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Thursday, September 3, 2015

Broken Linkages: Are you SURE you are Executing Strategy?

By: Gail Stout Perry

I recently had a conversation with an organization’s board member who said, “I’m so frustrated.  We have a balanced scorecard but I don’t see how the things the management team is measuring or executing are linked to our strategy.  I don’t see the connections.  Our balanced scorecard feels operational.”  He was correct.  Even with my practiced eye, I, too struggled to see clear linkages to strategy.  Then I fielded a confidential call from the management team at the same organization who expressed their own frustration that their board members “just didn’t get it.” And as these conversations cycled, the board members became even more exasperated that there was no evidence that the organization was actually executing its strategy.

So, what’s the diagnosis?  In two words:  Broken Linkages.

While there are multiple approaches to developing a balanced scorecard, most balanced scorecard practitioners will agree that balanced scorecards connect strategic planning with strategy execution.   

But too often, the critical linkages between strategy and execution are broken. 

Why?  A primary cause for broken linkages is when one team creates the organization’s strategic plan (a Board or an executive team) and then a different team (a management team or task force) is expected to “convert” the strategic plan to a balanced scorecard.  This piecemeal, “throw it over the fence,” approach to scorecard-building has three fatal flaws. 

  1. The strategy itself is usually incompatible for use with a balanced scorecard.  Typical strategic planning frameworks rarely contain clear and purposeful linkages all the way from high level vision, mission, and competitive positioning down through focus areas (strategic themes) and strategic objectives (which are the critical linkages used by balanced scorecard to connect strategy with execution).  
  2. The strategy is usually incomplete.  More likely than not, there was no consideration during strategy formulation of the four interdependent dimensions of strategic drivers and results (e.g. balanced scorecard perspectives) which usually results in a focus on results with no consideration of key drivers.  Key drivers are critical strategic choices and the crux of ensuring an executable strategy.
  3. The strategy gets lost in translation.  The balanced scorecard team and/or their consultant find themselves sifting through a strategy document to try and extrapolate what the driver and result objectives should be, what perspectives they belong in, and if/how the objectives are interrelated.  These are the basic building blocks for a balanced scorecard.  This approach can lead to erroneous assumptions about strategy, or even worse, the team may just abandon the effort to interpret the strategy and, instead, fall back on obvious operational objectives needed to ensure that the organization functions exactly as it always has.  The resultant operational objectives may or may not be aligned with the organization’s desired FUTURE – its desired strategic direction or its shift in competitive positioning.  
In other words, they end up with a scorecard similar to the one the board member was complaining about…one that simply measures normal operational execution and has no connection to strategy.  

We’ve created a short webinar to illustrate how the linkages should work, from high level strategy through the elements of a balanced scorecard, linking strategy to execution.  

If your linkages are broken, contact us about a strategic health assessment.  Your current strategic planning & management materials and process will be assessed and compared to best practice and a gap assessment will be delivered to show you where the linkages are broken and what needs to be done to repair them. 
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Gail Stout Perry

Gail Stout PerryGail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

Other posts by Gail Stout Perry

Contact author Full biography

Full biography

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations. She served as a Senior Associate with BSI from 2008 until 2016.

Gail became interested in operations, efficiency and patterns as a toddler struggling to participate in her mother’s kitchen.

“I tried to explain to my mother how to better organize her kitchen. She was wasting motion plus the kitchen wasn’t user friendly to me, its newest user who could not reach the things I needed to be self-sufficient—so, she had to help me. Mom could have saved herself work if she’d accepted my recommendations.”

During her career in aerospace and defense, Gail developed deep experience in operations, finance/accounting, information technology, human resources, purchasing/inventory management, manufacturing, engineering design, and sales and marketing. Today she consults with Fortune 500 companies, large military commands, government agencies and nonprofits.

“My diverse experience helps me be a better consultant by bringing new ideas and solutions to my clients when I see a connection or pattern to something I’ve experienced or observed in another industry/sector. There are common denominators, operations and issues across organizations. Just last month, I heard the same operational issue from a Fortune 150 and a city municipality—two organizations that couldn’t be more different.”

With clients in diverse sectors all over the globe, Gail’s adept at quickly understanding business models and cultural norms, and creating a positive impact. Prior to joining the Institute, Gail owned and operated Perry Consulting LLC, a North Texas firm focused on providing performance improvement consulting services to the nonprofit sector. It was in this role that she first realized the transformational power of an integrated strategic balanced scorecard while working with her client, Susan G. Komen for the Cure, to improve its strategic planning, performance management, budgeting, and employee alignment processes.

“I’ve learned how to quickly absorb information and get my head around an organization, what it does, how it does it, its key processes and challenges, and learn its unique culture and language. And I have a way of explaining things that makes the seemingly complex simple.”

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