A further common mistake in initiative management viewing initiatives as standalone: a portfolio approach is required. As Dr. David Norton comments,
“Initiatives should be seen as a portfolio, as it is the collective impact that ultimately closes the value gap.”
A 2013 report by Boston Consulting Group and the Performance Management Institute (see also Panel 2) explained the power of a portfolio approach. “[A] critical aspect of tracking progress is…proving a current port-folio approach for senior leaders.”
The report’s authors noted that an analysis of about 2000 initiative road-maps, with $4 billion impact-bearing milestones found that 35% exceeded plan, 45% were within plan, and 20% fell short. “Overall, this portfolio of initiatives was successfully delivered, achieving more than 100% of the tar-geted value.”
The report added, “A portfolio view…ensures that organizations adopt an enterprise-wide perspective. This generates the necessary forward-looking clarity on how the overall program is proceeding against planned impacts, spotlighting areas that require additional attention and enabling organiza-tions to over-deliver against targets, despite inevitable and initially unforeseen implementation shortfalls in individual roadmaps.”
Sub-Portfolios
If the overall set is a portfolio, then sub-portfolios can be created at the theme level. With the value gap defined, leaders then need to agree on how to close that gap. If, for instance, reaching the target requires significant improvement in new product development, then that theme would get the bulk of the ini-tiative investment. Conversely, if, for example, there’s a requirement to ease back on revenue building and to focus on efficiency for a while (as was the case with many financial institutions in the wake of the financial crisis), then
Fig. 8.4 Initiative realization time-lag. (Source: Synergys)
investments can be switched to initiatives that deliver operational excellence.
The map itself doesn’t necessarily change, but the performance improvement efforts are geared to one theme in particular. Over the lifetime of the strategy, all themes are of equal importance, but investments are prioritized sequen-tially. One of the benefits of managing by themes (see also Chap. 4) is that it provides a powerful vehicle for investing along a causal chain.
Parting Words
The progress of strategic initiatives should be formally assessed as part of the strategy review calendar (typically quarterly, or perhaps, as in the Turkcell Superonline example in Panel 1, to a monthly schedule in fast-moving mar-kets). We will consider the strategy review in the next chapter.
Panel 1: Turkcell Superonline Case Illustration
A wholly owned subsidiary of the Turkcell Group, Turkcell Superonline is the leading communications and technology company in Turkey. With market lead-ership in five of the nine countries in which it operates, Superonline had approxi-mately 71.3 million subscribers as of December 31, 2013.
A Case for Change: First Wave – Building the Fiber Road (2008–2012)
A vibrant economy together with a sizeable and young market with very high Internet usage potential and low broadband penetration were the key factors that pushed the company to fundamentally shift its strategic focus.
The CEO and top executives led the first wave—transforming the then-named Tellcom from a wholesale telecom service provider to a telecom operator with its own next-generation fiber infrastructure, which started in 2008. In the ultra-fast broadband market that Tellcom was about to enter, the target segment was no longer just the wholesale business, but also households and organizations.
As part of the shift, in 2009, Tellcom merged with Superonline, one of Turkey’s leading Internet providers. Turkcell Superonline initiated the “fiber age” in Turkey, offering Internet service at a speed of 1000 Mbps: the most advanced Internet access technology in the world, then provided in only seven other countries.
Establishing the OSM
As a further key element of driving transformational change, in 2008, the CEO introduced an Office of Strategy Management (OSM), reporting to him and with responsibility to facilitate and coordinate the strategy management process and taking control of driving strategy and change.
Seven focus areas were identified and strategic measures (superindicators) defined to assess progress. The top ten strategic initiatives were defined and
aligned to the Strategy Map. Strategy Maps were developed for the three mar-ket segments: residential, corporate, and wholesale. Cascading also reached the functional and support units.
Creating an Office of Strategy Management and Strategic Marketing
At first, the Strategic Planning Department was empowered to lead the score-card effort with the critical involvement of the CFO. However, this department was renamed the Office of Strategy Management and Strategic Marketing in 2011 and gained more responsibilities to execute, coordinate, and facilitate the whole strategy management process. The department started to report to the CMO as well, since the customer was a strategic focus in the next strategy wave instead of infrastructural expansion; thus, the department created synergies with the marketing team to support fast and accurate decisions.
Monitoring Performance
With responsibility for strategic initiatives within the OSM (and as set out in its OSM Charter), what is particularly innovative about the Turkcell approach is that strong customer analytics is seen as a strategic differentiator and is used exten-sively to monitor performance to, and the impact of, the small number of strate-gic initiatives that drive transformational change.
The organizations correctly realized that in the fast-moving sector in which it operates, quickly capturing shifting market/customer trends is a success prereq-uisite, and so, strategic initiatives must be constantly tracked for relevance and tweaked accordingly.
Turkcell Superonline monitors its strategic achievements at an especially intense level. The executive team holds weekly operational reviews for the day-to-day business issues and meets monthly and quarterly to review strategic per-formance (there’s a twice-yearly formal strategy refresh).
In the monthly meetings, the accent is on the superindicators and the ten strategic initiatives that drive most of the strategy’s success. Every quarter, competitors’ behaviour is analysed and strategic actions and priorities (and therefore initiatives) are evaluated according to the environmental changes.
Finally, there is an annual strategy review to adjust the strategy execution roadmap.
Second Wave: From “Good to Great” in Customer and Operational Excellence (2013–2018)
In 2012, the CEO announced a second wave of transformation, aimed at becom-ing “the indispensable technology partner by easbecom-ing the life of our customers with innovative solutions in the digital world.” The new vision involved switch-ing from the infrastructure orientation to a customer-oriented approach.
