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The KPI.org Blog

Tim Johnson Tim Johnson

Tim is a contributing author and BSI's former Director of Consulting with over 32 years of experience in management and professional services management consulting. Areas of expertise include strategic planning, portfolio management, performance measurement/management, project management and business process improvement.

Why Strategic Planning Fails - Part 6

By: Tim Johnson

Jul 9, 2018 285 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Executing the strategic initiatives effectively

Project ManagementThis is the sixth installment in a blog series that discusses potential pitfalls that could hold you back from being fully successful in your strategic planning efforts.  The first was ensuring that you have full leadership support before you begin the strategic planning initiative, the second was generating needed buy-in across the organization, the third was making sure you build that strategy in a way that it can be executed effectively, the fourth was prioritizing to narrow your focus and the fifth was integrating the strategy into how you do business.  As I started the first blog of the series, most things that I have been successful at in my life have been because I did it the right way and using the right tools.  At the Balanced Scorecard Institute, we have the “Nine-Step Process” to building a strategic management system.  We believe in this approach and we have helped hundreds of clients develop comprehensive strategic plans with a management system that enables them to effectively execute strategy.  I myself have worked with over 80 organizations and have seen very successful strategic planning efforts and also those that were less so!  I wanted to share some observations as to where those that were not as successful went wrong along the way. 

The sixth pitfall is in not executing the strategic initiatives effectively.  When you boil strategy down, it really ends up being a tool to help you understand what things you need to start doing today to build the organization of the future so it can be successful, given how you assume the world will be different.  That said, it is only the accomplishment of these “things” or key initiatives that really makes an organization successful.  As such, the successful execution of these initiatives becomes fundamentally important for achieving the vision of the organization.  By having a sound project management office (PMO) system with skilled project managers driving the initiatives to execution, you will be setting the course for successful strategy execution.  Given that leadership attention to objective measures and their link to key initiatives provides focus and attention needed to implement the plan, the management system must ensure an effective process for measuring and monitoring results and tracking the progress of initiative execution is in place.  With an effective system for managing and driving initiatives, the leadership team will have the information it needs to effectively direct the organization’s strategy.

If this pitfall sounds familiar, contact us. We specialize in helping organizations prioritize projects & initiatives. Or check out our Strategic Initiative Management Course. This program focuses on the project management skills needed to effectively manage strategic initiatives end-to-end.

There is one more blog that will complete this series of potential pitfalls that could hold organizations back from realizing the many benefits to developing a strategy and a supporting strategic management system.

Missed Part 5 of the blog series? You can read it here.  You can read Part 7 here.

Tim Johnson Tim Johnson

Tim is a contributing author and BSI's former Director of Consulting with over 32 years of experience in management and professional services management consulting. Areas of expertise include strategic planning, portfolio management, performance measurement/management, project management and business process improvement.

Why Strategic Planning Fails - Part 2

By: Tim Johnson

Jun 5, 2018 740 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Generating Buy-in

This is the second installment in a blog series that discusses potential pitfalls that could hold you back from being fully successful in your strategic planning efforts. The first was ensuring that you have full leadership support before you begin the strategic planning initiative. As I started the first blog of the series, most things that I have been successful at in my life have been because I did it the right way and used the right tools. At the Balanced Scorecard Institute, we have the “Nine-Step Process” to building a strategic management system. We believe in this approach and we have helped hundreds of clients develop comprehensive strategic plans with a management system that enables them to effectively execute strategy. I myself have worked with over 80 organizations and have seen very successful strategic planning efforts and also those that were less so! I wanted to share some observations as to where those that were not as successful went wrong along the way.

The second pitfall I have experienced is people not buying in to the strategy as it is developed. As mentioned in Part 1, too many times I have seen a leader or small cadre of leaders piece together a strategy and then expect everyone to understand it and get on board. This is not what works! People tend to own what they help create. The more people you can involve in creating the strategy, the more people you have who understand it and support it in the halls and by the water coolers.

There are some key places where involving more people is easy to do and very helpful. The first is in generating ideas up front concerning the future environment in which the organization will exist. Externally what are the opportunities that will be available in the future? What are the threats that need to be considered and mitigated? Internally what are the strengths and weaknesses that could have the most strategic impact on our future success? By getting people to provide input you are first informing them on the process and second telling them that their ideas are valued. You can also involve people beyond the leadership team when developing measurable objectives, KPIs and initiatives. You can find people willing to step up and “own” an objective or to lead an initiative. Again, the more people that are involved, the more traction you are creating within the organization to help drive change and execution.

