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The Strategy Management Office (SMO), also referred sometimes as the Office of Strategy Management (OSM), is the team responsible for managing the Corporate Strategy of the organization.
The ultimate role to execute Strategy lies with the line managers and employees, but without a core command and coordination office (i.e. the SMO), Strategy is either skipped from key processes or the processes are ineffectual across business units, causing poor Strategy execution.
This presentation is the final in a series of 3. It covers the nuances of implementing a Strategic Management Office. Topics include the 4 common SMO Organizational Models and SMO resourcing need.
Additionally, we discuss a specific case study of SMO implementation with Chrysler in the early 2000s, including a deep dive into resource allocation across the 9 SMO processes.
This deck also includes for you to use in your own business presentations.
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Source: SMO Series: Strategic Management Office (SMO) Implementation PowerPoint document
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SMO Series: Strategic Management Office (SMO) Implementation
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Framework Primer
SMO Series: Strategic Management
Office (SMO) Implementation
Presentation created by
Scorecard
Manageme
nt
Organizatio
n Alignment
Strategy
Reviews
Best
Practice
Sharing
Strategic
Planning
Workforce
Alignment
Strategy
Communi-
cation
Initiative
Manageme
nt
Planning/
Budgeting
Strategy
Management
1
2
3
4
5
67
8
9
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Contents
Overview
SMO Organizational Models
SMO Resource Needs
SMO Implementation Case Study
Templates
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This presentation discusses the art of implementation a Strategic
Management Office
Presentation Overview
There are reported Strategy implementation failure rates that hover around 60-90%—
companies set Strategic Plans with specific targets but few achieve them.
The Strategy Management Office (SMO), also referred sometimes as the Office of Strategy
Management (OSM), is the team responsible for managing the Corporate Strategy of the
organization.
The ultimate role to execute Strategy lies with the line managers and employees, but without a
core command and coordination office (i.e. the SMO), Strategy is either skipped from key
processes or the processes are ineffectual across business units, causing poor Strategy
execution.
This presentation is the final in a series of 3. It covers the nuances of implementing a Strategic
Management Office. Topics include the 4 common SMO Organizational Models and SMO
resourcing need.
Additionally, we discuss a specific case study of SMO implementation with Chrysler in the
early 2000s, including a deep dive into resource allocation across the 9 SMO processes.
This deck also includes for you to use in your own business presentations.
The content on this page has been partially hidden.
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Let’s begin by reviewing the 9 cross-functional processes that should be
run by the Strategy Management Office
SMO Overview – 9 Key Strategy Management Processes
For more details on the 9 strategy management processes, refer to this framework:
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There are 9 key Strategy Management Processes, categorized under 3 groups:
Scorecard
Management
Organization
Alignment
Strategy
Reviews
Best Practice
Sharing
Strategic
Planning
Workforce
Alignment
Strategy
Communi-
cation
Initiative
Management
Planning/
Budgeting
Strategy
Management
1
2
3
4
5
67
8
9
Desirable
SMO
Processes
Integrative
Processes
Core Processes
Source: Creating the Office of Strategy Management, Kaplan, Norton, 2005
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For successful implementation, the SMO needs to have a pivotal role in
achieving integration and alignment of Corporate Strategy
SMO Overview – Strategy Integration and Alignment
Due to SMO’s coordination, previously incongruent, disarranged, or missing management
processes are performed in an integrated fashion to deliver tangible results.
The SMO is responsible to ensure that all management processes are cohesive and are in perfect alignment
with the Strategy.
Enterprise strategy
planning
Organization
planning
Strategic manage-
ment process
Management
control & learning
Workforce
planning
CEO/Executive Team
Annual Cycle
Q2 Q3 Q4
Financial planning
Planning/Budgeting
Budgets
Plans
Initiatives
Finance
IT
HR
Employee alignment
Personal goals
Employee incentives
Personal development
Develop business and support unit scorecards
Align the organization
Corporate and business units aligned
Business and support units aligned
Board of Directors aligned
Q1
Strategy reviews
Initiative management
Best practice sharing
Strategy communication
Review and update strategy
Clarify vision
Develop the corporate scorecard/ strategy
map
Define corporate strategy
BSC Team Projects
LOB Leaders
Support Unit Leaders
CFO, HRO, CIO, CMO
HR
Chief Knowledge Officer
Corporate
Communication
4
1
2
1
7
8
3
6
9
5
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Contents
Overview
SMO Organizational Models
SMO Resource Needs
SMO Implementation Case Study
Templates
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There are 4 different organizational models followed to implement the
Strategy Management Office
SMO Organizational Models (1 of 2)
The SMO should ideally be the direct report under the CEO.
