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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

Administrator

The 2 year confidentiality embargo on this Research Report has expired

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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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Research Report – EMBA3 Assignment – Gim Victor ii

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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Research Report – EMBA3 Assignment – Gim Victor iii

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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Research Report – EMBA3 Assignment – Gim Victor iv

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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Research Report – EMBA3 Assignment – Gim Victor v

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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Research Report – EMBA3 Assignment – Gim Victor vi

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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Research Report – EMBA3 Assignment – Gim Victor vii

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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Research Report – EMBA3 Assignment – Gim Victor viii

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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Research Report – EMBA3 Assignment – Gim Victor 1

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


SECTION 2




SECTION 3

THE ANSWER


SECTION 4

THE RATIONALE


SECTION 5

THE EVALUATION



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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


Bloemfontein

Regional GeneralManagerDurban


Port Elizabeth


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


SECTION 2




SECTION 3

THE ANSWER


SECTION 4

THE RATIONALE


SECTION 5

THE EVALUATION



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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


SECTION 2




SECTION 3

THE ANSWER


SECTION 4

THE RATIONALE


SECTION 5

THE EVALUATION



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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


SECTION 2




SECTION 3

THE ANSWER


SECTION 4

THE RATIONALE


SECTION 5

THE EVALUATION



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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


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


SECTION 2




SECTION 3

THE ANSWER


SECTION 4

THE RATIONALE


SECTION 5

THE EVALUATION



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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

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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.


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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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.


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.


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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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.


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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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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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


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


NAME: Albe Smit

POSITION: Regional Sales Support Manager – Western Cape

DATE: 3 December 2002


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.


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.


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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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.


The RGM.


Refer question 5 answer.


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.


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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NAME: Avi Ramgoolam

POSITION: Area Manager – Constantia Berg Area

DATE: 19 November 2002


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.


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.


By reading the book and by attending the power point presentation of the RGM on the

topic.


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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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.


The RGM.


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.


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.



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.



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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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.




- 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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NAME: Christa Burger

POSITION: Regional Sales Support Manager – Western Cape



The RGM introduced the concept to the regional management team earlier in the year.


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.


Christa gained this understanding from the workshops that the RGM did in the region.


add?

She believed that the BSC would enable the regional management to keep focus on the

‘right’ things.


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.


The RGM.

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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.


Refer answer to question 7.



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.



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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- 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.


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.


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.




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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NAME: Lee Nakan

POSITION: Regional General Manager – Western Cape



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.


It is a performance management system that covers four brought quadrants, focussing on

financial and non-financial measures.


Lee first obtained the knowledge through theory and then through practice. He was

responsible for implementing the BSC in the region.


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.


The BSC enjoys a very high focus and forms the basis for performance reviews.

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The RGM. Lee feels that this is important, otherwise the BSC would not be there, and

everything would revert back to financial measures.


Refer question 5 answer.


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.



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.



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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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.


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.


The BSC was communicated to Area Managers and the support forum members.


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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NAME: Marius Mostert

POSITION: Area Manager – Durbanville Area



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.


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.


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.


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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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.


The RGM and the regional management team.


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.


The daily pressures on the Area Manager makes it difficult for him to drive the BSC on a

daily basis.



- 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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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.



- 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.


effort and content?

Marius shared his performance contract and the BSC concept with his Sales Managers

and Sales Support Managers.


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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- 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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NAME: Piet Briel

POSITION: Area Manager – Tygerberg Area



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).


At first Piet saw it as a performance management tool, but now he understands it more as

a manner to implement strategy.


Piet did his own theoretical research.

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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.


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.


The RGM.


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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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.



- 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.



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.



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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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.


The Sales Managers and the Sales Support Manager. The BSC should be cascaded down

to all levels.


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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NAME: Rudolf van Eck

POSITION: Area Manager – Milnerton Area



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.


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.


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.


add?

Refer answer to question 2.

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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.


The RGM and the support team.


The BSC is very alive in the region.


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.



- 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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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.



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.


effort and content?

Rudolf presented his scorecard to his Sales Managers and Sales Support Manager, to

show them on what he gets measured.


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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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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NAME: Wim de Vos

POSITION: Human Resources Consultant – Western Cape



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.


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.


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).


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.


Very high. It is used as measurement tool at regional level, and the Area Managers’

performance discussions are done according to the BSC.


The RGM.


Very alive, because the Area Manager’s performance are measured quarterly via the

BSC.


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.



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.



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.


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.


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.




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.

Documents

gsblibrary.uct.ac.zagsblibrary.uct.ac.za/ResearchReports/EMBA3/Victor.pdf · Copyright UCT . Research Report – EMBA3 Assignment – Gim Victor 124. No. Observation / insight Category