If this pitfall sounds familiar, then you might be interested in our Strategy Execution—Success Through Leadership workshop which addresses major obstacles and challenges faced in strategy efforts, and techniques on how to overcome them or let us facilitate your group to build support for the system.

Over the next few blogs we will explore five additional potential pitfalls I have seen that hold organizations back from realizing the many benefits to developing a strategy and a supporting strategic management system.

You can read Part 3 here.  Missed Part 1 of the blog series? You can read it here

Tim Johnson Tim Johnson

Tim is a contributing author and BSI's former Director of Consulting with over 32 years of experience in management and professional services management consulting. Areas of expertise include strategic planning, portfolio management, performance measurement/management, project management and business process improvement.

Why Strategic Planning Fails - Part 1

By: Tim Johnson

May 30, 2018 1072 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Gaining Senior Leadership Support

My father gave me an important piece of advice once that I will always remember.  “Always have the right tool for the job!”  Of course, I had to re-learn that lesson through the years a few times, but it really is good advice.  Most things that I have been successful at in my life have been because I did it the right way and using the right tools.  In the military they teach us to follow the process and meet the standards.  Of course, there are exceptions to any rule, but generally there are proven approaches available that help guide us to effectively and efficiently accomplishing what we undertake. 

At the Balanced Scorecard Institute, we have the "Nine Step Process" to building a strategic management system.  We believe in this approach and we have helped hundreds of clients develop comprehensive strategic plans with a management system that enables them to effectively execute strategy.  I myself have worked with over 80 organizations and have seen very successful strategic planning efforts and also those that were less so!  I wanted to share some observations as to where those that were not as successful went wrong along the way.  Over a series of seven blogs I wanted to share with you a handful of observations that could hold back a successful strategy initiative.  The seven that I will share are not meant to cover every potential pitfall, but they are definitely some of the most common fails I have seen in my experience.

The first pitfall has to do with not gaining Senior Leadership support before you begin the effort.  One of the first principles we stress in our Balanced Scorecard Professional Certification program is that if the leaders are not out in front of the strategic planning effort, it has zero chance of being successful.  I once had an executive approach me during our first break at a strategic planning offsite and tell me “I don’t like where this is going!  If I want them to have a strategy, then I will give them one!”  I was a bit taken aback and explained that if he was just to “pontificate” his strategy for his team to execute, then he would not be generating the needed buy-in to execute the plan later.  It would be his plan and his alone.  While he ended up eventually coming around, it could have been catastrophic if the key leader was not on board with the process and approach.  Additionally, not only should leaders be “okay” with developing strategy, they must be the biggest cheerleaders and talk about it in meetings, town halls, board meetings and any other opportunity they have to share the organization’s path forward.  Everyone needs to understand that the leaders completely support the effort, and the strategy will be executed.  Everyone involved must understand that there is “no turning back” and that its time to get on the bus!

If this pitfall sounds familiar, then you might be interested in our Balanced Scorecard Professional Certification course where leadership development, communications and change management action is discussed and becomes part of the strategy process or our Strategy Execution—Success Through Leadership workshop which addresses major obstacles and challenges faced in strategy efforts, and techniques on how to overcome them.

Over the next few blogs we will explore six additional potential pitfalls I have seen that hold organizations back from realizing the many benefits to developing a strategy and a supporting strategic management system.

You can read Part 2 here.

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

How to Keep Lettuce Crunchy and Other Strategy Execution Lessons

By: David Wilsey

Nov 22, 2016 6488 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
I learned two lessons in college that I still think about – one in the kitchen and one as a strategy execution consultant. My professor claimed during a cell biology lesson that if you leave iceberg lettuce in water for about 20 minutes its cells expand as they soak up the water. He said that many chefs knew that soaking lettuce in cold water made it seem fresher and crunchier but few understood that it was because the cells were packed to the bursting point.

I went home for the holidays eager to share this new lesson with my mother. This is where I learned the consulting lesson. 

My mother had been taught that in order to keep salad crisp, you should throw a slice of bread into the salad as you are making it and then pull the bread out just before serving. The thinking was that the bread soaked up the excess moisture that would otherwise lead to wilting.

When I shared my professor’s theory with her, I assumed that we would immediately begin saving a nickel per month due to all that saved bread. Instead I was surprised to find that my mother was not about to change the way she made salad because of something her son’s biology professor said, not even after I showed her that the lettuce didn’t wilt.

