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Research Report – EMBA3 Assignment – Gim Victor i
Towards the successful implementation of the Balanced Scorecard in
Old Mutual Personal Financial Advice
A Research Report
Presented to
The Graduate School of Business
University of Cape Town
In partial fulfilment of the requirements for the
Executive Masters of Business Administration Degree
By
Gim Victor
Student number: VCTPET001
March 2003
For Professor Tom Ryan
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Research Report – EMBA3 Assignment – Gim Victor i
Acknowledgements
I would like to thank the following people / institutions who helped me directly and
indirectly in the completion of this research report:
Old Mutual for allowing me the opportunity to do the EMBA, in particular Peter
McGregor, who encouraged and motivated me to enrol for the course.
The Graduate School of Business and Associate Professor Tom Ryan for providing a
course that encourages self-exploration and learning.
My fellow students, in particular Lois O’Brien, Ian Middleton and Sharon Julian for their
friendship and encouragement.
Last, but definitely not least, my wife Marina.
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TOWARDS THE SUCCESSFUL IMPLEMENTATION OF THE
BALANCED SCORECARD IN OLD MUTUAL PERSONAL
FINANCIAL ADVICE
Abstract
This research paper examines the key success factors that are needed to prepare an
organisation for the successful implementation of the Balanced Scorecard. It does not
focus on or evaluate the Balanced Scorecard. I applied a systems approach, and examined
factors that led to the less than successful implementation of processes and systems in
Old Mutual Personal Financial Advice.
With these findings in mind, I conducted an extensive literature review on the Balanced
Scorecard implementation, strategy implementation and the implementation of change in
organisations. In addition, managers were interviewed who have been exposed to the
Balanced Scorecard implementation in Old Mutual Personal Financial Advice. The
insights gained from the literature review and the interviews was compared with my
original findings of less than successful implementation of processes and systems within
Old Mutual Financial Advice during the recent past, to construct a framework for
managers. This framework is intended to assist managers within Old Mutual Personal
Financial Advice with preparing the business and staff for the implementation of the
Balanced Scorecard.
Key words: Implementation, Balanced Scorecard, organisational change, preparation.
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Plagiarism Declaration 1. I know that plagiarism is wrong. Plagiarism is to use another person’s work and
to pretend that it is one’s own.
2. I have used the recommended convention for citation and referencing. Each
significant contribution to, and quotation used, in this report from the work or
works of other people has been attributed, and has been cited and referenced.
3. This report is my own work.
4. I have not allowed, and will not allow, anyone to copy my work with the intention
of passing it off as his or her own work.
Signature:………………………….
Student no: VCTPET001
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Table of Contents
1. Introduction……………………………………………………………………... 1
1.1 Background and Objectives………………………………………………….. 1
1.2 Purpose of Research…………………………………………………………..2
1.3 Research Paradigm……………………………………………………………3
1.4 Relevance of Qualitative Research…………………………………………... 5
1.5 Personal Bias (self as participant)……………………………………………. 6
1.6 Layout of Report……………………………………………………………... 7
SECTION 1: THE SITUATION 10
2. Old Mutual Personal Financial Advice – An Organisational Context……… 11
SECTION 2: THE CONCERN AND QUESTION 23
3. Research Design………………………………………………………………… 24
3.1 Research Strategy…………………………………………………………….. 24
3.2 Phase 1: The Immersion Phase………………………………………………. 29
3.3 Phase 2: Structuring the Problem…………………………………………….. 33
3.4 Phase 3: Reflecting Critically on the CLD produced in Phase 2…………….. 34
3.5 Phase 4: Designing a Solution……………………………………………….. 34
3.6 Error of the Third Kind………………………………………………………. 37
4. Structuring the Problem……………………………………………………….. 38
4.1 Explaining the CLD………………………………………………………….. 38
4.2 The Problem Variables………………………………………………………. 42
4.3 Shaping the Research Question……………………………………………… 54
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SECTION 3: THE ANSWER 56
5. Research Synthesis……………………………………………………………… 57
SECTION 4: THE RATIONALE 66
6. Literature Review………………………………………………………………. 67
6.1 What is the Balanced Scorecard?…………………………………………….. 67
6.2 Kaplan and Norton…………………………………………………………… 70
6.3 What other authors have written about Preparation for and the
Implementation of the Balanced Scorecard………………………………….. 73
6.4 Strategy Implementation……………………………………………………... 81
6.5 Implementing Change………………………………………………………... 85
7. Designing a Solution……………………………………………………………. 96
7.1 Findings from the Literature Review with Direct Relevance to the
Research Question and Objectives…………………………………………… 96
7.2 Research Interviews………………………………………………………….. 99
7.3 Expansion and Modification of the CLD Representing the Concern………... 103
SECTION 5: THE EVALUATION 106
8. Conclusion and Recommendations……………………………………………. 107
8.1 Relevance…………………………………………………………………….. 108
8.2 Utility………………………………………………………………………… 109
8.3 Validity………………………………………………………………………. 109
8.4 Ethics………………………………………………………………………….110
8.5 Limitations / Constraints……………………………………………………... 110
8.6 Suggestions for Further Research……………………………………………. 111
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9. Personal Reflection……………………………………………………………... 112
References…………………………………………………………………………… 116
Appendices………………………………………………………………………….. 121
LIST OF APPENDICES
Appendix A: Affinity Diagram……………………………………………………... 121
Appendix B: Interrelationship Digraph…………………………………………….. 126
Appendix C: The Mindfulness Audit………………………………………………. 127
Appendix D: Research Interview Guide……………………………………………. 136
Appendix E: Interview Confirmation Cover Letter………………………………... 137
Appendix F: Linking the BSC to OMPFA’s Business Processes………………….. 138
Appendix G: Transcripts of Interviews…………………………………………….. 140
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List of Figures and Tables
Figure 1: Layout structure of the report……………………………………………. 8
Figure 2: The ‘Rich Picture’………………………………………………………... 12
Figure 3: Sales organisational chart………………………………………………... 13
Figure 4: Head Office organisational chart………………………………………… 14
Figure 5: Reference projections……………………………………………………. 17
Figure 6: Flowchart of methodology……………………………………………….. 30
Figure 7: Problem formulation CLD……………………………………………….. 38
Figure 7a: Problem formulation CLD elements shown as variables………………… 40
Figure 8: Model representing the solution to the research question………………... 57
Figure 9: Summarised process for building the Balanced Scorecard………………. 71
Figure 10: Processes of Balanced Scorecard implementation……………………….. 74
Figure 11: 10-Point BSC implementation plan……………………………………… 75
Figure 12: Four essential BSC implementation activities…………………………… 77
Figure 13: The BSC strategic planning visioning process…………………………... 78
Figure 14: The Metrus Group Balanced Scorecard approach……………………….. 79
Figure 15: Steps necessary to lay the groundwork for the successful BSC
implementation…………………………………………………………... 80
Figure 16: Framework for strategy implementation…………………………………. 81
Figure 17: Implementation of strategy: Keys to success and facts of failure………... 84
Figure 18: Method for succeeding in change………………………………………... 86
Figure 19: Eight-step approach to create major organisational change……………... 90
Figure 20: The creating readiness for change model………………………………… 94
Figure 21: My thinking process for designing systemic interventions……………….104
Figure 22: Handy’s wheel of learning……………………………………………….. 113
Figure 23: Illustration of how the BSC can be linked to the business planning
Cycle……………………………………………………………………... 138
Figure 24: Illustration of when to link the BSC to performance management……… 139
Table 1: Trends affecting the performance indicators…………………………….. 20
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List of Acronyms
AD: Affinity Diagram (refer chapter 3, page 40, and appendix A for a detailed
description)
BSC: Balanced Scorecard
BOT: Behaviour Over Time
CLD: Causal Loop Diagram (refer chapter 3, page 41, for a detailed description)
EMBA: Executive Masters of Business Administration
E3: Error of the Third Kind
HRC: Human Resources Consultant
ID: Interrelationship Digraph (refer chapter 3, page 41, and appendix B for a
detailed description)
IT: Information Technology
MIS: Management Information Services
MRM: Manager Regional Marketing
MRSA: Manager Regional Sales Administration
OMPFA: Old Mutual Personal Financial Advice
PRP: Performance Review Planning
RGM: Regional General Manager
RSCM: Regional Support Centre Manager
SWOT: Strengths; Weaknesses; Opportunities; Threats
TQL: Total Quality Leadership
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Chapter 1 INTRODUCTION
I have striven not to laugh at human actions, not to weep at them, nor to
hate them, but to understand them. Benedict Spinoza
1.1 Background and objectives
This paper offers a framework for the management of Old Mutual Personal Financial
Advice (OMPFA) to apply in preparing both the business and staff for the
implementation of the Balanced Scorecard (BSC).
My original broad area of interest was centred on the implementation of business
processes and procedures. Whilst working through the data collected for this research, it
became apparent that the business unit within which I operate (OMPFA) has not been
successful in implementing new processes and procedures. The understanding I gained
into the myriad reasons and their interdependencies for the unsuccessful or less-than-
optimal implementation of business processes, served as my problem formulation.
OMPFA intends to implement the BSC as part of the business planning cycle during the
course of 2003. This paper does not deal with the BSC tool per se, nor does it evaluate it
against other management control and strategy systems. My aim was to gain an
understanding of those issues that hamper implementation efforts. This understanding
helped me to develop a framework to prepare OMPFA for the successful implementation
of the BSC.
The intended audience of this research is managers within OMPFA as well as any person
who requires further insights into the causes for the failure of the implementation of
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processes and procedures, and those seeking a framework to help prevent it from
happening.
This paper takes a qualitative research position, making sense through the construction of
coherent inquiries. Crucial to this sense-making process, for me as the researcher, was to
comprehend the fit between the research project, the literature on this subject, my
previous experiences in this area, and the evolving sense that I was making of the
phenomenon when collecting data in the field.1
1.2 Purpose of research
“Everywhere our knowledge is incomplete and problems are waiting to be solved. We
address the void in our knowledge, and those unresolved problems, by asking relevant
questions and seeking answers to them. The role of research is to provide a method for
obtaining those answers by inquiringly studying the facts, within the parameters of the
scientific method.”
Paul D. Leedy
According to Zikmund, research (re-search) literally means to ‘search again’. It connotes
patient study and scientific investigation wherein the researcher takes another, more
careful look at data to discover all that can be known about the subject of study.
This definition points out that the objective is to facilitate the managerial decision process
for all aspects of a business. An essential tool for management in its problem-solving and
decision-making activities, business research generates and provides the necessary
information upon which to base decisions. By reducing the uncertainty of decisions, it
reduces the risk of making wrong decisions. However, the author states that research
should be an aid to managerial judgement, and not a substitute for it.2
1 Chenail, Robert J (1997) Keeping thing plumb in qualitative research, The Qualitative Report, Volume 3, Number 3, September. 2 Zikmund, William G (1997) Business Research Methods, The Dryden Press, p7.
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Leedy argues that research has one primary goal: discovery. Research is largely circular
in configuration. It begins with a problem and it ends with that problem being resolved.3
Saunders, Lewis and Thornhill states that people undertake research in order to find
things out in a systematic way, thereby increasing their knowledge.4
The theme of ‘discovery’ and ‘to find out’ comes out as the central theme from the
abovementioned authors. That is exactly my purpose for doing this research project.
In addition, this view is supported by the definition of research from the Longman
Dictionary of Contemporary English:
Research: advanced study of a subject, so as to learn new facts of scientific laws.
1.3 Research Paradigm
“I exist, and all that is not I is mere phenomenon dissolving into phenomenal
connections.”
Edmund Husserl
I will operate from a phenomological paradigm; necessitating further investigation into
the context of other predominant paradigms in use.
A paradigm is a fundamental perspective, or way of thinking, which reflects fundamental
beliefs and assumptions about the nature of organisational phenomena (ontology), the
nature of knowledge of these phenomena (epistemology), and the nature of ways of
studying these phenomena (methodology).5 Positivism and phenomenology (also referred
to as realism and interpretive constructionism) are the two predominant philosophical
approaches for developing research.
3 Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company, p8-9. 4 Saunders, Dr Mark; Lewis, Philip; Thornhill, Dr Adrian (1997) Research Methods for Business Students, Pitman Publishing, p1. 5 Sekiguchi, Tomoki. Theory development, Source unknown.
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The positivism approach underpins the notion that the subject under analysis should be
measured through objective methods rather than being inferred subjectively – through
sensation, reflection or intuition.6 Positivism assumes an objective world, within which
scientific methods can more or less readily be represented and measured, and it seeks to
predict and explain causal relations among key variables. The goal is to uncover truth and
facts as quantitatively specified relations among variables.7
The phenomenological approach understands reality as holistic, and socially constructed,
rather than objectively determined.8 The phenomenological approach offers ways to
understand individuals’ own meaning and theories of the world, a fundamental challenge
for any scholarly inquiry seeking to have practical relevance. The goal is to describe
meanings, understand individuals’ definitions of the situation, and to examine how
objective realities are produced.9
Edmund Husserl (1859 – 1938), who is regarded as the founder of Phenomenology,
emphasises that this is a philosophy that concentrates on what is consciously experienced.
Its influence extends to such fields as the philosophy of science, the philosophy of
language, the philosophy of religion, and to the social sciences. Husserl formulated an
alternative approach to philosophy through the examination of consciousness and its
objects. This systematic analysis of experience became known as phenomenology,
ostensibly because it treated everything as phenomena. The term is in general use in the
field of philosophy where reference is often made to “the phenomenology” of an activity,
any activity at all, with emphasis on a description or analysis of the conscious
experiences involved.10
6 Remenyi D, Williams B, Money A, Swartz E (1998) Doing research in business and management, Sage Publications, London. 7 Gephart, Robert (1998) Paradigms and research methods, Qualitative Research, 46(4). 8 Amaratunga Dilanthi, Baldry David (2001) Case study methodology as a means of theory building: performance measurement in facilities management organisations, Work Study, Volume 50, Number 3. 9 Gephart, Robert (1998) Paradigms and research methods, Qualitative Research, 46(4). 10 Magee, Bryan (1998) The story of philosophy, Dorling Kindersley Limited.
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1.4 Relevance of qualitative research
The basis of qualitative research is about words, and the quality of experience, and is
therefore descriptive and explanatory in nature. Qualitative methods can expose the range
of ideas, the depth and quality of experiences related to the how, what and where of the
issue investigated.11
Qualitative methods generally encompass three ways of data collection: (1) in-depth,
open-ended interviews; (2) direct observations; and (3) the use of written documents.
The data for qualitative analysis is typically extracted through fieldwork. The findings,
understanding, and insights that emerge from fieldwork and subsequent analysis are the
fruits of qualitative enquiry. When one examines and judges accomplishments and
effectiveness, one is engaged in evaluation. When this examination of effectiveness is
conducted systematically and empirically through careful data collection and thoughtful
analysis, one is engaged in evaluation research. Qualitative methods typically produce a
wealth of detailed information about a much smaller number of people and cases than
quantitative research. This increases the understanding of the cases and situations studied,
but reduces generalisability (the ability to generalise).12
Wrigh states that all data collected should be reported in such a way as to enable
transferability to other settings.13 The purpose of applied research and evaluation is to
inform action, enhance decision-making, and apply knowledge to solve human and
societal problems. Applied research is judged by its usefulness in making human actors
and interventions more effective and by its practical utility to decision makers,
policymakers and others who have a stake in efforts to improve the world.14
Transferability refers to the degree to which the results of qualitative research can be
generalised or transferred to other contexts or settings. From a qualitative perspective
transferability is primarily the responsibility of the individual doing the generalising.
11 Wrigh, Cheryl. Health Development (SA, National Physical Activity Program Director), Class handout from Professor Tom Ryan. 12 The nature of qualitative inquiry, Source unknown, Class handout from Professor Tom Ryan. 13 Wrigh, Cheryl. Health Development (SA, National Physical Activity Program Director), Class handout from Professor Tom Ryan. 14 The nature of qualitative inquiry, Source unknown, Class handout from Professor Tom Ryan.
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The qualitative researcher can enhance transferability by doing a thorough job of
describing the research context and the assumptions that were central to the research. It is
the responsibility of the individual to judge the sensibility of transfer.15
Qualitative findings need to be confirmed. According to Wrigh there is a need to confirm
the research with an outside source.16 Qualitative research tends to assume that each
researcher brings a unique perspective to the study. Confirmability refers to the degree to
which the results could be confirmed or collaborated by others.17
1.5 Personal Bias (self as participant)
I was and am part of the phenomenon that I researched. I found myself being both analyst
and actor and customer, and therefore I believe that following the methodology outlined
in Chapter 3 helped me to stay neutral as far as possible. I had to be aware of the
possibility of bias throughout the project.
Firstly, I am part of the management team that was targeted to effect the different
implementations and, secondly, I am also part of the senior management team wanting
others to implement new processes and systems. For this reason, I was interested in
understanding what the causes were for unsuccessful implementation within OMPFA.
The fact that this was my goal helped me to focus on the path to the outcome, rather than
on the people involved. This served to support my view that I was not just interfering in
this process, but that I had a reasoned foundation for my intervention. I found that
participants in our business unit naturally co-operated with me, because they believed
that the solution to this problem was of mutual interest.
15 Validity: the best available approximation to the truth of a given proposition, inference, or conclusion. Source unknown, Class handout from Professor Tom Ryan. 16 Wrigh, Cheryl. Health Development (SA, National Physical Activity Program Director), Class handout from Professor Tom Ryan. 17 Validity: the best available approximation to the truth of a given proposition, inference, or conclusion. Source unknown, Class handout from Professor Tom Ryan.
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Mouton and Marais refer to Jack Douglas, who confirms the assumption that, tacitly,
participants naturally wish to co-operate with the researcher, and that they will obviously
provide valid and reliable information.18 It has been my experience in all of my action
research learning projects that participants fully co-operated and provided valid and
reliable information. Most of the problems identified were improved upon through an
iterative process.
1.6 Layout of report
I used the SCQARE framework to structure my report. The framework consists of six
parts (Situation, Concern, Question, Answer, Rationale and Evaluation). It offers a
rigorous approach to conceptualising and articulating one’s ideas in a viable manner, and
guides you in developing an answer in a way that promotes its relevance, usefulness,
validity, and ethical content with respect to the context of the concern.19
The layout is represented in Figure 1, and will be referred to again at the start of each
section in this paper, to indicate (the section circled) to the reader at what stage he/she is
finding himself/herself.
18 Mouton, Johann; Marais, HC (1988) Basic concepts in the methodology of the social sciences, HSRC Publishers. 19 Ryan, Tom (2001) SCQARE: A framework for sensemaking, Working paper tr95/3 rev 6.
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Figure 1 – Layout structure of the report
The way that the five parts of the framework (as discussed by Tom Ryan) are linked to
my report is discussed herewith. For an idea to be meaningful, it has to be relevant to or
appropriate in a particular situation or context.
The situation part of this paper (Section 1), therefore offers the OMPFA organisational
context within which I approached this research and has also therefore shaped my
thinking about the answer to the research question. I have endeavoured to follow a
systems approach, as this significantly improves the relevance of the ideas that emerged
from my inquiry into the situation. This approach is discussed in more detail in chapter 3,
which deals with the research design.
My concern & question part of this paper (Section 2) describes in detail the methodology
I used for the research, and also deals particularly with the problem in terms of
implementation in OMPFA. The concern highlights the perceived need to bring about
some change or improvement. It is important to understand that my perceptions are
reflected here; hence, as already mentioned, I followed a systems approach to help me
improve the relevance of my ideas.
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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To deal with the concern I had to develop a concrete research question that I needed to
answer. The purpose of this question was to help me in the exploration and debate around
the concern, in order to lead to proposals for action that will deal with the concern.
My answer part of this paper (Section 3) addresses the research question. It highlights the
framework that I have developed for OMPFA to consider in preparation for the
successful implementation of the BSC. This framework was developed from my
knowledge of the particular system, from the literature review, from information gleaned
from interviews, and from applying a systems-thinking approach to the concern.
The rationale part of this paper (Section 4) provides the logical basis for the answer. This
part reflects the extensive literature review that I conducted and summarises my findings
from interviews with managers in OMPFA. It also covers the process I followed, and
illustrates my thinking in using systems-thinking to design a solution to the concern.
Section 5 provides an evaluation of the paper, in terms of its relevance, utility, validity
and ethical content. I commented on limitations of this research project and provided
recommendations for further work in this area. Finally, it offers a personal reflection on
the learning that I have experienced as a result of doing this dissertation.
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SECTION 1: THE SITUATION
For an idea to be meaningful it has to be relevant to or appropriate in a particular
situation or context, i.e. the setting, the place or the set of circumstances or conditions.
Any relevant idea needs to take cognisance of the facts of, the structure of, the processes
in, functions of, and the roles in the system or context of which it is a part.20
This section of the paper presents the OMPFA organisational context within which I
approached this research study. It provides the context within which I shaped my thinking
about the answer to the research question.
20 Ryan, Tom (2001) SCQARE: A framework for sensemaking, Working paper tr95/3 rev 6.
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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Chapter 2 OLD MUTUAL PERSONAL FINANCIAL ADVICE – AN ORGANISATIONAL
CONTEXT
Charles Handy address the question ‘what is a company for’ as follow:
“In my American business school in the sixties the answer was clear, it was inscribed above the blackboard in every class. It was to maximise the medium-term earnings per share. Not short-term earnings, and not optimise, but maximise. From this all else follows, given, of course, a perfect market and an intelligent one and managers who were clever, energetic and wise – something to which my business school was attending. Looking back, it is amazing that we never challenged either the statement or its premise. My business school in America was wrong. I am now convinced. The principal purpose of a company is not to make a profit – full stop. It is to make a profit in order to continue to do things or make things, and to do so even better and more abundantly.” 21
I drew a rich picture (see Figure 2) to visually provide an organisational context of
OMPFA.
I am the Business Planning Manager for OMPFA and have been in this role since January
1999. OMPFA became a separate business unit within the Old Mutual Group during 1998
and one of my tasks was to implement a business planning process for OMPFA.
OMPFA is a distribution business within the Old Mutual Group, established primarily to
distribute the Group’s products through a tied adviser force. Its purpose is to provide
face-to-face advice to customers. OMPFA distributes products for a number of product
providers within the Old Mutual Group, with its head office situated in Pinelands.
21 Professor Charles Handy, Michael Shanks Memorial Lecture, Delivered to the society on Wednesday 5 December 1990.
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Figure 2 – The ‘Rich Picture’
During 1998 OMPFA, with the help of McKinsey Consultants, embarked on an extensive
analysis of our business with the view to restructuring the business to ensure its
sustainability into the future.
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It was felt that the long period of stability in the financial services market, particularly the
personal investment and assurance arena, had ended and that it was unlikely that the
industry would experience such a prolonged period of stability again in the near future.
The restructuring was presented to staff that, in the face of growing consumer demands
for transparency, value for money, honestly and competence, any business – if it is to
remain successful – must constantly scan the environment and make changes necessary to
continue to satisfy the market’s wants and needs. The ultimate restructure in 1999
resulted in a large number of staff retrenchments – regions were reduced from 14 to
seven and the number of branches (now referred to as areas) from 138 to 51. The major
changes that had to be implemented involved the improvement of infrastructure support
to advisers, a more efficient sales process and more coaching and support from sales
managers to advisers.
This restructure resulted in the distribution network illustrated in Figure 3.
The distribution operation now consists of seven regions, with their regional offices in
Pretoria, Edenvale, Johannesburg, Bloemfontein, Durban, Port Elizabeth and Cape Town.
Each regional office has a regional general manager with area managers (responsible for
the areas) reporting to him/her. Certain areas also have district offices under their control.
The regional general managers presently report to the executive general manager located
at head office.
Figure 3 – Sales organisational chart
Executive GeneralManager
Regional GeneralManager
Johannesbug
Regional GeneralManagerPretoria
Regional GeneralManagerEdenvale
Regional GeneralManager
Bloemfontein
Regional GeneralManagerDurban
Regional GeneralManager
Port Elizabeth
Regional GeneralManager
Cape Town
Area Managersx 5
Area Managersx 6
Area Managersx 9
Area Managersx 8
Area Managersx 8
Area Managersx 5
Area Managersx 8
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Regional general managers (RGM) have a support forum at their regional office to assist
them. The support forum consists of the manager regional marketing (MRM), a human
resources consultant (HRC), regional support centre manager (RSCM) and a manager
regional sales administration (MRSA). The MRSA reports directly to the RGM and is
responsible for the implementation and support of processes and procedures that are
service related. The MRM reports to the marketing manager at head office and is
responsible for assisting with marketing plans for the areas. The HRC reports to the
human resources manager at head office and assists with the recruitment and selection
processes in the regions and supporting the development of staff. The RSCM also reports
to the human resources manager at head office. Each regional support centre has legal
advisers who provide legal assistance to advisers, IT consultants who provide computer
support and trainers who provide training to both advisers and support staff.
The head office operation consists of different divisions, headed up by division managers,
reporting to the executive general manager. The head office structure as at 2002 is
illustrated in Figure 4.
Figure 4 – Head office organisational chart
The divisions at head office develop and design new processes, procedures, training, etc.,
which need to be implemented and used by the region and area staff. Since the restructure
in 1999 there have been many examples of inadequate implementation of processes and
procedures. One example is the new sales process that we implemented as a result of the
restructure. Within months of the rollout of the new process, different people at regional
and area level customised it to their liking, with the effect that the process is no longer a
uniform standard process.
Executive GeneralManager
Finance Marketing Human Resources Projects Support Processes IntermediaryComputer Support
Field ServicesProperties
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A Market and Sell Products audit that was conducted by the group internal audit team
between March and April 2002 revealed that regular performance review sessions were
not being held as required, that the leads generation process was not adequate and that
there was a lack of evidence that advisers were performing a needs analysis prior to
selling a policy. All of these elements are part of the sales process that was implemented
during 1999.
I can also cite other examples of inadequate implementation. During 2001, the marketing
and finance divisions devised marketing plans to be implemented by each area manager.
The internal auditors report, as referred to above, indicated that marketing plans were not
adequately implemented in all the areas. Their findings showed that plans were not
updated with current marketing initiatives, some areas did not have plans at all and other
areas formulated their plans without any environmental analysis.
Pathfinder, the computer based software program to assist our advisers in doing the needs
analysis and planning for our clients, has also not been implemented adequately to date.
During consultation with a wide variety of people involved in the previous rollout of
Pathfinder our Human Resources division found that:
• An approach that focuses on Pathfinder as an end instead of a means to an end within the financial planning process is destined to fail.
• The advisers complained of a complete overload of information without enough time to internalise it. To get to an outcome where trainees are competent users, one needs to allow users to practise over and over again.
• A large part of the success of such a rollout rests on the competence of the facilitators.
• Training should be based on getting to know the various components of the program. When an adviser knows the program and what it can do, it can then be slotted into the sales process. This will allow them to use the program regardless of whether the process works in their area. Training material should not be based on the process, but on the system, to allow the process to evolve around the system.
• Sales managers should be expert users of the program and they should be trained in how to coach on Pathfinder.
• The areas where Pathfinder 3 was integrated successfully were the areas where the regional, area and sales management believed in the program and drove the process.
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• Where advisers were not encouraged to use the program, training has had to be repeated over and over again since the original rollout, without any indication of progress.
• Structured follow-up is needed. • For effective computer training, the groups cannot be bigger than
10 – 12 people. • A lack of understanding of the capital needs analysis and poor
computer literacy are serious threats to the success of the Pathfinder rollout.
As part of one of the action research learning projects I did, I applied the interactive
planning methodology. I found the obstruction analysis, the reference projections and the
reference scenario (all part of formulating the mess step part of the interactive planning
methodology) very useful to help me add to the explanation of the organisational context.
The purpose of obstruction analysis is to identify self-imposed constraints that restrict an
organisation’s development. Internal conflict that may exist in an organisation is part of
the obstruction analysis, and it is this part that I am reflecting here.22 I identified conflicts
between individuals, conflicts between individuals and the organisation, and conflicts
between units in the organisation. These are discussed below.
Conflicts between individuals: Area managers within the regions have different styles and
length of services. Some of the ‘older’ managers still believe in the ‘old’ way of doing
things and are not computer literate. They are sceptical of new ideas, which create the
potential for conflict. Some of the area managers are also not in favour of someone
getting the position of RGM without coming through the sales ranks, (in other words,
someone being promoted from head office or any other non-sales job).