Emphasis on customer and operational excellence themes shaped the new strat-egy. Success is measured in terms of take-up rate, customer satisfaction and retention, profit, and cash flow. The company set the key milestones to accom-plish the return of investment in accordance with customer satisfaction. Turkcell Superonline revised its strategy maps, KPIs, and strategic initiatives to reflect the second wave directions.
Key elements of wave two included the development of a more systematic initiative management system to better link budgeting, resource allocation, and
decision making to the strategy and enhance the follow up on the initiatives, as well as the introduction of the scenario-based strategic planning for a more accurate and agile adaptation of Turkcell Superonline’s strategy in an increas-ingly competitive landscape.
Measures of Success
As for success, consider the following. All figures compare 2008 with 2013:
• Total revenue increased fourfold, from 158 to 925 million Turkish Liras in four years.
• EBITDA turned from negative 42 million to positive 238 million Turkish Liras.
• Network coverage jumped from 64,000 homepass (fiber infrastructure cover-age) users to more than 1.7 million in just four years.
• Market share in terms of fixed Internet subscribers (including ADSL, fiber, and cable Internet) grew from 3% in 2010 to 11.3% in 2013.
• Almost 60% decrease in call centre usage from 2010 to 2012, showing the improvement of the operational activities.
• Employee satisfaction rate was 16% above the average value in Turkey.
Abridged from Palladium’s 2013 Hall of Fame Report and other materials. [3]
Panel 2: The PMOs Claim for Managing Strategic Initiatives
In 2013, the Project Management institute (PMI) released a report, jointly authored with Boston Consulting group, called Strategic Initiative Management:
the PMO Imperative. The report argued that “A program or project manage-ment office (PMO) can play a crucial role…in actively supporting the implemen-tation of strategic programs.” However, it underscored the fact that, “the role of the PMO within the firm must, in turn, become more strategic, and it must develop its capabilities accordingly.”
The report summarized four key skills required by PMOs, which resulted from several years of research among PMO and other leaders.
Focus on Critical Initiatives
Here, the message is to provide senior leaders with true operational insight through meaningful milestones and objectives for critical strategic initiatives.
“Such focus provides clarity and course-correction among emerging issues and the fullest possible realization of impact.”
The report stated that generally PMOs do already encourage the setting of milestones, measures, and objectives for initiatives, “but in many cases the tradi-tional approaches simply aren’t effective for large, complex and fast-moving ini-tiatives,” it was noted. “They generate either too little or too much information, obscuring what is really happening instead of providing PMOs and senior execu-tives with clear information that allows for timely course correction.”
Self-Assessment Checklist
The following self-assessment assists the reader in identifying strengths and opportunities for improvement against the key performance dimension that we consider critical for succeeding with strategy management in the digital age.For each question, any degree of agreement to the statement closer to one represents a significant opportunity for improvement (Table 8.2).
Institute Smart and Simple Processes
This component spotlighted the importance of establishing program-level rou-tines that track initiatives and their goals, communicate progress, and help to identify issues early without adding undue burdens or usurping the businesses and functions executing the work.
“Roadmaps must identify the set of critical milestones that provide leadership with a clear basis for operational insight into what the initiative is about, what the critical known risks and interdependencies are, and how the initiative is pro-gressing, using forward-looking indicators.”
Foster Talent and Capabilities
Developing and nurturing the right technical, strategic, and business manage-ment, as well as leadership, skills, and capabilities within the organization was the next component.
The report stated, “It is no longer enough to focus talent development only onto technical project-management skills. Organizations also need to develop a portfolio of talented PMO staff with strategic, business and leadership skills.”
Encourage a Culture of Change
This component stressed the criticality of actively building organization-wide support for, and commitment to, strategic initiative implementation and chang-ing management as real competitive differentiators.
“The implementation of initiatives is hard, and much can go wrong during the journey…PMOs need to foster the transparency about problems as they come up, providing senior leaders with the means to make course corrections in time to ensure that the overall initiative hits its target impact,” the authors state.
“That in turn requires an environment in which people, especially business man-agers executing initiatives, are willing to raise their hands if they need help or spot a burgeoning problem…. Red flags should not evoke punishment but encouraged as they identify concerns early enough for senior leaders to inter-vene as needed to address those concerns.”
Source: Strategic Initiative Management: the PMO Imperative, Boston Consulting Group, Project Management Institute, November 2013.
References
1. Jim Highsmith, et al. Manifesto for Agile Software Development, Agile Alliance, February 2001.
2. Rafael Lemaitre, James Creelman, Roberto Wyszkowski, Creating the Transformation Office, A New Organisational Capability for the Digital Era, ShiftIn White Paper, 2016.
3. Abridged from Palladium’s 2013 Hall of Fame Report and Other Materials.
Table 8.2 Self-assessment checklist
Please tick the number that is the closest to the statement with which you agree 7 6 5 4 3 2 1
My organization is generally very good at managing strategic initiatives
My organization is generally very poor at managing strategic initiatives In my organization, the
strategy office and PMO work very well together
In my organization, the strategy office and PMO do not work well together
In my organization, strategic initiatives are generally owned by senior managers
In my organization, strategic initiatives are general owned by mid-level managers We manage strategic initiatives
as an integrated portfolio
We manage strategic initiatives independently for each other We are very good at measuring
the performance impact of initiatives
We are very poor at measuring the performance impact of initiatives
© The Author(s) 2019 167
D. Wiraeus, J. Creelman, Agile Strategy Management in the Digital Age, https://doi.org/10.1007/978-3-319-76309-5_9