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DAVE NORTON IN SEPTEMBER – MAKING STRATEGY A CORE STATE OF THE ART COMPETENCE

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create value                                                                  Dave Norton says,  

“Behind every story of shareholder value, there is another story of value creation. That is the real story of strategy execution.”

Having had the privilege today to proof read the delegate materials for the upcoming Dave Norton Progress Conference on the 11th September, I cannot resist offering a little sneak preview of the 100 plus slides he has prepared for his South African audience.

In essence, he says, strategy must be a core competence and his presentation shows you precisely what you need to accomplish to make it a core state of the art competence. You can be assured of rich content with case studies and real life applications relevant to both the Private and Public sectors. His content flows seamlessly, offering delegates a deliberate journey through which they can contextualise their strategy execution efforts. And behind every success he shares with you he also tells the story of how the value was created.

THE STRATEGY MANAGEMENT VACUUM

First and foremost he will show how management systems have STILL not changed to keep up with the way the world has changed.  This is what he calls a Strategy Management Vacuum. He goes on to reveal his research into why strategies continue to fail and offer solutions to overcome this sadly, prevalent reality.

MAKING INTANGIBLE TANGIBLE

I was fascinated by his take on intangible assets and how describing your strategy begins by understanding the value the intangibles offer. He cites Apple, General Electric, IBM and others and will illustrate how Tom Stewart’s thinking in respect of how knowledge that exists in an organisation creates differential advantage. Dave remarks, “A good strategy focusses on the processes and people that have greatest impact on customer satisfaction.”

CLOSING THE STRATEGIC PERFORMANCE GAP WITH CAUSE AND EFFECT LOGIC

Dave has prepared a prolific set of strategy maps, scorecards and themes that have been applied within leading organisations. He asserts that your strategic theme is critical to create change and value.

“Intangible assets are bundled”, he says. “One initiative is not enough to execute strategy. You require a portfolio of several initiatives that are interdependent and cannot be treated on a stand- alone basis.” And again, he provides real management tools to show you how to include specific ways to define your strategic architecture, create robust strategy maps and tailor relevant strategy themes. In particular he provides delegates with specific Balanced Scorecards to show how they consistently fill the strategy management vacuum

LEADERSHIP IMPERATIVES FOR EFFECTIVE STRATEGY EXECUTION

Dave also says, “It is not a simple process for a CEO to mobilize transformation.” But his content goes on to provide tried and tested leadership essentials for certain success. He shows what is required in terms of left and right brain thinking to build your effective strategy management systems and why leadership issues are most often the dominant barrier to effective strategy execution. Just one barrier cited is how politics, in 89% of cases, is the major factor that prohibits the successful execution of strategy. Enter Dave’s right brain change management techniques and priorities, with ways to break down silos, get politics out of the way and cascade the strategy and scorecards to all key executives, business units and departments with appropriate accountability.

What follows on from there are the left brain change management tools that he has observed and that have been shown to achieve desired results.

MAKING STRATEGY EVERYONE’S JOB

Dave illustrates how Hilton Hotels did just this by linking their Balanced Scorecard to education, personal goals, incentive compensation and communication. Looking forward to how he will unpack this for us on the day.

SETTING TARGETS & FUNDING THE STRATEGY

Be prepared for prolific content and techniques to define your measures and targets and determine adequate funding.

SUCCESSFUL HUMAN CAPITAL DEVELOPMENT ATTRIBUTES

An annual survey of CEO’s Presidents and Chairman showed that Human Capital Development is the most important issue facing senior management. “People driven strategies counter slow markets and economic conditions. The Balanced Scorecard Hall of Fame shows that successful strategy execution begins with Human Capital Development”, he says. And then goes on to share the results of Public & Private sector results whilst showing you which are the key Human Capital Value Multipliers. He will also show us how to develop competency profiles for each essential strategic job family and in particular how to determine the gaps between individual and group level.

THE CHERRY ON THE TOP: BUILDING YOUR EFFECTIVE OFFICE OF STRATEGY MANAGEMENT: THE EVOLUTIONARY PROCESS

As he insists that strategy is a core competence and that managing strategy is a whole new ball game very different to managing functions, he will show you why new organisation approaches are needed to facilitate cross-functional alignment. He defines the responsibilities of the office of strategy management and suggests the best practices in terms of conducting your meetings and reviews to keep your strategy on course including frequency and structure.

