Perendie Business Alignment® explicitly aligns everyone and everything inside and outside the organisation around a single set of corporate goals, therefore delivering these goals more quickly, more effectively and at a lower cost.
Many approaches make these sorts of claims, but how things are done affects their effectiveness. Perendie Business Alignment® differs from other approaches in the way it achieves these results.
Firstly, Perendie Business Alignment® starts from the future – where you want to be – rather than trying to improve the present – where you don’t want to be. This stimulates radical and objective thinking about what needs to be done and employed.
Secondly, Perendie Business Alignment® uses this picture of the future as a benchmark to challenge the present objectively, systematically and radically, which increases productivity and improves services.
Thirdly, Perendie Business Alignment® allows and requires everyone to state the contribution they will make to the corporate outcomes, and how they will do so, which aligns everyone and everything around the corporate goals, internally and externally.
Finally, Perendie Business Alignment® uses diagrams rather than prose to define the causal relationships between the required outcomes, activities and resources at all levels. This enables joined-up working and predicts the probability of achieving the required outcomes, reducing risk and reassuring the organisation’s governors.
There are other performance management frameworks, including
ABC – Activity-Based Costing
ABM – Activity-Based Management
BPR – Business Process Re-engineering
BSC – Balanced Scorecard
EFQM – European Foundation for Quality Management
EPM – Enterprise Performance Management
IiP – Investors in People
KM – Knowledge Management
Lean – Toyota Production System
OD – Organisational Development
Six Sigma – Quality Improvement
SM – Strategy Mapping
TQM – Total Quality Management
VBM – Value-Based Management
These focus on improving the present situation rather than initiating the step change organisations need to make to be around in future.
Also, each addresses individual problems and provides a single solution, which is sub-optimal for the organisation as a whole.
Perendie Business Alignment® .incorporates the best of each of these frameworks.
The Perendie platform® is a unique digital platform which provides a single joined-up view of everything an organisation is aiming and likely to achieve, do and employ, releases resource for front-line delivery, increases productivity and effectiveness and saves time and money by automating the automatable aspects of leadership, governance and management.
The causal relationships between outcomes, and the order in which things are done, are critical to their efficiency and effectiveness. For example, a better environment and housing improve health, which enables people to learn, which increases prosperity, which reduces crime, which builds communities.
In every organisation, the relationships and dependencies between outcomes, processes, departments, staff, facilities and money are understood intuitively rather than explicitly. Since everyone’s intuition differs, the imperfect and differing knowledge of relationships and dependencies causes rework, error and unnecessary cost, and prevents people ensuring that money is converted into the desired outcomes. The larger the organisation, the greater the inefficiency.
Furthermore, an organisation creates artificial boundaries causing services to be delivered separately by separate organisational units with separate budgets. Separation creates duplication and misunderstandings, and customers have to join up the services themselves to get the outcomes they want.
Better results depend on people knowing whom they need to collaborate with, how to do so, and wanting to do so. It’s also about data relationships. There are so many relationships – between outcomes, risks, performance measures, activities, facilities, finance, customers, producers, society at large and the environment – that information technology is needed to manage them.
By systematically linking everything the organisation needs to do and employ to deliver its required outcomes, the Perendie platform® makes success predictable and enables preventive action, removing the causes of problems rather than repeatedly dealing with their symptoms. Existing roles, products and processes are simplified by reference to the model, and costs are reduced.
The platform exploits a huge unexploited opportunity to reduce cost and improve outcomes simultaneously by enabling leaders to define measurably what they want the organisation to achieve, and allowing staff to say what they will produce and do to contribute to its achievement.
Everyone is asked to state the measurable contribution they will make to the corporate outcomes. The voluntary approach increases commitment and makes use of unused ability. Everyone sets their own status and reward through the significance of the outcomes they commit to deliver. Consequently, jobs are more fulfilling, delivery is unconstrained by red tape and micro-management, and more is produced for less.
