Analysts Discuss Requirements for a Pattern Based Strategy During Gartner Symposium/ITxpo 2009, 2-5 November, in Cannes
Performance-driven culture will be one of the four disciplines required to support a Pattern-Based Strategy, according to Gartner, Inc. It predicts that through 2015, organisations that implement it supported by performance management applications will outperform their peers by at least 30 per cent.
A Pattern-Based Strategy provides a framework to proactively seek, model and adapt to leading indicators - often-termed "weak" signals that form patterns in the marketplace. Not only will leading organisations excel at identifying new patterns and exploiting them for competitive advantage, but their own innovation will create new patterns of change within the marketplace that will force others to react.
Gartner analysts discuss the framework for implementing and mastering a Pattern-Based Strategy at Gartner Symposium/ITxpo 2009, being held here through 5 November.
A successful Pattern-Based Strategy requires four disciplines to be implemented throughout the organisation: pattern seeking (seeking and exposing signals), optempo (operational tempo) advantage (improving the organisation’s competitive rhythm), a performance-driven culture (extending the traditional performance focus) and transparency (the demonstration of corporate health and strategic use of transparency for differentiation).
“The new economic environment that has emerged from the global downturn increases the pressure for organisations to adopt a performance-driven culture to support Pattern-Based Strategies,” said Yvonne Genovese, vice president and distinguished analyst at Gartner. “However, most organisations measure performance rather than managing it, but this clearly needs to change. They need to change the way they manage business performance, from a rear-view mirror perspective focused on financial measures to a perspective that focuses on leading performance and risk indicators. As a result, it provides a forward-looking focus that permeates all levels of the organisation, rather than just providing top-level measure.”
Ms Genovese said that a performance-driven culture enables an organisation to monitor leading indicators of change and where performance is used to enable change through the alignment of organisational resources to strategic performance metrics. She added that instilling a performance-driven culture serves as a means to manage the impact of change to organisational patterns, track progress and drive desired behaviours across the organisation.
“Most organisations struggle to overcome the cultural and technology barriers to implementing a performance-driven culture, which limits their opportunity to leverage Pattern-Based Strategy. However, we predict that through 2015, organisations that implement a performance-driven culture supported by the right technologies will outperform their competitors by at least 30 per cent,” said Nigel Rayner, research vice president at Gartner.
Identifying the right indicators of performance is one of the key foundations for Pattern-Based Strategies but is not, on its own, enough. The development of a metrics continuum, with its focus leading indicators and weak signals, needs to be incorporated into planning systems to drive day-to-day operations. Furthermore, Gartner advocates the use of linked planning systems where financial and operational targets are linked with specific strategic initiatives and shared performance information provides the context in which to make informed decisions.
“Moving to linked planning systems will be a major shift in enabling Pattern-Based Strategies as it provides the management teams with the ability to dynamically create “what if” scenarios and simulations to model the strategic impact of new and changing patterns,” added Mr Rayner.
“The issue in all of this is not the technology – although it can help – the primary challenges are in changing the mindset of the business leaders to use these systems to formulate and manage strategy,” said Ms Genovese. “Business Leaders need to change their approach to the planning and budgeting process so that it becomes part of a linked planning system, rather than a stand-alone budget that is used to control costs.”
Ms Genovese also had some advice for CEOs and management teams, who, she said, should take a more structured approach to strategy formulation by defining an enterprise metrics framework to link strategic objectives with financial outcomes. Similarly, C-level executives need to understand and define the leading indicators of performance to enable the organisation to seek new patterns.
“Creating a performance-driven culture requires changes in technology to support planning and forecasting, and more importantly, significant cultural challenges on the part of executives, managers and employees, but organisations that can overcome these will realise significant business benefits,” concluded Ms Genovese.
Gartner analysts will host a number of sessions examining various aspects of Pattern-Based Strategy at Gartner Symposium/ITxpo 2009, 2-5 November, in Cannes, France. A sample of some of these sessions focused on Pattern-Based Strategy is available at http://agendabuilder.gartner.com/esc21/webpages/sessionlist.aspx
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