Strategy implementation necessitates constant Organizational Transformation that can only be sanctioned by
the CEO.
Various organizational models have been found to be working at organizations striving to implement Strategy precisely,
including:
For the successful
implementation of
Strategy, the first 2 models
are desirable whereas the
second 2 are not, since it
is best suited for the SMO
to be reporting directly to
the CEO, or in parallel with
the heads of important
corporate functions such
as finance, IT, human
resources and operations.
Direct to CEO
This configuration guarantees direct access for
the SMO to the CEO.
Direct to CFO
(with direct access to CEO)
The configuration where the SMO is positioned
within the Strategic Planning or finance functions,
reporting to the CFO or COO, but has direct
access to the CEO also.
Indirect to CEO
(minus 1 level)
The organizational arrangement where the SMO
is placed 2 levels below the CEO and has no
direct access to the top.
Indirect to CEO
(minus 2 levels)
The organizational model where the SMO is
placed 3 levels below the CEO.
1 2
3 4
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The top 2 organizational models are the most appropriate for the
execution of Strategy
SMO Organizational Models (2 of 2)
An SMO in the minus levels finds it difficult to gain respect and attention from senior
executives for Strategy Management priorities.
Source: Creating the Office of Strategy Management, Kaplan, Norton, 2005
Direct to CEO
(Solo relationship)
CEO
SMO CFO COO HR IT Etc.
Direct to CFO, with direct access to
CEO
(Dual relationship)
CEO
CFO COO HR IT Etc.
SMO
Direct Minus One Level CEO Minus Two levels
CEO
CFO COO HR IT Etc.
SMO
CEO
CFO COO HR IT Etc.
SMO Measurement
The Direct to CEO and
Direct to CFO models
allow the SMO to set
the agenda for a
weekly meeting with
the CEO and CFO, and
for the weekly meeting
of the top company
executives. The SMO
has a matrixed
relationship with the
BSC managers in
major business/support
units, and with the
owners of strategic
initiatives to coordinate
the Strategic Planning
done in these units.
In the Indirect to CEO
(minus 2 levels), the
BSC is seen only as a
performance
measurement system
to drive operational
improvements but is
not placed at the center
of a Strategy
Management System.
In the Indirect
to CEO
(minus 1
level) model,
all SMO
functions are
scrutinized by
the CFO or
COO before
reaching the
CEO.
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Contents
Overview
SMO Organizational Models
SMO Resource Needs
SMO Implementation Case Study
Templates
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Of the 9 Strategy Management processes, we need to determine which
should be run by the SMO—this is critical to effective implementation
SMO Resource Needs – Roles and Responsibilities
The Integrative Processes are those that are run by the senior management, whereas the
SMO integrates Strategy for these processes.
The Desirable SMO processes are performed by existing organizational units. These processes should eventually be incorporated
into a central organization with strategic focus. The integrative processes fall under the natural domain of other functions where
the SMO plays a coordinating role, ensuring that the processes are closely incorporated with the enterprise Strategy.
The chart below delineates whether SMO should or should not run each of the 9 key Strategy Management processes.
Source: Creating the Office of Strategy Management, Kaplan, Norton, 2005
Scorecard Management – Design and report on the BSC measures
2 Organization Alignment – Ensure all business and support units are aligned with the strategy
1
3 Strategy Reviews – Shape the agenda for management strategy review and learning meetings
Strategic Planning – Help the CEO and executive team formulate and adapt the strategy
5 Strategy Communication – Communicate and educate employees about the strategy
4
6 Initiative Management – Identify and oversee management of strategic initiatives
Planning/Budgeting – Link financial, human resources, information technology, and marketing
to strategy
8 Workforce Alignment – Ensure all employee’s goals, incentives and development plans link
to strategy
7
9 Best Practice sharing – Facilitate a process to identify and share best practices
Strategy management process SMO Role
CFO, HRO,
CIO, CMO
HRO
CKO
Key
SMO must run the process
SMO should run the process
X SMO integrates strategy to a
process run by someone else (X)
CFO: Chief Financial Officer
HRO: Human Resource Officer
CIO: Chief Information Officer
CMO: Chief Marketing Officer
CKO: Chief Knowledge Officer
Core
Roles
Desirable
Roles
Inte-
grative
Roles
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Here is a breakup of resource requirements for a functional Strategy
Management Office
SMO Resource Needs
Some Strategy Management processes are more resource intensive than the others.