Conflicts between individuals and the organisation or parts of it: Many of the individuals
referred to above are still in ‘victim mode’ after the restructuring of OMPFA in 1999, and
are potentially opposed to much of the new thinking that comes from the divisions at
head office.
22 Systal interactive management, Class handout by Professor Tom Ryan.
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Conflicts between units at the same level: This only happens in isolated incidents. There
is mostly healthy competition among the areas, with one or two of the area managers not
too willing to share their success recipe.
A reference projection is an extrapolation of a performance characteristic of an
organisation, its parts, or its environment from its recent past into the future, assuming no
significant changes in the behaviour of the systems or its environment. It is not forecasts
of the future; it is a ‘what if’ projection. It reveals which current objectives cannot
possibly be met without a change in either the organisation behaviour or that of its
environment.29 Refer to Figure 5 for the reference projections of OMPFA.
Figure 5 – Reference Projections
Past Future
Time
High
Low
Lev
el Adviser numbers
Expenses
Retention of advisers
New business
New customers
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For the purpose of the reference projection I (together with the workgroup used during
the action research project) selected the following characteristics / performance
indicators:
• Adviser number growth
• New Business growth
• Expense levels
• Retention of advisers
• Acquisition of new customers.
As mentioned earlier, OMPFA went through a major restructure in 1999 and
implemented a new sales process at that time. That explains the big fluctuation in most of
the lines on the reference projection graph just prior to the present time. OMPFA had a
large sales force of over 5000 advisers, many of whom were not performing at the levels
that we would expect now. This led to a focus on performance management aimed at
those at lower-than-expected performance levels, and many left as a result of this. The
number of advisers is now at just over 2200. Because the number of advisers drives new
business to a great extent, we experienced a drop in overall new business, although the
productivity per adviser is now at much higher levels.
Expenses were increasing before the restructure. As a result of the restructure, as
mentioned earlier, OMPFA reduced its infrastructure from 138 branch offices to 51 area
offices. The new sales process also resulted in the implementation of a new remuneration
model for advisers. This, coupled with other cost cuts, enabled OMPFA to cut R218m out
of its operating expenses during 2001.
In the past, the retention of advisers has always been very low. Many advisers had to be
appointed to result in a growth of overall manpower. The new sales process has
introduced certain limits on how fast a team may grow and a strict recruitment profile for
new advisers has been set.
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There has not been a specific focus on the acquisition of new customers. Business has
traditionally come easily and OMPFA has always had a big base of existing customers
with whom to do business with.
The major fluctuations in the projections prior to 1999 also points to a drop in morale
amongst staff. The major restructure and retrenchments had a major effect on our staff
morale. Staff were originally told in 1998 that the restructure would not lead to the
retrenchment of staff. A subsequent group-wide initiative requested each business unit to
drastically reduce their expenses as a result of the listing that took place in 1999. OMPFA
was not aware of this during 1998 when senior management first communicated with
staff. Needless to say, when the retrenchments did happen, it did a great deal of harm to
the trust relationship between senior management and other staff.
These projections are discussed further below in terms of the reference scenarios.
A reference scenario is a comprehensive description of the future that the organisation or
unit would most likely have if no significant changes occur in its behaviour or that of its
environment.23 The time horizon to extrapolate the future was set at five years by the
work group involved in the action research-learning project. The five performance
indicators highlighted during the reference projections phase above, were used for the
purpose of the reference scenario.
Current trends in the supply of resources indicate that many of the area managers are not
computer literate and that they do not utilise the MIS system to its full potential. The
cross-sell opportunities from Employee Benefits have not been utilised. The regions have
a shortage of sales managers to effect the adviser number growth that they are looking
for. Most of Old Mutual’s competitors no longer have a tied adviser force, whilst all are
targeting the emerging black market as a source of new business. As far as consumption
is concerned, research has shown that people still do not have sufficient life and disability
cover and few people are in a position to retire and continue to enjoy the same standard
23 Systal interactive management, Class handout by Professor Tom Ryan.
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of living that they were used to whilst working. The insurance market is becoming more
regulated. The policyholder protection rules have been in force since 2001 and the
Financial Advisory and Intermediary Services (FAIS) Bill became law on 15 November
2002. This Bill focuses on disclosure, including the disclosure of commission to clients,
proper advice to clients and record keeping thereof and disclosure of the adviser’s
qualifications. This is another procedure that needs to be implemented within OMPFA.
The table below (Table 1) indicates how each of these trends affects the performance
indicators.
Table 1 – Trends affecting the performance indicators Adviser
numbers Expenses New
businessGrow new customers
Retention of advisers
PC literacy - - MIS utilisation - - Sales manager #’s --- -- - - Tied agency force ++ - ++ + Emerging black mkt - -- - - Consumer needs ++ +++ ++ + FAIS Bill + - + + + Key to the table above: Strong positive effect (+++) Medium positive effect (++) Weak positive effect (+) Strong negative effect (---) Medium negative effect (--) Weak negative effect (-) No effect ( ), box is blank
A prose description of OMPFA – a ‘prospective history’:
I placed myself at the time horizon and wrote the following prose description of OMPFA
and its environment at that time and how they got there. In effect, this scenario is a
‘prospective history’ of OMPFA over the time period from now to the horizon.
“We had a slow growth in adviser numbers, which was mostly driven by the fact that we
recruited people with a better profile and were able to increase our retention rate of
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these appointees. New business increased at a rate slightly better than inflation, but did
not meet our expectation of growing at around 15 percent per annum. The new business
growth we achieved was as a result of increasing the existing advisers’ productivity
levels and the fact that our new recruits performed at a higher rate than before we used
the new sales model. Our operating expenses grew at the same rate as inflation, which
means that we were able to control expenses. We are still not in a position to comment on
how we increased the number of new customers over the period. Our guess is that this
must have happened, but we cannot quantify it.”
As part of formulating the mess during the action research project where I applied the
interactive planning approach, I also conducted a mindfulness audit in the Western Cape
region. The regions are very similar and I believe that the findings represent OMPFA’s
level of mindfulness. Weick and Sutcliffe states that one of the greatest challenges any
business organisation faces is dealing with the unexpected. It is suspected that the
inability to manage the unexpected lies behind a number of the pressing problems that
executives face. Problems, after all, occur either when something that we expect to
happen fails to happen or when something that we did not expect to happen does happen.
For example, consider the chief concerns of today’s business professionals reported in the
first annual (2000) University of Michigan Business School Pressing Problems survey.
The second most frequent problem executives reported was “thinking and planning
strategically”; the third most pressing problem was “maintaining a high-performance
climate.” Both these problems can be seen as variants from dealing with unexpected
events.24
Managers in OMPFA have a moderate awareness level of mindfulness. Annexure C
contains the detailed mindfulness audit done in the Western Cape region, together with
my findings. It would appear that the managers ignore discrepant clues and may cut
corners. When various sources of mindlessness are combined, they form a picture of an
organisation that knows little about itself, may not realise that its knowledge is
impoverished and persists in doing traditional monitoring that produces few updates.
24 Weick, Karl; Sutcliffe, Kathleen (2001) Managing the Unexpected, Jossey Bass.
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The managers have a moderate pre-occupation with success rather than a fully mindful
pre-occupation with failure. An organisation that is ignorant about failure, its location,
genesis and trajectory, is less mindful than it could be. The potential to avoid
simplification is moderate amongst the region’s managers. When you seek out the
reluctance to simplify in your organisation, you want to find out how the system
socialises managers to make fewer assumptions, notice more, and ignore less. Moderate
sensitivity to operations exists. A comprehensive view of current operations enables
organisations to catch most of the small errors or mistakes that would normally go
unnoticed and are left to accumulate.
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SECTION 2: THE CONCERN & QUESTION
This section contains two chapters. Chapter 3 describes the methodology I applied.
This chapter informs the reader exactly how I proceeded and how I handled the data.
I followed a systems approach, which significantly improves the relevance of the ideas
that emerged from my inquiry into the situation. This approach comprised four phases,
which are explained in detail.
Chapter 4 deals with my problem formulation, which is about factors that may contribute
to the unsuccessful implementation of processes and systems within OMPFA, and the
shaping of the research question. The concern highlights the perceived need to bring
about some change or improvement. It is important to understand that my perceptions
are reflected here; hence I followed a systems approach, as already mentioned, to help
me improve the relevance of my ideas. To deal with the concern, I had to develop a
concrete research question that I needed to answer. The purpose of this question was to
help me in the exploration and debate around the concern, in order to lead to proposals
for action that will deal with the concern.
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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Chapter 3 RESEARCH DESIGN
When asked what single event was most helpful in developing the theory
of relativity, Albert Einstein is reported to have answered, “Figuring out
how to think about the problem.” Richard Saul Wurman, Information Anxiety
3.1 Research strategy
In the introduction section of this paper I explained the two main approaches to research
design as being positivistic and phenomenological. Saunders et al highlights a number of
distinguishing features of positivist research as:
• It is deductive (theory tested by observation)
• It seeks to explain causal relationships between variables
• It normally uses quantitative data
• It employs controls to allow the testing of hypothesis
• It uses a highly structured methodology to facilitate replication.
Saunders et al states that the phenomenological approach to research is so called because
it is based on the way people experience social phenomena in the world in which they
live. Phenomenology is characterised by a focus on the meanings that research subjects
attach to social phenomena; an attempt by the researcher to understand what is happening
and why it is happening. They continue to say that such research would be particularly
concerned with the context in which such events were taking place as, in my case, the
OMPFA organisational context.25 This is therefore the reason why I stated in the
introduction section that I would operate from a phenomenological paradigm.
25 Saunders, Dr Mark; Lewis, Philip; Thornhill, Dr Adrian (1997) Research Methods for Business Students, Pitman Publishing, p71,72.
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Having decided on a research approach, I had to consider a research strategy, i.e. a
general plan or methodology of how to answer the research question. Leedy refers to the
term research methodology as merely meaning the way in which you proceed to solve
problems. According to him all research methodology rests upon a bedrock axiom: The
nature of the data and the problem for research dictate the research methodology. If the
data is verbal, the methodology is qualitative, and if it is numerical, the methodology is
quantitative. There is, of course, an alternative to this strict dichotomy, which consists of
a hybrid variation.26 As the reader will later see, my data is of a qualitative nature.
Zikmund explains that when a researcher has a limited amount of experience with or
knowledge about research issues (which is certainly the case with myself), that
exploratory research is a useful preliminary step that helps ensure that a more rigorous,
more conclusive future study will not begin with an inadequate understanding of the
nature of the management problem. Exploratory research mostly provides qualitative
data. Usually, exploratory research provides greater understanding of a concept or
crystallises a problem, rather than precise measurement or quantification.27
I referred to the relevance of qualitative research in the introduction section of this paper,
but I think that it needs to be elaborated upon. Qualitative research describes and
classifies various cultural, racial and/or sociological groups by employing interpretive
and naturalistic approaches. It is both observational and narrative in nature and relies less
on the experimental elements normally associated with scientific research (reliability,
validity and generalisability). Qualitative research relies more on apparency,
verisimilitude and transferability. The purpose is to aim for objectivity, while it must take
into account the views of the participants. Many different approaches to qualitative
research exist. What follows is a brief discussion on each of the approaches that are more
frequently used by researchers.
26 Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company, p8,139. 27 Zikmund, William G (1997) Business Research Methods, The Dryden Press, p102.
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Ethnography
Ethnography is a long-term investigation of a group (often a culture) that is based on
immersion and, optimally, participation in that group. Ethnography provides a detailed
exploration of group activity and may include literature about and/or by the group.
Ethnography attempts to explain the web of interdependence of group behaviours and
interactions.
Narrative inquiry
Narrative inquiry is the process of gathering information for the purpose of research
through storytelling. The researcher then writes a narrative of the experience. Field notes,
interviews, journals, letters, autobiographies, and orally told stories are all methods of
narrative enquiry.
Short term observation
Short term observational studies list or present findings of short term qualitative study
based on recorded observation. Observations in the studied group’s natural setting are a
key aspect. Traditionally, the period of observation for a qualitative observational study
has been from six months to two years or more. The more time spent in the field the more
likely the academic community will view your results as credible.
Ethnomethodology
This approach is actually a form of ethnography, which specifically studies activities of
group members to see how they make sense of their surroundings.
Grounded theory
In essence, grounded theory attempts to reach a theory or conceptual understanding
through a step wise, inductive process.
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Kinesics
Kinesic analysis examines what is communicated through body movement. Kinesics
must be used thoughtfully and carefully, as movements and gestures can easily be
misinterpreted.
The following are some of the advantages of qualitative research:
• It accounts for the complexity of group behaviour
• It reveals interrelationships among multifaceted dimensions of group interactions
• It provides context for behaviours
• It helps determine questions and types of follow-up research
• It allows qualitative researchers to identify recurring patterns of behaviour that
participants may be unable to recognise
• Qualitative research often helps us to see why something is the way it is, rather
than just presenting a phenomenon.
The following are some of the disadvantages of qualitative research:
• The sources or subjects may not all be equally credible
• Some aspects may be previously influenced and affect the outcome of the study
• Study groups may not be representative of the larger group
• Too little data can lead to false assumptions about behavioural patterns
• The data collector’s first impressions can bias collection.
So how does quantitative data differ from qualitative data. As mentioned earlier,
qualitative data typically involves words while quantitative data involves numbers.
Another major difference between the two is that qualitative research is inductive, whilst
quantitative research is deductive. In qualitative research, a hypothesis is not needed to
begin research, whilst all quantitative research requires a hypothesis before research can
begin. In quantitative research, the researcher is ideally an objective observer who neither
participates in nor influences what is being studied.
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In qualitative research, however, it is thought that the researcher can learn the most by
participating and/or being immersed in the research situation.28
Desai highlights five core skills that a qualitative researcher should have29. These are:
• Managing human interactions
• Analysing diverse sources of data
• Interpreting the meaning of data
• Developing ideas and theories
• Creating solutions to problems.
I found all of these skills to be applicable in my research project. Desai goes on to say
that this set of skills offers the potential for a far wider range of roles than that of merely
a ‘qualitative researcher’. He suggests three possibilities that this way of thinking makes
apparent. First, the researcher could be an analyst. He could look at internal processes
within a company, documents and strategies (as was the case in my situation). Second,
the researcher could be a translator. The gap between employee understanding and the
practices of management is often too apparent, and the researcher could play a far more
active role in bridging that gap (this also applied in my situation). Finally, the researcher
could be a qualitative creative. Desai explains that the researcher builds new ideas,
concepts and solutions to problems, which was also the case in my situation.
It will become evident in the rest of this chapter that I applied a combined approach of
ethnography and grounded theory, coupled with a systems approach to my research,
which involved an immersion phase and the application of grounded theory. My
preference was not to get involved in storytelling (this is not a strength of mine), whilst I
did not have the time to do short term observations or kinesic analysis. I chose a systems
approach because all systems approaches are committed to holism.
28 http://writing.colostate.edu/references/research/observe/com4a4.cfm 29 http://www.aqr.org.uk/doclib/document.shtml?doc=philly.desai.01-07-2002.oyster
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Jackson30 states that if we view systems from within the interpretive paradigm they seem
to be much ‘softer’, to elude easy identification and to possess a precarious existence
only as the creative constructions of human beings. We can understand such systems by
trying to understand subjectively the points of view and the intentions of the human
beings who construct them. It is necessary to acquire detailed information about the
system by getting involved in its activities; by getting inside it. The purpose of studying
the system is still to understand the status quo better so that prediction and control are
facilitated.
The systems approach I applied to this research project to structure the problem and to
design a solution consists of four phases: (1) the immersion phase; (2) structuring the
problem in the form of a causal loop diagram (CLD); (3) reflecting critically on the CLD
produced in phase 2; and (4) designing a solution. This process is explained in detail and
is graphically illustrated in Figure 6.
3.2 Phase 1: The immersion phase
I commenced this research project with a basic and simple guiding reason. I was of the
opinion that the implementation in general (i.e. of new processes and programs), was not
as successful as it should be in OMPFA. Ronald Chenail states that qualitative
researchers need to “plumb up” their projects. By this he means that there should be a
basic and simple reason for doing a study.31
With this in mind I immersed myself in the problem situation without defining the
research problem. I glanced through a number of documents that I had accumulated
during the previous two years as sources for my data. These sources included the action
research learning projects, position paper assignments and critical incident logs I had
30 Jackson, Michael C (2000) Systems approaches to management, Kluwer Academic / Plenum Publishers. 31 Chenail, Robert J (1997) Keeping things plumb in qualitative research, The Qualitative Report, Volume 3, Number 3, September.
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been involved in during the previous two years. In addition I also consulted other relevant
OMPFA documents.
Figure 6 – Flowchart of Methodology
Individual work Data sources
Identify a broadconcern
Emerge myself intothe problem
situation
-Action Reseachprojects-Position Papers-Critical IncidentLogsOther relevantdocuments
Construct a 'RichPicture'
Construct anAffinity Diagram
Draw BOT graph
Construct anInterrelationship
Digraph
Develop an CausalLoop Diagram
Conduct anextensive literature
search
Apply groundedtheory approachand Triangulation
-GSB library-Relevant websites-Relevant journals
Output
'Rich Picture'
Affinity Diagram
BOT graph
InterrelationshipDigraph
Causal LoopDiagram
Conduct interviews
Analysis andmodification of
CLDCausal LoopDiagram
-Western Capemanagement team
PHASE
1
PHASE
2
PHASE
3
PHASE
4
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The main sources of data are discussed herewith.
Action Research Learning projects: During each of the inter-modular periods of the
Executive MBA programme I did an action research-learning project. Each of the
projects involved applying a prescribed systems-thinking technique to a problem situation
under my control in the work place. The action research cycle encompasses reviewing
your current practice; identifying an aspect for improvement; imagining a way forward;
trying it out; taking stock of what happened; modifying the plan; trying it out again;
monitoring what you have done; evaluating the modified action and so on until you are
satisfied with the necessary improvement. The data sources for my action research
learning projects included interviews, casual conversations, observations and relevant
documentation.
Position Papers: During each of the inter-modular periods of the Executive MBA
programme I completed a position paper. The intention of the position paper was to
evaluate the learning that had taken place during the module, developing an appropriate
theoretical framework and testing it in the work place. The data sources for my position
papers included interviews, casual conversations, observations and relevant
documentation.
Critical Incident logs: During each of the inter-modular periods of the Executive MBA
programme I logged ten critical incidents in a ‘critical incident logbook’. This gave me
the opportunity to objectively examine situations and to observe patterns in my
management behaviour. This helped me analyse the reasoning for certain outcomes. It
also gave me the opportunity to determine learning outcomes and to identify possible
personal development opportunities. Experiential learning theory focuses on making
students aware of the detail of their experience, to reflect on the experience, to identify
the theory in use and to test out new ideas in practice. The log is designed to encourage
students to become proficient in reflecting on their experience; conceptualising; planning
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for new actions and further experiences.32 This self-assessment has been of great value to
me because I was able to identify patterns in my behaviour and the effect on others.
Other documents and sources: These sources included minutes of meetings, a survey
done amongst our sales management team on conclusion of our business planning
workshop, an integrity profile document on OMPFA compiled by KPMG, an
unpublished thesis by Albe Smit (a manager in our business unit) on implementing
processes and procedures within OMPFA, and an audit report from group internal audit
on the process of marketing and selling within OMPFA.
After I had consulted the abovementioned sources of data, I constructed a rich picture
(refer Figure 2 on page 12) of the problem situation. A rich picture is an evocative visual
summary of complexity perceived by the analyst (myself) in a situation involving human
activity. It can also be referred to as a cartoon, which reflects my own understanding of
the situation.33
The rich picture and the aforementioned data sources provided me with the opportunity to
gather 62 observations/insights that were relevant to my broad area of interest, i.e. why
the implementation of processes and procedures was not as successful as we would want
it to be within OMPFA. I used these insights to construct an Affinity Diagram (AD) to
group my lessons in terms of their relevance to each other. The AD allows one to
organise a large number of ideas and issues in order to summarise natural groupings
among them, to understand the essence of the problem, and its breakthrough solutions.34
Each of the groupings was labelled in terms of a description for the grouping. The AD
can be viewed in Appendix A.
32 Creating and learning from a critical incident log, author unknown. Class handout from Professor Tom Ryan. 33 Waring, Alan (1996) Practical systems thinking, International Thomson Business Press. 34 Systems tools, Class handout by Professor Tom Ryan.
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To help me recognise patterns over time, I used the Behaviour Over Time (BOT) graph
(refer Figure 5 on page 17) that I constructed as part of the reference projection of
Interactive Planning during one of my action research learning projects. In the rich
picture, most of the energy is focussed on the pressures of the current moment. In using a
BOT graph the present is connected to the past. This enables one to see events and
recognise patterns over time. This does not only show you what happened, but can also
help you build a better understanding of why it happened.35
At this point I created a focusing statement to help me channel energy during the rest of
the process. This was a refinement of my broad area of interest and focused on why
OMPFA had so little success with the implementation of new processes and systems.
3.3 Phase 2: Structuring the problem
With this focusing statement in mind, I constructed an Interrelationship Digraph (ID).
The category labels from the AD were used in the ID. The ID can be seen as a systematic
identification of targets and means. It reflects the relationship between each of the
category labels and helps one to see which issues are drivers and which are outcomes.35
The ID can be viewed in Appendix B.
The driver category, the outcome category and the other categories from the ID were then
used to develop a Causal Loop Diagram (CLD). The CLD is explained in detail in
Chapter 4. A CLD offers the opportunity to explore dynamic interrelationships between
elements. It is a graphic description of the systemic structure of the elements. The
relationships between the elements are explained by the category labels in the
interrelationship, i.e. the one leading/causing the next one.36
35 A systems approach to problem structuring and solving, Class handout by Professor Tom Ryan. 36 Systems tools, Class handout by Professor Tom Ryan.
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3.4 Phase 3: Reflecting critically on the CLD produced in phase 2
I conducted an extensive literature search on the variables identified in the CLD to
validate and confirm my findings. To achieve this, I applied the grounded theory method
and made use of triangulation. Grounded theory both describes and explains the system
or behaviour under study and consequently is a methodology for developing theory that is
grounded in data systematically gathered and analysed.37 The process I followed through
the AD, IR and CLD can also be regarded as grounded theory. A theory must be readily
modifiable, based on ever-emerging notions from more additional data. Furthermore, the
theory must fit the data.38 It is useful to use triangulation with grounded theory. Wrigh is
of the opinion that triangulation will strengthen any research design. It is a term taken
from land surveying and really means that you look at things from several viewpoints –
so that you can have triangulation in your data sources, researchers and the method
disciplines involved.39
3.5 Phase 4: Designing a solution
At this stage I again did an extensive literature review, this time relating more to the
BSC. As stated before, I also applied the grounded theory method and made use of
triangulation during this stage. I did not only consider literature referring to the BSC
implementation, but also looked at perspectives relating to strategy implementation
and implementing change. The reason why I did this was because the BSC is a
strategy implementation tool, whilst change would be required in the organisation to
ensure the implementation of the BSC.
According to Leedy, the function of the literature review is to ‘look again’ (re-view) at
the literature (the reports of what others have done) in a related area: an area not
necessarily identical with, but running parallel to, your own area of study. Primarily, a
literature review is done to help you to attack the problem for research. Leedy states that 37 Strauss A, Corbin J (1994) Grounded theory methodology: an overview. In handbook of qualitative research, Sage, London. 38 Theoretical sensitivity, Source unknown, Class handout by Professor Tom Ryan. 39 Wrigh, Cheryl. Health Development (SA, National Physical Activity Program Director), Class handout from Professor Tom Ryan.
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in any research undertaking, your own research problem is always central. Everything
that you do is done because it helps you resolve your problem. When you know what
others have done, you are better prepared to attack the problem you have chosen to
investigate, with deeper insight and more complete knowledge.40
In addition to the literature review, I also conducted interviews with eight members of the
management team in the Western Cape region of OMPFA. The reason I interviewed them
was because they were exposed to the implementation of the BSC during the 2002.
I wanted to relate their experiences to my development of a solution to the problem.
Saunders et al states that the use of interviews can help you to gather valid and reliable
data that are relevant to your research question and objective(s).41
Zikmund offers the following advantages of personal interviews:
• They provide the opportunity for feedback from the interviewer to the respondent.
• They provide the opportunity to probe. If the respondent’s answer is brief or
unclear, the researcher may probe for a clearer or more comprehensive
explanation.
• If the research objective requires an extremely lengthy questionnaire, personal
interviews may be the only alternative.
• Social interaction between a well-trained interviewer and a respondent in a
personal interview increases the likelihood that a response will be given to all
items on the questionnaire.
• Interviewing respondents face-to-face allows the interviewer to use visual aids.
• The presence of an interviewer generally increases the participation on the part of
the respondent.42
40 Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company, p87. 41 Saunders, Dr Mark; Lewis, Philip; Thornhill, Dr Adrian (1997) Research Methods for Business Students, Pitman Publishing, p210. 42 Zikmund, William G (1997) Business Research Methods, The Dryden Press, p231-233.
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As far as the interview is concerned, Leedy mentions that it is not just about asking any
questions in any way. The questions for the interview should be carefully planned and
accurately worded. I followed his advice and carefully planned and worded the questions
I wanted to use during the interviews. The research interview guide I used can be viewed
in Appendix D.
Leedy further states that it is equally necessary to carefully plan for the interview, that the
interviews should be set up well in advance and that one should send the questions you
will ask to the interviewee.43 Appendix E contains the covering letter that I sent to the
interviewees, together with the research interview guide, well in advance of the
interviews.
I elected to use a manual coding system to categorise the data collected from the
literature review and interviews. I selected data of direct relevance to the research
question and objectives. In performing the analysis, the research findings have been
differentiated into those findings of direct relevance to the research question and
objectives, and other findings categorised as “additional findings”.
With the knowledge gained from the literature review and the interviews, I revisited the
CLD constructed during phase 2 to design a solution. This involved structurally changing
the CLD to produce the results I wanted.
43 Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company, p192-195.
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3.6 Error of the third kind
Throughout this project I had to be aware of not making the error of the third kind, that is,
solving the wrong problem precisely (E3). Mitroff states that:
“the ability to spot the right problems and then formulate them correctly is the critical skill that all workers, managers, and top executives must possess if they are to compete successfully in the twenty-first century.” 44
Type I and type II errors are found in statistics. The type I error refers to accepting a
hypothesis when it is in fact wrong. The type II error arises from rejecting the alternative
hypothesis incorrectly.45 Mitroff refers to an error of the third kind, which relates to the
process of formulating the problem. Type I and II errors pertain to doing given things
correctly. E3 pertains to what are the right things to do. E3 is the error associated with
solving the wrong problem precisely. It involves looking critically and consciously at the
impact of decisions on others.46
44 Mitroff, Ian (1998) Smart thinking for crazy times, Barrett-Koehler. 45 Keller, Gerald; Warrack, Brian (2000) Statistics for management and economic, Duxbury Thomson Learning. 46 Mitroff, Ian (1998) Smart thinking for crazy times, Barrett-Koehler.
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Chapter 4 STRUCTURING THE PROBLEM
4.1 Explaining the CLD
Given the organisational context explained earlier and the AD (refer Appendix A) and the
IR (refer Appendix B) I constructed from it, I developed the CLD that can be viewed in
Figure 7.
Figure 7 – Problem formulation CLD
The CLD forms the basis for my theory of why OMPFA had problems executing
implementations successfully. It highlights the elements that I identified as the cause of
the problem and describes the systemic structures that are creating the behaviour patterns.
Lack ofempowermentInsufficient shared
understanding
Impact of time ofimplementation
Responsibilitynot takenInadequate controls
and monitoring
Proper testing notdone
Adequacy of trainingand support
Distrust exist
contributesto the
therefore
adding to the
resulting in
thusmanagement
apply
impactingon the
adding to which can leadto a negative
R
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The CLD shows a story where shared understanding (the driving force) is insufficient,
adding to the negative impact of the incorrect timing of implementation. The ‘bad’ timing
then resulted in managers not taking responsibility (the outcome), which in turn affected
the controls and monitoring that management applied to ensure that implementation
succeeded.
