Performance Alignment: Cascading Strategy

This week at ASMI’s Balanced Scorecard Masters Conference I gave a talk entitled “Performance Alignment: Cascading Enterprise Strategy Throughout the Organization.”  For those of you that may not be familiar with the concept of cascading, it’s a formal method for achieving alignment throughout an organization.   Cascading isn’t the only possibility: all employee phone calls, status meetings, off-sites, and executive mandates are all used to improve alignment.  What makes cascading different is that it explicitly attempts to connect strategy to operations to tactics. Said another way, cascading tries to formalize the concept of middle management.

I used the metaphor of a honeycomb to describe a connected and aligned organization.  Every group and individual creates connections to the people above them, below them, and at the same level as they are.  Like a honeycomb, the connections don’t have to start from the top but rather grow organically from the middle out.  The key is to find the appropriate “queen bee” with the visibility, clout, and evangelism to seed the process.

An individual has four options when creating a formal link to an objective or a measure.  They can be identical, contributory, shared, or unique.  As a simple example, a sales organization is likely to cascade identical objectives and measures to the Western, Eastern, and Central regions.  The Western region, in turn, would cascade identically to Northern CA, WA/OR, and Southern CA.  The objectives and measure definitions might be the same but the actual values and the target values could be different – the Eastern region might have a $200M target while the Western region only needs to sell $150M.

On the other hand, consider an organization that has a corporate objective based on service level agreements using a key performance indicator such as “% time meet delivery promise”.  This objective and measure might be cascaded identically to the distribution organization but, when applied to the call center, the objective could be changed to reduce wait time and the KPI to average hold time.  The call center then contributes to the corporate objective but doesn’t use identical goals or measures.

In a later post, I’ll provide a detailed example of how this works for an anonymous manufacturer.  In the mean time, if you’re interested in learning more, feel free to check out a Web seminar that I recorded last year on this topic. As always, feedback is appreciated.