This blog barely scratches the surface or even does justice to what Dave Norton has in store for delegates on the 11th September, but hopefully provides you with some ideas to provoke and challenge your thinking in respect of your strategy execution efforts.

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Dr David Norton is the co-creator of the Balanced Scorecard and leading global practitioner in applying the Balanced Scorecard in both the Private and Public Sector. Together with Professor Robert Kaplan, he has been acclaimed by Harvard Business Review for his significant contribution to the management profession in the past 75 years. More recently Thinkers 50 have ranked them in their Hall of Fame alongside Tom Peters, Kenichi Ohmae, Warren Bennis, Howard Gardner, Henry Mintzberg, Charles Handy, Philip Kotler and Ikujiro Nonaka for their mammoth contribution to business management and leadership.

On the 11th September 2014 Dr Norton will present a full day seminar in Johannesburg on EXECUTING STRATEGY IN A NEW ECONOMY – Balanced Scorecard Essentials.

WHY STRATEGIES FAIL? DEVISING A STRATEGY EXECUTION SYSTEM FOR CERTAIN SUCCESS

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“If you can’t measure it, you can’t manage it. If you can’t manage it, you can’t improve it.”
Kaplan and Norton (and many others)

According to Professor Robert Kaplan and Dr Dave Norton, companies that effectively execute their strategy evidence an impressive 50-150% increase in value. Those that don’t continue to battle the odds of success.

The People Barrier

The People Barrier

The desktop research around strategy execution speaks volumes:
• Fortune Magazine cites that “….less than 10% of strategies effectively formulated are effectively executed”
• Harvard Business Review states that “…the prize for closing the strategy- performance gap is huge : increasing performance by at least 50% for most organisations”
• Bossidy & Charan in their book “Execution” cite that “…in the majority of cases – 70% – of the problem isn’t bad strategy [thinking] but bad execution [action]”
• Chris Zook in his book “Profit from the Core” states that “….more than 2/3 of companies had targets that exceeded 9% real growth; yet less than 1 company in 10 achieved this level of profitable growth.”
What desktop research is showing us is that companies that fail to forecast and target success, will generally miss the target. In plain English, the same adage holds true “what gets measured gets done”. And yet despite innumerate measures, companies STILL fail to hit their targets and achieve strategic goals and objectives – and the question “why?” has to be hot on the tail of this statement.

REAL RESEARCH TO UNDERSTAND WHY?

Why is successful strategy execution so difficult to achieve?

Kaplan and Norton have dedicated a lifetime of study to understanding the field of strategy and execution. Why do some companies succeed while others fail even when both have seemingly impressive leadership teams? Is it the thinking, or is it the action? Is it really around metrics or is strategy driven by culture and behaviour change?
The Balanced Scorecard didn’t just ‘appear’ in the halls of Harvard. It evolved as one of the best ways to combat the Four Barriers to Strategy Execution. Kaplan and Norton’s research has identified four key themes, or barriers, that appear to interfere with successful strategy implemenation. Their research also supports that a startling 80-90% of companies FAIL when it comes to strategy execution. Here’s what they found:
1. The People Barrier: only 25 % of managers have incentives directly linked to strategy implementation.
2. The Vision Barrier: only 5% of the work-force actually understand the strategy the organisation intends to execute.
3. The Management Barrier: a staggering 85 % of executive teams spend less than an hour per month discussing strategy.
4. The Resource Barrier: alarmingly more than 60% of organisations fail to link their strategy to a live budget.

The ongoing frustration of wanting to achieve something great often outstrips the company’s ability to implement their thinking. The results can be devastating and leaders can quickly lose credibility having promised and communicated one thing, yet fail to implement on the other hand. While the perception of leadership integrity remains challenged, its important to make clear that often the thinking is in tact, but it’s the execution that is poor.

WHAT TO DO?