The platform provides:
Integration – everything the organisation needs to produce, do and employ, financially and non-financially, is related and displayed for all stakeholders;
Inclusion – everyone is empowered and required to say what they will measurably contribute to the organisation, and how they will deliver it;
Transparency – any stakeholder, internally and externally, can see what everyone intends to employ, do and deliver, and their progress;
Predictability – the causes of success are identified and the probability of people achieving their outcomes is predicted.
The platform provides leaders at all levels with a fast and effective way of communicating the strategy. They decide which outcomes the organisation needs to deliver, how their delivery will be measured and predicted, the rewards accruing to each outcome on delivery, and the risks which may prevent its delivery. They set the future direction of the organisation, defining tomorrow today.
Successive levels of the organisation are empowered and required to say what they will contribute to the delivery of the higher level outcomes, what they will do to achieve their outcomes, and what resources they therefore need to employ, so aligning themselves with the strategic outcomes.
A holistic view
The consequence is a single joined-up view of everything the organisation is aiming and likely to achieve, do and employ, arranged in a hierarchy of outcomes. Everything the organisation needs to produce, do and employ is causally linked at all levels.
Each outcome has one or more customers and one or more producers. The customers are the people who need the outcome, and hold the budget for it. The producers are the people who are carrying out the activities to produce the outcome, and will receive the reward when it is delivered. The outcome hierarchy replaces the traditional management hierarchy, removing its cost and bureaucracy, and becomes the career path for all employees. It creates self-managing teams, empowering people and releasing managers to be producers. It creates one team, removing organisational divisions.
Remuneration is determined by the level an outcome occupies in the outcome hierarchy. Higher outcomes are remunerated more highly than lower level outcomes. The platform measures delivery objectively, valuing everyone for what they contribute and reducing the risk of prejudice and bias.
People are recognised and rewarded for the delivery of their outcomes, which increases motivation. Since the delivery of outcomes is measured objectively, people trust the platform to reward them as they deserve.
The ability to self-select allows people to further their careers and fulfil their potential by applying to contribute to increasingly important outcomes, which makes the most of their abilities, gives them a ladder they can climb and a career they can develop; facilitates succession planning, and helps to retain the people the organisation needs to retain.
The customers decide whether a potential producer can deliver the outcome s/he has applied to deliver, and recruit people from outside the organisation if there no qualified internal applicants. The platform allows potential recruits to apply to contribute to any of the outcomes the organisation is trying to achieve. The ability to select which outcomes to apply to produce increases the suitability of candidates, and reduces recruitment effort, time, cost and failures.
Any stakeholder, internally and externally, can see what everyone’s producing and what’s likely to happen, motivating productivity and increasing the cost-effectiveness of governance, reporting and audit.
The platform identifies the causes of success and predicts the probability of failure in time for people to take preventive action, preventing problems instead of reacting to them.
The transparency and predictability of the platform gives leaders far greater control over the organisation, assurance that the outcomes will be delivered, and the ability to prevent problems. It releases time they used to spend leading, governing and managing, enabling them to focus on growing and leading the organisation into the future.
The platform leads people to challenge their current deliverables, ways of working, initiatives and resourcing, stimulating innovation, simplifying processes, removing bureaucracy, reducing cost and releasing resource for front-line delivery. It automates the automatable aspects of governance, leadership and management. It integrates all management processes into a single process and platform, reducing cost.
Risk is managed by identifying the causes and effects of each outcome, the contributory outcomes, the key risk to each outcome, a predictor indicator, and the activities required to mitigate the risk.
Keep the organisation’s strategy under rigorous review.
Monitor the implementation of the strategy.
Ensure that the organisation’s strategy creates value.
Enable evidence-based leadership
Enhance intuition with information.
Make decisions based on evidence rather than hearsay.
Increase transparency and accountability.
Encourage ethical behaviour.
Provide the chairman, chief executive, non-executive directors and analysts with the information they need to do their jobs.
Reassure analysts, directors, shareholders and owners.
Increase confidence in the organisation.
Facilitate and expedite audit.
Reduce the cost of audit.
Make audit more transparent, useful and effective.
Increase the assurance provided by audit.
Know at all times which corporate outcomes have been achieved.
