An Interview with Dr. David Norton 06-25

An Interview with Dr. David Norton 

Image credit : Shyam's Imagination Library

In an interview with James Creelman, head of Palladium’s Knowledge and Research
Center, Palladium Chairman Dr. David Norton explains why more and more
government organizations are using tools such as the Balanced Scorecard and
Execution Premium Process™ (XPP) to effectively manage complexity in the 21st
century.

With particular reference to the military and police sectors, he explains how globalization and technology are changing the way work gets done and how this is driving government entities to adopt these tools so to better visualize and deliver to their mission and to manage inter- and intra-agency collaborations.

The Balanced Scorecard was in the right place at the right time. By the early 1990s the economic model was changing from one that was product-based to service-based. In this new economy there were requirements for a model to manage knowledge and tools for managing intangible assets. Many organizations were realizing that in this new economy measuring financial performance was still critical but that they needed a new approach to understanding the more intangible drivers of fi nancial success, and the Balanced Scorecard offered a way to do that.

It has endured because it delivered transformational results in many of the early adopters. Also, although originally a way to balance fi nancial and non-fi nancial measurement it developed into more of a management system than just a measurement tool. The adding of the Strategy Map was also an important milestone as this enabled organizationsto better visualize the strategy and what they had to do to deliver it.

The Balanced Scorecard concept is now almost 25 years old. Why has it proven to be so enduringly popular?

Since the mid-1990s the government sector has been a big user of the Balanced Scorecard, but usage has increasedsignifi cantly in recent years and across the globe. 

What has driven this uptake?

Leaders of government entities increasingly saw the Balanced Scorecard as a good idea. They had seen others succeed with its usage and decided to try it. Some of the early government successes, such as the City of Charlotte in the USA in the mid-1990s also helped to spread the message that this new way of managing could work in the  government or not-for-profi t sectors. A small number of early adopters inspired a growing number of followers. It is not unusual for any new idea to take time to trickle through and 20 years is a relatively short time.

The Balanced Scorecard is primarily a strategy implementation framework, yet many defense sector organizations have adopted it and focused more on “battle readiness.” In what important ways have defense organizations, such as Balanced Scorecard Hall of Fame™ inductees the Royal Norwegian Air Force and the US Army, tailored the Balanced Scorecard methodology for their own needs?

I would argue that “battle readiness” is a strategy. Every organization that we have worked with has a set of strategic themes that they must deliver to, rather than a one-dimensional strategy. Private sector fi rms have themes such as managing the core business, customer management, innovation, etc. The same is true for the military, which will have several themes that they must manage, such as operational effi ciency and battle readiness. The Strategy Map enables them to see those themes and how they work together.

Specifi cally related to police organizations, Abu Dhabi Police, Dubai Police, the FBI, and the Royal Canadian Mounted Police are also inductees into the Hall of Fame. What did they do well that others can learn from?

Most organizations have complex missions, but these organizations have very complex missions. The reason I say this is because to succeed to their mission they have to interface with many other organizations - success is impossible without doing so. For example, tackling the problem of drugs requires interfacing with many other agencies such as customs or the coast guard. The Royal Canadian Mounted Police, for example, built strategic themes around pieces of their mission to drive such cooperation in areas related to drugs and gangs, in which they did not have all the knowledge required to deal with the problems on their own. The Balanced Scorecard provided these organizations with a way to visualize and put into practice that integration and come up with a new paradigm for effective policing.

The Execution Premium framework is not just about strategy execution, but more broadly strategy management.

Why did you think it was important to expand on the original Balanced Scorecard concept?

This has been a natural evolution grounded in practical experience. Bob Kaplan and I began looking at a problem with measurement, and from that we developed the original Balanced Scorecard idea. From that we realized that the framework was most powerful when the strategic objectives were laid out as a map showing cause and effect, and this took us to Strategy Maps. There was an evolution from how we measure to how we manage. The Balanced Scorecard also became a bridge to the management system – as examples, how we set performance objectives for individuals and how we align investments in ways that best show the organization is delivering results. Measurement
itself does not guarantee results; for this to happen metrics have to be integrated into a broader management system. We also realized early on the important of leadership in using the Balanced Scorecard.

This takes us to the role of leadership, which along with Bob Kaplan you have repeatedly highlighted as the critical determinant of successful strategy execution and was deemed as such by a recent global survey by the Palladium Group. When it comes to strategic leadership, what must organizations do right?

