Sunday, April 27, 2008

My Management System

Some people say it’s too complex, some people say it’s out of date, but I am still a true believer of the Balanced Scorecard, BSC. But it must be properly used which requires that you understand that

Balanced Scorecard is a management system
(not just a measurement system)

Just like you use a heart rate monitor to manage your performance during your exercise, not just to measure your heart rate!

Being properly built and used BSC enables organizations to clarify their vision and strategy and translate them into action. It also provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

I built the Balanced Scorecard to our organization according to the ideas of Paul R. Niven. In his books he covers BSC as a whole – from why you should have BSC, how to build one, how to train and implement it and ultimately how to use it as a management system.

In their original concept Kaplan and Norton state that “ultimately, causal paths from all the measures on a scorecard should be linked to financial objectives.” This unfortunately leads the focus to a measurement system. On their recent Harvard Business Review article they have simplified the measurement concept and create a link to operations plan – finally making it a true management system.

Still everything is being pushed upward towards the financial perspective.
You need to work hard on the customer perspective to push upwards.
You need to work hard on the process perspective to push upwards.
And you need to work hard on the learning perspective to push upwards – if you have included any real learning measures.

I turn the perspectives upside down.

Everything starts from Learning and floats downwards effortlessly. Leading to improved performance in every perspective including (but not only) the financial perspective. My Manager’s Toolbox mission is Lifelong Learning. For me learning naturally comes first.

While writing this post, I have been reading two books, which also emphasize learning. First was Elegant Solution by Matthew E. May. He has written an excellent book about Toyota’s innovation system which is built on learning: “Learning and innovation go hand in hand, but learning comes first.”

The second book I was reading is a small pocket book Zen Lessons which my wife gave me one morning while I was going for a business trip – thanks love! As I was reading it at the airplane, I was encouraged when I found the lesson 2 of this 1000 year old wisdom being about Study and Learning: “Accumulate learning by study, understand what you learn by questioning.”

So I think we can egree that everything really starts from learning. And as always I end my post with some questions to help you understand my point.

Do you have a proper management system in place?

Does it provide internal and external feedback?

How big part do financial measures play on the system?

How much do you emphasize the learning perspective – individually or at your organization?

Sunday, April 20, 2008

My Strategy - Part 2

A good strategy is about choosing to run a different race than your competitors, not trying to run faster the same race. The real Eureka moment for my Manager’s Toolbox strategy was when I realized that

I have no competitors!

And that is no coincidence. That is a result of the strategic choices I explained in my earlier post. There are no competitors because nobody else could internalize knowledge for me. There are no competitors, because I chose not to compete with thousands of other sites providing advice to managers. I am sticking to my original idea to organize the best practices I have found during the years. I build Manager’s Toolbox for myself, thus I am my only customer and I have no competitors.

As I have no competitors, my strategy is a Blue Ocean Strategy. I have created a market place where no competitor exists and I do not need to waste my resources trying to produce more, faster or cheaper than they are producing. I fact in a blue ocean I can break this value / cost trade-off. I can align all Manager’s Toolbox activities in pursuit of differentiation and low cost – not choose differentiation or low cost as in a red ocean. In the book, Kim & Maurborgne show how companies can grow tremendously in their blue oceans. Their case example is Cirque du Soleil who reinvented the circus business grew from street performers to a global market leader.

Jim Collins, in his book Good to Great, defines a Hedgehog Concept. A concept which helps you, the hedgehog, to beat your competition, the fox, no matter how hard he tries. My Manager’s Toolbox strategy is in the intersection of the three elements he defines for the concept
  1. What you can best in the world at – I am best in the world to internalize knowledge for myself

  2. What drives your economic engine – Manager’s Toolbox has been my wish and hobby for several years, there are no costs and no revenue is necessary

  3. What are you deeply passionate about – I am deeply passionate about learning new things and developing new things

The question of economic engine is an interesting one. I could of course be doing all this in a notebook, but there are reasons why I chose to blog this. One is that the blog is available for myself anytime, anywhere. But now, let me repeat my question from my earlier post

Are you performing unique activities or just trying to produce more, faster and cheaper than your competitors?

Could you make strategic choices that make your competition irrelevant?

