Mastering Leadership Alignment

J.W. Ballard, Andrew Bargerstock

• Publisher: Business Expert Press
• Year: 2017
• Print ISBN: 9781631575037
• eBook ISBN: 9781631575044
• Topic: Business
• Subtopic: Operations
• Index: Business

This book raises the bar on what it means to be a high performance enterprise, providing methods and tools to engage the senior leadership team in building and sustaining rock-solid alignment. It demonstrates how to generate whole-hearted unanimity on precisely what creates value in the enterprise, who creates it, and how the value created shows up in the financial statements. Simple, step-by-step procedures given bring about whole-hearted unanimity in the senior leadership's understanding of how the enterprise makes money. Where to focus energy (and where not to) is revealed. Readers are guided to apply "non-directive leadership skills" to co-creating maps and reports of their enterprises' value creating activities into a Management Operating System ™ (MOS). Based on more than 30 years and over 50 hands-on projects using the work of legendary IBM Executive School leader, finance and values innovator, Lou Mobley, and Chuck Kremer, CPA, this book builds on Lou's original breakthrough works building IBM's executive leadership culture.

CHAPTER 1

Ballard’s Alignment and Reporting Disciplines

Ballard’s Alignment and Reporting Disciplines

1. Map and Identify: Map the sequence of VCAs; identify disconnects.

2. Analyze and Project: Three-bottom-line analysis with rolling cash flow projections.

3. Define and Link: Define financial drivers and disconnects; develop key KPIs linking activities and transactions.

4. Engage and Align: Engage leaders and staff by aligning on both true core facts and desired outcomes.

5. Monitor and Report: Regularly monitor performance in periodic huddles using outcome-driven agendas.

This primer on enterprise execution intends to enable CEOs, leaders, facilitators, and entrepreneurs to guide their enterprise toward long-term customer loyalty, achievement of business objectives, and improvement of cash flow from operating activities. In the preface and introduction to this book, we laid out the decades-long search for a Holy Grail, or what we call the Missing Methodology, that is, a systematic way to connect good business financial planning to consistently excellent performance in daily operating activities.

Contemporary management pundits speak about the importance of cultivating flexible, adroit thinking and problem-solving skills that can adapt to changing circumstances. Five books provide the backdrop for our adventure on how to systematically build enterprise unanimity with an effective system for closing the business performance gap.

1. In Deep Smarts: How to Cultivate and Transfer Enduring Business Wisdom, Leonard and Swap assert the importance of capturing the vast inherent (tacit) knowledge contained in the hearts, minds, and direct work experience of employees. Up to 50 percent of organizational capital goes undocumented, remaining in the form of tacit knowledge that cannot be easily transferred, or otherwise capitalized. Perhaps the greatest vulnerability in American business today springs from our inability to capture employees’ crucial enterprise know-how and sustaining wisdom (Leonard and Swap, 2005). Our take-away: Leadership and staff engagement and documentation of tacit knowledge are critical to developing wise and efficient ways to improve business performance.

2. In Education: The Discipline of Getting Things Done, Bossidy and Charran state, “Execution is not just tactics—it is a discipline and a system. Execution hasn’t yet been recognized or taught as a discipline, whereas other disciplines have no shortage of accumulated knowledge, tools and techniques. The leader who executes assembles an architecture of execution” (Bossidy and Charran, 2002. p.28). Our take-away: Systematic knowledge, tools, and methods provide the discipline and rigor for an architecture of execution.

3. In the business classic Managing by the Numbers (Kremer, Rizzuto and Case, 2000), the authors have provided what is apparently the first, and perhaps one of the only books that explains fundamental financial statements with simple common sense, and in plain English. It has sold close to 25,000 copies, largely by word of mouth, as no marketing was ever budgeted for the book after it was published. We will refer to this book throughout as the source guide for the financial side of our Value Creation Framework. Our take-away: Operational and financial literacy lay the foundation to create feedback and learning loops critical for assessing and monitoring operational progress.

4. In The Art of Focused Conversation (ICA Canada, 1997), Stansfield et al. provide 100 ways to access group wisdom in the workplace, and is intended to expand images of what can be accomplished through the Focused Conversation Method. It demonstrates how many workplace tasks can be accomplished through the medium of focused conversation. Ballard’s Alignment and Reporting Disciplines (BARD) is a highly specific form of what is offered in its 25 pages of text and 100 tested agenda designs. BARD methods have been built using this method. Our take-away: Develop rational and experiential outcomes for meetings first, before agenda setting; and design meetings that start with key data, then explore issues and insights, and end with decision recommendations and next steps.

