When considering the adoption of strategic management systems, placing too much focus on IT compatibility and integration can lead to missing the real opportunity for improving alignment and strategy execution.
It is very natural for people in IT (and large software companies) to see organizational alignment and strategy execution as a matter of system integration, data and reporting, so their priority issue when considering any technology is the degree to which any tool integrates with their other existing operational IT systems. For operational analytics or many types of process integration, that mindset is appropriate. But, when it comes to addressing the major strategic alignment issues, I believe that this is an often-repeated mistake that keeps many organizations from realizing the performance breakthroughs that could be achieved.
Metaphorically, it is helpful to contrast an automobile’s dashboard with a GPS navigation system. The dashboard of an automobile must be integrated into the inner workings of the vehicle know the fuel level, engine temperature, oil level, engine speed and vehicle speed. You can’t walk into a Walmart© and buy a different dashboard for your Honda Accord, because of the technical integration issues. You can, however, walk in and buy a GPS navigation system and walk out to the parking lot and stick it on your dashboard with a suction cup. No integration is needed. The key information for the GPS navigation system does not come from the car’s operational systems. It comes from the driver entering in the destination, the unit sensing satellite information to determine the current location and some well-designed technology that delivers the right information in a usable format. If you’re a life-long New Yorker at a hotel in San Diego and need to drive to a meeting in Santa Monica, would you prefer to have the dashboard or the GPS navigation system? Knowing “how you’re doing” with regard to operational metrics doesn’t provide the insights needed to execute a strategy to get to a destination you’ve never been to.
Approaching strategic management with the assumption that IT integration is the major issue to be addressed to reduce the implementation risks will generally lead to selecting tools that are strongly biased towards operational monitoring, data and the wrong type of capabilities. The resulting deployment is likely to be hard-wired to look backwards, and it is likely to take the focus OFF of the major strategic issues that could lead to truly breaking down organizational silos, overcoming the fragmentation that hinders strategy execution and harnessing the talent of the organization to overcome obstacles to achieving the vision. Given the fact that large ERP software vendors are deeply entrenched in operational systems and selling large IT systems, it is highly likely that their approach to strategic scorecards would be heavily influenced by their operational mind-set and technology-centric paradigm.
A true strategic management system is not intended to manage detailed operational performance monitoring, details of budgeting, or analysis for discovering new insights by analyzing sales data. It is intended to manage the journey forward, helping to map out and pro-actively manage the complex system of changes that will allow an organization to get to a new desired state (the strategic “vision”). Reaching that new desired state typically requires a multitude of well-orchestrated smaller changes and significant improvements in teamwork across the many different parts of an organization. The information needed to achieve that does not come from extracts out of operational databases. Instead, it is likely to come out of the minds of a diverse set of leaders, managers and staff that are engaged in a process to systematically clarify the strategic choices, understand and anticipate the obstacles and inter-dependencies that impact strategy execution. The information includes innovations to overcome the obstacles and a shared understanding of how the many different stakeholders can work together towards strategic objectives that they come to better understand and agree upon.
The most valuable information in a strategic management system is typically not even understood in the early stages of the process, much less sitting in some IT application waiting to be integrated. As the details of the strategy get clarified, and as dependencies are better understood, and as innovations are considered for how to overcome obstacles that are identified, a collective wisdom emerges that typically exceeds the understanding of anyone in the organization at the start of the process. This new type of information doesn’t fit well in an operational database or in most data-centered dashboard tools that are often sold as strategic management scorecards. Just as a GPS navigation system has fundamentally different ways of storing and presenting information than a traditional automotive dashboard, a strategic management system has different architecture from the technology dashboards that most vendors are pushing.
The strategic management system also includes information for measuring progress on the strategic objectives, but veterans in strategic management will emphasize that the most valuable strategic measures are often leading indicators that don’t come from data in any existing systems. Even in cases where the data does come from other systems, the volume of measurement data in a strategic management system is so small that data integration is often barely worth the effort. The other important information in a strategic management system is for identifying, prioritizing and monitoring the key strategic initiatives that are launched to support strategy execution. Even there, the most valuable information is often the comments from the project leaders rather than data that can be integrated from other systems.
Just as the GPS system depends on a system of satellites to gain essential information, a strategic management system depends on a process for systematically engaging various stakeholders to communicate, innovate, and otherwise collaborate on the essential details for strategy execution. This requires expertise that is rarely a strength in IT departments or large software companies. This process is most effective when experienced consultants have a well-designed strategic management system to help manage the system of information that gradually emerges from the process. The right software tools can be very valuable to manage this complex system of strategic information. In fact, without the right tools, the process will likely bog down as the volume of information exceeds that which can be easily grasped. Much like Google Maps allows people to easily interact with a staggering amount of information without being overwhelmed, a core capability of a strategic management system is the ability to zoom-in or zoom-out to different levels of detail. Rather than storing information in increasingly-cumbersome documents or libraries of smaller documents, a strategic management system provides structure for information in ways that are consistent with strategic management best practices and allow different types of users—from C-level executives to front-line staff—to easily see the information that is relevant for them to better perform their role in strategy execution. But it is important to remember that the “deliverable” of a well-deployed strategic management system is not a report or a functioning IT system. The people changes that occur during the process are just as important.
Recent surveys of executives across many industries have confirmed that the ability to execute strategy is one of their greatest concerns. Yet most are not even aware of how strategic management systems could help.
Check back in future weeks to learn more about how Strategic Management Systems can help organization improve alignment and strategy execution.
Written by Bill Barberg