Execution Excellence: Making Strategy Work Using the Balanced Scorecard

A hands-on guidebook for making your strategy work with effective Balanced Scorecard design, deployment, and maintenance Execution Excellence is the practitioner's guide to real-world implementation. Designed by a Balanced Scorecard (BSC) thought leader with 30 years of experience and over 300 global implementations under his belt across a range of industry sectors, this guide gives you a hands-on framework for putting the BSC methodology into action. Clear, concise, and easy to read, this book skips the theoretical exposition to get right to the point—how can companies use BSC to effectively deploy strategy and drive individual and enterprise performance? You'll find the answers here. The discussion outlines the ways in which firms commonly fail in implementing BSC. These failures can be traced back to common design and implementation flaws: making the process too complicated and focusing on the BSC process rather than the outcome. The discussion will also cover design optimization across a range of key industry sectors. You'll gain expert insight into avoiding these missteps and the practical tools and perspective you need to implement BSC correctly the first time. While the Balanced Scorecard framework is widely accepted and praised, about half of firms that implement it fail to realize the full benefits. The fault lies not with the framework, but with the design, and more importantly—execution. This book gives you the information and tools you need to adopt BSC successfully. Design a BSC that truly and simply reflects your strategy Customize the BSC to reflect your industry's uniqueness Define clear measurements and ownership that suit your strategy Develop a framework for efficient data collection and reporting Implement effective reviews to keep your business on track Use your Balanced Scorecard data to close performance gaps Developed in the early 1990s, the Balanced Scorecard framework has been recognized as one of the most seminal business ideas in the last 75 years. Thousands of companies around the world use BSC to create and maintain a performance-oriented enterprise, yet just as many try and fail. Execution Excellence shows you what you need to know and do to become a BSC success story.