The success of the Balanced Scorecard is always linked to the visible usage by and buy-in of leadership. Leaders will see it as a tool and they have lots of tools to choose from. Those leaders that get the most from a Balanced Scorecard really use it as an agent of change, and strategy is just another word for change. I need to build effective teams at the senior level – how do I do that? I have to get the organization to support a change of direction – how do I do that? I need to build a high-performing culture across the globe – how do I do that? So the CEO or equivalent
sees the Balanced Scorecard as their framework for describing critical strategic goals and a tool for managing that change.

To do this, a good leader has to combine both right brain and left brain thinking. The right brain is unstructured and about intuition and creativity - seeing opportunities, inspiring others, etc. The left brain is about structure – using management tools, measuring performance, etc. Both sides of the brain are important and together deliver change.

For good reasons, defense and police organizations tend to be much more hierarchical than others in the public and private sectors.

Does this lead to any unique challenges when implementing the Balanced Scorecard or the Execution Premium framework?

Absolutely. Strategy is horizontal in nature and not vertical. Strategy is about delivering solutions to common challenges that the organization is facing and this is at odds with a vertical structure.

This is why a Strategy Map and in particular strategic themes are powerful within organizations with fairly rigid hierarchies. By indentifying and laying out strategic themes on a map, these organizations are able to overlay a horizontal form of management onto the necessary hierarchical structure. The themes enable the organizations tomore effectively drive and manage cross- and intra-organizational  teamwork and pursuit of common goals.

How do you see the Balanced Scorecard/Execution Premium framework evolving over the next 3-5 years and are there any particular implications for those organizations in the defense/police sectors?

The Balanced Scorecard and Execution Premium framework will become increasingly used to manage complexity.

And this complexity has two main drivers that are greatly impacting all fi rms and military and police agencies in profound ways: globalization and technology.

First there’s globalization. As I have stressed, defense agencies now have to cooperate with other agencies across the world to tackle increasingly globalized security and criminal activities: the Balanced Scorecard will help them better manage the inherent complexities in doing so.

And then there’s technology. Obviously technology has changed the world in ways we were not able to even comprehend a few decades ago and is further changing the world as we speak. This is having signifi cant impacts on military and police agencies: think about how social media and video are now used to both prevent and solve complex crimes. Technology is enabling more seamless interaction within and among government agencies acrossthe world and is becoming more integrated into the structures of these organizations.

The need for a framework that allows the focus on managing such complexity will become increasingly mission-critical.

The content rights for this interview belong to The Palladium Group

Twelve Common Strategy Execution Mistakes - and What You Can Do to Avoid Them 03-06

Twelve Common Strategy Execution Mistakes - and What You Can Do to Avoid Them

The Balanced Scorecard is among the most widely-used management systems today. As with any framework or tool, its popularity is a double-edged sword: with more and more organizations implementing the Balanced Scorecard, more and more will screw it up.

When done well, the Balanced Scorecard can be a game-changing management tool; when done poorly, it is quickly sidelined and becomes just another flavor of the week. Perhaps every unhappy family is unhappy in its own way (our apologies to Tolstoy), but unhappy organizations tend to share a common profile – at least where strategy execution is concerned. These twelve mistakes are the most common culprits. 

1. Delegating too low 

The Balanced Scorecard is a deceptively simple concept, and as a result, responsibility for its implementation often falls to a relatively junior resource. This faulty assumption – that a straightforward framework makes for a straightforward process – leads to a host of problems. As a rule, the success of this process relies on the explicit, not merely complicit, support of senior leadership. 

Though junior resources can and usually should perform much of the legwork, the spokesperson for implementation ought to be someone whose position in the organization commands respect, which in turn sets the expectation that the Balanced Scorecard effort should be taken seriously. Junior resources typically lack the experience and institutional credibility necessary to guide the discussions that will ultimately shape the organization’s objectives. A more experienced employee with the requisite insight and social capital will have far greater success in eliciting insightful opinions and establishing buy-in from the larger organization.2 © 2015 Palladium Group, Inc. | www.thepalladiumgroup.com 

Organizations can most effectively utilize junior resources in a supportive role, but with ultimate responsibility for the success of the project assigned to a senior leader. The junior resource can do most of the work involved in creating deliverables, but always with the understanding that they are acting on the behalf of the senior leader, who in turn will be the public face of the implementation and will step in to aid the junior resource in areas where they lack expertise. The junior resource gets a tremendous opportunity to increase their visibility within the organization, and the senior leader is not tasked with time-intensive aspects of the implementation process. 

