Execution Premium
The Concept
Palladium is the largest company in the world focused exclusively on helping companies execute their strategies and achieve an execution premium. An execution premium is extraordinary value created by an organization. It may manifest itself as an increase in share price, revenues, brand recognition, customer loyalty, or employee commitment. It may also result from dramatically improved consolidation, optimal resource allocation, or reduced cycle times. An execution premium is achieved when strategy is properly clarified and linked to operations through the generation of timely, robust, mission-critical information.
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The Book
In their latest book, The Execution Premium, Linking Strategy to Operations for Competitive Advantage (Boston: Harvard Business Press, 2008), Drs. David P. Norton and Robert S. Kaplan provide a comprehensive management model designed to address one of management’s greatest challenges: linking strategy formulation and planning with operational execution. The six-stage model incorporates elements from the Balanced Scorecard, strategy maps, principles and practices along with management tools developed by leading experts to create a practical approach that will enable organizations to not only plan and successfully execute their strategy, but also to monitor, test and adapt their strategic assumptions in order to ultimately achieve an execution premium.
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The Execution Premium represents years of research, a synthesis of groundbreaking concepts, and case studies of organizations that have achieved a true Execution Premium. It underscores how organizations using formal strategy execution management consistently outperform their peers. Kaplan and Norton provide meticulous detail on how any organization can make strategy a regular part of its business processes. They describe how companies can establish strong linkages from strategy to operations so that employees’ everyday operational activities support strategic objectives. They introduce a new framework for management review meetings that clearly separates the operational review meetings, which solve short-term problems and monitor the improvement of key operational processes, from the meetings that review and improve strategy execution.
If you are, or work for, the CEO, CIO, or CFO of an organization that is looking to achieve an execution premium, then this book is required reading.
The Results
Achieving an execution premium will impact your company in a number of different ways—significantly improving performance from financial, customer, internal, and learning and growth perspectives. Our research has shown that in a world where nine out of ten organizations fail to execute their strategies, 70% of organizations that use a formal process to manage strategy out-perform their peer group. Here are just a few examples of the execution premiums client companies have achieved as a result of working with Palladium:
- Marriott Vacation Club (USA) saw operating profits rise by 80%, its customers rating them as "easy to do business with" rise by 70%, and the percentage of its employees who understood the strategy rise from 74% to 86%.
- Bank of Tokyo Mitsubishi UFJ saw its net profit rise by 117%, its Moody’s/S&P credit ratings increase from A2/BBB to A1/A, and it became the #1 ranked brand among Japanese financial institutions.
- SOHO in Indonesia saw its revenues increase by 65%, both its market share and customer satisfaction rating double, and its lead time on a key product reduced from 25 days to 2 days.
- Infosys saw its revenues rise by 310%, its new product revenues rise 48%, and, it was ranked India’s best managed company.
As these examples so profoundly demonstrate, across industries and across continents, when you successfully link strategy formulation and planning with operational execution, you achieve value creation—an execution premium.
Contact us to learn how Palladium can help you attain an execution premium.