Agile Strategy Management in the Digital Age: How Dynamic Balanced Scorecards Transform Decision Making, Speed and Effectiveness PDF
Preview Agile Strategy Management in the Digital Age: How Dynamic Balanced Scorecards Transform Decision Making, Speed and Effectiveness
DAVID WIRAEUS AND JAMES CREELMAN foreword by dr david p. norton AGILE STRATEGY in MANAGEMENT the DIGITAL AGE How Dynamic Balanced Scorecards Transform Decision Making, Speed and Effectiveness Agile Strategy Management in the Digital Age David Wiraeus • James Creelman Agile Strategy Management in the Digital Age How Dynamic Balanced Scorecards Transform Decision Making, Speed and Effectiveness David Wiraeus James Creelman Stratecute Group Creelman Strategy Alliance Gothenburg, Sweden London, UK ISBN 978-3-319-76308-8 ISBN 978-3-319-76309-5 (eBook) https://doi.org/10.1007/978-3-319-76309-5 Library of Congress Control Number: 2018945201 © Te Editor(s) (if applicable) and Te Author(s) 2019 Tis work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microflms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Te use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Te publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Te publisher remains neutral with regard to jurisdictional claims in published maps and institutional afliations. Tis Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG Te registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland I dedicate this book to my wife Vanja and our child Ella, as well as my sister Frida and parents Ulla and Anders, with all my love. David Wiraeus For my great nephews Kian Creelman and Ezra French and my great niece Arrabella French. Enjoy the long journey ahead. James Creelman Foreword More than 25 years have passed since Bob Kaplan and I introduced the con- cept of the Balanced Scorecard through a Harvard Business Review article. Tis relayed the fndings from a research project we led in 1990 with 12 large companies to fnd better ways to measure performance, rather than relying solely on fnancial measures. At that time, we were transitioning into the knowledge age, in which intangible assets were becoming more valuable than tangible ones, and where the increasing speed of change in markets meant that fnancial measures were no longer reliable predictors of future performance. Financial results would remain, and continue to be, important, at least for commercial entities, but what were the non-fnancial drivers of those out- comes? Tis was the question we grappled with. Te answer proved simple and logical. Customers delivered fnancial results; the organization had to ensure its internal processes delivered value to the customer and that they possessed the required skills and capabilities to deliver those processes efectively and efciently. Tese observations were translated into the Balanced Scorecard framework, which comprised Financial, Customer, Internal Process, and Learning and Growth perspectives, each of which contained objectives (what we want to achieve), measures and targets (how we will monitor progress), and initiatives (how we will deliver to those targets). A further question we wrestled with was why 90% of organizations failed to deliver to their strategy, even when it was well thought-out and logical. We found that the Balanced Scorecard could describe and operationalize strate- gies that previously were generally restricted to a very detailed strategic plan, vii viii Foreword which rarely left the boardroom shelf. Bob and I chronicled the successes of the original tranche of scorecard users in our frst book, Te Balanced Scorecard: Translating Strategy into Action. In our continued research, we found that some of the early Balanced Scorecard users, such as Mobil Oil’s North American Division, gained addi- tional value when the strategic objectives were laid out separately to show the causal efect from the learning and growth perspective, through internal pro- cesses to customer and fnancial. Furthermore, although originally launched to overcome strategic performance management and measurement challenges in commercial organizations, government and not-for-proft entities, such as the City of Charlotte, North Carolina, soon adopted the framework. However, to meet their needs, such organizations reordered the perspectives, with stake- holder at the top (typically replacing the term customer) and fnancial lower down the Strategy Map. Tese frst Strategy Maps