Tuesday, November 10, 2009

Palladium 2009 Americas Summit - How To Take Kaplan and Norton's Management System from "Execution Premium" to the Next Level with "Driven to Perform"

It is impossible to be a student of the performance management discipline without knowing the names of Robert Kaplan & David Norton, whose multiple best-selling books such as The Balanced Scorecard, Strategy Maps, and numerous others are required reading for anyone in this industry.  Together, Kaplan & Norton have made numerous seminal contributions such as the balanced scorecard, strategy maps, and time-driven activity-based costing.  I had the honor of attending Professor Kaplan's executive education course at Harvard Business School called Driving Corporate Performance with co-author Denise Broady in 2007 and it was a wonderful experience.  While in the course, Professor Kaplan hinted at and I started to see how all the pieces that had been articulated could be synthesized into a unified framework and asked Professor Kaplan about this.  He smiled and told me that this would be the topic of his next book, which was Execution Premium, released in the middle of 2008.  I view this book as truly the crowning synthesis of his work with Norton.  It is no secret that my co-authors and I began writing Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution right around the time the book came out, and speaking for myself only, their book was certainly influential because of this synthesis just as the others were.

On the eve of the Palladium 2009 Americas Summit, which promises to be a phenomenal event where both Kaplan and Norton will be giving keynotes, I wanted to point out, with the greatest humility possible, how  Driven to Perform builds on the ideas of Execution Premium and takes it to the next level. What are the three big ideas in Driven to Perform that take the Management System from Execution Premium to the Next Level?

- Driven to Perform unifies Performance, Risk, and Compliance Management in a process-based framework.  At today's opening sessions at the event, Professor Kaplan noted that risk management was an area he hoped to focus on in the future as it's an even bigger challenge than ABC and the Balanced Scorecard.  In Driven to Perform, performance management, risk management, and compliance management are woven together into a single strategic management process as shown in the diagram below:

 - Driven to Perform shows how this unified Performance, Risk, and Compliance process-based framework applies to nine different areas of the value chain:  Sales, Marketing, Service, Supply Chain, Product Development, Procurement, Finance, HR, and IT.  We include the processes, roles, metrics, collaboration points, and maturity models of each different line of business and their interlinkages, as you can see in the diagram below:

 -  Driven to Perform shows you how to literally drive execution with your strategy using the actual transactional business processes of the modern corporation to enable what we call strategy-driven execution.  For example, we show this transactional order process where we overlay the goals, risks, forecasts, and controls directly on top to show how they should intelligently drive the process directly:

My co-author Stephanie Buscemi will be at the event signing books.  Make sure you get a copy or you can order yours online!


  1. Nenshad,

    This is a very interesting post. Read it a couple of times to make sure I got it. I think I understand the framework and how it applies to the many different processes and applications -- but what I am missing here (and it is probably me) how do you adapt the framework to handle end-to-end processes that span various of the subsystems in it -- and that can become very complicated with dependencies, etc. For example, if there is a storm in a place where they grow an agriculture product that is used to make a base, used to compound a food, that we then use in our production -- how do we measure / asses / manage that risk?

    These are the complex scenarios that I see more and more becoming part of performance management (at least being discussed) that essentially talks to the mega-trend of building and managing ecosystems of partners.

    As I said, probably me -- but it would be interesting to see the mashup of KPI and KRI to come up with a common model as the processes become more complex. Do you flex-use the framework? or write separate code to handle the integration of data from both organizations / both processes? how about when iti grows / changes the function... how do you handle the growing / shifting complexity?

    interesting conversation, just looking to expand it a little bit (or be told what a doofus i am - that does not matter.

  2. Thank you Nenshad for sharing your thoughts. The three topics you outline from Driven to Perform seem to productively merge managerial processes in order to create unified approaches to overcome organizational challenges faced every day.

    Tate Ficker
    XPC Facilitator
    Palladium Group, Inc.

  3. I particularly like that first graphic. I think it's great for visualizing the planning cycles, and the difference between the executive planning group who design strategy and the management groups who produce the tactical responses.