Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers

Citation

Marr, B. (2008), "Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers", Strategic Direction, Vol. 24 No. 1. https://doi.org/10.1108/sd.2008.05624aae.001

Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers

Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers

Bernard Marr, Butterworth-Heinemann Publishing, Amsterdam, 2006Reviewer:William B. Mesa, School of Business and Leadership, Colorado Christian University, Lakewood, Colorado, USA

Executing a cogent and relevant strategic plan requires both a rich understanding of why a strategic plan is needed and how such a plan reflects the everyday routines of what the organization does in meeting customer needs. Weaving together these important ideas is what Marr accomplishes in a coherent and practical book on the strategic management process. Misunderstanding the relevant need of a strategic plan and not crafting a strategy that reflects the capabilities of the organization, inevitably yields the following emergent questions in an organization: What is our strategy and does it really matter? Why is activity X done a certain way and activity Y a certain way, but neither is seemingly related? What difference does a corporate strategy make – isn’t all I need to worry about meeting my performance marks? How can the strategic plan or goal be important to me if I never had anything to do with developing it?

Questions like these reflect the disconnectedness of a strategy to the actual work as found in routines, practices, and human interactions. The questions also indicate how “numbers” games in meeting performance marks are the imperative rather than meeting performance goals in support of the organization’s strategy – what Marr aptly calls the “performance trap” (p. 7). Finally, such questions represent the lack of employee participation or direct exclusion in developing a strategic process. These are the very individuals using resources and executing business plans!

In contrast to the above, in his book Marr lucidly demonstrates that the strategic management process is anything but the drafting of a plan with little utility or relevance. Knowing well that our current post-industrial market environment demands the management of resources that fosters innovation yet practicality, Marr provides a framework for developing a strategic process that organizations can develop and continually apply. For those practicing marketing, the clear interest and utility lies in that marketing is central to any strategic process that leverages resources towards the aim of meeting the expectations of customers.

Beginning each chapter with a set of crucial questions, Marr provides practitioners points of focus towards the development, execution, and maintenance of a strategic process. This type of questioning found in each chapter serves the purpose of mining out the gold inherent in every organization by virtue of what they believe, what they accomplish and what they own. Such is the utility and straightforward beauty of Marr’s book.

Outlining his book to meet the need of practicing managers, Marr provides a review of the fundamental dimensions of strategy: External Analysis and Internal Analysis. While many practitioners may skim or skip this section, analysis types may read it as a refresher. Including in the book this section on external and internal analysis (environmental analysis, as it is also called) always provides a useful reference point for a review of fundamental concepts. Practitioners, though, will find reading this first part of the book (rather than skimming or skipping it) provides them with the essential boundary conditions to developing a reasonable and practical strategic process. Marr defines this set of boundary conditions as “the glue that holds the whole organization together over quite a long period of time and sets the general boundaries in which an organization operates” (p. 19) In sum, an organization is organized and held together with purpose, vision, and goals – all of which provide the specific boundaries by which operations take place.

Understanding the organization’s boundaries means understanding the environment to which the organization belongs. This is external analysis. While Marr does not provide the minutia of this analysis (readers can attain this through Porter’s excellent Competitive Strategy), he does provide what practitioners can use: diagrams and summary tables that provide the dimensions and content of an external environment. Through use of these, practitioners can review and grasp the essentials of external environmental analysis.

In keeping with the concept that organizations are bundles of resources, Marr provides a concise yet substantive explanation of analyzing an organization’s internal environment. This analysis is crucial, as it sets up the development of the organization’s practical strategic management process. An organization must know what it does well; what it owns in resources – both tangible and intangible; and an organization must know how its way of doing things is unique or could be unique. In sum, an organization must know what its capabilities are and what they accomplish for the organization.

Understanding what the organization’s capabilities are is crucial, and because it is important, Marr provides a rich outline by which management can use in identifying what the organization does well and what it uses in doing its work well. Related to this is the identification of the organization’s core competencies. (See also Hamel and Prahalad’s (1990) landmark article, “The core competence of the corporation”.) While the concept of core competencies tends to be abstract, yet seemingly important, Marr describes the nature and content of competencies, thereby providing practitioners some ground to stand on as they begin their internal analysis. Emphasizing again the importance of internal analysis is that Marr posits an organization responds to the environmental pressures by the use of its internal resources – capabilities and competencies.

Completing the analysis provides practitioners of what is in the environment and what is available in the organization. Marr follows with what is perhaps one of the most valuable components of the text: the mapping out of value creation. It is in the mapping out of value creation where the organization must pull from employees the ways of doing work that combine the resources in the organization to create value. By virtue of integrating personnel (what an organization does!) from various divisions and departments and connecting them to central aspects of the corporation’s purpose, inextricably tied to marketing, the process of mapping out value yields a dynamic component to a strategic process. This mapping of value creation is hard work, and Marr gives strict advice that shortcuts in this process will lead to shortfalls in the execution and returns in a strategic process. Practitioners will find this section of value maps both intriguing and highly practical.

Creating value maps is a large contribution the book provides practitioners, but just as important is Marr’s framework of developing performance measures. Rather than using performance measures as grades to evaluate a manager’s or department’s “productivity”, Marr’s framework emphasizes learning. An organization remains strategic and responsive to environmental pressures by virtue of what it has learned and its ability to learn. This is in stark contrast to the use of performance measures that are used to evaluate a type of productivity but ignore what is essential in any form of strategic activity – learning, which provides the basis to innovation, improvement and flexibility.

An organization’s performance indicators draw from a developed set of value maps. Without sound value maps, the organization will be hard pressed to develop relevant performance indicators that cultivate learning rather than establishing a culture of numbers games. By creating an enabled learning environment, the organization establishes a dynamic strategic process that draws from the vital expertise of personnel and the integration of the dynamic capabilities.

In this excellent read, without compromising substance, Marr provides practitioners the dimensions to the strategic management process and the tools to develop and prepare a process that furthers the organization’s purpose.

This review was originally published in Journal of Product & Brand Management, Vol. 16 No. 1, 2007.