Strategy execution is about transformation. It is about the systematic implementation of the changes needed to move an organization forward. Unfortunately, as you try to convince people to change the way they do things, many of them react exactly like my mother did.

The change management field is built around several general principles in how to manage people through change: thoroughly communicate how/why/what change is happening, look for the “what’s-in-it-for-me” for employees, communicate using two-way dialog, remove barriers to change, celebrate success, describe a “burning platform”, etc. Strategy execution specialists bring a few more key approaches to these basic doctrines. 

Engage Around the Big Picture. A simple business case (e.g. this initiative will help us improve process efficiency and lower operating costs) often isn’t enough. To embrace change it helps to understand how a particular initiative is aligned with the overall strategy of the organization (e.g. we want to bring low cost healthcare solutions to those suffering from an ailment. If we can improve this process, the solution could be better, more consistent, and cheaper than anyone else in the market). Employees will be far more motivated to change if they believe in the strategy. Strategy professionals typically have the skills needed to articulate and communicate that story.

Make Strategy Everyone’s Job. Strategy is a team sport. Too many strategy professionals think that because they are good at it they should do all of the work themselves. But good strategy execution relies on others to implement. I can tell my mother that this is a better way or (if she were an employee) order her to follow a new process, but as long as she can dismiss the idea as an outsider’s, change will be painful. Good strategy execution professionals understand that their job is to facilitate a consensus around a shared vision rather than simply dream up a vision in a vacuum.

Pick Your Battles. Strategy is about focus and strategic thinkers should be good at prioritizing. The worst thing you can do is overwhelm employees with dozens of major changes at the same time and then when things go badly decide that it’s not worth the trouble. Better is to pick the most important changes and implement them at a pace that the organization can handle. Then think through and communicate the timeline, action steps, and resource changes that will happen as the change is rolled out.

Facilitate a Sense of Inevitability. The weakest client outcomes in my career happened when there was uncertainty about whether or not the senior-most executives were on board. A well-meaning strategic planning director that isn’t visibly supported by the executive team will struggle to move an organization forward even if they do everything else right. On the other hand, if the executive team has thoroughly and repeatedly communicated that this change is going to happen with or without you, the inertia of inevitability will convince people to jump on the bandwagon even if other change management mistakes are made.

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

How Did I Get an MBA Without Learning This?

By: David Wilsey

Mar 24, 2016 7844 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
Business Woman in classMost MBA programs pride themselves as being the ”practical” degree that will best prepare its students for any number of management roles. And I have to admit that I can point to that degree as a true turning point in my career. But it wasn’t until I became a Balanced Scorecard Professional (BSP) that I learned several principles that I have found to be key to being a good manager and leader.

  1. Help your team articulate a shared vision
    Many managers and leaders think that the key to success is to have a clear vision. But vision that is poorly articulated (or not at all) is just a dream. And simply dictating the vision to employees usually doesn’t work either. Change doesn’t happen because “I said so” or by assigning tasks without any context. Employees engage when they understand what we are trying to accomplish and why. Shared vision and change management happen through dialog, facilitation, and the development of a logical business case.

  2. Connect the dots between what employees are working on and desired outcomes
  3. A good supervisor makes sure that employees are completing their tasks. A good leader makes sure that employees are working on and completing tasks that move the organization toward a shared vision of the future. BSPs have been taught to articulate the difference between mission, vision, and strategy. They know how to organize their energy, measurements, and initiatives around a set of coherent strategic objectives. They know that many people are visual learners and so they use a strategy map to communicate how the dots connect. They know how to align department objectives with high level strategy and communicate to employees where they fit.

  4. Measure results (not just actions)
    Most managers know to measure project milestones as indicators of success, and unfortunately many strategic planners use this basic principle for KPI development. They define a handful of goals (e.g. Improve Brand Awareness), list all of the projects needed to reach those goals (e.g. website redesign), and then measure the completion of those projects as a measure of success (e.g. percentage of website redesign completed). Good leaders measure results. A redesigned website is nice, but I should be much more interested in whether or not it led to improved brand awareness.

  5. Develop strategy before KPIs
    The best KPIs in the world won’t help if they are designed to measure a half-baked strategy. The good news is that you don’t have to be a Steve Jobs-type visionary to develop an intuitive strategy by formally assessing your strategic situation and identifying a path forward using common methods like a SWOT, PESTEL, Customer Value Proposition, Blue Ocean Strategy, and other methods.

