Creating financial impact through strategic planning & execution.

I have often heard CFOs crying in their beer about their organization's inability to execute business plans that impact the bottom line. A company is like a symphony orchestra, where various sections (departments) must work harmoniously in order to deliver superior results. A strategic plan is the sheet of music, providing clarity of purpose and aligning work teams in the pursuit of a common set of objectives, to optimize revenue and profit.

The challenge in many organizations is that managers struggle with providing linkages between their strategic plan and value drivers that impact profitability. The fundamental issue is that most companies do not have a systematic approach to implementing strategy. Any strategy is only as good as an organization's ability to cascade various strategic initiatives throughout all levels of the enterprise and tie the responsibilities of employees with value driven tasks, activities, and projects that impact revenue and profit.

Having worked with more organizations than I care to mention, I have found very few magic bullets in my travels, but scorecarding tools such as "The Balanced Scorecard" are as close as they come. A recent study by the Bain Company found such tools to have far greater financial impact then other management genres such as TQM, MBO and Six Sigma.

The charge towards scorecarding is a result of global companies such as Wal*Mart and GE who continue to raise the stakes for competitors and vendors. These companies have very sophisticated practices created to hold managers, employees, and even suppliers accountable to a set of predetermined operational and financial outcomes. At Wal*Mart, each supplier must satisfy service criteria such as fill rate percentage and match rate percentage if they wish to continue to service the world's largest company.

Knowing that they must provide such a high level of service to these companies, what would you expect Wal*Mart and GE's vendors to do? They are scorecarding their suppliers and employees, creating a ripple effect as more and more companies are held accountable to meeting more specific expectations on the part of customers.

We now operate in a hyper-competitive global marketplace. Hyper-competition has brought about consolidation, margin erosion, and staff reductions. This phenomenon is having a significant impact on how companies operate and on how people work. Most professional people are like hamsters on a treadmill, trying to keep pace with escalating work flows. Executives often become hamsters themselves, only their wheel is moving even faster. This is why many people resist change and challenge new strategic initiatives, the fruit of the strategic planning process.

Good management teams understand the hamster affect, but in order to remain competitive, they need to align strategic initiatives with the bandwidth of the firm in the context of servicing customers. In order to expect execution, management must provide clarity to what initiatives have priority and why. That is why scorecarding is such a simple yet efficient tool: it creates self-directed processes that engage employees, and align them with the sheet of music.

Traditional financial measurements deal with what has already occurred. They are akin to the score of a baseball game at the end of the 9th inning. If you are unaware of your company's invoice match rate by the time your financials come out, you may be dead in the water, and your customer may have already fired you. Scorecard measurements predict what should happen in the future based on historical trends.

Scorecards mirror the strategic process; providing us a reflection in which we can see our success in real time. Strategic plans should be constructed so that they challenge fundamental business assumptions that can become flawed or outdated and engage thought leaders in provocative discussions about sustaining innovation or breaking through to the next paradigm.

Having systematic processes for continuous planning and execution are critical if companies are going to continuously reinvent themselves and focus on new and ancillary businesses that will sustain growth over time. Simply put, if you fail to plan, you plan to fail.

Marc Emmer is President of the SST Group a Valencia-based consulting firm specializing in strategic planning and performance improvement. Marc can be reached at 661-310-2210 or at [e-mail]