2. Ignoring political realities 

Even the most easy-going organizations are not free of office politics, and to pretend otherwise is to be willfully na- ïve. Especially at the outset, the implementation of the Balanced Scorecard can bring these politics to the forefront. Politically savvy organizations will recognize the Balanced Scorecard as a neutral ground that encourages transparency and gives voice to the entire organization, but without careful consideration it can easily devolve into a new arena on which to fight the same old battles. 

Most organizations begin their implementation process with a series of interviews and workshops to build their Strategy Map and Balanced Scorecard. The most successful organizations will take particular care in selecting their facilitator. This person needs to be impartial – and just as importantly, they need to be perceived as impartial by the participants in the interviews and workshops. When selecting the facilitator, leaders should ask themselves what agenda he or she may bring to the table (or even if they do not, what agenda others may think they bring) and what tensions could arise because of it. 

To avoid potential complications, many organizations use an external consultant at this stage of the process. A skilled facilitator will take care to elicit all viewpoints, not just the ones that come from the loudest voices. They will also use appropriate techniques to reach decisions in a collaborative way and mitigate sources of tension. When using an external consultant instead of an internal resource, make sure that they have done their homework and understand the politics that underlie the conversation.

 3. Going overboard with measures 

What gets measured gets done – so the more measures, the better, right? 

Not really. Strategic measures – those presented as part of a Balanced Scorecard – are intended to paint a high-level picture of the progress of a particular objective. Measures that contribute to a more nuanced, granular picture, while important, do not belong on the scorecard, where they only serve to obfuscate the vital information that will be used to lead discussions during strategy reviews. 

A glut of poorly curated information is nearly as useless as not enough information. Smart organizations choose one or possibly two measures per objective that are indicative of the health of that objective. The point of these measures is to capture a trend over time in a way that is immediately apparent. Conclusions drawn from additional measures should be reflected in the objective’s performance analysis, and the additional measures should be publicly available, but the scorecard itself should remain clean and uncluttered. 

Organizations rarely choose the optimal measures at the outset of the scorecard implementation. The most successful organizations revisit their strategic measures periodically to ensure that the intent – taking the temperature of an objective, so to speak – is being upheld. If the measure points to a different conclusion than the performance analysis, it must be reconsidered.

4.Failing to house data centrally Done

Well, the Balanced Scorecard promotes transparency across even large, complex organizations by ensuring that there is one version of the truth and that it is accessible throughout the organization. Done poorly, the large amount of data that contributes to a mature scorecard (or, more likely, series of cascaded scorecards) is a major headache. 

Successful organizations make information management a priority. Balanced Scorecard software offers a simple solution for housing all data in one place, but organizations that cannot make the investment will often manage their scorecards using Excel or even PowerPoint. Whatever the management system, it is vital that the information live in a single document. By allowing information to reside in numerous pockets scattered here and there throughout the organization – a particular concern when using document types that can be saved to local hard drives – organizations run the risk of version control issues. 

In the best case scenario, organizations will integrate their information management systems directly with their scorecard management. Savvy leaders recognize that employee attitudes towards the strategy management system can make or break its long-term success. By housing data in a central, accessible location, leaders demonstrate transparency and honesty. “De-mystifying” the scorecard by making the information viewable to anyone who is interested helps to break down potential sources of resistance.

5. Allowing the Strategy Map to become just a piece of artwork 

The process of creating the Strategy Map is in itself incredibly beneficial to an organization. By not only articulating what the organization plans to achieve but also breaking that plan into its underlying components, organizations by default will refine their priorities and improve their focus. That said, this process is the tip of the iceberg – necessary, but certainly not sufficient. Because creating the Strategy Map is reasonably time-intensive (not to mention debate-intensive), the effort involved can leave organizations with a false sense of accomplishment. 

After it has been finished, the Strategy Map is hung on the wall and all too often allowed to become a piece of artwork: nice to look at, but of aesthetic value only. Leadership teams can be unwittingly blind to this phenomenon, since, having undergone the effort of creating the Strategy Map in the first place, they are predisposed to see it as a more important piece of work than their employees do. A simple test is to ask a mid-level employee to describe how their work fits into the Strategy Map without any prior preparation. If they cannot, the leadership team has more work to do. 

