Connecting strategy and metrics - why, and how - dashboard quality

Did a talk this morning at Minnesota Manufacturing Group - the "7 Mistakes" talk from July, slightly revised.

Tremendously experienced and sharp group, asked some great questions - like how to measure and find the discipline of execution. like how to keep strategic plans from being perceived as "same old, same old," like the time horizon of long-term plans, like how to optimize ownership and accountability at the right levels.  Reflecting on the answers will take several blogs!

Some organizations do carry their strategic plans over from year to year.  If it's working, that's great.  But the question is how do you know it's working, and that gets to metrics.

A strategy without a dashboard is almost useless - and creating the dashboard is where the first hard work comes in.  There should only be a few metrics, since humans can focus on a few things, especially for a prolonged period of time.

And if there's only a few, then they'd better be good ones!

What makes good dashboard metrics? 

They're forward-looking.  On sales, for instance, you need good information about what's in the funnel (or pipeline) several months out, with appropriately cautious metrics that there won't be many surprises.

They're timely.  On customer satisfaction or employee experience, an annual survey is too long to wait to find out if there's a problem!  Better to have smaller samplings more often to keep a finger on the pulse so that corrections can be made when needed.

They measure what matters, rather than what's easy or traditional to measure.  When a call center realized what pressuring to reduce time-on-call meant for customer satisfaction (strong negative correlation), they switched to randomly sampling customer satisfaction, without pressuring agents to get off the phone quickly.

They're trustworthy.  The old adage of "garbage in, garbage out" is as true today as when the phrase was first used in the 70's - you can't make good decisions on bad data.  If a key data source is compromised, leaders need to clean it up or find other data to inform the same objective.

They're strategically consistent.  One person from Minnesota Manufacturing Group told the story of an organization he knew that measured salespeople on gross revenue, and production on cost-savings.  Can you guess what these competing metrics created?

Next strategy blog - how to avoid "same old same old"

Strategy - Who cares? What's it worth?

Strategy has gone through ups and downs, ins and outs historically.  From the graduate school course I've taught on it, it has cycled through periods where companies spend massive resources gathering data, reporting up in endless detail, and creating strategy, all the way to periods where some companies rejected the idea of having one at all (we seem to be closer to that, now).


An article in Harvard Business Review said "It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else" (Collis & Ruskad, 2008, p. 83).

So what?  What's lost if most people in the organization couldn't say what the strategy is?

A couple of important things - coherent decision-making at the right levels, and alignment.

Coherent decision-making means that everyone who might have to make a decision knows the direction and priorities.  That reduces waste of precious resources (like the leader's time!), and costly errors.

Alignment is a subtler benefit.  When everyone knows where the organization's heading, and why, and that direction and strategy mean something to the people in the organization who have to make it happen, better engagement happens.  The work means something, so people stick around, give more of themselves, care about quality and customers, and work together to achieve more.

Employee engagement is at an all-time low.  Some estimate that most people would leave their current jobs if they could find another one tomorrow.  What sort of performance does that mean?

So, if an organization doesn't have a strategy, or its members could not say what it is, where do you start?

That's in next week's blog...

Nice article on bad strategy

McKenzie Quarterly's June issue has a good article on bad strategy that got me thinking about the "7 Strategy Mistakes" I'm presenting in late July. Some of what the article lists is also what's in the presentation.

The article lists the hallmarks of bad strategy are failure to face the problem, mistaking goals for strategy, bad objectives (fuzzy or "blue sky"), and fluff.

The article attributes the abundance of bad strategy to inability to decide, and to following a template-style strategy.

It's on the last point, his assertion that templating the vision, mission, values, and strategies always leads to empty rhetoric and fluff, that I believe the author is mistaken.

Of course, using a template poorly can go wrong .  If an organization found a strategy self-help website and approached it as if playing "buzzword Mad-Libs" they'll get meaningless fluff.  In the worst cases I've seen, they may work on it so hard and so long that they start to think it's beautiful -- often to the amusement of others.  What a waste when it goes astray like that!

But when leaders develop strategy well, they ...

• answer the hard questions in an honest SWOT,
• do the hard homework of figuring out who's the real competition and how to beat them, 
• do a cold-eyed, realistic assessment of the changing market
• make a coherent plan for using talent, finance, resources...

AND when they also really revisit the Why are we here? questions of vision, mission, and values (sometimes with help, when that's not a skill that the leaders start with) - then they can also engage the hearts, minds, and full talents of the organization.

Because the most brilliantly conceived competitive strategy won't make much difference if the organization isn't aware, aligned, accountable, and committed to it.

