Agile Strategy Management in the Digital Age (eBook)

David Wiraeus is a founding Partner at Stratecute Group, a management consultancy headquartered in Stockholm, Sweden. With over 13 years of experience in the fields of strategy execution and performance management, he has assisted hundreds of clients in a broad range of industries and organizations. Previously he was an associated Partner at Palladium Group and Balanced Scorecard Collaborative.James Creelman is the founder of Creelman Strategy Alliance and an advisor, trainer and researcher in strategy management and related fields. He is the author of 24 books, most recently Doing More with Less: measuring, analyzing and improving performance in the not-for-profit and government sectors (Palgrave Macmillan, 2014) with Bernard Marr and with a foreword by Dr. David Norton, and Risk-Based Performance Management: integrating strategy and risk management (Palgrave MacMillan, 2013) with Andrew Smart.

Foreword 6
Acknowledgements 9
Contents 10
List of Figures 16
List of Tables 18
1: Digital Age Strategy Management: From Planning to Dynamic Decision Making 19
Introduction 19
No “Perfect” Management Solution 19
It’s All About Evolution 20
Learning from Genetics 21
Common Challenges 23
The Scourge of Silo-Based Working 24
Research Findings 25
A Significant Bottleneck 25
Seeking Mechanical Solutions 26
The Strategy Function and Process 26
Research Evidence 27
Assumptions that Must Be Verified in Execution 28
End-to-End Process Management 28
Strategic Innovation 30
Disruptive Innovation 30
The Importance of Agility 31
An Agile and Adaptive Model for Strategy Execution in the Digital Age 32
Agile and Adaptive 32
Stage 1, How to Formulate Strategies for the Digital Age 32
Stage 2, How to Build an Agile and Adaptive Balanced Scorecard System 33
Stage 3, Driving Rapid Enterprise Alignment 33
Stage 4, Getting Results Through Agile and Adaptive Strategy Execution 34
Stage 5, Unleashing the Power of Analytics for Strategic Learning and Adapting 34
At the Centre of the Model: How to Ensure a Strategy-Aligned Leadership and Culture 35
Underpinning the Model: Creating a Strategy-Aligned Workforce for the 4th Industrial Revolution 35
Collaborative Scorecards 36
Parting Words: Shifting Paradigms 37
Self-Assessment Checklist 38
References 39
2: From Industrial- to Digital-Age-Based Strategies 40
Introduction 40
The Potential Dangers of Agility 40
Be Careful with the “Sprint” 41
Challenging the Notion that “Strategy is dead!” 42
Defining Strategy 43
Case Illustration: A Singapore Clothing Manufacturer 43
Harvard Business School Professors: Useful Definitions 44
An Integrated Set of Choices 44
Position a Firm, in an Industry 44
Over the Long Run 45
Defining the Sense of Purpose 45
The Mission Statement 45
Case Illustration: The Ford Motor Company (Disruptive Innovation in the Early Nineteenth Century) 46
Case Illustration 1: Kodak (Not Paying Attention to the Function) 46
Case Illustration 2: Blockbuster (Not Paying Attention to the Function) 47
The Relevance Question 47
Reinventing the Business Model 48
Research Evidence: A Gloomy Picture 48
Disruptive Innovation: Something of a Myth 49
Technology-Based Planning: Outmanoeuvring the Competition 50
New Wine in Old Bottles 50
Finance-Based Planning 51
Blue Ocean Strategy 51
Case Illustration: Cirque du Sol 51
Business Model Canvas 53
Capturing the Voice of the Customer 53
Research Evidence 54
Mapping the Customer Journey 54
Emotional Touchpoints 55
The “Unknowing” Customer 56
Case Illustration: How Alibaba Is Disrupting Retail 56
Parting Words 57
From Finance-Based to Technology-Based Planning Self-Assessment Checklist 59
References 61
3: Agile Strategy Setting 62
Introduction 62
Crafting a Vision Statement 62
Not Visions: Advertising Slogans 62
Executable Visions 63
A Quantified Vision 64
Case Illustrations 64
Mid-Term Visions 64
Identifying the Value Gap 65
Environmental Scanning 66
Pattern-Based Strategy 67
Pattern Seeking 68
Optempo Advantage 69
Performance-Driven Culture 70
Transparency 70
SCOPE Situational Analysis 70
The Danger of Being Frozen in Time 71
Senior Management Interviews 72
Case Illustration: Norway-Based Power Company 72
Using an External Facilitator 73
Interview Questions 74
The Benefits of Anonymity 74
Interview Outcomes 75
Devolved Interviews 75
Purchasing Agency Case Illustration 75
A Strategic Change Agenda 76