The lack of control and monitoring therefore does not highlight the problems that may
exist and its impact on the adequacy of training and support that is provided by the
divisions at head office. This again adds to the lack of understanding by the people who
have to execute the implementation. This picture therefore represents a reinforcement
loop (a vicious circle). Three other elements also impact on the responsibility aspect: the
lack of empowerment contributes to responsibility not being taken; because proper
testing does not take place before the implementation of new processes and procedures,
and the processes are not working properly; this adds to the distrust that exists; this
distrust further results in responsibility not being taken.
To make it easier for the reader to understand the CLD, I elaborated on it to illustrate the
elements as variables. This enabled me to show how the nature of the relationship
between the variables is likely to change should the level of any of the variables change.
This elaboration on the problem formulation CLD can be viewed in Figure 7a. The ‘s’
links indicate that the variables move in the same direction, i.e. if the level of
responsibility taken improves, control and monitoring increases, and likewise, if the level
of responsibility taken declines, control and monitoring decreases.
I will now briefly explain how changes in any variable are likely to change the
relationship between the variables. When shared understanding increases, it enhances the
likelihood that implementation will take place when it could best be accommodated
within existing work pressures, thus impacting on the timing. Management will better
understand what the implementation is about and its impact on existing processes and
systems.
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An improvement of the timing of the implementation, i.e. when the business can best deal
with it, will ensure that employees are under less pressure, increasing the level of
responsibility taken for the implementation. This change will cause a change in the
adequacy of the controls and monitoring applied, because staff will now feel that they are
responsible for the successful implementation and would like to make it work. An
increase in control and monitoring will enable management to identify training and
support needs, which could then be enhanced to ensure successful implementation.
This increased training and support will then further enhance shared understanding, and
so the loop continues.
Figure 7a – Problem formulation CLD elements shown as variables
This reinforcement loop can of course also be impacted negatively. In a scenario where
shared understanding decreases, it impacts on when management is likely to initiate
implementation.
EmpowermentSharedunderstanding
Timing
ResponsibilityControls andmonitoring
Testing
Training andsupport
S
S
S
S
Trust
S
S
S
S
R
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This may have a negative impact on the timing of the implementation, which might result
in extreme pressure on employees, so resulting in less responsibility taken for the
implementation. Less responsibility can lead to inadequate controls and monitoring. This
in turn will impact negatively on the training and support being offered, as management
will not be aware of what is needed. Inadequate training and support then further impacts
on the shared understanding negatively, and so the story continues.
The level of empowerment affects the responsibility taken. An increase in empowerment
will, in all likelihood, improve the level of responsibility taken. Staff will feel empowered
for the task and therefore will want the implementation to succeed. The impact of
empowerment on the level of responsibility taken is discussed in more detail later in this
chapter. The converse is also true, as less empowerment negatively impacts on the level
of responsibility taken. The positive and negative effect on the level of responsibility will
then affect the variables following it in the reinforcement loop, as already discussed.
A higher level of testing will result in ironing out the problems with a new
implementation before it is put into practise. This will result in fewer problems with the
actual implementation, enhancing the trust of staff in the new process or system. A higher
level of trust will impact positively on the level of responsibility taken. Again in this
scenario, the converse is also true. Less testing may result in many problems with the
actual implementation, impacting negatively on the trust that staff may have in the
implementation of the process or system. As the level of trust that staff may have
decreases, the level of responsibility that they may take for the implementation may
decline. The positive and negative effect on the level of responsibility will then affect the
variables following it in the reinforcement loop, as already discussed.
Each of these variables, which impact on the successful implementation of processes and
procedures in OMPFA, will now be discussed in detail.
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4.2 The problem variables
Shared understanding
“If you use a word a man can’t understand, why, you might just as well insult him.”
John Steinbeck
My data from the action research learning projects indicated that a lack of shared
understanding was probably the biggest reason for the inadequate implementation of
processes and procedures. I found that it was important that our executive general
manager’s view and drive was aligned to that of the RGMs to ensure that the
implementation of the forecasting procedure delivered the results that were expected.
This was a very simple procedure, but a shared understanding was not in place in terms
of the benefits that it would yield. Collins comments in his book Good to great that when
the right people see a simple plan born of confronting the brutal facts – a plan developed
from understanding, not bravado – they are likely to say, “That’ll work. Count me in.”47
One of my action research learning projects focused on developing a framework for
making my (our) EMBA work group more effective. A lack of clear team objectives and
clear communication allowed differences in motivations, attitudes, values and roles to
fester. The project highlighted a need to rationalise a holistic team approach and team
identity with common goals and objectives, so that every team member understands and
can be clear on what the team is about. Until objectives are agreed, they have little force.
When a team possesses a clearly stated set of objectives to which all members feel
committed, it has achieved a great deal. Our team never really agreed on shared
objectives, resulting in the improvements not being implemented. In his book, Putting
strategy to work, Eddie Obeng refers to the work he once did with a major
pharmaceutical organisation. They made a significant investment in a culture change and
training activity, which encouraged people to make completely sure that before they did
47 Collins, Jim (2001) Good to great, Random House Business Books, p177.
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anything at all, they clearly understood the objectives, the deliverables and the time
scales for delivery. The change worked very effectively.48
As a result of the mindfulness audit I did, area managers confirmed that work processes
are not well understood and easily comprehensible. This linked well with the findings of
the KPMG integrity profile on OMPFA. KPMG Business Ethics Consultants was
commissioned during 2001 by OMPFA to prepare an integrity profile for the
organisation. Twenty-five percent of respondents felt that they frequently encounter
situations where policy is unclear to them, and 58 percent believe that they are confronted
with rules and procedures of which nobody seems to know the purpose. Communication
was identified as a problem area, specifically from staff to top management, but also from
top management to staff. More than 40 percent of respondents believed that they did not
receive the necessary information from Head Office in time to perform their duties.
Covey refers to a shared vision and principles. He has the following to say:
“How are we going to get work done? Well, we have to have some kind of management arrangement, some kind of agreement to formalize and organize our relationship. A win-win performance agreement, where both parties share a common vision based on common principles, liberates both parties to do what they must do: the worker to get the job done and the leader to be a source of help, a servant.” 49
Once employees have bought into a vision of what’s necessary and have some
understanding of what the organisation requires, they can accept the necessity of
replacing or moving people who don’t make the transition to the new way of working.50
Aaltonen and Ikävalko presented a paper on the key findings of a study on strategy
implementation. They state that a common concern was the creation of shared
understanding of strategy among the organisational members. The amount of strategic
48 Obeng, Eddie (1996) Putting strategy to work, the blue print for transforming ideas into action, Pitman Publishing, p210. 49 Covey, Stephen R (1990) Principled centered leadership, Summit Books, p184. 50 Beer, M; Eisenstat, RA (1990) Why change programs don’t produce change, Harvard Business Review, November / December, Volume 68, Issue 6.
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communication in most of the organisations they surveyed was large: both written and
oral communication was used, mostly in the form of top-down communication. However,
a great amount of information does not guarantee understanding and implementation,
which was the concern of many interviewees. Interpretation, acceptance and adoption
among implementers are crucial. A lack of understanding of the strategy was one of the
main obstacles of strategy implementation observed in their study.51 Neal Ryan compared
three different approaches to programme implementation and concluded that the common
ground of these models is that positive outcomes require that programmes have common
and congruent goals, and that there should be some clarity as to what is being
attempted.52
Joseph Jablonski mentions in his book, Implementing total quality management: an
overview, that approval of the implementation plan will take place smoothly if everyone
participates in its development and there are no last-minute surprises.53 I found this to be
true from my personal experience. My critical incident logs highlighted instances where I
involved another party in creating a shared understanding, and the implementations were
successful. I wanted to get the other participants to understand the importance of their
role in implementing the business planning process for the year. I did not want a similar
experience as the previous year where everything had to be rushed at the last minute. This
worked well. In another incident, I allocated a task to one of my staff members via the
department head; after we both first sat down to gain a common understanding of what I
wanted. What was delivered was excellent. I realised that the time I had invested in
creating and testing for understanding, had contributed to the result.
51 Aaltonen, Petri; Ikävalko, Heini (2002) Implementing strategies successfully, Integrated Manufacturing Systems, Volume 13, Issue 6. 52 Ryan, Neal (1996) A comparison of three approaches to programme implementation, International Journal of Public Sector Management, Volume 9, Issue 4. 53 Jablonski, Joseph R (1991) Implementing total quality management: an overview, Pfeiffer & Company, p63.
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Timing
The timing of the implementation also played a role in the success of the implementation.
Existing work pressure can result in the implementation of a process or procedure not
being adequate. I have already mentioned the unsuccessful implementation of the
forecasting process. A contributing factor was that other work pressures took over and no
one took responsibility for this process. The forecasting process was not implemented at
the time because too many other initiatives were being implemented. Timing of planned
implementations is important to ensure the necessary focus and attention to the specific
matter.
Another example of the effect of work pressure on the implementation of a new process
can be drawn from the framework I wanted to implement for my EMBA work group.
The pressure of delivering the daily assignments outweighed the benefit of the proposed
improvements. Salem Al-Ghamdi conducted a survey amongst 27 companies to gain an
understanding of what obstacles exist to the successful implementation of strategic
decisions in Britain. Eighty-three percent of the respondents highlighted that competing
activities distracted them from implementing strategic decisions.54
Theodore Levitt supports this point in an article he published in the Harvard Business
Review. Levitt’s focus is on the executive. He states that it is essential to recognise that
the greater the pressures of day-to-day operating responsibilities on the executive, the
more resistance he/she is likely to have to new ideas. If the operating burden happens to
fall on him/her, his/her job is to make the present set-up work smoothly and well. A new
idea requires change, and change upsets the smooth (or perhaps faltering) regularity of
the present operation on whose effectiveness he/she is being judged. He/she therefore has
very good reason to be extremely careful about a new proposal.55
54 Al-Ghamdi, Salem M (1998) Obstacles to successful implementation of strategic decisions: the British experience, European Business Review, Volume 98, Issue 6. 55 Levitt, Theodore (2002) Creativity is not enough, Harvard Business Review, August, Volume 80, Issue 8.
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The fact that Old Mutual implementing Project 500 (the cost-saving initiative launched as
a result of the listing on various Stock Exchanges) during the OMPFA restructuring and
sales process implementation had a negative impact on our implementation. OMPFA’s
implementation was delayed for over six months and diluted the focus and energy that
originally existed amongst staff – the timing of implementing projects and changes needs
to be considered very carefully so that focus is not diluted.
I can again support this argument from my personal experience. By allowing time for my
MIS staff to get used to and to use a new data-extraction tool more and more, ultimately
assisted us to fully implement the use of this tool and to move away from Excel.
Responsibility
Let us first consider how Stephen Covey defines the word responsibility. He concludes
that you need to:
“look at the word responsibility – ‘response-ability’ – the ability to choose your response. Highly proactive people recognise that responsibility. They do not blame circumstances, conditions, or conditioning for their behavior. Their behavior is a product of their own conscious choice, based on values, rather than a product of their conditions, based on feeling. Knowing that we are responsible is fundamental to effectiveness.” 56
The examples of inadequate implementations I cited under the organisational context
heading can, in many instances, be attributed to the fact that the people responsible for
the implementation did not take responsibility for it. One should, however, not only focus
on the people not taking the responsibility, but it may be useful to understand why they
are not taking the responsibility. My CLD indicates that empowerment and trust both
impact on the responsibility taken. The level of empowerment and the impact of trust on
responsibility are discussed later in this paper.
56 Covey, Stephen R (1989) The seven habits of highly effective people, Simon and Schuster, p71, 93.
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Covey states that responsibility has to do with scope and authority, either of which can be
enlarged or diminished.57 Collins found that the good-to-great companies built a
consistent system with clear constraints, but they also gave people freedom and
responsibility within the framework of that system.58
Heifetz and Laurie comment in an article in Harvard Business Review that getting people
to assume greater responsibility is not easy. Not only are lower-level employees
comfortable with being told what to do, but many managers are accustomed to treating
subordinates like machinery that requires control. Letting people take the initiative in
defining and solving problems means that management needs to learn to support rather
than control. Workers, for their part, need to learn to take responsibility.59
Control and monitoring
Control and monitoring versus empowerment and allowing people to take responsibility
represent a paradox. Mitroff explains that what is becoming apparent is that because of
the complexities of the systems in which all organisations now operate, paradox is the
very essence of organisational strategy.60 Lewis states that paradox denotes contradictory
yet interrelated elements – elements that seem logical in isolation but absurd and
irrational when appearing simultaneously. Paradox management entails exploring, rather
than suppressing, tensions.61
It is my belief that successful implementation would require both empowerment and
employee discretion as well as formal control and monitoring. Stroh and Miller argue that
in the past, when managers encountered a paradox, they resolved the conflict by opting
for one path and ignoring the other. To embrace paradox successfully, both managers and
organisations must develop new mindsets. 57 Covey, Stephen R (1989) The seven habits of highly effective people, Simon and Schuster, p228. 58 Collins, Jim (2001) Good to great, Random House Business Books, p125. 59 Heifetz, Ronald A; Laurie, Donald L (2001) The work of leadership, Harvard Business Review, December, Volume 79, Issue 11. 60 Mitroff, Ian (1998) Smart thinking for crazy times, Barrett-Koehler. 61 Lewis, Marianne W (2000) Exploring paradox: toward a more comprehensive guide, Academy of Management Review, October, Volume 25, Issue 4.
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Managers need to develop new attributes toward paradox and to learn ways of thinking
that resolve seemingly contradictory policies.62 My CLD model would argue that both
control and empowerment are important for successful implementation.
In the Harvard Business Review Simons writes about balancing control and
empowerment. He argues that as companies become bigger, more decentralised, and
geographically dispersed (OMPFA can be regarded as a company fitting this description),
senior managers are no longer in constant contact with all employees who will identify
and respond to emerging problems and opportunities. Nonetheless, the guiding principles
of communication and control are still very important.63
Let’s get back to discussing control and monitoring as a contributable variable to
inadequate implementation. Management controls in OMPFA were identified as a
weakness during the SWOT exercise senior management did for OMPFA’s business
planning exercise during 2002. To ensure successful implementation it is necessary to
build in monitoring. Successes and failures need to be reviewed and you need to learn
from them. My (our) EMBA work group did not do this, resulting in our good intentions
failing. Schutte confirms that variances from the standard should always result in
corrective action to eliminate variances.64 To achieve this, monitoring must be done in
the first place.
Another obstacle to successful implementation that Al-Ghamdi found in the survey he
did, was that the information systems used to monitor implementation were inadequate.
Seventy-one percent of the organisations responding to the survey highlighted this as an
obstacle.65
62 Stroh, Peter; Miller, Wynee W (1994) Learning to thrive on paradox, Training and Development, September, Volume 48, Issue 9. 63 Simons, Robert (1995) Control in an age of empowerment, Harvard Business Review, March/April, Volume 73, Issue 2. 64 Schutte, FG (2000) Integrated management systems – strategy formulation and implementation, Heinemann Publishers (Pty) Ltd, p104. 65 Al-Ghamdi, Salem M (1998) Obstacles to successful implementation of strategic decisions: the British experience, European Business Review, Volume 98, Issue 6.
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Levitt states that the purpose of control is to achieve the kind and degree of order and
conformity necessary to do a particular job. The control exists to restrict and channel the
range of individual actions and behaviour into a predictable and knowable routine.
He argues that without control there would be chaos and decay.66
According to Grundy, control is the checking back to ensure that the change process is on
track in terms of its benefits and costs (both expected and unexpected), and time scales.67
Again, I can support his view by drawing on my own experience. I wanted to implement
a new analysing tool amongst my MIS staff. We decided to monitor on a daily basis the
progress of the implementation of use of the new analysing tool, because we wanted to
ensure that people utilise the new tool for their own benefit, as this would ultimately save
them time. As mentioned earlier in this paper, the implementation was a success.
Training and support
Laudon and Laudon mention that often, basic elements of success are forgotten. Training
to ensure that end users are comfortable with a new system and fully understand its
potential uses is often sacrificed or forgotten in systems development projects.68
I mentioned earlier the unsuccessful implementation of the forecasting process. No
proper training was provided to RGMs on how they should do forecasting and what
factors they should consider, partly resulting in the implementation not taking place.
Before a recent business-planning workshop we implemented a new process for the area
managers in order for them to prepare for the workshop. In a survey we did to determine
the success of the process, managers indicated that more training could have been given
before the material was distributed.
66 Levitt, Theodore (2002) Creativity is not enough, Harvard Business Review, August, Volume 80, Issue 8. 67 Grundy, Tony (1993) Implementing strategic change: a practical guide for business, Kogan Page Limited. 68 Laudon, Kenneth C; Laudon, Jane P (1996) Management information systems: a new approach to organization and technology, Prentice Hall, Inc, Fifth edition, p519.
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Others felt that despite the complex nature of the system, that the support received from
the Head Office team and the MRMs contributed to them achieving success with the
process.
David Hussey argues that the envisioning and activating steps in implementation are
about sharing and sustaining inspiration. The supporting step is about helping others to
play a key part in the implementation process.69
Willem Vrakking conducted a study of concrete implementation processes described in
the literature. He lists a number of practical ideas from the literature on implementation,
one of which is to create support. Support plays a central role in all the articles and all the
issues mentioned that he consulted. One of the lessons he draws from the literature is to
make sure there is a guiding/coaching/development model for the managers who have to
realise the implementation. In other words, do not send them out on their own
immediately, support them for a while.70
Empowerment
“By empowering others, a leader does not decrease his power, instead he may increase it
– especially if the whole organisation performs better.”
Rosabeth Moss Kanter
As stated earlier, empowerment has an impact on the responsibility that staff will take,
and in our case, this impacts particularly the RGMs and area managers. Thompson and
Strickland argue in their book, Strategy formulation and implementation, that the goal is
to get everybody in the organisation involved and emotionally committed. The idea is to
try to generate contagious enthusiasm at all levels and among all employees. This should
be achieved by utilizing a tough-minded respect for the individual employee, a
willingness to train each employee thoroughly, a belief in setting reasonable and clear
69 Hussey, David E (1996) The implementation challenge, John Wiley and sons, p11. 70 Vrakking, Willem J (1995) The implementation game, Journal of Organizational Change Management, Volume 08, Issue 3.
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performance expectations, and a painstaking effort to grant employees enough autonomy
to stand out, excel, and contribute.71
Training has already been identified as an obstacle to effective implementation in
OMPFA. In my action research-learning project on the implementation of the forecasting
process, I highlighted the fact that each region should be autonomous in its own right.
Each region must therefore exhibit all the features of a viable system itself. This will
ensure that each RGM takes responsibility for delivery in his/her own region.
Stafford Beer developed the Viable System Model criteria. Espejo describes it as follows:
“Viable systems are those able to maintain a separate existence. Such systems have their own problem-solving capacity. If they are going to survive they need not only a capacity to respond to familiar disturbances, but potential to respond to unexpected, previously unknown disturbances. This latter capacity is the hallmark of a viable system: it gives them the capacity to adapt to changing environments.” 72
Managers felt that they are not yet empowered to do what is required of them. The
mindfulness audit also highlighted this fact. Mindlessness occurs because people cannot
do anything about what they see. People with a limited action repertoire often impose old
categories to classify what they see and mislabel unfamiliar new problems as familiar old
ones, so that they can act on them. This may explain why so many of the people involved
in the implementation of the new sales process since 1999 customised the new process to
their liking, with the effect that the process is no longer a uniform standard process.
Jay Klagge did a study among middle managers to engage their ideas on empowerment,
together with a literature review on the topic. He found that no single, universally
agreed-on definition of empowerment has been accepted within the literature. His
summary from the literature is that empowerment means to give increased power and
authority, and corresponding responsibilities and competencies to employees.
71 Thompson, Arthur A; Strickland, AJ (1980) Strategy formulation and implementation: tasks of the general manager, Fourth Edition, Richard D Irwin, Inc. p303. 72 Espejo, Raul; Harnden, R (1989) The value system model: interpretations and applications of Stafford Beer’s VSM, John Wiley & Sons Ltd, p79.
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The middle managers showed agreement with the literature when they defined
empowerment as placing responsibility for decisions and actions at the lowest possible
level within the organisation and giving that level the tools, resources, and authority
needed to decide and act.73 I have already alluded to the training and support that was not
adequate in OMPFA. In addition, I also believe that the trust relationship that was harmed
because of the recent restructure impacted on the empowerment that is given and the
responsibility that is taken.
This area is an obstacle that OMPFA’s senior management will have to deal with if
OMPFA wants more successful implementation. Nickols writes in Harvard Business
Review that the challenge to management is no longer one of ensuring compliance; it is
one of eliciting contributions. Meeting this challenge calls for discussion, debate and
negotiation.74 This is a challenge OMPFA will have to tackle.
Testing
A great deal of frustration and confusion has been caused to the area managers whom we
wanted to implement the new process in preparation for the recent business-planning
workshop. I list below some of the verbatim responses received from area managers in
response to the feedback survey we did after the workshop.
“The program should have been tested properly as this caused a lot of frustration
with the software not working properly.”
“Battled with programs until it got updated.”
“Much frustration until we got the right programs. Wasted time and effort working
with incorrect software and programs.”
73 Klagge, Jay (1998) The empowerment squeeze – views from the middle management position, Journal of Management Development, Volume 17, Number 8. 74 Nickols, Fred (1998) Empowerment: The emperor’s new clothes, Harvard Business Review, November/December, Volume 76, Issue 6.
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“Being exposed to the process for the first time was a problem, hence a number of
mistakes had to be fixed up with lots of spreadsheets, and different versions became
confusing.”
“Testing of the template should be done before sending it out to areas.”
Laudon et al confirm that testing plays an important role in successful implementation.
Their focus is on the implementation of management information systems. When
explaining what usually goes wrong in the implementation process they highlight testing
as one of the problems. In their view, the amount of time and money required for proper
testing is underestimated. Furthermore, the project team does not develop an organised
test plan. They go on to say that users are not sufficiently involved in testing and, lastly,
that the implementation team does not develop appropriate acceptance tests for
management review, resulting in management not reviewing and signing off on test
results.75
Trust
“To be persuasive, we must be believable. To be believable, we must be credible. To be credible, we must be truthful.”
Edward R Murrow
As already mentioned, OMPFA was grappling with the effects of implementing the
change programme after the restructure in 1999 because there was still a high level of
resistance and distrust of the new model amongst the old guard. This was exacerbated by
the fact that staff were told during 1998 that there would be no retrenchments as a result
of the implementation of the new sales process. Unfortunately, retrenchments did take
place in 1999. Trust is not easily rebuilt, and this is impacting on how staff are
responding to new process implementations. Covey supports this view.
75 Laudon, Kenneth C; Laudon, Jane P (1996) Management information systems: a new approach to organization and technology, Prentice Hall, Inc, Fifth edition, p523.
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He is of the opinion that trust is the highest form of human motivation. It brings out the
very best in people, but it takes time and patience.76 Wetlaufer agrees and writes in
Harvard Business Review that once trust starts to erode, people can become cynical,
indifferent, and overly concerned with their own interests.77
In Covey’s words:
“The lowest level of communication coming out of low-trust situations would be characterized by defensiveness, protectiveness, and often legalistic language, which covers all the bases and spells out qualifiers and the escape clauses in the event things go sour. Such communication produces only Win/Lose or Lose/Lose.” 78
I can again draw on my own experience. The action research learning project I did on my
(our) EMBA work group on effectiveness highlighted a need to develop trust among the
group members to ensure that each member felt valued in the team and contributed to the
success of the team. Rankin states that the trust gap stands as an ongoing obstacle to any
management initiative on organisation change and will prevent organisations from
achieving the required results.79 This can be related back to the reason why managers do
not always take responsibility for the implementation of new processes, as earlier stated.
4.3 Shaping the research question
To address the above-described problem, I had to formulate a research question to deal
with this concern. The goal of qualitative research is to define and answer a specific
research question. Like some researchers, I prefer to enter the study with a specific
question already in mind. While I still want to let events unfold as freely as possible once
busy with the study, I, believe that defining the question in advance will enable me to
better analyse the data and identify specific patterns of behaviour.80
76 Covey, Stephen R (1989) The seven habits of highly effective people, Simon and Schuster, p178. 77 Wetlaufer, Suzy (2001) To tell the truth, Harvard Business Review, June, Volume 79, Issue 6. 78 Covey, Stephen R (1989) The seven habits of highly effective people, Simon and Schuster, p270. 79 Rankin, Jim (1998) Building trust – the essential ingredient in partnering to improve business results, Empowerment in Organizations, Volume 6, Number 5. 80 http://writing.colostate.edu/references/research/observe/com4a4.cfm
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As stated in the introduction, OMPFA intends to implement the BSC as part of the
business planning cycle during the course of 2003. The formulation of the problem
helped me to gain a better understanding of those issues that hampered implementation
efforts in OMPFA. The information was considered in the development of a framework
for the successful implementation of the BSC. This framework could be a critical step for
OMPFA management to consider for the successful BSC implementation.
My research question can therefore be stated as:
How do you prepare for the successful implementation of the Balanced
Scorecard?
In asking this question, I proceeded to:
• Apply what I have learned from the problem formulation
• Review the literature on the subject
• Review the literature on material related to the subject
• Consider what managers within our business unit have experienced.
My overall objective was to develop a framework to help OMPFA prepare for the
implementation the BSC. The intention is that, should OMPFA apply this framework, it
should improve the chances of a successful BSC implementation. The objective of my
research is therefore not about building a BSC.
“It is a widely held misunderstanding that developing the right enterprise
strategy gives companies a decisive competitive advantage. In reality,
formulating the strategy is less than half the battle. In the majority of
cases - an estimated 70% - the problem occurs due to faulty
implementation.” Fortune Magazine 1999
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SECTION 3: THE ANSWER
This section offers the answer to the research question. It highlights the framework that I
have developed for OMPFA to consider in preparation for the successful implementation
of the BSC. The framework is represented in the form of a CLD solution model. The
model was developed from my knowledge of the particular system, from the literature
review, from information gleaned from interviews, and from applying a systems thinking
approach to the concern. Each of the variables in the model is briefly discussed. The
evidence for my claims is contained in the rationale section of this paper (page 66).
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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Chapter 5 RESEARCH SYNTHESIS
“The real, then, is that which, sooner or later, information and reasoning
would finally result in.” Charles Sanders Peirce
The model below (Figure 8) represents my solution to the research question.
Figure 8 – Model representing the solution to the research question
To prepare an organisation for implementing the BSC, ongoing communication is
essential throughout this process. Ongoing communication is crucial for success, as
Empowerment SharedUnderstanding
TimingResponsibilitytaken / Buy-in
Monitoring
Prototyping
Education andTraining
R
Senior ManagementCommitment
Support
Solving theRepresentation Crisis
willcontribute to
leads todecision to do
to ensure
which willsupport
is part of the
.enhances
that willcontribute to
will resultin
so that they do
furtherencouraging
self
assisting toget right
ensuring workloadmanaged, soenhancing
Linkage to othermanagement systems
Ongoing communica
tion Ongoing communication
Ongoing communication Ongoing communica
tion
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highlighted in my literature review and by the managers I interviewed. Ongoing
communication should inform people about the progress, it should reassure them and it
should motivate them. Communication therefore forms the backdrop within which my
model has to be applied, and will become evident in many of the variables discussed
hereafter.
Given that ongoing communication is important, my model starts with senior
management commitment. Senior management commitment is needed to drive four
different streams:
(1) Through a process of education and training, solving the representation crisis,
support and empowerment, senior management has to ensure shared understanding for
the employees. This process represents a reinforcement loop. Education and training will
equip employees with more information about the tool, which will aid senior
management in solving the representation crisis. Employees will gain more insight.
Solving the representation crisis is another step in the process in terms of the support that
senior management give staff. As staff get better equipped and better understand what it
is they have to do, they become more empowered to act and to make things happen. This
creates a sense of empowerment, which will then further encourage staff to take more self
training onboard, so further solving the representation crisis. And so the story continues.
(2) Senior management can influence the decision about prototyping the BSC, which will
contribute to the shared understanding amongst employees.
(3) Senior management should ensure that the BSC is linked to other management
systems which, again, will contribute to the shared understanding of the staff, who will
see the bigger picture and understand how the BSC fits into other parts of the business.
