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Bridging Business Strategy and Enabling Technology

  • March 01 2007, 1:00am EST
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Most business performance management (BPM) articles, conferences and Webcasts focus on technology, implementation or best practices. Limited attention is paid to the real purpose of BPM: improving the performance of an organization. Whether you are a project manager leading an initiative, a member of the project team or the CIO responsible for the overall project, it is imperative to step back on a regular basis to remind yourself of the business drivers for your project.

To start any performance initiative, you need to understand how the company wants to perform. Another way to say this is, what is the company's overall strategy? Is this strategy documented in one place? Is there buy-in from the executive team on the ramifications of strategy deployment? Has the strategy been effectively communicated to line managers for execution? Once you have these questions confirmed in the affirmative, BPM can help you determine how well the company is executing on this strategy, align and focus employees on the key elements and positively reinforce behaviors that help achieve the company's strategic goals.

Many companies need help creating clarity around their business strategy. Clearly defining the company's current strategy is an important first step in the process. You can implement elements of performance management that will make certain processes more efficient without doing this. However, it is unlikely that the company will more effectively execute on its vision. Determining the strategic vision can be difficult. Most people in a company will think they know what the strategy is. It usually goes something like, "Be the leader in our industry while maximizing returns for our employees and shareholders." That's great, but it lacks necessary depth and may not be current.

In many industries, moving into the leadership position can be very costly. Perhaps your company would prefer to be a highly profitable number two. What does being the leader mean? Having the greatest revenues or units sold, or highest customer satisfaction or contributions to the communities served? Do you want to be a leader in new sales or installed base? In what geographies or demographics do you want to be a leader? How do you want to grow into that leadership position - with current products or new ones? Do you want to grow organically or through acquisition? What level of investment is acceptable? What margins are required? To truly get your arms around the company's current, detailed strategic vision will require the involvement of senior management. If they won't commit to investing the time to communicate and potentially update the company's strategy, then you really can't move forward with a true BPM project. This strategy is at the core of BPM, and you should make sure the project team understands this before investing in additional technology tools.

Assuming you have this strategy communicated and understood by the team, you can begin defining measures of execution success. These particular measures are often called key performance indicators (KPIs) because they demonstrate how well the company is executing on its strategy. Along with the KPIs you need to define target ranges outside of which management action is required. KPIs become a straightforward and tangible way of communicating the company's strategic goals to employees throughout the organization, causing everyone to focus on what is most important to the business and creating company-wide strategic alignment. You may have noticed that none of the activities described so far have required software. Although software can be an enabler for displaying KPIs in a variety of graphical forms and dashboards, the hard work is the nontechnology part of developing KPIs.

If the company's strategy is the heart of BPM, then creating a performance culture is the soul. It's one thing for everyone to understand the company's goals; it's another thing entirely to change behaviors to achieve these goals. Management has several tools available to it to help in this area. First is to ensure end-user buy-in to your initiative.  It is helpful to communicate frequently with end-user employees as the project develops so that they feel some ownership of the end solution. Many projects die on the vine due to the fact that employees do not embrace the project or leverage the tools delivered as part of the initiative. Secondly, leverage team members' egos and competitiveness by prominently displaying the status of the KPIs and making it clear who is responsible for each one. No one likes to see their KPIs underperforming. The third and perhaps more powerful tool is incentive compensation tied to the performance measures. It seems simple enough: pay for performance. Implementation of this, however, is fraught with risk. If people don't believe you are measuring the right things, or don't trust the data, or don't feel ownership and the ability to impact the results, you will have a revolt on your hands. However, done carefully, over time with appropriate change management methodologies employed, this can be very effective.

Only when the company's strategy is well documented, key measures are in place for assessing execution and the organization is culturally ready for change are the key building blocks in place for the launch of a successful BPM project. With the variety of technology-enablement choices available, you can surely find something that meets your requirements and budget. On the flip side, not having these nontechnology-related topics covered will only increase your risk unnecessarily and leave you behind your competitors.  

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