Copyright © 2009 Metrus Group, Inc. Why Good Strategies Fail: Creating Sustainable Performance in Turbulent Times William A. Schiemann, Ph.D. ASP – Metro New York Chapter April 2009

Copyright © 2009 Metrus Group, Inc. Agenda The Context of Sustainability What’s the Value Proposition? Role of Measurement Social and Human Capital Barriers to Success Key Actions—Now!

Copyright © 2009 Metrus Group, Inc. Context Sustainability and the Bottom Line: –Planet –Societal –Organizations Triple Bottom Line –Financial –Environmental –Social

Copyright © 2009 Metrus Group, Inc. How Might Sustainability Be Important to Your Organization? Intentionally left blank

Copyright © 2009 Metrus Group, Inc. Qualities of Most Sustainable Companies Holistic integration Broad stakeholder engagement Metrics Systems alignment Strategic centrality Senior management support Deeply embedded values Wirtenberg, et. al based on Alcoa, Band of America, BASF, Coca Cola, Eastman Kodak, Intel, Novartis, Royal Philips, Unilever

Copyright © 2009 Metrus Group, Inc. Agenda The Context of Sustainability What’s the Value Proposition? Role of Measurement Social and Human Capital Barriers to Success Key Actions—Now!

Copyright © 2009 Metrus Group, Inc. Six Perspectives (Schiemann & Lingle) Financial Market Operational People Supplier Environmental –Community –Environment –Regulatory Adaptability

Copyright © 2009 Metrus Group, Inc. Value Map Customer Equity Shareholder Equity People Suppliers Environmental Product/ Service Value Creation

Copyright © 2009 Metrus Group, Inc. Agenda The Context of Sustainability What’s the Value Proposition? Role of Measurement Social and Human Capital Barriers to Success Key Actions—Now!

Copyright © 2009 Metrus Group, Inc. What is the Role of Measurement (e.g, Balanced Scorecards)? Clarity of the goals Targets (current, stretch) Managing change (current vs. goal) Accountability (visibility) Focus on manageable Resource focus Evaluation of strategy execution Guiding and testing strategic alignment

Copyright © 2009 Metrus Group, Inc. Agenda The Context of Sustainability What’s the Value Proposition? Role of Measurement Social and Human Capital Barriers to Success Key Actions—Now!

Copyright © 2009 Metrus Group, Inc. Social Factors to Consider Labor practices (health & safety, training, diversity, employee well being) Human Rights (discrimination, security, child labor) Society (community, corruption, fair competition) Product Responsibility (e.g, consumer health, privacy)

Copyright © 2009 Metrus Group, Inc. People Equity is Key Driver of Shareholder Equity Shareholder Equity People Equity Alignment Capabilities Engagement Customer Equity Initiatives Productivity

Copyright © 2009 Metrus Group, Inc. Connection to Human Capital Shareholder Equity People Equity Alignment Capabilities Engagement Customer Equity Initiatives Productivity Environment Safety Community Regulatory

Copyright © 2009 Metrus Group, Inc. Alignment Are we going in the same direction? Capabilities Do we have what we need to succeed? Engagement Are we committed? People Equity

Copyright © 2009 Metrus Group, Inc. Industry Leaders

Copyright © 2009 Metrus Group, Inc. CHANGE PROCESS Structure Capabilities Systems Culture TOMORROW Strategy Work Processes Work Processes Structure Capabilities Systems Culture TODAY Strategy Creating Alignment

Copyright © 2009 Metrus Group, Inc. Alignment: Community Goal Values statement (J&J Credo) Success defined (image) Scorecard (hours given) Operating plan –Community outreach –Communications –Who? What? When? Where? How? Tracking progress (pulse) Validate linkage to goals

Copyright © 2009 Metrus Group, Inc. Capabilities: Community Image Attracting talent -- Employer brand: –Reputation: values, benefits, growth, communications, innovation –Google “Do no evil!” Safety – DuPont –It’s a lifestyle and value at all levels –Attitudes, skills are learned Improve community –Image conveyed through employee behaviors and communications

Copyright © 2009 Metrus Group, Inc. Engagement & Sustainability at Sun Flexibility an important value today; linked to Attraction, Engagement and Retention More than 50% work at home; commuting 98% of employees carbon footprint Saved $1700 annually on gas/vehicles Home office equip less energy Flex created 2.5 weeks of new time

Copyright © 2009 Metrus Group, Inc. AQ 1 ACE 4953 ACE ACE BUYER ACE ACE ACE ACE ACE ACE ACE ACE AQ 2 ACE A - Alignment C - Capabilities E - Engagement Red = Trouble Yellow = OK Green = Strength People Equity Scorecard ACE

Copyright © 2009 Metrus Group, Inc. Turbulent Times Sustainability is a long term agenda and value proposition Implications during: –Weak economic period? –Strong economic period?

Copyright © 2009 Metrus Group, Inc. Agenda The Context of Sustainability What’s the Value Proposition? Role of Measurement Social and Human Capital Barriers to Success Key Actions—Now!

Copyright © 2009 Metrus Group, Inc. Critical Barriers to Overcome Creating a broad inclusive and transparent process Selling sr. management on longer horizon The “right” measurement process Accountability Picking the critical few Scenario planning & modeling Benchmarking Evaluation

Copyright © 2009 Metrus Group, Inc. Potential Actions for the Strategic Planner Education regarding sustainability, triple, CSR and value equation Deepen the strategic review process: –Environmental scan (broad and long term) –Conduct more risk analysis (cradle to grave thinking) –Use broader frameworks (like 6 dimensions) Build more holistic strategic measures that encompass sustainability goals

Copyright © 2009 Metrus Group, Inc. Potential Actions for the Strategic Planner Stronger modeling –Scenario testing of alternative futures (using broader assumptions) –Modeling of competitor, government, & other stakeholder actions Create process and context to guide holistic solutions (across structural silos) Test for resolve (visible communications, accountability, milestones, resources) Ensure that sustainable plans are linked with HC systems, capabilities, & culture

Copyright © 2009 Metrus Group, Inc Route 202, Somerville, NJ  Metrus Group is an industry leader in strategic performance measurement, assessment, and organizational change. For nearly twenty years we have partnered with the most successful – and challenging – organizations in the world to help them achieve superior, sustainable business results through the development of their People Equity and the creation of a high performance, measurement-managed culture.  Our Services Include:  Human Capital ROI Assessment & Solutions  Strategy Mapping  Balanced Scorecard Design and Assessment  Development of Quantifiable Performance Metrics  Return on Training Investment  Employee and Customer Survey Research  Leadership Assessment and Development  Corporate Governance, Alignment, and Accountability Audits  Measurement-Driven Organizational Change  Functional (e.g. HR, IT, Security, Sales) Strategies, Measures and Execution About Metrus

Copyright © 2009 Metrus Group, Inc. Thank You! Dr. William Schiemann Metrus Group