In all three of the above-mentioned streams, shared understanding will ultimately result
in a higher level of buy-in from employees.
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(4) Senior management’s commitment is needed to regularly monitor the process. They
are the driving force behind the implementation and need to be aware of obstacles, so as
to assist in removing them. Monitoring also needs to ensure that the process stays on
track. This will assist senior management to be aware of workload pressures and thus
affect the timing of certain actions they require for the implementation of the BSC. They
can therefore manage this and ensure buy-in from employees.
Each of the variables, and their linkage to the original CLD representing the problem
situation from Chapter 4, will now be discussed.
Senior management commitment
Senior management commitment is the driving force in my model. As illustrated above,
each of the four steams of my model starts with senior management’s commitment.
The importance of senior management commitment is stressed in the literature review I
conducted. The managers I interviewed also highlight it as essential. From the interviews
it was clear that the BSC is driven by the RGM, the senior manager in the region.
Managers stated that the BSC initiative was very alive in the region, and attributed this
fact to the RGM’s commitment to the tool. The RGM continually reinforces the BSC in
all discussions with his management team. The fact that the RGM was personally
convinced about the merits of the tool, and drove its implementation as a personal
objective to be achieved in the region, was a major driving force in getting the BSC
implemented in the region.
Each of the other variables in my model will only happen as a result of senior
management’s commitment. Their commitment and role is therefore reinforced in the
discussion of each of the other variables.
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Education and training
During my problem formulation, training and support were grouped together. Because
both are such important factors, with different intentions, they are discussed as separate
variables in my solution model. As part of my problem situation, I quoted Laudon et al,
who stated that training should not be underestimated. This argument was also further
supported by examples provided where inadequate training influenced the success of
implementation. (Refer page 49 and 50.)
The need for training is supported in the literature review I conducted. The
implementation of the BSC should begin with educating and involving the people who
must execute it. The need for an education program is a prerequisite for implementing
strategy, as this is the foundation of organisational alignment. The strategy training
process aligns well to the communication that needs to take place for the BSC
implementation. Change means acquiring and assimilating new skills, as well as new
ways of thinking and behaving. Training and coaching therefore play an important part in
the process and eventually lead to a dynamic for self-development.
The managers I interviewed support the need for training. They felt that it was important
for employees to understand the BSC at a conceptual level and that training and reading
material were needed to help employees with this.
Solving the representation crisis
“Why do we create drawings, models, diagrams and other such representations? We do
so because by representing information in another format we make it presentable to one
special-purpose perceptual competence or another. Mapping complexity into simpler,
more natural user-friendly formats is a hallmark of increasing intelligence.”
Daniel Dennett
Solving the representation crisis is a new variable that was not part of my CLD for the
problem formulation. This is an important step in ensuring shared understanding.
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My literature review stressed the fact that organisations need tools for communicating
both their strategy and processes and the systems that will help them implement that
strategy. It is senior management’s responsibility to develop a picture of the future that is
relatively easy to communicate and appeals to employees. Strategy maps provide a tool to
solve the representation crisis.
The strategy maps provide a visual representation of the company’s objectives and show
the relationships among them that drive the organisation’s performance. Once created by
senior management, the top-level BSC strategy map energises people and serves as a
strong communication vehicle that leadership can use to help everyone understand the
key objectives and how they interrelate. The strategy maps may then also be further
adjusted as a result of the communication sessions.
Julian Day refers to collaboration. According to him, collaboration is a type of
conversation that takes place in shared space. Shared space is a cognitive environment
that allows meaningful, viable conversation because it provides a shared interpretation
system in the form of an intelligible, offloaded representation. During collaboration,
people focus on the representation and manipulate it according to their needs, wishes and
beliefs. The process is collaborative and involves talk, but the outcome of the talk is
reflected in the manipulated representation. In this way, collaboration forces precision.
An intelligible and intelligent mode of representation thus structures and guides thinking.
Loose complexity in each individual’s head is synthesised into cohesive simplicity
reflected in the representation.81
From the interviews it was clear that managers remembered concepts that were explained
by means of visual tools and analogies. Many of them quoted the ‘aeroplane cockpit’
analogy that the RGM had used to explain the BSC concept.
81 Day, Julian (2002) The Design of Collaborative Projects, EMBA3 class handout.
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Support
As already mentioned, support becomes a separate variable in my solution model. During
the problem formulation phase I quoted Vrakking, who conducted a study of the concrete
implementation processes described in the literature. According to him, support plays a
central role in all the articles that he consulted. I found this to be true in the literature
review that I conducted. Too often, implementation actions flounder because employees
are not given adequate support. To accomplish change requires constantly overcoming
resistance, fighting against inertia and stagnation, and reaffirming the validity of the
implementation. During the interviews, managers expressed the need for ongoing
support. As they grapple with the new concept, ongoing support can assist to help them
keep the initiative on track.
Empowerment
Empowerment remains an important variable in my solution model. A lack of
empowerment was highlighted as a concern and discussed in detail during the problem
formulation phase. As explained, I argued that training and support would contribute to
the empowerment of staff. This is now reflected in the reinforcement loop of my solution
model. When employees are equipped and have the knowledge to do things, they will feel
empowered to act, so enhancing the likelihood for success in implementing the BSC.
Prototyping
The lack of proper testing was discussed as one of the obstacles to successful
implementation of new processes and systems during the problem formulation phase.
I quoted Laudon et al who says that implementation teams do not develop appropriate
acceptance tests for management review, resulting in management not reviewing and
signing off on test results.
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From my literature review I concluded that piloting the BSC is important. It enables the
organisation to minimise the risk of going ahead in unfavourable circumstances and
allows organisations to customise the project to suit the organisation’s needs.
Linkage to other management systems
This is a new variable that I added to my solution model, as a result of knowledge that I
gained from the literature review. Kaplan and Norton82 emphasised the importance of
linking the BSC to other management systems. They state that without such connections,
the effort devoted to developing the BSC may not deliver tangible benefits. The BSC, for
example, provides the vehicle to introduce strategic thinking into the business planning
process, but such a linkage must be made explicit. It is therefore important that OMPFA
links the BSC concept to its business planning process.
The managers I interviewed supported the argument that the BSC concept should be
linked to other management systems. They attribute the fact that the BSC is very alive in
the region, to the fact that their performance contracts and reviews are linked to the
objectives, initiatives, measurements and targets of the regional BSC.
My proposal on how OMPFA can achieve the linkage to the business planning process,
and later to performance management, is illustrated in Appendix F.
Shared understanding
Insufficient shared understanding was emphasised as the driving force for the
unsuccessful implementation of processes and systems as part of my problem
formulation. The importance of shared understanding was argued and various examples
were given from my data to support the argument. Although not the driving force in my
solution model, shared understanding remains essential to ensure buy-in and, ultimately
82 Kaplan, Robert S; Norton, David P (2000) Having Trouble with Your Strategy? Then Map It, Harvard Business Review, September/October.
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the successful implementation of the BSC. My model illustrates that three of the steams,
starting with senior management commitment, lead to shared understanding.
Monitoring
During my problem formulation, I explained the paradox that was presented between
monitoring and empowerment, and the importance of both elements being present to
ensure successful implementation. Amongst others, I quoted Grundy, who states that
monitoring is the checking back to ensure that the change process is on track in terms of
its benefits and costs and timescales.
Authors in my literature review support his view, in stating that change is such a complex
process that there is a danger of drifting away from the original objectives, whether by
following the wrong path, taking too long or costing too much. Monitoring the process is
therefore essential. The managers I interviewed also felt that monitoring was important.
Timing
My literature review informed me of the importance of this variable. The integration of
implementation actions needs to be phased in with the existing workload. I also made this
point during my problem formulation. I quoted Levitt, who makes the point of how the
pressures of day-to-day responsibilities can result in resistance to new ideas. For
implementation to occur smoothly, consideration must be paid to the priority and
sequencing of tasks and steps. This is again where senior management involvement and
commitment is illustrated. They must be sold on the BSC and fully understand why they
should treat it as their highest priority allowing other ‘fires’ which could divert attention
to ‘burn themselves out’.
The managers I interviewed support this argument. The fact that the region is trying to
implement the BSC in isolation to OMPFA does not work. The pressure is on
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performance and it is as if senior management keep on falling back on back-up plans
when results are not there in a specific week.
Responsibility taken / buy-in
Responsibility not taken was the outcome of the CLD I presented in the problem
formulation. This remains the outcome of my solution model, but it is now in the form of
a positive statement: responsibility taken / buy-in. In the problem formulation I
mentioned Heifetz et al, who states that it is not easy to get people to assume greater
responsibility. All the actions in my solution model are an attempt to ensure that buy-in is
achieved and responsibility taken for the implementation of the BSC.
The importance of buy-in is further supported by my literature review. Buy-in is essential
as this enables the employees to work in a coordinated, collaborative fashion toward the
company’s set goals and objectives. Employees must accept the BSC. It is a universal
truth that people will not accept change if they do not believe in it or have a chance to
influence it.
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SECTION 4: THE RATIONALE
This section provides the logical basis for the answer. Chapter 7 reflects the extensive
literature review that I conducted. My literature review covered the BSC implementation,
as well as strategy implementation and implementing change. The reason I expanded my
review beyond the BSC implementation to the mentioned fields, is because the BSC is a
strategy implementation tool, and it would bring about change in an organisation.
My findings from the literature review and interviews with managers in OMPFA are
summarised in chapter 8. It also covers the process I followed, and illustrates my
thinking, in using systems thinking to design a solution to the concern.
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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Chapter 6 LITERATURE REVIEW
“Those who do research belong to a community of scholars, each of whom
has journeyed into the unknown to bring back a fact, a truth, a point of
light. What they have recorded of their findings will make it easier for you
to explore the unknown: To help you also discover a fact, a truth, or bring
back a point of light.” Paul D. Leedy83
6.1 What is the BSC?
A summary of what the BSC is was constructed from three Harvard Business Review
articles published by Kaplan and Norton between 1992 and 1996, and their book,
Translating Strategy into Action, The Balanced Scorecard.84 Kaplan and Norton argue
that senior executives understand that their organisation’s measurement system strongly
affects the behaviour of managers and employees. Executives also understand that
traditional financial measures can give misleading signals for continuous improvement
and innovation – activities that today’s competitive environment demands. The
traditional financial indicators alone have become insufficient to measure performance in
terms of the skills and competencies companies are trying to master today. Managers
should not have to rely on one set of measures to the exclusion of the other. Managers
need a balanced presentation of both financial and operational measures.
83 Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company, p87. 84 Kaplan, Robert S; Norton, David P (1992) The Balanced Scorecard – Measures that Drive Performance, Harvard Business Review, January/February, Volume 70, Issue 1. Kaplan, Robert S; Norton, David P (1993) Putting the Balanced Scorecard to Work, Harvard Business Review, September/October, Volume 7, Issue 5. Kaplan, Robert S; Norton, David P (1996) Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review, January/February, Volume 74, Issue 1. Kaplan, Robert S; Norton, David P (1996) The Balanced Scorecard – Translating Strategy into Action, First Edition, Harvard School Press, Boston.
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The BSC retains financial measurement as a critical summary of business performance,
but it also highlights a more general, integrated set of measurements that link customers,
internal processes, employees and systems to long-term financial success. The BSC itself
is a list of performance measures set out in a series of tables, along with a ‘high-level
strategy map’ showing how these measures relate to each other and to the firm’s strategic
objectives (cause-and-effect). These help executives to communicate to everyone else in
the organisation what their strategy is, and how they expect it to be achieved.
The BSC is an approach to strategic management that imbeds the long-term strategy into
the management system through the mechanism of measurement. The underlying concept
is to establish a performance measurement framework using the four ‘perspectives’ –
Learning and Growth, Internal, Customer and Financial. Like an aeroplane’s control
panel, the Scorecard helps companies guide their business by using a set of financial and
non-financial measurements. It consequently balances external expectations – of
shareholders and clients – with internal capabilities.
A vision describes the ultimate goal – to be the best. A strategy is a shared understanding
about how that goal is to be reached. The BSC provides a medium to translate the vision
into a clear set of objectives. These objectives are then further translated into a system of
performance measurements that effectively communicate a powerful, forward-looking,
strategic focus to the entire organisation.
In contrast to traditional, financially based measurement systems, the Balanced Scorecard
solidifies an organisation’s focus on future success by setting objectives and measuring
performance from the four distinct perspectives:
The Learning and Growth perspective directs attention to the basis of all future success
– the organisation’s people and infrastructure. Adequate investment in these areas is
critical to long-term success. The development of a true learning organisation supports
success in the next Balanced Scorecard perspective, the Internal perspective.
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The Internal perspective focuses attention on the performance of the key internal
processes which drive the business. Improvement in the internal processes now is a key
leading indicator of financial success in the future. However, in order to translate superior
processes into financial success, companies must first please their customers.
The Customer perspective considers the business through the eyes of the customer, so
that the organisation retains a careful focus on customer needs and satisfaction.
Finally, the Financial perspective measures the ultimate results that the business
provides to its shareholders.
Together, these four perspectives provide a balanced view of the present and future
performance of the business.
So what is new about this approach? Older measurement systems concentrated almost
exclusively on lagging indicators. These indicators were often financial in nature and,
while financial indicators are important, they tend to reflect on past performance rather
than indicating future positions.
The approach of the BSC is fundamentally different. While financial measures are
included (financial measures are the logical end point of any objective), the scorecard
selects leading indicators. Unlike many management trends, the BSC elevates operational
measures – such as on-time delivery, order cycle time and productivity – to an equal
status with more traditional financial measures.
Managers using the BSC do not have to rely on short-term financial measures as the sole
indicators of the company’s performance. The Balanced Scorecard lets them introduce
four new management processes that, separately and in combination, contribute to linking
long-term strategic objectives with short-term actions:
1. The scorecard describes the vision of the future for the entire organisation. It helps
managers to translate the vision and strategy of the company into operational terms that
guide day-to-day operations. For people to act on the words in vision and strategy
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statements, those statements must be expressed as an integrated set of objectives and
measures, agreed upon by all senior executives, that describe the long term drivers for
success.
2. The scorecard creates shared understanding. It creates a holistic model of the strategy
that allows all employees to see how they can contribute to organisational success. It
enables managers to communicate their strategy both vertically and horizontally
throughout the organisation and enables them to link rewards to performance on those
objectives.
3. The scorecard focuses change efforts. When managers use the ambitious goals set for
Balanced Scorecard measures as the basis for allocating resources and setting priorities,
they can undertake and co-ordinate only those initiatives that move them forward to their
long-term strategic objectives. As a business-planning tool, the Balanced Scorecard helps
to align long-term strategic priorities with annual budgets, change programmes and
resource allocations.
4. The scorecard permits organised learning at the executive level. The scorecard enables
companies to modify strategies to reflect real-time learning. By making the cause-and-
effect hypotheses among objectives and measures explicit, businesses can test their
strategy in real-time and adapt as they learn.
The remainder of this literature review deals specifically with what has been written
around the implementation of the BSC, and not with issues dealing with the design of the
BSC. It also includes a literature review on strategy implementation and implementing
change.
6.2 Kaplan and Norton
Robert S. Kaplan and David P. Norton first introduced the concept of the BSC. Kaplan is
the Marvin Bower Professor of Leadership Development at Harvard Business School,
and is also known for his work on cost accounting and financial measurement.
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Norton is the President of Balanced Scorecard Collaborative Inc., and also a veteran
management consultant. They paired up in 1992 to write a seminal article in Harvard
Business Review, introducing the BSC as a revolutionary new performance measurement
system. They can be regarded as the gurus of the BSC. Since 1992, they have published
many more articles and two books, the best-selling Translating Strategy into Action, The
Balanced Scorecard, and their latest book, The Strategy-Focussed Organisation: How
Balanced Scorecard Companies Thrive. They have also given countless speeches, put on
numerous conferences and training programs, and consulted with many companies.
An outline for building the BSC can be viewed in Figure 9. Here Kaplan and Norton85
provide a typical process and the steps to be followed to build the BSC. As mentioned
earlier, the scope of my research only focuses on how to prepare OMPFA for the
implementation of the BSC, and is therefore limited to the preparation step.
Figure 9 – Summarised process for building the Balanced Scorecard – adapted from
Kaplan and Norton (1993)
85 Kaplan, Robert S; Norton, David P (1993) Putting the Balanced Scorecard to Work, Harvard Business Review, September/October, Volume 7, Issue 5.
BUILDING A BALANCED SCORECARD
A typical process has the following steps:
1. Preparation: Define the business unit for which a top-level scorecard is appropriate.2. Interviews – First round: Interview executives too get input on strategic objectives and possible scorecard
measures.3. Executive workshop – First round: Group debates around a proposed mission and strategy statements until
consensus is reached.4. Interviews – Second round: Compiled information discussed with executives about the tentative Balanced
Scorecard.5. Executive workshop – Second round: More debate on the vision, strategy and tentative scorecard. Start to
develop implementation plan and objectives.6. Executive workshop – Third round: Come to a final agreement on the vision, objectives and measurements
developed in the first two workshops. Agree on the implementation plan.7. Implementation-team develops the implementation plan for the scorecard.8. Periodic reviews: Done on a monthly or quarterly basis and reviewed annually.
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Kaplan and Norton86 state that leaders must make the organisation understand why
change is needed; “the organisation must be unfrozen”. They refer to J Kotter, who
describes how transformational change begins at the top and with three discrete actions
by the leaders: (1) establish a sense of urgency; (2) create the guiding coalition; and
(3) develop a vision and a strategy.
According to Kaplan and Norton87 the implementation of a strategy begins with
educating and involving the people who must execute it. They argue that organisations
that wish to have every employee contribute to the implementation of the strategy, will
share their long-term vision and strategy – embodied in the BSC – with their employees,
and will actively encourage them to suggest ways by which the vision and strategy can be
achieved. The BSC allows for a top-to-bottom alignment, where everyone in an
organisation would understand the strategy and how his or her individual actions support
the ‘big picture’. It should start at the top with executive management’s commitment.
Furthermore, the executive team should share its vision and strategy with the whole
organisation to gain maximum benefit. In an article in People Management88, Kaplan and
Norton state that the most successful organisations understand the importance of
engaging all their employees in the strategic process, because they will ultimately be the
ones who will implement the strategy. Whatever the organisation – manufacturing or
service provider, private or public, for-profit or not-for-profit – all of its employees need
to understand and be able to implement its strategy.
In their best selling book89 they continue to emphasise the importance of communication.
The communication of the strategy, and linkage of the strategy to personal goals creates a
shared understanding and commitment among all organisational participants. Here, they
argue the need for communication and education programmes as a prerequisite for
86 Kaplan, Robert S; Norton, David P (2001) Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part II, Accounting Horizons, June, Volume 15, Issue 2. 87 Kaplan, Robert S; Norton, David P (1996) The Balanced Scorecard – Translating Strategy into Action, First Edition, Harvard School Press, Boston, p199-200. 88 Kaplan, Robert S; Norton, David P (2001) Market impact, People Management, 25 November, Volume 7, Issue 21. 89 Kaplan, Robert S; Norton, David P (1996) The Balanced Scorecard – Translating Strategy into Action, First Edition, Harvard School Press, Boston, p199-200.
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implementing strategy. They go on to say that a consistent and continuing programme to
educate the organisation on the components of the strategy, as well as reinforcing this
education with feedback on actual performance, is the foundation of organisational
alignment.
In another Harvard Business Review article90, Kaplan and Norton also emphasise the fact
that the key to your strategy is to have people in your organisation to understand it.
Organisations need tools for communicating both their strategy and processes and
systems that will help them implement that strategy. According to Kaplan and Norton,
strategy maps provide a tool to do just that. Strategy maps give employees a clear line of
sight into how their jobs are linked to the overall objectives of the organisation. This
enables the employees to work in a coordinated, collaborative fashion toward the
company’s set goals and objectives. The strategy maps provide a visual representation of
a company’s objectives and show the relationships among them that drive the
organisation’s performance.
In, Translating Strategy into Action, Kaplan and Norton91 explain the importance of
linking the BSC to other management systems. One such system is the business planning
process in an organisation. They state that without such connections, the effort devoted to
developing a BSC may not deliver tangible benefits. The BSC provides the vehicle to
introduce strategic thinking into the business planning process, but such a linkage must
be made explicit.
6.3 What other authors have written about preparation for and the
implementation of the BSC
I have found that a great deal has been written in the literature covering the BSC on the
building and implementation of the BSC, with less emphasis on preparing the
90 Kaplan, Robert S; Norton, David P (2000) Having Trouble with Your Strategy? Then Map It, Harvard Business Review, September/October. 91 Kaplan, Robert S; Norton, David P (1996) The Balanced Scorecard – Translating Strategy into Action, First Edition, Harvard School Press, Boston, p280-284.
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organisation for the BSC implementation. My literature review focused more on material
that mentioned elements pertaining to preparing organisations for the implementation of
the BSC.
Marcus Wefers92, of SAP AG (Germany), states in an internal SAP article that the BSC
implementation in an organisation is a continuous process. This process usually begins at
a corporate or strategic business unit level and can then be expanded from there down to
the operative levels. Active participation by top management is a must, because the BSC
is a strategic management system, and not just a measurement project. An atmosphere of
permanent change must be created and promoted by decision-makers. A typical process
for the BSC implementation, as seen by SAP AG, can be viewed in Figure 10.
EVALUATION
Figure 10 – Processes of a Balanced Scorecard Implementation (Source: Balanced
Scorecard Collaborative and SAP AG)
92 Wefers, Marcus, Strategic Enterprise Management with the Balanced Scorecard, http://www.sap.com.
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The two stages in Figure 10 that link well with the preparation phase that I am referring
to in this research paper, are the business unit linkage and strategy training processes. As
already highlighted, Wefers stresses the need for leadership commitment from the top
during the business unit linkage process. The strategy training process aligns to the
communication that needs to take place for the BSC to be implemented. Here Wefers
mentions the need for communicating the planned strategy and its objectives through
information events. During this process, the training of employees and the collecting of
feedback are important, with the ultimate goal of broad acceptance throughout the
organisation.
David Parmente, writing in New Zealand Management93, argues that the problem with
failed BSC implementations starts with top management and is connected to a lack of
understanding, commitment and prioritising of the process. In his opinion, management
needs to adhere to a 10-point plan to implement the BSC. This plan can be seen in
Figure 11.
Figure 11 – 10-point BSC implementation plan (Source: David Parmente, New Zealand
Management)
The steps that link to my research are steps 1, 5, 6 and 10. Parmente stresses the
importance of senior management’s commitment. They must be committed to the BSC to 93 Parmente, David (2002) The Balanced Scorecard, New Zealand Management, May, Volume 49, Issue 4.
10-Point plan to implement a Balanced Scorecard in a 16 week timeframe:
1. Senior management commitment and education.2. Focus on the critical success factors.3. Focus on a magic 20 KPIs.4. Select a small team avoiding members of senior management.5. “Just do it”.6. Don’t get too flash.7. In reality it is not one Balanced Scorecard.8. You need to know your KPIs even if you do not implement a Balanced Scorecard.9. Balanced Scorecard designs are an art form, not a science.10. The Balanced Scorecard is far too important to be left on an individual’s performance
agreement.
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drive it down through the organisation. They must be sold on the concept and fully
understand why they should treat it as their highest priority, allowing other ‘fires’ which
could divert their attention to ‘burn themselves out’. Commitment means that the senior
management team sets aside time each week to perform exercises, including giving
feedback on suggested measures, being available to the BSC team for interviews, visiting
other BSC sites, and approving BSC investment proposals, all in a tight time frame. The
benefit from this action will ensure that the senior management team gets a buzz from
their involvement in a dynamic project, enhancing their understanding of the business,
and developing the organisation’s business strategies.
In step 5 Parmente refers to ‘just do it’. The senior management team should ensure that
the BSC project culture is a ‘just do it’ culture. With a ‘just do it’ culture comes belief
that ‘we can do it’. In step 6 of his 10-point plan he states that the BSC is a simple
concept, which can, and should, be largely carried out in-house. Again, senior
management should create this belief among employees.
Too often important projects are assigned to an individual, when in reality the ownership
belongs to the senior management team of an organisation. This point is stressed in
step 10. The BSC is too important to be left on an individual’s performance agreement.
There are four essential activities that have to be executed rigorously and diligently for
the implementation of the BSC to be successful. This is the view of Ganesh Venkatraman
and Michael Gering94. The four activities are shown in Figure 12.
94 Venkatraman, Ganesh; Gering, Michael (2000) The Balanced Scorecard, Ivey Business Journal, January / February, Volume 64, Issue 3.
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Figure 12 – Four essential BSC implementation activities (Source: Venkatraman and
Gering, Ivey Business Journal)
The first, third and fourth activities relate to my research. Venkatraman et al says that the
first milestone in producing a BSC is the identification and understanding of the strategic
requirements for organisational success. This is in the domain of senior management.
Venkatraman et al are in favour of prototyping the Scorecard measures before the BSC is
implemented. According to them this serves several purposes. Firstly, the Scorecard is
ready to be used before the problem has been forgotten, increasing the likelihood that the
organisation will accept it. Secondly, it enables users to work with the measure and refine
it. Thirdly, it helps identify relationships between measures that may not have been
readily apparent. And lastly, it may highlight unforeseen, inappropriate behaviour. In
their view, the use of prototyping speeds up the introduction of the BSC.
Venkatraman et al’s fourth activity relates to the employees in the organisation. The BSC
is intended to change their behaviour and they are required to make it work. According to
the authors, this is the most important and challenging activity in introducing the BSC.
They argue that the employees must accept the Scorecard. It is a universal truth that
people will not accept a change if they do not have a chance to influence it.
Four essential activities to ensure successful Balanced Scorecard implementation:
1. Make the strategy explicit: The organisation’s strategy must be made explicit and made to form the basis for the scorecard.
2. Choose the measures: The performance measures must be aligned with the strategy and the relationships between the measures must be clearly understood.
3. Define and refine: Performance measures must be put into place so that the scorecard becomes the language of the company.
4. Deal with people: Above all, people and change management must be properly managed.
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Hall95 refers to six BSC stages, as can be viewed in Figure 13. This model is a hybrid six-
stage approach used at the Defence Acquisition University, and was derived from the
standard Kaplan and Norton approach.
Figure 13 – The BSC strategic planning visioning process (Source: Hall, Program
Manager)
Stage 1 in this model links to my research. Hall states that mobilising leadership from the
top implies that the most senior leader is committed to the structure and discipline
required by the BSC. This means that senior management is willing to engage in the
learning necessary to understand the BSC at an implementation level. Leaders need to
understand their role in the change process. Active leadership is needed to help the entire
organisation through this change process.
Hall highlighted lessons learned at the Defence Acquisition University from its
implementation of the BSC. I noted the following lessons from her article:
• Very early in the BSC process, a clearly thought-out mission, vision and top-level
strategy emerged that could easily be communicated and understood by everyone
at all levels of the organisation.
• Once created by leadership, the top-level BSC strategy map energised people and
served as a strong communication vehicle that leadership could use to help
everyone understand the key programme objectives and how they interrelate.
95 Hall, Dr. Mary-Jo (2000) Bridging the Distance, Program Manager, November / December, Volume 29, Issue 6.
The six-stage BSC implementation approach:
1. Mobilise the leadership.2. Develop the architecture.3. Link and align the parts.4. Map the initiatives.5. Roll-out and cascade throughout the organisation.6. Continue to focus and improve the strategy.
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• Increased understanding by employees leads them to take the initiative to do
things that were unexpected and to put extra effort into their daily work.
The Metrus Group96 makes use of a four-phase BSC approach, which can be seen in
Figure 14. The Metrus Group is an international leader in implementing strategy through
measurement management, using tools such as Balanced Scorecards and employee
surveys to align and focus organisations.
The steps in their approach that link to my research are steps one and three (Refer Figure
14.) In their work with clients they, amongst other things, help organisations to gain
commitment and buy-in from employees. They also emphasise the importance of senior
management commitment and the need for proper change management before the
implementation of the BSC.
Figure 14 – The Metrus Group Balanced Scorecard approach
(Source: www.metrus.com/products/scorecards.html)
96 www.metrus.com/products/scorecards.html
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Berkman97 refers to a number of necessary steps that a Chief Information Officer needs to
take to properly lay the groundwork for a successful BSC implementation. These steps
can be seen in Figure 15.