Case Illustration: FBI 77
Parting Words 79
Self-Assessment Checklist 82
References 83
4: Strategy Mapping in Disruptive Times 85
Introduction 85
Starting with the Strategy Map 85
A Non-Agile Process 85
Writing Objectives 86
What Does Success Look Like in the Eyes of Shareholders (or Funders)? 87
What Does Success Look Like in the Eyes of Customers? 87
“To Satisfy Our Customers, and Stakeholders, in Which Internal Business Processes Must We Excel?” 87
To Achieve Our Goals, How Must Our Organization Learn and Develop? 88
Keeping Strategy Maps Focused 89
Objective Statements 89
Case Illustration: Hospital Complex 90
Consistent Interpretations 90
The Value of Strategic Themes 91
Designing Themes 91
Case Illustration: AW Rostamani 93
Constructing Theme Teams 93
Potential Downsides of Working with Themes 94
The Power of Cause and Effect 95
Age 2 Balanced Scorecard Systems 96
The Contribution of Early Pioneers 96
Classical Versus Quantum Mechanics 97
The Intellectual Capital Model 98
Interactions Between Intangible Assets 99
Parting Words 99
Self-Assessment Checklist 103
References 104
5: How to Build an Agile and Adaptive Balanced Scorecard 105
Introduction 105
Too Many KPIs 105
Agility in Strategy Execution 106
The Purpose of KPIs 106
Four Steps of KPI Selection 108
Key Performance Questions Explained 108
Case Illustration: Hospital Complex 109
Step 1: The Objective Description 109
Step 2: Value Drivers 109
Step 3: KPQs 109
Step 4: KPIs 110
Case Illustration 2: Durham Constabulary 110
The Balanced Scorecard Is Not a Measurement System 112
No “Perfect” KPI 113
De-emphasize KPIs 114
The Science of Measurement 114
The Dangers of Aggregation 115
Simpson’s Paradox 115
Trend Analysis 116
Driving “Rational” Behaviours 116
An Amusing Story 116
A Tragic Story 117
Be Careful What You Ask For 117
Identifying Rational Behaviours 117
Setting Targets 119
Precision and the Quantified Vision 120
A Target Is Not a Forecast 121
Assumption Management 122
Choosing Strategic Initiatives 122
Research Evidence 123
Steps to Prioritizing Initiatives 123
An Initiative Inventory 123
Prioritization Model 124
Parting Words 125
Self-Assessment Checklist 126
References 128
6: Driving Rapid Enterprise Alignment 129
Introduction 129
Traditional Approaches 129
Hoshin Kanri 129
Catchball 130
Thai Carbon Black Case Illustration 130
Balanced Scorecard 131
Conventional Scorecard Shortcomings 131
Identical 132
Contributory 132
New 132
Too Cascade or Not 132
An Agile Approach 133
Case Illustration: Statoil 133
Ambition to Action Explained 134
Change of Perspective Order 135
Key Lessons from Statoil 136
Team Discussions 136
Bad Practice Example 137
Departmental Success Story 137
Structure 138
Alignment and Synergies 138
Alignment: Using the Balanced Scorecard to Create Corporate Synergies 139
Strategy Maps and Diversified Organizations 139
Enterprise Synergy Model 139
Driving Out Complexity 140
Why Simplicity Matters 140
Parting Words 141
Self-Assessment Checklist 142
References 143
7: Aligning the Financial and Operational Drivers of Strategic Success 144
Introduction 144
Aligning Budgeting with Strategy 144
The Shortcomings of Budgeting 145
The Three Roles of Budgeting 146
Case Illustration: Statoil 146
Agile Financial Management 149
Killing the Budget 149
Rolling Forecasts 150
A Rolling Forecast Explained 150
Constructing a Rolling Forecast 151
Budgeting: Not a Performance Motivator 153
Linking Operations to Strategy 154
Strategically Critical Processes 155
The Dangers of Focusing on Continuous Process Improvement 155
Six Sigma Explained 156
Case Illustration: Motorola 157
Thwarting Innovation 158
Making the Strategy/Operations Link 159
Driver-Based Models 160
Case Illustration: Hospital Complex 160
Parting Words 162
Self-Assessment Checklist 163
References 164
8: Developing Strategy-Aligned Project Management Capabilities 165
Introduction 165
Not an Execution Framework 165
Professional Expertise 167
Agile Project Management 167
SCRUM 167
The Case for Merger 169
The Transformation Office 170
Transformation: A Definition 170
Core Vertical Transformations 170
Transversal Transformations 171
Transformation and Strategy 171
Measuring Impact 173
Two Types of Initiatives 174
A Portfolio Approach 174
Sub-Portfolios 175
Parting Words 176
Self-Assessment Checklist 179
References 180
9: Unleashing the Power of Analytics for Strategic Learning and Adapting 181
Introduction 181
