Tuesday, January 22, 2008

Building an Organized Process for Strategy Communication

In the New Economy, strategy is executed from the ranks. Employees interact with customers and peers; senior executives do not. No longer the exclusive domain of the CEO, strategy is literally everyone’s job.

As Dick Clark, CEO of Merck, once said, “Culture eats strategy for lunch.” Yet despite the ample evidence of employees’ pivotal role in strategy execution, 95% of workers typically do not understand their organization’s strategy. Employees are not informed about it, do not know their relation to it, and are not incented to find out. Many executives treat their strategy with the same secrecy accorded the formula for Coca-Cola. They fear that by revealing it to their employees, they will also be revealing it to their competitors.

However, we are seeing signs of a new openness about strategy. In a March 2006 Balanced Scorecard Collaborative survey of 143 performance management professionals, we found that 73% of the companies that were outperforming their peers had a formal process for communicating strategy to their employees. Among the underperformers, only 28% had such a process.

Through our research of successful organizations, we have learned that understanding the strategy is a prerequisite to executing the strategy. Employees cannot make proper judgments when interacting with customers, partners, and peers unless they understand the strategy and their role within it. Creating this understanding is not easy. Strategy is a complex subject that touches every facet of a business, from finance to products, customers to technology. For large companies with thousands of employees, the effort is complicated by diverse backgrounds and values.

Educating your workforce about the strategy, as well as your progress in achieving it, takes more than a brochure, pep talk, or report. It requires a comprehensive approach that makes strategy the central agenda around which all internal communication is organized. The employee Strategic Communication (which we call “Stratcomm”) program must be as comprehensive and systematic as an external marketing communications program that’s intended to convert prospects into customers. It’s a call to action for the organization, designed to align behavior with the strategy.

(From: 1.David P. Norton, Chairman and Cofounder, Balanced Scorecard Collaborative, and President, Palladium Group, Inc., and James Coffey, Manager, Palladium Group, Inc.
2.This article excerpt was featured in the May-June 2007 Balanced Scorecard Report)
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