Table Of ContentManagement for Professionals
Bernd Heesen
Eff ective
Strategy
Execution
Improving Performance
with Business Intelligence
Second Edition
Management for Professionals
Moreinformationaboutthisseriesat
http://www.springer.com/series/10101
Bernd Heesen
Effective Strategy
Execution
Improving Performance with Business
Intelligence
Second Edition
Prof.Dr.(UniversityofPhoenix)BerndHeesen
PrescientGmbH
Nuremberg,Germany
ISSN2192-8096 ISSN2192-810X (electronic)
ManagementforProfessionals
ISBN978-3-662-47922-3 ISBN978-3-662-47923-0 (eBook)
DOI10.1007/978-3-662-47923-0
LibraryofCongressControlNumber:2015946236
SpringerHeidelbergNewYorkDordrechtLondon
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Preface
Turbulenttimescreateathreatforthesurvivaloforganizationswhilealsooffering
newopportunities.Whydosomanycompaniesfailtoadapt?Howcancompanies
create an environment in which their management receives alerts early enough to
adjust their strategy execution before a business tsunami hits? Which communi-
cation infrastructure should be established to support the required changes in
planning and execution on all affected organizational levels? What kind of IT
infrastructure is needed to make this happen? This book presents many examples
to demonstrate how an improved strategic management approach, leveraging
established management concepts in conjunction with innovative technology
solutions,canleadtoimprovedresults.
Even in non-turbulent times, strategy execution can only be effective if the
strategy is understood by the actors, how else should they be able to support
it. While vision and mission statements are typically nice to read, they rarely
specify in detail what is intended to be accomplished by when and who will be
accountableformakingithappen.Oftenstrategicgoals,e.g.,short-termandlong-
termfinancialobjectives,areconflictingwitheachother;forexample,investments
in research and development may lead to superior new products and revenue in
future but lead to a reduced profit for this fiscal period. Without clearly defined
strategic objectives, management will find itself in dilemmas and will struggle to
make the right strategic decisions. I have been in executive positions myself and
experienced the negative effects this can have on the business. Opportunistic
interests may also interfere with the interests of the organization. This effect can
bemoderatedbyreflectingtheexpectedaddedvalueandpotentialsideeffectswhen
evaluatingtheconsequencesofstrategicdecisions.Iwillintroducetheconceptof
theValueScorecard™,1ascorecardwhichisnotonlybalancedbutfocusesonthe
attainment of maximum value, whatever the ultimate goal may be for an organ-
ization.Valuecanbemeasureddifferentlydependingonthekindoforganization.
Forprofitcompanies,financialmeasureslikerevenuegrowth,earningspershare,or
returnonsalesmightbeused.Governmentorganizationsmightmeasurevaluetobe
the quality of life of their citizens. A nonprofit organization collecting and
1ValueScorecard™istrademarkedbyBerndHeesen/Prescient.
v
vi Preface
distributing donations to people in need, like Aidmatrix (Aidmatrix, 2010), might
countthenumberoffoodservingsormedicalservicesprovidedastheirmeasureof
value to save a maximum number of lives. Improvement of these ultimate goals
typically depends on improvements in supporting processes, which can be
measured as well. Organizations like Aidmatrix (Aidmatrix, 2010) for example
focusonimprovingtheirefficiencyinoperationstohaveminimaloverheadcostso
theyareabletospend96centperdonateddollarontheirhumanitarianprograms.
Understandingthecorrelationsbetweenthesekeyperformanceindicators,howone
affectstheother,cansignificantlyhelptobetterpredicttheimpactofadecisionon
theoverallgoal.Afor-profitorganizationforexamplebenefitsfromunderstanding
towhatextentanimprovementincustomersatisfactionorbrandvalueisexpected
toleadtoincreased sales. TheValueScorecard™providesaframeworktodefine
therelevantelementsofastrategyincludingthedefinitionofmeasurableobjectives
andinitiativesandtodifferentiatebetweenthoseindicatorswhichcanbeimpacted
directly and short-term (leading indicators) or indirectly with a delay (lagging
indicators). An example is the investment in a new quality improvement program
inmanufacturingwhichleadstoanincreaseinmanufacturingcostandthenumber
of recognized errors in production (leading indicators) in the short term. Since
malfunctions are recognized before the product is delivered to the customer, this
leads to fewer customer complaints and returns and an improvement in customer
satisfactionovertime(laggingindicators).Anumberofcasesinthebookwillhelp
you to see how organizations have leveraged this kind of an understanding to
improvetheeffectivenessoftheirstrategyexecution.
