrganization
Aligning theOrganization
Validating the Strategic
Goals
Updating the area’s BSC
Developingthe Strategy
Planningthe Strategy
DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
SRM SRM SRM SRM SRM SRM SRM SRM SRM SRMSRM
SECmeeting
SECmeeting
SECmeeting
SECmeeting
SECmeeting
SECmeeting
Maria José Ortega Moncada,
Ilimite’s marketing director,
was formerly strategic
management coordinator
at Grupo Modelo.
14
It’s no secret that many public sector
employees feel a sense of entitlement
when it comes to their jobs. And why
shouldn’t they? Their employers seldom
go out of business, and job security
tends to be greater than in the private
sector. Yet many public sector employ-
ees also nurture a genuine desire to
serve society. But unleashing that pas-
sion to serve can prove challenging in
organizations characterized by complex
bureaucratic structures and compla-
cency in some of the ranks.
Nevertheless, some public agencies
have managed to overcome these
challenges. Using the Balanced Score-
card as the central mechanism, they
implement practices that transform the
stereotypical civil service mind-set to a
laser-sharp focus on the customer.
Energized around the strategy, employ-
ees identify with the organization, rath-
er than with their own jobs or areas.
And they make a measurable, positive
difference for their constituents.
Consider the following examples from
organizations that include Palladium
Balanced Scorecard Hall of Fame
members.
Hold All Employees Accountable for Satisfying Customers
All employees—not just higher-ups—
must be accountable for satisfying
customers. Atlanta-based Fulton County
School System (a 2003 Hall of Fame
winner) is an apt example. The organi-
zation faced big challenges, including
increasing racial, ethnic, and economic
diversity in its student body, as well as
size (83 schools, 9,500 employees, 73,000
students, and a $600 million budget).
Previously, Fulton County had used a
bottom-up management approach,
aggregating individual schools’ priori-
ties to determine systemwide goals. Yet
many of these goals weren’t measur-
able. The school system then adopted
a management approach based on the
Malcolm Balridge Award criteria, but
failed to link it to clearly defined perfor-
mance improvements.
When executives decided to adopt the
BSC, they made some valuable changes,
including clearly defining goals. But
the one that may have helped most to
focus the workforce on its “customers”
was the adoption of top-to-bottom
accountability. Fulton County decided
to hold everyone, and not only teach-
ers, accountable for promoting student
achievement. It began evaluating all
staff—teachers, principals, cafeteria
managers, school bus drivers—against
scorecard measures centering on
everything from strengthening students’
critical thinking skills to ensuring that
they were well nourished and arrived at
school on time and safely. The collective
effort paid off. As just one example, in
five years, students’ SAT scores went
from meeting the national average to
exceeding it by 23 points.
Another way to hold all employees
accountable for satisfying custom-
ers is to provide rigorous training and
developmental experiences, along with
no-holds-barred feedback on strategic
performance. Florida’s Miami-Dade
County government is a case in point.
After interest in measuring perfor-
mance within public sector organiza-
tions intensified during the late 1990s,
the county assembled a blue ribbon
panel to develop a strategic plan—its
first. The panel gathered community
leaders’ input on the plan, which re-
sulted in a heavy emphasis on resident
satisfaction.
After launching a BSC program to
execute the new plan, the county began
providing all new employees—and
not just customer-facing ones—with
online customer-service training to
help foster a customer-service mind-set
throughout the entire organization. In
addition, it encouraged departments to
design their own leadership develop-
ment opportunities for managers. For
instance, the Solid Waste department
began rotating who conducts each of
its strategy review meetings. These
experiences encouraged people to feel
a sense of ownership of their scorecard
and to see themselves as leaders.
To generate performance feedback for
employees, Miami-Dade also began
conducting county resident satisfaction
surveys every two to three years and
launched an initiative akin to a secret-
shopper program. “Shoppers” phone
a county department, ask questions,
and evaluate the quality of the services
they’ve received. Findings are cycled
back to employees so they can address
any problems.
These efforts have led to concrete
improvements in service quality and
resident satisfaction. For example, in
three years, 13% more residents ex-
pressed satisfaction with the quality
of road signs, and the number of
complaints regarding trash removal
fell dramatically. Customer perceptions
From Civil Service to Customer Focus: How Public Sector Organizations Energize Their Workforce Around StrategyBy Lauren Keller Johnson, Contributing Writer
In the best public sector organizations, “good enough for govern-
ment work” doesn’t cut it anymore. These high-performing entities
know how to unleash employees’ passion to serve—replacing
the traditional sense of entitlement with a sharp focus on the
customer. Private sector organizations, take note.
b a l a n c e d s c o r e c a r d r e p o r t
15s e p t e m b e r – o c t o b e r 2 0 1 0 : v o l u m e 1 2 , n u m b e r 5
of employees as courteous and profes-
sional also improved.
Provide the Right Incentives
Incentives also play a key role in focus-
ing employees’ attention on customers.
Take Busan Metropolitan City (BMC),
a 2008 Hall of Fame inductee. South
Korea’s second largest city, BMC had
become a semiautonomous municipal
government, funded in part by the
federal government and in part by city
tax revenues. This change brought
new challenges. For instance, height-
ened media coverage raised citizens’
awareness of government activities
and policy, which in turn raised their
service expectations. Yet a tradition of
guaranteed lifetime employment and
a seniority-based reward system had
left the workforce uninterested in
mustering the effort needed to meet
those challenges.
After the Korean central government
adopted the BSC and introduced it to
municipal governments, BMC volun-
teered to be Korea’s first city user of the
methodology. The municipality defined
new goals centered on improving the
quality of life in Busan through more
transparent, citizen-oriented manage-
ment and customer-service excellence.
It then introduced incentives to ensure
achievement of those goals. For in-
stance, it established “job performance
contracts” linked to specific scorecard
objectives and updated the contracts
annually. Bonuses and promotional
opportunities for department heads
and team members were tied to targets,
and performance against key objectives
constituted 25% of the overall perfor-
mance evaluation of managers at or
below the assistant manager level.
Such initiatives translated into
enhanced quality of life in Busan. For
example, over three years, customer
satisfaction rose, as did the number
of jobs created for the elderly and the
financial benefits per citizen (revenues
divided by number of citizens).
Leverage Information Technology
Performance management technol-
ogy has further enabled savvy public
agencies to rivet employees’ attention
on customer service. Busan excelled
in this area as well. The city put in
place a strategy information system it
called Danuri (“embrace everything” in
Korean). Danuri integrated its cus-
tomer relationship management (CRM),
business process management, and
knowledge management systems, and
was accessible to all citizens. Indeed,
citizen panels began regularly using
Danuri to evaluate BMC’s performance.
The city also started commissioning
yearly customer satisfaction surveys
of employees. Citizens who visited City
Hall with a public service purpose and
who received city services provided
their input, along with some who were
selected randomly. BMC fed the data
into Danuri’s CRM component and
counted evaluations from citizen panels
and survey results in employee perfor-
mance assessments.
Link the Budget to Customer- Related Strategic Initiatives