Prof. Fred Lachotzki

• Hoogleraar Business Policy

bij Nyenrode Business University

1

THE MESSAGE

De attributen van het prestatievermogen tot waardecreatie van een onderneming moeten net zo nauwgezet en consistent geëxpliciteerd en gepubliceerd worden als fianciële resultaten.

THE PROBLEM

• Boards are struggling finding a balance between control and freedom.

• Boards fail in having equal metrics and processes in place measuring the company’s capacity to execute as they have for their financial performance.

THE SOLUTION

Top Management in organizations needs a new system, a new framework.

THE SYSTEM

WHAT DOES IT LOOK LIKE?

Resulting in

Effective Boards

Through

• Focus on Value Maximization of the Firm or Institution

• Leading Beyond Control • Leadership team • Strategy ( leveraging resources and carefully adding new resources)

• Managing the milestones

• Superior long-term return on

capital • Superior competitive

advantage/position • Strong strategic and

stakeholder alignment

© Fred Lachotzki Nyenrode Business Universiteit

•

A company or institution is strategically aligned when the crucial people in the company decide that the quality of corporate organizational capabilities meets their expectations and enables them to execute the strategy.

A company or institution posses stakeholder

alignment when all relevant stakeholders confirm that their interests are fairly balanced with one another.

•

Strategic and stakeholder alignment l

© Fred Lachotzki Nyenrode Business Universiteit

Effective Boards

Through

• Focus on Value Maximization of Firm or Instituation

• Leading Beyond Control • Leadership team • Strategy ( leveraging resources and carefully adding new resources)

• Managing the milestones

© Fred Lachotzki Nyenrode Business Universiteit

•

Leading “Beyond Control” has two primary meanings:

The “what” meaning: devoting equal time to a

company’s financial performance, or institution’s end results –the finish-line- as to the ability to get there.

The “how” meaning : a structured way of ‘letting

go’ and allowing, through ‘Corporate Dialogue’ considerable room for contributions from both a broad range of key executives who account for a company’s or institution’s long-term success, as well as contributions from a wide range of stakeholders driving or accommodating success.

• Leading Beyond Control l

© Fred Lachotzki Nyenrode Business Universiteit

•

The Creation of the Strategic and Stakeholder Alignment agenda’s through Measuring – Matching - Managing

