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The Management of the Strategy

Studies of Professors Kaplan and Norton, inventors of Balanced Scorecard, shows that seven in eight companies do not get growing results although to have set strategies for this. On average a company fulfills only 63% of the financial performance promised by its strategy, due to imperfections in the planning and the execution. Worse yet is that the causes of the imbalance between the strategy and the real performance have low visibility for the management of the organization.

They gap between the strategy and the performance can be attributed to a combination of factors as plans badly formulated, resources badly applied, imperfections in the communication and limited responsibility for results. Plurianual results rarely corresponds the projections. There is a gap between the unfolding of the strategies throughout the company and the allocation of resources. With this the annual operational budget finishes for guiding investments and strategies.

This generates a culture of the sub-performance. Unreal plans create the expectation of that they will simply not be fulfilled. When this expectation is consummated, people start to believe that performance targets that will not be fulfilled is the norm in the organization.

For an efficient execution of the strategy it is necessary to inform which is the strategy, to guarantee that the general plans of the company are converted into plans in all management levels, to execute the strategic initiatives to reach the major plan, and finally to line up plain of development and qualification of staff and its goals and incentives of performance to the strategic objectives. Besides that the strategy need to be tested and adapted to be brought up to date with the reality of the execution and the variation of the scenarios.

To make sure that these actions are implemented and efficient, it is necessary to implement management practices that define responsibilities and authorities over the plans, how they will be controlled and reported to the management and how to perform periodic analysis of the strategy and performance.