The KPI Institute held a webinar titled “2023 Business Pulse: 5 Trends Impacting Strategy and Performance Management” in April 2023. The event was organized for executives and professionals in strategy and performance management who want to position their companies for success in today’s business environment. The discussion is based on the “2023 Global Trends Brief – Impact on Strategy and Performance Management Practices” report, which can be downloaded for free here.
2023 Global Trends Brief is a secondary research analysis aiming to outline the most important factors affecting the business environment and how they shape strategy and performance management practices. Executives and Strategy Managers are pressured to adopt management tools and processes to create resilient and agile organizations. Our research reviewed 95 reports and articles from reputable research and consultancy companies as of March 2023. These sources cover various factors shaping markets, such as geopolitical influences, global economic tendencies, society, technology, and climate. Based on our findings, five key driving factors of change for organizations have been identified and presented in the report to set the general operating context for most companies in 2023.
The distinction between divergent and convergent thinking was introduced by J.P. Guilford, president of the American Psychological Association, in the 1950s. Guilford and his colleagues defined divergent thinking as the ability to generate multiple alternative solutions to a given situation or problem (Runco, 2014). It is a useful technique for answering open-ended questions during brainstorming. Meanwhile, convergent thinking leads us to find the right answer as a consequence of previous logical steps and does not require much creativity.
In simpler terms, divergent thinking answers questions like “How can a brick be used?” whereas convergent thinking answers questions like “Who won the 1988 World Series?”
Strategy planning is a process that requires considerable thought from stakeholders. During the strategy formulation stage, executives may consider many possible options. A lot of information and data relevant to accomplishing the strategy have to be gathered, too. SWOT analysis, Porter’s Five Forces, or PESTEL analysis are used in the external and internal environmental scan, and multiple scenarios can be drafted before reaching a conclusion. All types of information relevant to the analysis are gathered: historical information as well as internal and external data.
During strategy planning, the opportunity to innovate emerges. Broad research, asking relevant questions, considering multiple perspectives, and generating new ideas all require the use of divergent thinking. Brainstorming sessions are examples of techniques where divergent thinking is applied and can be used to gather as many options as possible while exploring many paths, some of which may be unusual. Divergent questions may be asked, such as what happens if factor A does or does not occur.
Divergent thinking answers the questions with an open-ended task “How can we do this?” followed by multiple possible answers. Convergent thinking is then used to narrow down the “right” answers until a single answer is found. This is done by correctly diagnosing a problem, making the decision to adopt the most cost-effective strategic objective, and selecting the best strategy by weighing the pros and cons.
Both divergent and convergent are useful for the strategy planning process, as the former fosters creativity to generate original ideas and new possibilities while the latter enables concrete solutions to be identified. Ideas from divergent thinking are transformed into structured, feasible plans with convergent thinking. In a complex strategy planning process, it is best to adapt both—divergent thinking for creativity and innovation and convergent thinking for efficiency and structure.
Nancy Samir Ibrahim Khalil, who worked as aStrategic Planning and Performance Management Expert at the Ministry of Health and Prevention in UAE from December 2016 to November 2020, laid down the best practices in strategy planning for government agencies and tools that can improve performance in the public sector.
Trends
What are the key trends that have shaped the public sector in recent years?
The key trends in the public sector have been shaped in several domains, such as sustainable development in energy, transportation, education, high priority healthcare topics, and services.
Add to that big data resources, digital economy, innovation, artificial intelligence, smart government, and space discovery. There is also advanced research in science, society, economy, and policy.
What do the public services of the future look like?
Public services have been developed much in recent years, especially in terms of time management, quality assurance, well-trained staff, customer satisfaction and happiness meters, and smart applications that save time, effort, and money.
Public services will step up ahead new horizons through managing and designing variety, reachability, availability, efficiency, and interacting services. Add to that the digital and robotics services.
What role will strategy planning and KPI usage play in this futuristic scenario?
Strategic planning and KPI usage are the mechanisms of every improvement that can ever be desired. In fact, what is not measured can not be managed. Entities need to track and evaluate very closely the efficiency and outcome of their plans, objectives, initiatives, programs, projects, services, processes, and activities by designing different types of KPIs with ambitious targets.
