We need to measure how well our management team is leading and executing

This post is claiming a need for a fifth perspective in business leadership.

The management perspective = Leadership & Execution capability.

The fifth perspective is critical for any company in the software industry with an ambition of achieving global market dominance.

Attempting to micromanage execution compensating for the lack of strategy understanding in the ranks is doomed to fail. If business micromanagement was possible, the Soviet Union would be the dominating world economy today.  Well, it is not.

The 4 (now 5) Perspectives

The Balance Scorecard framework, which is helping us link strategy with execution, gave us 4 perspectives:

1. The Financial Perspective
2. The Customer Perspective
3. The Internal Processes Perspective
4. The Learning/Growth Perspective

My claim is that we also need to measure managements’ ability to lead/execute. This translates into measuring how capable and effective management are at defining, and executing successful strategies.

From Strategy to Execution

As a CEO you know that it takes a clear strategy to lead the journey through the three phases of international market penetration: Bootstrapping, Bridgehead and Leadership. You also know that it is not the strategy per se, which will do the job; it is the execution of the strategy. Strategy execution requires that more people understands the strategy and the activities, which must be accomplished to generate the desired outcome.

Linking strategy and execution has always been the #1 management challenge.  For good reasons.  While the “brilliant” strategy can be conceived in the executive boardroom, execution cannot. Execution is the myriad of activities performed by our own staff and by our business partners. Attempting to micromanage execution compensating for the lack of strategy understanding in the ranks is doomed to fail. It this was possible, the Soviet Union would be the dominating world economy today.  Well, it is not.

Execution requires that management is capable of communicating the strategy AND establish motivation programs, which are driving staff and business partners to perform activities in line with the strategic objectives. Thus the need for monitoring, measuring and improving the fifth perspective: Execution Capability.

Measuring “Management Perspective” Performance

How do we measure how well we perform on the Management Perspective?

At TBK Consult we measure Management Performance in 4 areas:

1.  Strategy formulation quality
2. Setting and following up on objectives
3. Drive (ability to act)
4. Alignment

The actual measurement is performed through 22 questions.  Ask the advisory board, the management team and some key staff members to answer these 22 questions and you will get a clear picture of the fifth dimension = the management team’s ability to lead and execute.

This post was first published on www.hpbech.com on August 15, 2011