PB Line-of-Sight Enterprise Indicator

Report XYZ Company

Version 1.0 January 2013

Created by: Prana Business LLC

Copyright 2013 Prana Business LLC - All Rights Reserved

Congratulations! You and your organization have just experienced the PB Line-of-Sight business indicator. This simple and non-intrusive tool is designed to create insights into the most critical blocking and tackling elements that every company must have in place to ensure alignment and strategy execution.

PB Line-of-Sight uses the Keys to Strategy Execution model, which is based on real-world empirical research and in-depth consulting experience that spans two decades. Additionally, the model combines concepts and theories extracted from many of the best strategic thinkers in the past half century. It has been put to work by testing and shaping strategies with thousands of managers across dozens of mid-cap and enterprise-sized firms. In addition, PB Line-of-Sight integrates a cutting-edge assessment and learning approach called Confidence-Based Marking (CBM). CBM fuses both a persons knowledge of a concept as well as their level of confidence in their knowledge into a more complete and powerful set of responses to each item presented throughout the following report. As each person responds to the items in the questionnaire they are asked to make a choice between four possible statements. As a result, each of their responses is then plotted into one of the four quadrants in the diagram. CBM Scale I am confident this statement is accurate I am somewhat confident this is accurate; I wish I were more confident This statement is NOT accurate Im really not sure

Copyright 2013 Prana Business LLC - All Rights Reserved

PB Line-of-Sight - Enterprise Indicator

Strategic Understanding
1. Most employees have a good understanding of our company strategy or game plan.
Aligned Somewhat Aligned Misaligned Not Sure

62%

53%

40%

28% 25% 19% 17% 11% 8% 9% 2% 26%

EXECUTIVE

MANAGER

STAFF

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4. Executives feel it's important for employees to have an understanding of our strategy.

Aligned

Somewhat Aligned

Misaligned

Not Sure

59% 57%

43%

33% 26% 22% 26%

12% 10% 0% 3% 9%

EXECUTIVE

MANAGER

STAFF

Copyright 2013 Prana Business LLC - All Rights Reserved

7. Most employees know who our main competitors are and how were different from them.

Aligned

Somewhat Aligned

Misaligned

Not Sure

61% 59%

36% 33% 31% 26% 22%

12% 9% 6% 2% 3%

EXECUTIVE

MANAGER

STAFF

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Snapshot: Strategic Understanding

The responses in this first section show that most team members are Aligned somewhat confident that employees understand the XYZ Company Somewhat Aligned strategy. However, they also indicate that they wish they were more confident. This tells us that respondents feel its important for employees Misaligned to have an understanding of the firms strategy. Additionally, the data Not Sure reveals that most managers believe an understanding of the firms strategy helps employees perform their jobs more effectively and feel a greater sense of purpose in their work. Although the data doesnt point to misalignment necessarily, there could be work done to shore up the scores to ensure more responses in the Aligned quadrant. Some of the scores indicate that employees could hesitate when making decisions and may at times feel confused about priorities. Confident knowledge of the XYZ Company strategy across the organization may lead to more consistent execution and compel clients to work with the firm in deeper ways and for longer periods of time, making it a win/win proposition. Item number 7 in this section gives us a snapshot into an employees understanding of the competitive landscape. Confident knowledge of the competition and how XYZ Company differentiates will help to create a sense of cohesiveness amongst employees. Improving the scores for this item may help employees position XYZ Company so that the firm stands out clearly among the competitive set, which could improve economic results. 70% of CEO failures come not as a result of poor strategy, but of poor execution. - Fortune

Considerations:
Although we are all prone to blind spots, effective managers are typically aware of their teams notable strengths and significant flaws. Some of the most promising opportunities, however, lie in the gray area between aligned and somewhat aligned. It is there that mediocrity often lives. It is there that a firm can move from good to great. To what degree does this apply to your team? What are the implications of these scores for you, your team, and XYZ Company overall?

Copyright 2013 Prana Business LLC - All Rights Reserved

Leadership
8. Executives have sufficient credibility with employees to lead the execution of strategy.

Aligned

Somewhat Aligned

Misaligned

Not Sure

56%

46% 42% 38% 37%

26% 19%

11% 0% 6%

10%

9%

EXECUTIVE

MANAGER

STAFF

Copyright 2013 Prana Business LLC - All Rights Reserved

Snapshot: Leadership
Leadership capability and credibility are two of the most valuable intangible assets within a company. Research shows that investors pay a premium for strong leadership because its a powerful leading indicator to financial performance. To ensure execution and sustainable competitive advantage, leaders must communicate strategy every day, embedding it into their communication in a way that is meaningful and actionable to employees. Your responses indicate that some work could be done to ensure that strategic communication happens more consistently and effectively.

Aligned Somewhat Aligned Misaligned Not Sure

Moreover, strategy is not a static element in business. Leaders must hone their ability to facilitate transition and change so a company can adjust their strategies and tactics according to market demand. Item number 9 in this section shows that respondents are mostly somewhat confident but wish they were more confident in the leaderships change management capabilities.

