Astute Strategy Formulation for sustenance in Balance Score Card Implementation

The Balance Score card was defined clearly in terms of process and methodology in the early nineties by Dr. Robert Kaplan and Dr. David Norton, and subsequently Balance Score Card software was developed. It is a well known fact that dramatic results were obtained by the organizations with the implementation of BSC.

However it was observed that after initial euphoric response, there seemed to an inertia and uncertainty, when it came to the ability to sustain the process. This often dealt a  severe blow to the process of optimization of production cycles and processes.

 The authors felt the need for creation of an independent office which could on permanent basis take care of sustainability in the implementation of the Balance Score Card. They devised a process for the sustainability and gave a simple nomenclature to define it. They christened it as Office of Strategy Management (OSM).

The last five years have seen a heavy wave of organizations adopting the OSM. In a recent survey of Hall of Fame organizations, over 85% have already built this organizational capacity (the OSM) to make strategy execution.

Why OSM is needed??

We know that there is continuous churn at the top of the organization. With the change in positions, changes in personnel, the inevitable change in perspective is brought about. The new perspective is likely to treat the Balance Score Card implementation as a lesser priority, resulting in continuity being a casualty.

We have independent offices for Finance, HR, Marketing and others, why not one for the strategy.  Strategy is one office that drives all other offices towards optimization by providing real time evaluation.

Now let us have a look at the functioning of the OSM.

In the October 2005 Harvard Business Review, Drs. Robert Kaplan and David Norton introduced the concept of a new enterprise function to coordinate and integrate all strategy management processes. Through a $5 million research effort involving over 60 organizations (25% of which are in the Palladium Balanced Scorecard Hall of Fame for Executing Strategy®)

They learned that sustaining a performance management system like the Balanced Scorecard requires two components:

1. A clearly defined process that is customized to fit into the existing Governance cycle of the Organization.

2. Establishment of an independent entity to oversee the implementation of BSC, an entity that coordinates with other departments and oversees the implementation of BSC everywhere and provides real time evaluation reports. This will facilitate path corrections for the departments in the initial stages itself.

Thus a new integrative system was evolved for strategy management named Office of Strategy Management (OSM).

OSM plays three important roles.

The Architect

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The Office of Strategy Management 

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Process Owner-------------------------------------------------------Integrator

Roles:

The Architect:

Define and clarify the philosophy of performance management and the processes required to
execute.

The Process Owner

Define, develop and oversee the execution of processes required to manage the strategy.

• Develop the Strategy

• Translate the Strategy

• Align the Organization

• Plan and Fund the Strategy

• Review the Strategy

• Test and adapt the Strategy

The Integrator

Insure that processes owned and run by other functional executives are linked to the strategy.

• Human Capital

• Strategy Communications

• Initiative Management

• Financial Resource Management

• Key Process Management

OSM imparts a sustainable competency; one that can survive churn at the top of the organization as well as changes in ownership and disruptive changes in the marketplace. In  fact, organizations with an OSM in place.

have been better prepared to weather the recessionary storm that has buffeted the global economy over the past three years.These organizations have reported stronger performance over the past three years and are much more optimistic about their chances of success in the coming years compared to organizations that are not so equipped.

I will be pleased to give a detailed presentation on OSM to corporates and the B-Schools

Best wishes,

Shyam

Shyamsunder Panchavati