There are other such principles, such as how to identify drivers of future performance using Perspectives, how to use strategy to prioritize, how to set and reach reasonable performance targets, and many more. If you can think of any others, please add them in the comments section below.

If you are unsure about what a balanced scorecard or a Balanced Scorecard Professional is, please visit our website. 
David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Identify Strategic Thinking with One Simple Question

By David Wilsey

Jul 29, 2014 20328 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
I used to work on a research team for a company that produced an operational risk software product. I always found it interesting how different members of the same team answered an important question: what do you do?

Here is the way Person A and Person B responded:

Person A: We do research on the internet and enter data points into an operational risk database.

Person B: We help banks understand operational risk and how much related capital they were required to reserve by providing an analytical software solution that models operational risk in the global market.

Technically both answers were correct. For the data model to be statistically significant, the product needed a certain number of data points, and our research team’s job was to research and categorize examples of operational loss in order to populate the database and make the model work. And yet, somehow Person A’s answer was always unsatisfying for some people.

It might be tempting to say that Person B was simply exaggerating the importance of their work by describing it in terms of the mission of the product line, but I think that misses an important point about the value of thinking strategically no matter what your position with the organization is. Person A was simply describing our job. Person B was describing how we created value. Different ways of describing our work was actually a window into the strategic thinking style of the team members.

From Daniel Pink to Simon Sinek and others, much has been said and written about how people are more motivated and productive when they understand the larger context for their work. Understanding why they are doing the work is profoundly important for creative professionals to feel a sense of engagement. Helping employees transition from narrowly thinking about what they do to more broadly thinking about what they are trying to accomplish can improve organizational performance in a number of ways.

The good news is that strategic thinking is a teachable skill. In our BSC Certification courses, we begin by teaching the basic semantics of strategy. At first, students mechanically append or replace the “task” language that most are comfortable with (we need to develop a new service by milestone x) with language that reflects a higher level objective (we want to improve the customer experience; the development of a new services is one option for accomplishing that). Over time, mechanical semantics evolve into an instinct for intuitively thinking about the strategic context. As students change the way they think about strategy and action, critical thinking skills improve as well (e.g. if we are trying to improve the customer experience, is a new service really the best way to do it?). The transition for many teams from always focusing on tactics and actions to always starting with the big picture and working down can be quite profound.

For more about how to improve strategic thinking in your organization, see our Balanced Scorecard Certification Program or The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.
Howard Rohm Howard Rohm

Howard Rohm is the Co-Founder and President of the Balanced Scorecard Institute. Howard is an author, performance management trainer and consultant, technologist, and keynote speaker with over 40 years' experience.

Gaming the System at the VA

By: Howard Rohm

Jul 16, 2014 9956 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Imagine you take your car to the car dealer to get serviced. Before you give your car to the service manager you see the following performance statistics posted on the wall:

  • Average time to wait for an appointment after requesting one—27 days
  • Number of people who requested an appointment but didn’t get one—46,000
Not too reassuring is it. Would you leave your car or look somewhere else?

Some Veteran Administration facilities have a performance history like this. According to a recent review of the VA requested by President Obama, the agency is in deep trouble—average wait time for an appointment is 27 days and 46,000 veterans never got an appointment after requesting one. Some veterans died while waiting for appointments, although it’s not clear if the delays in medical attention contributed to the deaths.

At some VA facilities performance measurement data were misreported to make executives’ performance appear better than it was. Fraudulent performance reporting was used to help justify executive performance bonuses. (A department audit reported that three out of four facilities had a least one instance of false wait-time data and in some facilities two sets of books were being maintained.)

This type of behavior is called “gaming the system”. It’s a consequence of a culture overly focused on the wrong things (wait times) and a measurement system that emphasizes process performance over outcome performance. We shouldn’t be too surprised by the VA experience. When the wrong things are measured and incentivized, the wrong behaviors almost always result.

Focusing on the wrong measures and missing or minimizing the right measures created a climate of misreporting and deceit at some VA facilities, leading some executives to get credit for and bonuses based on reported good performance while all along the opposite seems to be true. Almost $300 million was paid out by the VA in 2013 for performance bonuses to employees, including nearly 300 senior leaders. (Maybe some of these executives should give their bonuses back to the VA for poor performance!) We’ll leave for another discussion the bigger question—what is systemically wrong at VA that encourages a behavior to keep two sets of books on performance?