5. In Wheelspin: The Agile Executive’s Manifesto, Mike Richardson refers to organizational agility as the necessary ingredient to address the dynamic complexities of modern business. He refers to the importance of triage as “an acute form of focus, time and priority management in complex situations which are unfolding in real-time with high stakes.” Chaos and complexity grow to create a sense of being overwhelmed. Ultimately, “getting organized for agility takes higher order executive strengths” (Richardson, 2011). Our take-away: Focus and priority management are key ingredients for developing effective systems to deal with complexity profitably.

Today, as we look back to the evolution of our work in organizational development, we see how key ideas in these books helped shape the development of our guidance to business leaders and community benefit organizations. Gradually, we discovered the various tools needed. Then we crafted an insight-filled line of inquiry, engaging leaders and staff on this path of curiosity about “How well are we actually doing?” Collaboratively documented mining of tacit job knowledge triggers what ultimately can become enterprise-wide alignment and passion for achieving excellence in operating activities.

Ballard’s Alignment and Reporting Disciplines

The whole-systems model we use to wake up the enterprise and unlock the genius of its employees is called BARD, five core activities in sequence. BARD consists of integrated elements from value stream analysis, the theory of constraints, metrics-driven culture change, technology of participation, systems thinking, common language development, accountability, preparation and reporting of financials, and lean management.

The five disciplines proceed sequentially in this book.

1. Map and Identify: Map the sequence of value-creating activities (VCAs); identify the total set of disconnects, each linked to a VCA.

2. Analyze and Project: Conduct three-bottom-line analysis; create rolling what-if cash flow projections with material assumptions defined and indexed.

3. Define and Link: Define key financial drivers and disconnects; develop key performance indicators (KPIs) linking activities directly to the cash conversion cycle.

4. Engage and Align: Engage leaders and key staff to drive improvements by aligning on both core facts known and agreed to be objectively true, and outcomes to drive.

5. Monitor and Report: Regularly monitor performance in periodic huddles using outcome-driven agendas to generate an enterprise commons for mature measurement.

On the basis of decades of experimentation with BARD, we encourage the most senior leader to follow closely this finely tuned path of least resistance toward building a robust sense of unanimity within the organization. Through BARD, discover how to powerfully connect organizaobjectives directly to the day-to-day activities.

First, see how the combination of Value-Creating Activities mapping (VCAs), value chain indexing, and total disconnect analysis provide an accurate and forever repeatable method for continually reprioritizcurrent improvement initiatives across the entire enterprise. This book provides guidance for a precise sequence of leadership self- assessments, each building on the foundation of its previous, easily executed step.

Second, discover concepts and tools to conduct one’s own personal bottom lines analysis, and learn how to specify and/or personally generate rolling cash projections without being completely dependent on your valued financial professionals.

Third, learn how to extract the few financial drivers for critical business outcomes, and discover the most useful KPIs we call the 3-5 master measures, some of which will become fully validated key leading indicators over time.

Fourth, you will see how to stimulate high levels of senior leader engagement and alignment that builds and sustains leadership coherence, and then develop key staff capacity for continuously improving both activity and transaction results.

Finally, you will learn methods for self-organizing dialogues among senior, and later, associate leaders, which will keep the entire organization focused and on purpose to achieve continuous results improvements. Upgrades have generated millions of dollars within 12–24 months, as was the outcome in three of the 5 case studies in MLA.

Think of BARD as initiating a management operating system (MOS) upgrade. Some sort of MOS exists currently in every enterprise. The MOS articulates the procedures for activities such as paying employees, paying vendors, and serving customers. However, that existing MOS is almost never documented thoroughly enough for all leaders and eventually line staff, to be unanimously on the same page about all those important things that affect business performance. Through BARD, an enterprise can develop a core of whole-hearted unanimity about its MOS, documented so thoroughly and consistently that the entire business transforms into ever-higher levels of effectiveness.

The bottom lines axiom: Activity precedes transaction in all cases.