Considerations:
Keep in mind that responses in this brief section do not constitute a broad assessment of leadership capability at XYZ Company. Rather, the questions target 3 specific areas linked with business performance: (1) credibility to execute on strategy; (2) communication of strategy; and (3) ability to lead change. Given that the results are good but not yet great, what concrete opportunities for improvement exist? What needs to happen? What would it take to generate stellar results?

Copyright 2013 Prana Business LLC - All Rights Reserved

Balanced Metrics
13. Key performance indicators help employees stay focused on delivering unique customer value.
Aligned Somewhat Aligned Misaligned Not Sure

42% 37% 33% 28% 24%

27%

26% 24%

18% 15% 13% 13%

EXECUTIVE

MANAGER

STAFF

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Snapshot: Balanced Metrics

Every day, team members come to work and have a list of tasks they can choose to complete. Effective measurements, key performance indicators, and individual goals can help team members make choices about the most important tasks that relate to differentiating the firm. One of the biggest mistakes that organizations make is putting in place a vague strategy to be the best instead of a strategy to be different. Linking metrics and goals to a firms game plan helps ensure everyone is moving in the same consciously differentiated direction.

Aligned Somewhat Aligned Misaligned Not Sure

A balance of leading and lagging indicators is a vital part of maintaining organizational alignment. Metrics and measurements should clearly indicate how well a job or function is creating customer value. Oftentimes companies will put in place industry generic best practice measurements rather than crafting smart indicators that keep employees and teams truly focused on delivering and supporting profitable customer value. Your results show that work could be done to bolster the confidence that employees have in the firms overall measurement and scorecard system. This is a powerful step in the journey toward creating a culture of accountability, commitment, and high performance.

Considerations:
It is worth highlighting the results on Question 13. These indicate that most of the team believes that your metrics are not tightly linked to your value propositioni.e. how XYZ Company differentiates itself in the market-place. What are the implications of that disconnect? How would you change them in ways that could enhance performance?

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Activities & Structure

17. Employees use their knowledge of the strategy to help prioritize their daily activity and task list.

Aligned

Somewhat Aligned

Misaligned

Not Sure

66%

53% 47%

33%

33%

19% 12% 7% 7% 9% 3% 11%

EXECUTIVE

MANAGER

STAFF

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Snapshot: Activities & Structure

Activities, including tasks and projects, are the basic units of competitive advantage. When employees know how their daily tasks contribute to customer value this can help create a deeper sense of individual meaning and purpose, fuelling a virtuous cycle of results-focused activity. The responses reveal that some work needs to be done in this area. Scores indicate that strategy could be used more effectively than it currently is as a tool for prioritizing activities and targeting projects that create value for the firm. When individuals have a clear understanding of the firms game plan it provides a solid context and framework for them to make choices about what to do, and equally important what not to do.

Aligned Somewhat Aligned Misaligned Not Sure

Items in this important section show an overwhelming trend in the Somewhat Aligned quadrant. Although responses in that quadrant dont necessarily lead to poor execution, this may be an indication of where a little improvement could move a team or the firm overall from good to great.

The essence of strategy lies in choosing what not to do. Michael Porter

Considerations:
Comparing the responses in Questions 16 & 17 there is a notableand perhaps significant?contrast in perceptions of how Executives are linking activities to strategy versus how well Employees are doing so. Question 18 also highlights the perception that there may be opportunities to optimize organizational structure in order to execute more effectively on strategy. What are the implications of these two key learnings? What would be the benefits of addressing themand what, concretely, might be done?

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Human Capital
21. Employees receive training that enables them to perform activities that contribute to effective execution of the strategy.

Aligned

Somewhat Aligned

Misaligned

Not Sure

61%

47%

47%

33% 27% 26% 22%

11% 9% 0% 6%

11%

EXECUTIVE

MANAGER

STAFF

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13

Snapshot: Human Capital

Three of the most critical components of effective human capital development are: targeted training, knowledge sharing, and talent management. To create sustainable performance, organizations must continually lever-up their employees skills and abilities. Neglecting talent development will inevitably lead to mediocrity in the coming years. Even if training is happening, it is startling how frequently organizations provide training and development programs based on the latest fad rather than targeting skills closely linked to their strategic differentiation.

Aligned Somewhat Aligned Misaligned Not Sure

Similarly, effective knowledge sharingsupported by transparent and simple-to-use systems and practicesis a key enabler of creativity, efficiency, and, ultimately, performance. Finally, the capacity to attract and retain talent is an obvious hallmark of superior organizations.

Considerations:
The scores reveal that respondents feel XYZ Company is doing a good job of attracting and retaining talent. This is obviously good news. Nonetheless, there are clear opportunities to (1) bolster ongoing, strategy-linked employee development and (2) assess what creative knowledgesharing practices and systems might enhance your collective performance. Since activities are the basic units of competitive advantage, a more strategically-aligned effort towards developing human talent may lead to deeper client relationships. This, in turn, may lead to a bigger pay-off for XYZ Company: a win/win proposal.

