Strategic Planning: Developing Business Drivers for Performance Improvement
Organizational improvement efforts should be driven by business needs, not by the content of improvement models. While improvement models, such as the Capability Maturity Model Integration (CMMI) or the Baldrige Criteria for Performance Excellence, provide excellent guidance and best practice standards, the way in which those models are implemented must be guided by the same drivers that influence any other business decision. Business drivers are the collection of people, information, and conditions that initiate and support activities that help an organization accomplish its mission.
These drivers should be the guiding force behind performance improvement because they represent key factors or influences that matter to an organization's success. But how do we identify these drivers? This blog posting, the latest in a continuing series on the SEI's work on strategic planning, describes how we are using integrated strategic planning and the associated information framework to derive the most vital business drivers for performance improvement.
An Integrated Strategic Planning Method
The strategic planning method we've been using at the SEI integrates the following two complementary techniques that provide a framework for identifying business drivers for performance improvement:
- Critical success factors (CSFs), which are indicators that measure how well an organization is accomplishing its goals. For example, a CSF for agile software projects is achieving a high-level of client-developer interaction.
- Future scenarios, which allow organizations to explore multiple potential futures and generate robust strategies and the early warning signs that indicate how the future may unfold. For example, weather experts will create scenarios based on the critical uncertainties associated with a major weather system and plan for the range of possibilities, while monitoring the variables and narrowing on the most likely scenario over time.
Our integrated strategic planning approach (described in my February 2011 blog post and a November 2010 SEI technical report) sets the stage for initiatives, such as architecture analysis of alternatives, performance improvement, risk management, and portfolio management, that an organization can apply to improve its performance at multiple scales, ranging from individuals and teams up to the entire enterprise. Tying performance improvement to organizational strategy by identifying key business drivers creates an environment that is business-driven and model-based, but not model-driven. In other words, improvement decisions are informed by best practice models--such as the CMMI, the Baldrige Criteria for Performance Excellence, the Information Technology Infrastructure Library (ITIL), and the Project Management Body of Knowledge--but are driven by business concerns, rather than by an attempt to apply a particular model for its own sake.
Linking Strategic Planning to Performance Improvement
Through the SEI's strategic planning and performance improvement work with federal acquisition program offices, we've observed that key business drivers can and should be elicited from integrated strategic plans. In particular, aligning improvement activities with organizational strategic goals and CSFs helps ensure improvement activities achieve business goals. We've also learned that there is no one-size-fits-all improvement solution, that is, no single model improves performance across-the-board. Instead, organizations often see better results when they apply the most applicable parts of multiple models based on strategic business-driven information. When improvement initiatives and activities are directly derived from organizational goals, objectives, and CSFs, they can support and complement strategic initiatives and actions.
We particularly like how broad frameworks, such as the Malcolm Baldrige Criteria for Performance Excellence, can be used to identify general initiatives. The Baldrige Customer Focus criteria, considered with regard to the organization's customer goals and coupled with input from a strategic plan, might lead the organization to improve the resilience of their customer-facing web services, which can then be augmented with specific actions (such as ensuring that high priority alerts from incident detection systems are resolved within 60 minutes) guided by the CERT Resilience Management Model. This multi-model combination enables an organization to select the improvement model(s) and practices according to what will best support their business objectives (such as preserving the confidentiality of customer data), rather than according to model-based criteria (such as maturity levels).
Business-Driven Performance Improvement
To showcase the way that integrated strategic planning can help an organization understand its business drivers for improvement, consider an information technology (IT) group with the mission of acquiring IT systems that support the services provided to the broader company's customers. The IT group's CSFs would reflect the following operational areas that must function well to meet its mission:
- acquiring IT systems that serve customer needs
- managing and tracking a budget that is adequate for the mission
- formally managing relationships with key internal and external stakeholders through communication, managing expectations, and personal interaction
Likewise, the IT group's strategic goals might include the following:
- Deliver service at customer locations, not just at traditional in-house IT data centers and facilities
- Enable highly usable self-service systems to maximize the ability of customers to transact business without intervention by IT group staff
- Develop and certify qualified, competent project managers, project team members, and portfolio and project oversight staff members to manage IT projects successfully
Progress toward the goals and attention to the CSFs described above might involve improvement actions associated with maturing the IT group's requirements definition process. Specifically, the strategic goals outlined above could lead the IT group to the Baldrige Customer Focus category for criteria on Customer Listening. This goal would also indicate value in CMMI-ACQ process areas, such as CMMI for Acquisition (CMMI-ACQ) and the following practices:
- ARD - Acquisition Requirements Development
o Specific Practice 1: Develop Customer Requirements
o Specific Practice 3: Analyze and Validate Requirements
o Generic Practice 2.5: Train People
o Generic Practice 2.7: Identify and Involve Relevant Stakeholders
o Generic Practice 3.1: Establish a Defined Process
The goal might also lead the organization to practices in CMMI for Services (CMMI-SVC).
Future scenarios might help expose a driver about the potential for a dramatic change in the IT group's workforce over the next 5 to7 years. While scenarios do not present certainties, they present opportunities to develop robust strategies that will serve the organization well, regardless of the outcome of a high-impact uncertainty. Awareness of a critical uncertainty around the size of the workforce (due to economic conditions, aging, competition for talent, etc.) might help the IT group justify focus on the Baldrige Workforce Focus category for criteria on Workforce Capability and Capacity, as well as the People Capability Maturity Model (P-CMM).
Ideally, the IT group will have fully aligned strategic plans and improvement plans that identify the essential knowledge and best practices contained in the performance improvement models that are most relevant for their specific business drivers.
Current and Future Work on Integrated Strategic Planning
We are currently working with an organization that is undertaking 48 improvement actions, each derived from organizational goals and CSFs and tied to one of four performance improvement models, including the P-CMM, CMMI-ACQ, CMMI-SVC, and the Baldrige Criteria for Performance Excellence. By aligning the work associated with the improvement models to the organization's strategic plans, the improvement measures are tied to organizational goals and CSFs. Our work on this project thus far has provided compelling evidence that the integrated strategic planning process described in this blog posting is well-suited to identifying business drivers for performance improvement.
More broadly, an organization's store of knowledge and experience, embodied in people and captured for communication and use in the processes, practices, and procedures of the organization, help an organization react to change. In today's dynamic mission contexts, the ability of an organization to react to changes in its mission environment is a critical capability. We are exploring the use of an agile strategic planning process that links performance improvement to organizational agility. We look forward to sharing our results with you in a forthcoming post.
For more blog postings on strategic planning, please visit http://insights.sei.cmu.edu/archives.cfm/category/strategic-planning
I recently attended the SEPG Europe conference in Madrid, Spain, where I delivered a presentation about using strategic planning techniques to identify business drivers for multi-model performance improvement. My presentation was on Tuesday.