software development singleton
Successfully Closing the Strategy Gap
Many companies spend a lot of time, effort and money in producing a sublime strategic plan only to be frustrated in their ability to turn that strategy into reality. That can be due to a number of issues, but one in particular is the inability to successfully align annual departmental budgets to long-term strategic goals.
A common management method is to implement a top-down dictat; company directors impose next year’s expected results on departmental heads who then develop a short-term budget to achieve those aims. Once that method is employed then any correlation between long-term strategic aims and a joined-up departmental approach is soon forgotten.
Most budget reports delivered to departmental heads are merely a list of figures that bear very little resemblance to what is happening in the company. They merely show lists of spend and revenues shown against monthly or annual variances. There is seldom anything to indicate how the company is operating as a whole, or how products and customers interact.
So, rather than continue to report in this fashion and guess on the success of the company strategy enlightened companies are adopting a scorecard approach that enables them to close any gap between strategy and execution. This is not a completely new approach as scorecards have been part of innovative management methodology since the early 1990s, but it is proving more popular of late.
The major reason for that is that scorecards can be easily integrated into performance management software, making their maintenance and organisation-wide communication far easier. A balanced scorecard, such as that defined by Norton and Kaplan shows the key performance indicators for the company in the form of a snapshot, in a similar way to that in which a car dashboard informs and alerts a driver to a car’s performance. Using this analogy too many companies over-emphasise the importance of the warning lights, rather than driving correctly and looking out of the windscreen to check that they are headed in the right direction.
But, the successful implementation of the scorecard methodology allows for a reconnection between departmental heads and company strategy. They can more easily understand their place in the overall plan and place their emphasis on ensuring that they focus on customers, investors, internal processes and understanding what sustains the business.
However, implementing scorecards is just the beginning of the process. What makes the methodology ultimately successful is the ability to communicate cause-and-effect linkages; to move away from a tactical approach to a strategic one. That is the real challenge and one that will determine the difference between success and failure.
About the Author
Adam Singleton writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.
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