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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