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Market Discipline
24. Our company creates unique value for customers in many ways but our core strategy is built around...
Value Proposition
Operational excellence leading to lowest price for our products and services. Product leadership by continuously updating products and services to keep them on the cutting edge. Customer intimacy, i.e., customizing our products and services to meet each customer's unique needs. Don't know.

Operational Excellence

Product Innovation

Customer Intimacy

Don't Know

59% 53% 43% 29% 15%

27% 18% 13% 11% 9% 12% 11%

Executive

Manager

Staff

Very Certain
72%

Somewhat Certain
67%

Not Certain

25. I would characterize my level of certainty in my response to the previous question as...
25% 19% 9% 8%

49% 38%

13%

Executive
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Manager

Staff 15

Snapshot: Market Discipline

Operational Excellence Product or Service Innovation Customer Intimacy Don't Know Very Certain Somewhat Certain Not Certain

Why do your customers buy from you versus the competition?

This is the most fundamental question that any business needs to answer. A rigorous and constant internal focus on addressing this question will undoubtedly lead to firm success. At a glance, this question seems to focus heavily on the demand side of the business. However, with a little more reflection, executives will find that addressing this question consistently leads to a more economically efficient supply side, or business operations. XYZ Company needs to deliver reasonably and adequately in many areas of client value such as innovation, customization, cost, etc. However, attempting to be great or differentiate in too many types of client value can lead to mediocrity. Why? Because different components of value can require completely different sets of activities that employees must choose to perform. Those different activities require unique skills and abilities as well, not to mention corporate culture. Many of those activities can be in conflict with each other. Trade-offs must be made by employees.

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When prioritizing activities, XYZ Company employees need a consistent strategy to serve as the framework for decision-making and choosing important trade-offs. Without a clear value proposition at the center of strategy, employees wont have a consistent foundation and often choose incompatible activities. This can drive ineffectiveness in the value chain that ultimately will lead to economic inefficiencies. For example: the vice president of sales for XYZ Company might be pushing his or her team to emphasize that their company can be flexible and customize the product or service. At the same time, the vice president of operations might be stressing the importance of lean manufacturing and process optimization as to limit variations and inconsistencies in their product or service. Those two vice presidents may actually be undermining company performance by emphasizing incompatible activities. Flexibility and customization require variation. Process optimization removes variation.

Your Results:
Item number 24 shows a powerful agreement around the client value proposition of Customer Intimacy. Employees feel this is a key differentiator for XYZ Company. There is also a strong level of confidence in the responses to this item. This is excellent and certainly indicates the potential for successful strategy execution. As we dig deeper, we see that item number 26 reveals the firms internal processes might be somewhat inconsistent and may be disconnected from or in some cases actually inhibiting the delivery of customer intimacy. Customer Intimacy is created by cultivating long-lasting client relationships based on a deep understanding of the clients business. This ensures the delivery of customized and tailored services that lead to the best total solution for clients. However, one-third of the responses to item number 26 uncover that employees feel the firms internal processes are best described as standardized, simplified, tightly controlled and centrally planned. These responses are linked to the value proposition of Operational Excellence. This should spark critical conversation. Conversation that should ultimately lead to a consistent and effectual answer to the fundamental business question: Why do our clients buy from us versus the competition? There is more alignment in the responses to items numbered 28 and 30, which define the systems and culture of the firm. However, there are quite a few employees that selected Somewhat Certain as their response to those two items. Decades of research in Confidence-Based Marking (CBM) affirms that certainty in knowledge leads to confidence in action. Work could be done to build confidence around these items.

Considerations:
What are the implications of these scores for you and your immediate team? For XYZ Company, as a whole? Are these differences that make a difference? In other words, could steps be taken to tighten up the collective understanding of, and confidence in, your common strategy leading to enhanced performance? Would it be worth the effort to do so? If yes, what steps would provide you most value?

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Conclusion:
There is a tremendous amount of good news embedded in your PB Line-of-Sight results. It is not uncommon for LOS results to indicate far more numerous and serious disconnects and misalignment. Obviously, a lot of good things are in place and functioning in your niche at XYZ Company. Nonetheless, as discussed above, there are also many opportunities for insight and improvement, both in the 5 KSEs (Keys to Strategy Execution), as well in the area of Market Discipline. You are obviously interested in growth, evolution, enhanced performance. The task now is to assess and prioritize the insights generated through your LOS. We encourage you to leverage your results to engage in honest, bold dialogue with one another. Which KSEs do you consider most vital to address? Where will improvement give you the biggest bang for your buck (i.e. add the most value)? To gain true line-of-sight and align your team for optimal performance, it will be extremely helpful to gain committed consensus around these questions, to prioritize, brainstorm, decide, and act. We wish you the best of luck and are happy to support you in any way we can.

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