Building and executing a sound corporate strategy

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: Any organisations have achieved one-time performance breakthroughs without the use of a formal management system. Charismatic leadership and the art of management are powerful and frequently effective forces. Performance that depends on the power of individual leaders, however, is generally not sustainable over the long term. Unless an organisation links its strategy to its governance and operational processes, it won’t be able to sustain its successes.

The first sub process links business process improvements to strategic priorities. The second links strategy to forecasts of resource capacity and the spending on operating and capital resources that will be required to deliver on the strategic plan.

Improve key processes

Strategy execution requires alignment and execution of both strategic initiatives and process improvement programs. We describe how companies identify and execute portfolios of strategic initiatives—short-term, finite- length projects (up to twelve to eighteen months)—designed to drive improvement in Balanced Scorecard measures. We describe how to align ongoing process improvement programs with strategic objectives. Quality and process improvement programs existed well before the introduction of the

Balanced Scorecard. Japanese companies, in the 1970s, demonstrated the power of their total quality management (TQM) approaches, which built on earlier innovations by Deming, Shewhart and Juran. Western versions of Japanese TQM showed up in the 1980s, including lean management, just-in-time, and six sigma.

The US Congress established the Malcolm Baldrige National Quality Award in 1987; several European companies founded the European Foundation for Quality Management (EFQM) in 1988. The EFQM organisation created a model similar to Baldrige’s for judging applicants for a European Quality Award.

The reengineering movement occurred simul- taneously with the introduction of the Balanced Scorecard in the early 1990s. By the early 1990s, almost all enterprises were implementing quality and process improvement initiatives built on these developments.

Organisations can use the strategic objectives on their strategy maps and scorecards to enhance and align their process management programs. Quality models, by themselves, often focus on local, tactical, and unlinked process improvements. Quality resources are committed to processes that have been identified as falling short of best practices.

This allocation process, however, occurs independently of strategic priority setting. The BSC provides explicit causal links from quality and process improvements to successful outcomes for customers and shareholders.