An organization cannot overestimate the importance of communicating and socializing the Balanced Scorecard framework in general and the Strategy Map in particular. The communication truism “seven times in seven ways” is particularly apropos here. Hanging the Strategy Map on the wall is simply not enough – instead, organizations should seize the opportunity to exercise their creativity and find memorable ways to make the Strategy Map highly visible. 

The ultimate goal is not simply to familiarize employees with the contents of the map but to encourage its use as a tool to guide informed, intelligent business decisions. The most successful organizations will see everyone from senior leaders to front-line managers referring regularly to the Strategy Map in their day-to-day business.

6. Confusing operations with strategy Operations

 protect value – these are the things that need to be done in order to keep business running as usual. Strategy creates value – these are the things that need to be done differently to reach the desired future state. The line between the two is not always clear-cut (for example, if an organization is on a downward trajectory such that continuing with business as usual actually destroys value, then making operational improvements to halt that trajectory would actually be a strategic initiative), but nevertheless it is an important distinction to make.

Because operational concerns have near-term consequences, they have a tendency to creep into discussions of strategy. Organizations find themselves mired in operational details at the expense of the long-term strategy. While leaders do typically distinguish between operational and strategic review meetings, they often have a harder time adhering to a purely strategic agenda during strategy reviews when operational concerns are simply too pressing. It is incumbent upon the leader of the meeting to set clear guidelines for strategy review meetings and to nip operational conversations in the bud. 

This separation between the operational and the strategic is not to say that operations are unimportant – to the contrary, they are vital to the success of the organization – but rather that, left unchecked, they will eat up the time needed to review and refine strategy. By carving out time to deal exclusively with longer-term concerns, organizations guarantee that their strategy management system sustains its momentum. 

7. Failing to optimize strategy review meetings 

Much to the chagrin of executives everywhere, time is a finite resource. Wasting it in an interminable strategy review meeting is a sure-fire way to make the Balanced Scorecard the object of resentment. As with any meeting, time will be best spent if the agenda is set in advance and participants come to the meeting prepared. The Balanced Scorecard core team should prepare reading material well in advance of the meeting that includes the latest measure data and performance analyses for each objective. 

In addition, the meeting facilitator should circulate the agenda ahead of time and, both before and during the meeting, ensure that the conversation focuses on the issues raised by the data, not on reviewing the data itself. The most obvious agenda – addressing each objective beginning at the top of the Strategy Map and working down to the bottom – is not necessarily the best use of time. Consider beginning with the bottom of the map.

The causeand-effect structure of the Strategy Map means that the lowest objectives tend to be the most complex, have the greatest impact, and elicit the most debate. Relegating the thornier topics of conversation to the end of the meeting means that there is rarely time to discuss them in full. Furthermore, organizations should resist the urge to go through every objective one by one, even though every objective should be tracked and updated. As the strategy review process becomes more mature, organizations can optimize the meeting by budgeting time for only those topics that require a deep dive and merely skimming the surface of the rest. 

8. Assessing performance with rose-tinted glasses 

It is human nature to react to measurement – in particular, measurement of one’s own performance – by trying to put a positive spin on it. It is not uncommon to find, at the outset of the implementation process, that the scorecard is covered with green and yellow indicators. Leaders need to maintain a robust relationship with reality and look critically at a positive assessment right out of the gate: if this assessment is accurate, why do we not already see the outcomes we are trying to attain? 

As tempting as it is to assign blame to the mid-level employees who provided the falsely positive assessments in the first place, the blame lies with leaders who fail to manage change. Especially when the Balanced Scorecard is first being introduced, leaders need to do everything in their power to explain not just what is being measured but to what end. They need to actively solicit honest assessments, even if they are not positive. If initially the scorecard is mostly red, leaders ought not to feel dismayed – how else can they pinpoint what needs to change?

 Ultimately, leaders need to create an environment in which their employees see measurement as a vehicle for improvement, not for blame. The manner in which this change takes place is largely situational and will be dictated by organizational culture, but leaders across the board will benefit by practicing what they preach. By looking at “red” measures as the first step in uncovering a problem and publicly celebrating upward trends even when the goal has yet to be reached, leaders incentivize honesty instead of false positivity.

