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The KPI.org Blog

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

The Four Things I Wish I’d Known - Part 3

By: Gail S. Perry

Oct 15, 2018 751 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

KPIs Are Essential (But Know Your Audience)

I wanted to sink into the conference room floor. I was so embarrassed and was convinced that I must have just asked the stupidest question in the world. To this day, I cringe at the memory of standing there, in front of the entire leadership team at a prestigious, world-renowned, non-profit organization, while the entire team stared blankly at me. I was well into the second decade of my consulting career and was accustomed to taking on major projects. This time, I’d been asked to design a dashboard of metrics for this organization.  I’d gathered the heads of all functions and departments to explain the purpose of the project, their roles as stakeholders, and then, poised to write responses on the whiteboard, I asked the question: “Can each of you tell me what three to six key metrics you use (or would like to us) to manage your part of the organization?” My thinking was that this would give us a quick and rough outline of what metrics mattered most to the people who ran the organization – these same people who were now staring at me. Finally, one gentleman spoke up and said, “I believe this is what we hired you to do – don’t you know what metrics we should use?”  

Fast forward another decade and I have a lot more KPI experience under my belt and I’ve worked with dozens of major organizations on performance management as well as implemented KPIs for my own use in managing an organization. And in hindsight, I now realize that the managers who were staring at me should have known their key processes and value drivers and been able to articulate what they were trying to accomplish and how to measure it.

I have since learned that there are two kinds of managers/leaders. Those who operate at a tactical level and those who see the full picture. The tactical managers keep very busy managing what Covey calls the whirlwind of daily operations. Some focus only on the day-to-day actions that are required of them.  Some are great at people skills. Some are more entrepreneurial and implement innovations, initiatives, and projects they feel are needed as they sense and respond to risks and signals at the tactical level. But after all these years, I see how these sorts of managers consistently fail to achieve meaningful long-term results. They perform well on daily operations, but few can achieve sustainable improvements in those operations.  And that is exactly what happened to every one of the managers in that conference room. They did their daily jobs well, but they couldn’t produce long-term results for the organization.  Within five years, all were replaced.

The other type of managers/leaders see the full picture of key processes and value drivers and they leverage KPIs to monitor and manage performance. They know KPIs (metrics) will enable them to better manage overall performance as well as to assess the impact of any innovations, initiatives, and projects. 
  
I’ve since learned that I didn’t ask a stupid question. I simply was asking it of the wrong sort of manager/leaders. I’ve asked that same question of the other type of managers and they rattle off metrics faster than I can write them down.  

I have learned to assess the audience first and be sensitive to the fact that not everyone knows about KPIs or how they enable managers with insights and power for improving performance. Some individuals may need some basic education about the topic, they may have a long change management journey to buy into the value and use of KPIs, and they most likely will need coaching help to figure out their key processes and value drivers, as well as how to determine appropriate KPIs to use.  

It’s not rocket science. To some of us, it is simply common sense. But not everyone is wired this way.  We are all born with different natural tendencies so I’ve tried to learn to keep that in mind. And I no longer sink into the floor when someone stares blankly at me. I simply start asking more questions until we find common ground and then work forward from there.  

Read Part 2 of The Four Things I Wish I’d Known here. Read Part 4 here
Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

The Four Things I Wish I’d Known - Part 1

By: Gail S. Perry

Sep 26, 2018 1077 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
I was asked to speak to a group of new college graduates and to share a few things that I wish I’d known earlier in my business career.  What would have helped me to avoid major mistakes or to do a better job earlier on?  This is part of a series of 4 blogs in which I share the four things I wish I’d known.

Strategic Knowledge is a Must Have

Paul Porter was his name. He was my first manager and was conducting the first performance review of my career. I was less than six months out of college and working for the company that is now Accenture. I’d been working insane hours, using a software that no one else in the entire company knew how to use yet, and delivering on an innovative solution to a transportation company – a very early use of mobile technology and portable laptops when the only connectivity for the user was a landline in a rural motel room and the “laptop” was almost too big to fit in the overhead bin of a plane. I was the envy of my peer group due to the innovative nature of the engagement.  