Figure 15 – Steps necessary to lay the groundwork for the successful BSC
implementation (Source: Berkman, CIO Magazine)
Here again I can link two steps to my research topic. The steps are (a) the necessity to
prepare the organisation for change and (b) the fact that organisations need to obtain buy-
in at all levels. Berkman states that implementing the BSC is a significant change in the
way that employees view their jobs. The natural paranoia that comes with change is
bound to surface. It is therefore important to ensure that all employees, from the senior
executive through to the entry-level, have bought into the concept.
McCunn98 highlighted some do’s and don’ts in the Management Accounting magazine
pertaining to the implementation of the BSC. His do’s that relate to my research topic
include that fact that senior management commitment needs to be obtained before trying
to implement the BSC. The Scorecard project is too big to be anything other than top
priority, and it should never be left to the accountants to implement. He is also in favour
of implementing a pilot programme before the introduction of the BSC. McCunn argues
that the pilot programme provides valuable lessons and avoids ‘big bang’ risks.
Furthermore, the need to carry out an ‘entry review’ for each business unit before
implementing the BSC is highlighted. This minimises the risk of going ahead in
97 Berkman, Eric (2002) How to use the Balanced Scorecard, CIO Magazine, May 15. 98 McCunn, Paul (1998) The Balanced Scorecard…the eleventh commandment, Management Accounting: Magazine for Charted Management Accountants, December, Volume 76, Issue 11.
Steps necessary to lay the groundwork for BSC implementation:
1. Prepare the organisation for change.2. Devise the right metrics.3. Get buy-in at all levels.4. Plan to follow through to completion.
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unfavourable circumstances and allows organisations to customise the project to suit the
organisation’s needs.
McCunn underlines the fact that organisations should not underestimate the need for
training and communication in using the BSC. He warns that they should not be fooled
by the simplicity of the idea. The BSC brings huge change.
6.4 Strategy implementation
Hussey99 stresses that the successful implementation of strategy embraces both the hard
and soft aspects of management. He states that widespread participation has been argued
well, but you need to bear in mind whether it fits both the culture of the organisation and
the strategic situation of the organisation. Although participation may improve
motivation and increase the buy-in of strategy, Hussey says that there is much more to the
implementation of strategy than this. There are also hard and soft elements, which need to
fit together if the strategy is to be implemented. Hussey’s framework for strategy
implementation is summarised in Figure 16. The first three words deal mainly with the
soft aspects of management and therefore relate to my research topic. The last three
words cover the hard side, which relates to the systems and the administrative tasks. In
Hussey’s view, successful implementation depends on getting all six stages right,
although they should be varied according to the nature of the strategy.
Figure 16 – Framework for Strategy Implementation (Source: Adapted from Hussey, The
Implementation Challenge, p10-14)
99 Hussey, David E (1996) The implementation challenge, John Wiley and sons.
The EASIER way to implement strategic change:
1. ENVISIONING.2. ACTIVATING.3. SUPPORTING.4. INSTALLING.5. ENSURING.6. RECOGNISING.
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I have summarised below what Hussey says about each of the six stages.
Envisioning: This is the process of developing a coherent view of the future in order to
form an overarching objective for the organisation. Defining the vision clearly is an
important element in the implementation process. A leader who cannot articulate the
vision in a way that has meaning to others, will find it harder to ensure that everyone
pulls in the same direction.
Activating: This is the task of ensuring that others in the organisation understand, support
and eventually share the vision. The vision cannot be understood unless it is
communicated, and it cannot be communicated unless it is defined in a coherent way.
A widespread commitment to the vision makes it easier to see the relevance of the
strategies, and underlines the importance of coordinated efforts.
Supporting: This step is about helping others to play a key part in the implementation
process. To achieve this, the leader has to have a strong empathy with the people he or
she is trying to inspire, and the imagination to see things from their point of view.
Supporting needs a base of respect, trust and integrity, and fails when these essentials are
lacking.
Installing: This is the process of developing detailed plans to enable the strategy to be
implemented and controlled. It should be recognised that when the strategy takes the
organisation into a new situation, past experience may be of little help, and that the
planning of many large and small actions is needed to ensure success.
Ensuring: In this task, consideration must be given to the monitoring and control
processes. Monitoring and control processes provide a reason for the various players in
the implementation process to meet, thus providing a way of reinforcing the commitment
to the vision.
Recognising: This task is about giving recognition to those involved in the
implementation process. Recognition may be positive or negative, and should be used to
reinforce the change, and to ensure that obstacles to progress are removed.
The Total Quality Leadership (TQL) Office in the Office of the Under Secretary of the
US Navy, provides technical advice to a number of organisations inside and outside
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government. Wells100, the Director of the Executive Support Division provides a
handbook for senior leaders on strategy implementation. She states that implementation is
about taking the actions necessary to accomplish the goals, strategies and objectives of
the organisation. It requires action planning, senior leadership involvement, commitment
to the plan, resourcing (people, time, and money), and involvement from the entire
organisation. Wells provides actions that are keys for successfully implementing the
strategic plan, as well as actions that guarantee failure. (Refer Figure 17.)
Wells states that roles and responsibilities need to be assigned to establish who does what
to successfully implement the strategic plan. The senior leadership team is responsible for
overseeing implementation. It is responsible for making crucial decisions about the
direction of the organisation, adjusting the plan if necessary, and chartering teams to help
accomplish the strategies and objectives. Senior leadership teams are able to keep the
organisation focused on implementation by establishing regular reviews.
The organisation needs to define the way it is going to act on the objectives targeted for
implementation. Determining what type of infrastructure is best depends on the
objectives themselves and the way the organisation is currently organised. The
infrastructure needs to be defined to ensure accountability and responsibility for action.
Wells’s next key to success focuses on linking goal groups. She argues that it is important
for higher-level teams to review findings and suggestions from lower-level teams and
make needed decisions in a timely manner. Organisations that have had team members
trained in group dynamics found that their teams were very effective. The integration of
implementation actions needs to be phased in with the workload. Implementation teams
should develop implementation plans to address how they will carry out their charters.
A plan of action and milestones to develop implementation plans and, subsequently, to
manage implementation can be used. This, Wells states, can provide a description of the
tasks that need to be accomplished, show responsibility and resource requirements,
100 Wells, Denise L, Strategic Management for Senior Leaders: A Handbook for Implementation, TQLO Publication number 96-03, www.balancedscorecard.org/files/managebk.pdf.
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expected outcomes, measures to be used, and status. For implementation to occur
smoothly, consideration must be paid to the priority and sequencing of tasks and steps.
Figure 17 – Implementation of Strategy: Keys to Success and Facts of Failure (Source:
Wells, Strategic Management for Senior Leaders: A Handbook for Implementation, p40)
The next key to successful implementation suggests that everyone within the organisation
should be involved. It is important to link the day-to-day business to the tenets of the
strategic plan. The focus is on moving the current business towards a more strategic
future business rather than make the future business fit today’s business structure.
Because employees know the intricacies of the processes involved in their jobs, they can
make recommendations to their managers about needed changes in the day-to-day
business to help achieve the vision. Following on this key to success, is the allocation of
resources for implementation. Wells points out that resourcing a strategic plan involves
providing the people, money, and materials to ensure successful implementation.
Too often, implementation actions flounder because implementation teams are not given
adequate support. Sometimes the availability and use of resources is not readily apparent,
KEYS TO SUCCESS FACTS OF FAILURE
Assign roles and responsibilities No accountability
Involve senior leaders Disengagement from the process
Define an infrastructure Unmanaged activity
Link goal groups Fragmented accomplishment of objectives leads to sub-optimisation
Phase integration of implementation actions with Force people to choose between implementation and daily workload work; too many teams
Involve everyone within the organisation No alignment to strategies
Allocate resources for implementation Focus only on short term need for resources
Manage the change process Ignore or avoid change
Evaluate results No measurement system
Share lessons learned; acknowledge successes Hide mistakes / lay blame; limited / no communicationThrough open and frequent comminication
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but strategic planning can make them visible. For example, when the organisation
establishes what is really important, it also makes explicit those actions or tasks which
are not important. Eliminating redundancies in assignments or organisations can free up
the use of resources, making them available for strategic actions.
Wells then refers to managing the change process, the next key to successful
implementation. She says that the plan needs to be owned by the leadership team, and
should not be dependent on a single leader. Getting acceptance and input to the plan from
all members of the senior leadership team is crucial to the plan’s success. Wells’ second
last key to success is to evaluate the results. The important thing is for the senior
leadership team to keep up-to-date on implementation actions at regular review sessions,
to make appropriate adjustments, and to remove organisational impediments. The last key
to success is to share lessons learned and to acknowledge success through open and
frequent communication. Wells states that ongoing communication is crucial for success.
It is extremely important for the senior leadership team to share lessons learned, to share
successes, and to show that work is being accomplished. The fact that senior leaders are
paying attention to goal accomplishment will focus everyone’s attention on the plan.
6.5 Implementing Change
According to Pendlebury, Grouard and Meston101, the way in which change is instigated
can vary greatly; it may be forcibly imposed or it may be the result of a total consensus.
They argue that since change is ‘unnatural’, it is almost always imposed to a greater or
lesser extent. Since ‘imposed’ change results from management authority, it generally
takes place in businesses with a strong hierarchy, where authority is accepted. The
authors state that change ‘by consensus’, on the other hand, is characterised from the
outset by the complete support of all concerned. Although it can be difficult to obtain
such support, the aim is to improve the chances of success by a high initial level of
101 Pendlebury, John; Grouard, Benoit; Meston, Francis (1998) The Ten Keys to Successful Change Management, John Wiley & Sons Ltd.
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motivation and participation. Change ‘by consensus’ suits the culture of businesses in
which motivation takes precedence over authoritarianism.
Pendlebury et al argue that the management of change is far-reaching and all embracing,
and should therefore be supported by certain methods, techniques and tools. The method
the authors propose is intended to be both modest and ambitious. Their method comprises
ten keys, which they consider to be essential for accelerating change and maximising its
chances for success. (Refer Figure 18.)
Figure 18 – Method for Succeeding in Change (Source: Pendlebury et al (1998) The Ten
Keys to Successful Change, p42)
Key 1 – Defining the vision: The initial vision is the driving force that both prompts and
justifies the change. The vision defines the domain of change and takes the first step
towards indicating how and to what extent the various components of the business need
to be transformed. Pendlebury et al indicates the following five stages to be followed
when defining the vision:
1. Formalise the need for change
2. Identify the issues at stake in change
3. Develop alternative visions
THE TEN KEYS TO CHANGE:
Key 1: Defining the vision
Key 2: Mobilising
Key 3: Catalysing
Key 4: Steering
Key 5: Delivering
Key 6: Obtaining participation
Key 7: Handling the emotional dimensions
Key 8: Handling the power issues
Key 9: Training and coaching
Key 10: Communicating actively
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4. Choose the appropriate vision
5. Formalise the vision.
Key 2 – Mobilising: This key is intended to create a dynamic for change. The current
situation is compared to the vision. The differences effectively prove that the existing
situation is no longer appropriate. As the need for change becomes apparent, a sense of
anxiety emerges, which is a necessary characteristic of the mobilising phase. The authors
state that the following three objectives can be achieved by mobilising:
1. Sensitising employees to the need for immediate change
2. Endorsing the issues at stake in change, identified in key 1
3. Choosing the improvement initiatives.
The drive to mobilise continues throughout the change process, albeit less intensely.
Key 3 – Catalysing: Catalysing refers to the process of setting up an organisation which
will stimulate and manage change. Like any other project, change must be managed, but
its peculiar nature means that considerable resources need to be made available and
dedicated exclusively to it. To accomplish change requires constantly overcoming
resistance, fighting against inertia and stagnation, creating support, and reaffirming the
validity of the changes proposed.
Key 4 – Steering: Change is such a complex process that there is a danger of drifting
away from the original objectives, whether by following the wrong path, taking too long
or costing too much. Steering is focused on the guiding system that keeps the process on
track. Pendlebury et al offers the following activities for the steering process:
1. Establishing the logical structure of the change process
2. Planning the process
3. Making sure it runs properly on a day-to-day basis
4. Facilitating and accelerating change
5. Providing impartial advice and suggestions
6. Monitoring the attitude of change of key staff within the business
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7. Identifying the methods and tools needed and making them available to
employees
8. Initiating and following through on coaching
9. Ensuring that the other nine keys are applied appropriately.
Key 5 – Delivering: Delivering is the word the authors have chosen to characterise
carrying out the process of change; in other words, effecting the transition between the
current situation and the situation aspired to. Delivering, in Pendlebury et al’s view,
consists of five main sub-stages:
1. Making a detailed analysis of the existing situation in relation to the improvement
initiatives and identifying all the opportunities it presents
2. Devising a detailed plan for each improvement initiative and specifying what
must be achieved in each case for the vision to be delivered
3. Carrying out pilot testing
4. Using the results of testing to apply the process of change more generally
5. Setting up systems to ensure that change is lasting.
Key 6 – Obtaining participation: Delivering change requires the participation of the
entire workforce. Participation is an important issue, because it enables the business to
exploit the rich diversity of employees’ skills and experience, helps to overcome
resistance by involving employees directly, and ensures that change is lasting.
Key 7 – Handling the emotional dimension: The authors highlight the fact that individuals
react to change in many different ways; they may either be intimidated or attracted by its
novelty; they may be reluctant to alter their current ways of working or look forward to
greater job satisfaction; they may feel challenged or be afraid of failure, and so on. Some
of these reactions are positive, but unfortunately many of them are negative.
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This key therefore necessitates:
1. Identifying the emotional factors relevant to change
2. Assessing the problems created by resistance and mental blockage during the
implementation of change
3. Handling the emotional dimension.
Key 8 – Handling the power issues: Pendlebury et al states that change often alters the
balance of power within a business, which can cause certain individuals to oppose it or
try to turn it to their advantage. Power and change are often at odds, and successful
change requires that the balance of power within a business evolves in line with the
ultimate objectives. Using this key enables power issues to be dealt with in three stages:
1. Identifying the power issues
2. Handling power issues effectively
3. Altering the balance of power in line with the objectives of change.
Key 9 – Training and coaching: Change means acquiring and assimilating new skills, as
well as new ways of thinking and behaving. Training and coaching therefore play an
important part in the process of change and eventually lead to a dynamic for self-
development. Pendlebury et al suggests that this key deals with the following training and
coaching issues:
1. Determining and evaluating training and coaching requirements
2. Training, in particular identifying the specific technical skills demanded by
changes in jobs and responsibilities, as well as the interpersonal skills needed to
support the process of change itself
3. Coaching, describing how coaching techniques should be used
4. The dynamic of self-improvement that must be created to support change
effectively and derive the maximum benefit from it.
Key 10 – Communicating actively: Throughout the process of change the entire business
must engage in frequent and broad communication. Pendlebury et al states that
communication means not only informing people about the progress of change, thereby
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reassuring and motivating them, but also generating an explosion of ideas that enhance
and accelerate the process. Communication about change must follow strict procedures if
it is not to degenerate into a negative influence but, at the same time, the need for
information and self-expression must not be frustrated.
Kotter102 adopts an eight-step approach to creating major organisational change. (Refer
Figure 19.) According to Kotter, the most general lesson to be learned from the most
successful cases is that the change process goes through a series of phases that, in total,
usually require considerable time.
Figure 19 - Eight-step approach to create major organisational change (Source: Conger,
Sprietzer, Lawler III103)
Kotter comments on the steps as follows. The first step is essential because just getting a
transformation programme started requires the aggressive cooperation of many
individuals. Without motivation, people won’t help and the effort goes nowhere.
Sometimes, executives underestimate how hard it can be to drive people out of their
comfort zones. Change, by definition, requires a new system, which in turn always
demands leadership. The CEO, or most senior leader in the business, is therefore key.
102 Kotter, John P (1996) Leading Change, Harvard Business School Press. 103 Conger, Jay A; Sprietzer, Gretchen M; Lawler III, Edward E (1999) The Leader’s Change Handbook: An Essential Guide to Setting Direction and Talking Action, Jossey-Bass, San Francisco, p99.
Eight Steps to Transforming Your Organisation:
1. Establish a sense of urgency
2. Forming a powerful guiding coalition
3. Creating a vision
4. Communicating the vision
5. Empowering others to act on the vision
6. Planning for and creating short-term wins
7. Consolidating improvements and producing still more change
8. Institutionalising new approaches
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In cases of successful transformation efforts, the leadership coalition will continue to
grow over time. But whenever some minimum mass is not achieved early in the effort,
nothing much worthwhile happens. In successful transformation, the senior leader and a
number of other people come together and develop a shared commitment to excellent
performance through renewal. In the most successful cases, the coalition is always
powerful in terms of titles, information and expertise, reputations, and relationships.
A high sense of urgency within the managerial ranks helps enormously in putting a
guiding coalition together.
Kotter states that in every successful transformation effort that he has seen, the guiding
coalition developed a picture of the future that was relatively easy to communicate and
which appealed to customers, shareholders, and employees. Without a sensible vision, a
transformation effort can easily dissolve into a list of confusing and incompatible projects
that can take the organisation in the wrong direction or nowhere at all. A useful rule of
thumb from the author: if you cannot communicate the vision to someone in five minutes
or less and get a reaction that signifies both understanding and interest, you are not yet
done with this phase of the transformation process.
Transformation is impossible unless hundreds or thousands of people are not willing to
help, often to the point of making short-term sacrifices. Employees will not make
sacrifices, even if they are unhappy with the status quo, unless they believe that useful
change is possible. Without credible communication, and a lot of it, the hearts and minds
of the people are not captured. In more successful transformation efforts, executives use
all existing communication channels to broadcast the vision. They turn boring and unread
company newsletters into lively articles about the vision. Furthermore, communication
comes in both words and deeds, with the latter often the most powerful form. Nothing
undermines change more than behaviour by important individuals that is inconsistent
with their words.
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Employees are emboldened to try new approaches, to develop new ideas, and to provide
leadership. The only constraint is that their actions fit within the broad parameters of the
overall vision. The more people become involved, the better the outcome. To some
degree, a guiding coalition empowers others to take action simply by successfully
communicating the new direction. But communication is never sufficient by itself.
Renewal also requires the removal of obstacles. In the first half of a transformation, no
organisation has the momentum, power, or time to get rid of all obstacles. But the big
ones must be confronted and removed. If the blocker is a person, it is important that he or
she be treated fairly and in a way that is consistent with the new vision. But action is
essential both to empower others and to maintain the credibility of the change effort as a
whole.
Real transformation takes time, and a renewal effort risks losing momentum if there are
no short-term goals to meet and celebrate. Without short-term wins, too many people
give up or actively join the ranks of those people who have been resisting change. After a
few years of hard work, managers may be tempted to declare victory with the first clear
performance improvement. Although celebrating a win is fine, declaring the war won can
be catastrophic. Until changes sink deeply into a company’s culture – a process that can
take five to ten years – new approaches are fragile and subject to regression. Instead of
declaring victory, leaders of successful efforts use the credibility afforded by short-term
wins to tackle even bigger problems. In the final analysis, change sticks when it becomes
“the way we do things around here”, when it seeps into the bloodstream of the corporate
body. Until new behaviours are rooted in the social norms and shared values, they are
subject to degradation as soon as the pressure for change is removed.
The first five steps of Kotter’s approach link well to the preparation phase for
implementation, and therefore to my research topic.
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Armenakis, Harris and Mossholder104 write about creating readiness for organisational
change. According to them, many factors contribute to the effectiveness with which
organisational change is implemented. One such factor is the readiness for change,
something that I am interested in, in my research. To clarify the readiness concept, they
present a readiness model that can be seen in Figure 20.
The comments of Armenakis et al on the different factors relevant in creating readiness
for change are summarised below.
The Message: In general, the readiness message should incorporate two issues: (a) the
need for change, that is, the discrepancy between the desired end-state and the present
state; and (b) the individual and collective efficacy (i.e. the perceived ability to change)
of parties affected by the change effort.
Interpersonal and social dynamics: Interventions to create readiness for change are
attempts to mobilise collective support by building and shaping awareness across
organisational members regarding the existence of, the sources of, and the solutions
to the organisation’s problems. Through the dynamics of social information processing,
an organisation’s collective readiness is constantly being influenced by the readiness of
the individuals comprising it. System members look to one another for clues regarding
the meaning of events and circumstances facing the organisation. Any readiness-building
activities must take this social exchange into account. Identifying and recognising the
influence of opinion leaders in the organisation may enable the change agent to more
effectively design them into the readiness intervention. Building readiness in these
opinion leaders first could allow them to provide social cues for others in the organisation
and, in effect, act as information change agents in disseminating the logic of the readiness
program. As a result, a social information processing-based snowball effect might be
created.
104 Armenakis, Achilles A; Harris, Stanley G; Mossholder, Kevin W (2000) Organizational Development and Transformation: Managing Effective Change, McGraw-Hill Higher Education, p327-335.
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Figure 20 – The Creating Readiness for Change Model
(Source: Armenakis et al, Organization Development and Transformation, p329)
Influence strategies: Each of the influence strategies shown in the model offers a lever for
conveying discrepancy and efficacy information. Persuasive communication is primarily
a source of explicit information regarding discrepancy and efficacy. However, the form
of persuasive communication employed also sends symbolic information regarding the
commitment to, prioritisation of, and urgency for the change effort. Management of
external information refers to sources outside the organisation that can be used to bolster
the message conveyed by the change agent. Generally, a message generated by more than
one source, particularly if external to the organisation, is given a greater air of
believability and confirmation. Persuasive communication and the management of the
external information both emphasise the direct communication of the readiness message.
Active participation, however, is also required. One form of active participation is
directly involving individuals in activities which are rich in information pertaining to the
Contextual Factors
Contextual Factors
The Message: Discprepancy and Efficacy SystemReadiness
Influence Strategies Inter-personal
andSocial
Dynamics
ActiveParticipation
PersuasiveCommunication
Managementof ExternalInformation
Assessment
Change AgentAttributes
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potential discrepancy and efficacy message. Another form of active participation is
vicarious learning.
Change agent attributes: Attributes such as credibility, trustworthiness, sincerity and
expertise of the change agent are gleaned from what people know about the agent and/or
the agent’s general reputation. Clearly, readiness-creating messages will have more
influence if the change agent generating those messages has a good reputation in these
domains.
Readiness assessment: To guide readiness-building efforts, it is beneficial to assess the
system’s readiness. If properly conducted, such assessments can reveal the need to
intensify efforts, use additional strategies to create readiness, and offer insights into how
readiness messages might be modified.
“The reading of all good books is like a conversation with the finest men
of past centuries.” René Descartes (1596 – 1681)
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Chapter 7 DESIGNING A SOLUTION
“It’s not that I’m smart, it’s that I stay with problems longer.” Albert Einstein
7.1 Findings from the literature review with direct relevance to the research
question and objectives
The points from the literature review that spanned BSC implementation, strategy
implementation and implementing change that links to my research and objectives are
summarised herewith.
Senior Management Commitment
Active participation and commitment is required from top management. Ownership for
implementation belongs to senior management, who should create the belief amongst
staff. It is important for senior management to understand their role, as active leadership
is needed to help the entire organisation through the change process. This commitment
needs to be obtained before trying to implement the BSC. The Scorecard project is too
big to be anything other than top priority. Commitment is therefore required from senior
management as it is their responsibility to oversee the implementation of the BSC.
Education and Training
The implementation of the BSC should begin with educating and involving the people
who must execute it. The need for an education programme is a prerequisite for
implementing strategy, as this is the foundation of organisational alignment. The strategy
training process aligns well to the communication that needs to take place for the BSC
implementation. Change means acquiring and assimilating new skills, as well as new
ways of thinking and behaving. Training and coaching therefore plays an important part
in the process and eventually leads to a dynamic for self-development.
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Solving the Representation Crisis
Organisations need tools for communicating both their strategy and processes and the
systems that will help them implement that strategy. Senior management needs to
develop a picture of the future that is relatively easy to communicate and appeals to
employees. The vision of an organisation cannot be understood unless it is
communicated, and it cannot be communicated unless it is defined in a coherent way.
Strategy maps provide a tool to do just that. The strategy maps provide a visual
representation of the company’s objectives and show the relationships among them that
drive the organisation’s performance. Once created by senior management, the top-level
BSC strategy map energises people and serves as a strong communication vehicle that
leadership can use to help everyone to understand the key objectives and how they
interrelate.
Support
The BSC is intended to change the behaviour of employees and they are required to make
it work. Support is thus needed to help them to play a key part in the implementation
process. Leaders have to have a strong empathy with the people they are trying to inspire,
and the imagination to see things from their point of view. Supporting needs a base of
respect, trust and integrity. Too often, implementation actions flounder because
employees are not given adequate support. To accomplish change requires constantly
overcoming resistance, fighting against inertia and stagnation, and reaffirming the
validity of the implementation.
Buy-in
Buy-in is essential, as this enables the employees to work in a coordinated, collaborative
fashion toward the company’s set goals and objectives. Employees must accept the BSC.
It is a universal truth that people will not accept a change if they do not believe in it or
have a chance to influence it. Increased understanding by employees leads them to take
the initiative to do things that were unexpected and to put extra effort into their daily
work. Employees will not make sacrifices, even if they are unhappy with the status quo,
unless they believe that useful change is possible.
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Linkage of BSC to other Management Systems
Kaplan and Norton105 emphasise the importance of linking the BSC to other management
systems. They state that without such connections, the effort devoted to developing the
BSC may not deliver tangible benefits. The BSC, for example, provides the vehicle to
introduce strategic thinking into the business planning process, but such a linkage must
be made explicit.
Timing / Work Load
The integration of implementation actions needs to be phased in with the existing
workload. For implementation to occur smoothly, consideration must be paid to the
priority and sequencing of tasks and steps. This is where senior management involvement
and commitment are illustrated. They must be sold on the BSC and fully understand why
they should treat it as their highest priority allowing other ‘fires’ which could divert
attention to ‘burn themselves out’.
Monitoring
Change is such a complex process that there is a danger of drifting away from the original
objectives, whether by following the wrong path, taking too long or costing too much.
Monitoring the process is therefore essential. This commitment means that the senior
management team set aside time regularly to perform exercises, including giving
feedback, being available to employees, and removing obstacles to enable the
implementation to stay on track. In the first half of a transformation, no organisation has
the momentum, power, or time to get rid of all obstacles. But the big ones must be
confronted and removed. Action is essential both to empower others and to maintain the
credibility of the change effort as a whole.
105 Kaplan, Robert S; Norton, David P (2000) Having Trouble with Your Strategy? Then Map It, Harvard Business Review, September/October.
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Prototyping
Piloting the BSC before its implementation enables the organisation to minimise the risk
of going ahead in unfavourable circumstances and allows organisations to customise the
project to suit the organisation’s needs. Ultimately, the use of prototyping speeds up the
introduction of the BSC.
Communication
Ongoing communication before and throughout the implementation process is crucial for
success. Without credible communication, and a lot of it, the hearts and minds of the
people are not captured. Communication should not only be about informing people, but
should also be there to generate an explosion of ideas that will enhance and accelerate the
process. Communication about change must follow strict procedures if it is not to
degenerate into a negative influence, but at the same time the need for information and
self-expression must not be stifled.
7.2 Research Interviews
Eight in-depth, semi-structured interviews were conducted amongst members of the
regional management team of the Western Cape region of OMPFA. They were exposed
to the implementation of the BSC during 2002, as the RGM was instrumental in piloting
the BSC in his region. The management team comprises of 13 members. The fact that I
interviewed eight of these members therefore represents a big enough sample that will
represent the views of the team. A detailed transcript of each interview is contained in
Appendix G.
Due to the comprehensive, and at times lengthy, responses to the interview questions, I
have summarised my findings from the interviews herewith along the same headings as
that used for the literature review above.
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Senior Management Commitment
The BSC implementation is very alive in the region, which the management team
attributed to the commitment and involvement of the RGM, i.e. senior management
commitment. The RGM continually reinforces the BSC in all discussions with his
management team. The fact that the RGM was personally convinced about the merits of
the tool, and drove its implementation as a personal objective to be achieved in the
region, was a major driving force in getting the BSC implemented in the region.
