“Operationalising” strategic goals

Reposted, original on the “IT Governance, the Kapteyn’s view” blog on Computerworld UK in April 2009

When looking at real life strategic goals you can categorize them in two ways:

• Strategic goals for marketing purposes
• Strategic goals for operational purposes

What is a strategic goal for marketing purposes? Though nobody will admit their own company might have them, many people are able to recognize them in “that other organization that really does not understand what it is about”. A strategic goal for marketing purposes is usually formulated by top-management. It sounds great on paper and will help create goodwill for the company. These types of goals tend to end up in the company’s external communications and their annual report. Employees are proudly telling their friends and family about the “strategic goal of their company”. Share-holders love them. But... when you start digging and ask employees from different levels of the organization how this “perfect” goal actually affects their day-to-day operational performance, all you will receive are blank stares and vague answers. They are not “operationalized”.

A strategic goal for operational purposes on the other hand is cascaded down through the different layers of the organization. Each step of the way the goal is further detailed so it becomes understandable and applicable to that specific layer. At the bottom (the work floor) there is a clear traceability of individual KPIs and performance goals to one or more corporate goals.

What does all of this have to do with IT governance?

One of the primary goals of IT governance is to “operationalize” the corporate (strategic) goals into IT (strategic) goals. IT governance performs this task for the IT function in the same manner as financial governance (if there is such a process or entity) does it for the finance function. Each corporate entity will need to make this translation by answering two questions:

• Does the strategic goal impact my function/ entity?
• If so, how should I translate/ detail the goal so it can be implemented and assured?

Once these are answered (and accepted by the next level of management above) they become the goals for that specific level. Furthermore they should be cascaded to the next level down where the same two fundamental questions are answered. This process should be continued until you reach the work floor.

A mistake often made is the failure to cascade and as a result you will find in many companies that performance against these goals is estimated based on assumptions rather than calculated based on aggregated operational figures. (Partially) Working with assumptions instead of hard facts does not have to be wrong but very often these figures will “transform” themselves into the absolute truth while they make their way back to the top. If this happens it becomes very dangerous indeed since the inherit risk of working with assumptions is no longer recognizable.

So why is this important?

One could argue that all that Bernard Madoff did wrong was that he failed to “operationalize” his strategic investment goals!