Creating a Strategic Change Agenda

From a “process,” viewpoint, the transition from strategy formulation to execution includes a sequential series of distillations: from a broad mission statement through vision and strategic choices to a specific and focused set of Strategic Objectives.?Many tools are available to aid this process: one that I find particularly useful is a Strategic Change Agenda.

A Strategic Change Agenda Explained

A Strategic Change Agenda is a framework to identify and assess the current state – “As is…” and to project desired future states – “To be…” for key change / performance dimensions to which an organization must pay close attention in executing its strategy.?

As part of the process to develop a Balanced Scorecard System, these dimensions are grouped according to the four perspectives of the Balanced Scorecard. The content of the dimensions (typically two or three performance areas) are organization specific and must reflect the firm’s strategically critical capabilities, structure, and processes. The figure below provides an example.

Creating the Strategic Change Agenda is preceded by two critical steps. The shaping of a Strategic Ambition and a Executive Leadership Team (ELT) interviews.

The Importance of a Strategic Ambition

The Strategic Ambition succinctly describes what the organization wishes to achieve over the timeframe of the strategy. ?It should be quantified through a clear and measurable target for the end of the strategic horizon and describe the critical capabilities that are required to deliver to the target.

As one client example, an organization within an engineering industry shaped a Strategic Ambition that was the focal point of a transformative strategy through which it would be positioned as a specialist provider to customers is a specific global region, rather than generalist serving customers in many regions.

“To be (Euro) X billion in revenues organization by the end of 20XX, with (Euro)X billion in EBITDA based on our specialist product and market knowledge and focus on the XX region..”

Senior Management Interviews

Based on the Strategic Ambition, the next step is to facilitate a series of interviews with members of the ELT (and others if thought necessary).?The interviews should be one-to-one and confidential, with comments fed back to the ELT only in the aggregate. This provides a safe environment for the interviewee to speak candidly. Also if done in a workshop setting the danger is that the “loudest voice” or most influential member of the ELT shapes the outcomes.

?Questions are asked for each Perspective of the Balanced Scorecard System: Financial, Customer, Internal Process, Learning & Growth (tailored for a not-for-profit organization).

·??????What are the financial/funder objectives?

I would also ask whether the financial target within the Strategic Ambition achievable or is it ?not stretching enough and for the interviewee to explain why they hold this view.

·??????Who are the customers, and what are their objectives?

Keep in this mind that here we are looking for the objectives in the eyes of the customer, not what the organization wants to get from the customer. ?So no objectives such as “grow the share of the customer wallet” or, worst of all, “increase customer loyalty”.

·??????What internal processes support the financial and customer objectives and what capabilities do we need to develop these processes?

Here too, we should revert back to the Strategic Ambition and ask a question around the appropriateness of any process capabilities mentioned in the Strategic Ambition.

·??????What culture, competencies, and technology support the internal objectives and what capabilities do we need to develop these processes?

As with the internal process, we should revert back to the Strategic Ambition and ask a question around the appropriateness of any employee/technological capabilities mentioned in the Strategic Ambition.

Note that If the organization is already a scorecard user, then one or two questions can be asked about the value each interviewee believed they gained from the system – what worked well, what didn’t.

As examples of responses from this client example. The Balanced Scorecard was seen as:

-??????No longer representative of the structure of the organization

-??????Not?seen as relevant to people’s work

-??????Too general, with few specifics

-??????Not understood below executive level.

?A Strategic Change Agenda; Client Example

Based on the aforementioned client Strategic Ambition, plus the ELT interviews, a Strategic Change Agenda was developed, which included:

Financial

The three Performance Dimensions for the Financial Perspective included one for Sales. The Current State was "multi-national" whereas the Desired State was "predominantly [regionally] derived".

Customer

A Customer Relationships dimension identified "supplier-based" as the Current State and "partner-based" as the Desired State.

Internal Process

A Supply Chain dimension identified "case per case, non-structured" as the Current State and "structured supply systems for key customers" as the Desired State.

Learning & Growth

An Organizational Knowledge dimension identified "product-based" as the Current State and "market-based" as the Desired State.