Unfolding BARD Step by Step

In Chapters 2 to 6, we unfold the five disciplines. In a step-by-step manner, each chapter will show how the development of specific shared and simple work products facilitates progress toward recognizing and addressing those few most important issues. For example, in Chapter 2, where the theme is mapping the value creation sequence, you will learn how to develop a list of 19 to 22 core Value Creating Activities (VCAs). The sequence of value creating activities serves as the foundation for defining a Chart of Activities (CoA) that answers the question—What is the sequence of value creating activities we follow to generate satisfied and loyal customers; and all our financial results?

Having a validated CoA permits the development of a draft Value Cycle Map about which there will be no arguments because the whole senior team all genuinely had a hand in creating it. After the senior team, and then, prudently, all other staff, get the opportunity to include their value creation insights, this map communicates to everyone a basic picture of how the organization creates value for its customers. It can also be utilized to support and direct discussion about disconnects and waste that are thwarting performance.

Case Study: Maryland Association of CPAs

In most chapters, we demonstrate how each of the disciplines was implemented in a real case situation with a nonprofit professional association, the Maryland Association of Certified Public Accountants (MACPA), one of Jahn Ballard’s first clients to experiment with all five disciplines.

Founded in 1901, MACPA had developed a stable brand and mature market when former construction industry CFO, Tom Hood, became the new CEO at MACPA in 1996. As a nonprofit organization with 9,000 members and a staff of more than 30 employees, MACPA steadily embraced a mission involving professional education, skills development, and lobbying to help CPAs be successful while protecting the CPA brand. While it is a thriving concern today, in 1996 the MACPA business model was in need of an overhaul. Hood expressed the challenge in this way:

As senior leaders, all of us have a fundamental challenge with organizational leadership—it is that we’re just never done because our businesses are constantly evolving and changing, as are our people. The question then becomes, how do we continually figure the current situation out? How do we engage our people, train them and get them owning our business strategy, and then drive business execution in the right direction?

The problems Tom Hood faced when he arrived included an eroding revenue stream and growing expenses. Much of their revenue came from providing continuing education credits for the state CPA licensing requirements. Yet competitors had entered the market and were offering competing classes, which eroded MACPA revenues. In the past, MACPA had been able to obtain mailing lists of those passing the CPA exam. But new privacy laws prohibited releasing anything other than the names of exam passers. Thus, it had become more complicated to reach newly licensed CPAs. Another observation Tom made was that the organization had a compliance orientation, not a customer value orientation. They had developed a singular tunnel vision that focused on helping members stay compliant with continuing education requirements. Consequently, MACPA was missing opportunities to discover valuable new services that could benefit their membership.

Tom quickly identified the eroding revenue base as a top priority and had some success in reversing the downturn. But, by 2001, Tom wanted to find ways to enlist employees in efforts to further improve organizational performance, as they had grown revenues back over $4 million for that year, while going further into the red, with a negative Cash Flow from Operating Activities of $245,000. So he engaged in collaboration with Jahn Ballard to assist with an initial management system upgrade at MACPA. He started with teaching his staff a three-bottom-line performance view of their association. With this tool and methods, they could all see the financial results they were producing, and easily agree collectively on the few crucial areas for aligned focus of the entire staff. Educating and engaging the whole staff at MACPA in this manner delivered a $971,000 cash flow improvement in the first 12 months, with total revenues of $4 million.

Over the next decade, Ballard visited annually to train CPA members in the Three-Bottom-Line performance as part of their annual Continuing Professional Education...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Foreword
• Introduction
• Synopsis
• Chapter 1 Ballard’s Alignment and Reporting Disciplines
• Chapter 2 Mapping the Value-Creating Cycle
• Chapter 3 Conducting Three-Bottom-Line Analysis
• Chapter 4 Link Financial Drivers, Disconnects, and KPIs
• Chapter 5 Engage and Align Senior Leadership
• Chapter 6 Monitor and Report Performance
• Chapter 7 Value Stream and Value Cycle Accounting
• Chapter 8 Boosting Enterprise Performance
• Exhibits
• Executing on the Theory of Constraints
• Value Creation Self-Assessment Templates
• 3 MOS Upgrade™ Business Cases—Oklahoma Blood Institute 2008
• Indigenous Designs 2010
• IBM DuPont ROA Chart 1950–2008
• Sacred Glossaries and Why Every Enterprise Needs One
• BARD Reading List—MLA Library
• Why Mastering Leadership Alignment’s Appendices?
• MLA Contributions by Thought Leader Practitioners
• Afterword
• Acknowledgements
• Index