Voices » HBR Voices » Robert S. Kaplan and David P. Norton » Tesco's Approach to Strategy Communication
RSS Feed
10:31 AM Tuesday September 2, 2008
I recently returned from London where we held our 2008 annual European Balanced Scorecard Summit. Each of our summits features the induction of companies into the Balanced Scorecard Hall of Fame. We had several firsts at the London conference as we inducted the first two companies from Russia, the first Irish company, the first Middle East company, and the first enterprise from France, its Ministry of Defense.
We also noticed a distinct increase in delegates coming from companies in emerging markets, such as Tanzania, Namibia, Cyprus, Iran, Saudi Arabia, and Egypt. It's clear these countries are diversifying beyond their traditional simple manufacturing and agricultural companies into higher-value industries. As these companies march northward on the value chain, their need for more sophisticated management techniques will only increase.
In addition to the induction ceremony, we heard from leaders of world class companies, including Infosys, Old Mutual, BP, Nippon Boehringer, Solvay Pharmaceuticals, and HSBC--all presenting on how they approach strategy and execution, specifically using our Balanced Scorecard (BSC) method.
Sir Terry Leahy, CEO of Tesco, gave one of my--and the audience's-- favorite sessions. He described the challenges of delivering a distinctive and consistent buying experience to consumers in every store when you have more than 400,000 employees in multiple countries. It's a classic concern: How can you keep local store managers and employees engaged in satisfying consumers in their shopping experiences? Extended out a little: How can you keep distributed frontline employees--regardless of industry--engaged with and acting on the company's central strategy?
Leahy explained his approach: "Tesco doesn't want one leader. We want thousands of leaders who take initiative to execute the strategy."
To make this goal a reality, in the early 1990s, Tesco went through a process to clarify its mission, values, and strategy. Based on our first Harvard Business Review BSC article, Tesco communicated its new strategy to its employees via a "steering wheel," a simple symbol and metaphor for a tool intended to drive performance and help employees navigate into the future.
The Tesco steering wheel has four 90 degree arcs, representing the four BSC areas of focus: financial, customer, operations, and employee performance. Every store gets a monthly steering wheel update, a summary of its metrics within each of the four arcs, so that all employees in Tesco's multiple regions and formats get feedback on their performance. Tesco supplements its steering wheel report with "shopping lists" that capture key elements of the strategy in simple forms that employees can follow in their everyday activities. The steering wheel has helped the company stay focused on its strategy even as it experienced rapid growth over the past two decades.
Recently, Tesco added a fifth dimension, community, to the steering wheel report to encourage employees to be excellent citizens in the communities where they work and live. While praising the simplicity of the steering wheel display and its power to communicate to employees, Sir Terry emphasized that it is not easy, requiring extensive consumer research, data collection, and analytics to make sure that the objectives and metrics remain relevant as consumer preferences evolve and competition heats up. But in part because the steering wheel ensures all employees are aware of and can act on the strategy, Tesco has become an engine of social mobility, allowing employees from whatever background or education to advance in the company. Last year, Tesco filled 3,500 management position, 27 directors, 200 store managers, and 8,000 department heads by promoting from within the organization.
How about at your company? Is your company's strategy being adequately communicated to and acted upon by all employees? Can each employee explain the business unit strategy and how he or she contributes each day to implementing the strategy?
Stay up to date on the latest HBR articles, podcasts, blogs, and more. Sign up for the HBR Email Newsletter today.
Never miss a new post from your favorite blogger again with the HarvardBusiness.org Daily Alert email. The Alert delivers the latest blog posts from HarvardBusiness.org and HBR.org directly to your inbox every morning at 8:00 AM ET.
TrackBack URL for this entry:
http://blogs.harvardbusiness.org/cgi-bin/mt/mt-tb.cgi/2746
Listed below are links to weblogs that reference Tesco's Approach to Strategy Communication:
Strategy Management at Tesco from Crossderry Blog:
One of my regular alignment exercises is to ensure that our planned investments are tied to our strategy (see Jonathan Becher’s Strategy vs. Planning post here). As Jonathan notes: “[T]he budget isn’t really the plan; instead it... More
Posting Guidelines
We hope the conversations that take place on HarvardBusiness.org will be energetic, constructive, free-wheeling, and provocative. To make sure we all stay on-topic, all posts will be reviewed by our editors and may be edited for clarity, length, and relevance.
We ask that you adhere to the following guidelines.
Robert S. Kaplan is Baker Foundation Professor at the Harvard Business School and co-founder of Balanced Scorecard Collaborative, a Palladium company. He also serves as Chairman of Professional Practice at Palladium. Kaplan joined the HBS faculty in 1984 after spending 16 years on the faculty of the business school at Carnegie-Mellon University, serving as its Dean from 1977 to 1983. Kaplan is co-developer of both activity-based costing and the Balanced Scorecard. He has authored or co-authored twelve books, fifteen Harvard Business Review articles, and more than 120 other papers. In 2006, Kaplan received the Lifetime Contribution Award from the Management Accounting Section of the American Accounting Association. The Financial Times named him on its 2005 list of Top 20 influential business thinkers. He received the Telecom Italia "Prize for Leadership on Business and Economic Thinking” in 2004, the Distinguished Service Award from the Institute of Management Accountants (IMA), the CIMA Award by the Chartered Institute of Management Accountants (UK), and the Outstanding Accounting Educator Award of the American Accounting Association. Kaplan received a B.S. and M.S. in electrical engineering from the Massachusetts Institute of Technology and a Ph.D. in operations research from Cornell University.
David P. Norton is Founder and Director of Palladium, and co-founder of Balanced Scorecard Collaborative. Norton was previously the president of Renaissance Solutions, Inc., an international consulting firm he co-founded in 1992. Before Renaissance, Norton co-founded Nolan, Norton & Company where he spent 17 years as president, prior to its acquisition by KPMG Peat Marwick. A frequent lecturer and writer, Norton’s work with the Balanced Scorecard has been the subject of many articles and public conferences. He is the co-author, with Robert Kaplan, of eight Harvard Business Review articles and five books: The Balanced Scorecard, The Strategy-Focused Organization, Strategy Maps, Alignment, and The Execution Premium. His books have been translated into 23 languages. The Balanced Scorecard concept was selected by the editors of Harvard Business Review as one of the most influential management ideas of the past 75 years. Norton earned a B.S. in electrical engineering from Worcester Polytechnic Institute, an M.S. in operations research from the Florida Institute of Technology, an MBA from Florida State University, and his doctorate in business administration from Harvard Business School.
ADVERTISEMENT
If you can't read a balance sheet, you'd better read this. This specially priced set gives managers mastery of the financial basics they need to plan, budget, forecast, and control resources with confidence.
This specially priced set will show you how to plan and execute a course of action that will carry you and your employees through the current economic upheaval and help everyone maximize their performance.
ADVERTISEMENT
Comments
Very good article. Can we conclude that living the company's strategy is good enough for employees to out-perform within the company's performance matrix? If Not, what else the company strategist should keep in consideration?
- Posted by Mohamed A. El-Beshieti
September 4, 2008 10:16 AM
Great post; it sounds like you had an excellent event in London. After reading Leahy's comments, I wrote a post called "Tesco Showcases Strategy + Culture" on my blog: Customer Experience Matters
- Posted by Bruce Temkin
September 11, 2008 8:31 PM