Some critical questions come to mind. Where does customer satisfaction (veterans and their families are the customers) fit into the performance reporting and incentive equation? Shouldn’t satisfaction with medical service be heavily weighted in determining executive bonuses? If performance and reward are based mostly on process measures—like wait time—and wait time is being misreported, shouldn’t one assume that outcomes like effective medical care would suffer and that cheating to gain bonuses could occur?

How can an organization choose the “right” measures?  Start with the end in mind (desired results/accomplishments) and work backwards through the processes that lead to the desired outcomes and to the resources required to produce the program outputs that yield the desired outcomes. Make sure the desired results are expressed in unambiguous language. Then test the developed measures to make sure you’re not measuring what doesn’t matter, or worse, measuring the wrong things and incentivizing the wrong behaviors. Whether you are a hospital, a car dealership, or any other business, government or nonprofit, the same principles apply for developing good performance measures.

The unintended consequences of doing measurement badly are, in the case of the VA, potentially life threatening. Can your organization afford to do performance measurement badly, or not at all?

You can learn more about developing measures that matter in our book, The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard. You can order the book on our website or on Amazon.
Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

Don’t Be THAT Guy!

By Gail Stout Perry

May 15, 2014 13424 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
A very distraught woman (we’ll refer to her as Vera) recently called the Balanced Scorecard Institute office in panic.

Vera:  “Hello?  I need those flags.  Can you please overnight the flags to me?  It’s urgent!”  

Us:  “Excuse me?  I think you may have the wrong number?”

Vera:  “Isn’t this the Balanced Scorecard Institute?”

Us:  “Yes, ma’am.  But we don’t sell flags.”

Vera:  “Yes, you do.  My boss said so.”

Us: “Ummmmm….could you elaborate?”

Vera (in an exasperated tone):  “Listen!  My boss just announced that we are going to improve performance using a Balanced Scorecard.  He sent us a memo that said each store is responsible for showing performance by using red, yellow and green flags.  I’m a store manager and I am being held RESPONSIBLE!  I called the other store managers and nobody has the flags.  We all need to order those flags NOW!  You ARE the Balanced Scorecard Institute, are you not?!?”

I really am not sure we ever adequately explained to her that the “flags” are a term meaning a visual representation of the level of performance around a target value for a strategic objective or measure, with green generally indicating good performance, yellow generally indicating satisfactory performance, or red indicating poor performance.  And I’m pretty sure she thinks we are idiots for giving a complex response to a simple request to order some flags that she can wave.

For the record, I am not making fun of the caller herself.  She was an intelligent woman and obviously a dedicated worker.  But she was dreadfully misinformed and the source of the misinformation is the point of this blog.

My point is that her boss created angst and confusion in his organization by making an announcement with no explanation and no context.  HE knows his strategy, HE knows how he wants to measure performance on it, HE created a balanced scorecard to do so (without teaching anyone what that means), and HE announced it to the world and then said “YOU are responsible!”  

Don’t be that guy.  

Many bosses / executives / leaders are really smart.  They have a well-thought out strategy in their heads and they can make the leap from planning to execution…in their head.  But they are better at internal conversation (in their own head) than they are at communicating with others.   If this sounds familiar, let us help you bridge the gap between what you say and what your employees hear.  
I’ve written another blog about this topic (
Are Strategic Leaps of Logic Leaving You Dazed and Confused?), because this problem comes up over and over again.  

Please contact us and let us help. 

Or to learn more about how to translate your strategy into something that is clear to communicate in a way that employees can understand and effectively contribute to, we invite you to explor
e The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard.
Dan Montgomery Dan Montgomery

Dan is co-author of The Institute Way. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

In Search of the Canadian Hippo

By Dan Montgomery

Feb 24, 2014 5465 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
During the years we lived in Canada, my family became fond of Canadian Heritage Moments.  These were sixty-second vignettes that depicted formative moments in Canadian history.

One of my favorites has the intrepid French explorer Jacques Cartier arriving in the valley of the St. Lawrence River in the year 1534 and encountering a group of Iroquois. The leader of the tribe approaches the French party and invites them to visit his nearby village.  The viewer, having the benefit of English subtitles, learns that the word for village in Iroquois is “kanata.”

Cartier turns to the priest on his right and asks “What is he saying, father?” The priest hesitates a moment and then announces confidently: “He is saying that the name of this nation is Canada!”  A helpful and obviously intelligent young man steps up behind Cartier and says “Begging your pardon, sir, but he’s inviting you to visit him in his village. Canada is his word for village.” The priest asserts his authority, dismissing the young man, and off they go.  And the rest is history!