• Corporate Dialogue l

© Fred Lachotzki Nyenrode Business Universiteit

Creating the corporate alignment agenda

Company Strategic Agenda

Ambition based on definition

of success , desired

archtecture and avaliable

resources

Strategic alignment agenda

Results from stakeholders

dialogue

Results from company’s

ambition in combination with

architecture the Board

desires being matched with

what the organisation desires

and needs

Stakeholders agenda Corporate Alignment agenda

Results from matching

definition of success,

strategic agenda and

stakeholders agendas

Blackbox becomes operating arena = portfolio of the 39 capabilities

QUALITY OF THE COMPANY

Continuous Improvement

Result and Output Driven

Transparent Communication

Clear Intent

Reinvent for Change

Innovation

Customer Value Creation

ORGANISATION MANAGEMENT

CULTURE OF THE ORGANIZATION

Direct and Open

Open to Partnerships

Entrepreneurial

Meritocracy

Shared Principles and Values

Adaptive and Open to Change

Cooperative Atmosphere

CAREER

PERSONAL DEVELOPMENT

Professional Development

Emotional Growth

Career Ownership

Assessment and Feedback

IMAGE OF THE ORGANIZATION

Dynamic Industry Shaper

Attractive Employer

Responsible Company

Solid Reputation

BENEFITS AND REWARDS

Compensation based on Performance

Good Financial Package

Lifestyle Benefits

Work-Life Balance

Strategic Rewards

Operating

arena

QUALITY OF THE MANAGER

Management Competence

Winning Coach

Interpersonal Skills

Influential

Trustworthy

PERSONAL EMPOWERMENT

High Level Strategy Participation

Freedom to Act

Maximum Challenge

Access to Knowledge

Full Support

Compelling Objectives

Personal Accountability

An ‘Archtecture/infrastructure model’ consisting of 39 capabilities

QUALITY OF THE COMPANY

Continuous Improvement

Result and Output Driven

Transparent Communication

Clear Intent

Reinvent for Change

Innovation

Customer Value Creation

ORGANISATION MANAGEMENT CAREER

PERSONAL DEVELOPMENT

Professional Development

Emotional Growth

Career Ownership

Assessment and Feedback

IMAGE OF THE ORGANIZATION

Dynamic Industry Shaper

Attractive Employer

Responsible Company

Solid Reputation

BENEFITS AND REWARDS

Compensation based on Performance

Good Financial Package

Lifestyle Benefits

Work-Life Balance

Strategic Rewards

Operating

arena

QUALITY OF THE MANAGER

Management Competence

Winning Coach

Interpersonal Skills

Influential

Trustworthy

PERSONAL EMPOWERMENT

High Level Strategy Participation

Freedom to Act

Maximum Challenge

Access to Knowledge

Full Support

Compelling Objectives

Personal Accountability

CULTURE OF THE ORGANIZATION

Direct and Open

Open to Partnerships

Entrepreneurial

Meritocracy

Shared Principles and Values

Adaptive and Open to Change

Cooperative Atmosphere

Creating the corporate alignment agenda

Company Strategic Agenda

Ambition based on definition

of success , desired

archtecture and avaliable

resources

Strategic alignment agenda

Results from stakeholders

dialogue

Results from company’s

ambition in combination with

architecture the Board

desires being matched with

what the organisation desires

and needs

Stakeholders agenda Corporate Alignment agenda

Results from matching

definition of success,

strategic agenda and

stakeholders agendas

Current Scores (Scale 1-10)

De

sir

ed

Sc

ore

s (

Sc

ale

1-1

0)

De

sir

ed

Sc

ore

: A

ve

rag

e v

. T

ota

l

Current Score: Average v. Total

Company Monitor Introduction

gap

Current Scores (Scale 1-10)

De

sir

ed

Sc

ore

s (

Sc

ale

1-1

0)

De

sir

ed

Sc

ore

: A

ve

rag

e v

. T

ota

l

Current Score: Average v. Total Company Monitor™

Online measurement of 39 organizational capabilities

Assessment of strategic alignment within an organization

Feedback given by top management and key people

Reporting on all organizational and demographic levels

19 Realizing strategy =

measuring a moving target

Organizational blueprint

15

Monitoring Strategy Execution Intervention

Houston Case Brunel CompanyMonitor Survey 2012

17

Collective change ambitions versus the benchmark Brunel 2011 – 2012

18

Department Overview: Houston Collective change ambitions of departments within Houston

19

Hous

ton 17

Difference: 2.6

Brunel 2012

Capability Overview: Houston Finance 21 out of 39 capabilities score a gap of 30 or higher

20

Monitoring Strategy Execution CEO Change

jb2008

A

High-Growth, High-Margin,

Specialized Nutrition Company

A New Direction Needed

jb2008

Focussing the Organization

• Diversified and internationalized Supervisory Board

• Replaced 40% of Top 50 managers under Exec Board

• Strategy – Image – Getting things done - Management

Case example: Numico starting position 2003 (II)

Overall low desired scores and low current scores (‘cynical’)

10

2

17

30

40

23

5 15 11

23

20

19

13

25

19

34

5

25

12

31

14

7.0

7.5

8.0

8.5

9.0

9.5

10.0

4.4 4.9 5.4 5.9 6.4 6.9 7.4 7.9 8.4

CBM 2007 AVG Current

CB

M 2

007 A

VG

Desir

ed

Current Scores

Scale 1 - 10

Desir

ed

sco

res

Scale

0 -

10

Ready for Change Excellent

Complacent Cynical

2003

Desir

ed

sco

res

(scale

1-1

0)