I fully expected a glowing review. My heart sank when Paul turned the page to the “needs improvement” section of the evaluation and I saw he had written a full paragraph.  He advised that I needed to look up and see the big picture instead of focusing on the tasks at hand.  It had never occurred to me that it is not only ok, but encouraged, that a worker look up and understand the big picture. Isn’t that what the higher-ups are supposed to do? Wouldn’t I be overstepping my bounds? Besides, I was mystified as to how to even begin to do this.  

I wish I had known the principles of strategic planning and management and had the sense to ask to see the company’s strategy. I wish I had asked to see the overall project charter and to understand the business case, as well as the stakeholders, of the engagement. But I didn’t even have the basic knowledge (or vocabulary) to ask these questions at the time.  

Now, I give similar advice to anyone who asks how to improve their employees’ contributions. Ask them to consider the big picture. But you must also take the time to explain strategic principles while showing someone the big picture - whether it is how the company works, the key processes, the value drivers, the overall strategy, or a project charter. For many, this may be their first exposure to these fundamental business concepts. Help them to understand how they fit in and how they can contribute. And solicit their ideas for how to improve things.  

Some people thrive at the operations level.  But to Paul Porter’s point, you aren’t maximizing your contributions if you only focus on the assigned tasks at hand. We have an employee who has what, to me, would be the most mundane task-oriented job in the world.  But he loves his work and he is brilliant at it. When I showed him our strategy, I was delighted to see he was the first to volunteer some insightful feedback and ideas. He continues to contribute to the big picture in a meaningful way due to his tremendous depth of knowledge in his specific operational function.

The irony of that first review is that I’ve spent the better part of the past two decades doing nothing but strategic management. Once I started noticing the big picture, I was insatiable. For me personally, strategy and overall operational design is incredibly interesting and rewarding. I wonder where Paul Porter is today? I’d like to thank him.  

Read Part 2 here.
Tim Johnson Tim Johnson

Tim is a contributing author and Director at Jabian 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 7

By: Tim Johnson

Jul 16, 2018 1670 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Communicate, Communicate, Communicate!

Communication

This is the seventh 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, the fifth was integrating the strategy into how you do business and the sixth was ensuring you have effective execution of the strategy.  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 seventh and final pitfall is not communicating the strategy effectively.  As we are told with any change management effort: communicate, communicate, communicate!  In our balanced certification courses we love to give the example of a vision as John F. Kennedy announcing in 1962 that by the ended of the decade he wanted the United States as a nation to put a man on the moon.  It was a great vision and it really captured the imagination of the nation.  Everyone was on board and understood what we were trying to accomplish.  And at NASA, it is said that everyone understood how what they did was going to help the agency put a man on the moon.  There was effective communication that lead to overwhelming commitment.  Not only for those that worked at NASA, but truly by almost the entire country.  For effective change management to occur it must be well communicated.  People have to understand the “burning platform” behind the reason for change.  It must become so personal that they can translate what they do in terms of how it is going to help the organization become successful.  It is only when you get this kind of understanding and buy-in that strategy really is let loose throughout the organization.

If this pitfall sounds familiar, contact us. Communication throughout the strategic planning process is critical but it's especially important before the process begins and after it's implemented. 

This completes this blog series.  Again, these are not the only reasons why strategies fail, but just some of the key impediments I have seen that hold organizations back from realizing the many benefits to developing a strategy and a supporting strategic management system.

Missed Part 6 of the blog series? You can read it here

Tim Johnson Tim Johnson

Tim is a contributing author and Director at Jabian 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 1144 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 Director at Jabian 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 5

By: Tim Johnson

Jun 27, 2018 1708 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Integrating into how you do business

This is the fifth 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 and the fourth was prioritizing to narrow your focus and bite off what you can chew.  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 fifth pitfall is not integrating the strategy into how you do business.  I was once at an organization conducting interviews in preparation of facilitating strategic planning and made a startling observation.  My first day onsite I noticed one of those old metal filing cabinets, and on top was a plant that was kind of wilted and maybe overwatered.  There were leaves fallen all around and the plant was sitting on a thick document to keep it from rusting out that filing cabinet.  For some reason I went over and lifted the plant and found that the organization’s previous strategic plan was the filing cabinet protector!  I took a picture of this phenomenon and then made sure to open up the strategic planning session by displaying that picture.  I told them if this is what we are going to do with the strategy we are about to develop, then let’s just all go home now!  Of course, they got the message, but the point is that if you are going to go through the effort then really make the strategy you develop a part of how you do business.  Budgets should be aligned accordingly (not putting funding against the strategy is obviously a huge impediment!), rewards and incentives should be aligned, training should be built in to support future skill requirements, IT priorities should reflect desire future capability development to name just a few integration points.  To truly make strategy work, it must be integrated across the breadth of the entire organization.