Enjoy the story at http://tinyurl.com/k84fsdk

When exploring new territory, it’s best to draw as much as possible on the collective intelligence of the group when assessing the situation. This is truer than ever in our organizations, and at least as true as it was in Cartier’s time.  Cartier, after all, thought he was in Asia.

One of the biggest mistakes we make in strategic planning is assuming that the future will be more or less like the past. It won’t. It’s critical to articulate – and question – our assumptions about the environment we operate in, in terms of what our customers value, what our competition is offering, and the impacts of big forces like technology and the economy.

Many of our organizational ways derive from a simpler time, when we could rely on the experience of people who’d been around longer for an accurate assessment of the situation. In one of my classes, a student raised his hand and said “That’s what we call the HiPPO principle.  It means that decisions are made based on the Highest Paid Person’s Opinion.”

In rapidly changing times, making strategic assessments and decisions based on what worked in the past may prove short sighted. A well-managed system for tracking and reporting strategic metrics is the compass that leaders and staff throughout the organization can use to learn from experience and align their actions in pursuit of better value for customers.

We recommend that you:
  • Schedule periodic reviews of your assumptions about your macro-environment and stay tuned for new information that may challenge these assumptions
  • Agree on the strategic performance metrics that matter to you as an integral part of your planning process – not after the fact
  • Maintain an especially acute focus on tracking customer experience and value
  • Incorporate those metrics into your scorecard and make scorecard review a regular item on your leadership meeting agenda
Dan Montgomery Dan Montgomery

Dan is co-author of The Institute Way. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

What’s the Value in Having Values?

By: Dan Montgomery

Dec 13, 2013 12077 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

“It’s not hard to make decisions when you know what your values are.” – Roy E. Disney

Values can sometimes seem like the stepchild of strategic planning.  The guts of a strategic plan can include a results-oriented vision translated into specific objectives, measures and initiatives that will support it.

Values, on the other hand, can feel a bit fuzzy. Often, people think of values as a “do-gooder” thing. The exercise of defining values may feel like an exercise in identifying lofty sentiments rather than guiding day-to-day behavior.

Edgar Schein, who has made a career of studying organizational culture and values, makes a distinction between “espoused values” – the things we say we believe in - and “shared tacit assumptions” – the often unspoken assumptions about “the way things are” that actually shape our behavior. All organizations have values, whether these are explicit or not.

This last point is important. For example, Enron had a list of four values that sounded very convincing: respect, integrity, communication and excellence. There also were a number of other values, such as “consistent profits quarter over quarter no matter what,” that weren’t stated, yet were the primary drivers of management behaviors – hidden from public view until it was too late.

These kinds of values – stating things that sound nice but don’t really guide our behavior – are what we call “lobbyware.” They look good on a plaque but don’t really say anything about how we make decisions.

There’s nothing wrong with having a value based on profit—this is how businesses grow and sustain over time. I was working with the executive team of a privately-held company, defining values as part of Step 1 of the Institute’s Nine Step process, and the CEO proposed a value of “profit.” Some of his executives were mildly horrified, to say the least.  They were coming from the paradigm that all values have to be “nice,” and felt that somehow focusing on profit just wouldn’t be very motivating to most employees.  The CEO’s response was telling – “If we don’t make a profit, we’re out of business. And we’re all out of a job.”  Similarly, in the non-profit world, we hear the slogan “No margin, no mission.”

And, all values aren’t necessarily “humanistic” attributes like teamwork, respect, or public service. Values create both an ethical and a practical compass that influences actions and decision in every-day situations. In a “lean” company like Toyota, for example, values include “Go to where the work is done and find the facts,” “Encourage Consistency,” and “Reduce Waste” – all part of a rigorous emphasis on continuous, measureable process improvement.

Ultimately, values reflect the personality of the organization, and are an important component of the organization’s culture – part of the foundational perspective we refer to as “Organizational Capacity.” As part of this, well-articulated values can be a powerful way to attract and screen new employees who are compatible with the culture of your organization.

Finally, the assessment of an organization’s strengths and weaknesses may show that the current values of the leadership or workforce are incompatible with what is needed to move forward, seize opportunities, or adapt to change.  In that case, a strategic theme addressing cultural transformation may be called for.  This cultural transformation may be essential to achieve other goals of the organization.

Read more about Values in The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

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