Know at all times whether the corporate outcomes are likely to be achieved.
Provide visibility of progress towards outcomes.
Increase the predictability of outcome delivery.
Get early warning of failure to achieve intended outcomes.
Make data analytics useful
Create a taxonomy of the organisation’s desired outcomes and related data.
Define what data to analyse.
Reduce information overload
Simplify and reduce the Board’s agenda.
Give the Board the information they need, and only the information they need.
Provide more current, predictive and integrated reporting than is proposed by < IR > (Integrated Reporting)..
Produce the first interactive corporate report.
Save trees of paper.
Enable leaders to lead, staff to feel more fulfilled, and customers to be better served.
Gain greater control over the organisation.
Increase employee productivity.
Increase profit by at least 10%.
Lead people forward
Combine meritocracy with democracy.
Combine top-down leadership with bottom-up implementation.
Help people journey from the present to the future.
Move the organisation on from where it is.
Engage all stakeholders
Allow people to see what the future holds and say what they can contribute to its realisation.
Create an inclusive culture where the diversity of employees’ talents and capabilities is fully harnessed.
Give people an opportunity to use their full capability to the benefit of the organisation and themselves.
Encourage people to innovate.
Persuade people to declare their accountability and responsibility for the delivery of their outcomes.
Align everyone and everything around the corporate goals
Focus everyone on strategy implementation.
Align business and support units around the delivery of the strategy.
Combine central control with local devolution.
Integrate front and back offices.
Tell people who they need to work with to succeed.
Motivate people to produce even while jobs are being cut.
Determine status objectively.
Distribute rewards fairly, objectively and transparently.
Reward the delivery of outcomes rather than the management of resources.
Replace corporate bonuses by outcome bonuses.
Encourage good individual performance.
Be proactive more than reactive.
Generate internal competition to deliver.
Give outcome producers time to avoid failure.
Motivate those who are falling behind to catch up.
Combine business and individual performance management.
Remove the need for formal performance appraisals.
Move from being activity-based to results-oriented.
Create rolling budgets.
Specify and justify what needs to be procured.
Co-ordinate business groups
Clarify and communicate the strategic outcomes required, the top-level activities needed to deliver these outcomes, and the sorts of resources required to carry out these activities.
Heal the divisions created by organisational structure.
Increase collaboration and co-operation between business groups and individuals.
Reduce turf battles.
Increase the effectiveness of joint ventures and partnerships.
Evaluate potential acquisitions, mergers and joint ventures.
Extract the forecast value from acquisitions, mergers and joint ventures.
Stimulate radical thinking about what needs to be produced, done and employed in future.
Set the future direction of the organisation.
Validate, integrate and improve the strategy.
Facilitate the continual review of strategic direction, performance indicators and outcomes make it more joined-up, efficient and effective.
Communicate the strategy more widely and effectively.
Ensure that the strategy is complete, consistent and correct.
Determine the required outcomes.
Prioritise the required outcomes.
Exclude what the organisation has decided not to accomplish.
Objectively evaluate current objectives and initiatives.
Join up outcomes
Know which order to deliver outcomes in.
Link and align strategy and operations.
Make relationships which would otherwise not be made because of their complexity.
Avoid rework and waste.
Define what to measure.
Relate existing mandatory key performance indicators to outcomes.
Validate and review the existing KPIs, explain their purpose and relevance, and increase commitment to them.
Discover the causes of success
Say what people need to learn and excel at to deliver the strategy.
Balance long term capability-building with short term delivery.
Turn attention from problems to causes.
Identify root causes of outcomes rather than problems.
Increase the probability of implementing the strategy.
Mitigate the risk of failure.
Focus on those risks which are likeliest to prevent the delivery of outcomes.
Integrate isolated risk registers.
Promote the values of the organisation.
Continuously reveal and remove duplication.
Copy best practice.
Reduce the need for meetings and paper reports.
Reduce the time spent on administration and in meetings.
Identify core processes.
Systematically derive the minimal activities and resources required to deliver the outcomes.
Make processes and ways of working joined up and efficient.