Creating the corporate alignment agenda

Company Strategic Agenda

Ambition based on definition

of success , desired

archtecture and avaliable

resources

Strategic alignment agenda

Results from stakeholders

dialogue

Results from company’s

ambition in combination with

architecture the Board

desires being matched with

what the organisation desires

and needs

Stakeholders agenda Corporate Alignment agenda

Results from matching

definition of success,

strategic agenda and

stakeholders agendas

Case example: Numico starting poition in 2003 (I) - On almost all 39

capabilities high Gaps (i.e. Desired score >> Current score)

Personal Empowerment

Company Monitor™ Quality of Boss

Benefits & Rewards

Quality of Company

Personal Development

Result & Output driven

Continuous Improvement

Transparent Communication

Customer Value Creation

Career Ownership

Emotional Growth

Professional Development

Assessment & Feedback

Interpersonal Skills

Winning Coach

Management Competence

Access to knowledge

Freedom to act

High strategy participation

Full Support

Maximum Challenge Compelling Objectives

Reinvent for Change

Clear Intent

Innovation

Influential

Trustworthy

Personal Accountability

Lifestyle Benefits

Good Financial Package

Comp.Based on Contr.

Work-life Balance

Profit Sharing

58

23

75

**

**

55

53

20 20 24

31 21

23 43 **

10 27

24 **

28

15

35

42

31

35

35

26

**

31

53

Image of Organisation Dynamic Industry Shaper

Solid Reputation

Responsible Company

Attractive Employer

67

40

9

3

30

Culture of Organisation Open to Partnerships

Sense of Service / Care

Entrepreneurial

Cooperative Atmosphere

Shared Principles & Values

Meritocracy

Adaptive & Open to Change

Direct & Open 9

18

31

36

37

25

** 26

23

25

30

29

jb2008

Key Capabilities

capability with significantly greater

alignment than the benchmark

Strengths R

an

k

Se

cti

on

Cate

go

ry

De

sir

ed

Cu

rre

nt

MM

Ga

p

MM

Ga

p

MM

Ga

p

1 PE Personal Accountability 8.9 8.0 3 5 12

2 IO Solid Reputation 8.7 7.6 6 7 19

3 IO Responsible Company 8.6 7.5 6 10 8

4 QB Trustworthy 9.3 8.2 7 8 5

5 PE High-Level Strategy Involvement 9.0 7.7 7 11 14

6 QB Influential 9.1 7.8 8 12 9

7 PE Maximum Challenge 9.1 7.8 9 13 14

8 QC Result & Output Driven 8.9 7.6 9 10 16

9 QC Clear Intent 9.2 7.8 10 12 31

10 PE Freedom to Act 9.0 7.6 10 9 12

Image: Solid Reputation,

Responsible Company

Getting things done: personal

accountability, result and output

driven, maximum challenge, freedom

to act

Strategy: clear intent, high level

strategy involvement

Management: trustworthy and

influential

1

2

3

4

10

2

17

30

40

23

515 11

2320

19

13

25

19

34

5

25

12

3116

13

15

14

13

7.0

7.5

8.0

8.5

9.0

9.5

10.0

4.4 4.9 5.4 5.9 6.4 6.9 7.4 7.9 8.4

CBM 2007 AVG Current

CB

M 2

00

7 A

VG

De

sir

ed

Current Scores

Scale 0 - 10

De

sir

ed

sc

ore

s

Sc

ale

0 -

10

Ready for Change Excellent

ComplacentCynical

2004

2003

2005

2007

2006

Resulting in

Effective Boards

Through

• Focus on Value Maximization of the Firm or Institution

• Leading Beyond Control • Leadership team • Strategy ( leveraging resources and carefully adding new resources)

• Managing the milestones

• Superior long-term return on

capital • Superior competitive

advantage/position • Strong strategic and

stakeholder alignment

© Fred Lachotzki Nyenrode Business Universiteit

THE MESSAGE

De attributen van het prestatievermogen tot waardecreatie van een onderneming moeten net zo nauwgezet en consistent geëxpliciteerd en gepubliceerd worden als fianciële resultaten.

30