If this pitfall sounds familiar, contact us. Organizations have leveraged BSI’s expertise for many years by bringing us onsite to facilitate strategic actions to improve performance, build strategic management systems, provide on-site technical support, and coach leaders and managers how to execute strategy and create high performance organization.

Over the next few blogs we will explore two 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.

Missed Part 4 of the blog series? You can read it here.  Read Part 6 here

Tim Johnson Tim Johnson

Tim is a contributing author and Director at Jabian 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 4

By: Tim Johnson

Jun 20, 2018 1685 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Prioritizing - Biting off what you can chew!

This is the fourth 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 and the third was making sure you build that strategy in a way that it can be executed effectively.  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 fourth pitfall is not prioritizing—biting off more than you can chew!  The Japanese have something called "Hoshin Planning."  The idea is that they go through a very rigorous strategic planning effort to find a handful things that they need to accomplish to be successful.  And then everyone gets on board and they execute those critical few strategies across the organization.  It provides focus. Not that I am advocating that you find just a couple strategic priorities to focus on strategically, but the point is that there is a limit to the amount of resources available to focus on strategic transformation.  People have day jobs that are mostly about driving the organization operationally.  They each do not have 16 hours of work day to get everything done that you would like!  So instead of identifying 50 initiatives to accomplish, identify first what resources you have year-over-year and then build a roadmap on when initiatives will be executed that is going to guide your efforts.  Like climbing a mountain, we first have to understand what we need to do to get to “base camp 1” and then from there to the next succession of base camps until we are at the top of the mountain!  By spreading the organization to thin you run the risk of doing a lot of things, but not getting anything done!

If this pitfall sounds familiar, then you might be interested in our Balanced Scorecard Professional Certification workshop which gives practitioners the tools and skills they need to help prioritize in tough economic times. 

Over the next few blogs we will explore three 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 5 here.  Missed Part 3 of the blog series? You can read it here
Tim Johnson Tim Johnson

Tim is a contributing author and Director at Jabian 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 3

By: Tim Johnson

Jun 13, 2018 1616 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Developing an "executable" strategic plan

This is the third 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 and the second was generating needed buy-in across the organization.  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 third pitfall is developing an “executable” strategic plan.  For me, this is the most glaring gap I see when reviewing strategic plans.  It jumps off the page when the strategy in not built in such a way to support successful execution.  There are several key areas that really require doing it the “right way.”  The first key element to mention is understanding the key future assumptions that are driving the strategy.  Linking the strategy to future assumptions is the only thing that makes “strategic planning strategic!”  So many strategies end up sounding like operational plans because they fail to link it to their analysis of the future environment in which the organization will  exist.  The problem is, if you are not lifting your gaze and scanning the horizon you could be missing out on significant opportunities or worse yet, not seeing impending threats!  If we made buggy whips in 1910, and our strategy was all about making better buggy whips, more variety, high quality, faster to market, etc.; we would miss out on the fact that they were building car assembly plants and missing a glaring opportunity to redefine our business.  The second major miss is developing “measurable objectives.”  These usually start with words like increase, decrease, reduce, etc.  These are words that we can measure.  Many strategies have initiative words in their objectives like “create,” “develop” and “build.”  These identify actions that have a beginning and an end and not necessarily what we can monitor to track our strategic transformation.  The last key building block is in linking initiatives to objective targets.  I had a client who had an objective to “generate 5 million more customers in 5 years.”  A great measurable objective!  But when pressed on what initiatives supported the objective, we determined that the ones they had in place were only going to generate 75 thousand new customers.  They failed to link what they said they needed to accomplish with the initiatives they identified would get the job done.  Bottom line is that if you said that the targets are what you need to achieve, then make sure you are going to do things to reach those targets!  If you want a strategy that you can measure, will guide the organization, and is sure to create the success you have identified that you need, then it is important to build it the right way!

