creating the office of strategy management.pdfVIP

Paper 05-071 Creating the Office of Strategy Management Robert S. Kaplan David P. Norton Copyright © 2005. Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Creating the Office of Strategy Management Robert S. Kaplan David P. Norton April 2005 Organizations often fail at strategy execution. Various sources have reported implementation failure rates at between 60 and 90 percent. A Bain Consulting study of large companies in eight industrialized countries found that seven out of eight companies failed to achieve profitable growth between 1988-1998, defined, rather modestly, as 5.5% annual real growth in revenues and earnings, with returns that exceeded their cost of capital. Interestingly, 90% of companies in the Bain study had strategic plans with targets exceeding these growth targets; few achieved them.1 For the past 15 years, we have studied companies that achieved performance breakthroughs by placing the Balanced Scorecard as the centerpiece of a new strategy management system. The successful companies align their key management processes for effective strategy execution. Many of these companies have now sustained their focus on strategy execution by establishing a new corporate-level unit, an Office of Strategy Management (OSM). Not all organizations, however, have understood the need for a corporate-level office to align existing management processes to strategy. C