Education and Training
The RGM spent considerable time before implementing the BSC to ensure that the
management team understood what the BSC was about. After handing prior reading
material to his management team, the RGM shared the theory on the BSC at an
introductory/conceptualising one-day work session with them. This was followed up by a
series of practical workshops over a three-month period. Two of the members attended a
conference on the BSC during February 2002 and they both indicated that their buy-in
increased as a result of attending the conference. Management team members further felt
that it was important for employees to understand the BSC at a conceptual level and that
training and reading material was needed to help employees with this.
Solving the Representation Crisis
Do not over-complicate the BSC concept and do not make it an academic exercise, i.e.
keep it simple. It was clear that members remembered concepts that were explained by
the use of visual tools and analogies, as many of them quoted the ‘aeroplane cockpit’
analogy in my interviews with them. The visual aids that the RGM used during his initial
workshop were highlighted as a good way of helping people to get to grips with the BSC
concept. During this workshop, the RGM first gave the team some material to read
relating to conditions in Zimbabwe and then divided them into groups to address issues
related to the reading. The brief was that each group were consultants for a different
perspective relating to the article and they had to come up with ideas on how to improve
on their respective perspective. It was actually a BSC exercise, and after the feedback
everyone understood the systemic nature of the perspectives. You could not fix one thing
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without affecting or impacting upon another. In this way the RGM linked it to the BSC
and showed that everything had to work together (cause-and-effect).
Support
The RGM needs to identify people to act as his allies to help him with the preparatory
and ‘selling’ function of the BSC, and who can then act as a support for him during the
process. The Area Managers need ongoing support as they grapple with the new concept
and the ‘support team’ can assist by helping them to keep the initiative on track. The
members caution, however, that the support team should do exactly that, support – and
not ‘police’ the effort. Each of the four support forum members was allocated a BSC
quadrant, which they specifically champion and support.
I have gathered from the interviews that the Area Managers have struggled to implement
the concept lower down to their respective management teams, and support here will go a
long way in ensuring this.
Buy-in
Buy-in from the management team is essential to ensure that the BSC is implemented in
the region. Although the Area Managers are struggling to take the BSC down to the next
management level, it would appear, in retrospect, that it was essential to first get the Area
Managers’ buy-in, which occurred during the first year. They are now in a better position
to take it further.
The fact that the Area Managers were exposed to a series of workshops and worked
through the BSC perspectives themselves helped them to gain a better understanding and
buy-in of the concept.
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Linkage of BSC to other Management Systems
The BSC objectives, initiatives, measures and targets were linked to the Area Managers’
performance contracts and forms part of the quarterly performance discussions. This
works well and aids in keeping the BSC alive in the region, and makes it that much more
real to Area Managers.
Linkage of the BSC to other management systems is further highlighted by the fact that
the marketing plans were done in isolation to the BSC objectives and created frustration
for the Area Managers, as they felt that it was additional work. This should not be done
separately, but should all form part of the BSC.
Timing / Work Load
The fact that the region is trying to implement the BSC in isolation to OMPFA did not
work. The pressure is on performance, and it is as if senior management keep on falling
back on back-up plans when results are not there in a specific week. They do not stick to
and measure the longer-term plans as agreed for the BSC. Area Managers also felt that
the daily pressure on them makes it difficult for them to drive the BSC on a daily basis.
This is something that senior management needs to be aware of, so that they can help in
removing obstacles that may jeopardise the BSC implementation.
Monitoring
Monitoring is important. The ‘trick’ is for the RGM to read each Area Manager’s buy-in
separately, and to work with individual managers to help their understanding and get their
personal commitment to the implementation and continuing use of the tool. This was not
adequately done by the RGM on a consistent basis with each manager.
The BSC allowed the Area Manager to contract in terms of the action plans needed to
deliver the results. The fact that new action plans have to be developed on an ad hoc basis
during the year creates an obstacle and dilutes the focus on the BSC. This is something
that senior management needs to be aware of, so that they can help in removing obstacles
that may jeopardise the BSC implementation.
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Prototyping
One of the interviewees felt that a strong case could be made for a pilot of the BSC. I did
not ask any questions relating to piloting the BSC, and this was information volunteered
by one of the participants.
Communication
Communication about the BSC, on an ongoing basis, is very important to keep the BSC
alive in the region. The RGM attempts to talk about the BSC in all his interactions with
the Area Managers. He includes it as an agenda point at his regional meetings, where
feedback on all four quadrants is required. It is important to keep on talking about the
BSC, and not only to do so during performance reviews.
Additional findings from the interviews
The time that it takes to develop the buy-in to the BSC should not be underestimated.
Enough time must be allocated for debate and to work through every quadrant’s
objectives, initiatives, measures and targets. It is important to persevere and to allow for
behaviour to be changed over time. The BSC implementation should be a process of
co-creation where everything should be developed collectively. This takes time. In the
region’s case, this happened over a five-month period, during which at least six one-day
workshops were held.
7.3 Expansion and Modification of the Causal Loop Diagram Representing the
Concern
I revisited the CLD developed during the problem formulation stage (refer Figure 7 in
Chapter 4). I used the insights collected from the literature review and the research
interviews and re-examined the CLD. With this knowledge I looked at ways to break the
causal connections between variables, whether I could add additional links, or whether I
should change certain links in an attempt to design a systemic solution to my research
question. All of this had to link back to my overall objective of developing a framework
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to help OMPFA to prepare for the implementation of the BSC. My thinking process is
illustrated in Figure 21 and discussed below.
Figure 21 – My Thinking Process for Designing Systemic Interventions
Ongoing communication throughout the preparation for the implementation process was
highlighted as an essential aspect for success. This aspect therefore forms the underlying
boundary within which my model has to be executed.
Shared understanding remains a very important element to achieve. This was the driving
force in my original CLD for the problem formulation. In my solution, senior
management commitment becomes the driving force, as it is their responsibility to ensure
the required shared understanding and the ultimate successful implementation of the
BSC. Shared understanding remains very important and a new reinforcement loop
consisting of the education and training, solving the representation crisis, support and
empowerment elements will ensure this shared understanding. Senior management can
Lack ofempowermentInsufficient shared
understanding
Impact of time ofimplementation
Responsibilitynot takenInadequate controls
and monitoring
Proper testing notdone
Adequacy of trainingand support
Distrust exist
R
Split trainingand support to form two
separate variables
Change this to monitoring and
its position in the loop
Change this variable to prototyping
Although trust is very
important, this will be a result of the steps that lead to Shared Understanding Change this
to Buy-in and illustrate it
clearly as the outcome
This variable is renamed to
Timing
This variable will be moved into the loop to
enhance Shared Understanding
Add the variables: Senior Management Commitment, Training, Solving the
Representation Crisis, Linkage to other Management Systems and Support to a
loop that results in Shared Understanding
The preparation framework for implementation should happen within a
system of ongoing communication
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further contribute to the shared understanding by allowing for prototyping and linking the
BSC to other management systems. All of the steps that lead to shared understanding will
enhance the trust that exists between senior management and staff, and will therefore be a
direct result of these actions. I therefore do not include trust as a separate variable in my
solution model.
In addition, senior management should also ensure regular monitoring and they should
assist in the timing of the implementation by considering the existing workload and
removing obstacles where necessary.
All of the above will enhance the ultimate buy-in for implementing the BSC that will be
achieved in the organisation.
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SECTION 5: THE EVALUATION
This section provides an evaluation of the paper. The reflection in Chapter 9 was done in
terms of its relevance, utility, validity and ethical content. I commented on limitations of
this research project and provided recommendations for further work in this area.
Chapter 10 offers a personal reflection on the learning that I have experienced as a
result of doing this dissertation.
SECTION 1
THE SITUATION
Chapter 2: OMPFA – An Organisational context
SECTION 2
THE CONCERN & QUESTION
Chapter 3: Research Design Chapter 4: Structuring the
Problem & Shaping theResearch Question
SECTION 3
THE ANSWER
Chapter 5: Research Synthesis
SECTION 4
THE RATIONALE
Chapter 6: Literature ReviewChapter 7: Designing a Solution
SECTION 5
THE EVALUATION
Chapter 8: Conclusion and Recommendations
Chapter 9: Personal Reflection
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Chapter 8 CONCLUSION AND RECOMMENDATIONS
This was probably one of the more difficult parts of dissertation for me, because I had to
evaluate my own work, which is not an easy thing to do.
As explained in my methodology (refer to Chapter 3), I followed a systems approach in
this research study to do both my problem structuring and to design a solution. It is
difficult, if not impossible to objectively approach problems when you immerse yourself
into the situation. Following a systems approach helped me to manage this to a large
degree. The systems approach I followed is but one of many systems approaches.
Jackson106 summarises Checkland’s elements that he sees as necessary in any piece of
research as follows: firstly, there must be a ‘framework of ideas’ in which knowledge
about the situation being researched is expressed. Secondly, there is a methodology in
which the framework of ideas is embodied. The third element is the area of concern. In
systems thinking we usually refer to the intervention in some real-world concern, as was
the case in my research. Jackson refers to my type of research as being governed by the
area of concern rather than the framework of ideas. My research was organised around a
particular area of concern (refer Chapter 4) and is generated for those who will find the
outcomes useful, i.e. the management of OMPFA. It is important to realise that because
this type of research revolved around a real-world area of concern, it would have been
unlikely that any single discipline would have been able to provide a suitable framework
of ideas. The data I used and the different areas of literature I reviewed illustrated this
point. Jackson refers to this as being ‘transdisciplinary’. It is therefore important to
realise that the framework of ideas that I employed may only be relevant to my area of
application, although I believe that other readers may benefit from my insights.
106 Jackson, Michael C (2000) Systems approaches to management, Kluwer Academic / Plenum Publishers, p12-14.
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Theory is defined as ‘a formulation regarding the cause and effect relationships between
two or more variables, which may or may not have been tested’. Saunders et al states that
this definition of theory demonstrates that ‘theory’ has a specific meaning. It refers to
situations where if A is introduced, B will be the consequence.107 My solution model in
Chapter 6 therefore offers a theory to OMPFA that they can apply for preparing the
business for the implementation of the BSC. It is important to mention that my theory has
not yet been tested.
The evaluation part of the SCQARE framework is a quality check for the framework.
It consists of four parts by which a contribution might be evaluated: Relevance, Utility,
Validity and Ethics.108 Each of these parts is discussed herewith.
8.1 Relevance
This part refers to the relevance of the concern (Section 2) in the situation (Section 1).
My concern deals with the issues that have led to the implementation of processes and
systems in OMPFA not being as successful as one would want them to be. The data I
collected to construct my concern was obtained over the last two years (2001 – 2002).
The data was obtained from the action research learning projects, position papers and
critical incidents I was involved in. All of these were undertaken whilst I was in OMPFA,
and done within OMPFA, or with OMPFA as reference. My work experiences within
OMPFA also contributed to additional data I collected. The situation sketches the
organisational context of OMPFA, highlighting what the organisation has been through in
the recent past, its structure, its people, its business and its longer-term goals. I am
therefore confident that the concern is relevant in the situation.
107 Saunders, Dr Mark; Lewis, Philip; Thornhill, Dr Adrian (1997) Research Methods for Business Students, Pitman Publishing, p24. 108 Ryan, Tom (2001) SCQARE: A framework for sensemaking, Working paper tr95/3 rev 6.
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8.2 Utility
This part asks the question whether the answer (Section 4) will satisfactorily deal with the
concern (Section 2). The formulation of the concern gave me the opportunity to
understand what factors were causing the implementation of processes and systems in
OMPFA to be less satisfactory than desired. It provided me with insights and an
understanding of these factors, which I could relate to my research question, to enable me
to design a framework that will assist OMPFA to successfully implement the BSC. The
answer built on the model that was first designed during the problem formulation phase,
and will, when applied, assist OMPFA to be better equipped and have a better chance of
successfully implementing the BSC. The proposed framework will also serve the same
purpose with any other process or system implementation.
8.3 Validity
This part asks the question whether the rationale (Section 5) provides a valid argument
for the answer (Section 4). The rationale contains the extensive literature review I
conducted; a summary of data collected via the interviews, and illustrates my thinking
process in designing a solution to my research question. The literature review did not
only include material which has been written about the BSC implementation, but also
took into account material on strategy implementation and change implementation. It
therefore looked beyond just the BSC. This was an attempt from my side to combine
learnings from other fields to strengthen my model. I have also shown how I expanded on
the original model from my problem formulation and how the literature review and
interview data aided me in doing so. The rationale I provided therefore validates the
answer.
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8.4 Ethics
This part asks the question whether the answer (Section 4) is an ethical option given the
context provided in the situation (Section 1). The answer deals with preparing people for
change, with the ultimate focus on gaining shared understanding and their buy-in. Given
the fact that OMPFA has not been all that successful with implementing new processes
and systems, I believe that the answer is an ethical option, as it will improve the chances
for successful implementation. Gaining buy-in will take people ‘with’ the organisation,
ultimately resulting in everyone benefiting from a business that operates better.
8.5 Limitations / Constraints
An inherent limitation of qualitative research, using semi-structured interviews, is the
inability to make generalisations about the entire population, where the research is based
on small numbers, as is the case in this study.
Time and resource constraints precluded me from performing a greater number of
interviews outside of my own organisation. It precluded the possibility of corroborating
interviewee responses by conducting further individual or focus group interviews. I am
aware that a number of other ‘bigger’ organisations in South Africa have implemented or
are in the process of implementing the BSC. These companies include:
• ABSA
• Bell Equipment Ltd.
• Clover SA
• De Beers Consolidated Mines
• Debtech
• Development Bank of Southern Africa
• Engen
• Samancor
The opportunity to conduct interviews with members of these organisations may have
brought additional insights to my research.
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8.6 Suggestions for further Research
Apart from the limitations mentioned above, my solution model offers a broad approach.
It mentions each of the variables, and its interrelationships, that could prepare OMPFA
better for the successful implementation of the BSC. Each of the variables by itself could
warrant further research.
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Chapter 9 PERSONAL REFLECTION
“It is better to foresee even without certainty than not to foresee at all.” Henri Poincare in The Foundations of Science
This was the first time that I have done a dissertation, and although it was very
time-consuming, I found it an enriching experience. The fact that I was dedicated and
spent time on it almost every day helped me to complete the research project. It reminds
me of the analogy; if you want to eat an elephant, start doing it bit by bit, otherwise it
might just look too much of a daunting task.
Charles Handy109 states that real learning starts by answering a question or solving a
problem. The questions range from the immense to the trivial, but when we have no
questions we need no answers, while other people’s questions are soon forgotten. Handy
says that it is best to think of learning as a wheel divided into four parts, as illustrated in
Figure 22.
Handy specifically draws learning as a wheel. One set of questions, duly answered and
tested and reflected upon, leads to another. It is thus an ongoing process. This was exactly
my experience. I started with a question, or you could call it a basic and simple guiding
reason, as I put it in Chapter 3. I was of the opinion that implementation in general (i.e.
of new processes and programmes), was not as successful as it should be in OMPFA.
This guiding reason later led to a more precise question (Chapter 5), for which I wanted
to find an answer.
109 Handy, Charles (1989) Age of unreason, Business Books.
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I realised that what Kurt April said about our basic assumptions was true.110 We all bring
basic assumptions with us – our own mental models or pictures – about how the world
operates, our own self-interests, etc. Our basic assumptions are developed from our early
childhood days, our life experiences and socialising, our peers and family, our education
and our reading.
Figure 22 – Handy’s wheel of learning
I therefore had to learn to suspend judgement and to trust the process that I set out in
Chapter 3. This helped me a great deal. In my attempt to find an answer to my question, I
gained a great deal of knowledge. I did this by revisiting all the material and experiences
I have been involved in during the last two years. I also conducted a formal literature
review, did interviews and learned more from having conversations with fellow students
and colleagues.
110 April, Kurt (2001) Module 1 EMBA3 class handout.
QUESTION
THEORY
TEST
REFLECTION
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Although my solution model has not been formally tested, it was tested in the sense that I
applied a systems approach. I stated in Chapter 3 that the systems approach significantly
improves the relevance of the ideas that emerged from my inquiry into the situation.
It helped me formulate valid arguments to support my claims.
As a result of the process that I followed, there was a great deal of reflection during the
course of this project in order to arrive at the model that I am proposing to be the answer
to my research question. I found this part extremely stimulating, but true to Handy’s
wheel of learning, it has led to many other questions. Each of the variables in the solution
model could become a study for further research in its own right, which will lead to more
exploration on my part in the years that lie ahead.
During the course of the research project, I had to be careful not to be distracted from the
research question by all the other interesting questions that arose. I referred to Chenail in
Chapter 3. He states that qualitative researchers need to “plumb up” their projects. By this
he means that there should be a basic and simple reason for doing a study, and that the
researcher should constantly make sure that he is still addressing this reason, i.e. “plumb
up”. I took this advice seriously, and it certainly helped me to stay on track.
Although I believe that my research has not really produced any new ideas in terms of
preparing companies for the implementation of new systems such as the BSC, I do
believe that my insights have produced a model that will focus management’s attention
once more on the important elements to achieve success. None of the literature on the
BSC implementation had a precise model for dealing with the change that is associated
with this type of implementation. I attempted to sweep in multiple views on this topic,
and therefore trust that my model will assist the management of OMPFA. I hope that they
will find it useful during 2003 as they approach the implementation of the BSC.
In closing, I can draw a correlation between my model and golf. I am a keen golfer, hence
this analogy. Most weekend golfers rush to the golf course on a Saturday, arrive at the
first tee just in time to tee off, do one or two warm-up stretches, and then tee up for the
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first shot. They are then extremely amazed if they do not hit a perfect shot, and cannot
understand how the professionals do it so well. What they do not, or do not want to
realise, is that the professionals prepare extensively for the game. They first go to the
practice tee and hit about 100 balls before they even consider approaching the first tee.
Gary Player once remarked, when asked why he is so ‘lucky’ on the golf course, that:
“the more I practice, the luckier I get”. I do believe that this will be the same with the
BSC implementation in OMPFA. The better we prepare, and prepare the staff, the better
our chances of a successful implementation.
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REFERENCES
A systems approach to problem structuring and solving, Class handout by Professor Tom Ryan. Aaltonen, Petri; Ikävalko, Heini (2002) Implementing strategies successfully, Integrated Manufacturing Systems, Volume 13, Issue 6. Al-Ghamdi, Salem M (1998) Obstacles to successful implementation of strategic decisions: the British experience, European Business Review, Volume 98, Issue 6. Amaratunga Dilanthi, Baldry David (2001) Case study methodology as a means of theory building: performance measurement in facilities management organisations, Work Study, Volume 50, Number 3. April, Kurt (2001) Module 1 EMBA3 class handout. Armenakis, Achilles A; Harris, Stanley G; Mossholder, Kevin W (2000) Organizational Development and Transformation: Managing Effective Change, McGraw-Hill Higher Education. Beer, M; Eisenstat, RA (1990) Why change programs don’t produce change, Harvard Business Review, November / December, Volume 68, Issue 6. Berkman, Eric (2002) How to use the Balanced Scorecard, CIO Magazine, May 15. Briel, Piet: OMPFA Area Manager, Tygerberg area. Burger, Christa: OMPFA Manager Regional Support Centre, Western Cape region. Chenail, Robert J (1997) Keeping things plumb in qualitative research, The Qualitative Report, Volume 3, Number 3, September. Collins, Jim (2001) Good to great, Random House Business Books. Conger, Jay A; Sprietzer, Gretchen M; Lawler III, Edward E (1999) The Leader’s Change Handbook: An Essential Guide to Setting Direction and Talking Action, Jossey-Bass, San Francisco. Covey, Stephen R (1989) The seven habits of highly effective people, Simon and Schuster. Covey, Stephen R (1990) Principled centered leadership, Summit Books.
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Creating and learning from a critical incident log, author unknown. Class handout from Professor Tom Ryan. Day, Julian (2002) The Design of Collaborative Projects, EMBA3 class handout. De Vos, Wim: OMPFA Human Resources Consultant, Western Cape region. Espejo, Raul; Harnden, R (1989) The value system model: interpretations and applications of Stafford Beer’s VSM, John Wiley & Sons Ltd. Gephart, Robert (1998) Paradigms and research methods, Qualitative Research, 46(4). Grundy, Tony (1993) Implementing strategic change: a practical guide for business, Kogan Page Limited. Hall, Dr. Mary-Jo (2000) Bridging the Distance, Program Manager, November / December, Volume 29, Issue 6. Handy, Charles (1989) Age of unreason, Business Books. Heifetz, Ronald A; Laurie, Donald L (2001) The work of leadership, Harvard Business Review, December, Volume 79, Issue 11. http://writing.colostate.edu/references/research/observe/com4a4.cfm http://www.aqr.org.uk/doclib/document.shtml?doc=philly.desai.01-07-2002.oyster Hussey, David E (1996) The implementation challenge, John Wiley and sons. Jablonski, Joseph R (1991) Implementing total quality management: an overview, Pfeiffer & Company. Jackson, Michael C (2000) Systems approaches to management, Kluwer Academic / Plenum Publishers. Kaplan, Robert S; Norton, David P (1992) The Balanced Scorecard – Measures that Drive Performance, Harvard Business Review, January/February, Volume 70, Issue 1. Kaplan, Robert S; Norton, David P (1993) Putting the Balanced Scorecard to Work, Harvard Business Review, September/October, Volume 7, Issue 5. Kaplan, Robert S; Norton, David P (1996) Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review, January/February, Volume 74, Issue 1. Kaplan, Robert S; Norton, David P (1996) The Balanced Scorecard – Translating Strategy into Action, First Edition, Harvard School Press, Boston.
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Kaplan, Robert S; Norton, David P (2000) Having Trouble with Your Strategy? Then Map It, Harvard Business Review, September/October. Kaplan, Robert S; Norton, David P (2001) Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part II, Accounting Horizons, June, Volume 15, Issue 2. Kaplan, Robert S; Norton, David P (2001) Market impact, People Management, 25 November, Volume 7, Issue 21. Keller, Gerald; Warrack, Brian (2000) Statistics for management and economic, Duxbury Thomson Learning. Klagge, Jay (1998) The empowerment squeeze – views from the middle management position, Journal of Management Development, Volume 17, Number 8. Kotter, John P (1996) Leading Change, Harvard Business School Press. Laudon, Kenneth C; Laudon, Jane P (1996) Management information systems: a new approach to organization and technology, Prentice Hall, Inc, Fifth edition. Leedy, Paul D (1993) Practical Research: Planning and Design, Macmillan Publishing Company. Levitt, Theodore (2002) Creativity is not enough, Harvard Business Review, August, Volume 80, Issue 8. Lewis, Marianne W (2000) Exploring paradox: toward a more comprehensive guide, Academy of Management Review, October, Volume 25, Issue 4. Magee, Bryan (1998) The story of philosophy, Dorling Kindersley Limited. McCunn, Paul (1998) The Balanced Scorecard…the eleventh commandment, Management Accounting: Magazine for Charted Management Accountants, December, Volume 76, Issue 11. Mitroff, Ian (1998) Smart thinking for crazy times, Barrett-Koehler. Mostert, Marius: OMPFA Area Manager, Durbanville area. Mouton, Johann; Marais, HC (1988) Basic concepts in the methodology of the social sciences, HSRC Publishers. Nakan, Lee: OMPFA Regional General Manager, Western Cape region. Nickols, Fred (1998) Empowerment: The emperor’s new clothes, Harvard Business Review, November/December, Volume 76, Issue 6.
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Obeng, Eddie (1996) Putting strategy to work, the blue print for transforming ideas into action, Pitman Publishing. Parmente, David (2002) The Balanced Scorecard, New Zealand Management, May, Volume 49, Issue 4. Pendlebury, John; Grouard, Benoit; Meston, Francis (1998) The Ten Keys to Successful Change Management, John Wiley & Sons Ltd. Professor Charles Handy, Michael Shanks Memorial Lecture, Delivered to the society on Wednesday 5 December 1990. Ramgoolam, Avi: OMPFA Area Manager, Constantia Berg area. Rankin, Jim (1998) Building trust – the essential ingredient in partnering to improve business results, Empowerment in Organizations, Volume 6, Number 5. Remenyi D, Williams B, Money A, Swartz E (1998) Doing research in business and management, Sage Publications, London. Ryan, Neal (1996) A comparison of three approaches to programme implementation, International Journal of Public Sector Management, Volume 9, Issue 4. Ryan, Tom (2001) SCQARE: A framework for sensemaking, Working paper tr95/3 rev 6. Saunders, Dr Mark; Lewis, Philip; Thornhill, Dr Adrian (1997) Research Methods for Business Students, Pitman Publishing. Sekiguchi, Tomoki. Theory development, Source unknown. Schutte, FG (2000) Integrated management systems – strategy formulation and implementation, Heinemann Publishers (Pty) Ltd. Simons, Robert (1995) Control in an age of empowerment, Harvard Business Review, March/April, Volume 73, Issue 2. Smit, Albe: OMPFA Manager Regional Sales Administration, Western Cape region. Strauss A, Corbin J (1994) Grounded theory methodology: an overview. In handbook of qualitative research, Sage, London. Stroh, Peter; Miller, Wynee W (1994) Learning to thrive on paradox, Training and Development, September, Volume 48, Issue 9. Systal interactive management, Class handout by Professor Tom Ryan.
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Systems tools, Class handout by Professor Tom Ryan. The nature of qualitative inquiry, Source unknown, Class handout from Professor Tom Ryan. Theoretical sensitivity, Source unknown, Class handout by Professor Tom Ryan. Thompson, Arthur A; Strickland, AJ (1980) Strategy formulation and implementation: tasks of the general manager, Fourth Edition, Richard D Irwin, Inc. Validity: the best available approximation to the truth of a given proposition, inference, or conclusion. Source unknown, Class handout from Professor Tom Ryan. Van Eck, Rudolph: OMPFA Area Manager, Milnerton area. Venkatraman, Ganesh; Gering, Michael (2000) The Balanced Scorecard, Ivey Business Journal, January / February, Volume 64, Issue 3. Vrakking, Willem J (1995) The implementation game, Journal of Organizational Change Management, Volume 08, Issue 3. Waring, Alan (1996) Practical systems thinking, International Thomson Business Press. Wefers, Marcus, Strategic Enterprise Management with the Balanced Scorecard, http://www.sap.com. Weick, Karl; Sutcliffe, Kathleen (2001) Managing the Unexpected, Jossey Bass. Wells, Denise L, Strategic Management for Senior Leaders: A Handbook for Implementation, TQLO Publication number 96-03, www.balancedscorecard.org/files/managebk.pdf. Wetlaufer, Suzy (2001) To tell the truth, Harvard Business Review, June, Volume 79, Issue 6. Wrigh, Cheryl. Health Development (SA, National Physical Activity Program Director), Class handout from Professor Tom Ryan. www.metrus.com/products/scorecards.html Zikmund, William G (1997) Business Research Methods, The Dryden Press.
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APPENDICES
Appendix A - Affinity Diagram
The AD allows one to organise a large number of ideas and issues in order to summarise
natural groupings among them, to understand the essence of the problem, and its
breakthrough solutions.111 Each of the groupings was labelled in terms of a description
for the grouping.
Trigger Question In the context of how successful the implementation of processes and programs have been in my business unit, which lessons belong together?
111 Systems tools, Class handout by Professor Tom Ryan.
No. Observation / insight Category Label
6
There is a lack of empowerment in OMPFA, resulting in management not taking responsibility for making implementation happen. A lack of empowerment exist.
9
Each region should be autonomous in its own right. Each region must therefore exhibit all the features of a viable system itself. This will ensure that RGMs take responsibility for delivery in his / her own region. A lack of empowerment exist.
30
Mindlessness also occurs because people cannot do anything about what they see. People with a limited action repertoire often impose old categories to classify what they see and mislabel unfamiliar new problems as familiar old ones, so that they can act on them. A lack of empowerment exist.
No. Observation / insight Category Label
10
No proper training was provided to RGMs on how they should do forecasting and what factors they should consider, resulting in part that the implementation never took place. Adequacy of training and support?
45
Guidelines, although first round, were too vague. A structured step-by-step guide could have saved more time and less frustration. Adequacy of training and support?
46 At first the guideline document seemed to be very Adequacy of training and support?
47The support from head office team and MRM made it (the guideline document) simple. Adequacy of training and support?
49I do feel though that more training could have been given before the material was distributed. Adequacy of training and support?
