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Creating the Office of Strategy Management
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Organizations often fail at strategy execution. Various sources have reported implementation failure rates at between 60 and 90 percent. A Bain Consulting study of large companies in eight industrialized countries found that seven out of eight companies failed to achieve profitable growth between 1988-1998, defined, rather modestly, as 5.5% annual real growth in revenues and earnings, with returns that exceeded their cost of capital. Interestingly, 90% of companies in the Bain study had strategic plans with targets exceeding these growth targets; few achieved them.1
For the past 15 years, we have studied companies that achieved performance breakthroughs by placing the Balanced Scorecard as the centerpiece of a new strategy management system. The successful companies align their key management processes for effective strategy execution. Many of these companies have now sustained their focus on strategy execution by establishing a new corporate-level unit, an Office of Strategy Management (OSM). Not all organizations, however, have understood the need for a corporate-level office to align existing management processes to strategy. Companies, after developing Balanced Scorecards, often make a major error by continuing to plan, allocate resources, budget, report, communicate, and review performance as they had in the past.
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Creating the Office of Strategy Management
Management
English
2005
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