Readers of this blog will know that I have a deep affinity for a portion of Performance Management that has come to be known as Strategy Management. The most obvious explanation for my passion is the fact that I ran a company often cited as pushing the envelope in strategy management. However, I’ve also always felt that the concept of strategy management was largely misunderstood – often relegated to the display of a few metrics on a dashboard – and, as such, the potentially profound impact on an organization’s performance is usually squandered.
Since people misunderstand strategy management, they often equate performance management to better budgeting and planning. The confusion is rampant and, until recently, was exacerbated by the market analysts. Some firms, notably Ventana Research, have encouraged the use of strategy management for several years. However IDC helped the industry take a huge step forward by using the term “Financial Planning and Strategy Management (FPSM)” to refer to the category and including strategy management in their market sizing. But I was particularly pleased to see Gartner emphasize strategy management in this year’s preparation for the magic quadrant. An abbreviated version of their description is as follows:
Strategy management applications provide a packaged approach to support strategic planning, modeling and monitoring to improve corporate performance, accelerate management decision making and facilitate collaboration. These solutions are usually tied to strategy maps or methodologies, such as the balanced scorecard. Strategy management comprises:
· Strategic planning
· Initiative/goal management
· Scorecards and strategy maps
· Dashboards (or cockpits)
CPM suites should at the very least provide dashboard capabilities to help display performance information in a way that is easily understood by users. However, more sophisticated organizations are implementing strategy maps (linked frameworks of KPIs) using scorecard software to link CPM to other aspects of performance management. Strategy Management is therefore becoming an increasingly important aspect of CPM suites [emphasis added].
I can certainly still quibble with their definition, as I think they are missing the fact that strategy management is not just about helping organizations develop the strategy and make better decisions based on the strategy but also for every employee to better understand the strategy and how they can impact it. In particular, without sophisticated techniques for cascading strategy has the tendency to be trapped in the executive suite. But the point is that Gartner, and many others, have begun to realize the importance of strategy management in improving an organization’s performance.
I don’t want to be guilty of irrational exuberance but maybe I’ll never have to write another post complaining that the market isn’t changing.