"How to Implement a New Strategy without Disrupting Your Organization"

Robert Kaplan and David Norton

Harvard Business Review

March 2006, pp. 100-109

The authors of this article are famous as the founders of the Balanced Scorecard approach. This article is an excerpt from their forthcoming book entitled "Alignment".

Two basic structural business models that have been the main ones used by organizations for some time now: centralization by function or decentralization by product and region. Some organizations have also adopted the matrix design. The authors argue that structural reorganization usually is not the right approach to unlock more value. Their recommendation: "choose an organizational structure that works without major conflicts and then design a customized strategic system to align that structure with the strategy."

The authors recommend their own Balanced Scorecard approach as the best way to align structure and strategy. Though much of their past work has focused on business units, more recently corporations have begun using the approach for their corporate level strategy. The corporate scorecard and strategy map look at the financial, customer, process, and learning and growth "perspective" as sources of corporate value creation.

Using this approach, corporations have identified three to five strategic themes to describe their enterprise value proposition. These themes link objectives, measures, and initiatives that span the four perspectives of the balanced scorecard. Local managers use these themes to help link to local strategies, and determine the cross-unit collaboration needed.

Implementation steps include:

• Using the 3 to 5 corporate themes as a basis, the top executives articulate how the whole is more valuable than the sum of the parts.
• A senior executive is assigned to be responsible for each of the strategic themes.
• The executive team "identifies the strategic initiatives (typically those that span business-unit boundaries) that support each theme and authorizes the resources-money and people-required to implement each initiative." Performance of the initiatives is periodically reviewed by the theme owner and the executive team.

The article includes two illustrative case studies from DuPont Engineering Polymers and the Royal Canadian Mounted Police.

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