For famed management strategist Robert Kaplan, many organisations fail to implement change because they can’t align their people around a unified strategy

GREAT STRATEGY is about doing a small number of things exceptionally well but too often leaders spread themselves too thinly and fail to communicate a vision of where they want their organisation to go. That’s the view of world renowned management expert Robert Kaplan who is in Dublin this week to address an IBEC HR Leadership conference.

Kaplan came to prominence in 1992 following the publication with David Norton of an article in Harvard Business Review that introduced the idea of the “Balanced Scorecard”. The central thesis of this was that traditional accounting systems only measured tangible assets, such as cash, stock and plant and machinery, and that intangible assets such as people and customer relationships were not duly considered.

The Balanced Scorecard encompasses other measures including customers, internal processes, learning and growth as well as traditional financial measures. The concept has spawned a raft of books, models and software tools that have found favour in boardrooms around the world and has also proved popular with governments, the public sector and not-for-profit organisations.

Kaplan says that organisations are generally very good at diagnosing their problem and formulating strategy. Many, however, fall down on strategy implementation as they fail to align their people around a unified strategy.

“There’s a lot of rhetoric around strategy but the key is to get employees aligned as they are the ones who will implement the strategy on the ground. You have to motivate them and ensure that they have the skills to do the job. The HR function has a vital role in this area and needs to be thoroughly engaged with the process but too often it’s operating off to the side rather than being in the centre of the action,” he says.

Kaplan says that organisations should use tools, such as a strategy map and balanced scorecard to identify the key processes that they want to change. They should also identify which employees will have the most critical impact in these areas and what additional skills and resources they will need. While he says the scale of this group will vary between organisations, in some case studies a relatively small group of 10-15 per cent of employees have been identified as being key to the transformation process and these are the people that resources should be intensively targeted at.

Three to five years is a reasonable time frame for a transformation programme in a significant private sector organisation but larger public sector organisations may need to think in terms of up to a decade to achieve the changes they truly want. Nonetheless, organisations should set stretch targets. The targets used should be meaningful to those who need to implement change.

He cites Southwest Airlines in the United States – the carrier Ryanair modelled itself on – as a good example. “They figured out that if they could get a plane turned around in less than 30 minutes as opposed to the then norm of 55, that they could get two extra flights a day with the same shifts. They focused on what they needed to do to achieve this, did it and became the most profitable airline in the country in the process.”

Moreover, Southwest focused on getting customers to their destinations on time, boosted the frequency of flights to give customers more convenience and competed with other modes of transport to grow the airline market.

Profitability was the consequence of the strategy but it is a “lagging indicator” he says. The strategy focus should be on improving customer experience, as, in a well-managed organisation, the profits will follow.

Incentives are important as well. “If you give employees objectives that they can understand and influence, they will respond, particularly if you can address the WIIFM (what’s in it for me) issue. If achieving these goals creates extra profits, they should share in those gains so you need to align your variable compensation to measures that drive your strategy,” Kaplan advises.

In the case of a utility company, for example, compensation could be aligned with service outages, response times or safety issues – issues employees can directly influence.

Strategy is not a secret – it’s highly public, he adds. The key is in execution which is all about communication and getting buy-in.

The current challenged environment is a time for brave and decisive leadership rather than slashing costs and hunkering down. While organisations may need to become leaner to survive, they also need to focus on where they can achieve growth.

“If the focus is too tactical and short-term, that may satisfy immediate earnings targets but it destroys value before long and the consequence is disloyal customers and poorly trained or disengaged employees,” he says. “Good CEOs are the ones who have visions that can sustain them through difficult times, who focus on how they can deliver better service to the key customers and who know how to communicate that to the key people in their organisation.”