Stop processes and initiatives which don’t lead to the outcomes required in future.
Prioritise work – if an activity directly delivers an outcome on the strategy map, it’s top priority.
‘Health check’ and manage the programme portfolio.
Challenge what exists
Challenge and justify partners’ and support units’ outcomes.
Replace potentially litigious Service Level Agreements.
Empower people to challenge and change current deliverables, ways of working and resource allocations.
Share best practice
Establish future best practice.
Locate best practice and knowledge at the point of use.
Align information technology with the business.
Immediately reallocate the resources associated with redundant activity.
Automate, integrate and replace all business management processes including corporate governance, risk management, business planning, job specification, job evaluation, budgeting, procurement, resource allocation, programme management, performance appraisal, performance management, remuneration, information technology management, knowledge management, internal communication, auditing and corporate reporting.
Halve the time, effort, cost and uncertainty of management, saving the time and cost of the most expensive people.
Remove the need to command and control, and for micro-management.
Make management simpler, faster, more flexible, cheaper and more effective.
Lighten the management workload.
Manage methodically rather than randomly.
Ensure that management is world-class.
Transform customer service.
Enhance stakeholder value by achieving corporate goals faster.
Rapidly and flexibly change direction, best practice and resourcing.
Implement the strategy.
Neville de Spretter, former Head of Internal Audit at ACCA, describes a new approach being used by ACCA to grasp the holy grail of prevention rather than cure.
INTEGRITY THROUGH INTEGRATION
On 5 October 2005, ACCA’s Senior Management Group (SMG) met at the Waldorf Hotel to review ACCA’s performance over the last year and to set targets for the next year. There was much debate about the past and future key performance indicators and a general feeling emerged that there had to be a better way to lead and manage the organisation.
At the time, the strategic imperatives, initiatives and KPIs were unlinked, disconnected from what actually happens in the business, and had little apparent commitment from staff. Much depended on the attention of the Chief Executive, who knew he needed a robust, efficient and effective management framework and system but rightly dislikes bureaucracy and transfer charging.
In the afternoon a consultant, Peter Bebb of Perendie, presented a strategy map similar to the following:
The SMG, led by Chief Executive Allen Blewitt, immediately saw that the strategy map had summarised ACCA’s 35 page strategy into the 12 outcomes which are most critical to the realisation of its vision. It had also defined the causal relationships between the outcomes, i.e. which outcomes are dependent on which other outcomes. In so doing, it had validated and assured the quality of the strategy.
The SMG also recognised a solution to the age-old problem of prioritisation. Outcomes are prioritised by their inclusion on the strategy map, and actions are prioritised by their relationship to the strategic outcomes. Those actions which directly deliver the strategic outcomes are automatically top priority. Not all actions result in something useful and hard work is not always productive. Relating actions to the strategic outcomes ensures that only useful actions are included.
The SMG also saw that the cause and effect relationships between outcomes provide a means of predicting the delivery of the vision. If one of the prime causes is failing, there is early warning that the vision is at risk of failure. KPIs do not provide this predictability.
The Chief Executive immediately set up a Strategy Implementation Team (SIT) consisting of myself, Peter Bebb, the Head of Strategy Implementation and the Risk Manager, sponsored by himself and led by the Managing Director Operations.
Effective communication of the strategy is a necessary condition of its implementation. The strategy map tells the story of the strategy without additional explanation. It explains how the strategy will be delivered. It is possible, by following the arrows, to understand the chain of cause and effect which will lead to the ultimate outcome which achieves the mission.
A strategy map is simple. It fits onto one page. It provides unexpected insights into the future of the organisation. The outcomes on a strategy map are concrete, specific and measurable. The causal connections between the outcomes give credibility to the story it tells. And the combination of these factors creates understanding of the strategy and gets people on board.
The SMG discussed, amended and agreed the strategy map with Council, ACCA’s governing body. The Chief Executive communicated the strategy map to ACCA’s staff.
In consequence, many more people understand ACCA’s strategy, and there is consensus on what needs to be delivered strategically.