The Desired States identified for the Performance Dimensions of the Strategic Change Agenda were then translated into the Strategic Objectives that appeared on the Strategy Map.

Using the examples cited.

Financial:?the Sales Desired State of predominantly [regionally] derived was captured in Strategic Objectives that focused on revenue and margin growth ?from the [specialized] market?in [geographic region].

Customer: the Customer Relationships Desired State of partner-based became “be my preferred partner to grow my business”.?Note that here the customer objective was written as if spoken by the customer. This is the accepted best practice approach.

Internal Process: The Supply Chain Desired State of structured supply systems for key customers became “create a dedicated supply chain for key customers in [specialized market]”.

Learning & Growth: The Organizational Knowledge Desired State of market-based, became, “develop and maintain a deep understanding of the market and solutions in [specialized product]".

FBI Case Example

As another best practice illustration, the US-based Federal Bureau of Investigation (FBI) developed a Strategic Change Agenda (with facilitative support from the then Balanced Scorecard Collaborative) to reset priorities post 9/11.

Professor Robert Kaplan (co-creator of the Balanced Scorecard concept) explained in a 2015 article that to adapt to the new challenges, the FBI needed a brand-new strategy and significant changes to the organizational culture.?To do so, the then FBI Director Robert Mueller recognized there was a need to educate the workforce as to the massive transformation required.

“The change agenda [which the FBI called “Strategic Shifts,”] indicates that the agency would have to undergo a major shift from being a case-driven organization (reacting to crimes already committed) to becoming a threat-driven organization (attempting to prevent a terrorist incident from occurring),”?Kaplan said, adding that as a key Strategic Shift, agents had to make the mindset and cultural switch from being secretive to working outside of traditional operational silos and?to become contributors to integrated teams. “In even more of a discontinuity, the FBI had to learn to share information and work collaboratively with other federal agencies to prevent incidents that could harm US citizens."

The Strategic Change Agenda emerged from extensive dialogue throughout the organization, inviting all levels of the FBI to participate in setting the goals for the new strategic direction, which contributed to widespread understanding and support for the new strategy that followed.

Kaplan explained that Director Mueller carried a laminated FBI Strategic Change Agenda with him whenever he visited a field office. “If agents expressed scepticism about or resistance to the new initiative and structures he reminded them, using the single-page summary, why change was necessary.” (1)

A Powerful Communication Tool

The FBI example highlights a key reason why I particularly like the Strategic Change Agenda. It is a powerful communication tool, providing rich context to why the strategy is being implemented and how far the organization is from success, thus triggering useful conversations of what needs to be done to close the gap.

A Strategic Change Agenda helps the leadership articulate and communicate the cultural, structural, and operating changes necessary to transition from the past to the future.?

Based on the Strategic Change Agenda, the FBI then built its Strategy Map and supporting Balanced Scorecard of KPIs, targets and initiatives.

Parting Words

In my work with organizations, I encourage that much more time is spent on shaping the Strategic Change Agenda than on choosing the Strategic Objectives. From my experience, if the Strategic Change Agenda is done well ?then the objective just fall out – they are obvious.

In addition to the value in identifying Strategic Objectives (and for strategic communication purposes) the rich conversations that happen in shaping the Strategic Change Agenda, enables an initial understanding of the causal relationship between the Perspectives and provides clarity around where work needs to be done (in Strategic Initiatives and Strategic Process Improvements) to move from the Current to the “Desired, states and so deliver to the Strategic Ambition.

Ends

Reference

1.??????Leading Change with the Strategy Execution System?Dr. Robert S. Kaplan, Marvin Bower Professor of Leadership Development, Emeritus, Harvard Business School, Palladium, 2015.

James Creelman is Director of the UK-based Cardinal Management Consulting, an Associate Director of Strategia Worldwide and the Strategy Management Practice Lead for Impact Consulting.

?He is available for advisory, training, or research support in Adaptive Strategy Management and related disciplines and can be contacted on +44 7933 575340 or?[email protected]

?Recommendation

“James Creelman has been a champion of the Balanced Scorecard since its early days and has contributed significantly to furthering awareness through his books and articles, consulting engagements, and training assignments. James has excellent writing skills; he is able to synthesize complex concepts and explain them simply."