Correlations and Causality 182
Analytics and KPIs 183
Analytics and Decision Making 183
A Data-Driven World 183
Big Data Analytics 184
A Measurement Game Changer 184
Descriptive Analytics 185
Diagnostic Analytics 186
Predictive Analytics 186
Prescriptive Analytics 186
Advanced Analytics and Strategy Management 186
Develop and Translate the Strategy 187
Align the Organization 188
Align Operations 188
Strategic Learning 188
Strategy Update 188
Customer Engagement 189
Required Capabilities 189
Leadership Commitment 190
Data Management 190
Simple Analytics 191
UK-Based Airline Case Illustration 192
Performance Reviews 193
Operational Reviews 194
Strategy Reviews 194
The Shortcomings of Colour Coding 194
Accountability at the Theme Level 195
Case Illustration: KiwiBank 195
Strategy Reports 196
A Decline in the Importance of KPIs 196
The Strategy Refresh 197
Research Evidence 198
The Price of External Failure 198
Learning and the Annual Refresh 199
Implications for the Strategy Office: Practitioner View 199
Parting Words 200
Self-Assessment Checklist 203
References 204
10: How to Ensure a Strategy-Aligned Leadership 205
Introduction 205
The Importance of Context 206
The Stories of Steve Jobs and Winston Churchill 206
Leadership for the Execution of Strategy 207
Context 208
Characteristics 209
Conditions 210
Capabilities 211
The Last Stage: Not the First 211
Palladium Model Summary 212
The Potential of the “Ordinary” Leader 212
Strategic Leadership: Research Evidence 213
Poor Change Management 213
Leadership Development 214
Agile Leadership in an Age of Digital Disruption 215
Humble 215
Adaptable 216
Visionary 216
Engaged 216
Essential Behaviours of Agile Leadership 217
Hyperawareness 217
Informed Decision Making 217
Fast Execution 217
Assessing the Models 218
Parting Words 219
Self-Assessment Checklist 219
References 220
11: How to Ensure a Strategy-Aligned Culture 221
Introduction 221
The Elephant in the Room 222
The Challenge of Culture: Research Evidence 222
Defining Culture 223
A Great Culture Is Not Necessarily a Strong Culture 223
Corporate Values 224
Case Illustration: Poor Practice Example 225
Case Illustration: Good Practice – Korea South-East Power 226
Leadership and Culture 227
The Shadow of the Leader 227
Driving Culture Change with the Balanced Scorecard 228
Cultural Assessment 229
Integrating Data 230
Parting Words 232
Self-Assessment Checklist 236
References 237
12: Ensuring Employee Sense of Purpose in the Digital Age 238
Introduction 238
Gallup Research Evidence 238
Changing the Employee-Employer Relationship 240
The End of Appraisals 241
The Views of Dr. Deming 242
The Dangers of Assigning KPIs to Individuals 242
Changing the Conversation 243
Theory X and Theory Y 244
A Sense of Purpose 244
Organizational Sense of Purpose 244
Individual Sense of Purpose 245
Deloitte Research Findings 245
Team Sense of Purpose 247
Communication 247
Essex Police Cast Illustration 249
Human Capital Development to Execute Strategy 250
Parting Words 251
Self-Assessment Checklist 253
References 254
13: Further Developments: Driving Sustainable Value Through Collaborative Strategy Maps and Scorecards 256
Introduction 256
Corporate Social Responsibility 256
Triple Bottom Line 257
Nova Nordisk Case Illustration 257
Sustainability Strategy Map 258
Shared Value 261
Shared Value Explained 261
Positive Impact 262
Networked Organizations 262
Case Illustration: Thriving Weld 263
Zoomable Strategy Maps 265
Robust Shared Measurement System 265
The Million Dollar Question: Is This Approach Creating the Desired Impact? 266
Improved Communication 266
Improved Alignment of Funders and Other Stakeholders 266
Improved Engagement and New Actions 267
Parting Words 267
Self-Assessment Checklist 269
References 270
14: Conclusion and 25 Key Strategic Questions 271
Introduction 271
Agile and Adaptive 271
25 Key Strategic Questions 272
Stage 1: How to Formulate Strategies for the Digital Age 272
Stage 2: How to Build an Agile and Adaptive Balanced Scorecard 275
Stage 3: Driving “Rapid” Enterprise Alignment 277
Stage 4: Getting Results Through Agile Strategy Execution 278
Stage 5: Unleashing the Power of Analytics for Strategic Learning and Adapting 280
Underpinning the Model 282
How to Ensure a Strategy-Aligned Leadership and Culture 282
Creating a Strategy-Aligned Workforce for 4th Industrial Revolution 283
Final Words 284
References 284
Index 285