Sanjiv Anand, Chairman, Cedar Management Consulting International
Who owns the formulation of a company’s strategy and who owns the execution? These may seem like simple questions, but I can assure you confusion exists on these topics. To a large extent, the lack of clarity in answering these questions also contributes to the failure in designing a strategy that can work, and executing it successfully.
Owning the Formulation
We all agree that for an organization to succeed, its people need to be aligned and focused in one direction. As we endeavor to achieve that, an assumption is made that the strategy that is formulated needs to be bottom-up, not top-down. While that sounds very democratic, it’s not the right way to approach strategy.
Here’s the issue: As one moves down an organization, the roles and competencies become more operational and less strategic. That group is really focused on getting the job done, and preoccupied throughout the day with meeting customer expectations.
When executives put a new idea on the table, the rest of the organization immediately thinks of how this new idea can be delivered through the existing operating framework and processes. If it can’t, the red flags go up and the immediate response is that it can’t be done because the existing processes or technology cannot handle it.
This perspective misses the whole point of developing a new, breakthrough strategy, which is to do things differently. Therefore, I am a strong believer that strategy needs to be formulated by those with the keys to the executive washroom. Even within this elite group, it’s possible to find gaps in strategic thinking, which is why consultants exist—to bring in new ideas and facilitate their induction into organizations. There is no harm in getting some internal feedback from four levels below the CEO. The leadership team can use that information to make a strategic call and include input from the organization that they feel is relevant.
From my standpoint, it’s clear that formulation is the prerogative of the leadership team. That’s what they get paid to do. This doesn’t absolve them of the responsibility to effectively communicate the strategy throughout the organization and facilitate alignment. Having a strong internal communication framework is key to do this, and this is where the Balanced Scorecard (BSC) plays the most effective role of communicating strategy through the organization and driving performance.
Owning the Execution
It’s quite clear that the top 25 objectives on a strategy map and BSC should be owned by the leadership team and the specific individuals who are operationally responsible for delivering the objectives. For example, a sales objective is owned by the head of sales. That person may rely on others within the organization to develop analysis to support understanding of specific, performance-related issues. With this assistance, the head of sales will fully understand the data and measures, and be able to lead a discussion on the topic in the monthly management meeting.
This should not be seen as generating additional work for the head of sales. Even if the BSC didn’t exist, leaders should know what is actually going on. In fact, the BSC helps leadership teams develop a strong focus and understanding of some of their existing operational responsibilities.
There are situations when no one on the management team is qualified to own a BSC objective. In that case, the CEO can pick someone from the leadership team to own it. This could be an executive who is being groomed for the c suite, or simply a highperforming individual. One thing is clear—ownership of a strategic objective is not a task for junior-level executives or project managers, even those who oversee key strategic initiatives.
The CEO will own the overriding financial objective, as well as other select objectives within the BSC. Don’t worry that too many objectives will be loaded onto one executive. The math is simple: The BSC has 20–25 objectives, and a leadership team has about eight executives, which works out to three objectives per executive. That’s quite manageable.
It’s important that every member of the executive committee owns at least one objective. If this doesn’t work out clearly, you should wonder if the strategy map is comprehensive enough or, worse still, if the wrong people are on the executive committee. Every C-level executive should be capable of owning an objective.
[Excerpted with permission of the publisher, Wiley, from Execution Excellence: Making Strategy Work Using the Balanced Scorecard by Sanjiv Anand. Copyright (c) 2016 by Sanjiv Anand. All rights reserved. This book is available at all bookstores and online booksellers.]
About the Author
Sanjiv Anand is Chairman of Cedar Management Consulting International, an award-winning firm with over 1,000 clients and a network of offices spanning the U.S., Europe, the Middle East, and Asia. A recognized Balanced Scorecard thought leader, he has more than 30 years of global management consulting experience and has worked on 300 different scorecard designs across a range of industries. He is the author of Execution Excellence: Making Strategy Work Using the Balanced Scorecard , Unlocking Human Capital to Drive Performance , and he writes regularly for publications including Business India and Gulf News.