Good analysis, auditing, statistics, reporting of the performance of the plans, and using different systems and portals empower entities to accelerate and excel in futuristic scenarios.
How is technology impacting the performance of government entities?
Well-built designed systems and smart apps can help maintain an excellent framework to easily manage entities’ strategic and operational plans, contents, and requirements.
Systems provide graphs, live charts, statistics, historical data, comparison, and performance status, which helps handle gaps, take relevant decisions and actions, and optimize resources. Technology saves time, effort, and money.
Practice
What are your recommended best practices in strategy planning for government agencies?
There are many best practices government agencies can adopt. Some of them are fundamental for every entity, and some of them can be much related to the specialization, culture, or work environment of the entity.
Periodic performance management revision meetings for strategic and operational plans with concerned departments
Periodic analysis reports of the performance and KPIs results
Periodic top management steering committee meetings to discuss the status of the performance on a higher level
Visits to the entities that won excellence awards
Workshops and presentations
Training of strategy coordinators to follow up closely with their departments.
The use of a project management system
What key performance indicators should be reported for the successful delivery of public services?
KPIs should report the current situation of performance, whether it is good or needs more effort or bad. They should be coded with related colors (green, yellow, or red), along with solid analysis reports of the strength, weakness points, improvement areas needed, and recommendations with a timeframe to achieve. Dashboards also help a lot in generating quick results, important graphs, trends, and directions.
What are the key performance management tools that any government entity should use to ensure performance improvement?
SWOT and PESTEL Analysis
Scenarios Planning
Stakeholders Matrix
Methodologies
Questionnaires
Mind Maps and infographics
Benchmarking
Cause and effect analysis (ex. Ishikawa)
Workshops and Presentations
Systems and Dashboards
Work forms
What are the biggest challenges that government entities face during the implementation and usage of a performance management system? Please provide your suggested solutions.
Among the challenges are:
The deadlines and the delay of submitting results and documentation,
Resistance to change
Poor strategy culture and knowledge inside the entity
Inflexible administrative hierarchy
The delegation of mandates and responsibilities of the concerned department (strategy development) to other departments
Limited strategy team members
The solutions can be implemented by empowering the strategy department and giving them the needed authority, having enough specialized team members, using electronic systems in tracking and alerting, working closely with the management, addressing challenges and finding proactive solutions, raising strategy awareness, supporting and guiding other departments, and developing initiatives issues through accelerators.
What are the crucial success factors in building performance and data-driven culture in the public sector?
Teamwork
Trust and Confidence
Knowledge and Specialization
Time management
Decentralization
Accuracy and documentations
Numbers and Facts
Collaboration
Addressing Needs and Priorities
Flexibility
Evaluation and Monitoring
What are the key competencies of a successful business leader in a government entity?
The competencies of a successful business leader are a reflection of the corporate values itself, such as transparency, commitment, credibility, integrity, trust, and teamwork. There are many examples of values that every entity adopts to control and organize corporate behavior and the work principles of employees and leaders.
Moreover, the leader should have a good vision, management competency, communication skills, and ability to build teams and solve problems. Besides, the leader should be a good listener, have an open-door policy, and be ambitious and positive. The leader must be empowering, encouraging, and decisive.
What processes and tools do you look at when differentiating a successful performance management system from a superficial one?
There are some processes and tools that can be used:
The mechanism of building strategy document, strategy, and operational plans
The level of engagement of other teams of departments in designing and creating components of strategy
Methodologies of tracking and implementing a strategy
Mechanism of reviewing and evaluating plans, performance, and auditing results
Periodicity presentations and meeting minutes of the strategy and performance
Questionnaires’ results about strategy concepts and understanding.
Other departments’ satisfaction rate towards the effort provided by strategy teams
Proof of closing gaps and addressing recommendations within the deadlines suggested
Project management system.