9. Underestimating the importance of communication 

Think you haven’t communicated enough? You haven’t. Do it some more. At the outset of the Balanced Scorecard implementation, organizations tend to make communication a higher priority. In the excitement of doing something new, sharing information with the organization as a whole and educating them on the new system simply makes sense. As that excitement wanes and the Balanced Scorecard settles into the normal routine, it can slip quietly from the organization’s radar.

Alternatively, they hold off on communication until they get it just right – but it never is. The most successful organizations will partner their Balanced Scorecard team with their marketing and communications department to find creative ways to keep the organization as a whole informed and engaged, both initially and once the Balanced Scorecard effort is well underway. Making an investment in communication is anything but a frivolous expense, even when the delivery method – think mascots, comic strips, and good-natured competition – might veer into silliness. 

Making sure the entire organization stays informed displays trust and openness, giving employees a reason to buy in to a program and feel that their input matters. Keeping the strategy top-of-mind across the organization, not just the leadership team, yields insights from surprising places. Further, celebrating the progress made by a given department or team motivates the rest of the organization and spurs friendly competition. 

10. Neglecting education and training 

The Balanced Scorecard is a deceptively straightforward concept. “It’s simple, just do it!” is a recipe for disaster. For all that it is an easy concept to grasp, putting the Balanced Scorecard into play is a complex process. Organizations need to be realistic in assessing the readiness of their staff to implement the program and commit to filling gaps in expertise. 

An upfront investment in preparing the key players in the implementation process helps organizations avoid wasted time and energy. Further, organizations ought to assess not just the readiness of the team as a whole but the knowledge gaps of each individual. For example, the Balanced Scorecard sponsor needs to grasp the process as a whole and have a working knowledge of best practices, but the administrative details can be left to a more junior team member. 

That team member, on the other hand, needs to have a deep understanding of the mechanics of the scorecard and be prepared to manage the minutiae of an intricate system. Addressing these potential knowledge gaps at the outset rather than scrambling to play catchup down the road will save organizations time and money. 

11. Surrounding yourself with the same old folks

 Organizations that keep discussions of strategy to the rarified few – usually the executive leadership team alone – are missing out. One of the tremendous benefits of the Balanced Scorecard is the opportunity it provides for crossfunctional discussions that break down traditional silos and bring forth voices that might otherwise not be heard. 

The smartest organizations will embrace the dissonant voice and the unusual opinion and welcome their input, not disregard it for contradicting inherited wisdom. The Strategy Map development process usually begins with a series of interviews that inform the first draft of the Strategy Map. While these interviews nearly always include the entire leadership team, organizations should ask who else could add a useful voice to the conversation, particularly one that is infrequently heard. 

This voice could represent customer-facing employees, stakeholders, or support functions that do not have a seat at the executive table. Once the Strategy Map is finalized, organizations will often establish teams to manage each perspective or theme. Consider mixing teammates from across departments and functions. The disparate perspectives only lead to a richer, more informed dialogue.

12. Failing to evolve 

After the work involved in creating the Balanced Scorecard, it is tempting to hold it as gospel and resist making changes, but successful organizations know that it needs to be a living, changing document for it to be valuable. The Balanced Scorecard works best for managing a mid-range strategy, which for most organizations is between three and five years, depending on the rate of environmental change. A scorecard should always be created with the assumption that it will be dismantled and reengineered a few short years down the road. 

Even within that three- to five-year range, the Balanced Scorecard ought not to be a static document. Throughout the strategy review process, organizations must ask themselves not only whether they are making progress towards their goals, but whether their underlying assumptions continue to hold true. Adjusting measures, targets, objectives, or even the structure of the Strategy Map in response to incorrect assumptions or a changing external environment is an expected component of the strategy review process. 

Organizations can ensure that they take a critical look at the underlying components of their strategy by purposefully planning it into their governance cycle. A typical timeframe for a strategy refresh (as opposed to the rewriting of the strategy that takes place after three to five years) is once annually, though in a particularly fast-moving industry, it may be necessary to do so more often. Though the leadership team will make final determinations, suggestions for changes and improvement often come from the theme or perspective teams, and it is worth actively soliciting their input. 

For smaller tweaks (adjusting measures, etc.), organizations should consider giving theme or perspective teams the autonomy to make the determination on their own rather than use time during strategy review meetings. Just as successful strategy management systems tend to share a set of best practices, failed or even just subpar implementations often come from the same set of poor behaviors and incorrect assumptions. 