proved as valuable to users as the original Balanced Scorecard itself, as we explained in our second book, Te Strategy-Focused Organization: How Balanced Scorecard Companies Trive in the New Business Environment and described fully in our third book, Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Te story did not end there. We continued to learn from the experiences of an ever-growing number of users. Our fourth book, Alignment: Using the Balanced Scorecard to Create Corporate Synergies, documented the value orga- nizations gained from cascading the Balanced Scorecard from the corporate level to business units and then to operating departments and support func- tions, as well as being the basis for strategically aligning external stakeholders. Our fnal book. Te Execution Premium: Linking Strategy to Operations for Competitive Advantage, set out to ofer a complete strategy management sys- tem through a six-stage model: defning the strategy, translating the strategy, aligning the organization, aligning operations, monitoring and learning, and testing and adapting. However, even completing the ffth and fnal book does not mean the end of the story. On introducing the Balanced Scorecard framework and method- ology, Bob Kaplan and I realized we were launching a revolution, not a static system. We knew it would continue to evolve to meet the strategic require- ments of organizations in ever-changing and fast-moving markets. Our work, and most notably the fnal book, serves as the inspiration for this book, Agile Strategy Management in the Digital Age – How Dynamic Balanced Scorecards Transform Decision Making, Speed, and Efectiveness. Forewor d ix Just as Bob and I grappled with the challenges of transitioning from the industrial age to the knowledge age, Wiraeus and Creelman turn their atten- tion to the challenges of moving into the digital age. Changing roles from Balanced Scorecard historian to Balanced Scorecard futurist, the authors inventory the issues that must be integrated into the management systems of the future – Tey are to be commended for the audac- ity of their undertaking and for the reach of their results. Te revolution continues. Massachusetts David P. Norton March, 2018 Acknowledgements Tis book could not have been written without the advice, knowledge, and support of many people, whom we here acknowledge. Bill Barberg (Insightformation), James Bass (Certifed Scrum Professional), Bjarte Bogsnes (Statoil), James Cofey (Beyond Scorecard), Deepanjan Chakrabarty (previously Palladium), Marcello Coluccia (Imerys Graphite & Carbon), Jade Evans (Palladium), Liam Fahey (Leadership Inc.), Elena Gómez Domenech (Palladium) Mihai Ionescu (Strategys), Saliha Ismail (Ministry of Works, Municipality Afairs & Urban Planning, Bahrain), Brett Knowles (pm2Consulting), Stanley Labovitz (SurveyTelligence), Armen Mnatsakanyan (ConconFM), Sandy Richardson (Collaborative Strategy), Hubert Saint- Onge (Saint-Onge Alliance), Alistair Schneider (startupsinnovation.com), Andreas de Vries (Oil & Gas Strategy Management Speuncialist expert), Iain Wicking (Oyonix Group). We also extend our gratitude to Dr. David Norton for providing the Foreword to this book and to all our ex-colleagues in Palladium, who shared their knowledge and experience with us over many years. Tanks also to Palgrave Macmillan’s Stephen Partridge and Gabriel Everington for their continued support and guidance. Finally, James would like to thank Matt Sabbath Stark, Hugh Sturrock, Hugh Macleod, and Anto Brownes for their many nights in the Earl of Derby, Kilburn, London, patiently listening to his constant talking about the writing of the book. xi Contents 1 Digital Age Strategy Management: From Planning to Dynamic Decision Making 1 Introduction 1 No “Perfect” Management Solution 1 It’s All About Evolution 2 Common Challenges 5 Te Scourge of Silo-Based Working 6 Te Strategy Function and Process 8 Assumptions that Must Be Verifed in Execution 10 End-to-End Process Management 10 Strategic Innovation 12 Te Importance of Agility 13 An Agile and Adaptive Model for Strategy Execution in the Digital Age 14 Parting Words: Shifting Paradigms 19 Self-Assessment Checklist 20 References 21 2 F rom Industrial- to Digital-Age-Based Strategies 23 Introduction 23 Challenging the Notion that “Strategy is dead!” 25 Defning Strategy 26 Defning the Sense of Purpose 28 Finance-Based Planning 34 xiii
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