Crafting and Executing Strategy:Management by Objectives

Aygun Suleymanova, May 2010

Starting point: Defining Value Proposition

Exercise/ Discussion: Current Value Proposition Analysis

Criteria Importance Our Performance Comments

QUALITY - -

CUSTOMER SERVICE - -

GLOBAL REACH - -

FLEXIBILITY - -

EXPERTISE - -

BRAND ATTACHMENT - -

Key Questions:

IS THIS VALUE WHAT YOU EXACTLY MEAN TO DELIVER?

IS IT WHAT YOU DO DELIVER?

IS IT WHAT YOUR EMPLOYEES BELIEVE THEY DELIVER?

ARE YOU WELL-POSITIONED INTERNALLY TO DELIVER IT?

IS IT FULLY CONGRUENT WITH YOUR STRATEGY AND GUIDING PHILOSOPHY AND IS WHAT YOU BELIEVE TO BE(COME) YOUR COMPETITIVE ADVANTAGE?*DEFINITELY NOT EXACTLY

*The one that would be hard for your competitors to imitate

DEFINITELY!

1) Articulate it well through forming a MISSION statement around customer-centricity

2) Together with the Team create the longer-run VISION statement to tie your activities to

3) Again, with the Team, create key strategic priorities (no more than 5) for the year to focus on

4) Immediately after, have the Direct Reports (Division heads) come up with the objectives/projects for their Division that would go under each strategic priority and a KPI for each

5) Have them continue the process down to individual level

NOT EXACTLY…

1) Identify, considering competition, the industry and the customers what you stand for and where you are going

2) Together with the Team create the longer-run MISSION statement to tie your activities to

3) Again, with the Team, create key strategic priorities (no more than 5) for the year to focus on

4) Immediately after, have the Direct Reports (Division heads) come up with the objectives/projects for their Division that would go under each strategic priority and a KPI for each

5) Have them continue the process down to individual level

INPUTS FOR STRATEGY FORMULATION

1) SWOT Analysis. Industry-wise, opportunities and threats should capture multiple industries that the company operates in: SaaS, HSE solutions, Sustainability Vendors

2) Congruence of values analysis3) Industry Success Factors and the ways to leverage them:

– BRAND STRENGTH– CUSTOMER SERVICE/SATISFACTION– PARTNERSHIP & TRUST

EXECUTION

Steps to Strategy Formulation

Vision &Mission Formulation

Up to 5 Company Strategic Priorities

Unit Objectives

Individual Objectives

Related Division Objectives [year]

Target deployment

1

2

3

4

5

Company CEO, Direct reports &Key contributors

Direct reports to middle managers;middle managersto their teams and so forth downto individual level

Example (A technology consulting firm):Vision - Enabling freedom:We will lead by providing our clients with

insights and capabilities that boost their freedom to achieve superior results.

Mission - Enabling transformation:We enable our clients to transform and perform through technologies.

We will lead by providing

our clients with insights

and capabilities that boost

their freedom to achieve

superior results.

IncreasePresence in The Market

Cutting EdgeSolutions

Superior Quality

B. Dev-t:1) Bring in X new

Customers2) Launch CRM,

Etc.

Client Services:

1); 2); 3) etc.

Technology:1) Increase

capacity of existing… etc.

1) Upgrade the

Corporate Website

Corporate Level

Company Vision

Division Level

Team or Individual

Level**Depending on the depth of hierarchythe objectives will be cascaded down

Strategic

Prioriti

es

Nature of Objectives & KPIsType of Objective

Description Level Shared or Individual

KPI

Project-based

Release the standard version of the X module/ product

Division Shared – X, Y, Z divisions Project

Deadline

Process-based

Close the customer complaints in average of 24 hrs

Team/ Individual

Individual 24 hrs

Competency Integration into Performance Evaluation is important

• 3-4 Core Competencies that are specific to the company depending on its vision, like: Adaptability to Changes, Quality, Customer Care, etc.

• Job Family Competences: STRATEGIC LEADERS; PEOPLE LEADER; PROFESSIONAL KNOWLEDGE WORKERS; CUSTOMER CONTACT; ADMINISTRATIVE SUPPORT

Competences in Force• Competence-based STARs/ARs that employees

give one another will reinforce the development of competences

• Defined competences will make the 360 degree evaluation well-defined as well

• Allows you to tie development activities to

Jan

FebM

arA

pr

MayJunJulAug

Sep

Oct

Nov

Dec

Strategy Review

Meeting

1Annual

Operational Budget Approval

2

(Mass) Communicati

on of New Strategy to Employees3

Target Deploy-

ment

4

Target Review

1 6

Target Review

36

Perfor-mance

Appraisal

7

Individual Developme

nt Plans5

Bonuses8

Target Review 2

6

Ideal Timeline for

PM Process

360 Review

6

CHALLENGES

1) Geographical dispersion: time and cultural differences2) KPI determination: the un-tested targets to be set (for e.g.

in customer service, there might be set a target to close the customer issues in 24 hours, however, it might be either unrealistic or the gauges could be biased as to what is considered to be ‘closed’)

3) It is imperative that all the processes running in the company are clearly designed and documented (in MS Visio map format) and the job responsibilities and reporting structure are as well clearly defined

4) Lack of incentive structure to complement the “Management by Objectives” framework could significantly impede the implementation of the concept

SOLUTIONS

1) Research: corporate value analysis, defining the differences in beliefs and values between the two teams for tailoring the implementation and communication strategy accordingly

2) Leadership commitment and intensive communication through different media

3) Development: creating a competence framework consistent with the strategy to develop certain set of competences in employees to reach their (and ultimately corporate) objectives

4) Middle management development and commitment: This is the most important communication channel for nurturing company values and implementing strategy; Creation of Succession planning

5) Creation of a consistent STRATEGIC incentive structure (not just monetary, but also career and recognition rewards)

ENGAGEMENT ANALYSIS

Conducting a survey among the company employees to define:- How they feel about being a Company employee?- What they value most in their job?- What values they see/show most in their work?- Is their vision and view of the company same with the

leadership’s?------------------------------------------------------------------------------------ Provide recommendations on how to tailor

communication and implementation strategy within the company

LEADERSHIP COMMITMENT

In realizing its vision through the employees it is important that the leadership show their commitment in each step of strategy formulation and execution by:

1) Getting the Team together for strategy formulation meeting, opening the meeting with a speech and demonstrating initiative ownership

2) Underlining the importance of the execution to Direct reports and instilling belief in them in the vision

3) Following through with the Target deployment4) Using the company Intranet and e-mail to announce ‘the

Company’s Way Ahead’ in a text and video format5) Monitoring the implementation throughout the year

PROJECT MILESTONES:

Formulating Vision: an interview with the CEO Presenting industry, company and customer analysis for: Formulating Mission, key priorities and Division objectives Presenting competence framework for the strategy Conducting Employee Survey (on corp. culture & values) Company-wide communication of strategy to employees Facilitating Objectives Deployment & integration of

competences into individual development objectives Maintaining and constantly communicating the status of

achievements