At the heart of most failed Balanced Scorecard implementations is the fallacy that a simple framework will lead to a simple process. Organizations just beginning the process ought not to be discouraged. Knowing what mistakes to look for allows you to cut them off at the pass. By preparing adequately – and above all, being willing to test and adapt when things are not going as expected – a successful scorecard implementation is well within reach. 

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HPCL 08-25

Pa l l a d i um B a l a n c e d S c o r e c a r d Ha l l o f F ame R e p o r t 2 0 1 1 33

Hindustan Petroleum

Corporation Ltd.

A Mumbai-based oil and gas giant focused on customer satisfaction to become competitive in a transformed industry. With the BSC as the tool for executing its new customer intimacy strategy, Hindustan Petroleum has achieved dramatic gains in workforce alignment, revenue,

dealer supply times, and other critical metrics.

Boasting $25 billion in annual sales and an 11,000-strong workforce, Hindustan Petroleum Corporation Ltd. (HPCL) is a Fortune 500 giant. The Mumbai-headquartered company was created in

1974 and owns and operates two major oil refineries as well as the largest lubricants refinery in India. Its other business units include Aviation, Bulk Fuel, Liquefied Petroleum Gas (LPG), Lubricants,

Retail (60% of the company’s business), Trade (including oil and petroleum-product imports and exports), Exploration and Production, and Joint Venture Companies.1 HPCL has 13 regional marketing offices, 130 terminals and depots, more than 8,500 gas stations, 43 LPG plants, and 2,250 LPG dealerships. Three large cross-country pipelines carry petroleum products to the company’s major supply points.

Sharpening Focus on the Customer

Like all Indian oil companies, HPCL is a “mega public sector unit”—51% government owned and subject to price and wage constraints. Until the late 1990s, it operated in a predictable environment and faced little private sector or global competition. In the state-regulated oil industry, the government even planned

industry growth. But the next decade brought liberalized trade. The opening of the Indian markets to multinationals and private enterprise created new found competition. Although HPCL enjoyed solid

financial performance, its executives recognized that customer satisfaction had to be the primary goal if HPCL hoped to remain competitive in its radically reshaped industry. And a motivated,

sharper workforce would be key to achieving that goal. In February 2003, top executives, along with functional-area and SBU heads, began intensive deliberations to craft their own individual visions of the organization’s—and their personal— success as it related to customer satisfaction. From these, they

articulated a corporate-level vision: to “delight customers [through] superior understanding and fulfill their stated and latent needs with innovative products and services.” The visionalso included being more agile than the competition, being a “learning and innovative organization,” and creating “an environment of trust, pride, and camaraderie”—all while achieving the highest possible growth rate and ROI.Management then built the corporate strategy map and scorecard.Objectives included “Improve strategic thinking capabilities”

(learning and growth perspective), “Ensure inter-SBU coordination” (internal process), “Increase profitability of dealers”

(customer), “Increase focus on premium products” (financial),and “Conscientious corporate citizen” (corporate).

Building a Shared Vision

Executives knew that the new organizational vision couldn't be achieved through management edict alone. To buy in to HPCL’s desired future, employees had to help define it. This would be a challenge, given the civil-service mind-set that had characterized the company’s workforce for so long. The answer: building

a shared vision.2 Then–human resources director (and future chairman) Arun Balakrishnan recommended adopting the Balanced Scorecard to execute the customer intimacy strategy that

would be crucial to realizing HPCL’s vision. Through a series of workshops held in 2003, managers and

employees (including unionized labor) from HPCL’s SBUs, shared services units, and teams articulated their own vision for their units in alignment with the organizational vision. Using such

leading techniques as SWOT (strengths, weaknesses, opportunities, and threats) analysis and Michael Porter’s Five Forces approach, the units then crafted strategies for realizing their

vision and, with the help of internal coaches, depicted them on corresponding strategy maps and scorecards—a total of 200 BSCs for the operating units and functional areas, and 500 for team leaders. In addition, the company asked each employee to identify his or her career (and even personal) aspirations as they

related to the company’s future. Executives knew that the new organizational vision

couldn’t be achieved through management edict alone. To buy in to HPCL’s desired future, employees had to help define it. This would be a challenge,

given the civil-service mind-set that had characterized the company’s workforce for so long. The

answer: building a shared vision.

