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Title: The
Strategy-Focused Organization
Author(s):Robert S. Kaplan & David P. Norton. Publisher: Harvard Business School Press, 2001, 400 pages. Manageris 93a. It is not as difficult to develop an effective strategy as it is to get it implemented. The authors of The Strategy-Focused Organization show how an appropriate management system provides essential support in strategy implementation. They show how a Balanced Scorecard helps ensure that the different initiatives taken at all levels of the organization are aligned with corporate strategy. This tool also helps managers focus on long-term strategic thinking rather than short-term objectives. Main subject [Strategy
Implementation] |
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Reading Tips for...
This book is built around the idea that a good management system is central to the success of a strategy, because it ensures that strategy will be implemented. The authors identify five key drivers that serve as the guiding theme for each of the book’s five sections. The essence of these ideas is summarized in chapter one.
The key message of the book is that strategy will not be implemented unless it is translated into operational terms and understood by the entire organization. Two tools are particularly suited for these tasks, namely the Balanced Scorecard and the Strategy Map. These tools are described in the first three chapters, and illustrated with a very detailed example of the management system used by a division of Mobil. This tableau is completed with many other examples, both from the public (chapter 5) and private (chapter 4) sectors.
The interest of this type of system is that it demonstrates overall strategic consistency. This is all the more important in large and diversified organizations. Chapter 6 develops upon how the management system can be used to foster inter-business unit cooperation. Similarly, the Balanced Scorecard can be a way to encourage corporate headquarters to develop synergies (chapter 7). The Shell example is striking.
Communicating the strategy is therefore a key objective. This is the focus of chapter 8, which regrettably presents only quite traditional communication tools, such as brochures, seminars, and e-mail.The strategic objectives must then be cascaded down into the organization. Chapter 9 insists upon the need for individual Balanced Scorecards, using supporting examples from Mobil and Nova Scotia Power. These personal objectives can be used to develop a compensation policy that truly motivates people to implement the strategy. This point is developed in great detail in chapter 10.
Finally, the authors warn managers of their tendency to focus on tactical, rather than strategic issues. They show how to make strategy a continual process (chapter 10) and emphasize the need to focus management team meetings on strategic questions (chapter 11).
Critical commentary…
by J. Carlos Jarillo,
Professor of Corporate Strategy at the University of Geneva.
The basic idea behind this book is simple and powerful, i.e. if it isn’t measured, it isn’t managed. The authors make the observation that most companies measure only financial results. This means that most companies obviously have a long way to go in perfecting their management systems!
This book is a sequel to the first, immensely-successful book by the same two authors entitled, “The Balanced Scorecard,” published in 1996. As the title indicates, that book introduced the concept of the “Balanced Scorecard.” In essence, the authors wanted to remind managers that financial indicators provide only a partial view of company reality. To manage the rest, companies have to measure that too, just as systematically as they measure sales and personnel costs.
The Strategy-Focused Organization goes one step further. It starts with the important observation that company problems are less due to poor strategy than poor strategy execution. Indeed, what good is knowing what must be done, if the company cannot actually do it? The authors offer their Balanced Scorecard as a key part of implementing any new strategy.
Transforming an organization necessarily requires the people employed therein to change their behavior. If people continue to do things as they always have and do not change their priorities, the resulting strategy will be the old, rather than the new one. The Balanced Scorecard is held up as a very practical tool for stimulating this change in behavior.
First, the strategy must be understandable, that is, translated into operational terms. Strategies are very often more or less eloquent or well-phrased platitudes that mean nothing in terms of the daily work of employees. As a friend of mine likes to say, "the difference between a corporate “vision” and a “hallucination” is often very slight!"
Once the strategy is operational, progress made toward its implementation can be measured. This forces the entire company to focus on key initiatives that support the new strategy. The strategy must become “an everyday part of everyone’s job.” If the company can’t get to that point, the strategy will probably never get off the ground.The great advantage of this book is that, in addition to this extremely practical point of view, it provides detailed explanations on how to do things, as well as many real-world examples. For managers tired of making efforts to derive strategies that end up accomplishing little or nothing for their businesses large or small, this book is invaluable.
Further readings…
- The Balanced Scorecard
Robert S. Kaplan, David P. Norton – Harvard Business School Press. (Book and Manageris Synopsis N°45b) - EVA : les défis
de la création de valeur (EVA: The value-creation challenge)
Al Ehrbar – éd. Village Mondial. (Book and Manageris Synopsis N°71b) - The new strategists
Stephen J. Wall, Shannon Rye Wall – The Free Press. (Book and Manageris Synopsis N°36b)
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