Most organizations face increasingly complexities, resulting in a growing ‘waste’ in their productivity.  As a result, stock markets now apply ‘corporate discounts’ when valuing large companies, because the costs of these complexities are often higher than the benefits of the economies of scale.

Every day, people in companies implement a lot of new initiatives and, by doing so, create future value but also add to the complexities. In a recent article in the Harvard Business Review, David J. Snowden and Mary E. Boone describe the characteristics of complex systems. According to them, complexities involve a large number of interacting elements, most of which are non-linear and minor changes, which produce disproportionately major consequences.  Since the environment in which we work is dynamic and relatively unpredictable, pre-designed and standard responses or solutions can be inappropriate. Constant adaptability is therefore key, as are local solutions, even for companies operating globally.

Well-designed frameworks however can help reduce complexities.

The three overriding questions in corporations are, the ‘what’, ‘how’ and ‘who’ questions, asked when determining strategy (what), implementation (how) and governance (who).

 At ING Asia/Pacific, we recognized this and as a result designed and implemented a framework for managing these three areas more effectively. We called it the “Towards Performance Excellence” framework or TPE for short. It is designed to align strategy and execution through an aligned organisation, and allowing us to measure results using Key Performance Indicators (KPIs) for each objective set.

The framework requires a three-step implementation approach:

Step 1 – The “what” question: Identify market ‘positions’ which are ‘core’ to our business results and develop opportunities to grow and leverage the ‘core’ based on 5 strategic areas of focus. Decisions are made through an iterative process between the head office, business units and functions and are then translated into a picture.  A 5-legged ’spider’ framework communicates the growth strategy of expansion through 1) Reach, 2) Lines of Business, 3) Products, 4) Distribution Channels and 5) Customer Segments.

Step 2 – The “how” question: Having set the strategic direction, the process moves on to set the strategic priorities, which in turn categorizes the priorities in a comprehensive and consistent process by listing all the main objectives and then adding KPIs.

This is done by grouping all business objectives into six ‘Drivers of Excellence’. This step ensures that everyone involved understands where they are placed to help execute the strategy. All their business targets, initiatives and personal objectives can also be placed in one of the six drivers.

Each Driver of Excellence consists of a variety of sub-drivers, which unambiguously define all businesses and functions in the same way.

This means, for example, that if an employee moves from a business unit in one country to another country he knows that the TPE framework is also applied in new business unit he moves into. Each of the ‘Level 1 Drivers’ drill deeper into the day-to-day work, while second level drivers define further e.g. operations can be further defined as grouping activities around new business sales processes, claims processing turn-around-time and so on.

Step 3 – The “who” question: The organizational framework allows the entire organization to know who is doing what and who is responsible for which measures and objectives.  All business units and functions apply the same organizational format, indexed in a matrix chart.  This chart clearly distinguishes which unit within a business unit is a business line (with P&L responsibility) and which department has a functional role.  This is different from the typical hierarchal organizational chart which misses the horizontal and vertical lines of the matrix organization, needed to enforce people to work together and avoid silos within a company.

Through these three steps, addressing the “what, how, & who” question in a comprehensive, consistent and cohesive way, the corporation is connecting all the dots.  It also connects the target setting for pay-for-performance schemes and even a knowledge management portal has been designed along the same framework.

A company that is determined to execute their strategy successfully can of course achieve this goal in a number of ways. However, when it comes to replication of a successful strategic execution across a diverse set of businesses in different countries, TPE has worked very well for ING. By unifying diversity, we now benefit from the richness of having that diversity by operating with 24 different business units in thirteen countries while eliminating the costs of the ambiguity it create