The Execution Premium: Linking Strategy to Operations for Competitive Advantage [Hardcover]

Very good book. Pulls together Kaplan's and Norton's teaching on strategic management and gives a good guidelining for executing a strategy.

I have read and reviewed all of Robert S. Kaplan and David P. Norton's previous books and consider this one their most valuable...thus far. Why? Here are three reasons.

First, I agree with Kaplan and Norton that managing strategy differs from managing operations but both are vital and need to be integrated. I appreciate their mastery of what Roger Martin characterizes as "integrative thinking" in The Opposable Mind. That is, they agree with Thomas Edison's observation that serves as the title of this review: "Vision without execution is hallucination." They also agree with Peter Drucker who once observed, "There is surely nothing quite so useless as doing with great efficiency what should not be done at all." According to Michael Porter, "The essence of strategy is choosing what not to do." That is why Kaplan and Norton devote almost all of their attention to focusing on (a) what is most important in terms of linking strategy to operations for competitive advantage and (b) how to do that with resources and initiatives that are cohesive, comprehensive, and cost-effective.

Also, they make brilliant use of various reader-friendly devices to highlight, consolidate, and summarize, and emphasize especially important points. For example, Figures: Figure 1-1 "Strategy management: State-of-the-art practices," Page 5; Figure 3-14 "Establishing targets based on cause-effect-scenarios," Page 92; Figure 9-9 "Strategy map and scorecard for Store 24's new Ban Boredom strategy," Page 267; and Figure 10-3 Strategy management: An integrated closed-loop process," Page 289. I also appreciate the dozens of checklists that are strategically inserted throughout the lively but eloquent narrative. Together with the Figures, the various checklists facilitate, indeed expedite frequent review of key points.

Finally, as in their previous books, Kaplan and Norton share information, insights, and advice that all relevant to any organization, whatever its size and nature may be. No two organizations are exactly the same...nor is any organization the same today as it was a year ago or will be a year from now. Kaplan and Norton do everything humanly possible to educate their reader with regard to what is needed to link strategy to operations for competitive advantage but they also help their reader to develop what I characterize as the "executive premium" mindset: challenge all assumptions and premises, seek out and welcome principled dissent, be receptive to unorthodox ideas (especially from unexpected sources), and meanwhile focus (as do Kaplan and Norton) on what is most important and measure all initiatives, viewing each setback not as a failure but as a precious learning opportunity.

Robert S. Kaplan is professor at Harvard Business School, while David P. Norton is the founder of Balanced Scorecard Collaborative and a director of Palladium Group. This book was published in 2008 and consists of 10 chapters plus a short preface and acknowledgement.

There is considerable history behind this book, which goes back to 1992 when the authors introduced the balanced scorecard as a performance management system. The balanced scorecard made it possible for managers to express and measure operational performance. The framework was built around 5 management principles: (1) Mobilize change through executive leadership; (2) translate strategy into operational terms; (3) align the organization to the strategy; (4) motivate to make strategy everyone's job; and (5) govern to make strategy a continual process. This has resulted in four previous books by the authors, which focused primarily on the first 4 principles.

In the preface Kaplan and Norton explain that while they set out to document the best practices for the fifth principle, "we ended up with a self-contained and comprehensive mangement system that links strategy and operations." In the first introductory chapter, the authors explain that although many of the building tools for strategy development, strategic planning and operational planning already exist, but that a comperehensive framework to integrate all these tools is still lacking. They therefore introduce a six-stage comprehensive, closed-loop management system that integrates management tools to help companies with strategy execution. In addition, they introduce a new organizational unit that helps design the integrated system.

The six-stage framework is almost broken by chapter. Chapter 2 contains a detailed description of the 3 strategy development process. Chapter 3 describes the first 2 strategy planning processes. Chapter 4 describes the 3 initiative management processes. Chapter 5 describes the best practices companies use to align organizational units and employees to the strategy. Chapter 6 discusses the linkaged of strategy to process improvements. Chapter 7 describes the conversion of a strategy plan into plan for resource capacity and for operating and capital expenses. Chapter 8 presens the structure, frequency, partipants, agenda, and actions fo operational and strategy review meetings. Chapter 9 provides detais and several case examples of the test and adapt meetings. Chapter 10 finalises the book and describes the roles and responsibilities for a new unit termed "office of strategy management", who should become the architect, process owner, and integrator of the process embedded in the management system.

However, the authors make one explicit additional remark to the 6 strategy management stages: "... leadership is so important to the strategy management system we believe it to be both necessary and sufficient." The necessary condition comes from the authors' experence with the more than 100 enterprises around the world who have become members of the Balance Scorecard Hall of Fame. The sufficiency claim is even bolder as the authors believe that each of the six stages is doable, when guided by a senior management office. However, "we cannot provide a blueprint for visionary and effective leadership."

Yes, I do like this book. It does perhaps not bring many new issues to the table, apart from the office of strategy management, but I still believe that the highly visual aspects of the balanced scorecard and this 5-stage framework assist to explain strategy, measures, targets, processes, reviews and findings to all parties involved in organizations. The framework povides great guidelines to organizations to execute their strategy better through improved operations. Highly recommended.