E X E C U T I O N E X C E L L E N C E E X E C U T I O N E X C E L L E N C E MAKING STRATEGY WORK USING THE BALANCED SCORECARD SANJIV ANAND Coverdesign:Wiley Copyright2016bySanjivAnand.Allrightsreserved. PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey. PublishedsimultaneouslyinCanada. Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinany formorbyanymeans,electronic,mechanical,photocopying,recording,scanning,orotherwise, exceptaspermittedunderSection107or108ofthe1976UnitedStatesCopyrightAct,without eitherthepriorwrittenpermissionofthePublisher,orauthorizationthroughpaymentofthe appropriateper-copyfeetotheCopyrightClearanceCenter,222RosewoodDrive,Danvers, MA01923,(978)750-8400,fax(978)646-8600,oronthewebatwww.copyright.com. RequeststothePublisherforpermissionshouldbeaddressedtothePermissionsDepartment, JohnWiley&Sons,Inc.,111RiverStreet,Hoboken,NJ07030,(201)748-6011, fax(201)748-6008,oronlineatwww.wiley.com/go/permissions. LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheirbest effortsinpreparingthisbook,theymakenorepresentationsorwarrantieswiththerespecttothe accuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimanyimplied warrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymaybecreatedor extendedbysalesrepresentativesorwrittensalesmaterials.Theadviceandstrategiescontained hereinmaynotbesuitableforyoursituation.Youshouldconsultwithaprofessionalwhere appropriate.Neitherthepublishernortheauthorshallbeliablefordamagesarisingherefrom. Forgeneralinformationaboutourotherproductsandservices,pleasecontactourCustomer CareDepartmentwithintheUnitedStatesat(800)762-2974,outsidetheUnitedStates at(317)572-3993orfax(317)572-4002. Wileypublishesinavarietyofprintandelectronicformatsandbyprint-on-demand.Some materialincludedwithstandardprintversionsofthisbookmaynotbeincludedine-booksorin print-on-demand.IfthisbookreferstomediasuchasaCDorDVDthatisnotincludedinthe versionyoupurchased,youmaydownloadthismaterialathttp://booksupport.wiley.com.For moreinformationaboutWileyproducts,visitwww.wiley.com. LibraryofCongressCataloging-in-PublicationData: Names:Anand,Sanjiv,author. Title:Executionexcellence:makingstrategyworkusingthebalanced scorecard/SanjivAnand. Description:Hoboken,NewJersey:JohnWiley&Sons,Inc.,[2016]|Includes index. Identifiers:LCCN2015048159|ISBN9781119196464(hardback)|ISBN 9781119196488(ebk);ISBN9781119196471(ebk) Subjects:LCSH:Balancedscorecard(Management)|Strategicplanning.| BISAC:BUSINESS&ECONOMICS/StrategicPlanning. Classification:LCCHD58.93.A532016|DDC658.4/012–dc23LCrecord availableathttp://lccn.loc.gov/2015048159 PrintedintheUnitedStatesofAmerica. 10 9 8 7 6 5 4 3 2 1 Thisbookisdedicatedtomywife,Monica,andtomyboys, SahilandJai,fortoleratingmy30yearsoftravel intryingtomakestrategyworkforclients. Tomydad,whotaughtmeconsultingandhow tobeagoodhumanbeing.Andtomymom, whohelpedmydadandmefollowourdreams. Contents Preface xv Acknowledgments xvii I THEREALWORLDOFSTRATEGY 1 ’ 1 TheGlobalBusinessEnvironmentinToday sFlat World:NewsFlowsFasterthanWater! 3 SoWhereDoWeGofromHere? 5 WhatDoesThatMean? 5 2 TheEvolvingRoleofStrategy:IsStrategyDead? 7 Blue-SkyStrategy 8 Back-to-BasicsStrategy 8 3 StrategyFormulation:BuildingaStrategy thatWorks 11 ExternalAssessment 12 InternalAssessment 12 ’ 4 StrategyExecution:It sAllAboutthe Implementation 17 ’ 5 TheBusinessPlanningProcess:Don tLet theProcessOverrunYou 19 Ownership 21 vii viii CONTENTS II INTRODUCINGTHEBALANCEDSCORECARD 23 6 IntroducingtheBalancedScorecard: Circa1992andStillGoingStrong 25 History 25 BasicBSCFramework 26 Design 29 Implementation 30 Cascades 30 IndividualBSC 30 UsingtheBSCtoFormulateStrategy 31 7 ChallengesinImplementingtheBalanced ScorecardSuccessfully:TimetoPutona Helmet! 33 GeneralChallenges 33 DesignChallenges 35 Implementation Challenges 37 III CHALLENGESINBALANCEDSCORECARDDESIGN 41 8 DesigningtheStrategyMap:KeepItLite 43 Introduction 43 DesignMethodology 44 StrategyMapDesignComponents 45 ImpactofIndustryCustomizationandSupportFunctionson StrategyMapDesign 49 StrategyMapDesignforNonprofitandGovernment Organizations 52 TheConceptoftheLinkageModel 52 DesigningaLiteVersionofaStrategyMapforBoard Reporting:StrategicThemes 54