Saturday, April 12, 2008

My Strategy – Part 1

What Is Strategy? is a classic Harvard Business Review article by Michael Porter. He points out that the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are difficult to match. Strategy itself is a long term action plan designed to achieve a particular goal, the vision.

There are some unique and valuable positions behind my Manager’s Toolbox strategy

To internalize and summarize
the knowledge I need
during my management career.

What makes my strategy unique? It is a needs based strategy which Porter defines as serving most or all the needs of a particular group of customers when there are groups of customers with different needs, and when a tailored set of activities can serve those needs best. A good example of needs based positioning is your local pub, where they serve you not only beer, but also food and entertainment to satisfy more of your needs - not the best quality but good enough to make you stay longer and make you spend more money there.
Photo of pub food by DanieVDM

Other strategic positions are variety based or access based. A good example of variety based position is McDonald’s who can best produce a variety of products using distinctive sets of activities. McDonald’s tried to introduce pizza but failed because they could not figure out how to make and serve a pizza in 30 seconds or less (using their distinctive set of activities). Starbucks in turn is an example of access based positioning; segmenting customers who are accessible in different ways because of customer geography or scale. You can find a Starbucks sometimes in every corner when the customer scale and geography allows this.

Treacy and Wiersema describe three strategic value disciplines that can create customer value and provide a competitive advantage. They are operational excellence, product leadership, and customer intimacy. Think about summarizing the knowledge needed during a management career. There is nobody that can beat the operational excellence of Wikipedia. How could anybody summarize more information faster or cheaper? The same way I do not think there is nobody who can question the product leadership of Harvard Business Review. They recently celebrated 100 years of Harvard Business School with a special issue on leadership and strategy.

Now think of internalizing and summarizing the knowledge I need during my management career. My strategic positioning for Manager’s Toolbox is clearly a customer intimacy strategy cultivating close and long term customer relationships and intimate knowledge of customer requirements. This comes even more apparent after making a strategic trade-off and deciding that

I am my only customer.

Manager’s Toolbox is helping me internalize the knowledge I need – and you bet I have a long term relationship with myself and intimate knowledge about my requirements. Understanding this took me one year when I did not write any blog entries. I was just not able to define who my customer would be and how I could provide them value. When I realised that I am the only customer, I also realized that I can easily provide myself value just by internalizing knowledge and summarizing it to this blog. And my strategic positioning and value discipline became crystal clear.

What are your personal or your organization’s strategic positioning and value discipline?

Have you clearly defined them?

Do you make strategic choices based on them?

Are you performing unique activities or just trying to produce more, faster and cheaper than your competitors?

Saturday, April 5, 2008

My Mission and Vision

If I am my own CEO, at the same time it means

I am my own Organization

An organization, which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment.

An organization must have mission and vision. As a non native English speaker I have always had trouble distinguishing the difference between them. Not anymore! Before writing this blog I had to figure out a way never to mix them up again.

My Manager’s Toolbox Mission is Lifelong Learning. This simple mission statement tells me what Manager’s Toolbox is now. It defines my customer, critical processes and it informs me about the desired level of performance.

My Manager’s Toolbox Vision is Improved Management and Leadership Skills. This simple vision statement outlines what Manager’s Toolbox wants to be. It is my source of inspiration and provides clear decision-making criteria.

I never mix up mission and vision again, because I remember them with the help of these two unexpected sources – activating also the creative right side of brain.

The Blues Brothers have a simple mission statement "We're on a mission from God". Their mission statement includes everything they need to remember about the fact that The Catholic orphanage they grew up in needs to pay $5,000 taxes in 11 days, or else it will be closed. Their mission keeps them going despite all the obstacles on their way.

See for your self, The Blues Brothers: "We're on a mission from God"

John Lennon’s Imagine is a simple vision statement “Imagine all the people living life in peace”. In December 2006 Former U.S. president Jimmy Carter said, "In many countries around the world — my wife and I have visited about 125 countries — you hear John Lennon's song 'Imagine' used almost equally with national anthems." Think about it. In 2006! Do you remember on which decade Imagine was released and Jimmy Carter took office? Imagine is a strong vision statement still remembered by millions of people around the world.

Just listen to it, John Lennon's Vision: “Imagine all the people living life in peace”

Do you remember your organizations Mission and Vision statements?

Are they good ones?

Do you have your personal mission and vision statements helping you to clarify what you do and why?