About the Expert
Bachelor’s Degree, Double Majors in Econometrics & Social Statistics University of Khartoum – Faculty of Economic and Social Studies | Khartoum, Sudan – 2006
Strategic Planning and Performance Management Expert | Ministry of Health and Prevention, UAE – Strategy and Future Department | December 2016 to November 2020
Head of Strategic Planning Section | Ministry of Justice, Sudan – General Directorate for Development and Strategic Planning | April 2016 to December 2016
Strategic Planning Specialist | Ministry of International Cooperation and Development | Corporate Development Dept. | April 2012 up to Dec 2015
Customer Support Executive | Emirates Telecommunication and Corporation Company -.Etisalat, Dubai, UAE | June 2010 – December 2011
Courses & Training: Creativity & Innovation, Strategic Planning and Strategic Thinking, PMP, Six Sigma, Change Management, Excellence Leaders, Institutional Excellence, Economic Analysis, Integration Strategies in Trade, Business English, TOFEl Course
This interview was first published in the 24th printed edition of PERFORMANCE Magazine. You can get a free digital copy from the TKI Marketplace here or purchase a print copy from Amazon for a nominal fee here.
Strategy and performance management updates in tourism: Learn how the travel and hospitality industries have been navigating the post-pandemic era so far.
IATA issues new report on safety performance
The International Air Transport Association’s (IATA) 2021 safety performance data for the commercial airline industry reveals significant progress in key categories compared to both 2020 and the previous five years. Findings show that the total number of accidents, all-accident rate, and deaths declined. Last year, there were no fatal accidents among IATA members or airlines on the IATA Operational Safety Audit (IOSA) registry (which covers all IATA members). For the first time in at least 15 years, there were no runway/taxiway excursion incidents.
“Safety is always our highest priority. The severe reduction in flight numbers last year compared with the five-year average magnified the impact of each accident when we calculate rates. Yet in the face of numerous operational challenges in 2021, the industry improved in several key safety metrics. At the same time, it is clear that we have much work ahead of us to bring all regions and types of operations up to global levels of safety performance,” said Willie Walsh, IATA’s Director General. | Source: IATA.org
Hyatt Hotels Corporation shares performance data on revenues, occupancy
Hyatt Hotels Corporation said that its comparable system-wide RevPAR in May was around $127, the highest RevPAR performance in any single month since November 2019. RevPAR, a commonly used performance measure in our industry, refers to the product of the average daily rate and the average daily occupancy percentage. System-wide RevPAR in May was around 6% lower than in May of 2019(1), or approximately 3% higher when Asia Pacific was excluded. Comparable system-wide RevPAR increased by 2% in May compared to April, owing to higher occupancy, mainly in urban areas. In addition, the average daily rate in May was nearly 8% higher than in May of last year, driven by luxury brands in the Americas, which outperformed 2019 by approximately 24%. | Source: businesswire.com
GE’s Airspace Insight adds new feature for operational performance monitoring
GE Digital announced the addition of the new Network View Module to its Airspace Insight™ software. This will give airlines insights where within their network they need to focus to enhance operational performance based on a range of efficiency and safety metrics developed to identify patterns in airspace waste and minimize fuel consumption. Moreover, the module can aid in tracking and measuring the results of initiatives to enhance airspace efficiency and safety, as well as benchmarking progress against other airlines or collaborating with other airlines, regulators, and Air Navigation Service Providers (ANSPs) to promote industry efficiency and safety.
“Reduced reliance on anecdotal evidence for understanding operational issues, benchmarking, and knowledge sharing between other airlines are what airlines are looking for. They want to know which airlines are flying into this airport, and how efficiently and safely they are doing so. Which markets are underserved or not served at all? Airspace Insight’s Network View Module can help answer these questions,” said Andrew Coleman, General Manager of GE Digital’s Aviation Software business. Source: marketscreener.com
HSMAI survey reveals woes in retaining talent in hospitality
The Hospitality Sales and Marketing Association International (HSMAI) has launched the report “The State of Hotel Sales, Marketing, and Revenue Optimization Talent 2020-2021.” Results found that employers in the industry are facing issues in the areas of compensation and benefits, scarcity of competent candidates, pipeline concerns, and poaching loyalty and company culture. Meanwhile, the trends detected by the report emphasize the value of corporate culture, servant leadership, mental health and wellness, and reskilling and upskilling. The insights are from “50 brand and hotel management company revenue executives and ownership group commercial executives across disciplines to rate the challenges facing commercial talent in hospitality.” Source: hsmai.org
US announces new National Travel and Tourism Strategy
To promote the US travel and tourism industry, US Commerce Secretary Gina M. Raimondo introduced a new National Travel and Tourism Strategy. It is designed to achieve a five-year target of attraching 90 million foreign tourists to the country annually. The arrival of tourists is expected to generate $279 billion each year, strengthening employment growth in communities around the United States, its territories, and the District of Columbia. The strategy involves positioning the US as a major travel destination to encourage visitation to underprivileged and underrepresented groups; ensuring safe and efficient travel to and within the US and its territories; supporting diverse tourist experiences, particularly on federal lands and waterways while also safeguarding them; and establishing sustainable travel and tourism. Source: https://ftnnews.com/
Often than not, several executives take strategy as a routine task or a series of frameworks instead of a mode of visualizing and solving problems. Furthermore, taking on the newest strategy trends or following a successful entrepreneur’s guidelines is not an ideal way to win. Companies need to take their strategies through a series of tests to determine their validity.