52Guidelines, although very detailed I think it was too theoretical for the majority of the area managers. Adequacy of training and support?
59The advisers complained of a complete overload of information without enough time to internalise. Adequacy of training and support?
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No. Observation / insight Category Label
5
OMPFA was grappling with the effects of implementing the change program because there was still a high level of resistance and distrust in the new model amongst the old guard. Distrust exist.
16
The project highlighted a need to develop trust among the team members to ensure that each member feel valued in the team and contribute to the success of the team. Distrust exist.
21
A good flow of information and ideas is essential to the effectiveness of teams. Status symbols need to be removed in order for communication to be effective. In our team status seemed to play a big role, resulting in the improvements not being implemented successfully. Distrust exist.
No. Observation / insight Category Label
1
My project plan that I devised for myself during the Scenario Planning project ensured that I stayed on track during the project and helped me achieve my deadline and finalised product. Impact of timing of implementation.
4
Implementing Project 500 during the OMPFA restructuring and sales process implementation was bad – the timing of implementing projects and changes need to be considered very carefully so that focus is not diluted. Impact of timing of implementation.
7
The time from when a decision is made to when the actual implementation takes place is too long. This results in focus being lost. Impact of timing of implementation.
8
The implementation of the forecasting process did not take place. The reason is that other work pressures took over and no one took responsibility for this process. Impact of timing of implementation.
12
The forecasting process was not implemented at the time because too many other initiatives were being implemented. Timing of planned implementations is important to ensure the necessary focus and attention to Impact of timing of implementation.
13
Other work pressures affected the implementation of the improvements we wanted to make to our group’s effectiveness. The pressure of delivery outweighed the benefit of the proposed improvements. Impact of timing of implementation.
40
By allowing time for the MIS staff to get use to and use the extraction tool more and more ultimately assisted us to fully implement the use of this tool and to move away Impact of timing of implementation.
No. Observation / insight Category Label
50
The program should have been tested properly as this caused a lot of frustration with the software not working properly. Proper testing not done.
53 Battled with programs until it got updated. (Testing) Proper testing not done.
54
Much frustration until we got the right programs. Wasted time and effort working with incorrect software and programs. (Testing) Proper testing not done.
55
Being exposed to the process for the first time was a problem hence a number of mistakes had to be fixed up with lots of spreadsheets and versions became confusing. (Testing) Proper testing not done.
58Testing of the template should be done before sending it out to areas. Proper testing not done.
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No. Observation / insight Category Label
2
Management controls were identified as a weakness during the SWOT exercise. This could be a possible reason why implementation in OMPFA is not always Inadequate controls and monitoring.
20
To ensure successful implementation it is necessary to build in monitoring. Successes and failures need to be reviewed and you need to learn from them. Our team did not do this, resulting in our good intentions failing. Inadequate controls and monitoring.
25
The performance of the technical staff was not monitored, resulting in no consequences management. From a client perspective there appear to be little or no consequence management for the operators. Inadequate controls and monitoring.
27
Performance management principles need to be utilised. This was one of the differences identified between the reference scenario and the idealised design as a result of applying the interactive planning approach. Inadequate controls and monitoring.
35
We decided to have a check every day to monitor the progress on the implementation of using the new analysing tool, because we wanted to ensure that people utilise the new tool for their own benefit, as this would ultimately save them time. Inadequate controls and monitoring.
60
The areas where P3 was integrated successfully were the areas where the regional, area and sales managers believed in the program and drove the process. (Commitment, management control) Inadequate controls and monitoring.
61 Structured follow-up is needed. Inadequate controls and monitoring.
No. Observation / insight Category Label
18
The project highlighted a need to ensure that the team stay focussed on the task at hand and that the team follow a planned approach to ensure that it stays on track. Responsibility not taken.
23
Ann strikes me as a person who has too many deliverables under her control and is therefore not focussing on the implementation of our procedures. Responsibility not taken.
24
Meike do not take responsibility for the implementation of her part of the process. When things go wrong she blames other parts of the process for the apparent failure. Responsibility not taken.
37
Marketing did not take ownership of implementing the marketing plans we wanted for the areas. This resulted in the marketing plans not being implemented last year. Responsibility not taken.
39
Refer observation number 38. Getting all the participants to understand their role in the process helped me to obtain their commitment to implementing the business planning process. Responsibility not taken.
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No. Observation / insight Category Label
3
In a perfect ‘world’ it would have worked better to involve everyone at every stage. This should ideally be done in the form of a formal scenario-learning workshop, maybe spanning over a week. This would have prevented some of my subjectivity in parts and ensured that everyone had a shared understanding. Insufficient shared understanding.
11
It is important that Peter’s view and drive is aligned to that of the RGMs to ensure that the implementation delivers the results that is expected. Insufficient shared understanding.
14A lack of clear team objectives allowed differences in motivations, attitudes, values and roles to fester. Insufficient shared understanding.
15Poor communication allowed differences in motivations, attitudes, values and roles to fester. Insufficient shared understanding.
17
The project highlighted a need to rationalise a holistic team approach and team identity with common goals and objectives, so that every team member understands and can be clear on what the team is about. Insufficient shared understanding.
19
Until objectives are agreed they have little force. When a team possesses a clearly stated set of objectives to which all members feel committed, it has achieved a great deal. Our team never really agreed on shared objectives, resulting in the improvements not being implemented. Insufficient shared understanding.
22
It would appear that ISD staff does not understand our business and why the reporting of the figures are so important to us. In my view the maintenance of the system is just another job for them, and as long as they complete it at any time, they are happy that they have done what they should. Insufficient shared understanding.
32Managers indicated that the work process is not relatively well understood and easily comprehensible. Insufficient shared understanding.
36
It turned out that the technical staff did not really understand our business and the effect their actions had on our users, our reporting and us. Insufficient shared understanding.
38
I wanted to get the other participants to understand the importance of their role in implementing the business planning process for the year. I did not want a similar experience as the year before where everything had to be rushed at the last minute. Insufficient shared understanding.
41
I allocated a task to one of my staff members via the department head. The result of what was delivered was not what I was hoping to get. I realised that I did not express myself well enough and that I should have tested for understanding. Insufficient shared understanding.
42
I provided the holistic picture for Gary that gave him context to understand my view. We build the foundation for a sound relationship going forward and ensured that we shared common assumptions and would implement targets that both would be happy with. Insufficient shared understanding.
43
25% of respondents feel that they frequently encounter situations where policy is unclear to them, and 58% believe that they are confronted with rules and procedures of which nobody seems to know the purpose. Insufficient shared understanding.
44
Communication has been identified as a problem area, specifically from staff to top management, but also from top management to staff. More than 40% of respondents believe that they do not receive necessary information from Head Office in time to perform their duties. Insufficient shared understanding.
48It was a bit difficult initially to understand what was required. Insufficient shared understanding.
51Initially very confused and unsure of the steps and outcome. (Understanding) Insufficient shared understanding.
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No. Observation / insight Category Label
26
The organisational culture existing among the operators in CSC may impact on the motivation of the operators. The routine nature of the jobs they do may lead to boredom and therefore the lack of focus on the Moderate level of mindfulness exists.
28
Area managers have a moderate awareness level of mindfulness. They seem to have a moderate sense of what needs to go right and a moderate understanding of the factors that might signal that things are going right. Moderate level of mindfulness exists.
29
Managers may ignore discrepant clues and may cut corners. (Discipline) This may be part of the reason why the new sales process is not fully implemented. Moderate level of mindfulness exists.
31Managers have a low tendency to doubt, to inquire or to update themselves. (Culture) Moderate level of mindfulness exists.
33
Managers have a moderate pre-occupation with success rather than a fully mindful pre-occupation with failure. (Culture) Moderate level of mindfulness exists.
34
Managers have a moderate potential to avoid simplification. (Culture) They have a sense that people do not listen to them and that their views are dismissed. Sceptics are not appreciated. Moderate level of mindfulness exists.
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Appendix B – Interrelationship digraph
The ID can be seen as a systematic identification of targets and means. It reflects the
relationship between each of the category labels and helps one to see which issues are
drivers and which are outcomes.112
112 Systems tools, Class handout by Professor Tom Ryan.
Lack ofempowerment
Adequacy oftraining and
support
Distrust exist
Impact of time ofimplementation
Inadequate controlsand monitoring
Insufficient sharedunderstanding
Moderate level ofmindfulness
Proper testingnot done
Responsibilitynot taken
In: 1, Out: 4
In: 1, Out: 4.
In: 3, Out: 0
In: 1, Out:2
In: 5, Out:1In: 1, Out:5
In: 2, Out:2
In: 1, Out:2.
In: 6, Out:1
Driver
Outcome
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Appendix C – The Mindfulness Audit
One of the greatest challenges any business organisation faces is dealing with the
unexpected. It is suspected that the inability to manage the unexpected lays behind a
number of the pressing problems that executives face. Problems, after all, occur either
when something that we expect to happen fails to happen or something that we did not
expect to happen does happen. For example, consider the chief concerns of today’s
business professionals reported in the first annual (2000) University of Michigan
Business School Pressing Problems survey. The second most frequent problem
executives reported was “thinking and planning strategically”; the third most pressing
problem was “maintaining a high-performance climate.” Both these problems can be seen
as variants from dealing with unexpected events. (Weick, 2001)
As part of formulating the mess, I conducted a mindfulness audit in the Western Cape
region. I forwarded the mindfulness audit questionnaire that was developed by Karl
Weick to all the managers (eleven managers) in the Western Cape region. Seven
managers completed the questionnaire, which represents 63.6% of the population,
indicating that my sample is big enough to determine the level of mindfulness in the
Western Cape region. I used the aggregate of their answers to each of the questions to
determine the level of mindfulness in the Western Cape region. My findings are reflected
below.
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1. Establishing the current situation.
1. Starting Point of Your Firm’s Mindfulness: How well does each of the following statements characterize your organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. There is an organisation-wide sense of susceptibility to the unexpected. 2.29 2. Everyone feels accountable for reliability. 1.86 3. Leaders pay as much attention to managing unexpected events as they do to
achieving formal organisational goals. 1.86
4. People at all levels of our organisation value quality. 1.71 5. We spend time identifying how our activities could potentially harm our
organisation, employees, our customers, other interested parties, and the environment at large.
1.71
6. We pay attention to when and why our employees, our customers, or other interested parties might feel peeved or disenfranchised from our organisation.
1.71
7. There is widespread agreement among the firm’s members on what we don’t want to go wrong.
2.14
8. There is widespread agreement among the firm’s members about how things could go wrong.
2.29
9. Total Score 15.57 It would appear that Western Cape region have a moderate awareness level of
mindfulness. The managers seem to have a moderate sense of what needs to go right and
an understanding of the factors that might signal that things are going right.
2. Developing mindfulness and avoiding mindlessness
2. Assessing Your Firm’s Vulnerability to Mindlessness: How well does each of the following statements describe your work unit, department, or organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. During a normal week, exceptions rarely arise in our work. 1.86 2. The situations, problems, or issues we encounter are similar from day to day 1.86 3. People in this organisation have trouble getting all the information they need
to do their work. 2.14
4. People are expected to perform their jobs in a particular way without deviations.
2.14
5. People often work under severe production pressures (i.e., time, costs, growth, or profits).
3.00
6. Pressures often lead people to cut corners. 2.29
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7. There are incentives in the work environment to hide mistakes 1.57 8. People have little discretion to take actions to resolve unexpected problems
are they arise. 2.00
9. Many people lack the skills and expertise they need to act on the unexpected problems that arise.
2.14
10. People rarely speak up to test assumptions but issues under discussion. 2.14 11. If you make a mistake, it is often held against you. 2.57 12. It is difficult to ask others for help 1.86 Total score 25.57 Scoring: Add the numbers. IF you score higher than 24, the current potential for mindlessness is high and you should be actively considering how you can immediately improve the capability for mindfulness. If you score between 14 and 24, the potential for mindlessness is moderate. Scores lower than 14 suggest a strong capacity for mindfulness.
The score from this section suggest that the Western Cape region current potential for
mindlessness is high and that they should be actively consider how they can immediately
improve their capability for mindfulness. This score suggest that the managers ignore
discrepant clues and may cut corners. Mindlessness also occurs when people cannot do
anything about what they see. People with a limited action repertoire often impose old
categories to classify what they see and mislabel unfamiliar new problems as familiar old
ones, so they can act on them. When these various sources of mindlessness are combined,
they form a picture of an organisation that knows little about itself, may not realise that
its knowledge is impoverished and persists in doing traditional monitoring that produces
few updates.
3. The need for mindfulness
3. Assessing Your Firm’s Tendency Toward Doubt, Inquiry, and Updating: Respond agree or disagree with the following statements about your work unit, department, or organisation. Audit Questions Score Doubt
1. People around here are quick to deny problems when they show up. agree 2. When someone voices a doubt or concern, people are quick to dismiss it. disagree 3. When something unexpected occurs, we rarely try to figure out why things
didn’t go as we expected. agree
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Inquiry
1. When something unexpected happens, the information is not widely shared. agree 2. When unexpected problems arise, those involved rarely spend time to debrief
what they saw and heard prior to the incident. agree
3. When things don’t go as expected, people rarely try to uncover what they assumed in the first place.
agree
4. It is uncommon to check our assumptions against reality. agree Updating
1. If things don’t go as we expected, it is uncommon for people to update their original assumptions.
agree
2. It is uncommon to revise our practices and procedures to incorporate revised assumptions and understandings.
disagree
Agree Total 7 Disagree Total 2 Scoring: Count the number of agree and disagree responses. The greater the number of agree responses, the less tendency to doubt, inquire, or update; hence, a greater potential for mindlessness. Use these questions to begin thinking of ways to improve your capacity for mindfulness.
A total of seven agrees suggest a low tendency of doubt, to inquire or to update
themselves by managers in the Western Cape region. This points to a greater potential for
mindlessness. The rudiments of mindfulness are a willingness to doubt that one’s current
picture is complete, a willingness to inquire further to remove some of those doubts, and
a desire to update situational awareness on a continuing basis. If there appears to be a
shortfall in these rudiments, as is the case here, these need to given a more conspicuous
and valued place in meeting agendas, performance appraisals, mentoring, socialising, and
briefings. This way people will get used to these activities, get better at doing them, and
be able to connect the accomplishment of these activities to improved outcomes.
4. Inquiring into mindfulness in your organisation
4. Assessing where Mindfulness is most Required: Respond agree or disagree with the following statements about your work unit, department or organisation. Audit Questions Score 1. Work is accomplished through a number of sequential steps carried out in a
linear fashion. agree
2. Feedback and information on what is happening is direct and simply verified. disagree 3. The work process is relatively well understood and easily comprehensible disagree 4. The work process does not require co-ordinated action by numerous
mechanical components and operators. disagree
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5. We can directly observe all the components in our “production” process. disagree 6. Our work process is such that it is possible to put the system on a stand-by
mode, and delays are possible because unfinished products or services can sit for a while or be stored without damage.
disagree
7. There are many ways to produce our product or service, items can be re-routed, schedules changed, and parts can be added later if delays or shortages occur.
disagree
8. There is a lot of slack in our work process and it does not require much precision; things don’t have to be done right the first time because they can always be repeated.
disagree
9. There is a lot of opportunity to improvise when things to wrong. agree Total Agrees 2 Total Disagrees 7 Scoring: Count the number of agree and disagree responses. The greater the number of disagree responses, the more your system in interactively complex and tightly coupled, and therefore the more important it is be mindful. Use these questions to begin thinking of ways to improve your capacity for mindfulness.
A total of seven disagrees point to the fact that the system is interactively complex and
tightly coupled, and therefore points to the importance for mindfulness.
5. Preoccupation with failure
5. Assessing Your Firm’s Pre-occupation with Failure: How well does each of the following statements describe your work unit, department or organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. We focus more on our failures than our successes. 2.29 2. We regard close calls and near misses as a kind of failure that reveals
potential danger rather than as evidence of our success and ability to avoid disaster.
2.14
3. We treat near misses and errors as information about the health of our system and try to learn from them.
1.86
4. WE often update our procedures after experiencing a close call or near miss to incorporate our new experience and enriched understanding.
1.86
5. We make it hard for people to hide mistakes of any kind. 1.71 6. People are inclined to report mistakes that have significant consequences
even if nobody notices. 2.00
7. Managers seek out and encourage bad news 1.14 8. People feel free to talk to superiors about problems. 1.71 9. People are rewarded if they spot problems, mistakes, errors, or failures. 1.00
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Total score 15.71 Scoring: Add the numbers, if you score lower than 11, you are preoccupied with success and should be actively considering how you can immediately improve your focus on failure. If you score between 11 and 18, you have a moderate pre-occupation with success rather than a fully mindful pre-occupation with failure. Scores higher than 18 suggest a healthy pre-occupation with failure and a strong capacity for mindfulness.
A score of 15.71 suggest a moderate pre-occupation with success rather than a fully
mindful pre-occupation with failure. An organisation that is ignorant about failure, its
location, genesis, and trajectory, is less mindful than it could be. You can help the system
be more alert to its failure, and you can do something about how the system handles
failure and failure reporting. You can, for instance, help call attention to failure, articulate
the consequences of continued denial of failure, uncover what happens to people when
they report failure, seek similar failures elsewhere and benchmark how people manage
them, spot the potential for failures in apparent successes, propose measures to detect
failure systematically, and transmit memorable stories that preserve the lessons learned
from failure.
6. Reluctance to simplify
6. Assessing Your Firm’s Reluctance to Simplify: How well does each of the following statements describe your work unit, department or organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. People around here take nothing for granted. 1.71 2. Questioning is encouraged. 2.00 3. We strive to challenge the status quo. 1.71 4. People in this organisation feel free to bring up problems and tough issues. 1.71 5. People generally prolong their analysis to better grasp the nature of the
problems that come up. 2.29
6. People are encouraged to express different views of the world. 2.00 7. People listen carefully; it is rare that anyone’s view is dismissed. 1.57 8. People are not shot down for surfacing information that could interrupt
operations. 2.00
9. When something unexpected happens, people are more concerned with listening and conducting a complete analysis of the situation than with advocating for their view.
1.71
10. We appreciate sceptics. 1.14
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11. People demonstrate trust for each other. 1.86 12. People show a great deal of mutual respect for each other. 2.14 Total score 21.84 Scoring: Add the numbers, if you score higher than 24, the potential to avoid simplification is strong. If you score between 14 and 24, the potential to avoid simplification is moderate. Scores lower than 14 suggest that you should actively be considering how you could immediately improve your capabilities to prevent simplification in order to improve your firm’s capability for mindfulness.
The score of 21.84 indicate that the potential to avoid simplification in the Western Cape
region is moderate. When you seek out the reluctance to simplify in your organisation,
you want to find how the system socialises people to make fewer assumptions, notice
more, and ignore less. Requisite variety is encouraged through diverse checks and
balances that come from adversarial reviews, committees and meetings, frequent job
rotation and retraining, and the selection of employees with non-typical prior experience.
Divergence in viewpoints provides the group with a broader set of assumptions and
sensitivity to a greater variety of inputs, both of which are the antithesis of simplification.
7. Sensitivity to operations
7. Assessing Your Firm’s Sensitivity to Operations: Respond agree or disagree with the following statements about your organisation. Audit Questions Score 1. On a day-to-day basis, there is an ongoing presence of someone who is
paying attention to what is happening and is readily available for consultation if something unexpected arises.
agree
2. Should problems occur, someone with the authority to act is always accessible and available, especially to people in the front lines.
disagree
3. Supervisors readily pitch in whenever necessary. agree 4. During an average day, people come into enough contact with each other to
build a clear picture of the current situation. agree
5. People are always looking for feedback about things that aren’t going right. agree 6. People are familiar with operations beyond one’s own job. disagree 7. We have access to resources if unexpected surprises crop up. agree 8. Managers constantly monitor workloads and are able to obtain additional
resources if the workload starts to be excessive. disagree
Agree Total 5 Disagree Total 3 Scoring: Count the number of agree and disagree responses. The greater the number of disagree responses, the less the sensitivity to operations. Use these questions to begin thinking of ways to improve your sensitivity to operations and capacity for mindfulness.
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There seems to be a moderate sensitivity to operations. Being sensitive to operations is a
unique way to correct failures of foresight. A comprehensive view of current operations
enables organisations to catch most of the small errors or mistakes that would normally
go unnoticed and are left to cumulate. By keeping errors from accumulating, the
readiness to make large numbers of small adjustments reduces the likelihood that any one
error will become aligned with another and interacts with it in ways not previously
anticipated.
8. Commitment to resilience
8. Assessing your Firm’s Commitment to Resilience: How well do each of the following statements describe your work unit, department or organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. Forecasting and predicting the future is not that important here. 1.57 2. Resources are continually devoted to training and re-training people on the
properties and technical system. 2.57
3. People have more than enough training and experience for the kind of work they have to do.
2.14
4. This organisation is actively concerned with developing people’s skills and knowledge.
2.43
5. This organisation encourages challenging stretch assignments. 2.57 6. People around here are known for their ability to use their knowledge in
novel ways. 2.00
7. There is a concern with building people’s competence and response repertoires.
2.14
8. People have a number of informal contacts that they sometimes use to solve problems.
2.57
9. People learn from their mistakes. 1.86 10. People are able to rely on others. 2.14 Total Score 21.99 Scoring: Add the numbers. If you score higher than 20, the commitment to resilience is strong. If you score between 12 and 20, the commitment to resilience is moderate. Scores lower than 12 suggest that you should actively consider how you could immediately begin building resilience and the capacity for mindfulness.
The score of 21.99 indicate a strong commitment to resilience in the Western Cape
region. Resilience is about bouncing back from errors and about coping with surprises in
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the moment. The capability for resilience, even if it is not exercised, aids diagnosis and
detection of unwarranted simplifications and a cumulative trend in a series of errors.
9. Deference to expertise
9. Assessing the Deference to Expertise in Your Firm: How well does each of the following statements describe your work unit, department, or organisation? Enter next to each item below the number that corresponds with your conclusion: 1 = not at all; 2 = to some extent; 3 = a great deal Audit Questions Score 1. People are committed to doing their job well. 2.14 2. People respect the nature of one another’s job activities 2.00 3. If something out of the ordinary happens, people know who has the expertise
to response. 2.14
4. People in this organisation value expertise and experience over hierarchical rank.
2.00
5. In this organisation, the people most qualified to make decisions make them. 2.14 6. If something unexpected occurs, the most highly qualified people, regardless
of rank, make the decisions. 1.86
7. People typically “own” a problem until it is resolved. 1.71 8. It is generally easy for us to obtain expert assistance when something comes up that we don’t know how to handle.
1.86
Total Score 15.85 Scoring: Add the numbers. If you score higher than 16 the deference to expertise is strong. If you score between 10 and 16, the deference to expertise is moderate. Scores lower than 10 suggest that you should actively think of ways to improve the deference to expertise and capacity for mindfulness.
The deference to expertise in the Western Cape region is moderate, as a score of 15.85
suggest. Mindful organisations enact a more flexible decision-making structure when
something goes wrong. What they do is to loosen the designation of who the “important”
decision maker is in order to allow decision making and problems to migrate to the
person or team with expertise in that choice-problem combination.
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Appendix D – Research Interview Guide
BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
GUIDE:
NAME:…………………………………………
POSITION:……………………………………
DATE:…………………………………………
1. When and how did you first hear about the Balanced Scorecard?
2. What did you understand the Balanced Scorecard’s purpose to be?
3. How did you gain this understanding?
4. What, if any, particular value did you believe the Balanced Scorecard would add?
5. What priority does the Balanced Scorecard enjoy in your region?
6. Who is driving the Balanced Scorecard in the region?
7. How alive is the Balanced Scorecard in the region?
8. What is causing this? (Refer question 7)
9. Could you describe the process by which your Balanced Scorecard strategy was
formulated and implemented in the region?
10. What, in your opinion was good about this and would you like to see incorporated
in an implementation framework for OMPFA? (Refer question 9)
11. What barriers or obstacles did you experience in terms of the implementation
process? (What did not work for you?)
12. What, if anything, have you done to communicate the Balanced Scorecard effort
and content?
13. Which audience and why? (Refer question 12)
14. Please share any additional experiences, observations etc. that you would like to
that you believe would enhance the implementation of the Balanced Scorecard in
other regions?
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Appendix E – Interview Confirmation Cover Letter
(Interviewee) (Designation) Dear (Interviewee) INTERVIEW: BALANCED SCORECARD IMPLEMENTATION First of all, thank you for agreeing to meet with me. I am conducting research into the possible implementation of the Balanced Scorecard in Old Mutual Personal Financial Advice (OMPFA). My research objective is to develop an implementation framework for the Balanced Scorecard that could be used by OMPFA should it decide to implement the measurement tool. I am conducting the research to meet the final requirement of the Executive MBA program, and trust that the findings will be valuable to OMPFA too. This now brings me to you. You have been exposed to elements of the Balanced Scorecard during the last year in your region and my aim is to discuss various aspects of the implementation of the tool in your region. I intend to use the knowledge that I gain from our interview in developing an implementation framework that all in OMPFA can benefit from. Please note that my research is of a qualitative nature, implying open questions to you, whilst I will do the analysis and generalisations of all the data. OMPFA senior management has approved my research in this area, and I plan to protect people and our organisation through disguise and anonymity. I promise confidentiality as required, so please feel free to share useful information and indicate if the source of such information needs to be withheld. I may be in touch with you again after the interview, to clarify or gain further insights based on your experience. I look forward to interviewing you, and thank you again for agreeing to assist me. Kind regards Gim Victor Executive MBA Class 2001/02
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Appendix F – Linking the BSC to OMPFA’s business processes
Figure 23 below illustrates how the BSC can be linked to OMPFA’s existing business
planning process, which is indicated by the five steps in the figure.
Figure 23 – Illustration of how the BSC can be linked to the business planning cycle
The BSC fits the five stage strategic planning process of OMPFA well. It links to the
second step where the BSC can be utilised to generate the strategies. For this purpose the
strategy map can be used. The BSC also fits well to steps four and five of the business
planning cycle. The BSC can be utilised as vehicle to implement the plan, and the
existing MIS system, Checkered Flag, can be used to reflect the results against the agreed
measures and targets.
Figure 24 indicates how the BSC, after linking it to the business planning process, can be
linked to performance contracts and performance management.
PFA Strategic Business Planning
Cycle
PFA Strategic Business Planning
Cycle
1. Positioning
2.Generate Strategy
Options
3.EvaluateOptions
Choose Best
4.Plan &
Implement
5.Performance
Monitoring
CheckeredFlag
Strategy Map
BSC
BSC
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Figure 24 – Illustration of when to link the BSC to performance management
1. Strategic Business Planning
Later – Include Performance ManagementLater – Include Performance Management
2. Performance Monitoring
3. Individual Performance Contracts
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Appendix G – Transcripts of Interviews
BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Albe Smit
POSITION: Regional Sales Support Manager – Western Cape
DATE: 3 December 2002
1. When and how did you first hear about the Balanced Scorecard?
The RGM introduced the concept to Albe. After the introduction by the RGM, the
support forum members started to look at the BSC and talked about it, particularly as
each of their roles pertained to the different quadrants.
2. What did you understand the Balanced Scorecard’s purpose to be?
Albe’s understanding evolved as the regional team started to unpack the quadrants and
started talking about the objectives. In his opinion the BSC is a measurement tool to
ensure that the business’s objectives are achieved.
3. How did you gain this understanding?
This understanding was gained through many debates and discussion that took place
around the BSC concept.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Albe beliefs that the BSC adds value in two areas. The first is that measurement becomes
clear and that the measures are clear to everyone. The second is that the BSC creates a
common understanding of what it is the business is trying to achieve. Ultimately, the
BSC makes the management of people easier.
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5. What priority does the Balanced Scorecard enjoy in your region?
At an Area Manager level the priority is high. A lot of energy went into this. The priority
is not so high at a Sales Manager and Sales Support Manager level.
6. Who is driving the Balanced Scorecard in the region?
The RGM.
7. How alive is the Balanced Scorecard in the region?
Refer question 5 answer.