The temptation for any business is to try to ‘nail’ all four barriers in one go. That alone may be a strategy, but will probably result in continuing poor execution. Perhaps a better strategy is to target one barrier at a time, and over time, with the goal of eliminating them totally. As each barrier becomes a strategy in and of itself, over time, each barrier will be diluted if not eliminated completely. And, when that happens, the strategic thinking has a chance to surface over the traditional mindsets and restrictions that inhibit success.

THE 10-20% EXECEPTION VS THE 80-90% NORM

Those organisations that enjoy an impressive 50 – 150% increase in value have a formal process for strategy execution. Through this lens they have commonly identified what we can today call the “conventional wisdom” of stratgy execution:
1.FINANCIAL: They recognise that financial indicators are lag indicators and only measure the tangible outcomes of the strategy.
2.CUSTOMER: They revere the customer value proposition and define them as their source of value.
3.PROCESSES: They acknowledge that strategic processes create value for customers and shareholders.
4.LEARNING & GROWTH: They know that aligned intangible assets drive improvement in the strategic process.

ENTER, KAPLAN & NORTON’S 6 STAGE CLOSED LOOP MANAGEMENT SYSTEM FOR SUCCESSFUL EXECUTION

This is how Kaplan and Norton deliberately ensure you overcome the Four Barriers to successful strategy execution.
1. DEVELOP THE STRATEGY: Formulate your mission, vision & values – all the fundamentals. Keep in mind Google’s mission – “To organise the world’s information and make it universally accessible and useful.” And that of Bill Gates: “To put a PC on every person’s desk.’

2. TRANSLATE THE STRATEGY: This means having to create strategy maps and themes with measures and targets, assigning portfolios and providing funding to ensure that you overcome the Vision Barrier.

3. ALIGN THE ORGANISATION: This includes all business units, support units and employees. Ensure you overcome the People Barrier through initiatives that support strategy execution. Never under-estimate the investment required and the power of appropriate change management and communication in strategy execution.

4. PLAN THE OPERATIONS – Devise resource and capacity plans as well as key process improvements that will be required to make sure the Resource Barrier does not hinder the success of your strategy.

BOTTOM LINE : EXECUTE, MONITOR & LEARN

Make sure you properly review your strategy and operations to overcome the management barrier. TEST and review the profitability, devise hypotheses in terms of cause and effect and be alert to emerging strategies, new opportunities and risks. ADAPT where necessary.
This strategy execution system coupled with leaders who affirm their fundamental goals and purpose with quantifiable outcomes, Norton and Kaplan have continuously shown how much value you can derive by implementing strategy maps and balanced scorecards. This is why they have been acknowledged by Harvard Business Review for creating one of the most significant management tools in the past 75 years.
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Dr David Norton is the co-creator of the Balanced Scorecard and leading global practitioner in applying the Balanced Scorecard in both the Private and Public Sector. Together with Professor Robert Kaplan, he has been acclaimed by Harvard Business Review for his significant contribution to the management profession in the past 75 years. More recently Thinkers 50 have ranked them in their Hall of Fame alongside Tom Peters, Kenichi Ohmae, Warren Bennis, Howard Gardner, Henry Mintzberg, Charles Handy, Philip Kotler and Ikujiro Nonaka for their mammoth contribution to business management and leadership.

On the 11th September 2014 Dr Norton will present a full day seminar in Johannesburg on EXECUTING STRATEGY IN A NEW ECONOMY – Balanced Scorecard Essentials.

Public Sector Strategy Execution Essentials

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Applying the Balanced Scorecard to deliver value for a “public sector version” of “shareholder value”.   

Public Sector

Radical Transformation

RADICAL TRANSFORMATION  

In Kaplan and Norton’s book they discuss triggers of a transformational strategy. This is what Kaplan and Norton say about transformational strategy, in their latest book The Execution Premium. “The trigger of a transformational strategy can be negative, such as a burning platform of a failed strategy or the appointment of new leaders.  New leaders are frequently summoned to deal with burning platforms, but leadership changes have become the norm in all organisations, including the public sector, where new leaders are appointed after elections.”

So what now for the South African public sector after the 5th democratic election? In President Zuma’s inauguration speech he has promised radical transformation. This is what he said. “we will move into industrialisation and strengthening the role of the state of the economy….the government would concentrate on better execution of land restitution and job employment, especially for the youth… to achieve this the performance of the state has to improve.. we have to eradicate corruption and inefficiencies in the public service…. And we are determined to succeed.”