Strategies are rarely static since they need to be adjusted to accommodate
changed circumstances. This means that strategy formulation and execution are
continuous, permanent tasks, which impact decisions regarding the allocation of
resources via the budgeting process, establishment of goals via the planning
process, and the execution of the business and initiatives to reach the strategic
goals.Itisamanagementchallengetoalign allorganizationalmemberstopullin
the same direction, toward the strategic objectives. The Strategic Alignment
Process™2 helps managers step by step to focus on the most critical tasks to
accomplish this task. The basic foundation of this process is the knowledge that
managementtimeisscarceanddelegationandempowermentshouldbeleveraged
totheextentpossible.
Management in this sense is not limited to the executive level. Nowadays
business decisions are made on all levels of the organizational hierarchy. Smaller
teams are often used to be more reactive and flexible and business may be
performed by profit centers, business divisions, and business units operating with
muchautarchyandautonomy.Therefore,whenIusethewordmanagementinthis
book,myunderstandingisinclusiveofeveryonewhoisadecisionmakerwithinthe
organization.
2StrategicAlignmentProcess™istrademarkedbyBerndHeesen/Prescient.
Preface vii
A term of special importance, Management by Objectives (MBO), has been
popularized by the management guru Peter Drucker in his book The Practice of
Management (Drucker, 2006a) since 1954. Generations of management students
haveheardaboutthisconcept.Buttowhichextentdidtheypracticeit?Thanksto
theimprovementofITsystemscapabilities,itcannowbeputintopracticeonanew
scale. I consider this to be the revival of the Management by Objectives in the
twenty-firstcentury,whichIrefertoasMBO2.0™3Followingtheterminologyof
Web 2.0, this naming indicates the availability of new innovative applications
facilitating interactive and collaborative dialogue within the organization and
withexternalstakeholders.
TheWorldofStrategicBusinessIntelligence™4istheconceptualfoundation
toaligntwoworldsandperspectivesthattoooftenexistinisolation,businessand
IT.Many ITdepartmentsfollowtheir ownagendasnotsufficientlyunderstanding
therequirementsoftheircolleaguesresponsibletoexecutethebusiness,whomthey
support.Yes,ITisasupportfunction!Itsexistenceisjustifiedbyaddingmorevalue
thancosttotheorganization.Theindividualsexecutingthestrategyshouldbeable
toestablishperformancetargetsfortheirunitandtomeasureandmonitorit.Alerts
shouldbetriggeredtomakemanagementawareofcriticaldevelopmentsthatneed
managementattention,therebyfacilitatinganeffectiveuseofthescarcetimeofall
decisionmakers.Tobeuseful,thisinformationneedstobecapturedanddistributed
to the decision makers with minimal delay using advanced IT solutions including
broadcasting, alerts, or management cockpits, which are easy to use and help to
visualizecomplexinformation,e.g.,usingcolorcoding,trendindicators,andmaps
todisplaygeolocationperformance.
How can this be supported from an IT standpoint? While I do not intend to
describe all technological details of relevance, I will share the basic architecture
required to support these critical business needs. A solid overview will help
managers responsible for strategy execution to develop a better understanding of
whatcanbedoneandhowmuchofaneffortthismayrequireontheITandbusiness
side.Intheend,newITsolutionsareonlybeneficialtotheorganizationiftheyare
accepted by the users and used properly. A change management effort needs to
accompany the introduction of new systems to explain the benefits and make end
users understand what they can expect as well as any limitations, which may be
resolved in future initiatives. Setting appropriate expectations and supporting all
those affected by the change of processes, which may include the use of new
systems, significantly improves the acceptance. Finally, I will share some state-
of-the-art solutions of Business Intelligence or Decision Support Systems to
allow you to envision how this could be potentially applied to the benefit of your
organization.
