To start with a simple example, we can think of companies that before the pandemic had already implemented a Business Continuity Management System based on ISO 22301:2019, a system that I have implemented for many years in different types of institutions. Having this Management system implemented implies being prepared with recovery plans for disruptive incidents, making scenarios of possible risks (Plan), executing drills, among other aspects of business continuity (Do), reviews and audits of the results of the drills. (Verify), document, the necessary improvements according to the lessons learned, (Act) execute the corrective measures in the plans and scenarios and run the cycle again seeking business continuity and organizational resilience in the event of a disruptive incident such as the pandemic.
Let us not forget that the basic principle of a Management System is to comply with the Plan-Do-Check-Act cycle, this not only applies to management systems based on standards of the International Standards Organization (ISO), It also implies other management systems such as Customer Management, Knowledge Management, Social Responsibility, among others.
One of the management systems that should not be missing in companies is the Strategy Management System, which, properly applied, will make the company more resilient and capable of reacting more agilely to the market and the new stocks that the pandemic is leaving us. .
The continuous improvement cycle is widely known, but unfortunately I have come across many professionals who normally associate it with Process Management, Continuous Improvement, Operation Management, among others, and do not normally associate it with Business Strategy Management.
After having implemented a Strategy Management System based on the Execution Premium Process model of Drs. Kaplan and Norton in many medium and large companies as well as in non-profit institutions and the Military among others, an easy way I found to explain In a simple way, what the Strategy Management System consists of, is summarized in the following image.
In this phase, a strategic analysis is initially carried out using the tools that are most convenient for the company according to the nature of its business, normally an analysis of the current competitive position is made, exploring the external, the internal and trends and defining a position desired future.
It is important in this phase, so that a good implementation of the strategy can be carried out, to be able to land the strategic analysis on at least the following elements:
o Superior Vision (Quantified Vision)
o Strategic Map (The strategy represented graphically or One Page Strategy)
o Balanced Scorecard (Key performance metrics related to strategic objectives)
o Portfolio of Strategic Initiatives (Projects to be executed to achieve the strategy), normally carried to their main milestones for planning and budget purposes.
o StratEX (Strategic Expenditures – Budget needed to implement the strategy)
Portfolio of Strategic Projects
This stage is the essence of the strategy, without project portfolio there is no execution, so at this stage the execution of the project portfolio defined in the planning phase must begin. The main activities for the achievement of the milestones with their respective managers must already be in place, without which it will be impossible to start the execution.
In this phase, the Strategic budget (StratEX) defined in the previous phase also begins to be executed as planned, normally as CapEX (Capital Expenditures) and OpEX (Operational Expenditures)
As an example, with an important regional Hydroelectric Group, a Strategic Initiative "Expansion of the Hydroelectric Park" with a defined budget (StratEX) remained in the planning phase, when the execution of the project began and the first turbine was purchased, the CapEX is being executed and then, keeping the new turbine in operation will be the OpEX.
Another extremely important component of the execution of the strategy is the internal processes, without them and without clients or employees, there would be no company, the processes must continue to be executed efficiently and apply the necessary improvements.
As part of the execution of the Portfolio of Strategic Projects, some will require improvements to the current processes, some Projects may even incorporate new processes. (For example, in an important land transport company, one of its Strategic Objectives was "Improve customer service" and in the medium term it had been contemplated to create the Customer Service area. In another example, a service company had a part of your strategy Digitally Transform your logistics process which would require making changes and improvements to your current process)
This stage is extremely important, if we do not do the necessary verifications, we will never know if the execution is going according to plan, much less we will be able to generate corrections and improvements.
The 2 key components of this stage are as follows.
Operational Analysis Meetings (RAO)
Are our operations under control?
These meetings will allow close monitoring of the company's operations, especially those that have the greatest relationship and impact with the achievement of the execution of the strategy. The timing of these meetings has a lot to do with the life cycle and the product/service that the company offers.
The minimum elements to be reviewed in this meeting are the following:
o Processes that directly impact the strategy
o Progress and results of activities
o Operational demetric dashboards
o Operational budget control
o Portfolio of Strategic Projects
o Progress and results of project activities
o Progress and results for the achievement of milestones
Normally the RAOs are carried out between the managerial commands towards supervisory towards operational levels.
Strategic Analysis Meetings (RAE)
Are we properly executing our strategy?
These meetings are normally held on a monthly basis, the management team and general management participate and should focus on the discussion of the results of the strategic elements, it is sought that the time be dedicated to solving problems and making decisions rather than being alone watching presentations.
Items typically reviewed at this type of meeting include the following:
o Strategic Themes
o Strategic Objectives
o Key Performance Indicators (BSC – KPIs)
o Strategic Projects
A prudent time for the execution of the meeting is 2 to 3 hours.
It is important that prior to the RAE the participating managers have carried out their RAOs and as a result of these meetings have prepared and sent prior to the meeting their respective performance analyzes and recommendations of the elements in their charge as well as it is important that the other Managers read these summaries of reports prior to the meeting. The agenda is sent prior to the meeting and is intended to be a decision-making space rather than long presentations of results.
By default, tactical elements are not discussed unless necessary, feedback, it is assumed that the participating manager made his RAOs and arrives prepared.
As a result of executing the RAOs and RAEs, decisions are made to correct and improve the different elements of the strategy, these actions are recommended to be documented and stored.
For example, during an RAE, it may be decided to move the completion date of a project, or the completion date of a milestone, it may be decided to modify the goal of a KPI, among other things.
Likewise, during the execution of an RAO, decisions related to the operation are made, for example delays in the maintenance program, low performance according to process metrics, among others.
Finally, it is advisable to create the Role of Strategy Management Officer, who will be the orchestrator that will allow things to happen and report to the General Directorate, in another article I will write more details about each step of the Management System as well as the functions of the Strategy Management Officer.
Escrito por: Elder A. Guerra V.
CEO ES Consulting
Kaplan & NortonExecution Premium Certified since 2009
Registered Expert ISO/IECJTC 1/SC27/WG1 Information security, cybersecurity and privacy protection
Kaplan, R., y Norton, D. (2008). TheExecution Premium.
ISO 9004. (2018). GTC-ISO 9004 Gestión de la Calidad. Orientación para lograr el éxito sostenido.
Pietersen, William G. (2010),Strategic Learning