Crafting and Executing Strategy:

Management by Objectives

Aygun Suleymanova, May 2010

Starting point: Defining Value
Proposition
 Exercise/ Discussion:
Current Value Proposition
Analysis
Criteria Importan Our Comments
ce Performanc
e
QUALITY - -
CUSTOMER SERVICE - -
GLOBAL REACH - -
FLEXIBILITY - -
EXPERTISE - -
BRAND ATTACHMENT - -
 Key Questions:
IS THIS VALUE WHAT YOU EXACTLY MEAN TO DELIVER?

IS IT WHAT YOU DO DELIVER?

IS IT WHAT YOUR EMPLOYEES BELIEVE THEY

DELIVER?

ARE YOU WELL-POSITIONED INTERNALLY TO DELIVER IT?

IS IT FULLY CONGRUENT WITH YOUR STRATEGY AND

GUIDING PHILOSOPHY AND IS WHAT YOU BELIEVE TO
BE(COME) YOUR COMPETITIVE ADVANTAGE?* NOT
DEFINITELY
EXACTLY
*The one that would be hard for your competitors to imitate
DEFINITELY!
1) Articulate it well through forming a MISSION
statement around customer-centricity
2) Together with the Team create the longer-run
VISION statement to tie your activities to
3) Again, with the Team, create key strategic
priorities (no more than 5) for the year to focus on
4) Immediately after, have the Direct Reports
(Division heads) come up with the
objectives/projects for their Division that would go
under each strategic priority and a KPI for each
5) Have them continue the process down to
individual level
NOT EXACTLY
1) Identify, considering competition, the industry and the
customers what you stand for and where you are
going
2) Together with the Team create the longer-run MISSION
statement to tie your activities to
3) Again, with the Team, create key strategic priorities
(no more than 5) for the year to focus on
4) Immediately after, have the Direct Reports (Division
heads) come up with the objectives/projects for their
Division that would go under each strategic priority
and a KPI for each
5) Have them continue the process down to individual
level
INPUTS FOR STRATEGY
FORMULATION
1) SWOT Analysis. Industry-wise, opportunities
and threats should capture multiple industries
that the company operates in: SaaS, HSE
solutions, Sustainability Vendors
2) Congruence of values analysis
3) Industry Success Factors and the ways to
leverage them:
BRAND STRENGTH
CUSTOMER SERVICE/SATISFACTION
PARTNERSHIP & TRUST
EXECUTION
 Steps to Strategy
Formulation
Vision &
Company CEO, 1 Mission Formulation
Direct reports &
Key contributors
2 Up to 5 Company Strategic Priorities

Target deployment
Direct reports to 3 Related Division Objectives [year]
middle managers;
middle managers
to their teams
and so forth down
4 Unit Objectives

to individual
level Individual Objectives
5
 Example (A technology
consulting firm):
Vision - Enabling freedom:
We will lead by providing our clients
with insights and capabilities that
boost their freedom to achieve
superior results.

Mission - Enabling transformation:

We enable our clients to transform
and perform through technologies.
 We will lead by providing
our clients with insights Com
pan
and capabilities that boost yV
isio
their freedom to achieve n
superior results.
Cor
g ic p ora
e te L
t rat ities eve
S or l
i
Pr Increase
Cutting Edge Superior
Presence in
Solutions Quality
The Market

Div
B. Dev-t: isio
1) Bring in X new Client Technology: n Lev
Customers Services: 1) Increase el
capacity of existing
2) Launch CRM, 1); 2); 3) etc. etc.
Etc.

Tea
m
1) Upgrade the Lev or In
el* d iv
Corporate Website idu
*Depending on the depth of hierarchy al
the objectives will be cascaded down
 Nature of Objectives & KPIs
Type of Descript Level Shared KPI
Objecti ion or
ve Individ
ual
Release the
Project- standard Division Shared X, Y,
Z divisions Project
based version of the
X module/
Deadlin
product e
Close the Individual
Process- customer Team/ 24 hrs
based complaints in
average of 24
Individu
hrs al
 Competency Integration into
Performance Evaluation is
important
3-4 Core Competencies that are
specific to the company depending
on its vision, like: Adaptability to
Changes, Quality, Customer Care,
etc.
Job Family Competences: STRATEGIC
LEADERS; PEOPLE LEADER; PROFESSIONAL
KNOWLEDGE WORKERS; CUSTOMER
CONTACT; ADMINISTRATIVE SUPPORT
 Competences in Force
Competence-based STARs/ARs that
employees give one another will
reinforce the development of
competences
Defined competences will make the
360 degree evaluation well-defined
as well
Allows you to tie development
activities to
 Target
4
7
Perfor
- Deploy-
mance ment
(Mass)
Communi Apprai
cation of sal

3
New
Strategy
to Individu

5
Employee al
s Develop
ment
Plans

6
Annual Target

2
Operati
onal
Revie
w1

1
Budget
Approva

8
Strateg l
y
Review Bonuse
Meetin s
g
Targe
360

6
t
Revie Revie

6
w
Ideal
w3

Target
Timeline for
Revie

6
w2
PM Process
CHALLENGES
1) Geographical dispersion: time and cultural differences
2) KPI determination: the un-tested targets to be set (for
e.g. in customer service, there might be set a target
to close the customer issues in 24 hours, however, it
might be either unrealistic or the gauges could be
biased as to what is considered to be closed)
3) It is imperative that all the processes running in the
company are clearly designed and documented (in MS
Visio map format) and the job responsibilities and
reporting structure are as well clearly defined
4) Lack of incentive structure to complement the
Management by Objectives framework could
significantly impede the implementation of the
concept
SOLUTIONS
1) Research: corporate value analysis, defining the differences in
beliefs and values between the two teams for tailoring the
implementation and communication strategy accordingly
2) Leadership commitment and intensive communication through
different media
3) Development: creating a competence framework consistent
with the strategy to develop certain set of competences in
employees to reach their (and ultimately corporate) objectives
4) Middle management development and commitment: This is
the most important communication channel for nurturing
company values and implementing strategy; Creation of
Succession planning
5) Creation of a consistent STRATEGIC incentive structure (not
just monetary, but also career and recognition rewards)
ENGAGEMENT ANALYSIS
Conducting a survey among the company employees to
define:
- How they feel about being a Company employee?
- What they value most in their job?
- What values they see/show most in their work?
- Is their vision and view of the company same with
the leaderships?
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- Provide recommendations on how to tailor
communication and implementation strategy within
the company
LEADERSHIP COMMITMENT
In realizing its vision through the employees it is
important that the leadership show their commitment
in each step of strategy formulation and execution by:
1) Getting the Team together for strategy formulation
meeting, opening the meeting with a speech and
demonstrating initiative ownership
2) Underlining the importance of the execution to Direct
reports and instilling belief in them in the vision
3) Following through with the Target deployment
4) Using the company Intranet and e-mail to announce
the Companys Way Ahead in a text and video format
5) Monitoring the implementation throughout the year
PROJECT MILESTONES:
Formulating Vision: an interview with the CEO
Presenting industry, company and customer analysis for:
Formulating Mission, key priorities and Division
objectives
Presenting competence framework for the strategy
Conducting Employee Survey (on corp. culture & values)
Company-wide communication of strategy to employees
Facilitating Objectives Deployment & integration of
competences into individual development objectives
Maintaining and constantly communicating the status of
achievements