This is what Dr Norton says

The change of administration is an ideal time to introduce a Balanced Scorecard (BSC). The new leadership has a new vision and new strategies.  However, research shows that directions are not enough to create results.  90% of organizations fail to execute their strategies.  The issue for a new administration is not only a new strategy.  It’s about executing that new strategy!

The BSC requires an organization to translate that strategy into a set of related objectives, measures, targets and initiatives.  The “strategy map” can then be cascaded to all departments and all levels of the organization.  It can be communicated to employees and citizens and can be used as a basis for budgeting and human capital development.

The change of administration is the best of times.  Citizens are excited about the new directions but are cynical about the likelihood for success.  The BSC provides a way to “put your money where your vision is by creating a Strategy Focused Organization that brings together the energies of the citizens on a set of shared objectives, measures and results?

THE BRAZILIAN CNI STRATEGIC VISION AND PLAN TO REVERSE DECADES OF POOR PERFORMANCE

What can we learn from Kaplan and Nortons’ Strategy Execution Model and Balanced Scorecard used by the Brazilian Confederation of National Industries to achieve their bold economic plans for growth.

The Confederation of Local Industries (CNI) is an association of private sector organisations seeking to improve the competitiveness of Brazilian Industry. A member of their board suggested that they use the Balanced Scorecard to push an agenda for growth. They wanted to reverse the continued poor performance of the Brazilian economy over the past decades.

What transpired was one of the most innovative and complex applications of theme-based strategy maps. CNI recognised that implementing the national strategy would require the co-operation of a broader audience. They quickly realised they would need to change their structure to deliver on the strategy map objective to build stronger coalitions with various stakeholders such as government ministers and entrepreneurs. What they also acknowledged was that their strategy map goals were beyond their own control, but were determined to do their best. Their assertion is that the strategy map process will certainly increase the probability of implementation with better social and economic outcomes.

ADDRESSING AN UNFAVOURABLE CLIMATE FOR DOING BUSINESS IN BRAZIL

From the outset CNI acknowledged that a key to generate sustained economic growth was to address the climate which was unfavourable to investments, discouraged business persons and created obstacles for generating jobs to finance social expenses and services for society. As recently as last week it is still reported that the Brazilian government continues to make it difficult for businesses to operate within the onerous constraints.

CNI’S VISION FOR A PUBLIC SECTOR VERSION OF “SHAREHOLDER VALUE”.

This was about 5 tangible results or high level objectives for the public sector version of shareholder value.

  1. Economic growth reaching annual levels of 5,5% by 2010 and 7 % by 2015.
  2. More jobs and income for the citizens.
  3. An increase in the quality of life.
  4. A decrease in social and regional inequalities.
  5. Expansion of businesses that generate sustainable value.

How did they measure up….In 2010, the financial world fell in love with Brazil with 7,5% increase in output that year. Tens of millions of people were entering the middle class and in 2013, they raked in $ 65 billion US in direct foreign investment, 4th highest in the world, according to the United Nations Conference on Trade & Development. But behind this all was what CNI largely anticipated and that was the bureaucratic headache of doing business in Brazil, something they call custo Brazil  – a combination of the longer time and higher costs that come in doing business there. This is still a largely prevailing problem inhibiting growth. Despite all this foreign investors are seeing the value of doing business in Brazil and recognise they have to be there.

MEASURING KEY BUSINESS OUTCOMES TO ACHIEVE DESIRED RESULTS – PRIVATE SECTOR CONTRIBUTION

With their belief that the private sector was the key to sustained economic growth and for Brazil to achieve the desired results, their strategy map indicated a clear market positioning for Brazilian companies, measured against several business outcomes.

  1. Competitive and quality products.
  2. Innovative products and services.
  3. Products and services with higher aggregate value.
  4. Recognition of Brazilian brands.
  5. Accelerated growth of industrial output.
  6. Increased participation by Brazil growth in trade.

CNI DEFINED THE 5 DRIVERS TO ACHIEVE THEIR STRATEGY

  1. Expansion of the industrial base.
  2. International insertion.
  3. Management & productivity.
  4. Innovation,
  5. Social & Environmental responsibility.

