Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

Sidnei Vieira Marinho

Universidade do Vale do Itajaí (UNIVALI)

Cristiano Cagnin

DG Joint Research Centre Institute for Prospective and Technological Studies

The 4th International Seville Conference onFuture-Oriented Technology Analysis (FTA)

12 & 13 May 2011

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

1. Introduction

• Despite the growing number of publications on Performance Measurement Systems, it can be observed that consensus has not yet been on the stages of their implementation within an organization.

• The systematic proposal is composed by four different phases which to optimize the utilization of Balanced Scorecard by methods, tools and author’s contributions of this paper.

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

1. Introduction (Why Balanced Scorecard?)

• Studies demonstrate that one of the performance management systems most widely used by organizations is the balanced scorecard.

• It is made up of four strategic perspectives and includes some of the subjects that are of greatest importance to implementation of strategy, these are: the transformation of strategy into operational actions; the creation of correlation hypotheses based on cause and effect relationships; the monitoring of both financial and non-financial measures; and alignment and management of the scope of objectives in such a way as to facilitate feedback and strategic learning with the aim of transforming strategy into a continuous process.

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

2. Balanced Scorecard

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

2. Balanced Scorecard

LIMITATION AUTORS SUGESTIONS AUTORS

The cause and effect relationships

between performance measures are

linear and static

Butler, Letza e Neale, 1997;

Anthony e Govindarajan, 1998;

Schneiderman, 1999; Norreklit,

2000; Richmond, 2001

System Dynamics

Richmond, 2001; Todd, 2000;

Akkerman e Oorshot, 2002; Linard,

Fleming e Dvorsky 2002;

Schoeneborn, 2003

There is a need for additional

perspectives if all stakeholders are to

be catered for

Otley, 1999; Schneiderman, 1999;

Norreklit, 2000; Neely, e

Kennerley, 2002; Brignall, 2002;

Atkinson, 2006

Performance Prism Neely, e Kennerley, 2002

The balanced scorecard fails because

of difficulties that are encountered

during the implementation phase

Epstein e Manzoni, 1998;

Atkinson, 2006Hoshin Kanri Witcher e Chau, 2007

Employees are not represented when

strategic objectives and measures are

defined

Norreklit, 2000

Hoshin Kanri Witcher e Butterworth, 2000;

Tennant e Roberts, 2001

Skandia Navigator

Walker e MacDonald 2001; Olve,

Roy e Wetter, 2001; Hagood e

Friedman 2002; Andriessen 2004;

Wu 2005

The balanced scorecard doesn’t take

into account the interaction between

the processes of strategy

development and implementation

Epstein e Manzoni, 1998;

Atkinson, 2006

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

3. Systematic Proposal

Phase 4

Phase 3

Strategic Learning

Phase 1

Mission

Vision

Values

Organizational Strategy Strategic Diagnostic

Phase 2

External Environment

Internal Environment

Cascading the Strategy into Operational Actions

Objectives Measures Targets Initiatives Budget

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

3. Systematic Proposal (Phase 2 – Strategic Diagnostic)

Identification of strategic questions

Analysis of internal environment Analysis of external environment

SWOT matrix

Selection of scenarios

Description of scenarios

Analysis of implications and options

Selection of initial measures

Stage 1

SWOT analysis

Stage 2

Global Business Network Method

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

3. Systematic Proposal (Phase 3 – Cascading the Strategy)

Stage 3: Definition of the Strategic Objectives

Stage 4: Construction of the Strategy Maps

Stage 5: Selection of the Measures

Stage 6: Targets Supervision

Stage 7: Strategic Management of Initiatives

Stage 8: Strategic Budget

CASCADING THE STRATEGY INTO OPERATIONAL ACTIONS

STRATEGIC OBJECTIVES MEASURES TARGETS INITIATIVES BUDGET

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

3. Systematic Proposal (Phase 4 – Strategic Learning)

MONITORING CYCLE

MONITORINGMEETING

(SINGLE LOOP)

EXIT RESULTS

ENTER RESOURCES

FINANCE

LEARNING MEETING (DOUBLE LOOP)

STRATEGIC LEARNING CYCLE

INITIATIVES AND PROJECTS

BALANCED SCORECARD

STRATEGY

BUDGET

TRANSLATION OF THE STRATEGY

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

4. Validation (Delphi Method and Case Studies)

• Once this system had been defined, its phases and stages were validated using the Delphi method, in order to obtain the opinion of the specialists This implementation of the Delphi method involved specialists from Brazil, Germany, Spain, Canada and Japan.

• The systematic proposal has been tested within three case studies .The first case aimed to assess the efficiency of the Brazilian State of Parana in sharing juridical knowledge with citizens to implementation of sustainable policies.

• The second case aimed at verifying if the social responsibility measures used by a higher education institution were sufficiently linked to its strategic objectives

• The third case took a place in a no-profit organisation and aimed at checking how far its annual budget was directed towards the strategic objectives of the caring population.

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

5. Quantitative and qualitative aspects of the proposal and roles of FTA

• The System Dynamics tries to investigate and provide solutions to problems via simulations and modelling embedded in a learning environment. By performing changes in variables, which are controlled to ensure it leads to robust and viable outcomes, one can easily understand how policy or strategy options will resonate in the overall system.

• In the same line, the integration and adaption the CommonKADs into the proposal provides an enhanced governance of the system as it enables strategic knowledge in terms of processes and production to be transferred, thus offering robust information and value measures across the system or value chain.

• The combination of CommonKADs with System Dynamics provide effectiveness in fostering learning and transferring knowledge since such combination integrates all important elements of an organisation's strategy and operations.

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

5. Quantitative and qualitative aspects of the proposal and roles of FTA

Systematic Proposal Phases

Contributions of FTA

Organizational strategy FTA supports the development of a shared vision in the value chain. It does so by providing spaces in which actors can come together to shape likely pathways into the future, which would be the basis for actors to jointly develop creative solutions to challenges. This supports the definition of a common as well as an individual strategy.

Strategic diagnostic FTA provides a shared understanding of stakeholders' views as well as of risks, opportunities, system capabilities and dynamic changes, all of which are critical to better understand ways in which the system might evolve. This is critical for the definition of a vision to be pursued.

Cascading the strategy into operational actions

FTA involves the collective articulation of visions and expectations, which is paramount in the definition of a common strategy and related action plans to be pursued as well as of monitoring systems to put in place and resources which need to be coordinated and mobilised. This increases legitimacy, ownership and transparency of decisions.

Strategic learning FTA processes lead to mutual experimentation and learning. This increases communication across the value chain and the development of partnerships based on trust, which in turn allows the system to become adaptive in time and to build new configurations through a multi-level governance approach.

Using a combination of the commonkads and system dynamics methodologies to

make operational the transition between the definition of a joint innovation strategy

and its implementation and management

6. Conclusions

•The systematic proposal was developed based on perceived gaps in the process of implementing the balanced scorecard;

• The combination of Delphi and case studies demonstrated both the importance and originality of systematic proposed;

• The application of systematic proposal in practice shows that the notion of stakeholder involvement, mutual experimentation and learning, and of a common vision to be pursued across the system is however still neglected;

• Embedding FTA enables firms to steer solutions to possible challenges in decision making and implementation processes which include the coordination and mobilization of resources across the value chain.