The SMO controlling all 9 processes generally has between 6 to 8 full-time equivalent (FTE) staff.
Source: Creating the Office of Strategy Management, Kaplan, Norton, 2005
Core Roles
Desirable
Roles
Integrative
Roles 8 Workforce Alignment
7 Planning/Budgeting
9 Best Practice sharing
2 Organization Alignment
1 Scorecard Management
3 Strategy Reviews
5 Strategy Communication
4 Strategic Planning
6 Initiative Management
SMO Role
HRO
CFO, HRO,
CIO, CMO
CKO
Total FTE:
Strategy Management Process Typical staffing (FTE)
0.5
0.5
0.5-1.0
1.0-1.5
1.0
0.5-1.0
0.5-1.0
0.5
1.0-1.5
6-8
Key
SMO must run the process
SMO should run the process
X SMO integrates strategy to a
process run by someone else (X)
CFO: Chief Financial Officer
HRO: Human Resource Officer
CIO: Chief Information Officer
CMO: Chief Marketing Officer
CKO: Chief Knowledge Officer
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Contents
Overview
SMO Organizational Models
SMO Resource Needs
SMO Implementation Case Study
Templates
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As the new CEO, Dr. Dieter Zetsche, took over, he—alongside the vice president of business
strategy and the executive team—developed a new strategy introducing drastic cost reductions
in the near-term and significant investments to enable new products.
Chrysler’s Strategy group with guidance from the executive team interpreted the strategy into a
Balanced Scorecard. The Strategy group then trained the business and support units on
preparing local scorecards linked with corporate objectives, and customized to their operations.
She strategy group retained the task for data collection and reporting processes for the
scorecard, and hence their Balanced Scorecard project evolved.
The Chrysler Strategy group also took over the role for communicating the new strategy and
scorecard to all employees, briefing the CEO—before every management meeting—about any
glitches identified by the scorecard needing attention, and following up after meetings to ensure
required actions are implemented.
Within 2 years, the role of business strategy expanded to incorporate many new enterprise-wide
strategy implementation processes.
Organizations seldom get a running start in terms of having a fully-
functional Strategy Management Office—let’s look at the case of Chrysler
SMO Implementation – Chrysler Case Study (Overview)
By 2004, Chrysler launched a series of exciting new products and earned a profits
of $1.2B in spite of a weak domestic automobile market.
A functional Strategy Management Office is rarely a case at most organizations. For instance, after a series of
successes in the 1990s, Chrysler reached an innovation drought in 2000. A deficit of about $5 billion was
forecasted for 2001—in the face of recession, escalating costs, and threatening imports.The content on this page has been partially hidden.
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Chrysler assigned the following staff for the implementation
of their SMO
SMO Implementation – Chrysler Case Study (Core Roles)
Chrysler’s SMO lead makes certain that the focus of the review meetings remain on
performance gaps revealed by the scorecard.
Chrysler’s resource allocation across the 9 SMO processes is in the following order:
One manager and 1 Chrysler IT analyst (assigned part-time) to create scorecard
metrics and targets for the Executive Committee, enable monthly scorecard reporting,
and reporting system maintenance.
One manager coordinates with HR to help align the organization with the Strategy, by
linking the Performance Management System to corporate and functional-level
scorecards.
Three senior managers and 7 managers take care of the agendas, meetings’ minutes,
and prepare briefing binders for executive committees’ meetings.
Organizationa
l Alignment
Scorecard
Management
Strategy
Reviews
1
2
3
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The SMO assists in the development of Strategy material and
communication content
SMO Implementation – Chrysler Case Study (Desirable Roles)
The SMO assists the CFO in linking Strategic Plans to budgets.
Strategy Com-
munication
One senior manager and 3 managers outline the strategic discussion with the help of
Scenario Planning and identifying core challenges, for the strategic initiatives
shortlisted in the annual Strategic Planning process.