The article from McKenzie Quarter can be found at http://www.mckinseyquarterly.com/The_perils_of_bad_strategy_2826

A quirky sort of strategy research

For several years, I’ve been teaching courses on Strategy in a graduate business school.  Over a hundred learners have all done essentially the same project:  Based on the readings and research, evaluate your own organization’s strategy. What needs changing, and why? What are the consequences and opportunities?

The learners are all working leaders, often senior managers in some significantly large organizations; they roll their sleeves up and get it done every day. 

So over the years, I’ve started to see some of the same patterns again and again.  When things go badly wrong with strategy, they seem to follow one (or more) of a few specific patterns.

I’m also part of two different networks of consultancies, with Resource Associates (about 300 nationally) and with Association of Independent Business Consultants (over 1000 globally).  In “members only” discussions, I’ve floated these patterns of mistakes, asking if others have seen these – and they have.

In my consulting practice, addressing strategy with clients, some of these same patterns have to be overcome. 

When working for / with some well-known organizations over the last 15+ years, the same patterns were there, too.

So between direct, hands-on experience, polling other consultants, teaching, these patterns of costly mistakes keep popping up.

These patterns have predictable outcomes in how an organization operates, competes, and adapts.  Those outcomes can be very, very costly.   And some fairly simple (not easy, just simple) guidelines can keep organizations clear of these errors.  (These are forming into a "white paper" to be published this summer).

Next week – What is it about strategy that can go so badly? 

"Strategy is dead" RIP, and long live AGILE strategy!

Last week, the Wall St. Journal featured an article saying “Strategic Plans Lose Favor” with larger companies (read).

The article reports that companies like Home Depot, Spartan Motors, and (surprisingly!) Accenture think “Strategy, as we knew it, is dead.”

I say “Rest in peace!” -- for the sort of strategic planning that Accenture has specialized in, and that most larger companies have practiced.

Strategic planning can be, and has been, a massively analytical undertaking. Large consulting firms, like Accenture, can spend months of effort and hundreds of thousands of dollars developing an exquisitely detailed strategic plan based on massive analysis. Sometimes they’ll deliver it in nice leather binders so it looks great on the executives’ bookshelves.

In an economy with lots of surprises, such strategic plans can be obsolete before they’re printed.

One manufacturing company spent months developing a plan to achieve ambitious growth over a 3-year period. Within the first 2 quarters, sales dried up and they went into survival mode. As for the strategic plan? “Well, we haven’t looked at it in quite a while.”

So does that mean that strategic planning is dead, killed by the accelerating pace of change?

By no means! But the analytical behemoths may go extinct, while more agile approaches will flourish.

To be useful in turbulent and difficult times, strategic plans need to be flexible and adaptive, open to rapid learning from the environment.

If a strategic plan is not agile, it’s dead, worthless, money very poorly spent for “SPOTS” (Strategic Plan On The Shelf).

So how can a strategic plan be agile? See my next blog.

How to map to the future

Once your future’s envisioned, the harder work begins. Envisioning the future state as powerfully, vividly, viscerally as possible is creative, inspiring fun. (If it’s not, you’re not doing it right!)

This step’s much harder, and comes with a tide of hard questions. The first and hardest is, where are you now, really?

To get to that envisioned, inspiring future, you need a cold hard look at exactly what your present reality is.

That assessment includes (but, as a lawyer would say, “…is not limited to…”) –

• What’s your product and service mix? What do you do now to make enough money to pay the bills?

• What’s your brand, and how’s it doing in the marketplace?

• What are your financial resources and liabilities?

• What’s your current inventory, equipment, licenses, productive capacity…?

• What skills, talents, gifts does your staff currently have – and use?

• How well do they understand how their current roles fit the current reality? How engaged are they?

• What is your competition, and how’s the contest? When they win, how do they win?

With a little imagination, these actually apply to individuals as well as to organizations.

They’re hard questions that need honest answers, and these take a little time and wrestling to realistically assess.

But until you do, you can’t go on – because you can’t build a useful map based on any delusions. You have to know where you are, first, before you set your course to your future.

Next blog post – How to get there, from here...

How can you create your future?

Previous entry left with “Plan your future to create it. Envision the future you want, map how to get there, set goals and achieve them.”

It’s not really as easy as that sounds. If it were, everybody would do it, all the time. As is, very few do. Both organizations and individuals are more frequently reactive than planful.

But those that are actively engaged in creating their future are more successful and satisfied than the rest.

Step 1 is to envision the future you want.

When operating reactively, under stress, just coping, that can be a great challenge.

