New performance management trends in Saudi Arabia

The beginning of February accommodated an important QPR visit to Saudi Arabia where I had the opportunity with my colleague, Tero Aspinen, to meet local QPR partners and customers. One of the highlights of the visit was meeting with PMCGA (Performance Center for Government Agencies), a QPR key customer. PMCGA carries out tasks such as measuring productivity rates of government agencies by checking the optimal use of human, financial and material resources. In effect, it is the key organization that supports Saudi Arabia’s government agencies in performance management.

QPR visits key customer PMCGA in Saudi Arabia

Reflecting on the above, interest in Kaplan & Norton’s balanced scorecard, as a strategic planning and management system, has increased in recent years in the Middle East. Demand seems to be growing especially in the public sector, where there is regulatory pressure to raise transparency and efficiency. Meeting with customers in Saudi Arabia helped us to gain important insight about the growing market opportunities within the region.

Another exciting trend is the spreading interest in Enterprise Architecture (EA). EA is starting to gain visibility in the agendas of organizations. Organizations seem to be especially interested in combining balance scorecard and strategic level performance management with EA so as to generate a holistic view of companies’ operations. The main reason for this is that EA is a discipline that covers all the dimensions that are needed to align strategy with business operations such as organizational structures, processes and It systems.

The recent change of regime in Saudi Arabia will inarguably bring about both big and small changes in governance and organizational structures in the Kingdom, including ones affecting PMCGA. But the above mentioned boost in demand for operational excellence through increased agility and efficiency is a refreshing direction.


Sakari Lapinsuo

https://fi.linkedin.com/in/sakarilapinsuo

What's the deal in LATAM?

My colleague and I did a 3 week road trip in Latin America where we visited some of our  partners and customers as well as hosted several marketing events in different countries such as Brazil, Chile, Mexico and Trinidad and Tobago. It was a great experience as we got firsthand insight of the local business environment in both private and public sectors. During the trip we learned how organizations approach strategy execution and operational development.

Focus on Performance Management and Strategy Execution
What we perceived when talking to customers and partners is that the business environment in Latin America is not significantly different from Europe.  Organizations are facing similar kinds of challenges - political changes, new laws and directives as well as pressures caused by the downturn in economic growth. These pressures force organizations to rethink their strategies and business models and also think how to improve operational efficiency.

However, organizations in Latin America and Europe do differ considerably in the way they approach the above mentioned challenges. In Europe, the market pressures are tackled by aligning strategic requirements with operational development and to support this organizations have already adopted methodologies to measure performance and model operations such as business processes and IT-systems. In Latin America, organizations are focusing, or starting to focus, on making their operations transparent through Performance Management and only few companies have started to model their operations with the goal of making plans on how to improve the performance.

From left: Angel Arturo Perez Cotero (Laguna Verde), Mario Nuricumbo (NG Business Value -QPR partner), Raul Partida (QPR), Tero Aspinen (QPR), Martin Nuricumbo (NG Business Value - QPR partner)

Another focus area for organizations in Latin America is strategy execution and by far the most adopted methodology is Balanced Scorecard. Many companies have achieved brilliant results with this approach. For instance, the largest Nuclear plant in Mexico, CFE’s Laguna Verde power plant, won a prestigious BSC Hall of Fame award based on their successful strategy executions using Balanced Scorecard methodology.

New approaches to operational improvement create interest
When facing the current market challenges, organisations in Latin America are driven to improve their strategy execution and operational efficiency with Balanced Scorecard and Performance Management being the most popular approaches at the moment. But I see great value for organizations when they will, probably during the upcoming years, apply also methodologies focusing on planning and identifying how they can improve their operations based on strategy and performance requirements. In this area methodologies, such as strategy driven Enterprise Architecture and business process modeling as well as Automated Business Process Discovery (ABPD) will offer organizations great value. This provides great opportunities for organization working with QPR as QPR’s total offering supports organizations to formulate and communicate their strategy as well as to monitor and plan the operations to match the strategic requirements.

Raul Partida
https://fi.linkedin.com/in/raulpartida 

Tero Aspinen
http://fi.linkedin.com/pub/tero-aspinen/2a/592/344

Balanced scorecard aligns initiatives. .. And then what?

Balanced scorecard alone is not enough for successful strategy execution. To achieve significant change, it's critical to understand how strategic objectives and initiatives influence organization's business operations and architecture.

Balanced scorecard (BSC) is an excellent framework for defining and aligning strategic objectives and initiatives to support strategy execution. However, many organizations struggle with the discrepancy between strategy execution planning and the actual execution. Based on our experience, the discrepancy is caused by too high level strategic initiatives, which do not take into account organization's existing architecture and operations.

