Lack of Coordinated Effort at the Enterprise Level
I’ve rarely been in a meeting where the following leaders have met to bring about a coordinated effort to synchronize their key performance or financial and operational measures: VP of Finance, Strategy (Enterprise and Business Unit), Operations and Enterprise Architecture. Their perspectives, responsibilities and ability to affect positive change are indispensible but rarely coordinated. It is time to explore the opportunity and the challenges to overcome.
My experience working or consulting to executives within multi-billion revenue organizations is that their enterprise and business unit strategies are so broad and complex that very few people grasp the whole, and few could explain how they integrate. Yet, these organizations explain to Wall Street in terms of revenues and profitability how all these operations work together.
Few people operate at the enterprise level, so this coordinated enterprise story of coordination between finance strategy, execution is usually pretty weak. Often the story is basically a financial one or the power points of various business unit executives pulled together.
Most people work in business units and have their own part of the total strategy to execute. They have to optimize their operations to reach their own financial and other measured goals, regardless of the level of clarity of the enterprise strategy. A common refrain from the top executives on downwards, is “I know what our part of the organization is working on, but I have only a remote understanding of what other groups are doing and how their efforts impact ours.” Add to that, is the fact that most financial measures for organizations are not well aligned to the operational efforts.
What You End Up With Is A Major Gap In Understanding of What Has To Change Operationally To Move The Dial On Enterprise Financial Measures
How then can a large organization create this connection between corporate financial measures and business unit operations?
Creating a Common Language for Strategy to Execution: Targeted Outcomes (Financial, Strategic, Operational, Behavioral etc.)
The one approach that has consistently worked is the decomposition of Targeted Outcomes. These targeted outcomes start as targeted financial outcomes at the highest strategic level. For example, Earnings per Share can be decomposed into the profitability targets for the major strategic focus areas of the business. These in turn can be decomposed into the targeted revenue and cost savings targets within the business units. It is at this stage that you can decompose financial outcomes into all the operational targeted outcomes that are necessary to achieve the financial measures.
Once you have the set of targeted operational outcomes identified, you can add measures to them. That is exactly the type of information that VP’s and Directors need within Business Units to identify the operational efforts, programs and projects that can achieve those higher level operational outcomes.
Once the operational outcomes and associated projects are identified, it becomes just a matter of standard enterprise architecture and project management practice to identify and communicate the areas of change and then the dependency between change projects anywhere within the organization.
This is by design a short point of view based on observation and bringing about successful change. The major take away is that bringing Financial Measures, Strategy and Execution together using Targeted Outcomes Decomposition and Enterprise Architecture can be done. The problem is more often, that these groups and their efforts are still carried out within silo’s.
No Common Governing or Meeting Platform to Bring Together the Right People for the Right Actions
It is the influential executive or bold director/ manager who can bring the right level of awareness to the problem and potential solution. It is tougher still to get the right people in the room to even agree to an enterprise solution.
I’ll be writing more about the promise and value of bring these together and with some suggestions on how to bring it about in the real world of competing agendas, and not enough time.
Challenges to Overcome in Coordinating Finance to Strategy to Execution Efforts at the Enterprise Level
Here are some of the challenges that need to be explored in building coordination in Finance, Strategy, Execution and Enterprise Architecture;
- How to inform each other of the opportunities that we each know exist if we coordinated efforts.
- How to overcome the silo’d way those groups operate.
- What to do, when there is no standing forum for these leaders to come together.
- How to set up a charter for this group, and the measures of success that they can newly influence, and
- How to measure and sustain success.