While the strategy map was being communicated, the SIT started to develop a balanced scorecard to measure and predict the delivery of the strategic outcomes. The balanced scorecard differs from key performance indicators (KPIs). There is a unique measure of the achievement of an outcome which avoids the ambiguity caused by multiple KPIs. There is also a predictor measure, which tells the management team whether they are likely to achieve the outcome. Finally the SIT identified the key risk to each outcome, aligning risks with outcomes.
We discussed and modified the balanced scorecard with the project sponsor, the project leader, the SMG and Council. The Remuneration Committee has agreed that the SMG’s bonuses are determined by the achievement of the strategic outcomes as measured by the balanced scorecard.
Much clarity, objectivity and productivity has been obtained through the strategy map and the balanced scorecard.
Of course it’s not enough to know what you need to achieve. You also have to achieve it.
The SIT next worked out what ACCA needs to do to achieve its strategic outcomes. We deliberately ignored current processes and project in order to get an objective view of what is really necessary, in line with Michael Hammer’s original principle of Business Process Re-engineering. We then compared these with current processes and initiatives to identify those which could stop.
The relationships between the outcomes and the activities required to deliver them have defined outcome-oriented organisational units and teams which successively add value to the stakeholders of ACCA by delivering the strategic outcomes. The skills required by the teams are defined as the ability to carry out the activities needed to deliver the outcomes, and the competences are defined as the ability to produce the outcomes.
Outcome-oriented teams are more productive than skill-based teams such as Marketing or Human Resources Departments because they focus people on the delivery of outcomes rather than operation within a skill silo.
The value chain was discussed, amended and agreed with the SMG. Following this agreement, the SIT derived a service-oriented architecture from the value chain which revealed that the existing portfolio of around 60 ACCA computer systems and fragmented data store could be reduced to just 5 systems and 2 databases, saving million of pounds whilst dramatically improving the service provided to staff and members.
The final step in the alignment of ACCA corporately was to estimate the resources required – the skills and facilities required to carry out the activities. The volume of skills required was calculated from an estimate the time needed to carry out each activity multiplied by the number of outcomes to be delivered. This resource optimisation process identified a potential productivity g ain of 20%.
The SIT next broke the strategic outcomes, activities and resources into their contributory outcomes, activities and resources. We formed lower level business areas from these and agreed them with the SMG, who then formed business area teams to define the areas in more detail.
Successive levels of the existing organisational structure will be invited to say what they can contribute to higher level outcomes. In defining their own contributions, people declare their accountability and responsibility for the delivery of these outcomes. This ‘pull’ approach will create genuinely self-managing teams.
We are producing a lot of information and need somewhere to store it and process it so that we can use it to lead, manage and audit the business. Perendie are developing a business management system for us, which will provide the following benefits:
Integration – everything the organisation needs to do and employ to deliver its required outcomes will be linked at all levels across the whole value chain from customers through staff to suppliers
Predictability – the probability of the required outcomes being delivered will be objectively predicted, enabling risk mitigation
Transparency – any stakeholder will be able to see what ACCA intends to employ, do and deliver, and the progress being made and expected.
We’re talking about changing the whole business management process – about integrating and replacing existing management processes, including corporate governance, business planning, budgeting, risk management, resource management, portfolio and programme management, performance management, reward management, information technology strategy, knowledge management and corporate communication. It is wrong to see business alignment as a programme or project. It is simply a more economic, efficient and effective way of running an organisation. It firstly transforms the organisation and then continuously improves it.
Consequently this isn’t a quick fix though there are quick wins along the way, as described above. But it hasn’t been plain-sailing. As you can see the timescale is longer than anyone would like, but forcing the pace doesn’t work with a programme that is aimed at creating self-managing teams. The main reason for the long timescale is the distraction of the daily crises which business alignment will prevent.
Perendie also had problems producing the business management system. Their first supplier failed to deliver the system required. Perendie appointed a more flexible and productive supplier, and are delighted with the quality of the system they have produced.
I am keen for others to benefit as we have and will be happy to show you what we’ve done. I can be contacted at email@example.com.