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The pyramid principle for strategic planning and removing siloes

Published on 27 April 2020

The pyramid principle for strategic planning and removing siloes

Whether you are in a planning, insight, quality, operational or leadership role, if your work doesn’t align to the organisation’s objectives, you set yourself up for trouble and, potentially, a lot of wasted effort. Our new best practice thinking in this area starts with the Strategy Pyramid, an evolution of our long-standing KPI Pyramid. Start at the top. What do you stand for as an organisation? Often this is laid out in a corporate purpose, vision and values, but how well this is worked down does vary a lot across our member organisations. 

Work published in the Harvard Business Review (see box) is thought provoking, because a good brand strategy will make this easier to operationalise, starting with the customer in mind. Our brand and values should dictate the goals and expectations we set. What are your organisational objectives and brand strategy? How do they link in to what you do in your role? 

Build a pyramid of strategies
You need high-level strategies that will deliver these goals, with clear measures of success. These may exist already, or they may need challenging and developing.

A very useful technique, which we teach in our Learning Academy, is the ‘balanced scorecard’ and there will be scorecards at each level. Starting from the top, create a dashboard (for instance) that looks at four key strategic areas. This balances factors that often can’t be directly compared (‘apples & pears’) but are all necessary for achieving your corporate goal. 

Four stakeholder lenses
We call these the lenses and four is often a good number. It gives diversity and it works well in a matrix or a 3-dimensional pyramid. Beware: don’t just think about this when you are starting to build a dashboard; that is too late! In this example (see diagram), we look at success in terms of these four lenses: colleague, customer, business (‘company’) and compliance. How are we meeting the needs of these stakeholder groups? Do we need to manage expectations in some way? Create a strategy for each lens that considers the needs of these stakeholders in relation to the rest. Otherwise they just compete, a potential weakness in balanced scorecards. For instance, members often talk about conflict at an operational level between reducing costs and engaging colleagues, or customer satisfaction. Your overarching objectives should give this balance between the lenses. Your culture and how you use the measures for performance management is also extremely important (see the following pages).  

Workforce & customer strategies
Be sure strategies are both holistic and realistic, with buy-in from corporate functions, like finance, sales, marketing & HR, as well as operations. For instance, resource planning teams require a clear workforce strategy that looks at the needs of colleagues in a way that can prevent operational conflict, as mentioned. The customer strategy, thankfully now more common, needs to spell out what is expected of colleagues (in order to deliver for customers), and what can be afforded (by the business). The right lenses will vary by organisation or sectors. For instance, you may need a strategy for the environment or the local community – or to distinguish clients (who pay) from end customers (who benefit).Why does this matter? Because a profitable business or a low-cost service does not always mean happy customers or colleagues or regulators – and vice versa. The balance is key to success. 

Performance measures 
When setting indicators, the pyramid principle is key. For each lens, you need a measure of success that you can track. These are the Key Performance Indicators (KPIs). High-level strategies focus on what we are setting out to achieve. You will also need enabling delivery strategies that detail the how. Each will have its own success measure(s), also called Performance Indicators but not strictly KPIs. Working with a hierarchy in this way means you can aim for just four KPIs, one for each lens. 

In 1956, psychologist George A Miller proposed a theory that our working memory can hold just seven things. This is the memory we use when processing information. More recent studies put this figure as low as three or four. If we limit the number of metrics, at each level of a hierarchy, it means we can process this information better. When developing delivery strategies, it can be helpful to add layers, breaking into stages or journeys for each lens. Map it out one stage at a time and beware of creating siloes, for instance by setting strategies at a departmental level. So, express a customer journey in terms of their experience not your departments.

For compliance, start by mapping the regulators you need to satisfy. Remember each strategy needs a measure of success and each must link back to the next level above. You can add layers as you need, to keep your scorecard simple for users at each level and help them process the information. To avoid siloes, a balanced scorecard at the departmental or team level will typically draw on a mix of lenses.

Input measures 
The final layers are our input measures. Here it is important to distinguish measures that are inputs (what happens) from outputs (the consequences that result). Also establish which factors we can influence, and which are outside our control. Inputs are things that need to happen (or not happen) to deliver successfully on your output performance indicators – for instance behaviour or processes that drive productivity or external events. It is especially important for planners and analysts to build understanding among stakeholders of the operational levers you can pull or the operational impacts to watch for. For instance, handling time or productivity and most shrinkages are operational measures that we need to manage. On the other hand, weather patterns – or, of course, a virus – are factors that we can’t control, but absolutely need to understand and forecast. It’s also vital to model and predict the impact of these on other input or output metrics. 

For instance, we can use trigger points for any of our input measures to define when we start to implement our playbook of operational contingencies. This can, clearly, be used at any stage of the planning cycle, from strategy and budgets right through to on-the-day operational effectiveness. Planning for the unexpected is something we have all been getting much more experienced at these last few years! If you have a robust hierarchy of strategies and indicators that everyone buys into, from top to bottom, then you will find yourself much more agile and joined-up as an organisation. Learn more from our virtual learning modules. Why not try our Strategic Analyst Box Set?

Brand Strategy: what do we stand for? 
Denise Lee Yohn identified nine types of corporate brand, in her book FUSION: How Integrating Brand and Culture Powers the World’s Greatest Companies. Published in the Harvard Business Review, December 2019.

  • Disruptive challenges the market
  • Conscious on a mission to make a social or environmental impact 
  • Service delivers high quality customer care
  • Innovative introduces breakthrough products and technologies
  • Value offers low prices
  • Performance product or services that deliver a superior performance
  • Luxury higher quality at a higher price
  • Style differentiated by look and feel
  • Experience differentiated by the experience offered

This article was first published in the 2020 Best Practice Guide - 2020 Vision: Crystallising your knowledge

To download a full digital copy of the Best Practice Guide, click here

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Author: Leanne McNamee

Categories: Library, Planning & Resourcing


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