One senior manager and 3 managers liaise with the corporate communications team to
create the Balanced Scorecard and Strategy packs—e.g., presentations, print media,
electronic media, and training materials. The SMO acts as the communications content
experts at the quarterly executive meetings, the monthly Strategy awareness forums for
managers, and other public events.
Two senior managers, 3 managers, and 2 analysts have been assigned to identify
strategic initiatives for the annual Strategic Planning process. These resources
evaluate the progress of strategic projects and guide the performance of the SMO team
members involved in the initiatives. The operational groups, however, are responsible
for the execution of their own initiatives.
Strategic
Planning
Initiative
Management
4
5
6
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Workforce
Alignment
Planning and
Budgeting
Best Practices
Sharing
7
8
9
The SMO is responsible for aligning all employee processes—
compensation, performance mgmt, and development—to Strategy
SMO Implementation – Chrysler Case Study (Integrative Roles)
The SMO assists in documenting and communicating strategic insights and best practices
across the different departments.
Chrysler Group prepares 2 business plans: a detailed 3-year operating business plan
and a 10-year high-level Strategic Plan. The SMO contributes towards the annual
budget preparation for the 3-year plan, as well as to the near-term Strategic Plans.
Chrysler’s human resources department in collaboration with the SMO implements
employee development processes and programs, using proprietary performance
appraisal systems for employees, to link personal goals to Corporate Strategy.
Alongside a specific formal process for communicating strategic best practices, the
Balanced Scorecard assists in yielding best practices clearly discernable—e.g.,
through objectives setting and measures reporting processes. Due to the strong
affiliation between product development and Strategic Planning units, product
development best practices have been recorded and shared with the Chrysler’s product
development teams.
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Contents
Overview
SMO Organizational Models
SMO Resource Needs
SMO Implementation Case Study
Templates
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Insert headline
9 Key Strategy Management Processes – TEMPLATE
Insert bumper.
Scorecard
Management
Organization
Alignment
Strategy
Reviews
Best
Practice
Sharing
Strategic
Planning
Workforce
Alignment
Strategy
Communi-
cation
Initiative
Management
Planning/
Budgeting
Strategy
Management
1
2
3
4
5
67
8
9
Desirable SMO
Processes
Integrative
Processes
Core Processes
Source: Creating the Office of Strategy Management, Kaplan, Norton, 2005
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Insert headline
SMO Organizational Models – TEMPLATE
Insert bumper.
Direct to CEO
This configuration guarantees direct access
for the SMO to the CEO.
Direct to CFO
(with direct access to CEO)
The configuration where the SMO is
positioned within the Strategic Planning or
finance functions, reporting to the CFO or
COO, but has direct access to the CEO also.
Indirect to CEO
(minus 1 level)
The organizational arrangement where the
SMO is placed 2 levels below the CEO and
has no direct access to the top.
Indirect to CEO
(minus 2 levels)
The organizational model where the SMO is
placed 3 levels below the CEO.
1 2
3 4
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Insert headline
SMO Organizational Models – TEMPLATE ALTERNATE
Insert bumper.
Direct to
CEO
Indirect to
CEO
(minus 1 level)
Direct to
CFO
(with direct
access to CEO)
Indirect to
CEO
(minus 2
levels)
This configuration
guarantees direct access
for the SMO to the CEO.
The organizational
arrangement where the
SMO is placed 2 levels
below the CEO and has
no direct access to the
top.
The organizational model
where the SMO is placed
3 levels below the CEO.
The configuration where
the SMO is positioned
within the Strategic
Planning or finance
functions, reporting to the
CFO or COO, but has
direct access to the CEO
also.
1 2
3 4
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Insert headline
SMO Organizational Models – TEMPLATE ALTERNATE
Insert bumper.
The organizational
model where the
SMO is placed 3
levels below the
CEO.
This configuration
guarantees direct
access for the SMO
to the CEO.
Direct to CEO
The organizational
arrangement where
the SMO is placed 2
levels below the
CEO and has no
direct access to the
top.
Direct to CFO
(with direct
access to CEO)
The configuration
where the SMO is
positioned within the
Strategic Planning
or finance functions,
reporting to the CFO
or COO, but has
direct access to the
CEO also.
Indirect to CEO
(minus 1 level)
Indirect to CEO
(minus 2 levels)
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Flevy (www.flevy.com) is the marketplace
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Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
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recreating the same foundational business
documents. Our vision is for Flevy to
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from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
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