It requires a decision to put the present “on hold” for short period, to disconnect from the stress, to recognize that the all-consuming crises will have to wait a bit.

The important work of envisioning the future has to take priority over the urgent, if only for a little while.

Is "a little while" all this takes?!?

Well, that depends – on how many people need to be involved. When an individual creates her own vision of the future, is can be pretty quick, with guidance and attention.

When a small organization envisions its future, those various views need to be reconciled to a meaningful consensus. That takes longer, but still can be achieved in a morning.

When a larger organization does this, more people need to be involved and engaged, and it becomes an ongoing process. The senior leadership creates the vision, and then needs to engage the rest of the organization. While more time on the calendar will pass, it’s still just a very few hours at a time, spread over several weeks.

Is it worth the time and effort?

When you consider that the alternative is staying reactive, and what that costs, it certainly is.

5 problems with reactive mode

“Failing to plan is planning to fail.” We all know, intuitively, that if we don’t make and follow some sort of plan, we get stuck in a reactive mode.

Operating reactively has five specific disadvantages or risks.

1) Progress is unknown. If we don’t know where we’re going, how would we know if we’re getting closer, or farther away?

2) Satisfaction is elusive. Absent knowledge of progress, the best that can be said of a day might be “Nothing went haywire that we couldn’t fix!” While that can be an expression of relief, it’s different from satisfaction.

3) Decision quality is at risk. Without the context and guidance of a known strategy or goal, there’s no way to be sure we make right decisions. We may guess right most of the time, but it’s riskier.

4) Attention is scattered. By necessity, we focus on the urgent – and that may not be what’s most important. Operating without plans or goals leads to more - and more varied - things becoming urgent, until we’re overwhelmed and barely coping.

5) Stress levels rise. Productivity in organizations is at a very high level, as members cope with a long season of “do more, with less” as the guiding principal. When members leave, survivors take on as much of their jobs as can’t be left undone. But how long is that sustainable?

So, what to do?

Plan your future to create it. Envision the future you want, map how to get there, set goals and achieve them.

Is it that simple?

See my next blog for that.

First Blog post - on radio about strategy and engagement

On Wednesday, November 4, I'll be on the Peter McClellan radio show from 5-6 PM on AM 1570, streaming online at business1570.com.

Being there, and posting this, and cross referencing it in Twitter and Facebook, is my foray into the new world of social media marketing.

I've held back from doing this for a while, with the nagging question in my mind "Does the world really need another blog?"

But I've come to believe that there are a few things that are well worth talking about, putting out there for public dialog and interaction, holding up for examination from a critical and maybe unique perspective.

So tomorrow what Peter and I will be talking about will be getting ready for the recovery with strategic planning and alignment. There will be other topics, including sales force development, employee engagement, assessment, and (following the Scottish theme of the show) haggis...

The last season in the economy has been hard on a lot of companies, large and small. Some have shed employees to save costs, some have retrenched, some have gone under; nearly all have struggled.

There's reason for hope - the news today reports some increases in manufacturing, and estimates of when the recovery will start to pick up get closer and closer.

At some point in the future (hopefully the near future), demand for the products and services will start to pick up. The pace of business will accelerate as the economy rebounds.

But there's a real risk at this moment, I think - one that reminds me of those old "Road Runner" cartoons where Wile E. Coyote's gone over the cliff, still spinning his legs, not falling... until he looks down.

For some companies, that have gone through layoffs - with the resulting burnout and changed culture among the "survivors" - there's a potential crisis of confidence among the best performers. If they are not engaged, if they don't know why they're coming to work in the morning, or what difference their own job makes in taking the company where they want to work toward where it needs to go.

People need to know why they come to work - beyond just collecting a paycheck and doing what's required.

They need to understand where the organization is going, feel a part of a worthy endeavor, and see the connection between their contribution of talent and effort and organizational goals that are worth it.

If the strategy hasn't changed in several years, or if it's unknown, or disbelieved, or clearly not working, people won't buy into it, and they won't give their best. Having no strategy, or one that doesn't fit reality, leads to cynicism and lack of faith.

And burnout, cynicism, skepticism about the organization's future may have a very bad (and not widely expected) impact: The best people in the organization will start looking for other work exactly when they're needed most.

What if, instead, organizations can muster the wisdom and focus to re-engage in a systematic strategic planning process? What if it's clear to all that the leadership is planning to take the organization in directions that its people can believe in? What if they take the strategy throughout the organization, so that everybody knows where the organization's going, and wants to go along?

Maybe that will be a key difference between the companies that are able to step up to the coming recovery, with their people engaged and giving their best, and those that get surprised by the loss of key talent at the moment they're needed most.