If this pitfall sounds familiar, contact us. We have been helping clients for many years, and can help connect the dots and work with you to customize our approach to best meet your needs for future success.

Over the next few blogs we will explore four 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.

Missed Part 2 of the blog series? You can read it here. You can read Part 4 here.

Tim Johnson Tim Johnson

Tim is a contributing author and Director at Jabian 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 1450 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 Director at Jabian 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 1960 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.

Which Tax Change Means Reassessing YOUR Strategy?

By David Wilsey

Apr 19, 2018 1430 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
2018 Tax LawTim Johnson noted in his recent strategic planning article that 85% of Fortune 500 companies from 1955 no longer exist today. This is because they failed to keep up with a changing world. The assumptions upon which they based their strategy on were no longer valid due to a change related to either market demands, customer needs, or technology. If your organization wants to avoid a similar failure, it is critical that you periodically evaluate the strategic environment that you work in and make sure that your strategy is not based on similarly invalid assumptions.

The new tax law that was passed in December 2017 in the U.S. offers an example of a change that could possibly disrupt a key assumption you might have made when you developed your strategy. While most organizations will not make any major changes in this case, it still helps demonstrate the types of strategic questions that you might be asking yourself if you work in certain sectors. 

Do you work in the non-profit sector? Since the standard deduction has been raised significantly, some fear that there be a decline in charitable donations. This aggravates the problem that has arisen with the generational change happening across our society, where those who have been the strongest donors in the past are aging and passing on to a new generation that likes to give in different ways. The strategic question you may ask is, where can we make up for projected shortfalls in revenue? How must our contribution mix be changed in the future?

Do you sell luxury goods? One accountant I spoke with who had done a year-by-year comparison said that clients that make more than $750k per year were getting quite a windfall, while the middle brackets were coming out close to even. Another friend I know who does million-dollar home remodeling said that he as already seen an uptick in business. The strategic question here is, how can we tap into the increase in capital available across certain industries?

Do you work in, or sell to, the Federal government sector? Non-defense spending is down for multiple reasons already – a huge reduction in revenues will likely only reinforce this trend. The strategic questions might be how can we increase our efficiency or improve our quality to reduce our cost structure? Or should we refocus on different sectors?

Are you an accountant or a tax lawyer? At least in the short term, some folks can plan for a big boost in business as they help everyone figure out what to do. The strategic questions here are, where are the biggest targets of opportunity? How can we align our services and branding to align to these changing market conditions?

Is your business connected to divorce, education, or the moving industry? Do you sell meals and entertainment to corporations? Do you sell depreciable property? Specific issues have been highlighted in the news that could affect very specific industries: alimony deduction rules have changed; 529 College Savings Plan’s can now be used for education other than just colleges; moving expenses are no longer deductible; rules for corporate meals / entertainment expenses and deductions for depreciable property changed significantly. Any of these changes could have an impact on certain organizations. In all these cases, the strategic questions revolve around, how can we succeed considering these changes?

Are you an architect or engineer? You’ll need a team of certified tax lawyers to help you decipher the new pass-through portion of the law, but I’ve already heard of organizations trying to add engineering services to their product line to gain certain tax advantages. Maybe this opens the door for partnering opportunities, or maybe a new consulting service offering to help organizations navigate in a new market place for them?

The point of this blog is not to educate you on the new tax law, as this is just a few highlights of the change. The point is that you might need to reassess your strategy depending on your organization and the assumptions on which you have based your strategic priorities. If any of the considerations listed above are relevant for your organization, I’d recommend you talk to a tax lawyer about the details and then consider what changes might be needed. There might be implications for some of the KPI targets you have set as you emphasize one strategy over another. There might be initiatives that need to be added or removed from your priority list. In some rare cases, there might be reason to refocus your efforts on a different strategy altogether. The key is that you continuously assess your strategic environment to see if any of the assumptions that were made to formulate strategy have changed, as you don’t ever want to be one of those organizations that gets left behind by a changing world.
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