Friday, July 24, 2009

Sustainable Execution - 10 rules for survival

Ron Dimon wrote a nice piece in his blog Did somebody say strategy?, entitled Sustainable Execution - 10 rules for survival, where he comments about the 10 simple rules for survival, described in the Adam Werback's book: Strategy for Sustainability: A Business Manifesto. He mentions the 10 simple rules for survival and how an eXtended Performance Management discipline (Trademark of his company Business Foundation) can support them (Dimon's comments are in gray):

1. Diversify across generations.
In the DEBATE about strategic objectives (especially revenue growth), build financial and operational models the include scenarios for mergers, acquisitions, and divestitures of products, customers, geography, and capabilities. Continue to optimize your models by connecting them to learning done in the DECIDE process – especially drivers, constraints, and assumptions from budgets, plans & forecasts (and actuals).
2. Adapt to the changing environment -- and specialize.
Base your analysis (UNDERSTAND) on what you learn from GATHER (actuals, variances, events) as well as what you created in DEBATE (eg: forecast accuracy, actual ROI, and so on). Commit to changes in DECIDE via enterprise planning (workforce plans, for example).
3. Celebrate transparency. Every species knows which species will eat it and which will not.
When you interconnect all parts of the performance management framework to a common business language, common data, definitions, meta-data, and master-data, and you use performance management tools to give visibility to the organization, you create transparency – not just for results, but also for the cause & effect of those results as well as the reasons why you were after those results in the first place (strategic objectives, targets, models, and plans).
4. Plan and execute systematically, not compartmentally. Every part of a plant contributes to its growth.
This whole framework is predicated on systematic planning for the enterprise: financial & operational.
5. Form groups and protect the young. Most animals travel in flocks, gaggles, and prides. Packs offer strength and efficacy.
Packs, or work teams, divisions, SBUs, projects, and so on, generally live at the intersection of a business function and a layer in the business (strategic, operational, or tactical). Have the performance management framework honor their unique perspectives, yet interconnect with the rest of the organization. Help “protect” the pack with the right HR KPIs.
6. Integrate metrics. Nature brings the right information to the right place at the right time. When a tree needs water, the leaves curl; when there is rain, the curled leaves move more water to the root system.
Measure the right things.
Cut out the noise.
Focus and align on the most material and volatile drivers of value in the business.
Turn the data into actionable information.
7. Improve with each cycle. Evolution is a strategy for long-term survival.
The whole cycle fosters continuous improvement (as in the DECIDE to DEBATE example above). Performance management maturity comes by interlinking (in both directions) each component of the framework.
8. Right-size regularly, rather than downsize occasionally. If an organism grows too big to support itself, it collapses; if it withers, it is eaten.
A part of your continuous DEBATE is around resources (FTE, PPE, etc.) – what is the optimal level of the workforce, of facilities, of capital, to deliver on our strategic goals? Agree in the DEBATE and execute via plans in the DECIDE.
9. Foster longevity, not immediate gratification. Nature does not buy on credit and uses resources only to the level that they can be renewed.
A balance of short-term and long-term targets are required to execute beyond just the quarter.
10. Waste nothing, recycle everything. Some of the greatest opportunities in the 21st century will be turning waste -- including inefficiency and underutilization -- into profit.
Measures and results around efficiency, productivity, waste, utilization, and so on are all baked-in to the performance management cycle. Benchmark yourself internally and externally to see what’s normal and give yourself ‘exceed’ scenarios in your forecasts to overachieve.

Ron Dimon knows deeply Performance Management and Business Strategy, his comments about the rules supported by a performance management discipline (enabled by processes and technology) are interesting and useful, a real lesson about Performance Management.

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