Sunday, December 2, 2012

Defining The Office of Strategy Management | Executive Street

Many organizations do an adequate job strategic planning, only to see the effort go to waste as execution languishes ? sometimes due to poor project management, lack of initiative ownership / accountability and political turf wars occurring within the business. Strategy governance is the secret weapon to combat such obstacles, but even then the approach taken with strategic plan oversight distinguishes the outcomes a great deal. Governance disconnected from business operations usually results in a powerless reporting function that does not help improve upon strategy execution. For a strategy governance organization to produce better than average results in execution, it requires the function to be well-integrated within the business and exist in a culture of accountability. It must offer process sophistication, planning maturity and have the authority to act. The best practice for closing that gap between strategy and execution is the establishment of a corporate-level Office of Strategy Management (OSM) ? responsible for overseeing all strategy-related activities ranging from formulation to execution. This article describes such an office and examines role, function and benefit to an organization.

What is an Office of Strategy Management?

An Office of Strategy Management is usually organized at the corporate level to facilitate corporate strategic plan development and oversee implementation. We use the term ?oversee? because execution of strategy must be accomplished in an integrated fashion throughout an organization and the OSM is not intended to do all of the work. The OSM?s role is not just strategy development, but also to be the major player in corporate strategic program coordination.

The term Program Management Office (PMO) is related to an OSM in many ways, yet the OSM?s function can be much broader than managing programs and projects. A PMO is generally a group or department within an enterprise that defines and maintains standards for project management across the organization, seeking to standardize and introduce economies of repetition in the execution of projects. PMOs are generally the source of documentation, guidance and metrics on the practice of project management and execution. In that regard, a PMO?s standards might well serve the OSM ? where managing programs and projects is part of the function the OSM provides, but not the primary purpose. Likewise, an OSM should be the source of documentation, guidance and metrics on the practice of strategic and operational planning practices. If PMO standards for project management exist already within the organization, an OSM should be leveraging those assets. If not, it most likely will step up to fill that gap. Perhaps the most important similarity between PMOs and an OSM relates to the form of PMO implementation where governing groups of related projects is part of that function?s scope. In this regard, a PMO?s program governance role is closely related to the OSM?s primary purpose and overlap might exist between the two.

To conclude this point, the OSM performs a strategy governance function for strategic plan development and implementation. Central to governance are the concepts of leadership, authority, accountability, transparency and stewardship. Additional to this is the concept that the OSM serves as a ?delivery arm? to ensure the efficient, effective and equitable allocation of funding is directed to strategy-aligned initiatives.

How can an OSM be established and when does it become a requirement?

So how does an OSM become a reality and when is one needed? The answer to the second question is the easiest to address. An OSM, whether it begins with a single individual or a small team, adds value to the CEO and executive team as soon as the organization begins to formally perform strategic planning. That?s because the executive team cannot be expected to manage the day-to-day execution details of strategy. Someone or some organizational function must do that.

The answer to how an OSM is normally established varies, but typically may evolve from the initial appointment of a Chief Strategy Officer and grow organically as more resources are needed to keep up with the scope of the office. The strategy officer defines the job and sets the tone for what the OSM might someday be.

A strategy officer is typically responsible for driving strategic planning and interacting with business units and functions during that process. A strategy officer should also provide support in operational planning by ensuring that business units have the knowledge they need and the tools required to develop tactical plans that support alignment with the corporate strategy.

The strategy officer also normally serves as the glue that helps disparate business functions work better together. Through involvement in the corporate strategy development and then later involvement in operational planning, budgeting is attenuated with strategy and more importantly with fiscal operational plans.

How? Enterprise, division, line-of-business and departmental budgets determine the resources that can be invested towards a strategy goal achievement.?Goal timeframes may not be accomplishable if financial resources are too limited or, worse yet, do not exist in key areas of the enterprise ecosystem.?During operational planning, financial constraints will begin to emerge and must be resolved.?The strategy officer can work with the organization?s CFO to help in this regard. Sometimes that means that plans must be scaled back or adjusted to reflect the limits of capacity to meet goal objectives in certain areas of the organization without additional investment by the enterprise.? In any case, finalized budget allocations allow the detailed aspects of the plan to be developed fully and be realistic with organizational capacity.

Summary

The Office of Strategy Management can be a very effective corporate function to help close that gap between strategy and execution. An OSM is usually responsible for overseeing all strategy-related activities ranging from formulation to execution. Whether an OSM begins as a single individual or is established initially as a small team, CEOs and executive teams can benefit by realizing improvements in strategy implementation. A such, an OSM can be initiated as soon as the organization begins to formally perform strategic planning.

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Source: http://blog.vistage.com/business-strategy-and-management/defining-the-office-of-strategy-management/

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