CNI ACNOWLEDGED THE SET OF ENABLERS TO LEVERAGE ECONOMIC GROWTH

  1. Infrastructure
  2. Resource availability
  3. Entrepreneurial leadership
  4. Institutional & regulatory environment
  5. Education & health

NOW, THIS IS WHERE THE BALANCE COMES IN…

According to Dave Norton, this overall architecture by itself was not enough to achieve execution. What was required was another level of detail. This was a set of strategic objectives for each of their themes, in particular, a measure to see the cause and effect relations between them. This logic clearly defines the set of activities and their interrelationships required to execute the theme.

INNOVATION THEME – CAUSE & EFFECT CASE IN POINT

By example, The CNI Innovation theme was designed to create country- level results including, economic growth, more jobs and income and expansion of businesses to generate value with products and services with a higher aggregate value. These outcomes also need to be linked to the enablers including innovation programs and learning & development enablers.

This succinct description of their Economic Development Strategy enabled the leaders for the first time, to clearly communicate their desired direction for the country and the specific requirements to achieve results from their strategy execution process.

SOURCE | The Execution Premium – Robert S Kaplan and David P Norton 2008

In 2014, BRG & GIBS will present Dave Norton – Live and in Person: Executing Strategy: Balanced Scorecard Essentials. The 2014 programme includes the latest findings and experiences in strategy, measurement, leadership, human capital and cross functional priorities and solutions.

Dr Dave Norton has most recently been honoured by Thinkers 50 in their Hall of Fame sharing this acclaim with Tom Peters, Warren Bennis, Howard Gardner, Charles Handy, Philip Kotler, Henry Mintzberg, Kenichi Omae, Ikujiro Nonaka and his colleague Professor Kaplan, for their mammoth contribution to business management and leadership. Harvard Business Review recognised the Balanced Scorecard as one of the most influential management ideas in the past 75 years.

 

USING THE BALANCED SCORECARD TO DEFINE THE BIG DATA THAT WILL OFFER THE BIGGEST IMPACT ON YOUR STRATEGY AND COMPETITIVE ADVANTAGE

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The Balanced Scorecard can drive your big data strategy to overcome data analysis paralysis; Dr Dave Norton and Professor Dave Ulrich affirm that big data is of no use unless it offers leaders insights relevant to their strategy.

In 2012, Big Data made the cut as the new form of economic currency. The world’s brightest and best thought leaders in Davos acknowledged big data as an economic agent as strong as gold, oil or money itself.

Gartner defines big data as follows; “high volume, velocity and variety information assets that demand cost effective, innovative forms of information process for enhanced insight and decision making.

So with the prediction that nearly 3 billion people will be online pushing the data created and shared to nearly 8 “zettabytes”, how do companies decide which data will offer them the insights and choices to determine their strategy and leverage their competitive advantage?

So what does this mean for leaders in business?

Although there is strong argument that algorithms will rule over instinct Dr Dave Norton, renowned for his balanced approach to measure the effectiveness of business methodology, strongly urges a combination of left and right brain thinking where leaders blend their intuitive insights with structured disciplined methodologies including using big data to test the relationships of their hypotheses and assess how this will enable transformational change. On his recent visit to South Africa, Professor Dave Ulrich recognised the value of information as a fundamental capability, but highlighted further that this capability is less about the information and more about insight and impact. He says leaders need to collect data to make informed choices. This is key to overcoming “data analysis paralysis”.

Dr Dave Norton and Professor Dave Ulrich concur that the data mined must offer relevant insights. Bill Schmarzo, the moniker “Dean of Big Data” and Author of Big Data: Understanding How Data Powers Big Business, suggests that your Balanced Scorecard could define your navigation choices in terms of which information is relevant to your strategy.

To illustrate this, he aligned his big data requirements with his Balanced Scorecard key metrics. This is his big data determinant on one key metric.

