From the course: Strategic Financial Intelligence for Business Leaders

How to translate strategy into measurable execution

From the course: Strategic Financial Intelligence for Business Leaders

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How to translate strategy into measurable execution

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- Once your corporate strategy is set, that's when the real work begins bringing it to life, and that starts with a five year long-range plan. Map out your big strategic goals. Maybe it's expanding into a new market, growing your capacity to improve margins, launching a new product, acquiring a competitor. After that, identify what it's going to take to turn those objectives into reality. You'll probably need capital, talent and systems. Next, zoom into year one. That is your 12-month operating budget. Your first step towards those five year goals. What you are effectively doing is you're answering what thresholds do we need to hit this year in order to stay on track with the plan? But keep in mind budgets alone, don't drive execution. You need a way to connect strategic intent to day-to-day performance, and that's where the balance scorecard comes in. This is a strategic tool developed at Harvard by Kaplan and Norton in the early '90s, and it's still one of the most effective ways to translate your big picture goals into real, measurable performance. First, financial. This is where you need to assess whether you're improving profit, margins, or cashflow. This lens helps you understand whether your strategy is turning into real financial outcomes. Second customer, are you gaining market share? Are you improving customer satisfaction? Are you retaining the right customers? Because if not, your growth strategy might be missing the mark. Third, internal processes, are you becoming faster, leaner, more efficient? This perspective tells you whether your operations are keeping pace with your goals or if they're holding you back. And fourth, learning and growth. Are you building the skills, the capabilities, the culture to stay competitive both now and in the future? As you can see, each balanced scorecard perspective gives you a different view of your business, and together they help you monitor execution. They help you spot issues early, and they help you course correct before performance drifts too far from your strategy. Now, the balance scorecard framework ensures you're not just chasing numbers, but you're actually building a business that lasts. But it's the OKRs objectives and key results framework that help you turn that strategy into action. OKRs take the balance scorecard framework one step further, and they help you turn those big goals into measurable outcomes that the teams can actually own and measure progress against. For example, let's say your objective is to increase valuation by a certain percentage, and let's say that will require scaling your operating profit or your EBITDA by 20%. Your key results in connection with that might be to grow revenue by 10%, to cut operating expenditures by 5%, and to improve collections by 15%. Each team will set supporting OKRs and will then track progress against those using KPIs. Sales teams will look at pipeline velocity. Operations teams will look at managing cost per unit, and then the finance team will focus on day sales outstanding and margin per client. This is how strategic intent becomes day-to-day execution in your business. Unfortunately, execution alone is not enough. You need a system to connect those actions back into a long-term value creation, and that's what we're covering in the next video.

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