Getting the Most out of Strategic Planning, Part 3

Along with the benefits of better leadership strategic planning’s need for a clear mission and performance measures has a direct, positive, impact on the management of organizations. The focus provided by a strategic plan comes from the clarity found in the organization’s mission… not some flowery, Dilbertesque string of platitudes and bureaujargon, but a simple declarative sentence of what the organization must do and must get for those efforts. It’s no accident that most strategic planning facilitators begin by writing a mission statement, because everything in an organization begins and ends there.

Having worked through dozens of such statements, and sharing the frustration that participants do at the constant word-smithing and hair-splitting consistent with the exercise, I discovered folks were making it too hard. And in the process robbing their organizations of the focus a good mission should provide. I spent some time analyzing mission statements and came to the conclusion that the best ones were nothing more than do-get declarations. I have often cited, although I’ve never found it written anywhere, a mission attributed to Alfred P. Sloan when he became President of General Motors in 1923. Supposedly surveying the diversified GM empire he said, “We bend metal for profit.”

Pretty straightforward stuff: noun, verb, object. The beauty of such clear thinking is that it leads to clear action so that anyone at GM, CEO to the person sweeping out the factory after the shift, gets it: his or her job is to make that mission happen. It worked so well GM was, until recently, the model of the superiorly managed corporation. I know your’re curious. GM’s contemporary mission statement:

G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stock-holders will receive a sustained superior return on their investment."

The current mission seems accurate and detailed next to Sloan's, but it lacks a more important property: clarity. Sloan's is a rallying point, what I like to call the "north star" of the organization, a point of reference that instantaneously tells everyone who you are and what you are about. This allows, as Tom Peters once put it, for folks to "stick to the knitting."

A well done mission statement doesn’t have to be as linear as Sloan’s I like the one I did for General Parts, Inc. a few years ago: we distribute and sell auto parts for the benefit of the customer, our employees and our shareholders. Same idea.

Conceived of in this manner, the mission statement lays the foundation for the powerful management device of performance measurement. As a simple proclamation of what an organizations does and what is expected from those efforts the mission provides what, using the technical language of performance measurement, is needed to determine whether efforts produce results, definitions of both outputs and outcomes.

For many organizations this is a huge step forward and a signal effort towards holding an organization accountable… not for just what it does, but for what it achieves. Such thinking leads quickly to the idea of an organizational report card or, as Kaplan and Norton put it, a balanced scorecard. To their thinking any organization really has four bottom lines to attend to: financial outcomes, customer satisfaction, organizational capacity (internal business practices) and the adequacy of its knowledge base (this latter equating with organizational intelligence).

An organization that can measure, monitor and manage itself with these four general performance standards in mind is going to be strong… rooted in its commitment to meet customer needs, cognizant of financial imperatives for sustainability and profit, aware of a need to grow, improve and to learn.

The unfortunate thing is the development of performance measures is often skipped in the strategic planning process. Identifying them is difficult and, for the uninitiated, time-consuming especially when there are a lot of other things to do. Over-looking this step, however, compromises the plan and assures confusion as to where an organization is going and whether it ever gets there. The sad truth is that most CEOs have cars in the corporate parking lot with more instruments on the dashboard than they have performance measures in the board room.

Once measures are identified it is possible to track organizational performance over time. The first year of measurement establishes a baseline against which every succeeding year can be compared. Similarly, performance can be benchmarked against other organizations. These are effective ways of determining whether goals are being achieved as well as allowing for analyses of “gaps” to set future performance goals.

The fundamental impact of the introduction of performance measurement as a management tool is to shift the organization’s analysis and thinking from opinion and myth to data and fact. While care needs to be taken to assure the validity of these measurements and their application, their use to inform management decisions can be transformative.

To see the Powerpoint presentation I used at NAR follow these links: http://pnwconsult.com/NAR DC 2009 VO.pptx or http://pnwconsult.com/NAR Midyear 2009.ppt

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