Now,whatisthevalueofconceptsiftheyarenotapplied?Idonotwanttoleave
you just with a new framework for effective strategy execution but with new
3MBO2.0™istrademarkedbyBerndHeesen/Prescient.
4WorldofStrategicBusinessIntelligence™istrademarkedbyBerndHeesen/Prescient.
viii Preface
managementtoolswhichyoucanuserightaway.Inacomplexworld,management
needs to remain in control and have visibility of all performance indicators in all
theirorganizationalentitiesworldwidewithzerolatency.Isitnotenjoyabletouse
theremotecontrolfortheTV?Wheneveryoumakeupyourmindaboutwhatyou
liketoview,youjustclickonabuttonandyougetwhatyouwant.Itransferredthis
concepttomanagement,which for obviousreasons is slightly morecomplex.But
theideashouldbethesame.Ifanexecutiveormanagerhasaninformationneed,it
should justbeaclick away. Now isthisrealistic? Howrealistic has been the idea
fromPresidentKennedythatAmericansshouldputtheirfeetonthemoon?Onehas
tohaveavisiontoworktowardinordertogetthere.Withthisinmind,anewtoolI
invented is the Strategic Alignment Remote Control™5 which supports the
preparationandexecution ofastrategy.Itallowsustoaccessallrelevantinform-
ation at all levels of the organization across the globe allowing the management
teamtofocustheirattentiononthemostrelevantproblemsaswellasopportunities.
SevenCaseStudiesfromdifferentindustriesacrosstheglobeprovideexamples
of how the new concepts can be applied to improve organizational performance.
They include companies like Daimler, Wu¨rth, Tetra-Pak, Germany’s Federal
EmploymentAgency,CityofAix-Les-BainsinFrance,andGiesecke&Devrient.
AdditionalexamplesfromorganizationslikeDisney,Marriott,Volkswagen,Avis,
FedEx, and Harrah’s help to demonstrate how the application of these concepts
addsuniquevalue.
This book provides new ideas and practical advice for anyone responsible for
strategyexecution;itisaboutpracticallyrelevantconceptsandhowtoapplythem
within the context of the real world. Effective Strategy Execution is intended for
professionalsaswellasthosewhowanttopreparethemselvesfortheircareer,not
justforexecutives.Peopledonotbecomeeffectiveinstrategyexecutionbyreading
books; they become effective by applying new, superior concepts in their own
environment. This book provides the foundation individuals need to be effective
membersoftheirorganizationsaspractitionersorconsultantsinthefieldofstrategy
formulationorexecution.
Ihavehelpedmanyorganizationsonallcontinentsduringmyconsultingcareer.
Improvingtheeffectivenessoftheirorganizationwasthecoreobjectiveinallthese
cases.Thisrequiredtheorganizationstorecognizetheirownsuboptimaleffective-
ness in the first place! Without the capability of self-reflection, improvements are
rarely possible.Therefore, I wantto encourage you to participate inthe Big Data
andStrategyExecutionEffectivenessSurvey.Thesurveywillhelpyoutoassess
your organizational effectiveness in regards to strategy execution. Right after
completingthesurvey,youwillhaveaccesstoasummaryofallsurveyresponses,
whichallowsyoutocompareyourperformancewiththoseofotherorganizations.
Thesurveyisavailableonthewebsitehttp://www.survey.prescient.pro.
5StrategicAlignmentRemoteControl™istrademarkedbyBerndHeesen/Prescient.
Preface ix
Oncetheopportunitiesforimprovementareuncovered, theonlytasklefttobe
doneistoleveragetheopportunity!Ihopethatthisbookwillencourageyoutouse
yourcreativityandcommitmenttoimprovetheeffectivenessofyourorganization.
Nuremberg,Germany BerndHeesen
2015