So what should be taken into consideration after a strategy has been defined? How the strategic objectives should be made actionable? You certainly want to avoid your organization ending up in the below situation where planning and execution are going to opposite directions. As per an earlier post by colleague Sami Lotvonen, 44 % of enterprises still fail at strategy execution.

Figure 1 - How not to do strategy execution planning

What to consider in strategy execution planning

Initiatives in BSC are strategic in nature and often drive for significant change. Based on our global experience, initiative planning is often on a too high level and done without proper understanding of organization's current business operations and architecture. To become actionable, the initiatives must cover three vital dimensions of strategy execution: process, people and IT systems. Only by doing this, you get through the strategy execution chain described in the below picture.

 

Figure 2 - Strategy execution chain

Processes
To achieve strategic change, processes must change. You can say that all activities in an organization belong to either core or support processes.  Some processes are automated using a workflow solution or other IT tool and some are based on people, following instructions and formal process models. Especially the latter can be ad-hoc and happen differently every time, giving its own flavor to making changes.

People
Regarding people, you need to consider two aspects: allocating enough resources to strategically important activities and making sure that the people have sufficient competences. Be aware that for most people, the big challenge is to give up tasks that don’t lead toward strategic execution and take on new ones as “walking on the unknown territory” is often uncomfortable. Nowadays it’s more common to cascade balanced scorecard down to individual level so that the high level strategy leads everyday activities.

IT systems
Cloud technologies, big data and mobility open opportunities for completely new business models. Therefore, IT is not only a pre-requisite for efficiency but it should be utilized as a source for innovations and as an enabler for competitive advantage.

Four steps to avoid discrepancy in strategy execution planning
1.       Understand the ‘as-is’ situation of your business operations and architecture.
2.       Consider the three dimensions already when analyzing feasibility of different strategic options. For example, an old technology platform can stop an organization from executing a brilliant strategy. If this is not noticed on time, it will lead to some very expensive corrective actions.
3.       Plan ‘to-be’ business operations and architecture.
4.       Design transition roadmap and deployment for strategy execution.

When in the strategy execution phase, remember to establish continuous monitoring and feedback loops from all three dimensions. This allows you to steer your business towards strategic objectives.

Maija Erkheikki
http://fi.linkedin.com/pub/maija-erkheikki/2/303/a11

Tero Aspinen
http://fi.linkedin.com/pub/tero-aspinen/2a/592/344

Mikko Rajala
http://fi.linkedin.com/pub/mikko-rajala/a/102/179

Strategy execution a hot topic at Strategy Leaders Forum in Dubai

Last week QPR and QPR’s Strategic VAR in the Middle-East region IYCON sponsored Strategy Leaders Forum that took place on 13-17 of April 2014 in Dubai. 

 Dr. Robert Kaplan with the team from QPR and IYCON

 

One of the highlights of the Forum was Dr. Robert Kaplan’s (co-creator of balanced scorecard methodology) Master class session on strategy execution. Dr. Kaplan started his presentation by emphasizing the importance of leading change as part of strategy execution and pointed out that in today’s dynamic environment business leaders should always be prepared for change - even if business is currently running smoothly. To ensure business success also in the future, companies should proactively look for strategic level change. He brilliantly brought home the message by quoting the legendary former CEO of General Electric, Jack Welch: “Change before you have to”.

Another interesting topic of the Master Class was a thorough and pragmatic presentation of Kaplan-Norton six stage management system for strategy execution. It is a comprehensive tool for strategy execution that creates a link between strategy and operations. Dr. Kaplan then ended his session by bringing in risk management and talking about the significance of integrating it into the Strategy execution process.

Overall, as a company that develops software tools that support organizations in strategy execution and in strategic level change, is was great to listen to his message. QPR’s offering gives means not only to plan and monitor strategic change but also manage risk, in addition to fully supporting the framework developed by Kaplan & Norton. So we can really help organizations who are looking for management system for strategy execution, and it was great to see that our comprehensive approach was validated by Dr. Kaplan who is a leading authority in this field. The event included also many other excellent presentations and we’re proud to mention that the presented case studies also included a couple of QPR customers.

And as usual, the discussions outside of the presentation rooms proved to be interesting. One of the key findings was that organizations DO regard strategy planning and execution as an essential ingredient for a company’s success, and most companies have established a dedicated organizational function, Strategy Management Office, to manage strategy planning and execution. Furthermore, many organizations also seek for software tools to automate the strategy execution process and to improve communication and collaboration around strategy execution.

It seems that the above approach has brought companies great results in the Middle-East.

So, as a take away from the event we can say that successful strategy execution requires real dedication and commitment from the organization, and the right framework with right tools. 

Tero Aspinen

Director, Partner Management

fi.linkedin.com/pub/tero-aspinen/2a/592/344/