There are three tests that identify the success of strategies. These assessments help executive teams to answer some of their burning question, such as:
a) Does your company strategy respond to uncertainty and trends?
b) Does your strategy exploit legitimate sources of advantage?
c) Is your strategy aligned and cascaded throughout your organization?
Three Winning Strategy Tests
There are three types of tests companies can apply to determine whether their strategies are viable or not. The first one is the Fit Test. This type of test measures the level of fitness of a company’s strategy along with its business condition. When conducting the Fit Test, there are three fit dimensions that need to be assessed: internal fit, external fit, and dynamic fit.
Internal fit and external fitare the keys to securing a company’s survival (Tyge Payne et al., 2015). Internal fit is described as a multi-dimensional matching of strategy with structure. It is undertaken to ensure that the strategy matches the company’s resources as well as competitive capabilities. Winning strategies display an internal fit and must be compatible with the ability of a company to implement the strategy in a competent mode.
External fit refers to the congruence between an entity’s strategy and composition and its task environment. Testing external fit will exhibit how a strategy matches significantly with the external conditions, such as industry dynamics, competition, and market opportunities. Therefore, a strategy will only work well if it has an excellent external fit against the external environment.
The last type of fit test is dynamic fit. It is a fundamental measurement that assesses if strategies are changing over time. Dynamic fit is used to synchronize and align the current state of the business with market conditions.
According to Jonathan Trevor and Barry Varcoe, retaining a good strategic alignment relies on the ability of a company’s structure, procedures, and culture to evolve with strategy changes. The signs of misalignments are always evident to employees and customers who fail to receive the type of service they expect.
The second type of test is called the Competitive Advantage Test. This type of test measures the lasting competitive advantages of businesses in the market space. The Competitive Advantage Test also enlightens managers on strategies that often fail to keep up a constant competitive advantage with rivals. Failed approaches to maintain a competitive advantage over competitors usually lead to inferior performance in the long run.
As winning strategies enable competitive advantage to be durable and larger, the research of competitive advantages in the tech industry by (Huang et al., 2015) sheds light on the outcome differences between Temporary Competitive Advantage (TCA) and Sustainable Competitive Advantage (SCA).
The paper suggests that companies can achieve higher outcomes through SCA by amassing assets, resources, and capabilities. However, TCA created through strengthening market positions can assist firms with capital to accumulate resources that will develop a sustainable competitive advantage.
The Performance Test is the third form of measurement to differentiate a winning or losing strategy. A performance test is vital for organizations as companies usually mark their success based on performance. There are two types of indicators that a company looks at to understand the standard of this strategy test:
a) Competitive strength and market positioning and
b) Profitability and financial strength.
One of the performance measurements tools that businesses can use to effectively manage organizational performance is the balanced scorecard. It provides a holistic strategy implementation framework comprising five elements: desired state of evolution, strategy map, performance scorecard, performance dashboard, and portfolio of initiatives.
To sum it up, a company’s strategy needs to excel in all tests to succeed. Failing in even one of the tests could spell problems for business ventures and lead to negative performance. A company can introduce new practices only if they match or erase both internal and external conditions. On the other side, existing strategies should always be evaluated thoroughly to affirm that they are fit and contribute to good performances and competitive advantage. Incorporate fast changes to current strategies if companies fail at least one of the three tests.
Take a look at The KPI Institute’s website and find out more about the Certified Balanced Scorecard Management System Professional course. Discover new approaches on how to create a performance management system based on the balanced scorecard technique and how to implement it at all levels of the organization.
