Closing the gap between strategy and execution

I was tipped off to this excellent paper (which originally appeared here in the Summer ’07 edition of the Sloan Management Review) via the London Business School Research news feed.

Professor Donald Sull’s “Strategy loop” is the best model I’ve seen that describes how xPM works.  xPM is the (business) foundation for an organization’s management operating system.

Sull touches on four areas that are reflected in our xPM model.  They are:

1. Observe data and come to a shared mental model: we call these phases “Gather” (reporting, business intelligence) and “Analyze,” based on common business rules and master data management.

2. Make choices through respectful arguments: this is the “Debate” part of xPM, where financial and operational models are built and negotiated.

3. Make it happen (getting good promises): This is called “Decide” in our model and is where budgeting, planning, and forecasting happen.  What else is a forecast, other than a promise to deliver by person, by geo, by probability, and by a certain time?

4. Revise: you connect the planning processes with the reporting & analysis processes in order to account for ever-changing market & customer circumstances.   Hopefully, by making two-way connections among these xPM processes, you become a learning organization, building on institutional knowledge and capturing relevant business drivers.

Here’s how they line up:

Strategy Loop	Management Operating System	xPM
1. Observe data and come to a shared mental model	Gather & Analyze	Enterprise reporting, business intelligence, and analytics based on common business rules and master data management
2. Make choices through respectful arguments	Debate	financial and operational models are built and negotiated
3. Make it happen (getting good promises)	Decide	budgeting, planning, and forecasting
4. Revise	Connect the planning processes with the reporting & analysis processes in order to account for market & customer circumstances	by making two-way connections among the xPM processes, you become a learning organization, building on institutional knowledge and capturing relevant business drivers

Also refer to our entry on Don’s Sull’s “Promise Based Management” work at http://businessfoundation.typepad.com/bf_blog/2007/09/the-essence-of-.html
Or see more at http://www.donsull.com