By Melissa Raffoni, Founder and CEO, The Raffoni Group
Ok, now that I have your attention, I am not advocating that you stop cascading goals. What I am advocating is to not think about cascading goals when you have your yearly strategic planning session with your C-suite team. At least not during the part where your objective is to agree on the "go forward" strategy for the business.
Here are the reasons why:
1) A cascading mindset often leads to watered down strategic goals which, in truth, are operational drivers. I applaud Kaplan and Norton on their Balanced Scorecard work. It refocused organizations on execution, it brought result measuring to the forefront, and the intent of educating, aligning and engaging employees was right on. My beef with the Balanced Scorecard is, in my humble opinion, that the end result doesn't always represent a new strategy, but instead, represents a framework for understanding what drives operational performance in the business. Awesome for employee alignment, not so awesome for making true "non-business as usual" or working on versus in business strategies. In reality, most all companies want to achieve their financial targets, offer great products, provide great customer satisfaction, improve their processes and care for their talent—so, where is the strategy in that?
2) Strategy sessions are meant to talk about strategy, not operations. If you are continually thinking about what you are going to say to employees, it will limit your true strategic thinking. For example, if your strategy is to close a plant, or lay off employees, or acquire a company do you want to cascade that? Probably not or, at least, not yet. Focus on developing the right strategy, not on alignment. Alignment is a different objective and you can tackle how and when to do that after the strategy is developed.
3) There might be some things you do not want to cascade. I was recently in a meeting in which the C-suite team felt it was critical to improve productivity to free up resources to invest in innovation. Their guiding metric was revenue per employee. Right or wrong, the team spent far too many cycles discussing whether or not to put the metric on their Strategic Scorecard because of the potentially negative message it sends to employees. My point, create the right Strategic Scorecard for the C-suite and decide what you will and cascade later. Don’t not measure something that is critical because you are too concerned with employee perception. Again, alignment is a different objective.
4) Operational drivers should fundamentally stay the same, with tweaks where appropriate. Generally, if you prescribe to the balanced scorecard type of approach, the drivers or pillars or operating principles of the business (choose your term) should stay fundamentally the same, barring an overall business model change. If your operational drivers stay the same, it will be much easier for your organization to remember year after year. Envision yourself on the podium talking to the organization and fill in the blanks: “For our company to be successful we need to always focus on 4 (or 5) things...” Statements around financial results, products, customers, processes and talent will most likely make the forefront, but they should not change much year to year. Develop good ones that you believe in and are relatively unique. The cascading each year will then be easier as you simply tweak or reset the KPIs, leaving you more time to work on true strategy!
Whether you call it working "on the business" versus "in the business", or you call it "making hard choices about what you will do or won’t do", or you call it "big bet thinking"-- it needs to be done. Your strategic planning session is critical to your on-going success as a company. Challenge your team to look at the external landscape. Challenge your team to hold up the mirror on your potentially crippling internal weaknesses and be honest about true core competencies that drive your competitive position. Challenge your team to be clever about how you can approach the market in a unique, differentiated way that will make your company stand out above the rest. So, stop thinking about cascading when you are with your C-suite team that you have invested so much time and effort into building, and focus the session on a strategy that is potentially game changing and that you are excited to brag about!