Table of Contents:
Preface xv Acknowledgments xvii I THE REALWORLD OF STRATEGY 1 1 The Global Business Environment in Today’s Flat World: News Flows Faster than Water! 3 So Where Do We Go from Here? 5 What Does That Mean? 5 2 The Evolving Role of Strategy: Is Strategy Dead? 7 Blue-Sky Strategy 8 Back-to-Basics Strategy 8 3 Strategy Formulation: Building a Strategy that Works 11 External Assessment 12 Internal Assessment 12 4 Strategy Execution: It’s All About the Implementation 17 5 The Business Planning Process: Don’t Let the Process Overrun You 19 Ownership 21 II INTRODUCING THE BALANCED SCORECARD 23 6 Introducing the Balanced Scorecard: Circa 1992 and Still Going Strong 25 History 25 Basic BSC Framework 26 Design 29 Implementation 30 Cascades 30 Individual BSC 30 Using the BSC to Formulate Strategy 31 7 Challenges in Implementing the Balanced Scorecard Successfully: Time to Put on a Helmet! 33 General Challenges 33 Design Challenges 35 Implementation Challenges 37 III CHALLENGES IN BALANCED SCORECARD DESIGN 41 8 Designing the Strategy Map: Keep It Lite 43 Introduction 43 Design Methodology 44 Strategy Map Design Components 45 Impact of Industry Customization and Support Functions on Strategy Map Design 49 Strategy Map Design for Nonprofit and Government Organizations 52 The Concept of the Linkage Model 52 Designing a Lite Version of a Strategy Map for Board Reporting: Strategic Themes 54 9 Defining Objectives: The Wordsmith’s Challenge 55 The Bad Way 55 The Good Way 56 Customer Objectives 58 10 Picking Owners: Four Executives Don’t Run a Company 61 Owning the Formulation 61 Owning the Execution 62 How Does Ownership Really Work in a BSC Meeting? 63 BSC Ownership versus Individual Performance Measures 64 11 The Art of Measurement: Lead, Lag, and How Many Are Enough 67 Introduction 67 Financial and Non-financial Measures 68 Lead and Lag Measures 69 Strategic versus Non-strategic Measures 69 Financial Measures 70 Customer Measures 70 Internal Perspective 72 Learning and Growth Measures 73 Measurement Formulas 74 Data Sources 75 What about Missing Data Sources? 76 How Many Are Enough? 76 12 Units and Frequency of Measurement: Stay Honest 79 Units of Measurement 80 Key Milestone Indicators (KMS) 80 Decimals 81 Frequency of Measurement 81 13 Target Setting: Actionable or Aspirational? 83 Target Intensity 83 How Many Targets to Set of Each Kind? 85 Target-Setting Benchmarks 86 Target Calculation 88 14 Initiative Alignment: Are You Overrun with Projects? 89 15 Designing Cascades: Top Down or Bottom Up 93 Introduction 93 The Next Level Cascade: Functional Organization 95 Multi-divisional Structures and Cascades 96 16 Aligning Individual and Enterprise Performance: Unlocking Human Capital 99 Introduction 99 The Right Way 100 Measures 101 Cascading Weights and Measures 102 Bands 103 IV CHALLENGES IN IMPLEMENTATION 105 17 Selecting the Right Balanced Scorecard Coordinator: Not the Audit Team, Please! 107 Introduction 107 The BSC Coordinator 108 Cascade Coordinators 113 18 Get Ready for the First Reporting: Sixty Days to Lift-Off! 115 Introduction 115 Timelines 115 The Accuracy of a Measure 118 You Missed the Start of the Year 118 19 How Should the First Meeting Run? And How Frequently? 121 Introduction 121 Deck Pre-distribution 122 BSC Coordinator’s Role 123 The Discussion 124 The Discussion on Initiatives 126 Meeting Closure 128 What about the Cascade Scorecard Meetings? 128 Conclusion 128 20 What About Scorecard Automation? Mobile and Dynamic Scorecards 129 Introduction 129 The Excuse to Automate 129 When to Automate? 130 Components of BSC Automation 131 The Automation Process: The Data Challenge 132 Benefits of BSC Automation 133 21 What Happens After a Meeting? Making Sure the Traction Lasts the Whole Month 135 Introduction 135 Circulation of Post-meeting Deck 136 Follow-up Action 136 Complaining 137 Ensure Cascade Alignment 137 Initiative Action 138 An Unfortunate Case Study: Blowing Up a $5 Billion Company 138 22 The Communication Challenge: It’s Like Keys to the Executive Washroom 141 An Unfortunate Case Study: Paper on the Walls 141 Start at the Design Stage 142 At the Reporting Stage 143 Board Reporting 143 Using It to Build a Training Agenda 144 23 What Happens If Performance Does Not Improve? Patience and Speed Go Together 145 Introduction 145 It’s Not a Formula 1 Car 145 What If There is No Cause and Effect? 147 Too Many Reds 148 The CEO Is Not Pushing the Agenda 149 The Ownership of the Strategy Is Wrongly Placed 150 24 Running a Best-in-Class Project Management Office: You Can’t Do It without a Command Center 153 Everything Is a Project 153 The Evolving Landscape of Project and Program Management 154 The Program Manager’s Role 155 An Effective PMO 155 PMO Knowledge Areas 156 PMO Process Groups 159 PMO Maturity Levels 160 PMO Types and Approaches 161 Critical Success Factors to Set Up an Effective PMO 162 Linking the PMO to Strategy through the Balanced Scorecard 163 25 Oops. The Strategy Has Changed: What Happens Now? 167 Introduction 167 Midyear Strategy Change 167 Annual Strategy Review 170 V CONCLUSION 173 26 Conclusion 175 Make Your Strategy Positive 175 Execution Is about Focus 177 Focus and Measurement 178 Ownership 178 Stay on Track 178 Youth Matters 179 Gray Hair Matters 179 Appendix A: Industry and Function Specific Strategy Maps and Scorecards 181 Appendix B: Bank Case Study 227 Appendix C: Textile Company Case Study 235 Appendix D: Travel and Tourism Case Study 245 Appendix E: Illustrative Financial Measures by Industry 255 About the Author 259 Index 261

About the Author :
SANJIV ANAND is the Chairman of Cedar Management Consulting International, a global management consulting firm with over 800 clients and a network of offices worldwide. He is considered a Strategy and Balanced Scorecard thought leader, with more than thirty years of global management consulting experience and 300 Balanced Scorecard designs executed across a wide range of industry sectors. He is a Harvard Business School and NYU Stern Alumnus, and a former YPO Chapter Chair.