Metric: Secure 87.M in New Accounts

Big Data Impact Examples:

  1. Improve forecasting model predictability by modelling each individual deal (and components of the deal) taking into consideration sales team selling capacity (number and strength of deals in their forecast), sales team behavioural tendencies (selling products vs solutions), industry product buying trends and sales team track record with similar new name accounts
  2. Leverage text mining capabilities to analyse the call notes captured by the account development organisation to assess strength of industry solution opportunity; benchmark every NNA opportunity against similar successful and unsuccessful NNA engagements.
  3. Measure the effectiveness of sales and marketing campaigns to drive new NNA opportunities into the pipeline
  4. Flag any change in the sales team comments that might indicate a change in deal status.

SOURCE: Big Data and The Balanced Scorecard Framework | Bill Schmarzo Part 1,11 & 111 December 2013

In 2014, BRG & GIBS will present Dr Dave Norton – Live and in Person: Executing Strategy: Balanced Scorecard Essentials. The 2014 programme includes the latest findings and experiences in strategy, measurement, leadership, human capital and cross functional priorities and solutions.

Dr Dave Norton has most recently been honoured by Thinkers 50 in their Hall of Fame sharing this acclaim with Tom Peters, Warren Bennis, Howard Gardner, Charles Handy, Philip Kotler, Henry Mintzberg, Kenichi Omae, Ikujiro Nonaka and his colleague Professor Kaplan, for their mammoth contribution to business management and leadership. Harvard Business Review recognised the Balanced Scorecard as one of the most influential management ideas in the past 75 years.

HR VALUE STRESS TEST | 16 questions for HR professionals to measure their success.

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February 2014

The HR Value Stress test is designed by Professor Dave Ulrich. It is for everyone in the HR department including organisational design, employee wellness, learning & development, talent management, human capital, recruitment, remuneration, communications, transformation and change professionals. It provides you with a quick snapshot to determine how you deliver value to customers, shareholders and the community.

Why not review this as a team? You can score individually and compare notes to achieve a collaborative consensus on your future HR priorities and at the same time celebrate your accomplishments.

The review is based on Dave’s global research on HR competence and the requirements to deliver HR value. How do you measure up on business context, Outside-in HR, Talent, Leadership & HR practices?

How effectively does our HR work account for the following? 

How effective NOW?  1 = minimal and 5 = a great deal;

Most critical in the future 2 -3 year

1. Outside/in (a): We are good at connecting our HR work with customers.

2. Outside/in (b): We are good at connecting our HR work with investors.

3. Outside/in (c): We are good at connecting our HR work with communities outside our organisation.

4. Business Context: We are good at understanding the social, technological, economic, political, environmental and demographic context of our business.

5. Value: We are good at defining the value created by our HR work.

6. Talent (a): We are good at improving the productivity of our employees through their competence.

7. Talent (b): We are good at improving the productivity of our employees through their commitment.

8. Talent (c): We are good at improving the productivity of our employees through their contribution.

9. Culture/Organisation: We are good at identifying & investing in organisation capabilities required for our future success.

10. Leadership (a): We are good at building leadership depth and breadth through the company with things like bench strength.

11. Leadership (b): We are good at building leadership depth and breadth through the company with quality of management.

12. Leadership (c): We are good at building leadership depth and breadth through the company with things like leadership brand.

13. Restructuring HR departments: We are good at building HR departments so they turn knowledge into client productivity, with clear roles and responsibilities.

14. Re-engineering HR practices: We are good at aligning, integrating and innovating our HR practices in people, performance, communication and work.

15. Upgrading HR professionals: We are good at ensuring that HR professionals have the right competencies to deliver value & build their career.

16. Tracking or measuring progress: We are good at creating HR analytics focussed on the right issues.

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Business Results Group and GIBS will be bringing Dave to South Africa to present his 13 milestones for HR to transcend the way the deliver measurable value to their organisations. In JHB on 27 May and Cape Town on 28 May.

For further information contact Angela on 011 463 9898

Professor Dave Ulrich

Dave has consulted and done research with over half of the Fortune 200. His honours exude a consistent track record of global influence and authority in human resources and business management.  His research is based on collective feedback from over 60 000 line managers and HR professionals on the competencies required to improved business performance.

An accomplished and celebrated educator Dave is sought after the world over to present his findings and educate businesses. He has published over 200 articles and book chapters and over 25 books which he has co-authored with numerous fellow thought leaders.

Follow Dave Ulrich on twitter: @dave_ulrich