Hall of Fame Performance and the Leadership Factor

Jack Welch gets excited about leadership.

Jack Welch gets excited about leadership.

The key issue isn’t having a strategy, it’s getting it implemented!  ~Jack Welch

One of the most difficult areas of business is not developing strategy, but actually delivering on strategic objectives. Every business has a strategy (some developed with expensive consulting support and others developed by the business leaders themselves), but a large majority fail to implement effectively. Numerous studies, including one by McKinsey&Co (one of the premier strategy consulting firms) claim that 70% of companies fail to execute effectively on their strategic objectives.

In most cases it’s not bad strategy or lack of money, but poor execution internally. And 75% of CEOs who get fired from office leave as a result of an inability to deliver on a strategy sold to the Board.

Dr-Robert-Kaplan-Dr-David-NortonOne of the bright spots in this rather bleak landscape of business execution is a robust strategy execution business process called the Balanced Scorecard with its strategy mapping and governance processes. First developed by Harvard professors Robert Kaplan and David Norton in a 1992 Harvard Business Review article and subsequently in a groundbreaking book, The Balanced Scorecard: Translating Strategy into Action (Harvard Press, 1996)

Fast forward some 30 years later and the use of the Balanced Scorecard and Strategy Map frameworks are ubiquitous in many organizations around the world. In fact, in 2000 Kaplan and Norton established the strategy execution Hall of Fame to honour those companies who delivered exceptional performance results through the use of strategy maps and the Balanced Scorecard framework. Just scanning the list of Hall of Fame companies from across the globe reveals some iconic brands as well as some highly successful small companies.

Hall of Fame map

While the use of strategy maps and the framework tends to improve company performance upwards of 50% compared to peer group companies, those in the Hall of Fame delivered a whopping 150% increase in shareholder value.

Hall of Fame

The Leadership Factor:

What accounts for the huge difference between Balanced Scorecard users and Hall of Fame users?

The key difference is Leadership! But what kind of leadership are we talking about? A charismatic CEO? More meetings?  More and better KPI’s?  More charts on the wall?  CEO speeches to show commitment? An Office of Strategy Management?

As you look into the several hundred Balanced Scorecard Hall of Fame winners over the years, there are a couple of key elements of leadership that are evident in nearly all the Hall of Fame companies. And the leadership factor is so much about individual leadership, but about the workings of the senior leadership team. The senior team in most cases has signed up for a major focus on “Shared Objectives” as opposed to trying to drive separate functional objectives.  In other words the delivery of the overall business strategy is more important than meeting departmental or functional budgets and objectives.

Conventional business practice states that by delivering on all the functional objectives will roll up into delivery of the overall strategic objectives. But reality has proven time and time again that to be a fallacy. Why? First of all, there is no perfect strategy and even if there was, the external business competitive an economic landscape keeps changing, calling for shifts in strategic focus. These shifts must be delivered through internal company resources, usually time, talent and money. But no company has enough available cash to fund everything it wants to do internally plus respond to shifting external market conditions. So something needs to give. And 90% of the time, senior managers fight fiercely to hold on to their budgets and talent in the belief that making their functional budgets and targets is optimum for the company.  Actually it may be optimum for their personal bonuses, but just the opposite for overall strategy execution.

aligned arrowsHall of Fame companies put the delivery of the overall strategy first and leaders are willing to share talent, resources and even budgets across the organization when required. If one key strategic initiative needs more talent or additional budget money, there is an open willingness to give up in certain areas in order to deliver on the overall strategic objectives. The essence of this refocusing of thinking about budgets, and personal success versus company success lies in the following mindset:

Not everyone gets what they want, but everyone wins!

What’s the primary focus of your senior leaders? If it’s not a shared objective of delivering on the overall company strategic objectives, then you are missing a huge performance improvement opportunity.

And it’s all about leadership!

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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One Response to Hall of Fame Performance and the Leadership Factor

  1. Yes John. Yes. So many smart people. So many strategies. So little competence in execution. So few autopsies to evaluate what went wrong, how to improve and most importantly, so little accountable.

    Like

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