I recently interviewed top management expert, Harvard Business School Professor Robert Kaplan, one of the originators of the performance management system the Balanced Scorecard. (Here’s his biography on the Harvard Web site.) He’s come out with another book (with David Norton) –The Execution Premium: Linking Strategy to Operations for Competitive Advantage.
 
The concept behind the book is to show organizations how they can mesh strategy and operations to attain corporate goals using a deliberate six-stage management process. Kaplan says that many organizations try to do this in an “ad hoc fashion” but that it seldom works. Instead, they need to take a systems approach.
 
This is more important when times are tough. Here’s what he told me:
 
“In good times business is expanding and it’s easy for managers not to pay much attention to strategy. They’re making money and markets are expanding. So it becomes more important when times get tough. At that point you have to cut back some of the capacity and spending that you’ve been doing during the growth stage. And if you’re not careful you end up not just slashing waste and inefficiency and excess capacity, but you end up slashing into the building of capabilities that you need to come out of any economic slowdown in even stronger shape.
 
“… During rapid times you’re not as disciplined about restraining spending so you do build up a certain amount of inefficiency and waste because you don’t want to miss the market growth. But during the slowdown then you have to look much more closely at all the spending programs and all the capacity you have put in -and hold onto only those that you want to sustain into the future. That’s where strategy helps you focus.”
 
My full interview with Kaplan and book overview will be published in the Sept. 10, 2008, issue of MDM. Find it at mdm.com. The current issue of MDM (Aug. 25, 2008) is available here.