8. What is causing this? (Refer question 7)
Refer to question 5 answer. Albe feels that in retrospect it might be a good thing that the
initial focus was only at an Area Manager level. They have bought in well, and it might
be easier now to take it down another level.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
The RGM presented a model of the BSC to the regional management team and discussed
the theory around the concept with the team. This was followed with practical work
sessions, where the team was divided into teams, each to deal with a different quadrant
and then to report back to the bigger team. The work groups developed the objectives,
initiatives, measures and targets for their respective quadrants and then reported back to
the bigger team. At these sessions the objectives, initiatives, measures and targets were
debated, discussed and amended until consensus was achieved. This took place over four
work sessions (4 different days with enough time in between them to develop the content
for debate).
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10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
Albe feels strongly that one should not underestimate the time that is required to develop
the buy-in of the BSC. Robust debate is needed to allow for this, with many sessions that
need to take place. It is important to let people work things out for themselves between
the work sessions. Link people’s strengths to the relating quadrants when they get
allocated to work in groups on the quadrants objectives, initiatives, measures and targets.
11. What barriers or obstacles did you experience in terms of the implementation
process? (What did not work for you?)
This was difficult for Albe to answer, as the BSC did not directly pertain to him.
12. What, if anything, have you done to communicate the Balanced Scorecard effort
and content?
Albe recons that he could have been more involved to get the Area Managers to take the
concept down to their Sales Managers.
13. Which audience and why? (Refer question 12)
Area Managers, Regional Support Forum, Sales Managers and Sales Support Managers.
Buy-in from the Area Managers was essential and in retrospect it may have been good
that the region focussed on them first during the first year. The idea will now be to take it
further down to the Sales Managers and Sales Support Managers.
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14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
- Enough time must be allocated for debate and to work through every quadrant’s
objective, initiatives, measures and targets. Let people first understand the concept.
- Develop a structured presentation pack for the RGMs to use.
- Do not over complicate the concept or tool. Keep it simple.
- The RGM need to identify people to act as his alias to help him with the preparatory
and selling / implementation function of the BSC. Members from the support forum
can be considered.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Avi Ramgoolam
POSITION: Area Manager – Constantia Berg Area
DATE: 19 November 2002
1. When and how did you first hear about the Balanced Scorecard?
Avi’s daughter is studying a master’s degree. He heard about the BSC from her the first
time.
The RGM subsequently handed him a book on the topic and introduced him formally to
the concept during a regional workshop.
2. What did you understand the Balanced Scorecard’s purpose to be?
It would allow a manager to integrate the different perspectives of business more
efficiently. Avi quoted the aeroplane analogy where a passenger steps into the cockpit
only to find one dial. The pilot mentioned that it measured altitude. The story goes that
you cannot fly a plane only by knowing the altitude. The BSC is similar to business and
is an all-encompassing tool for measurement. You cannot run a business on only one
measure.
3. How did you gain this understanding?
By reading the book and by attending the power point presentation of the RGM on the
topic.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Avi believed that it would offer a more scientific / structured approach to managing
business. He also thought that it would align action plans and allow Area Managers to
think the action plans through more clearly.
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5. What priority does the Balanced Scorecard enjoy in your region?
A high priority. The RGM attempts to use the BSC in all his interactions with the Area
Manager. The BSC is a regular item on agendas for regional meetings.
The RGMs measurement of the Area Manager is done according to the BSC, which also
forms part of the Area Manager’s performance contract. The PA is done on the four
quadrants.
6. Who is driving the Balanced Scorecard in the region?
The RGM.
7. How alive is the Balanced Scorecard in the region?
Avi believe that it is still very alive. The RGM includes the BSC as an agenda point on
his regional meetings, where feedback on all four quadrants are required. A champion has
also been appointed for each quadrant. This person need to give feedback at the regional
meetings on the measures and progress related to their quadrant.
8. What is causing this? (Refer question 7)
As mentioned above. The four people appointed as the champions are all members of the
regional support team, and the quadrants fall well within each of their area of
responsibility.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
The RGM first OMPFA’s strategic thrusts and them shared some theory on the BSC at a
one-day workshop with the Area Managers. This was an introductory / conceptualising
session.
At subsequent workshops the RGM divided the Area Managers into four groups. Each
group were allocated a perspective of the BSC. The Area Managers spent time on their
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respective perspectives and devised measures for it over a period of time. The groups
reconvened for a later session where each group presented their measures. These were
then debated till everyone agreed on the appropriate measures.
10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
The process as mentioned above was good. The BSC has also provided a good
framework for doing a performance appraisal on the Area Manager with which Avi is
more comfortable.
11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
- Area Managers need more buy-in.
- Still too much emphasis on one quadrant in favour of others. The weighting between
the quadrants need to be established and managed.
- Avi do not really know how to roll the BSC down to his Sales Managers.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Avi found it necessary to share the BSC with his Sales Managers, but he did not gain the
necessary buy-in from them. He struggled to let them see the BSC as he was seeing it.
Avi has tried to make the BSC concept part of his performance review sessions with his
Sales Managers. They discuss people, process and finance measures on a weekly basis,
and discuss customer issues on a monthly basis.
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13. Which audience and why? (Refer question 12)
As mentioned above. Avi’s struggled to get his Sales Managers to understand the BSC
and to get the same value from it as he was hoping to get from it.
14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
- It should not be an academic exercise.
- Employees need to understand the BSC at a conceptual level. Training, reading
material etc need to be provided.
- There is a strong case for a pilot of the BSC.
- The marketing action plans that was done felt like it was done in isolation of the BSC
perspectives. This should not be done separately, but should all form part of the BSC.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Christa Burger
POSITION: Regional Sales Support Manager – Western Cape
DATE: 4 December 2002
1. When and how did you first hear about the Balanced Scorecard?
The RGM introduced the concept to the regional management team earlier in the year.
2. What did you understand the Balanced Scorecard’s purpose to be?
The BSC is a systematic performance management tool, where you can ensure that you
do not view business from one perspective, but also cover other bases. It helps you
understand what it is you have to do in each quadrant to achieve the objectives that the
business has set for themselves.
3. How did you gain this understanding?
Christa gained this understanding from the workshops that the RGM did in the region.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
She believed that the BSC would enable the regional management to keep focus on the
‘right’ things.
5. What priority does the Balanced Scorecard enjoy in your region?
The BSC enjoys high priority. The RGM utilise it in the performance management of the
Area Managers. Christa also uses it in her dealings and discussions with the Area
Managers relating to training support.
6. Who is driving the Balanced Scorecard in the region?
The RGM.
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7. How alive is the Balanced Scorecard in the region?
Refer question 5 answer. In addition, the RGM continuously reinforces the BSC with the
Support Forum team in all discussions with them. The BSC is also discussed at regional
management meetings.
8. What is causing this? (Refer question 7)
Refer answer to question 7.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
The RGM first did his homework in terms of what he has observed in the region. He then
proceeded to give the regional management team a theoretical presentation of what the
BSC entails, followed by a practical exercise in which the managers had to take part. The
learnings from working through the practical example were then related to the region.
The Area Managers were grouped into four groups, each of which worked with a
different quadrant. These groups were tasked to develop the objectives, initiatives,
measures and targets for their respective quadrant. A great deal of time was spend by the
groups to work on this between workshops. The findings of each group was then
presented to the bigger group at the workshop sessions, at which time the finding were
debated and adapted as agreed by the bigger group. This helped to establish buy-in and
ownership.
10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
- The attempt to gain the ownership and buy-in at an Area Manager level was good.
- There was a benefit in the whole process for the RSC as many of the aspects
discussed gelled well with what the RSC wants to achieve.
- The RGM keeps talking about the BSC. The BSC has also brought focus to the
management meetings.
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11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
- The alignment with levels below the Area Manager was not achieved.
- The RGM pushed hard for the BSC to be implemented, which was needed. The RGM
should however also check on the detail that happens in the background to ensure that
the BSC principles are applied.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Christa use the BSC deliverables in her discussions with the Area Managers as this
relates to the objectives of the different quadrants.
13. Which audience and why? (Refer question 12)
Area Managers and the RSC staff. By linking the deliverables of the BSC to the support
of the RSC staff will contribute to the service rendered to the region.
14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
Area Managers may still fail to see the bigger picture and only do the BSC because of
their performance contracts. One needs to persevere and allow for behaviour to be
changed over time.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Lee Nakan
POSITION: Regional General Manager – Western Cape
DATE: 3 December 2002
1. When and how did you first hear about the Balanced Scorecard?
Lee read the book by Kaplan and Norton in 2000. He is an avid reader of management
literature and so got to read this book.
2. What did you understand the Balanced Scorecard’s purpose to be?
It is a performance management system that covers four brought quadrants, focussing on
financial and non-financial measures.
3. How did you gain this understanding?
Lee first obtained the knowledge through theory and then through practice. He was
responsible for implementing the BSC in the region.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
He believed the BSC to be a holistic approach to management instead of just having a
purely financial focus. It includes people and process measures and needs to include
customer measures. Lee implemented it at a tactical and operational level. Formal
performance reviews takes place on a quarterly basis, based on the BSC. Lee states that
this has helped him to do the simplest performance appraisals he has ever done. Everyone
knows what is expected and how they have done against the targets. Short-term results
are beginning to show in terms of people and process measures.
5. What priority does the Balanced Scorecard enjoy in your region?
The BSC enjoys a very high focus and forms the basis for performance reviews.
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6. Who is driving the Balanced Scorecard in the region?
The RGM. Lee feels that this is important, otherwise the BSC would not be there, and
everything would revert back to financial measures.
7. How alive is the Balanced Scorecard in the region?
Refer question 5 answer.
8. What is causing this? (Refer question 7)
The reason for the BSC being alive in the region is the fact that it has been integrated as
the performance management system of choice in the region.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
Lee first introduced the BSC to the Area Managers in the form of theoretical
presentation. This was followed by a series of workshops to explore what the ideal
measures should be. A great deal of debate took place over a period of time (four 1 day
sessions) to reach agreement on the quadrant objectives, initiatives, measures and targets.
10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
Lee states that the BSC implementation should be a process of co creation where
everything should be developed collectively. A great deal of time should be allowed for
debate (possibly 3 to 4 different sessions). Workshops and work groups are needed to
work through the objectives, initiatives, measures and targets for themselves. This
resulted in the performance reviews being fairly easy.
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11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
The fact that Lee did not deploy it down to a Sales Manager level is seen by him as
something that could be taken into account. The RGM need to drive this. Consequence
management is essential at the Sales Manager level, as the measures will not be linked to
the remuneration.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Lee first created a clear context for the Area Managers regarding the benefits of the BSC.
The BSC was the operationalised and is now used on a day-to-day basis.
13. Which audience and why? (Refer question 12)
The BSC was communicated to Area Managers and the support forum members.
14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced Scorecard in
other regions?
- The RGM needs a guiding coalition to help him with the implementation. For this
purpose he should task experts in his / her region relating to the people, finance,
process and customer quadrants. Area Managers can then be grouped according to
their respective strengths to these groups to help design the objectives, initiatives,
measures and targets for each quadrant. This could be done via a number of workshop
sessions.
- It is very important that the top executive must champion the BSC implementation in
the organisation.
- Consistency is important. Keep to the targets agreed up front in that particular year.
This could be reviewed on an annual basis, although Lee beliefs that many of the
objectives, initiatives and measures will remain the same – the targets may be
adjusted.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Marius Mostert
POSITION: Area Manager – Durbanville Area
DATE: 20 November 2002
1. When and how did you first hear about the Balanced Scorecard?
Marius first read about the concept in the first book by Kaplan and Norton. He learned
more about the BSC from the presentation done in the region by the RGM.
2. What did you understand the Balanced Scorecard’s purpose to be?
Marius understood the BSC as a tool that provides a structure in terms of how to manage
one’s business.
He explained it in terms of an analogy relating to a motor vehicle’s wheel alignment. You
need to have your wheel alignment of your motor vehicle done. When the car then pulls
left, you need to do something to get it fixed. At periodic intervals one would check on
the motor vehicle’s alignment.
3. How did you gain this understanding?
From the RGM’s presentation and the fact that the Area Managers themselves worked
through the four quadrants of the BSC and devised the measures for these.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Marius believed that the BSC would provide a measurement tool to see how he was
doing against the vision, strategy and goals set for his area. In his opinion the return and
dividend of these actions will only be seen over the long-term. He believed the BSC was
not a quick fix instrument.
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5. What priority does the Balanced Scorecard enjoy in your region?
The BSC is not part enough of his daily work. Marius believes that it should become part
of the culture in the organisation.
Contracting has been done with the Area Managers for the performance contract in terms
of the quadrants of the BSC. For Marius results remain important (referring to the
production / financial perspective), whilst all the other perspectives link into this
ultimately.
6. Who is driving the Balanced Scorecard in the region?
The RGM and the regional management team.
7. How alive is the Balanced Scorecard in the region?
It is not as alive as it could be. According to Marius the Area Manager must keep it alive,
therefore it is very important to obtain the buy-in to the BSC at an Area Manager level.
8. What is causing this? (Refer question 7)
The daily pressures on the Area Manager makes it difficult for him to drive the BSC on a
daily basis.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
- An initial workshop was conducted by the RGM to launch the concept.
- Area Managers were grouped in four, where each group took responsibility for a
quadrant of the BSC.
- Each group presented the work they did on their quadrant back to the big group,
eliciting a discussion and finally reaching consensus on the measures.
- Each group then had to document the final decision on their respective quadrant. This
was then circulated to the rest of the regional management team.
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10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
- The initial workshop the RGM held and the visual aids he used to introduce the BSC.
- The involvement of the Area Managers in the exercises to develop the measures for
the respective quadrants. This took place over a three-month period.
- The buy-in that was obtained from each Area Manager.
- Giving guidelines in terms of the generic objectives from the strategy is important. It
is then up to the regions and areas to devise measures and action plans for achieving
these objectives.
11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
- The concept needs to be driven from the top by the EGM.
- Initially the appointed champions for each of the quadrants were ‘policing’ the
measures with the Area Managers. Although Marius believes that they should play a
support role, the interaction should take place between the RGM and the Area
Managers.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Marius shared his performance contract and the BSC concept with his Sales Managers
and Sales Support Managers.
13. Which audience and why? (Refer question 12)
Marius shared it with his Sales Managers and Sales Support Managers because he
believes that you need their buy-in to help create a culture in which the BSC can succeed.
They need to understand what the Area Manager needs to achieve and their actions
should therefore be aligned to what the Area Manager needs to achieve.
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14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
- The RGM himself must drive and discuss the BSC measures directly with the Area
Managers. This should not be done via the support team.
- More of a launch has to take place to introduce the BSC: visuals needed. The launch
needs more of a marketing effort. You need to get enthusiasm and excitement from
your employees.
- The BSC is nothing new. It is a very simplistic tool, and should be conveyed to be
that.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Piet Briel
POSITION: Area Manager – Tygerberg Area
DATE: 19 November 2002
1. When and how did you first hear about the Balanced Scorecard?
Piet first learned about the BSC at the Stellenbosch Business School whilst doing his
MBA. A fellow student gave a 15-minute presentation on the topic.
The RGM presented the BSC to the region, which made Piet believe that he is thinking
about business in a different way to the traditional RGM. The RGM got all the Area
Managers together for a day initially. At first he gave them material to read relating to
conditions in Zimbabwe and then divided them into groups to address issues related to
the reading. The brief was that each group was consultants for a different perspective
relating to the article and they had to come up with ideas on how to improve on their
respective perspective. It was actually a BSC exercise, and after the feedback everyone
understood the systemic nature of the perspectives. You could not fix one thing without
effecting or impacting another. In this way he linked it to the BSC and showed that
everything had to work together (cause-and-effect).
2. What did you understand the Balanced Scorecard’s purpose to be?
At first Piet saw it as a performance management tool, but now he understands it more as
a manner to implement strategy.
3. How did you gain this understanding?
Piet did his own theoretical research.
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4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Piet believed that it rightfully focussed more on people. In his opinion OMPFA has for
long only been an organisation that focussed on figures / immediate results. The value
will be on the longer-term view of how people impact on the results and what OMPFA
will need to do to achieve the desired figures.
In addition Piet believe that the BSC will enhance participation, involving people, getting
buy-in and commitment from employees towards the strategy.
5. What priority does the Balanced Scorecard enjoy in your region?
When the RGM first started with the BSC it had a great deal of priority. It has weakened
since then. The RGM still use the BSC to conduct performance appraisal sessions with
the Area Managers.
The EGM was not yet committed to the BSC at the time that the RGM launched it in the
region. The way that the RGM are therefore managed by the EGM does not involve the
BSC approach. This feels like the region now almost has the BSC on the one side and
business as usual on the other side.
6. Who is driving the Balanced Scorecard in the region?
The RGM.
7. How alive is the Balanced Scorecard in the region?
Not as alive as it should be. The region is running the risk of failing with the
implementation. The Area Managers have also not really taken the BSC down to the next
level. The difficulty lies in how to take it down to the Sales Managers. When Piet
discussed the BSC with them, they asked whether they should now do the BSC in
addition to their business as usual.
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8. What is causing this? (Refer question 7)
The RGM must understand the BSC and then live it. It will be of no value if the RGMs
say it is the right thing to do and then they do not follow through.
It is crucial that incentives are aligned with the BSC.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
- A first workshop was conducted.
- Follow-up workshops took place.
- The Area Managers were divided into groups according to the perspectives of the
BSC. They worked in their groups to devise measures for their respective
perspectives. These were presented to the big group and discussions took place as a
result of this to gain consensus of what measures were required.
10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
The exposure given to the BSC to the Area Managers as a result of the workshops was
good. The fact that Area Managers worked through the perspectives themselves helped
them gain a better understanding and buy-in.
11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
The Area Managers did not follow the same process with their Sales Managers.
The fact that the region is trying to implement the BSC in isolation to OMPFA did not
work. The pressure is on performance and it is as if management keep on falling back on
back-up plans when results are not there in a specific week. They do not stick to and
measure the longer-term plans as agreed for the BSC.
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12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Piet had a session with his Sales Managers where he showed and shared the Area
Manager BSC and performance contract with them.
Piet felt that he should have made his performance contract the Sales Managers
responsibility in the BSC format and that he should have cascaded it down.
13. Which audience and why? (Refer question 12)
The Sales Managers and the Sales Support Manager. The BSC should be cascaded down
to all levels.
14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced Scorecard in
other regions?
- Peter (the EGM) should continuously have to ask for feedback in the BSC way.
Guidelines should be provided to the regions in terms of in what format the feedback
is required. It should always be linked to the BSC.
- The RGM should prescribe to the Area Manager the format that he wants the Area
Managers to utilise to conduct the BSC sessions with their respective Sales Managers.
(The number of sessions required and the content thereof.)
- What you measure is what you get.
- Do not only follow up measures at PA time. Do it on an ongoing basis and keep on
talking the BSC language.
- The BSC must be driven from the top.
- The BSC must be part of the RGMs performance contract and driven and managed by
the EGM.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Rudolf van Eck
POSITION: Area Manager – Milnerton Area
DATE: 20 November 2002
1. When and how did you first hear about the Balanced Scorecard?
The RGM first mentioned the concept to Rudolf during February of this year. Rudolf was
not yet in his current position when the RGM did the original workshop to introduce the
BSC.
2. What did you understand the Balanced Scorecard’s purpose to be?
The BSC is a process through which you can manage you business. There are elements
that you focus on that will make your business successful. The BSC gives you a good
balance between production on the one side and people on the other side. The BSC now
also channel the Area Manager’s focus to other elements that will contribute to the
success of the organisation.
3. How did you gain this understanding?
The RGM’s discussions with me, and presentations by him helped Rudolf gain the above-
mentioned understanding. The RGM also provided reading material on the topic. The
RGM conduct his quarterly performance review sessions with the Area Manager
according to the BSC quadrants. The RGM also include the BSC as an agenda point on
all meetings.
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Refer answer to question 2.
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5. What priority does the Balanced Scorecard enjoy in your region?
The RGM is trying to make the BSC succeed in the region. He makes use of every
possible opportunity to discuss and motivate the tool and refer to the quadrants and
measures.
6. Who is driving the Balanced Scorecard in the region?
The RGM and the support team.
7. How alive is the Balanced Scorecard in the region?
The BSC is very alive in the region.
8. What is causing this? (Refer question 7)
The support team members have each been allocated the responsibility of a quadrant,
which they champion. The Area Managers are measured on the quadrants of the BSC on
a quarterly basis during the performance review sessions. Rudolf feels that the BSC is a
good measurement instrument and are therefore in favour of its use in the region.
9. Could you describe the process by which your Balanced Scorecard strategy
was formulated and implemented in the region?
- The RGM first gave an overview of the BSC tool.
- The Area Managers were divided into four groups, each taking responsibility for the
development of measures for their respective quadrant. The groups developed
measures over a period of time and then reported back to the regional team. This lead
to consensus in terms of which measures will be used in the region.
- The RGM contracted with each Area Manager ultimately about his own scorecard.
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10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
- Each Area is unique and the BSC allows for this in that the measures are done at an
Area specific level.
- Area Managers devised their own measures to link to the OMPFA strategic thrusts
and values.
- Guidelines may be useful from the top in terms of what generic topics need to be
covered under the quadrants for which the Area’s can then develop their own
measures.
11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
The BSC allowed the Area Manager to contract in terms of the action plans needed to
deliver the results. The fact that new action plans have to be developed on an ad hoc basis
during the year creates an obstacle and dilutes the focus on the BSC.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
Rudolf presented his scorecard to his Sales Managers and Sales Support Manager, to
show them on what he gets measured.
13. Which audience and why? (Refer question 12)
The Sales Managers and Sales Support Manager. They need to understand what areas of
delivery are important to the Area Manager and have an understanding of why he is
focussing on it. Rudolf requires the buy-in from them so that they can help him achieve
his objectives.
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14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
The BSC provides a fair approach to manage different Area Managers in a region. Each
have contracted according to their own goals and measures and are the managed
according to these.
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BALANCED SCORECARD IMPLEMENTATION – RESEARCH INTERVIEW
NAME: Wim de Vos
POSITION: Human Resources Consultant – Western Cape
DATE: 4 December 2002
1. When and how did you first hear about the Balanced Scorecard?
Probably about 1992 whilst still in corporate HR, via the internal communication system
in HR about cutting-edge new measurement methodologies. It was at the same time that
HR went through restructuring and lots of new ideas were imported.
2. What did you understand the Balanced Scorecard’s purpose to be?
It measured other-than-financial stuff, hence the name: more balanced than just the
bottom-line. This is because there was a growing realisation (concurrent with the
understanding of “new” ideas such as systems thinking/ chaos theories) that there are
many more factors that impact on the (financial) bottom-line than just financials.
3. How did you gain this understanding?
As HRC (1994) he interacted with divisional management around alternative managerial
interventions. It was clear to him that mere ‘business orientation’ (in the sense of just
measuring financial bottom-line) didn’t achieve the desired results. The Balanced
Scorecard was then implemented in one division (Gary Grobbelaar’s: some aspect of
Client Services, if I remember correctly), and the idea of a “dashboard” of measurements
slowly started to make sense (probably 1997 on).
4. What, if any, particular value did you believe the Balanced Scorecard would
add?
Exactly that it enables management to look more systemically at a wider range of issues
that impact on the running of a business. Specifically, the dimensions of Processes,
Customers and People/Learning, get more attention than before.
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Individual managers, who before would measure their particular “favourite” variable, get
“forced” or, positively put, get the opportunity to expand their thinking level from a more
singular approach to that of a more systemic way of thinking. The implementation of the
BSC can support individual’s personal development by moving them to a next level of
thinking.
5. What priority does the Balanced Scorecard enjoy in your region?
Very high. It is used as measurement tool at regional level, and the Area Managers’
performance discussions are done according to the BSC.
6. Who is driving the Balanced Scorecard in the region?
The RGM.
7. How alive is the Balanced Scorecard in the region?
Very alive, because the Area Manager’s performance are measured quarterly via the
BSC.
8. What is causing this? (Refer question 7)
The quarterly Performance reviews by the RGM, and continuing focus by the RGM on
the measurements/ continued implementation (meaning also that there are plans to
cascade it further down into the Areas).
9. Could you describe the process by which your Balanced Scorecard strategy was
formulated and implemented in the region?
The RGM introduced the concept formally at a management meeting and allowed
discussion of each quadrant, to help grow an understanding by Area Manager’s and the
support forum.
At a next meeting, each quadrant was given to a champion and a small team, to work out
the objective, strategy and measurements per quadrant. This was debated over a period of
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two months during various meetings and agreed to at the end of the period as
measurements per quadrant.
Then a performance review document based on the BSC and agreed-to measurements for
Area Manager’s were designed and the RGM started to do quarterly reviews per Area
Manager.
10. What, in your opinion was good about this and would you like to see
incorporated in an implementation framework for OMPFA? (Refer question
9)
The most important aspect is that the RGM was personally convinced about the merits of
the tool, and drove its implementation as a personal objective to be achieved in the
region. Announcing the concept and allowing time for Area Manager’s to get used to the
concept and each quadrant was good.
The small work teams with line managers taking ownership almost on a project basis, to
work with each quadrant and develop a set of measurements also worked well. Debating
these at length during a series of meetings over a time period contributed to the success.
Using it as a ‘personal’ performance management ‘tool’ makes it that much more real to
Area Managers.
11. What barriers or obstacles did you experience in terms of the
implementation process? (What did not work for you?)
It is a new way of thinking for managers and the time lag between getting used to it and
being measured against it, was/is definitely uncomfortable (culture shock) for Area
Managers. However, it was also the most effective way to help them get to grips with it
in a fairly quick way.
The “trick” is for the RGM to read each Area Manager’s buy-in separately, and to work
with individual managers to help their understanding and get their personal commitment
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to the implementation and continuing use of the tool. This was not done, in our case, by
the RGM on a consistent basis with each manager.
12. What, if anything, have you done to communicate the Balanced Scorecard
effort and content?
When the RGM first started to mention the BSC, Wim realised how serious he was (also
doing his Masters on its implementation), he gave him some more reading about it (e.g. a
manager’s “thesis” from her BLDP days on the BSC, some stuff from Harvard Business
Review). He attended a conference on the BSC during February and discussed this with
the RGM: this is another option for getting more buy-in from managers! Another Area
Manager also attended this conference and his buy-in into the process skyrocketed!
Wim was involved in the people quadrant’s drawing up of measurements and all the
discussions around it. He designed the performance review documentation that the RGM
uses with Area Managers.
13. Which audience and why? (Refer question 12)
RGM, Support Forum, and Area Managers: all involved in the “roll-out” process. Wim
specifically was part of the people quadrant’s measurements debate from the angle as
HRC and looking at management/leadership/competency development.
14. Please share any additional experiences, observations etc. that you would like
to that you believe would enhance the implementation of the Balanced
Scorecard in other regions?
Firstly, Wim believes the BS’s implementation is very worthwhile and is actually a
much-needed step towards a more inclusive picture of business drivers. (He is arguing
that business isn’t just driven by bottom-line financials, but that the other quadrants also
contribute significantly to doing better business).
However, he also believes it is just a step in the right direction! What is still severely
missing from the BSC concept is the recognition of the impact of qualitative aspects. The
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moment that measurements are put into place for each quadrant, it “objectifies” that
which it intends to measure: making it quantitative.
Wim would therefore like to see the development of a business model that goes “Beyond
the BSC” (!) which also gives recognition to qualitative (or, his word, the subjective
nature of human interactions) interventions. This is actually the domain of personal
development wider than merely developing people to become better workers. Personal
development in the original sense of the word, is about growing in personal mastery,
growing in one’s understanding of leadership (beyond the theory), growing in more ways
than just becoming a better worker, but becoming a better human being in all the facets of
humanness: not just financial (material, physical) rewards, but emotional maturity, moral
development, aesthetic appreciation, spiritual growth, and importantly, growing in
understanding what social interaction / creating “our” reality (as opposed to creating MY
reality), ecological and community issues, really means.
An argument, which Wim have about the implementation for any such business tool, is
that it actually opposes the popular notion of growing managers’ “internal locus of
control”. Because there is little focus on helping managers understand how radically
subjective human nature and the nature of human interaction is, managers actually
become more and more externally focussed on implementing more and more
measurement – without really understanding the impact on themselves and their own
impact on others around them. This remains the challenge for the business world:
growing leaders who have a realistic sense of themselves and their impact on the life of
people and the wider “ecology” around them.