Securing Commitment to Strategy Execution

HPCL launched a plethora of initiatives to secure the commitment to strategy execution. For example, it created a performance measurement system for each corporate officer, sending

the message that the highest levels of leadership were just as accountable for strategy execution as the lowest-level employees. Officers’ incentives are based on not only how they perform against their scorecard targets but also how their SBU performs.

34 S t r a t e g y E x e c u t i o n C h amp i o n s

The company also identified strategic job families and provided training and developmental experiences (including mandatory job rotations for managers) on the competencies essential for

each job family. It provides continuous training on BSC methodology as well, delivering about 70 workshops to more than 600 officers in 2009 alone. Careful crafting of service-level agreements (SLAs) between shared service functions and SBUs further reinforced commitment.

\To draw up the SLAs, managers answered two questions: (1) “What help does our unit or function need to provide to make this SBU’s strategy successful?” and (2) “How do we offer goods

and services to be superior to an external supplier providing similar services?”

The company also encourages best practice sharing by enabling managers and employees to share success stories through multiple communication channels: the chairman’s blog and regular executive and business council meetings, webcasts, corporate emails, fliers, in-house magazines, and large-scale

town-hall meetings. The company has also put in place online work systems such as HR tools and internal channels of communication to improve transparency, individual employee

performance, and efficiency in communications.

Scoring Impressive Successes

HPCL’s dedication to strategy execution has delivered impressive results in the five years since the company adopted the BSC. Revenue more than doubled, the company’s retail network grew almost 30%, and dealer supply time (the time between receipt of a purchase order and shipment) shrank from 24 hours to just

two hours for high-volume “category A” dealers. Refinery project delays decreased from as long as 24 months to on-time performance, and new-employee attrition fell by more than 40%.

Equally remarkable, when major government-owned Indian companies went on strike during January 2009 to protest a delay in pay increases, HPCL officers declined to join them. The company

worked around the clock during the three days of the strike to serve customers, staving off what could have turned into a complete shutdown of India’s transportation infrastructure. Grateful customers praised HPCL for helping them continue to operate during the strike—giving the company a powerful edge

over rivals in instilling customer trust and faith. A dizzying array of awards, domestic and global, further testifies to the company’s success. For example, HPCL became the only Indian aviation fuel company to win the Golden Peacock award for environmental management. And in 2008, it won the NDTV Profit Business Leadership Award, given to companies that have fueled the Indian economy and nurtured excellence. It has won national training and marketing awards, and over several years was named best employer in India by Hewitt Associates.Notes Balakrishnan, who retired in August 2010, “The Balanced

Scorecard has become the method for communicating and implementing change as we become a more customer-focused learning organization.” His successor, Shri S. Roy Choudhury, former director of marketing and BSC program head—and a fervent believer in the impact of learning and growth and

internal process perspective objectives on customer and financial outcomes—has oriented the organization toward holistic measurement systems.

(All results from 2004–2009)

• Revenue jumped from approximately $14.4 billion

(Rs 652.2 billion) to approximately $25 billion.

• The number of retail stations increased from 6,667 to

8,539—a jump of almost 30%.

• Turnover of new hires decreased from 11% to 6%.

• Project delays fell from as long as 24 months to on time.

• New pipeline throughput in 2010 was 11.95 million

metric tons (MMT), compared with 6.14 MMT in 2003–04;

and the length of HPCL’s own pipeline (i.e., excluding

joint venture pipelines) grew from some 730 kilometers

to 2,130 kilometers.

Execution Premium

• Integrating BSC reporting software with the company’s

existing enterprise resource planning platform.

• Continuing to train newly hired managers in the BSC

methodology.

• Holding vision-building workshops.

• Revisiting strategy maps at least quarterly to ensure

alignment of objectives and initiatives.

• Reviewing and refreshing individual Balanced

Scorecards to conform to strategy map and BSC

changes.

Future Focus

1 HPCL currently has nine joint ventures and two subsidiaries in such businesses as manufacturing and marketing specialized bitumen emulsion, underground LPG

storage, and distributing and marketing environmentally friendly fuels.

2 Shared Vision is one of the five disciplines of a learning organization defined by Peter Senge in his book The Fifth Discipline. The remaining disciplines are,

Team Learning, Personal Mastery, Mental Models, and Systems Thinking.