framework for getting from aligned strategy to aligned execution

Over the past two years, ING Insurance Asia/Pacific has successfully evolved and implemented the Towards Performance Excellence management framework.  This management model, which was developed with input from functional heads, senior management and staff at the business units, is now the operating mantra for all 24 of the region’s business units across everything they do.  Most of ING’s employees in Asia are now familiar with the six drivers of excellences that form the foundation for the Towards Performance Excellence (TPE) model.  However, it is important from time to time to revisit the business reasons that prompted us to create this strategic framework in the first place.  In line with ING’s philosophy of continuous improvement, an updated note on this strategic framework is presented below:

How Towards Performance Excellence fits into daily life

We are all implementing an ever increasing number of initiatives within businesses, including Diversity, Multiple Performance Metrics, Customer Centricity, Procurement, Living the Brand, IT-Security, Shared Services, Cost Reduction, Pensions, Compliance, SOX, IFRS, Basle II etc.  No business can afford to ignore any of these issues.  But do business units have an effective method to ensure that each of these are tackled properly while ensuring that the solution is in-line with the business’s strategic direction?  This situation is comparable to an architect who starts to build a house without first drawing up any plans and blueprints.

TPE effectively organizes (i.e. lists and catalogues) all these concepts and initiatives in a more coherent manner according to six ‘Drivers of Excellence’ – the Portfolio, Marketing, Organizational, Financial, Reputation and Operational excellences – and then into logical sub-drivers.  This process provides a checklist of sub-drivers under the top-line excellences and thereby a strong tool for implementation of action plans and follow-through.  In addition, TPE aligns all the Drivers to the Mission/Strategy, Knowledge Management function and corporate audit services of a company, while supporting managerial discussions and action plans.

The below diagram describes the strategic areas/markets/products in which Insurance Asia/pacific is active as well as the areas for future growth opportunities.

Having an Aligned Strategic Direction under the following framework will bring us to Aligned Execution:

Some businesses have operational excellence as one of their strategic objectives.  Yet we can not achieve overall excellence in performance, if we don’t have excellence in all the key drivers of our business activities.

What the “hundreds” of initiatives or plans have in common is that they all are (or should be) “Drivers for Performance Excellence”.  Yet, they can only achieve this goal if managed in a consistent and cohesive way, with clear and simple objectives and measures set-out.  An example below breaks-out the drivers/sub-drivers for Sales & Distribution within the Marketing function.

What Towards Performance Excellence brings

TPE provides us with the road map for strategic development, implementation, and more importantly a visual manifestation of that process with a clear list of next steps.  Employees should say: “This is my ’living organization‘, its components, how we get to our goals and how I fit in.”  We all aim to create more than just an organization chart – instead we create an identifiable, flexible and adaptable structure, which is unambiguous, easy to understand, and can fit on one page!

The TPE model also provides commonality to the initiatives that we tackle every day and shows their purpose and how they fit into the ultimate objective of Performance Excellence. The model also provides a form of cohesion, so that themes such as Branding, Living the Brand or Finance initiatives such as Economic Value, Embedded Value, Risk-based capital etc., can be organized in a way so that we do not lose sight of our overarching objectives and are able to unambiguously explain what they intend and mean.

TPE is an initiative to create more order in an otherwise unplanned world, which can quickly cause staff to conclude that we don’t have a clear strategy and do not know what to achieve first or how to execute any plans.

TPE can then be used to share knowledge and boost use of the intranet as the main form of communicating and sharing best practices.  If somebody wants to know how to get to the lowest cost of claim handling, the best branding campaign or IT security, this can be found easily on the intranet through the relevant drivers.  It also forms the basis of the medium-term planning process, country management discussions, communications and management reporting and is well aligned with AO scans and input from corporate audit services.

All management layers are involved

The impact of TPE is that all management layers and all functional columns adopt the same approach, and the same objectives and measures in an integrated and simple manner.  The matrix organization becomes much more effective, as well as the role of a regional office in is efforts to “lead, support and control in a balanced way”.

Everyone has a “bird’s eye” view of what is taking place in other parts of the organization, how their activities fit into the greater scheme of things and how other parts of the organization are working.

TPE also compels managers to pay attention to the six drivers, and the relevant objectives that have been set.  All too often managers find themselves pre-occupied with reorganization, internal or external events, special projects etc., and while they wish to be more involved in other parts of the organization, find they are unable to do so.  TPE offers a way to update managers instantly on the progress in each of the six drivers and where the company stands in terms of the set targets.  Applying the TPE Framework allows them to be more focused on all issues relevant to drive performance and not just on issues such as sales, cost management and operational excellence.

TPE driven Performance Appraisal and Compensation

Parts of Senior Managers’ personal objectives are also set along the lines of TPE, using a scorecard as illustrated below. Consequently, appraisals weigh the importance of each of six TPE drivers in relation to the management function and indicate to what extent the objectives in each of the drivers have been realized.

Finally TPE is used to structure our meetings and reports in order to better align our communications .

Conclusion

Over 2005, we progressed from a diversified group of businesses/countries with a variety of different strategies, approaches and business-languages to leverage a much more unified and aligned approach to define, manage and communicate our businesses. While respecting the differences in our businesses, we have unified what we have in common.  I call this “Unifying Diversity”.  We added clear objectives and measures to the ‘hundreds’ of (sub) drivers, needed to manage our businesses, allowing us to drive more effectively the overall region to Performance Excellence.